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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 1, 1995
(Asset Management Portfolio II & Asset Management Portfolio III)
File No. 811-7774
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT No. 9
BT INVESTMENT PORTFOLIOS
(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, 6 St. James Avenue, Boston, Massachusetts 02116
(Name and Address of Agent for Service)
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BT0393A
EXPLANATORY NOTE
This Registration Statement on Form N-1A (the "Registration Statement")
has been filed by BT Investment Portfolios -- Asset Management Portfolio II &
Asset Management Portfolio III (the "Registrant") pursuant to Section 8(b) of
the Investment Company Act of 1940, as amended. However, beneficial interests in
the series of the Registrant are not being registered under the Securities Act
of 1933, as amended (the "1933 Act"), because such interests will be issued
solely in private placement transactions that do not involve any "public
offering" within the meaning of Section 4(2) of the 1933 Act. Investments in the
Registrant's series may only be made by investment companies, insurance company
separate accounts, common or commingled trust funds or similar organizations or
entities that are "accredited investors" within the meaning of Regulation D
under the 1933 Act. The Registration Statement does not constitute an offer to
sell, or the solicitation of an offer to buy, any beneficial interests in any
series of the Registrant.
This Amendment No. 9 to the Registration Statement includes Part A and
Part B relating to Asset Management Portfolio II and Asset Management Portfolio
III, two active series of the Registrant, and incorporates by reference herein
Part A and Part B of: Amendment No. 8 relating to Liquid Assets Portfolio;
Amendment No. 7 relating to Latin American Equity Portfolio , Global High Yield
Securities Portfolio, Small Cap Portfolio, and Pacific Basin Equity Portfolio;
Amendment No. 4 relating to International Bond Portfolio; and Amendment No. 3
relating to European Equity Portfolio.
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BT0393A
ASSET MANAGEMENT PORTFOLIO II
ASSET MANAGEMENT PORTFOLIO III
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.
BT Investment Portfolios (the "Trust") is a no-load, diversified,
open-end management investment company which was organized as a trust under the
laws of the State of New York on March 27, 1993.
Beneficial interests in the Trust are divided into separate series,
each having a distinct investment objectives and policies, two of which, Asset
Management Portfolio II and Asset Management Portfolio III (each a "Portfolio"
and, collectively, the "Portfolios") are described herein. Beneficial interests
in the Portfolios are issued solely in private placement transactions that do
not involve any "public offering" within the meaning of Section 4(2) of the
Securities Act of 1933, as amended (the "1933 Act"). Investments in the Trust
may only be made by investment companies, insurance company separate accounts,
common or commingled trust funds or similar organizations or entities that are
"accredited investors" within the meaning of Regulation D under the 1933 Act.
This Registration Statement does not constitute an offer to sell, or the
solicitation of an offer to buy, any "security" within the meaning of the 1933
Act.
Each Portfolio seeks to achieve its investment objective by allocating
investments among stocks, bonds and short-term instruments. The Portfolio's
investment objectives are as follows: Asset Management Portfolio II seeks
long-term capital growth, current income and growth of income, consistent with
reasonable investment risks; and Asset Management Portfolio III seeks high
income over the long term consistent with conservation of capital.
Additional information about the investment policies of each Portfolio
appears in Part B. There can be no assurance that the investment objective of
the Portfolios will be achieved.
Investment Allocations. In seeking to achieve the Portfolio's
investment objective, Bankers Trust Company ("Bankers Trust"), as the
Portfolios' investment advisor (the"Advisor") allocates the Portfolios' assets
among three principal asset classes (as discussed below): stocks, bonds and
short-term instruments. Bankers Trust will normally allocate the Portfolio's
assets among the asset classes within the following investment parameters: Asset
Management Portfolio II - 0-50% in short-term investments; 30-60% in bonds and
20% 40% in equity. Asset Management Portfolio III - 0-65% in short-term
investments; 35-70% in bonds and 0% 30% in stocks. Each Portfolio's asset
allocation fluctuates around the following neutral positions: Asset Management
Portfolio II - 20% in short-term investments, 45% in bonds and 35% in stocks;
Asset Management Portfolio III - 10% in short-term investments, 35% in bonds and
55% in stocks. As of March 31, 1995, the Portfolio's asset allocation were as
follows: Asset Management Portfolio II - 27% in short-term investments, 42% in
bonds and 31% in stocks; Asset Management Portfolio III - 39% in short-term
investments, 50% in bonds and 11% in stocks.
The Portfolios may make substantial temporary investments in cash and
money market instruments for defensive purposes when, in Bankers Trust's
judgment, market conditions warrant or when the Portfolio has less than $10
million in assets.
Bankers Trust regularly reviews the Portfolios' investment allocations,
and will gradually vary them over time to favor asset classes that, in Bankers
Trust's current judgment, provide the most favorable total return outlook. In
making allocation decisions, Bankers Trust will evaluate projections of risk,
market and economic conditions, volatility, yields and expected return. Bankers
Trust will seek to reduce risk relative to an investment in common stocks by
emphasizing the bond and short-term classes when stocks appear overvalued.
Bankers Trust's management will include use of database systems to help analyze
past situations and trends, research specialists in each of the asset classes to
help in securities selection, portfolio management professionals to determine
asset allocation and to select individual securities, and its own credit
analysis as well as credit analysis provided by rating services to determine the
quality of debt securities.
SHORT-TERM SECURITIES. These securities include all types of domestic
and foreign securities and money market instruments with remaining maturities of
thirteen months or less. Bankers Trust will seek to maximize total return within
the short-term class by taking advantage of yield differentials between
different instruments, issuers and currencies. Short-term instruments may
include foreign and domestic: (i) short-term obligations of sovereign
governments, their agencies, instrumentalities, authorities or political
subdivisions; (ii) other short-term debt securities rated Aa or higher by
Moody's Investors Service, Inc. ("Moody's") or AA or higher by Standard & Poor's
Corporation ("S&P") or, if unrated, of comparable quality in the opinion of
Bankers Trust; (iii) commercial paper; (iv) bank obligations, including
negotiable certificates of deposit, time deposits and bankers' acceptances; and
(v) repurchase agreements. At the time the Portfolio invests in commercial
paper, bank obligations or repurchase agreements, the issuer or the issuer's
parent must have outstanding debt rated Aa or higher by Moody's or AA or higher
by S&P or outstanding commercial paper or bank obligations rated Prime-1 by
Moody's or A-1 by S&P; or, if no such ratings are available, the instrument must
be of comparable quality in the opinion of Bankers Trust. These instruments may
be denominated in U.S. dollars or foreign currencies and will have been
determined to be of high quality by a nationally recognized statistical rating
organization ("NRSRO") or, if unrated, by Bankers Trust.
BONDS. These securities include all varieties of investment grade
domestic and foreign fixed-income securities with remaining maturities or
durations greater than thirteen months. Bankers Trust seeks to maximize total
returns within the bond class by adjusting the Portfolio's investments in
securities with different credit qualities, maturities, and coupon or dividend
rates, as well as by exploiting yield differentials between securities.
Securities in this class may include bonds, notes, adjustable rate preferred
stocks, convertible bonds, mortgage-related and asset-backed securities,
domestic and foreign government and government agency securities, zero coupon
bonds, Rule 144A securities and other intermediate and long-term securities. As
with the short-term class, these securities may be denominated in U.S. dollars
or foreign currency. No more than 5% of each Portfolio's net assets (at the time
of investment) may be in lower rated (BB/Ba or lower), high yield bonds. Each
Portfolio may retain any bond whose rating drops below investment grade if it is
in the best interest of the Portfolio's investors. Securities rated BB/Ba by a
NRSRO are considered to have speculative characteristics. See the Appendix in
Part B for further information on these securities.
STOCKS. These securities include domestic and foreign equity
securities of all types (other than adjustable rate preferred stocks included in
the bond class). Bankers Trust seeks to maximize total return within this asset
class by actively allocating assets to industry sectors expected to benefit from
major trends, and to individual stocks that it believes to have superior
investment potential. Securities in the stock class may include common stocks,
fixed-rate preferred stocks (including convertible preferred stocks), warrants,
rights, depositary receipts, securities of closed-end investment companies, and
other equity securities issued by companies of any size, located anywhere in the
world.
Bankers Trust believes that diversification of each Portfolio's
investments among the asset classes will, under most market conditions, better
enable the Portfolio to reduce risk while seeking high total return over the
long-term.
Maturity and Duration. The remaining maturity of a fixed-income
instrument is the amount of time left before the bond's principal is due. The
duration of an instrument or a group of instruments measures the instrument's or
group of instruments' value's expected response to changes in interest rates.
Foreign Investments and Currency Management. Each Portfolio focuses on
U.S. investment opportunities, but may invest a portion of its assets in foreign
securities. Each Portfolio will not invest more than 25% of its total assets in
equity securities of foreign issuers under normal conditions. Each Portfolio
also will not invest more than 25% of its total assets in each of the bond and
short-term classes in foreign securities and securities denominated in foreign
currencies. Foreign securities of all types will normally constitute less than
50% of each Portfolio's assets.
In connection with each Portfolio's investments denominated in foreign
currencies, Bankers Trust may choose to utilize a variety of currency management
strategies. Bankers Trust seeks to take advantage of different yield, risk, and
return characteristics that different currencies, currency denominations, and
countries can provide to U.S. investors. In doing so, Bankers Trust will
consider such factors as the outlook for currency relationships, current and
anticipated interest rates, levels of inflation within various countries,
prospects for relative economic growth, and government policies influencing
currency exchange rates and business conditions.
To manage exposure to currency fluctuations, each Portfolio may enter
into forward currency exchange contracts (agreements to exchange one currency
for another at a future date), may buy and sell options and futures contracts
relating to foreign currencies, and may purchase securities indexed to foreign
currencies. Each Portfolio will use currency exchange contracts in the normal
course of business to lock in an exchange rate in connection with purchases and
sales of securities denominated in foreign currencies. Other currency management
strategies allow Bankers Trust to hedge portfolio securities, to shift
investment exposure from one currency to another, or to attempt to profit from
anticipated declines in the value of a foreign currency relative to the U.S.
dollar. Some of these strategies will require the Portfolio to set aside liquid
assets in a segregated custodial account to cover its obligations. For
additional information on foreign investments and currency management, see the
Appendix and Part B.
Options and Futures Contracts. Each Portfolio may buy and sell options
and futures contracts to manage its exposure to changing interest rates,
security prices and currency exchange rates, and as an efficient means of
managing allocations between asset classes. Each Portfolio may invest in options
and futures based on any type of security or index related to the Portfolio's
investments, including options and futures traded on foreign exchanges.
Some options and futures strategies, including selling futures, buying
puts, and writing calls, hedge the Portfolio's investments against price
fluctuations. Other strategies, including buying futures, writing puts, and
buying calls, tend to increase market exposure. Options and futures may be
combined with each other, or with forward contracts, in order to adjust the risk
and return characteristics of an overall strategy. See the Appendix for further
information on options on stocks, options and futures contracts on stock
indexes, options on futures contracts, foreign currency exchange transactions,
and options on foreign currencies.
Other Investments and Investment Techniques. Each Portfolio may buy
and sell securities on a when-issued or delayed-delivery basis. These
transactions involve a commitment by a Portfolio to buy or sell securities at a
set price, with payment and delivery taking place at a future date. When the
Portfolio agrees to purchase a security on a when-issued or delayed-delivery
basis, it sets aside liquid securities in a segregated custodial account to
equal the payment that will be due. Purchasing securities in this manner may
cause greater fluctuations in the Portfolio's share price.
Each Portfolio may engage in short sales with respect to securities
that it owns or has the right to obtain (for example, through conversion of a
convertible bond). These transactions, known as short sales "against the box,"
allow a Portfolio to hedge against price fluctuations by locking in a sale price
for securities it does not wish to sell immediately.
Each Portfolio may invest in indexed securities whose value depends on
the price of foreign currencies, securities indexes or other financial values or
statistics. Examples include debt securities whose value at maturity is
determined by reference to the relative prices of various currencies or to the
price of a stock index. These securities may be positively or negatively
indexed; that is, their value may increase or decrease if the underlying
instrument appreciates.
Each Portfolio is permitted to lend up to 30% of the total value of its
securities. These loans must be secured continuously by cash or by equivalent
collateral or by a letter of credit at least equal to the market value of the
securities loaned plus accrued income. By lending its securities, the Portfolio
can increase its income by continuing to receive income on the loaned securities
as well as by the opportunity to receive interest on the collateral. Any gain or
loss in the market price of the borrowed securities which occurs during the term
of the loan inures to the Portfolio and its investors.
Each Portfolio may invest in repurchase agreements. In a repurchase
agreement the Portfolio buys a security and simultaneously agrees to sell it
back at a higher price. In the event of the bankruptcy of the other party to
either a repurchase agreement or a securities loan, a Portfolio could experience
delays in recovering either its cash or the securities it lent. To the extent
that, in the meantime, the value of the securities lent repurchased had
decreased or the value of the securities lent had the Portfolio could experience
a loss. In all cases, Bankers Trust must find the creditworthiness of the other
party the transaction satisfactory. A repurchase agreement is considered a
collateralized loan under the Investment Company Act of 1940, as amended (the
"1940 Act").
Additional Investment Limitations. Each Portfolio's investment
objective, together with the investment restrictions described in this paragraph
and in Part B, except as noted, are "fundamental policies," which means that
they may not be changed without the approval of a "majority of the outstanding
voting securities" (as defined in the 1940 Act) of each Portfolio. As a
diversified fund, no more than 5% of the assets of each Portfolio may be
invested in the securities of one issuer (other than U.S. Government
securities), except that up to 25% of each Portfolio's assets may be invested
without regard to this limitation. Each Portfolio will not invest more than 25%
of its assets in the securities of issuers in any one industry. These are
fundamental investment policies of each Portfolio which may not be changed
without investor approval. No more than 15% of each Portfolio's net assets may
be invested in illiquid or not readily marketable securities (including
repurchase agreements and time deposits maturing in more than seven days).
Additional investment policies of the Portfolios are contained in Part B.
Risk Factors. Each Portfolio allocates its investments within the
parameters described in "General Description of the Registrant." Since the
Portfolios' asset allocation involves significant investment in short-term
instruments and bonds over time, it is expected that the Portfolios will be less
volatile than funds that invests primarily in common stocks.
Each Portfolio's performance may be affected by many different factors,
depending on the Portfolio's emphasis. Short-term instruments are generally the
most stable securities in which the Portfolio will invest . Their returns depend
primarily on current short-term interest rates, although currency fluctuations
can also be significant with respect to foreign securities.
The bond class is affected primarily by interest rates: prices of
fixed-income securities tend to rise when interest rates fall, and fall when
interest rates rise. Interest rate changes will have a greater impact on a
Portfolio if it is heavily invested in long-term or zero-coupon bonds.
Fixed-income securities may also be affected by changes in credit quality.
The stock class is subject to the risks of stock market investing,
including the possibility of sudden or prolonged market declines as well as the
risks associated with individual companies. These risks may be intensified for
investments in smaller or less well-known companies or in foreign securities.
Risks of Investing in Foreign Securities. The investment in foreign
securities may involve additional risks. Foreign securities usually are
denominated in foreign currencies, which means their value will be affected by
changes in the strength of foreign currencies relative to the U.S. dollar as
well as the other factors that affect security prices. Foreign companies may not
be subject to accounting standards or governmental supervision comparable to
U.S. companies, and there often is less publicly available information about
their operations. Generally, there is less governmental regulation of foreign
securities markets, and security trading practices abroad may offer less
protection to investors such as the Portfolios. The value of such investments
may be adversely affected by changes in political or social conditions,
diplomatic relations, confiscatory taxation, expropriation, nationalization,
limitation on the removal of funds or assets, or imposition of (or change in)
exchange control or tax regulations in those foreign countries. Foreign
securities may be less liquid or more volatile than domestic investments.
Bankers Trust considers these factors in making investments for the Portfolios
and limits the amount of a Portfolio's assets that may be invested in foreign
securities to 25% of its total assets for each asset class and to less than 50%
for all classes under normal conditions. However, within each Portfolio's
limitations, investments in any one country or currency are not restricted.
Derivatives. Each Portfolio may invest in various instruments that are
commonly known as derivatives. Generally, a derivative is a financial
arrangement, the value of which is based on, or "derived" from, a traditional
security, asset or market index. Some "derivatives" such as mortgage-related and
other asset-backed securities are in many respects like any other investment,
although they may be more volatile or less liquid than more traditional debt
securities. There are, in fact, many different types of derivatives and many
different ways to use them. There are a range of risks associated with those
uses. Futures and options are commonly used for traditional hedging purposes to
attempt to protect a fund from exposure to changing interest rates, securities
prices or current exchanges rates for cash management purposes as a low cost
method of gaining exposure to a particular securities market without investing
directly in those securities. However, some derivatives are used for leverage,
which tends to magnify the effects of an instrument's price changes as market
conditions change. Leverage involves the use of a small amount of money to
control a large amount of financial assets and can, in some circumstances, lead
to significant losses. The Adviser will use derivatives only in circumstances
where the Adviser believes they offer the most economical means of improving the
risk/reward profile of a Portfolio. Derivatives will not be used in increase
portfolio risk above the level that could be achieved using only traditional
investment securities or to acquire exposure to changes in the value of assets
or indexes that by themselves would not be purchased for the Portfolio. The use
of derivatives for non-hedging purposes may be considered speculative. A
description of the derivatives that each Portfolio may use and some of their
associated risks is found in the Appendix.
The Portfolios' investments in options, futures or forward contracts,
and similar strategies depend on Bankers Trust's judgment as to the potential
risks and rewards of different types of strategies. Options and futures can be
volatile investments, and may not perform as expected. If Bankers Trust applies
a hedge at an inappropriate time or judges price trends incorrectly, options and
futures strategies may lower a Portfolio's return. Options and futures traded on
foreign exchanges generally are not regulated by U.S. authorities, and may offer
less liquidity and less protection to the Portfolio in the event of default by
the other party to the contract. Each Portfolio could also experience losses if
the prices of its options and futures positions were poorly correlated with its
other investments, or if it could not close out its positions because of an
illiquid secondary market.
Further descriptions of a number of investments and investment
techniques available to each Portfolio, including foreign investments and the
use of options and futures, and certain risks associated with these investments
and techniques are included in the Appendix.
Portfolio Turnover. The frequency of portfolio transactions the
Portfolio's turnover rate will vary from year to year depending on market
conditions. Each Portfolio's portfolio turnover rates were as follows: Asset
Management Portfolio II -- 105% for fiscal year ended March 31, 1995 and 79%
(not annualized) for the period from October 14, 1993 (commencement of
operations) through March 31, 1994; and Asset Management Portfolio III -- 111%
for fiscal year ended March 31, 1995 and 84% (not annualized) for the period
from October 15, 1993 (commencement of operations) through March 31, 1994.
Because a higher turnover rate increases transaction costs and may increase
taxable capital gains, Bankers Trust carefully weighs the anticipated benefits
of short-term investment against these consequences.
ITEM 5. MANAGEMENT OF THE FUND.
The Board of Trustees of the Portfolios provides broad supervision over
the affairs of the Portfolios. A majority of the Portfolios' Trustees are not
affiliated with the Adviser. As the administrator (the "Administrator"), Bankers
Trust supervises the overall administration of the Portfolios. The Portfolios'
fund accountant, transfer agent , custodian and dividend paying agent is also
Bankers Trust.
Bankers Trust, a New York banking corporation with executive 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 market. As of December
31, 1994, Bankers Trust New York Corporation was the seventh largest bank
holding company in the United States with total assets of approximately $97
billion. Bankers Trust is a worldwide merchant bank dedicated to servicing the
needs of corporations, governments, financial institutions and private clients
through a global network of 129 offices in 38 countries. Investment management
is a core business of Bankers Trust, built on a tradition of excellence from its
roots as a trust bank founded in 1930. The scope of Bankers Trust's investment
management capability is unique due to its leadership positions in both active
and passive quantitative management and its presence in major equity and fixed
income markets around the world. Bankers Trust is one of the nation's largest
and most experienced investment managers, with over $185 billion in assets under
management . Of that total, approximately $2.1 billion are in tactical asset
allocation funds. This makes Bankers Trust one of the nation's leading manager
of tactical asset allocation funds.
Bankers Trust has more than 50 years of experience managing retirement
assets for the nation's largest corporations and institutions. In the past,
these clients have been serviced through separate account and commingled fund
structures. Now, the BT Family of Funds brings Bankers Trust's extensive
investment management expertise, once available to only the largest institutions
in the U.S., to individual investors for the first time. Bankers Trust's
officers have had extensive experience in managing investment portfolios having
objectives similar to that of the Portfolios.
Bankers Trust has been advised by its counsel that, in counsel's
opinion, Bankers Trust currently may perform the services for the Portfolios
described in this Registration Statement 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.
Bankers Trust, subject to the supervision and direction of the Board of
Trustees, manages the Portfolios in accordance with the Portfolios' investment
objective and stated investment policies, makes investment decisions for the
Portfolios, places orders to purchase and sell securities and other financial
instruments on behalf of the Portfolios and employs professional investment
managers and securities analysts who provide research services to the
Portfolios. Bankers Trust may utilize the expertise of any of its worldwide
subsidiaries and affiliates to assist it in its role as investment adviser. All
orders for investment transactions on behalf of the Portfolios 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 a Portfolio only if Bankers Trust believes that the affiliate's charge
for the transaction does not exceed usual and customary levels. Each Portfolio
will not invest in obligations for which Bankers Trust or any of its affiliates
is the ultimate obligor or accepting bank. Each Portfolio may, however, invest
in the obligations of correspondents and customers of Bankers Trust.
Under its investment advisory agreement with each Portfolio, Bankers
Trust receives a fee from the Portfolios computed daily and paid monthly at the
annual rate of 0.65% of the average daily net assets of each Portfolio.
Under an administration and services agreement with the Portfolios,
Bankers Trust calculates the value of the assets of each Portfolio and generally
assists the Board of Trustees of the Portfolios in all aspects of the
administration and operation of the Portfolios. The administration and services
agreement provides for the Portfolios to pay the Administrator a fee computed
daily and paid monthly at the annual rate of 0.10% of the average daily net
assets of each Portfolio. Under the administration and services agreement, the
Administrator may delegate one or more of its responsibilities to others ,
including Signature Broker-Dealer Services, Inc. ("Signature"), at Bankers
Trust's expense.
Each Portfolio bears its own expenses. Operating expenses for the
Portfolios generally consist of all costs not specifically borne by Bankers
Trust or Signature , the Trust's placement agent and sub-administrator,
including investment advisory and administration and service fees, fees for
necessary professional services, the costs associated with regulatory compliance
and maintaining legal existence and investor relations.
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.
The Trust is organized as a trust under the laws of the State of New
York. Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in separate series of the Trust. Each investor is entitled
to a vote in proportion to the amount of its investment in each Portfolio.
Investments in the Portfolios may not be transferred, but an investor may
withdraw all or any portion of his investment at any time at net asset value.
Investors in the Portfolios (e.g., investment companies, insurance company
separate accounts and common and commingled trust funds) will each be liable for
all obligations of each Portfolio. However, the risk of an investor in the
Portfolios incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and each Portfolio
itself was unable to meet its obligations.
The Trust reserves the right to create and issue a number of series, in
which case investments in each series would participate equally in earnings and
assets of the particular series. Currently, the Trust has ten series: the
Portfolios, Liquid Asset Portfolio, Mortgage-Backed Securities Portfolio, Global
High Yield Securities Portfolio, Latin American Equity Portfolio, Small Cap
Portfolio, Pacific Basin Equity Portfolio, European Equity Portfolio and
International Bond Portfolio.
Investments in the Portfolios have no pre-emptive or conversion rights
and are fully paid and non-assessable, except as set forth below. The Trust is
not required and has no current intention to hold annual meetings of investors,
but the Trust will hold special meetings of investors when in the judgment of
the Trustees it is necessary or desirable to submit matters for an investor
vote. Changes in fundamental policies will be submitted to investors for
approval. Investors have under certain circumstances (e.g. upon application and
submission of certain specified documents to the Trustees by a specified
percentage of the aggregate value of the Trust's outstanding interests) the
right to communicate with other investors in connection with requesting a
meeting of investors for the purpose of removing one or more Trustees. Investors
also have the right to remove one or more Trustees without a meeting by a
declaration in writing by a specified number of investors. Upon liquidation of a
Portfolio, investors would be entitled to share pro rata in the net assets of
the Portfolio available for distribution to investors.
The net asset value of each Portfolio is determined each day on which
the New York Stock Exchange Inc. ("NYSE") is open for trading ("Fund Business
Day") (and on such other days as are deemed necessary in order to comply with
Rule 22c-1 under the 1940 Act). This determination is made as of the close of
regular trading on the NYSE which is currently 4:00 p.m., New York time (the
"Valuation Time").
Each investor in the Portfolios may add to or reduce its investment in
each Portfolio on each Fund Business Day. At each close of business on each such
business day, the value of each investor's beneficial interest in each Portfolio
will be determined by multiplying the net asset value of a Portfolio by the
percentage, effective for that day, that represents that investor's share of the
aggregate beneficial interests in the Portfolio. Any additions or withdrawals,
which are to be effected at the close of business on that day, will then be
effected. The investor's percentage of the aggregate beneficial interests in
each Portfolio will then be recomputed as the percentage equal to the fraction
(i) the numerator of which is the value of such investor's investment in each
Portfolio as of the close of business on such day plus or minus, as the case may
be, the amount of any additions to or withdrawals from the investor's investment
in each Portfolio effected on such day, and (ii) the denominator of which is the
aggregate net asset value of each Portfolio as of the close of business on such
day plus or minus, as the case may be, the amount of the net additions to or
withdrawals from the aggregate investments in each Portfolio by all investors in
each Portfolio. The percentage so determined will then be applied to determine
the value of the investor's interest in each Portfolio as of the close of
business on the following business day of each Portfolio.
The net income of each Portfolio shall consist of (i) all income
accrued, less the amortization of any premium, on the assets of each Portfolio,
less (ii) all actual and accrued expenses of each Portfolio determined in
accordance with generally accepted accounting principles ("Net Income").
Interest income includes discount earned (including both original issue and
market discount) on discount paper accrued ratably to the date of maturity and
any net realized gains or losses on the assets of the Portfolio. All the Net
Income of each Portfolio is allocated pro rata among the investors in each
Portfolio. The Net Income is accrued daily and distributed monthly to the
investors in each Portfolio.
Under the anticipated method of operation of the Portfolios, the
Portfolios will not be subject to any income tax. However, each investor in the
Portfolios will be taxable on its share (as determined in accordance with the
governing instruments of the Portfolio) of the Portfolios' ordinary income and
capital gain in determining its income tax liability. The determination of such
share will be made in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"), and regulations promulgated thereunder.
It is intended that the Portfolios' assets, income and distributions
will be managed in such a way that an investor in the Portfolios will be able to
satisfy the requirements of Subchapter M of the Code, assuming that the investor
invested all of its assets in the Portfolios.
ITEM 7. PURCHASE OF SECURITIES BEING OFFERED.
Beneficial interests in the Portfolios are issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. See "General Description of Registrant"
above.
An investment in the Portfolios may be made without a sales load. All
investments are made at the net asset value next determined if an order is
received by the Portfolios by the designated cutoff time for each accredited
investor. The net asset value of each Portfolio is determined on each Fund
Business Day. Each Portfolio's portfolio securities are valued primarily on the
basis of market quotations or, if quotations are not readily available, by a
method which the Board of Trustees believes accurately reflects fair value.
There is no minimum initial or subsequent investment in the Portfolios.
However, because each Portfolio intends to be as fully invested at all times as
is reasonably practicable in order to enhance the yield on its assets,
investments must be made in federal funds (i.e., monies credited to the account
of the Trust's custodian bank by a Federal Reserve Bank).
Each Portfolio may, at its own option, accept securities in payment for
interests. The securities delivered in payment for interests are valued by the
method described under "Purchase, Redemption and Pricing of Securities" in Part
B as of the day a Portfolio receives the securities. This is a taxable
transaction to the investor. Securities may be accepted in payment for interests
only if they are, in the judgment of Bankers Trust, appropriate investments for
the Portfolio. In addition, securities accepted in payment for interests must:
(i) meet the investment objective and policies of the Portfolio; (ii) be
acquired by the Portfolio for investment and not for resale; (iii) be liquid
securities which are not restricted as to transfer either by law or liquidity of
market; and (iv) if stock, have a value which is readily ascertainable as
evidenced by a listing on a stock exchange, over-the-counter market or by
readily available market quotations from a dealer in such securities. Each
Portfolio reserves the right to accept or reject at its own option any and all
securities offered in payment for its interests.
The Trust and Signature reserve the right to cease accepting
investments in the Portfolios at any time or to reject any investment order.
The placement agent for the Portfolios is Signature. The principal
business address of Signature is 6 St. James Avenue, Boston, Massachusetts
02116. Signature receives no additional compensation for serving as the
placement agent for the Portfolios.
ITEM 8. REDEMPTION OR REPURCHASE.
An investor in the Portfolios may withdraw all or any portion of its
investment at the net asset value next determined if a withdrawal request in
proper form is furnished by the investor to the Portfolios by the designated
cutoff time for each accredited investor. The proceeds of a withdrawal will be
paid by the Portfolios in federal funds normally on the Fund Business Day the
withdrawal is effected, but in any event within seven calendar days following
receipt of the request. The Portfolios reserve the right to pay redemptions in
kind. Investments in the Portfolios may not be transferred.
The right of any investor to receive payment with respect to any
withdrawal may be suspended or the payment of the withdrawal proceeds postponed
during any period in which the NYSE is closed (other than weekends or holidays)
or trading on such Exchange is restricted, or, to the extent otherwise permitted
by the 1940 Act, if an emergency exists.
ITEM 9. PENDING LEGAL PROCEEDINGS.
Not applicable.
APPENDIX.
GOVERNMENT SECURITIES. Government securities may or may not be backed
by the full faith and credit of the U.S. Government. U.S. Treasury bonds, notes
and bills and certain agency securities, such as those issued by the Federal
Housing Administration, are backed by the full faith and credit of the U.S.
Government and are the highest quality government securities. The Portfolios may
also invest a substantial portion of its portfolio in securities issued by
government agencies or instrumentalities (such as executive departments of the
U.S. Government or independent federal organizations supervised by Congress),
which may have different degrees of government backing but which are not backed
by the full faith and credit of the U.S. Government. There is no guarantee that
the government will support these types of securities, and therefore they
involve more risk than other government obligations.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities are securities
representing interests in a pool of mortgages. Principal and interest payments
made on the mortgages in the underlying mortgage pool are passed through to the
investor. Unscheduled prepayments of principal shorten the securities' weighted
average life and may lower their total return. (When a mortgage in the
underlying pool is prepaid, an unscheduled principal prepayment is passed
through to the investor. This principal is returned to the investor at par. As a
result, if a mortgage security were trading at a premium, its total return would
be lowered by prepayments, and if a mortgage security were trading at a
discount, its total return would be increased by prepayments.) The value of
these securities also may change because of changes in the market's perception
of the creditworthiness of the federal agency that issued them. In addition, the
mortgage securities market in general may be adversely affected by changes in
governmental regulation or tax policies.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). CMOs are pay-through
securities collateralized by mortgages or mortgage-backed securities. CMOs are
issued in classes and series that have different maturities and often are
retired in sequence. CMOs may be issued by governmental or non-governmental
entities such as banks and other mortgage lenders. Non-government securities may
offer a higher yield but also may be subject to greater price fluctuation than
government securities.
ASSET-BACKED SECURITIES. Asset-backed securities consist of undivided
fractional interests in pools of consumer loans (unrelated to mortgage loans)
held in a trust. Payments of principal and interest are passed through to
certificate holders and are typically supported by some form of credit
enhancement, such as a letter of credit, surety bond, limited guarantee or
senior/subordination. The degree of credit enhancement varies, but generally
amounts to only a fraction of the asset backed security's par value until
exhausted. If the credit enhancement is exhausted, certificate holders may
experience losses or delays in payment if the required payments of principal and
interest are not made to the trust with respect to the underlying loans. The
value of these securities also may change because of changes in the market's
perception of the creditworthiness of the servicing agent for the loan pool, the
originator of the loans or the financial institution providing the credit
enhancement. Asset-backed securities are ultimately dependent upon payment of
consumer loans by individuals, and the certificate holder generally has no
recourse to the entity that originated the loans. The underlying loans are
subject to prepayments which shorten the securities' weighted average life and
may lower their return. (As prepayments flow through at par, total returns would
be affected by the prepayments: if a security were trading at a premium, its
total return would be lowered by prepayments, and if a security were trading at
a discount, its total return would be increased by prepayments).
ZERO COUPON DEBT SECURITIES. Zero coupon debt securities do not make
regular interest payments. Instead they are sold at a deep discount from their
face value. Because a zero coupon bond does not pay current income, its price
can be very volatile when interest rates change. In calculating its net income
the Portfolio takes into account as income a portion of the difference between a
zero coupon bond's purchase price and its face value.
RULE 144A SECURITIES. The Portfolios may purchase securities in the
United State that are not registered for sale under federal securities laws but
which can be resold to institutions under the Securities and Exchange
Commission's ("SEC") Rule 144A. Provided that a dealer or institutional trading
market in such securities exists, these restricted securities are treated as
exempt from the Portfolio's 15% limit on illiquid securities. Under the
supervision of the Board of Trustees, Bankers Trust determines the liquidity of
restricted securities and, through reports from Bankers Trust, the Board will
monitor trading activity in restricted securities. Because Rule 144A is
relatively new, it is not possible to predict how these markets will develop. If
institutional trading in restricted securities were to decline, the liquidity of
the Portfolio could be adversely affected.
FOREIGN INVESTMENTS. The Portfolio may invest in securities of foreign
issuers directly or in the form of American Depositary Receipts ("ADRs"),
European Depositary Receipts ("EDRs") or other similar securities representing
securities of foreign issuers. These securities may not necessarily be
denominated in the same currency as the securities they represent. ADRs are
receipts typically issued by a U.S. bank or trust company evidencing ownership
of the underlying securities. EDRs are receipts issued by a European financial
institution evidencing a similar arrangement. Generally, ADRs, in registered
form, are designed for use in the U.S. securities markets, and EDRs, in bearer
form, are designed for use in European securities markets.
With respect to certain countries in which capital markets are either
less developed or not easily accessed, investments by the Portfolios may be made
through investment in other investment companies that in turn are authorized to
invest in the securities of such countries. Investment in other investment
companies is limited in amount by the 1940 Act, will involve the indirect
payment of a portion of the expenses, including advisory fees, of such other
investment companies and may result in a duplication of fees and expenses.
OPTIONS ON STOCKS. The Portfolios may write and purchase put and call
options on stocks. A call option gives the purchaser of the option the right to
buy, and obligates the writer to sell, the underlying stock at the exercise
price at any time during the option period. Similarly, a put option gives the
purchaser of the option the right to sell, and obligates the writer to buy, the
underlying stock at the exercise price at any time during the option period. A
covered call option, which is a call option with respect to which a Portfolio
owns the underlying stock, sold by a Portfolio exposes the Portfolio during the
term of the option to possible loss of opportunity to realize appreciation in
the market price of the underlying stock or to possible continued holding of a
stock which might otherwise have been sold to protect against depreciation in
the market price of the stock. A covered put option sold by the Portfolio
exposes the Portfolio during the term of the option to a decline in price of the
underlying stock. A put option sold by the Portfolio is covered when, among
other things, cash or liquid securities are placed in a segregated account to
fulfill the obligations undertaken.
To close out a position when writing covered options, the Portfolios
may make a "closing purchase transaction," which involves purchasing an option
on the same stock with the same exercise price and expiration date as the option
which it has previously written on the stock. The Portfolio will realize a
profit or loss for a closing purchase transaction if the amount paid to purchase
an option is less or more, as the case may be, than the amount received from the
sale thereof. To close out a position as a purchaser of an option, the Portfolio
may make a "closing sale transaction," which involves liquidating the
Portfolio's position by selling the option previously purchased.
The Portfolios intends to treat over-the-counter options ("OTC
Options") purchased and the assets used to "cover" OTC Options written as not
readily marketable and therefore subject to the limitations described in
"Investment Restrictions" in Part B.
OPTIONS ON STOCK INDEXES. The Portfolios may purchase and write put and
call options on stock indexes listed on stock exchanges. A stock index
fluctuates with changes in the market values of the stocks included in the
index.
Options on stock indexes are generally similar to options on stock
except that the delivery requirements are different. Instead of giving the right
to take or make delivery of stock at a specified price, an option on a stock
index gives the holder the right to receive a cash "exercise settlement amount"
equal to (a) the amount, if any, by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying index on the date of exercise, multiplied by (b)
a fixed "index multiplier." Receipt of this cash amount will depend upon the
closing level of the stock index upon which the option is based being greater
than, in the case of a call, or less than, in the case of a put, the exercise
price of the option. The amount of cash received will be equal to such
difference between the closing price of the index and the exercise price of the
option expressed in dollars times a specified multiple. The writer of the option
is obligated, in return for the premium received, to make delivery of this
amount. The writer may offset its position in stock index options prior to
expiration by entering into a closing transaction on an exchange or the option
may expire unexercised.
Because the value of an index option depends upon movements in the
level of the index rather than the price of a particular stock, whether a
Portfolio will realize a gain or loss from the purchase or writing of options on
an index depends upon movements in the level of stock prices in the stock market
generally or, in the case of certain indexes, in an industry or market segment,
rather than movements in the price of a particular stock. Accordingly,
successful use by the Portfolio of options on stock indexes will be subject to
Bankers Trust's ability to predict correctly movements in the direction of the
stock market generally or of a particular industry. This requires different
skills and techniques than predicting changes in the price of individual stocks.
FUTURES CONTRACTS ON SECURITIES INDEXES. The Portfolios may enter into
contracts providing for the making and acceptance of a cash settlement based
upon changes in the value of an index of securities ("Futures Contracts"). This
investment technique may be used to hedge against anticipated future change in
general market prices which otherwise might either adversely affect the value of
securities held by a Portfolio or adversely affect the prices of securities
which are intended to be purchased at a later date for the Portfolio or as an
efficient means of managing allocations between asset classes. A Futures
Contract may also be entered into to close out or offset an existing futures
position.
When used for hedging purposes, a Futures Contract involves the
establishment of a position which will move in a direction opposite to that of
the investment being hedged. If these hedging transactions are successful, the
futures positions taken for a Portfolio will rise in value by an amount which
approximately offsets the decline in value of the portion of the Portfolio's
investments that are being hedged. Should general market prices move in an
unexpected manner, the full anticipated benefits of Futures Contracts may not be
achieved or a loss may be realized.
Futures Contracts do involve certain risks. These risks could include
a lack of correlation between the Futures Contract and the corresponding
securities market , a potential lack of liquidity in the secondary market and
incorrect assessments of market trends which may result in poorer overall
performance than if a Futures Contract had not been entered into.
Brokerage costs will be incurred and "margin" will be required to be
posted and maintained as a good-faith deposit against performance of obligations
under Futures Contracts written for a Portfolio. The Portfolio may not purchase
or sell a Futures Contract if immediately thereafter its margin deposits on its
outstanding Futures Contracts (other than Futures Contracts entered into for
bona fide hedging purposes) would exceed 5% of the market value of the
Portfolio's total assets.
OPTIONS ON FUTURES CONTRACTS. The Portfolios may invest in options on
such Futures Contracts for similar purposes.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Because the Portfolios buy and
sell securities denominated in currencies other than the U.S. dollar and receive
interest, dividends and sale proceeds in currencies other than the U.S. dollar,
the Portfolios from time to time may enter into foreign currency exchange
transactions to convert to and from different foreign currencies and to convert
foreign currencies to and from the U.S. dollar. A Portfolio either enters into
these transactions on a spot (i.e., cash) basis at the spot rate prevailing in
the foreign currency exchange market or uses forward contracts to purchase or
sell foreign currencies.
A forward foreign currency exchange contract is an obligation by a
Portfolio to purchase or sell a specific currency at a future date, which may be
any fixed number of days from the date of the contract. Forward foreign currency
exchange contracts establish an exchange rate at a future date. These contracts
are transferable in the interbank market conducted directly between currency
traders (usually large commercial banks) and their customers. A forward foreign
currency exchange contract generally has no deposit requirement and is traded at
a net price without commission. The Portfolios maintain with the custodian a
segregated account of high grade liquid assets in an amount at least equal to
their obligations under each forward foreign currency exchange contract. Neither
spot transactions nor forward foreign currency exchange contracts eliminate
fluctuations in the prices of a Portfolio's securities or in foreign exchange
rates, or prevent loss if the prices of these securities should decline.
The Portfolios may enter into foreign currency hedging transactions in
an attempt to protect against changes in foreign currency exchange rates between
the trade and settlement dates of specific securities transactions or changes in
foreign currency exchange rates that would adversely affect a portfolio position
or an anticipated investment position. Since consideration of the prospect for
currency parities will be incorporated into Bankers Trust's long-term investment
decisions, the Portfolios will not routinely enter into foreign currency hedging
transactions with respect to security transactions; however, Bankers Trust
believes that it is important to have the flexibility to enter into foreign
currency hedging transactions when it determines that the transactions would be
in a Portfolio's best interest. Although these transactions tend to minimize the
risk of loss due to a decline in the value of the hedged currency, at the same
time they tend to limit any potential gain that might be realized should the
value of the hedged currency increase. The precise matching of the forward
contract amounts and the value of the securities involved will not generally be
possible because the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of such securities
between the date the forward contract is entered into and the date it matures.
The projection of currency market movements is extremely difficult, and the
successful execution of a hedging strategy is highly uncertain.
OPTIONS ON FOREIGN CURRENCIES. The Portfolios may write covered put and
call options and purchase put and call options on foreign currencies for the
purpose of protecting against declines in the dollar value of portfolio
securities and against increases in the dollar cost of securities to be
acquired. The Portfolios may use options on currency to cross-hedge, which
involves writing or purchasing options on one currency to hedge against changes
in exchange rates for a different, but related currency. As with other types of
options, however, the writing of an option on foreign currency will constitute
only a partial hedge up to the amount of the premium received, and a Portfolio
could be required to purchase or sell foreign currencies at disadvantageous
exchange rates, thereby incurring losses. The purchase of an option on foreign
currency may be used to hedge against fluctuations in exchange rates although,
in the event of exchange rate movements adverse to a Portfolio's position, it
may forfeit the entire amount of the premium plus related transaction costs. In
addition, the Portfolio may purchase call options on currency when the Adviser
anticipates that the currency will appreciate in value.
There is no assurance that a liquid secondary market on an options
exchange will exist for any particular option, or at any particular time. If a
Portfolio is unable to effect a closing purchase transaction with respect to
covered options it has written, the Portfolio will not be able to sell the
underlying currency or dispose of assets held in a segregated account until the
options expire or are exercised. Similarly, if a Portfolio is unable to effect a
closing sale transaction with respect to options it has purchased, it would have
to exercise the options in order to realize any profit and will incur
transaction costs upon the purchase or sale of underlying currency. The
Portfolios pay brokerage commissions or spread in connection with their options
transactions.
As in the case of forward contracts, certain options on foreign
currencies are traded over-the-counter and involve liquidity and credit risks
which may not be present in the case of exchange-traded currency options. A
Portfolio's ability to terminate over-the-counter options ("OTC Options") will
be more limited than with exchange-traded options. It is also possible that
broker-dealers participating in OTC Options transactions will not fulfill their
obligations. Until such time as the staff of the SEC changes its position, a
Portfolio will treat purchased OTC Options and assets used to cover written OTC
Options as illiquid securities. With respect to options written with primary
dealers in U.S. Government securities pursuant to an agreement requiring a
closing purchase transaction at a formula price, the amount of illiquid
securities may be calculated with reference to the repurchase formula.
All options that the Portfolios write will be covered under applicable
requirements of the Securities and Exchange Commission. The Portfolios will
write and purchase options only to the extent permitted by the policies of state
securities authorities in states where shares of the investors in the Portfolios
are qualified for offer and sale.
There can be no assurance that the use of these portfolio strategies
will be successful.
Asset Coverage. To assure that each Portfolio's use of futures and
related options, as well as when-issued and delayed-delivery securities and
foreign currency exchange transactions, are not used to achieve investment
leverage, a Portfolio will cover such transactions, as required under applicable
interpretations of the SEC, either by owning the underlying securities or by
establishing a segregated account with the Portfolio's custodian containing high
grade liquid debt securities in an amount at all times equal to or exceeding the
Portfolio's commitment with respect to these instruments or contracts.
<PAGE>
BT0393A
ASSET MANAGEMENT PORTFOLIO II
ASSET MANAGEMENT PORTFOLIO III
PART B
ITEM 10. COVER PAGE.
Not applicable.
ITEM 11. TABLE OF CONTENTS. Page
General Information and History . . . . . . . . . . .
Investment Objectives and Policies . . . . . . . . .
Management of the Fund . . . . . . . . . . . . . . .
Control Persons and Principal Holders
of Securities . . . . . . . . . . . . . . .
Investment Advisory and Other Services . . . . . . .
Brokerage Allocation and Other Practices . . . . . .
Capital Stock and Other Securities . . . . . . . . .
Purchase, Redemption and Pricing of
Securities Being Offered . . . . .. . . . .
Tax Status . . . . . . . . . . . . . . . . . . . . .
Underwriters . . . . . . . . . . . . . . . . . . . .
Calculation of Performance Data . . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . .
ITEM 12. GENERAL INFORMATION AND HISTORY.
Not applicable.
ITEM 13. INVESTMENT OBJECTIVES AND POLICIES.
Part A contains additional information about the investment objectives
and policies of Asset Management Portfolio II and Asset Management Portfolio III
(each a "Portfolio", collectively, the "Portfolios"). This Part B should only be
read in conjunction with Part A. This section contains supplemental information
concerning the types of securities and other instruments in which each Portfolio
may invest, the investment policies and portfolio strategies that each Portfolio
may utilize and certain risks attendant to those investments, policies and
strategies.
Certificates of Deposit and Bankers' Acceptances. Certificates of
deposit are receipts issued by a depository institution in exchange for the
deposit of funds. The issuer agrees to pay the amount deposited plus interest to
the bearer of the receipt on the date specified on the certificate. The
certificate usually can be traded in the secondary market prior to maturity.
Bankers' acceptances typically arise from short-term credit arrangements
designed to enable businesses to obtain funds to finance commercial
transactions. Generally, an acceptance is a time draft drawn on a bank by an
exporter or an importer to obtain a stated amount of funds to pay for specific
merchandise. The draft is then "accepted" by a bank that, in effect,
unconditionally guarantees to pay the face value of the instrument on its
maturity date. The acceptance may then be held by the accepting bank as an
earning asset or it may be sold in the secondary market at the going rate of
discount for a specific maturity. Although maturities for acceptances can be as
long as 270 days, most acceptances have maturities of six months or less.
Commercial Paper. Commercial paper consists of short-term (usually from
1 to 270 days) unsecured promissory notes issued by corporations in order to
finance their current operations. A variable amount master demand note (which is
a type of commercial paper) represents a direct borrowing arrangement involving
periodically fluctuating rates of interest under a letter agreement between a
commercial paper issuer and an institutional lender pursuant to which the lender
may determine to invest varying amounts.
For a description of commercial paper ratings, see the Appendix.
Illiquid Securities. Historically, illiquid securities have included
securities subject to contractual or legal restrictions on resale because they
have not been registered under the Securities Act of 1933, as amended (the "1933
Act"), securities which are otherwise not readily marketable and repurchase
agreements having a maturity of longer than seven calendar days. Securities
which have not been registered under the 1933 Act are referred to as private
placements or restricted securities and are purchased directly from the issuer
or in the secondary market. Mutual funds do not typically hold a significant
amount of these restricted or other illiquid securities because of the potential
for delays on resale and uncertainty in valuation. Limitations on resale may
have an adverse effect on the marketability of portfolio securities and a mutual
fund might be unable to dispose of restricted or other illiquid securities
promptly or at reasonable prices and might thereby experience difficulty
satisfying redemptions within seven calendar days. A mutual fund might also have
to register such restricted securities in order to dispose of them resulting in
additional expense and delay. Adverse market conditions could impede such a
public offering of securities.
In recent years, however, a large institutional market has developed
for certain securities that are not registered under the 1933 Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale of such investments to the
general public or to certain institutions may not be indicative of their
liquidity.
The Securities and Exchange Commission (the "SEC") has recently adopted
Rule 144A, which allows a broader institutional trading market for securities
otherwise subject to restriction on their resale to the general public. Rule
144A establishes a "safe harbor" from the registration requirements of the 1933
Act for resales of certain securities to qualified institutional buyers. Bankers
Trust Company ("Bankers Trust"), as the Portfolios' investment adviser (the
"Adviser"), anticipates that the market for certain restricted securities such
as institutional commercial paper will expand further as a result of this new
regulation and the development of automated systems for the trading, clearance
and settlement of unregistered securities of domestic and foreign issuers, such
as the PORTAL System sponsored by the National Association of Securities
Dealers, Inc. (the "NASD").
The Adviser will monitor the liquidity of Rule 144A securities in each
Portfolio's portfolio under the supervision of the Board of Trustees. In
reaching liquidity decisions, the Adviser will consider, among other things, the
following factors: (1) the frequency of trades and quotes for the security; (2)
the number of dealers and other potential purchasers wishing to purchase or sell
the security; (3) dealer undertakings to make a market in the security; and (4)
the nature of the security and of the marketplace trades (e.g., the time needed
to dispose of the security, the method of soliciting offers and the mechanics of
the transfer).
Lending of Portfolio Securities. The Portfolios have the authority to
lend portfolio securities to brokers, dealers and other financial organizations.
The Portfolios will not lend securities to Bankers Trust, Signature
Broker-Dealer Services, Inc. ("Signature") or their affiliates. By lending their
securities, the Portfolios can increase its income by continuing to receive
interest on the loaned securities as well as by either investing the cash
collateral in short-term securities or obtaining yield in the form of interest
paid by the borrower when U.S. Government obligations are used as collateral.
There may be risks of delay in receiving additional collateral or risks of delay
in recovery of the securities or even loss of rights in the collateral should
the borrower of the securities fail financially. The Portfolios will adhere to
the following conditions whenever their securities are loaned: (i) the
Portfolios must receive at least 100% cash collateral or equivalent securities
from the borrower; (ii) the borrower must increase this collateral whenever the
market value of the securities including accrued interest rises above the level
of the collateral; (iii) the Portfolios must be able to terminate the loan at
any time; (iv) the Portfolios must receive reasonable interest on the loan, as
well as any dividends, interest or other distributions on the loaned securities,
and any increase in market value; (v) the Portfolios may pay only reasonable
custodian fees in connection with the loan; and (vi) voting rights on the loaned
securities may pass to the borrower; provided, however, that if a material event
adversely affecting the investment occurs, the Board of Trustees of the Trust
must terminate the loan and regain the right to vote the securities.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
General. The successful use of such instruments draws upon the
Adviser's skill and experience with respect to such instruments and usually
depends on the Adviser's ability to forecast interest rate and currency exchange
rate movements correctly. Should interest or exchange rates move in an
unexpected manner, a Portfolio may not achieve the anticipated benefits of
futures contracts or options on futures contracts or may realize losses and thus
will be in a worse position than if such strategies had not been used. In
addition, the correlation between movements in the price of futures contracts or
options on futures contracts and movements in the price of the securities and
currencies hedged or used for cover will not be perfect and could produce
unanticipated losses.
Futures Contracts. The Portfolios may enter into contracts for the
purchase or sale for future delivery of fixed-income securities or foreign
currencies, or contracts based on financial indices including any index of U.S.
Government securities, foreign government securities or corporate debt
securities. U.S. futures contracts have been designed by exchanges which have
been designated "contracts markets" by the Commodity Futures Trading Commission
("CFTC"), and must be executed through a futures commission merchant, or
brokerage firm, which is a member of the relevant contract market. Futures
contracts trade on a number of exchange markets, and, through their clearing
corporations, the exchanges guarantee performance of the contracts as between
the clearing members of the exchange. The Portfolios may enter into futures
contracts which are based on debt securities that are backed by the full faith
and credit of the U.S. Government, such as long-term U.S. Treasury bonds,
Treasury notes, Government National Mortgage Association modified pass-through
mortgage-backed securities and three-month U.S. Treasury bills. The Portfolios
may also enter into futures contracts which are based on bonds issued by
entities other than the U.S. Government.
At the same time a futures contract is purchased or sold, the
Portfolios must allocate cash or securities as a deposit payment ("initial
deposit"). It is expected that the initial deposit would be approximately 1 1/2%
to 5% of a contract's face value. Daily thereafter, the futures contract is
valued and the payment of "variation margin" may be required, since each day a
Portfolio would provide or receive cash that reflects any decline or increase in
the contract's value.
At the time of delivery of securities pursuant to such a contract,
adjustments are made to recognize differences in value arising from the delivery
of securities with a different interest rate from that specified in the
contract. In some (but not many) cases, securities called for by a futures
contract may not have been issued when the contract was written.
Although futures contracts by their terms call for the actual delivery
or acquisition of securities, in most cases the contractual obligation is
fulfilled before the date of the contract without having to make or take
delivery of the securities. The offsetting of a contractual obligation is
accomplished by buying (or selling, as the case may be) on a commodities
exchange an identical futures contract calling for delivery in the same month.
Such a transaction, which is effected through a member of an exchange, cancels
the obligation to make or take delivery of the securities. Since all
transactions in the futures market are made, offset or fulfilled through a
clearinghouse associated with the exchange on which the contracts are traded,
the Portfolio will incur brokerage fees when it purchases or sells futures
contracts.
The purpose of the acquisition or sale of a futures contract, when a
Portfolio holds or intends to acquire fixed-income securities, is to attempt to
protect the Portfolio from fluctuations in interest or foreign exchange rates
without actually buying or selling fixed-income securities or foreign
currencies. For example, if interest rates were expected to increase, the
Portfolio might enter into futures contracts for the sale of debt securities.
Such a sale would have much the same effect as selling an equivalent value of
the debt securities owned by the Portfolio. If interest rates did increase, the
value of the debt security in the Portfolio would decline, but the value of the
futures contracts to the Portfolio would increase at approximately the same
rate, thereby keeping the net asset value of the Portfolio from declining as
much as it otherwise would have. A Portfolio could accomplish similar results by
selling debt securities and investing in bonds with short maturities when
interest rates are expected to increase. However, since the futures market is
more liquid than the cash market, the use of futures contracts as an investment
technique allows a Portfolio to maintain a defensive position without having to
sell its portfolio securities.
Similarly, when it is expected that interest rates may decline, futures
contracts may be purchased to attempt to hedge against anticipated purchases of
debt securities at higher prices. Since the fluctuations in the value of futures
contracts should be similar to those of debt securities, a Portfolio could take
advantage of the anticipated rise in the value of debt securities without
actually buying them until the market had stabilized. At that time, the futures
contracts could be liquidated and a Portfolio could then buy debt securities on
the cash market. To the extent a Portfolio enters into futures contracts for
this purpose, the assets in the segregated asset account maintained to cover the
Portfolio's obligations with respect to such futures contracts will consist of
cash, cash equivalents or high quality liquid debt securities from its portfolio
in an amount equal to the difference between the fluctuating market value of
such futures contracts and the aggregate value of the initial and variation
margin payments made by the Portfolio with respect to such futures contracts.
The ordinary spreads between prices in the cash and futures market, due
to differences in the nature of those markets, are subject to distortions.
First, all participants in the futures market are subject to initial deposit and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced, thus producing distortion. Third, from
the point of view of speculators, the margin deposit requirements in the futures
market are less onerous than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures market may
cause temporary price distortions. Due to the possibility of distortion, a
correct forecast of general interest rate trends by the Adviser may still not
result in a successful transaction.
In addition, futures contracts entail risks. Although the Adviser
believes that use of such contracts will benefit the Portfolios, if the
Adviser's investment judgment about the general direction of interest rates is
incorrect, a Portfolio's overall performance would be poorer than if it had not
entered into any such contract. For example, if a Portfolio has hedged against
the possibility of an increase in interest rates which would adversely affect
the price of debt securities held in its portfolio and interest rates decrease
instead, the Portfolio will lose part or all of the benefit of the increased
value of its debt securities which it has hedged because it will have offsetting
losses in its futures positions. In addition, in such situations, if a Portfolio
has insufficient cash, it may have to sell debt securities from its portfolio to
meet daily variation margin requirements. Such sales of bonds may be, but will
not necessarily be, at increased prices which reflect the rising market. A
Portfolio may have to sell securities at a time when it may be disadvantageous
to do so.
Options on Futures Contracts. The Portfolios intend to purchase and
write options on futures contracts for hedging purposes. The purchase of a call
option on a futures contract is similar in some respects to the purchase of a
call option on an individual security. Depending on the pricing of the option
compared to either the price of the futures contract upon which it is based or
the price of the underlying debt securities, it may or may not be less risky
than ownership of the futures contract or underlying debt securities. As with
the purchase of futures contracts, when a Portfolio is not fully invested it may
purchase a call option on a futures contract to hedge against a market advance
due to declining interest rates.
The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of the security or foreign currency which
is deliverable upon exercise of the futures contract. If the futures price at
expiration of the option is below the exercise price, a Portfolio will retain
the full amount of the option premium which provides a partial hedge against any
decline that may have occurred in the Portfolio's portfolio holdings. The
writing of a put option on a futures contract constitutes a partial hedge
against increasing prices of the security or foreign currency which is
deliverable upon exercise of the futures contract. If the futures price at
expiration of the option is higher than the exercise price, a Portfolio will
retain the full amount of the option premium which provides a partial hedge
against any increase in the price of securities which the Portfolio intends to
purchase. If a put or call option a Portfolio has written is exercised, the
Portfolio will incur a loss which will be reduced by the amount of the premium
it receives. Depending on the degree of correlation between changes in the value
of its portfolio securities and changes in the value of its futures positions, a
Portfolio's losses from existing options on futures may to some extent be
reduced or increased by changes in the value of portfolio securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities. For
example, a Portfolio may purchase a put option on a futures contract to hedge
its portfolio against the risk of rising interest rates.
The amount of risk a Portfolio assumes when it purchases an option on a
futures contract is the premium paid for the option plus related transaction
costs. In addition to the correlation risks discussed above, the purchase of an
option also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the option purchased.
The Board of Trustees has adopted a further restriction that the
Portfolios will not enter into any futures contracts or options on futures
contracts if immediately thereafter the amount of margin deposits on all the
futures contracts of a Portfolio and premiums paid on outstanding options on
futures contracts owned by a Portfolio (other than those entered into for bona
fide hedging purposes) would exceed 5% of the market value of the total assets
of the Portfolio.
Options on Foreign Currencies. The Portfolios may purchase and write
options on foreign currencies for hedging purposes in a manner similar to that
in which futures contracts on foreign currencies, or forward contracts, will be
utilized. For example, a decline in the dollar value of a foreign currency in
which portfolio securities are denominated will reduce the dollar value of such
securities, even if their value in the foreign currency remains constant. In
order to protect against such diminutions in the value of portfolio securities,
a Portfolio may purchase put options on the foreign currency. If the value of
the currency does decline, a Portfolio will have the right to sell such currency
for a fixed amount in dollars and will thereby offset, in whole or in part, the
adverse effect on its portfolio which otherwise would have resulted.
Conversely, where a rise in the dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, the Portfolios may purchase call options thereon. The
purchase of such options could offset, at least partially, the effects of the
adverse movements in exchange rates. As in the case of other types of options,
however, the benefit to a Portfolio deriving from purchases of foreign currency
options will be reduced by the amount of the premium and related transaction
costs. In addition, where currency exchange rates do not move in the direction
or to the extent anticipated, a Portfolio could sustain losses on transactions
in foreign currency options which would require it to forego a portion or all of
the benefits of advantageous changes in such rates.
The Portfolios may write options on foreign currencies for the same
types of hedging purposes. For example, where a Portfolio anticipates a decline
in the dollar value of foreign currency denominated securities due to adverse
fluctuations in exchange rates it could, instead of purchasing a put option,
write a call option on the relevant currency. If the expected decline occurs,
the options will most likely not be exercised, and the diminution in value of
portfolio securities will be offset by the amount of the premium received.
Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar cost of securities to be acquired, a
Portfolio could write a put option on the relevant currency which, if rates move
in the manner projected, will expire unexercised and allow the Portfolio to
hedge such increased cost up to the amount of the premium. As in the case of
other types of options, however, the writing of a foreign currency option will
constitute only a partial hedge up to the amount of the premium, and only if
rates move in the expected direction. If this does not occur, the option may be
exercised and the Portfolio would be required to purchase or sell the underlying
currency at a loss which may not be offset by the amount of the premium. Through
the writing of options on foreign currencies, the Portfolio also may be required
to forego all or a portion of the benefits which might otherwise have been
obtained from favorable movements in exchange rates.
The Portfolios intend to write covered call options on foreign
currencies. A call option written on a foreign currency by a Portfolio is
"covered" if the Portfolio owns the underlying foreign currency covered by the
call or has an absolute and immediate right to acquire that foreign currency
without additional cash consideration (or for additional cash consideration held
in a segregated account by its Custodian) upon conversion or exchange of other
foreign currency held in its portfolio. A call option is also covered if a
Portfolio has a call on the same foreign currency and in the same principal
amount as the call written where the exercise price of the call held (a) is
equal to or less than the exercise price of the call written or (b) is greater
than the exercise price of the call written if the difference is maintained by a
Portfolio in cash, U.S. Government securities and other high quality liquid debt
securities in a segregated account with its custodian.
The Portfolios intend to write call options on foreign currencies that
are not covered for cross-hedging purposes. A call option on a foreign currency
is for cross-hedging purposes if it is not covered, but is designed to provide a
hedge against a decline in the U.S. dollar value of a security which a Portfolio
owns or has the right to acquire and which is denominated in the currency
underlying the option due to an adverse change in the exchange rate. In such
circumstances, a Portfolio collateralizes the option by maintaining in a
segregated account with its custodian, cash or U.S. Government securities or
other high quality liquid debt securities in an amount not less than the value
of the underlying foreign currency in U.S. dollars marked to market daily.
Additional Risks of Options on Futures Contracts, Forward Contracts and
Options on Foreign Currencies. Unlike transactions entered into by the
Portfolios in futures contracts, options on foreign currencies and forward
contracts are not traded on contract markets regulated by the CFTC or (with the
exception of certain foreign currency options) by the SEC. To the contrary, such
instruments are traded through financial institutions acting as market-makers,
although foreign currency options are also traded on certain national securities
exchanges, such as the Philadelphia Stock Exchange and the Chicago Board Options
Exchange, subject to SEC regulation. Similarly, options on currencies may be
traded over-the-counter. In an over-the-counter trading environment, many of the
protections afforded to exchange participants will not be available. For
example, there are no daily price fluctuation limits, and adverse market
movements could therefore continue to an unlimited extent over a period of time.
Although the purchaser of an option cannot lose more than the amount of the
premium plus related transaction costs, this entire amount could be lost.
Moreover, the option writer and a trader of forward contracts could lose amounts
substantially in excess of their initial investments, due to the margin and
collateral requirements associated with such positions.
Options on foreign currencies traded on national securities exchanges
are within the jurisdiction of the SEC, as are other securities traded on such
exchanges. As a result, many of the protections provided to traders on organized
exchanges will be available with respect to such transactions. In particular,
all foreign currency option positions entered into on a national securities
exchange are cleared and guaranteed by the Options Clearing Corporation ("OCC"),
thereby reducing the risk of counterparty default. Further, a liquid secondary
market in options traded on a national securities exchange may be more readily
available than in the over-the-counter market, potentially permitting the
Portfolio to liquidate open positions at a profit prior to exercise or
expiration, or to limit losses in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options,
however, is subject to the risks of the availability of a liquid secondary
market described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effects of other
political and economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-counter market.
For example, exercise and settlement of such options must be made exclusively
through the OCC, which has established banking relationships in applicable
foreign countries for this purpose. As a result, the OCC may, if it determines
that foreign governmental restrictions or taxes would prevent the orderly
settlement of foreign currency option exercises, or would result in undue
burdens on the OCC or its clearing member, impose special procedures on exercise
and settlement, such as technical changes in the mechanics of delivery of
currency, the fixing of dollar settlement prices or prohibitions on exercise.
As in the case of forward contracts, certain options on foreign
currencies are traded over-the-counter and involve liquidity and credit risks
which may not be present in the case of exchange-traded currency options. A
Portfolio's ability to terminate over-the-counter options will be more limited
than with exchange-traded options. It is also possible that broker-dealers
participating in over-the-counter options transactions will not fulfill their
obligations. Until such time as the staff of the SEC changes its position, the
Portfolio will treat purchased over-the-counter options and assets used to cover
written over-the-counter options as illiquid securities. With respect to options
written with primary dealers in U.S. Government Securities pursuant to an
agreement requiring a closing purchase transaction at a formula price, the
amount of illiquid securities may be calculated with reference to the repurchase
formula.
In addition, futures contracts, options on futures contracts, forward
contracts and options on foreign currencies may be traded on foreign exchanges.
Such transactions are subject to the risk of governmental actions affecting
trading in or the prices of foreign currencies or securities. The value of such
positions also could be adversely affected by: (i) other complex foreign
political and economic factors; (ii) lesser availability than in the United
States of data on which to make trading decisions; (iii) delays in the
Portfolio's ability to act upon economic events occurring in foreign markets
during nonbusiness hours in the United States; (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States; and (v) lesser trading volume.
Options on Securities. The Portfolios may write (sell) covered call and
put options to a limited extent on their portfolio securities ("covered
options") in an attempt to increase income. However, a Portfolio may forgo the
benefits of appreciation on securities sold or may pay more than the market
price on securities acquired pursuant to call and put options written by the
Portfolio.
When a Portfolio writes a covered call option, it gives the purchaser
of the option the right to buy the underlying security at the price specified in
the option (the "exercise price") by exercising the option at any time during
the option period. If the option expires unexercised, a Portfolio will realize
income in an amount equal to the premium received for writing the option. If the
option is exercised, a decision over which a Portfolio has no control, the
Portfolio must sell the underlying security to the option holder at the exercise
price. By writing a covered call option, a Portfolio forgoes, in exchange for
the premium less the commission ("net premium"), the opportunity to profit
during the option period from an increase in the market value of the underlying
security above the exercise price.
When a Portfolio writes a covered put option, it gives the purchaser of
the option the right to sell the underlying security to the Portfolio at the
specified exercise price at any time during the option period. If the option
expires unexercised, a Portfolio will realize income in the amount of the
premium received for writing the option. If the put option is exercised, a
decision over which a Portfolio has no control, the Portfolio must purchase the
underlying security from the option holder at the exercise price. By writing a
covered put option, a Portfolio, in exchange for the net premium received,
accepts the risk of a decline in the market value of the underlying security
below the exercise price. A Portfolio will only write put options involving
securities for which a determination is made at the time the option is written
that the Portfolio wishes to acquire the securities at the exercise price.
A Portfolio may terminate its obligation as the writer of a call or put
option by purchasing an option with the same exercise price and expiration date
as the option previously written. This transaction is called a "closing purchase
transaction." Where a Portfolio cannot effect a closing purchase transaction, it
may be forced to incur brokerage commissions or dealer spreads in selling
securities it receives or it may be forced to hold underlying securities until
an option is exercised or expires.
When a Portfolio writes an option, an amount equal to the net premium
received by the Portfolio is included in the liability section of the
Portfolio's Statement of Assets and Liabilities as a deferred credit. The amount
of the deferred credit will be subsequently marked to market to reflect the
current market value of the option written. The current market value of a traded
option is the last sale price or, in the absence of a sale, the mean between the
closing bid and asked price. If an option expires on its stipulated expiration
date or if a Portfolio enters into a closing purchase transaction, the Portfolio
will realize a gain (or loss if the cost of a closing purchase transaction
exceeds the premium received when the option was sold), and the deferred credit
related to such option will be eliminated. If a call option is exercised, a
Portfolio will realize a gain or loss from the sale of the underlying security
and the proceeds of the sale will be increased by the premium originally
received. The writing of covered call options may be deemed to involve the
pledge of the securities against which the option is being written. Securities
against which call options are written will be segregated on the books of the
custodian for the Portfolio.
A Portfolio may purchase call and put options on any securities in
which it may invest. A Portfolio would normally purchase a call option in
anticipation of an increase in the market value of such securities. The purchase
of a call option would entitle the Portfolio, in exchange for the premium paid,
to purchase a security at a specified price during the option period. A
Portfolio would ordinarily have a gain if the value of the securities increased
above the exercise price sufficiently to cover the premium and would have a loss
if the value of the securities remained at or below the exercise price during
the option period.
A Portfolio would normally purchase put options in anticipation of a
decline in the market value of securities in its portfolio ("protective puts")
or securities of the type in which it is permitted to invest. The purchase of a
put option would entitle a Portfolio, in exchange for the premium paid, to sell
a security, which may or may not be held in the Portfolio's portfolio, at a
specified price during the option period. The purchase of protective puts is
designed merely to offset or hedge against a decline in the market value of a
Portfolio's portfolio securities. Put options also may be purchased by a
Portfolio for the purpose of affirmatively benefiting from a decline in the
price of securities which the Portfolio does not own. A Portfolio would
ordinarily recognize a gain if the value of the securities decreased below the
exercise price sufficiently to cover the premium and would recognize a loss if
the value of the securities remained at or above the exercise price. Gains and
losses on the purchase of protective put options would tend to be offset by
countervailing changes in the value of underlying portfolio securities.
The Portfolios have adopted certain other nonfundamental policies
concerning option transactions which are discussed below. The Portfolios'
activities in options may also be restricted by the requirements of the Internal
Revenue Code for qualification as a regulated investment company.
The hours of trading for options on securities may not conform to the
hours during which the underlying securities are traded. To the extent that the
option markets close before the markets for the underlying securities,
significant price and rate movements can take place in the underlying securities
markets that cannot be reflected in the option markets. It is impossible to
predict the volume of trading that may exist in such options, and there can be
no assurance that viable exchange markets will develop or continue.
The Portfolios may engage in over-the-counter options transactions with
broker-dealers who make markets in these options. At present, approximately ten
broker-dealers, including several of the largest primary dealers in U.S.
Government securities, make these markets. The ability to terminate
over-the-counter option positions is more limited than with exchange-traded
option positions because the predominant market is the issuing broker rather
than an exchange, and may involve the risk that broker-dealers participating in
such transactions will not fulfill their obligations. To reduce this risk, a
Portfolio will purchase such options only from broker-dealers who are primary
government securities dealers recognized by the Federal Reserve Bank of New York
and who agree to (and are expected to be capable of) entering into closing
transactions, although there can be no guarantee that any such option will be
liquidated at a favorable price prior to expiration. The Adviser will monitor
the creditworthiness of dealers with whom a Portfolio enters into such options
transactions under the general supervision of the Trust's Trustees.
Options on Securities Indices. In addition to options on securities,
the Portfolios may also purchase and write (sell) call and put options on
securities indices. Such options give the holder the right to receive a cash
settlement during the term of the option based upon the difference between the
exercise price and the value of the index. Such options will be used for the
purposes described above under "Options on Securities."
Options on securities indices entail risks in addition to the risks of
options on securities. The absence of a liquid secondary market to close out
options positions on securities indices is more likely to occur, although a
Portfolio generally will only purchase or write such an option if the Adviser
believes the option can be closed out.
Use of options on securities indices also entails the risk that trading
in such options may be interrupted if trading in certain securities included in
the index is interrupted. The Portfolios will not purchase such options unless
the Adviser believes the market is sufficiently developed such that the risk of
trading in such options is no greater than the risk of trading in options on
securities.
Price movements in each Portfolio's portfolio may not correlate
precisely with movements in the level of an index and, therefore, the use of
options on indices cannot serve as a complete hedge. Because options on
securities indices require settlement in cash, the Adviser may be forced to
liquidate portfolio securities to meet settlement obligations.
Forward Foreign Currency Exchange Contracts. Because the Portfolios buy
and sell securities denominated in currencies other than the U.S. dollar and
receives interest, dividends and sale proceeds in currencies other than the U.S.
dollar, each Portfolio from time to time may enter into foreign currency
exchange transactions to convert to and from different foreign currencies and to
convert foreign currencies to and from the U.S. dollar. The Portfolios either
enter into these transactions on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market or use forward contracts to
purchase or sell foreign currencies.
A forward foreign currency exchange contract is an obligation by a
Portfolio to purchase or sell a specific currency at a future date, which may be
any fixed number of days from the date of the contract. Forward foreign currency
exchange contracts establish an exchange rate at a future date. These contracts
are transferable in the interbank market conducted directly between currency
traders (usually large commercial banks) and their customers. A forward foreign
currency exchange contract generally has no deposit requirement and is traded at
a net price without commission. The Portfolios maintain with their custodian a
segregated account of high grade liquid assets in an amount at least equal to
its obligations under each forward foreign currency exchange contract. Neither
spot transactions nor forward foreign currency exchange contracts eliminate
fluctuations in the prices of a Portfolio's securities or in foreign exchange
rates, or prevent loss if the prices of these securities should decline.
The Portfolios may enter into foreign currency hedging transactions in
an attempt to protect against changes in foreign currency exchange rates between
the trade and settlement dates of specific securities transactions or changes in
foreign currency exchange rates that would adversely affect a portfolio position
or an anticipated investment position. Since consideration of the prospect for
currency parities will be incorporated into Bankers Trust's long-term investment
decisions, the Portfolios will not routinely enter into foreign currency hedging
transactions with respect to security transactions; however, Bankers Trust
believes that it is important to have the flexibility to enter into foreign
currency hedging transactions when it determines that the transactions would be
in each Portfolio's best interest. Although these transactions tend to minimize
the risk of loss due to a decline in the value of the hedged currency, at the
same time they tend to limit any potential gain that might be realized should
the value of the hedged currency increase. The precise matching of the forward
contract amounts and the value of the securities involved will not generally be
possible because the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of such securities
between the date the forward contract is entered into and the date it matures.
The projection of currency market movements is extremely difficult, and the
successful execution of a hedging strategy is highly uncertain.
While these contracts are not presently regulated by the CFTC, the CFTC
may in the future assert authority to regulate forward contracts. In such event
each Portfolio's ability to utilize forward contracts in the manner set forth in
Part A to this Registration Statement may be restricted. Forward contracts may
reduce the potential gain from a positive change in the relationship between the
U.S. dollar and foreign currencies. Unanticipated changes in currency prices may
result in poorer overall performance for a Portfolio than if it had not entered
into such contracts. The use of foreign currency forward contracts may not
eliminate fluctuations in the underlying U.S. dollar equivalent value of the
prices of or rates of return on a Portfolio's foreign currency denominated
portfolio securities and the use of such techniques will subject the Portfolio
to certain risks.
The matching of the increase in value of a forward contract and the
decline in the U.S. dollar equivalent value of the foreign currency denominated
asset that is the subject of the hedge generally will not be precise. In
addition, the Portfolios may not always be able to enter into foreign currency
forward contracts at attractive prices and this will limit the Portfolios'
ability to use such contract to hedge or cross-hedge its assets. Also, with
regard to each Portfolio's use of cross-hedges, there can be no assurance that
historical correlations between the movement of certain foreign currencies
relative to the U.S. dollar will continue. Thus, at any time poor correlation
may exist between movements in the exchange rates of the foreign currencies
underlying a Portfolio's cross-hedges and the movements in the exchange rates of
the foreign currencies in which the Portfolio's assets that are the subject of
such cross-hedges are denominated.
Rating Services. The ratings of Moody's Investors Service, Inc.
("Moody's") and Standard & Poor's Corporation ("S&P") represent their opinions
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 a Portfolio, an obligation may cease to be rated or
its rating may be reduced below the minimum required for purchase by the
Portfolio. Neither event would require either Portfolio to eliminate the
obligation from its portfolio, but Bankers Trust will consider such an event in
its determination of whether a Portfolio should continue to hold the obligation.
A description of the ratings used herein and in Part A is set in the Appendix.
INVESTMENT RESTRICTIONS
The investment restrictions below have been adopted by the Trust with
respect to each Portfolio as fundamental policies. Under the Investment Company
Act of 1940, as amended (the "1940 Act"), a "fundamental" policy may not be
changed without the vote of a "majority of the outstanding voting securities" of
a Portfolio, which is defined in the 1940 Act as the lesser of (a) 67% or more
of the securities present at a meeting if the holders of more than 50% of the
outstanding securities are present or represented by proxy, or (b) more than 50%
of the outstanding securities. 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, a Portfolio may not:
1. Borrow money or mortgage or hypothecate assets of the
Portfolio, except that in an amount not to exceed 1/3 of the current
value of the Portfolio's net 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 borrowings (it is intended that money would be borrowed
only from banks and only either to accommodate requests for the
withdrawal of beneficial interests 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) or reverse repurchase
agreements, 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
"State and Federal Restrictions" below (as an operating policy, the
Portfolios may not engage in dollar roll transactions);
2. Underwrite securities issued by other persons except
insofar as the Portfolio 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 lending
of the Portfolio's portfolio securities and provided that any such
loans not exceed 30% of the Portfolio's total assets (taken at market
value), (b) through the use of repurchase agreements or the purchase of
short-term obligations or (c) 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 Portfolio may hold and
sell, for its portfolio, real estate acquired as a result of the
Portfolio's ownership of securities);
5. Concentrate its investments in any particular industry
(excluding U.S. Government securities), but if it is deemed appropriate
for the achievement of the Portfolio's investment objective, up to 25%
of its total assets may be invested in any one industry;
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 initial deposit and variation margin, are not considered to
be the issuance of a senior security for purposes of this restriction.
As an operating policy the Portfolios will not invest in another
open-end registered investment company.
State and Federal Restrictions. In order to comply with certain state
and federal statutes and policies the Portfolios will not as a matter of
operating policy:
(i) borrow money (including through reverse repurchase or dollar
roll transactions) for any purpose in excess of 5% of the
Portfolio's total assets (taken at cost) except that the
Portfolio may borrow for temporary or emergency purposes up to
1/3 of its assets;
(ii) pledge, mortgage or hypothecate for any purpose in excess of
10% of the Portfolio's net assets (taken at market value),
provided that collateral arrangements with respect to options
and futures, including deposits of initial deposit and
variation margin, and reverse repurchase agreements are not
considered a pledge of assets for purposes of this
restriction;
(iii) purchase any security or evidence of interest therein on
margin, except that such short-term credit as may be necessary
for the clearance of purchases and sales of securities may be
obtained and except that deposits of initial deposit and
variation margin may be made in connection with the purchase,
ownership, holding or sale of futures;
(iv) sell securities it does not own such that the dollar amount of
such short sales at any one time exceeds 25% of the net equity
of the Portfolio and the value of securities of any one issuer
in which the Portfolio is short exceeds the lesser of 2.0% of
the value of the Portfolio's net assets or 2.0% of the
securities of any class of any U.S. issuer and, provided that
short sales may be made only in those securities which are
fully listed on a national securities exchange or a foreign
exchange (This provision does not include the sale of
securities of the Portfolio contemporaneously owns or has the
right to obtain securities equivalent in kind and amount to
those sold, i.e., short sales against the box.) (The
Portfolios have no current intention to engage in short
selling.);
(v) invest for the purpose of exercising control or management;
(vi) purchase securities issued by any investment company except by
purchase in the open market where no commission or profit to a
sponsor or dealer results from such purchase other than the
customary broker's commission, or except when such purchase,
though not made in the open market, is part of a plan of
merger or consolidation; provided, however, that securities of
any investment company will not be purchased for the Portfolio
if such purchase at the time thereof would cause: (a) more
than 10% of the Portfolio's total assets (taken at the greater
of cost or market value) to be invested in the securities of
such issuers; (b) more than 5% of the Portfolio's total assets
(taken at the greater of cost or market value) to be invested
in any one investment company; or (c) more than 3% of the
outstanding voting securities of any such issuer to be held
for the Portfolio; provided further that , except in the case
of a merger or consolidation, the Portfolio shall not purchase
any securities of any open-end investment company unless the
Portfolio (1) waives the investment advisory fee with respect
to assets invested in other open-end investment companies and
(2) incurs no sales charge in connection with the investment;
(vii) invest more than 10% of the Portfolio's total assets (taken at
the greater of cost or market value) in securities (excluding
Rule 144A securities) that are restricted as to resale under
the 1933 Act;
(viii) invest more than 15% of the Portfolio's total assets (taken at
the greater of cost or market value) in (a) securities
(including Rule 144A securities) that are restricted as to
resale under the 1933 Act, and (b) securities that are issued
by issuers which (including predecessors) have been in
operation less than three years (other than U.S. Government
securities), provided, however, that no more than 5% of the
Portfolio's total assets are invested in securities issued by
issuers which (including predecessors) have been in operation
less than three years;
(ix) with respect to 75% of the Portfolio's total assets, purchase
securities of any issuer if such purchase at the time thereof
would cause the Portfolio to hold more than 10% of any class
of securities of such issuer, for which purposes all
indebtedness of an issuer shall be deemed a single class and
all preferred stock of an issuer shall be deemed a single
class, except that futures or option contracts shall not be
subject to this restriction;
(x) with respect to 75% of its assets, invest more than 5% of its
total assets in the securities (excluding U.S. Government
securities) of any one issuer;
(xi) invest in securities issued by an issuer any of whose
officers, directors, trustees or security holders is an
officer or Trustee of the Portfolio (Trust), or is an officer
or partner of the Adviser, if after the purchase of the
securities of such issuer for the Portfolio one or more of
such persons owns beneficially more than 1/2 of 1% of the
shares or securities, or both, all taken at market value, of
such issuer, and such persons owning more than 1/2 of 1% of
such shares or securities together own beneficially more than
5% of such shares or securities, or both, all taken at market
value;
(xii) invest in warrants (other than warrants acquired by the
Portfolio as part of a unit or attached to securities at the
time of purchase) if, as a result, the investments (valued at
the lower of cost or market) would exceed 5% of the value of
the Portfolio's net assets or if, as a result, more than 2% of
the Portfolio's net assets would be invested in warrants not
listed on a recognized United States or foreign stock
exchange, to the extent permitted by applicable state
securities laws;
(xiii) write puts and calls on securities unless each of the
following conditions are met: (a) the security underlying the
put or call is within the investment policies of the Portfolio
and the option is issued by the Options Clearing Corporation,
except for put and call options issued by non-U.S. entities or
listed on non-U.S. securities or commodities exchanges; (b)
the aggregate value of the obligations underlying the puts
determined as of the date the options are sold shall not
exceed 5% of the Portfolio's net assets; (c) the securities
subject to the exercise of the call written by the Portfolio
must be owned by the Portfolio at the time the call is sold
and must continue to be owned by the Portfolio until the call
has been exercised, has lapsed, or the Portfolio has purchased
a closing call, and such purchase has been confirmed, thereby
extinguishing the Portfolio's obligation to deliver securities
pursuant to the call it has sold; and (d) at the time a put is
written, the Portfolio establishes a segregated account with
its custodian consisting of cash or short-term U.S. Government
securities equal in value to the amount the Portfolio will be
obligated to pay upon exercise of the put (this account must
be maintained until the put is exercised, has expired, or the
Portfolio has purchased a closing put, which is a put of the
same series as the one previously written); and
(xiv) buy and sell puts and calls on securities, stock index futures
or options on stock index futures, or financial futures or
options on financial futures unless such options are written
by other persons and: (a) the options or futures are offered
through the facilities of a national securities association or
are listed on a national securities or commodities exchange,
except for put and call options issued by non-U.S. entities or
listed on non-U.S. securities or commodities exchanges; (b)
the aggregate premiums paid on all such options which are held
at any time do not exceed 20% of the Portfolio's total net
assets; and (c) the aggregate margin deposits required on all
such futures or options thereon held at any time do not exceed
5% of the Portfolio's total assets.
There will be no violation of any investment restriction if that
restriction is complied with at the time the relevant action is taken
notwithstanding a later change in market value of an investment, in net or total
assets, in the securities rating of the investment, or any other later change.
Each Portfolio will comply with the permitted investments and
investment limitations in the securities laws and regulations of all states in
which any registered investment company investing in the Portfolio is
registered.
Portfolio Turnover. Each Portfolio may attempt to increase yields by
trading to take advantage of short-term market variations, which results in
higher portfolio turnover. This policy does not result in higher brokerage
commissions to the Portfolio, however, as the purchases and sales of portfolio
securities are usually effected as principal transactions. Each Portfolio's
turnover rate is not expected to have a material effect on its income and is
expected to be zero for regulatory reporting purposes.
ITEM 14. MANAGEMENT OF THE FUND.
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 that those Trustees and officers are
"interested persons" (as defined in the 1940 Act) of the Trust. Unless otherwise
indicated below, the address of each Trustee and officer is 6 St. James Avenue,
Boston, Massachusetts 02116.
TRUSTEES
PHILIP W. COOLIDGE* Trustee and President; Chairman, Chief Executive
Officer and President, Signature Financial Group, Inc. ("SFG") (since December,
1988) and Signature (since April, 1989).
CHARLES P. BIGGAR 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.
S. LELAND DILL Trustee; Retired; Director, Coutts & Co. Trust Holdings
Limited and Coutts & Co. (U.S.A.) International; Director, Zweig Cash Fund and
Zweig Series Trust; formerly Partner of KPMG Peat Marwick; Director, Vinters
International Company Inc.; General Partner of Pemco (an investment company
registered under the 1940 Act). His address is 5070 North Ocean Drive, Singer
Island, Florida 33404.
OFFICERS
JAMES B. CRAVER Treasurer and Secretary; Senior Vice President, SFG
(since January, 1991); Secretary, Signature (since January, 1991); Partner,
Baker & Hostetler (prior to January, 1991).
DAVID G. DANIELSON Assistant Treasurer; Assistant Manager, SFG (since
May, 1991); Graduate Student, Northeastern University (from April, 1990 to
March, 1991); Tax Accountant & Systems Analyst, Putnam Companies (prior to
March, 1990).
JAMES S. LELKO, JR. Assistant Treasurer; Assistant Manager, SFG (since
January 1993); Senior Tax Compliance Accountant, Putnam Investments (prior to
December 1992).
BARBARA M. O'DETTE Assistant Treasurer; Assistant Treasurer, SFG (since
December, 1988); Assistant Treasurer, Signature (since April, 1989).
DANIEL E. SHEA Assistant Treasurer; Assistant Manager, SFG (since
November 1993); Supervisor and Senior Technical Advisor, Putnam Investments
(prior to November 1993).
LINDA T. GIBSON Assistant Secretary; Legal Counsel and Assistant
Secretary, SFG (since May, 1992); Assistant Secretary, Signature (since October,
1992); student, Boston University School of Law (September, 1989 to May, 1992);
Product Manager, SFG (January, 1989 to September, 1989).
THOMAS M. LENZ Assistant Secretary; Vice President and Associate
General Counsel, SFG (since November, 1989); Assistant Secretary, Signature
(since February, 1991); Attorney, Ropes & Gray (prior to November, 1989).
MOLLY S. MUGLER Assistant Secretary; Legal Counsel and Assistant
Secretary, SFG (since December, 1988); Assistant Secretary, Signature (since
April, 1989).
ANDRES E. SALDANA Assistant Secretary; Legal Counsel, SFG (since
November, 1992); Assistant Secretary, Signature (since September, 1993);
Attorney, Ropes & Gray (September, 1990 to November, 1992); law student, Yale
Law School (September, 1987 to May, 1990).
Messrs. Coolidge, Craver, Danielson, Lelko, 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 either of the Portfolios. No director, officer or employee of
Signature or any of its affiliates will receive any compensation from a
Portfolio for serving as an officer or Trustee of the Portfolio. The Portfolios
and Cash Management Portfolio, Treasury Money Portfolio, Tax Free Money
Portfolio, NY Tax Free Money Portfolio, International Equity Portfolio, Utility
Portfolio, Equity 500 Index Portfolio, Short/Intermediate U.S. Government
Securities Portfolio, Intermediate Tax Free Portfolio, Capital Appreciation
Portfolio, Asset Management Portfolio and BT Investment Portfolios (the "Fund
Complex") collectively pay each Trustee who is not a director, officer or
employee of the Adviser, the Administrator or any of their affiliates an annual
fee of $10,000, respectively, per annum plus $500, respectively, per meeting
attended and reimburses them for travel and out-of-pocket expenses.
<TABLE>
<CAPTION>
TRUSTEE COMPENSATION TABLE
PENSION OR
AGGREGATE RETIREMENT
COMPENSATION BENEFITS ACCRUED ESTIMATED ANNUAL TOTAL COMPENSATION
NAME OF PERSON, FROM AS PART OF BENEFITS UPON FROM FUND COMPLEX
POSITION PORTFOLIO PORTFOLIO EXPENSES RETIREMENT PAID TO TRUSTEES
-------------- ------------ ------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Philip W. Coolidge, none none none none
Trustee of Portfolio
Charles P. Biggar, $12,000 none none $12,000
Trustee of Portfolio
S. Leland Dill, $12,000 none none $12,000
Trustee of Portfolio
</TABLE>
For the fiscal year ended March 31, 1995, Asset Management Portfolio II
accrued Trustees fees equal to $1,180 and Asset Management Portfolio II accrued
trustees fees equal to $1,178. Bankers Trust reimbursed the Portfolio for a
portion of its Trustees fees for the period above. See "Investment Advisory and
Other Services: below.
The Portfolios' Declaration of Trust provides that it will indemnify
its Trustees and officers against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Portfolio, unless, as to liability to the Portfolio or the
investors in the Portfolio, it is finally adjudicated that they engaged in
wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in their offices, or unless with respect to any other matter it
is finally adjudicated that they did not act in good faith in the reasonable
belief that their actions were in the best interests of the Portfolios. In the
case of settlement, such indemnification will not be provided unless it has been
determined by a court or other body approving the settlement or other
disposition, or by a reasonable determination, based upon a review of readily
available facts, by vote of a majority of disinterested Trustees or in a written
opinion of independent counsel, that such officers or Trustees have not engaged
in wilful misfeasance, bad faith, gross negligence or reckless disregard of
their duties.
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of July 1, 1995, BT Investment Lifecycle Short Range Fund and BT
Investment Lifecycle Mid Range Fund (each a "Fund") (series of shares of BT
Investment Funds each owned approximately 100% of the value of the outstanding
interests in Asset Management Portfolio III and Asset Management Portfolio II,
respectively. Because BT Investment Lifecycle Short Range Fund and BT Investment
Lifecycle Mid Range Fund controls the corresponding Portfolios, it may take
actions without the approval of any other investor in the Portfolios or any
other series of the Trust, as the case may be.
Each Fund has informed the Trust that whenever it is requested to vote
on matters pertaining to the fundamental policies of a Portfolio, the Fund will,
except as permitted by the SEC, hold a meeting of shareholders and will cast its
votes as instructed by the Fund's shareholders in the same proportion as the
votes of the Fund's shareholders. Fund shareholders who do not vote will not
affect the Fund's votes at the Portfolio meeting. The percentage of the Fund's
votes representing Fund shareholders not voting will be voted by the Trustees or
officers of the Fund in the same proportion as the Fund shareholders who do, in
fact, vote. Whenever a Fund is requested to vote on a matter pertaining to a
Portfolio, the Fund will vote its shares without a meeting of the Fund
shareholders if the proposal, if made with respect to such Fund, would not
require the vote of the Fund shareholders as long as such action is permissible
under applicable statutory and regulatory requirements. It is anticipated that
other registered investment companies investing in the Portfolios will follow
the same or a similar practice.
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.
The Adviser manages the assets of each Portfolios pursuant to an
investment advisory agreement (the "Advisory Agreement"). Subject to such
policies as the Board of Trustees of the Trust may determine, the Adviser makes
investment decisions for each Portfolio. Bankers Trust will: (i) act in strict
conformity with the Trust's Declaration of Trust, the 1940 Act and the
Investment Advisors Act of 1940, as the same may from time to time be amended;
(ii) manage each Portfolio in accordance with each Portfolio's investment
objectives, restrictions and policies as stated herein; (iii) make investment
decisions for each Portfolio; and (iv) place purchase and sale orders for
securities and other financial instruments on behalf of each Portfolio.
The Adviser furnishes at its own expense all services, facilities and
personnel necessary in connection with managing each Portfolio's investments and
effecting securities transactions for each Portfolio. The Advisory Agreement
will continue in effect if such continuance is specifically approved at least
annually by the Board of Trustees or by a majority vote of the investors in each
Portfolio (with the vote of each being in proportion to the amount of its
investment), and, in either case, by a majority of the Trust's Trustees who are
not parties to the Advisory Agreement or interested persons of any such party,
at a meeting called for the purpose of voting on the Advisory Agreement.
The Advisory Agreement is terminable with respect to each Portfolio
without penalty on 60 days' written notice by each Portfolio when authorized
either by majority vote of the investors in each Portfolio (with the vote of
each being in proportion to the amount of its investment), or by a vote of a
majority of the Trust's Board of Trustees, or by the Adviser, and will
automatically terminate in the event of its assignment. The Advisory Agreement
provides that neither the Adviser not its personnel shall be liable for any
error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of security transactions
for the Portfolio, except for wilful misfeasance, bad faith or gross negligence
or of reckless disregard of its or their obligations and duties under the
Advisory Agreement.
For compensation of investment advisory services provided to the Asset
Management Portfolio III, Bankers Trust aggregated $136,199 for the fiscal year
ended March 31, 1995 and $44,872 for the period October 15, 1993 (commencement
of operations) through March 31, 1994. For the same periods, Bankers Trust
reimbursed $62,017 and $33,838, respectively, to the Portfolio to cover
expenses.
For compensation of investment advisory services provided to the Asset
Management Portfolio II, Bankers Trust aggregated $156,421 for the fiscal year
ended March 31, 1995 and $46,279 for the period from October 14, 1993
(commencement of operations) through March 31, 1994. For the same periods,
Bankers Trust reimbursed $65,748 and $34,192 , respectively, to the Portfolio to
cover expenses.
Pursuant to an administration and services agreement (the
"Administration Agreement"), Bankers Trust provides administration services to
the Trust. Under the Administration Agreement, Bankers Trust is obligated on a
continuous basis to provide such administrative services as the Board of
Trustees reasonably deems necessary for the proper administration of the Trust.
Bankers Trust will generally assist in all aspects of the Trust's operations;
supply and maintain the Trust with office facilities, 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 administrative services, and stationery and office supplies; prepare reports
to investors; prepare and file tax returns; supply financial information and
supporting data for reports to and filings with the Securities and Exchange
Commission (the "SEC"); 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 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 Portfolios; and negotiate arrangements with, and
supervise and coordinate the activities of, agents and others retained by the
Trust to supply services to the Trust and/or the investors in the Portfolios.
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.
Bankers Trust also provides fund accounting, transfer agency and
custodian services to the Trust and the Portfolios, pursuant to the
Administration Agreement.
In compensation for administrative and other services provided to the
Portfolios, Bankers Trust received: $20,954 for the fiscal year ended March 31,
1995 and $6,903 for the period from October 15, 1993 (commencement of
operations) through March 31, 1994 from Asset Management Portfolio III; and
$24,065 for the fiscal year ended March 31, 1995 and $7,120 for period from
October 14, 1993 (commencement of operations) through March 31, 1994 from Asset
Management Portfolio II. See "Investment Advisory and Other Services" above.
Coopers & Lybrand are the independent certified public accountants for
the Trust, providing audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the SEC. The
principal business address of Coopers & Lybrand is 1100 Main, Suite 900, Kansas
City, Missouri 64105.
ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.
The Adviser is responsible for decisions to buy and sell securities,
futures contracts and options on such securities and futures for each Portfolio,
the selection of brokers, dealers and futures commission merchants to effect
transactions and the negotiation of brokerage commissions, if any.
Broker-dealers may receive brokerage commissions on portfolio transactions,
including options, futures and options on futures transactions and the purchase
and sale of underlying securities upon the exercise of options. Orders may be
directed to any broker-dealer or futures commission merchant, including to the
extent and in the manner permitted by applicable law, Bankers Trust or its
subsidiaries or affiliates. Purchases and sales of certain portfolio securities
on behalf of the Portfolio are frequently placed by the Adviser with the issuer
or a primary or secondary market-maker for these securities on a net basis,
without any brokerage commission being paid by a Portfolio. Trading does,
however, involve transaction costs. Transactions with dealers serving as
market-makers reflect the spread between the bid and asked prices. Transaction
costs may also include fees paid to third parties for information as to
potential purchasers or sellers of securities. Purchases of underwritten issues
may be made which will include an underwriting fee paid to the underwriter.
The Adviser seeks to evaluate the overall reasonableness of the
brokerage commissions paid (to the extent applicable) in placing orders for the
purchase and sale of securities for the Portfolios taking into account such
factors as price, commission (negotiable in the case of national securities
exchange transactions), if any, size of order, difficulty of execution and skill
required of the executing broker-dealer through familiarity with commissions
charged on comparable transactions, as well as by comparing commissions paid by
the Portfolios to reported commissions paid by others. The Adviser reviews on a
routine basis commission rates, execution and settlement services performed,
making internal and external comparisons.
The Adviser is authorized, consistent with Section 28(e) of the
Securities Exchange Act of 1934, when placing portfolio transactions for the
Portfolios with a broker to pay a brokerage commission (to the extent
applicable) in excess of that which another broker might have charged for
effecting the same transaction on account of the receipt of research, market or
statistical information. The term "research, market or statistical information"
includes advice as to the value of securities; the advisability of investing in,
purchasing or selling securities; the availability of securities or purchasers
or sellers of securities; and furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts.
Consistent with the policy stated above, the Rules of Fair Practice of
the NASD and such other policies as the Trust's Trustees may determine, the
Adviser may consider sales of securities of other investment company clients of
Bankers Trust as a factor in the selection of broker-dealers to execute
portfolio transactions. Bankers Trust will make such allocations if commissions
are comparable to those charged by nonaffiliated, qualified broker-dealers for
similar services.
Higher commissions may be paid to firms that provide research services
to the extent permitted by law. Bankers Trust may use this research information
in managing the Portfolios' assets, as well as the assets of other clients.
Except for implementing the policies stated above, there is no
intention to place portfolio transactions with particular brokers or dealers or
groups thereof. In effecting transactions in over-the-counter securities, orders
are placed with the principal market-makers for the security being traded
unless, after exercising care, it appears that more favorable results are
available otherwise.
Although certain research, market and statistical information from
brokers and dealers can be useful to the Portfolios and to the Adviser, it is
the opinion of the management of the Portfolios that such information is only
supplementary to the Adviser's own research effort, since the information must
still be analyzed, weighed and reviewed by the Adviser's staff. Such information
may be useful to the Adviser in providing services to clients other than the
Portfolios, and not all such information is used by the Adviser in connection
with the Portfolios. Conversely, such information provided to the Adviser by
brokers and dealers through whom other clients of the Adviser effect securities
transactions may be useful to the Adviser in providing services to the
Portfolios.
In certain instances there may be securities which are suitable for the
Portfolios as well as for one or more of the Adviser's other clients. Investment
decisions for the Portfolios and for the Adviser's other clients are made with a
view to achieving their respective investment objectives. It may develop that a
particular security is bought or sold for only one client even though it might
be held by, or bought or sold for, other clients. Likewise, a particular
security may be bought for one or more clients when one or more clients are
selling that same security. Some simultaneous transactions are inevitable when
several clients receive investment advice from the same investment adviser,
particularly when the same security is suitable for the investment objectives of
more than one client. When two or more clients are simultaneously engaged in the
purchase or sale of the same security, the securities are allocated among
clients in a manner believed to be equitable to each. It is recognized that in
some cases this system could have a detrimental effect on the price or volume of
the security as far as the Portfolios are concerned. However, it is believed
that the ability of the Portfolio to participate in volume transactions will
produce better executions for the Portfolios.
The Asset Management Portfolio II paid brokerage commissions in the
amount of $25,346 for the fiscal year ended March 31, 1995 and $9,424 for the
period from October 14, 1993 (commencement of operations) through March 31,
1994. The Asset Management Portfolio III paid brokerage commissions in the
amount of $15,143 for the fiscal year ended March 31, 1995 and $5,814 for the
period from October 15, 1993 (commencement of operations) through March 31,
1994.
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.
Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in separate series, such as the Portfolios. No series of
the Trust has any preference over any other series. Investors in the Portfolios
are entitled to participate pro rata in distributions of taxable income, loss,
gain and credit of the Portfolios. Upon liquidation or dissolution of the
Portfolios, investors are entitled to share pro rata in the net assets of the
Portfolios available for distribution to investors. Investments in the
Portfolios have no preference, preemptive, conversion or similar rights and are
fully paid and nonassessable, except as set forth below. Investments in the
Portfolios may not be transferred.
Each investor in the Portfolios is entitled to a vote in proportion to
the amount of its investment. The Portfolios and the other series of the Trust
will all vote together in certain circumstances (e.g., election of the Trust's
Trustees and auditors, as required by the 1940 Act and the rules thereunder).
One or more series of the Trust could control the outcome of these votes.
Investors do not have cumulative voting rights, and investors holding more than
50% of the aggregate beneficial interests in the Trust, or in a series as the
case may be, may control the outcome of votes and in such event the other
investors in the Portfolios, or in the series, would not be able to elect any
Trustee. The Trust is not required and has no current intention to hold annual
meetings of investors but the Portfolios will hold special meetings of investors
when in the judgment of the Trust's Trustees it is necessary or desirable to
submit matters for an investor vote. No material amendment may be made to the
Trust's Declaration of Trust without the affirmative majority vote of investors
(with the vote of each being in proportion to the amount of its investment).
The Trust, with respect to each Portfolio, may enter into a merger or
consolidation, or sell all or substantially all of its assets, if approved by
the vote of two-thirds of the Portfolios' investors (with the vote of each being
in proportion to its percentage of the beneficial interests in a Portfolio),
except that if the Trustees of the Trust recommend such sale of assets, the
approval by vote of a majority of the investors (with the vote of each being in
proportion to its percentage of the beneficial interests of each Portfolio) will
be sufficient. A Portfolio may also be terminated (i) upon liquidation and
distribution of its assets, if approved by the vote of two-thirds of its
investors (with the vote of each being in proportion to the amount of its
investment), or (ii) by the Trustees of the Trust by written notice to its
investors.
The Trust is organized as a trust under the laws of the State of New
York. Investors in the Portfolios or any other series of the Trust will be held
personally liable for its obligations and liabilities, subject, however, to
indemnification by the Trust in the event that there is imposed upon an investor
a greater portion of the liabilities and obligations than its proportionate
beneficial interest. The Declaration of Trust also provides that the Trust shall
maintain appropriate insurance (for example, fidelity bonding and errors and
omissions insurance) for the protection of the Trust, its investors, Trustees,
officers, employees and agents covering possible tort and other liabilities.
Thus, the risk of an investor incurring financial loss on account of investor
liability is limited to circumstances in which both inadequate insurance existed
and the Trust itself was unable to meet its obligations with respect to any
series thereof.
The Declaration of Trust further provides that obligations of the
Portfolios or any other series of the Trust are not binding upon the Trustees
individually but only upon the property of the Portfolios or other series of the
Trust, as the case may be, and that the Trustees will not be liable for any
action or failure to act, but nothing in the Declaration of Trust protects a
Trustee against any liability to which he would otherwise be subject by reason
of wilful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office.
The Trust reserves the right to create and issue a number of series, in
which case investments in each series would participate equally in the earnings
and assets of the particular series. Investors in each series would be entitled
to vote separately to approve advisory agreements or changes in investment
policy, but investors of all series may vote together in the election or
selection of Trustees, principal underwriters and accountants. Upon liquidation
or dissolution of any series of the Trust, the investors in that series would be
entitled to share pro rata in the net assets of that series available for
distribution to investors.
ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED.
Beneficial interests in each Portfolio are issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. See "General Description of
Registrant," "Purchase of Securities Being Offered" and "Redemption or
Repurchase" in Part A.
Each Portfolio determines its net asset value on each day on which the
NYSE is open ("Fund Business Day"), by dividing the value of each Portfolio's
net assets (i.e., the value of its securities and other assets less its
liabilities, including expenses payable or accrued) by the value of the
investment of the investors in each Portfolio at the time the determination is
made. (As of the date of this Registration Statement, the NYSE is both open
every weekday except for: (a) the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day; and (b) the preceding Friday of the
subsequent Monday when one of the calendar-determined holidays falls on a
Saturday or Sunday, respectively. Purchases and withdrawals will be effected at
the time of determination of net asset value next following the receipt of any
purchase or withdrawal order.
Equity and debt securities (other than short-term debt obligations
maturing in 60 days or less), including listed securities and securities for
which price quotations are available, will normally be valued on the basis of
market valuations furnished by a pricing service. Short-term debt obligations
and money market securities maturing in 60 days or less are valued at amortized
cost, which approximates market. Securities for which market quotations are not
available are valued by Bankers Trust pursuant to procedures adopted by the
Portfolios' Board of Trustees. It is generally agreed that securities for which
market quotations are not readily available should not be valued at the same
value as that carried by an equivalent security which is readily marketable.
The problems inherent in making a good faith determination of value are
recognized in the codification effected by SEC Financial Reporting Release No. 1
("FRR 1" (formerly Accounting Series Release No. 113)) which concludes that
there is "no automatic formula" for calculating the value of restricted
securities. It recommends that the best method simply is to consider all
relevant factors before making any calculation. According to FRR 1 such factors
would include consideration of the:
type of security involved, financial statements, cost at
date of purchase, size of holding, discount from market
value of unrestricted securities of the same class at the
time of purchase, special reports prepared by analysts,
information as to any transactions or offers with respect to
the security, existence of merger proposals or tender offers
affecting the security, price and extent of public trading
in similar securities of the issuer or comparable companies,
and other relevant matters.
<PAGE>
To the extent that a Portfolio purchases securities which are
restricted as to resale or for which current market quotations are not
available, the Adviser of the Portfolio will value such securities based upon
all relevant factors as outlined in FRR 1.
ITEM 20. TAX STATUS.
The Trust is organized as a trust under New York law. Under the
anticipated method of operation of the Trust, the Portfolios will not be subject
to any income tax. However each investor in the Portfolios will be taxable on
its share (as determined in accordance with the governing instruments of the
Trust) of a Portfolio's ordinary income and capital gain in determining its
income tax liability. The determination of such share will be made in accordance
with the Internal Revenue Code of 1986, as amended (the "Code"), and regulations
promulgated thereunder.
The Trust's taxable year-end is December 31. Although, as described
above, each Portfolio will not be subject to federal income tax, the Trust will
file appropriate income tax returns with respect to each Portfolio.
It is intended that the assets, income and distributions of the
Portfolios will be managed in such a way that an investor in each Portfolio will
be able to satisfy the requirements of Subchapter M of the Code, assuming that
the investor invested all of its assets in that Portfolio.
There are certain tax issues that will be relevant to only certain of
the investors, specifically investors that are segregated asset accounts and
investors who contribute assets rather than cash to the Portfolios. It is
intended that such segregated asset accounts will be able to satisfy
diversification requirements applicable to them and that such contributions of
assets will not be taxable provided certain requirements are met. Such investors
are advised to consult their own tax advisors as to the tax consequences of an
investment in the Portfolios.
Foreign Securities. Tax conventions between certain countries and the
United States may reduce or eliminate such taxes. It is impossible to determine
the effective rate of foreign tax in advance since the amount of each
Portfolio's assets to be invested in various countries will vary.
If each Portfolio is liable for foreign taxes, and if more than 50% of
the value of each Portfolio's total assets at the close of its taxable year
consists of stocks or securities of foreign corporations, it may make an
election pursuant to which certain foreign taxes paid by it would be treated as
having been paid directly by its investors. Pursuant to such election, the
amount of foreign taxes paid will be included in the income of each Portfolio's
investors, and such investors (except tax-exempt investors) may, subject to
certain limitations, claim either a credit or deduction for the taxes. Each such
investor will be notified after the close of each Portfolio's taxable year
whether the foreign taxes paid will "pass through" for that year and, if so,
such notification will designate (a) the investor's portion of the foreign taxes
paid to each such country and (b) the portion which represents income derived
from sources within each such country.
The amount of foreign taxes for which an investor may claim a credit in
any year will generally be subject to a separate limitation for "passive
income," which includes, among other items of income, dividends, interest and
certain foreign currency gains. Because capital gains realized by each Portfolio
on the sale of foreign securities will be treated as U.S.-source income, the
available credit of foreign taxes paid with respect to such gains may be
restricted by this limitation.
ITEM 21. UNDERWRITERS.
The placement agent for the Trust is Signature, which receives no
additional compensation for serving in this capacity. Investment companies,
insurance company separate accounts, common and commingled trust funds and
similar organizations and entities may continuously invest in each Portfolio.
ITEM 22. CALCULATION OF PERFORMANCE DATA.
Not applicable.
ITEM 23. FINANCIAL STATEMENTS.
The following financial statements are hereby incorporated by
referenced from the Registrant's Annual Report and have been included in
reliance upon the report of Coopers & Lybrand, independent certified public
accountants, as experts in accounting and auditing.
Asset Management Portfolio III
Statement of Assets and Liabilities, March 31, 1995
Statement of Operations for the year ended March 31, 1995
Statement of Changes in Net Assets for the year ended March 31, 1995
and for the period October 15, 1993 (commencement of operations) to
March 31, 1994
Financial Highlights: Selected ratios and supplemental
data for the periods indicated
Schedule of Portfolio of Investments, March 31, 1995
Notes to Financial Statements
Report of Independent Accountants
Asset Management Portfolio II
Statement of Assets and Liabilities, March 31, 1995
Statement of Operations for the year ended March 31, 1995
Statement of Changes in Net Assets for the year ended March 31, 1995
and for the period October 14, 1993 (commencement of operations) to
March 31, 1994
Financial Highlights: Selected ratios and supplemental
data for the periods indicated
Schedule of Portfolio of Investments, March 31, 1995
Notes to Financial Statements
Report of Independent Accountants
<PAGE>
B-1
APPENDIX
BOND AND COMMERCIAL PAPER RATINGS
Set forth below are descriptions of ratings which represent opinions as to the
quality of the securities. It should be emphasized, however, that ratings are
relative and subjective and are not absolute standards of quality.
MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt-edged". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuations of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risk appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safe-guarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
NOTE: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
MOODY'S INVESTORS SERVICE, INC.'S SHORT-TERM DEBT RATINGS
Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually promissory obligations not having an original maturity in excess of
one year.
Issuers rated PRIME-1 or P-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 or P-1
repayment ability will often be evidenced by many of the following
characteristics:
-- Leading market positions in well established industries. High rates of
return on funds employed.
-- Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
-- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
-- Well established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated PRIME-2 or P-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
STANDARD & POOR'S RATINGS GROUP'S CORPORATE BOND RATINGS
INVESTMENT GRADE
AAA: Debt rated AAA has the highest rating assigned by S&P's to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB: Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
SPECULATIVE GRADE
Debt rated BB, B, CCC, CC, and C is regarded as having predominantly speculative
characteristics with respect to capacity to pay interest and repay principal. BB
indicates the least degree of speculation and C the highest. While such debt
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major exposures to adverse conditions.
BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B: Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal.
The B rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BB or BB- rating.
CCC: Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal.
The CCC rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied B or B- rating.
CC: The rating CC is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC debt rating.
C: The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
C1: The Rating C1 is reserved for income bonds on which no interest is being
paid.
D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
PLUS (+) OR MINUS (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NY: Bonds may lack a S&P's rating because no public rating has been requested,
because there is insufficient information on which to base a rating, or because
S&P's does not rate a particular type of obligation as a matter of policy.
STANDARD & POOR'S RATINGS GROUP'S COMMERCIAL PAPER RATINGS
A: S&P's commercial paper rating is a current assessment of the likelihood of
timely payment of debt considered short-term in the relevant market.
A-1: This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1 ".
A-3: Issues carrying this designation have adequate capacity for timely payment.
They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
FITCH INVESTORS SERVICE, INC. BOND RATINGS
INVESTMENT GRADE
AAA: Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA: Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated "AAA". Because bonds rated in the "AAA" and
"AA" categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated "F-1+".
A: Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
HIGH YIELD GRADE
BB: Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B: Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC: Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC: Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C: Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D: Bonds are in default of interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. "DDD"
represents the highest potential for recovery on these bonds, and "D" represents
the lowest potential for recovery.
PLUS (+) OR MINUS (-): The ratings from AA to C may be modified by the addition
of a plus or minus sign to indicate the relative position of a credit within the
rating category.
NR: Indicates that Fitch does not rate the specific issue.
CONDITIONAL: A conditional rating is premised on the successful completion of a
project or the occurrence of a specific event.
FITCH INVESTORS SERVICE, INC. SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.
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 issues rated
"F-1+".
F-2: Good Credit Quality. Issues assigned this rating have a satisfactory degree
of assurance for timely payment, but the margin of safety is not as great as the
"F-1+" and "F-1 "categories.
F-3: Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate, however,
near-term adverse changes could cause these securities to be rated below
investment grade.
DUFF & PHELPS BOND RATINGS
INVESTMENT GRADE
AAA: Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+, AA, AND AA-: High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic conditions.
A+, A, AND A-: Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic stress.
BBB+, BBB, AND BBB-: Below average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles.
HIGH YIELD GRADE
BB+, BB, AND BB-: Below investment grade but deemed likely to meet obligations
when due. Present or prospective financial protection factors fluctuate
according to industry conditions or company fortunes. Overall quality may move
up or down frequently within this category.
B+, B, AND B-: Below investment grade and possessing risk that obligations will
not be met when due. Financial protection factors will fluctuate widely
according to economic cycles, industry conditions and/or company fortunes.
Potential exists for frequent changes in the rating within this category or into
a higher or lower rating grade.
CCC: Well below investment grade securities. Considerable uncertainty exists as
to timely payment of principal interest or preferred dividends. Protection
factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company developments.
Preferred stocks are rated on the same scale as bonds but the preferred rating
gives weight to its more junior position in the capital structure. Structured
financings are also rated on this scale.
DUFF & PHELPS PAPER/CERTIFICATES OF DEPOSIT RATINGS
CATEGORY 1: TOP GRADE
Duff 1 plus: Highest certainty of timely payment. Short-term liquidity including
internal operating factors and/or ready 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.
DUFF 1 MINUS: High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very small.
CATEGORY 2: GOOD GRADE
DUFF 2: Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
CATEGORY 3: SATISFACTORY GRADE
DUFF 3: Satisfactory liquidity and other protection factors qualify issue as to
investment grade. Risk factors are larger and subject to more variation.
Nevertheless timely payment is expected.
No ratings are issued for companies whose paper is not deemed to be of
investment grade.
* * * * *
Bonds which are unrated expose the investor to risks with respect to capacity to
pay interest or repay principal which are similar to the risks of lower-rated
bonds. The Fund is dependent on the investment adviser's or investment
subadviser's judgment, analysis and experience in the evaluation of such bonds.
Investors should note that the assignment of a rating to a bond by a rating
service may not reflect the effect of recent developments on the issuer's
ability to make interest and principal payments.
<PAGE>
BT0393A
ASSET MANAGEMENT PORTFOLIO II, ASSET MANAGEMENT PORTFOLIO III
PART C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS
The financial statements called for by this Item are included
in Part B and listed in Item 23 hereof.
(b) EXHIBITS
1. Declaration of Trust of the Registrant.3
2. By-Laws of the Registrant.3
5(A). Investment Advisory Agreement between the Registrant
and Bankers Trust Company ("Bankers Trust").3
5(B). Sub-Investment Advisory Agreement between Bankers
Trust and BT Fund Managers International Limited.2
9. Administration and Services Agreement between the
Registrant and Bankers Trust.1
13. Investment representation letters of initial
investors.1
17. Financial Data Schedules with respect to Asset
Management Portfolio II and Asset Management
Portfolio III.2
----------------------------------
1Incorporated by reference to the Registrant's
Registration Statement as filed with the Commission
on June 7, 1993.
2Incorpoated by reference to Amendment No. 3 to the
Registrant's Registration Statement as filed with
the Commission on September 20, 1993.
3Filed 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
Series of Beneficial Interests (as of July 1, 1995)
Liquid Assets Portfolio 2
Growth and Income Portfolio 0
100% Treasury Portfolio 0
Asset Management Portfolio II 1
Asset Management Portfolio III 1
Global High Yield Securities Portfolio 1
Latin American Equity Portfolio 1
Small Cap Portfolio 1
European Equity Portfolio 0
Pacific Basin Equity Portfolio 1
International Bond Portfolio 0
ITEM 27. INDEMNIFICATION.
Reference is hereby made to Article V of the Registrant's Declaration
of Trust, filed as an Exhibit herewith.
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 each Portfolio. 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 or has been at any time during
the past two fiscal years 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 or during the past two fiscal
years have been engaged in any other business, profession, vocation or
employment of a substantial nature. These persons may be contacted c/o Bankers
Trust Company, 280 Park Avenue, New York, New York 10015.
<PAGE>
Name and Principal
Business Address Principal Occupation and Other Information
George B. Beitzel Retired Senior Vice President and Director,
International Business Member of Advisory Board of International
Machines Corporation Business Machines Corporation. Director of
Old Orchard Road Bankers Trust and Bankers Trust New York
Armonk, NY 10504 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 Chairman of the Board and Chief Executive
J.C. Penney Company, Inc. Officer, J.C. Penney Company, Inc. Director
P.O. Box 10001of Bankers Trust and Bankers Trust New York Corporation.
Plano, TX 75301-0001 Also a Director of Exxon Corporation,
Halliburton Company and Warner-Lambert
Corporation.
Jon M. Huntsman Chairman and Chief Executive Officer, Huntsman
Huntsman Chemical Corporation Chemical Corporation, Director of Bankers Trust
2000 Eagle Gate Tower and Bankers Trust New York Corporation.
Salt Lake City, UT 84111 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. Partner, Akin, Gump, Strauss, Hauer & Feld,
Akin, Gump, Strauss,LLP. Director of Bankers Trust and Bankers
Hauer & Feld, LLP Trust New York Corporation. Also a Director of
1333 New Hampshire Ave., N.W. American Express Company, Corning Incorporated,
Washington, DC 20036 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 Chairman of the Executive Committee, Philip
Philip Morris Companies Inc. Morris Companies Inc. Director of Bankers Trust
120 Park Avenue and Bankers Trust New York Corporation.
New York, NY 10017 Director of The News Corporation Limited.
<PAGE>
Donald F. McCullough Chairman Emeritus, Collins & Aikman
Collins & Aikman Corporation Corporation. Director of Bankers Trust and
210 Madison Avenue Bankers Trust New York Corporation. Director of
New York, NY 10016 Massachusetts Mutual Life Insurance Co. and
Melville Corporation.
N.J. Nicholas Jr. Former President, Co-Chief Executive Officer
745 Fifth Avenue and Director of Time Warner Inc. Director of
New York, NY 10020 Bankers Trust and Bankers Trust New York
Corporation. Also a Director of Xerox
Corporation.
Russell E. Palmer Chairman and Chief Executive Officer of The
The Palmer Group Palmer Group. Director of Bankers Trust and
3600 Market Street, Bankers Trust New York Corporation. Also
Suite 530 Director of Allied-Signal Inc., Contel
Philadelphia, PA 19104 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 Chairman and Chief Executive Officer, Schneider
Schneider S.A. S.A. Director and member of the European
4 Rue de Longchamp Advisory Board of Bankers Trust and Director of
75116 Paris, France 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. Chairman of the Board of Bankers Trust and
Bankers Trust Company Bankers Trust New York Corporation. Also a
280 Park Avenue Director of Mobil Corporation and J.C. Penney
New York, NY 10017 Company, Inc.
Eugene B. Shanks, Jr. President of Bankers Trust and Bankers Trust
Bankers Trust Company New York Corporation.
280 Park Avenue
New York, NY 10017
Patricia Carry Stewart Former Vice President, The Edna McConnell Clark
c/o Office of the Secretary Foundation. Director of Bankers Trust and
280 Park Avenue Bankers Trust New York Corporation. Director,
New York, NY 10017 Borden Inc., Continental Corp. and Melville
Corporation.
George J. Vojta Vice Chairman of the Board of Bankers Trust and
Bankers Trust Company Bankers Trust New York Corporation. Director of
280 Park Avenue Northwest Airlines and Private Export Funding
New York, NY 10017 Corp.
ITEM 29. PRINCIPAL UNDERWRITERS.
Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
The accounts and records of the Registrant are located, in whole or in
part, at the office of the Registrant and the following locations:
NAME ADDRESS
Signature Broker-Dealer 6 St. James Avenue
Services, Inc. Boston, MA 02116
(placement agent)
Bankers Trust Company 280 Park Avenue
(investment adviser, administrator, New York, NY 10017
custodian, transfer agent)
Investors Fiduciary Trust Company 127 West 10th Street
Kansas City, MO 64105
BT Fund Managers International Ltd. Commonwealth Park Building,
(investment sub-advisor for Level 23
Pacific Basin Equity Portfolio) 367 Collins Street
Melbourne, Victoria
Australia 32000
ITEM 31. MANAGEMENT SERVICES.
Not applicable.
ITEM 32. UNDERTAKINGS.
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, as
amended, 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 31st day of July, 1995.
BT INVESTMENT PORTFOLIOS
By________________________
Thomas M. Lenz
Assistant Secretary
<PAGE>
BT INVESTMENT PORTFOLIOS
ASSET MANAGEMENT PORTFOLIO II AND ASSET MANAGEMENT PORTFOLIO III
EXHIBIT INDEX
TO
REGISTRATION STATEMENT ON
FORM N-1A
Exhibit No. Page
1 Declaration of Trust of the Registrant.
Amendment No. 1
Amendment No. 2
Amendment No. 3
Amendment No. 4
Amendment No. 5
Amendment No. 6
Amendment No. 7
2 By-Laws of the Registrant.
5 Advisory Agreement between the Registrant and Bankers Trust
Company.
17 Financial Data Schedules with respect to the Registrant.
<PAGE>
EXHIBIT 99.1
BT INVESTMENT PORTFOLIOS
DECLARATION OF TRUST
Dated as of March 27, 1993
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I--The Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Name . . . . . . . . . . . . . . . . . 1
Section 1.2 Definitions . . . . . . . . . . . . . 1
ARTICLE II--Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.1 Number and Qualification . . . . . . . 3
Section 2.2 Term and Election . . . . . . . . . . 4
Section 2.3 Resignation, Removal and Retirement . 4
Section 2.4 Vacancies . . . . . . . . . . . . . . 4
Section 2.5 Meetings . . . . . . . . . . . . . . . 5
Section 2.6 Officers; Chairman of the Board . . . 6
Section 2.7 By-Laws . . . . . . . . . . . . . . . 6
ARTICLE III--Powers of Trustees . . . . . . . . . . . . . . . . . . . . . 6
Section 3.1 General . . . . . . . . . . . . . . . 6
Section 3.2 Investments . . . . . . . . . . . . . 6
Section 3.3 Legal Title . . . . . . . . . . . . . 7
Section 3.4 Sale and Increases of Interests . . . 7
Section 3.5 Decreases and Redemptions of Interests 8
Section 3.6 Borrow Money . . . . . . . . . . . . 8
Section 3.7 Delegation; Committees . . . . . . . . 8
Section 3.8 Collection and Payment . . . . . . . . 8
Section 3.9 Expenses . . . . . . . . . . . . . . . 8
Section 3.10 Miscellaneous Powers . . . . . . . . . 9
Section 3.11 Further Powers . . . . . . . . . . . . 9
ARTICLE IV--Investment Advisory, Administration and Placement
Agent Arrangements; Custodian . . . . . . . . . . . . . . . . 10
Section 4.1 Investment Advisory and Other
Arrangements . . . . . . . . . . . . . 10
Section 4.2 Parties to Contract . . . . . . . . . 10
Section 4.3 Custodian . . . . . . . . . . . . . . 10
Section 4.4 1940 Act Governance . . . . . . . . . 11
ARTICLE V--Liability of Holders; Limitations of Liability of Trustees,
Officers, etc. . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.1 Liability of Holders; Indemnification 11
Section 5.2 Limitations of Liability of Trustees,
Officers, Employees, Agents, Independent
Contractors to Third Parties . . . . . 11
Section 5.3 Limitations of Liability of Trustees,
Officers, Employees, Agents, Independent
Contractors to Trust, Holders, etc. . 12
Section 5.4 Mandatory Indemnification . . . . . . 12
Section 5.5 No Bond Required of Trustees . . . . . 13
Section 5.6 No Duty of Investigation; Notice in Trust
Instruments, etc. . . . . . . . . . 13
Section 5.7 Reliance on Experts, etc. . . . . . . 13
Section 5.8 No Repeal or Modification . . . . . . 14
ARTICLE VI--Interests . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 6.1 Interests . . . . . . . . . . . . . . 14
Section 6.2 Establishment and Designation of
Series . . . . . . . . . . . . . . . 14
Section 6.3 Non-Transferability . . . . . . . . . 16
Section 6.4 Register of Interests . . . . . . . . 16
ARTICLE VII--Increases, Decreases And Redemptions of Interests . . . . . . 16
ARTICLE VIII--Determination of Book Capital Account Balances,
and Distributions . . . . . . . . . . . . . . . . . . . . . 16
Section 8.1 Book Capital Account Balances . . . . 16
Section 8.2 Allocations and Distributions to
Holders . . . . . . . . . . . . . . . 17
Section 8.3 Power to Modify Foregoing Procedures . 17
ARTICLE IX--Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 9.1 Rights of Holders . . . . . . . . . . 17
Section 9.2 Meetings of Holders . . . . . . . . . 18
Section 9.3 Notice of Meetings . . . . . . . . . . 18
Section 9.4 Record Date for Meetings,
Distributions, etc. . . . . . . . . . 18
Section 9.5 Proxies, etc. . . . . . . . . . . . . 18
Section 9.6 Reports . . . . . . . . . . . . . . . 19
Section 9.7 Inspection of Records . . . . . . . . 19
Section 9.8 Holder Action by Written Consent . . . 19
Section 9.9 Notices . . . . . . . . . . . . . . . 19
ARTICLE X--Duration; Termination; Dissolution; Amendment; Mergers; Etc. . 20
Section 10.1 Duration . . . . . . . . . . . . . . . . . . . 20
Section 10.2 Dissolution . . . . . . . . . . . . . . . . . 20
Section 10.3 Termination . . . . . . . . . . . . . . . . . 21
Section 10.4 Amendment Procedure . . . . . . . . . . . . . 22
Section 10.5 Merger, Consolidation and Sale of Assets . . . 22
Section 10.6 Incorporation . . . . . . . . . . . . . . . . 23
ARTICLE XI--Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 11.1 Certificate of Designation; Agent for Service
of Process . . . . . . . . . . . . . . . . . . 23
Section 11.2 Governing Law . . . . . . . . . . . . . . . . 23
Section 11.3 Counterparts . . . . . . . . . . . . . . . . . 23
Section 11.4 Reliance by Third Parties . . . . . . . . . . 23
Section 11.5 Provisions in Conflict with Law or Regulations 24
<PAGE>
DECLARATION OF TRUST
OF
BT INVESTMENT PORTFOLIOS
This DECLARATION OF TRUST of BT Investment Portfolios is made
as of the 27th day of March, 1993 by the parties signatory hereto, as Trustees
(as defined in Section 1.2 hereof).
W I T N E S S E T H:
WHEREAS, the Trustees desire to form a master trust fund under
the law of the State of New York consisting of one or more subtrusts or series
for the investment and reinvestment of assets contributed thereto; and
WHEREAS, it is proposed that the trust assets be composed of
money and other property contributed to the subtrusts of the trust fund
established hereby, such assets to be held and managed in trust for the benefit
of the holders of beneficial interests in such subtrusts;
NOW, THEREFORE, the Trustees hereby declare that they will
hold in trust all money and other property contributed to the master trust fund
established hereby and will manage and dispose of the same for the benefit of
such holders of beneficial interests and subject to the provisions hereof, to
wit:
ARTICLE I
The Trust
1.1. Name. The name of the master trust established hereby
(the "Portfolio-Trust") shall be BT Investment Portfolios, and the Trustees
shall conduct the business of the Portfolio-Trust's activities under that name
or any other name or names as they may from time to time determine. The name BT
Investment Portfolios (and the word "Portfolio-Trust" wherever hereinafter used)
shall refer to the Trustees as Trustees, and not individually, and shall not
refer to the officers, employees, agents or independent contractors of the Trust
or its holders of beneficial interests.
1.2. Definitions. As used in this Declaration, the following
terms shall have the following meanings:
"Administrator" shall mean any party furnishing services to
the Portfolio-Trust pursuant to any administration contract described in Section
4.1 hereof.
"Book Capital Account" shall mean, for any Holder (as
hereinafter defined) at any time, the Book Capital Account of the Holder at such
time with respect to the Holder's beneficial interest in the Trust Property (as
hereinafter defined) of any Series (as hereinafter defined), determined in
accordance with the method established by the Trustees pursuant to Section 8.1
hereof. Each Holder shall have a separate Book Capital Account for each such
Series.
"Code" shall mean the United States Internal Revenue Code of
1986, as amended from time to time, as well as any non-superseded provisions of
the Internal Revenue Code of 1954, as amended (or any corresponding provision or
provisions of succeeding law).
"Commission" shall mean the United States Securities and
Exchange Commission.
"Declaration" shall mean this Declaration of Trust as amended
from time to time. References in this Declaration to "Declaration", "hereof",
"herein" and "hereunder" shall be deemed to refer to this Declaration rather
than the article or section in which any such word appears.
"Fiscal Year" shall mean an annual period determined by the
Trustees which ends on December 31 of each year or on such other day as is
permitted or required by the Code.
"Holders" shall mean as of any particular time all holders of
record of beneficial interests in the Trust Property of any Series.
"Institutional Investor(s)" shall mean any regulated
investment company, segregated asset account, foreign investment company, common
trust fund, group trust or other investment arrangement, whether organized
within or without the United States of America, other than an individual, S
corporation, partnership or grantor trust beneficially owned by any individual,
S corporation or partnership.
"Interested Person" shall have the meaning given it in the
1940 Act (as hereinafter defined).
"Interest(s)" shall mean the beneficial interest of a Holder
in the Trust Property of any Series, including all rights, powers and privileges
accorded to Holders by this Declaration, which interest may be expressed as a
percentage, determined by calculating for a particular Series, at such times and
on such basis as the Trustees shall from time to time determine, the ratio of
each Holder's Book Capital Account balance to the total of all Holders' Book
Capital Account balances. Reference herein to a specified percentage of, or
fraction of, Interests, means Holders whose combined Book Capital Account
balances represent such specified percentage or fraction of the combined Book
Capital Account balances of all, or a specified group of, Holders.
"Investment Adviser" shall mean any party furnishing services
to one or more Series of the Portfolio-Trust pursuant to any investment advisory
contract described in Section 4.1 hereof.
"Majority Interests Vote" shall mean the vote, at a meeting of
Holders (or Holders of one or more Series as the context may require), of (A)
67% or more of the Interests present or represented at such meeting, if Holders
of more than 50% of all Interests are present or represented by proxy, or (B)
more than 50% of all Interests, whichever is less.
"1940 Act" shall mean the United States Investment Company Act
of 1940, as amended from time to time, and the rules and regulations thereunder.
"Person" shall mean and include individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities, whether
or not legal entities, and governments and agencies and political subdivisions
thereof.
"Portfolio-Trust" shall mean the master trust fund established
hereby and shall include each Series hereof.
"Redemption" shall mean the complete withdrawal of an Interest
of a Holder the result of which is to reduce the Book Capital Account balance of
that Holder to zero, and the term "redeem" shall mean to effect a Redemption.
"Series" shall mean the subtrusts of the Portfolio-Trust
established hereby as the same are established and designated pursuant to
Article VI hereof, each of which shall be a separate subtrust.
"Trust Property" shall mean as of any particular time any and
all assets or other property, real or personal, tangible or intangible, which at
such time is owned or held by or for the account of the Portfolio-Trust or the
Trustees, each component of which shall be allocated and belong to a specific
Series to the exclusion of all other Series.
"Trustees" shall mean each signatory to this Declaration, so
long as such signatory shall continue in office in accordance with the terms
hereof, and all other individuals who at the time in question have been duly
elected or appointed and have qualified as Trustees in accordance with the
provisions hereof and are then in office, and reference in this Declaration to a
Trustee or Trustees shall refer to such individual or individuals in their
capacity as Trustees hereunder.
ARTICLE II
Trustees
2.1. Number and Qualification. The number of Trustees shall be
fixed from time to time by action of the Trustees taken as provided in Section
2.5 hereof; provided, however, that the number of Trustees so fixed shall in no
event be less than three. Any vacancy created by an increase in the number of
Trustees may be filled by the appointment of an individual having the
qualifications described in this Section 2.1 made by action of the Trustees
taken as provided in Section 2.5 hereof. Any such appointment shall not become
effective, however, until the individual named in the written instrument of
appointment shall have accepted in writing such appointment and agreed in
writing to be bound by the terms of this Declaration. No reduction in the number
of Trustees shall have the effect of removing any Trustee from office. Whenever
a vacancy occurs, until such vacancy is filled as provided in Section 2.4
hereof, the Trustees continuing in office, regardless of their number, shall
have all the powers granted to the Trustees and shall discharge all the duties
imposed upon the Trustees by this Declaration. A Trustee shall be an individual
at least 21 years of age who is not under legal disability.
2.2. Term and Election. Each Trustee named herein, or elected
or appointed prior to the first meeting of Holders, shall (except in the event
of resignations, retirements, removals or vacancies pursuant to Section 2.3 or
Section 2.4 hereof) hold office until a successor to such Trustee has been
elected at such meeting and has qualified to serve as Trustee, as required under
the 1940 Act. Subject to the provisions of Section 16(a) of the 1940 Act and
except as provided in Section 2.3 hereof, each Trustee shall hold office during
the lifetime of the Portfolio-Trust and until its termination as hereinafter
provided.
2.3. Resignation, Removal and Retirement. Any Trustee may
resign his or her trust (without need for prior or subsequent accounting) by an
instrument in writing executed by such Trustee and delivered or mailed to the
Chairman, if any, the President or the Secretary of the Portfolio-Trust and such
resignation shall be effective upon such delivery, or at a later date according
to the terms of the instrument. Any Trustee may be removed with or without cause
by the affirmative vote of Holders of two-thirds of the Interests or (provided
the aggregate number of Trustees, after such removal and after giving effect to
any appointment made to fill the vacancy created by such removal, shall not be
less than the number required by Section 2.1 hereof) by the action of two-thirds
of the remaining Trustees. Any Trustee who has attained a mandatory retirement
age, if any, established pursuant to any written policy adopted from time to
time by a majority of the Trustees shall, automatically and without action by
such Trustee or the remaining Trustees, be deemed to have retired in accordance
with the terms of such policy, effective as of the date determined in accordance
with such policy. Any Trustee who has become incapacitated by illness or injury
as determined by a majority of the other Trustees, may be retired by written
instrument executed by a majority of the other Trustees, specifying the date of
such Trustee's retirement. Upon the resignation, retirement or removal of a
Trustee, or a Trustee otherwise ceasing to be a Trustee, such resigning,
retired, removed or former Trustee shall execute and deliver such documents as
the remaining Trustees shall require for the purpose of conveying to the
Portfolio-Trust or the remaining Trustees any Trust Property held in the name of
such resigning, retired, removed or former Trustee. Upon the death of any
Trustee or upon removal, retirement or resignation due to any Trustee's
incapacity to serve as Trustee, the legal representative of such deceased,
removed, retired or resigning Trustee shall execute and deliver on behalf of
such deceased, removed, retired or resigning Trustee such documents as the
remaining Trustees shall require for the purpose set forth in the preceding
sentence.
2.4. Vacancies. The term of office of a Trustee shall
terminate and a vacancy shall occur in the event of the death, resignation,
retirement or removal of a Trustee. No such vacancy shall operate to annul this
Declaration or to revoke any existing agency created pursuant to the terms of
this Declaration. In the case of a vacancy, Holders of at least a majority of
the Interests entitled to vote, acting at any meeting of Holders held in
accordance with Section 9.2 hereof, or, to the extent permitted by the 1940 Act,
a majority vote of the Trustees continuing in office acting by written
instrument or instruments, may fill such vacancy, and any Trustee so elected by
the Trustees or the Holders shall hold office as provided in this Declaration.
The Trustees may appoint a new Trustee as provided above in anticipation of a
vacancy expected to occur because of the retirement, resignation or removal of a
Trustee, or an increase in number of Trustees, provided that such appointment
shall become effective only when or after the expected vacancy occurs. Subject
to the foregoing sentence, as soon as any Trustee has accepted his or her
appointment in writing, the Trust estate shall vest in the new Trustee, together
with the continuing Trustees, without any further act or conveyance, and he or
she shall be deemed a Trustee hereunder. The power of appointment is subject to
Section 16(a) of the 1940 Act.
2.5. Meetings. Meetings of the Trustees shall be held from
time to time upon the call of the Chairman, if any, the President, the
Secretary, an Assistant Secretary or any two Trustees. Regular meetings of the
Trustees may be held without call or notice at a time and place fixed by the
By-Laws or by resolution of the Trustees. Notice of any other meeting shall be
mailed or otherwise given not less than 24 hours before the meeting but may be
waived in writing by any Trustee either before or after such meeting. The
attendance of a Trustee at a meeting shall constitute a waiver of notice of such
meeting except in the situation in which a Trustee attends a meeting for the
express purpose of objecting to the transaction of any business on the ground
that the meeting was not lawfully called or convened. The Trustees may act with
or without a meeting. A quorum for all meetings of the Trustees shall be a
majority of the Trustees. Unless provided otherwise in this Declaration, any
action of the Trustees may be taken at a meeting by vote of a majority of the
Trustees present (a quorum being present) or without a meeting by written
consent of a majority of the Trustees.
Any committee of the Trustees, including an executive
committee, if any, may act with or without a meeting. A quorum for all meetings
of any such committee shall be a majority of the members thereof. Unless
provided otherwise in this Declaration, any action of any such committee may be
taken at a meeting by vote of a majority of the members present (a quorum being
present) or without a meeting by written consent of a majority of the members.
Any notice, waiver or written consent hereunder may be
provided and delivered to the Portfolio-Trust or a Trustee by facsimile or other
similar electronic mechanism.
With respect to actions of the Trustees and any committee of
the Trustees, Trustees who are Interested Persons of the Portfolio-Trust or
otherwise interested in any action to be taken may be counted for quorum
purposes under this Section 2.5 and shall be entitled to vote to the extent
permitted by the 1940 Act.
All or any one or more Trustees may participate in a meeting
of the Trustees or any committee thereof by means of a conference telephone or
similar communications equipment by means of which all individuals participating
in the meeting can hear each other and participation, to the extent permitted by
law, in a meeting by means of such communications equipment shall constitute
presence in person at such meeting.
2.6. Officers; Chairman of the Board. The Trustees shall, from
time to time, elect a President, a Secretary and a Treasurer. The Trustees may
elect or appoint, from time to time, a Chairman of the Board who shall preside
at all meetings of the Trustees and carry out such other duties as the Trustees
may designate. The Trustees may elect or appoint or authorize the President to
appoint such other officers, agents or independent contractors with such powers
as the Trustees may deem to be advisable. The Chairman, if any, shall be and
each other officer may, but need not, be a Trustee.
2.7. By-Laws. The Trustees may adopt and, from time to time,
amend or repeal By-Laws for the conduct of the business of the Portfolio-Trust.
ARTICLE III
Powers of Trustees
3.1. General. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Portfolio-Trust and
each Series to the same extent as if the Trustees were the sole owners of the
Trust Property and such business in their own right, but with such powers of
delegation as may be permitted by this Declaration. The Trustees may perform
such acts as in their sole discretion they deem proper for conducting the
business of the Portfolio-Trust and any Series. The enumeration of or failure to
mention any specific power herein shall not be construed as limiting such
exclusive and absolute control. The powers of the Trustees may be exercised
without order of or resort to any court.
The Trustees shall have full power and authority to do any and all acts
and to make and execute any and all contracts and instruments that they may
consider necessary or appropriate in connection with the management of the
Portfolio-Trust. The Trustees shall have full authority and power to make any
and all investment which they, in their uncontrolled discretion, shall deem
proper to accomplish the purposes of this Portfolio-Trust.
3.2. Investments. The Trustees shall have the power with
respect to the Portfolio-Trust and each Series to:
(a) conduct, operate and carry on the business of an
investment company;
(b) subscribe for, invest in, reinvest in, purchase
or otherwise acquire, hold, pledge, sell, assign, transfer, exchange, distribute
or otherwise deal in or dispose of United States and foreign currencies and
related instruments including forward contracts, and securities, including
common and preferred stock, warrants, bonds, debentures, time notes and all
other evidences of indebtedness, negotiable or non-negotiable instruments,
obligations, certificates of deposit or indebtedness, commercial paper,
repurchase agreements, reverse repurchase agreements, convertible securities,
forward contracts, options, futures contracts, and other securities, including,
without limitation, those issued, guaranteed or sponsored by any state,
territory or possession of the United States and the District of Columbia and
their political subdivisions, agencies and instrumentalities, or by the United
States Government, any foreign government, or any agency, instrumentality or
political subdivision of the United States Government or any foreign government,
or any international instrumentality, or by any bank, savings institution,
corporation or other business entity organized under the laws of the United
States or any state or under any foreign laws; and to exercise any and all
rights, powers and privileges of ownership or interest in respect of any and all
such investments of any kind and description, including, without limitation, the
right to consent and otherwise act with respect thereto, with power to designate
one or more Persons to exercise any of such rights, powers and privileges in
respect of any of such investments; and the Trustees shall be deemed to have the
foregoing powers with respect to any additional instruments in which the
Trustees may determine to invest;
(c) to definitively interpret the investment
objective, policies and limitations of the Portfolio-Trust and each Series.
The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Portfolio-Trust, nor shall the
Trustees be limited by any law limiting the investments which may be made by
fiduciaries.
3.3. Legal Title. Legal title to all Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have the
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Portfolio-Trust or any
Series, or in the name or nominee name of any other Person on behalf of the
Portfolio-Trust or any Series, on such terms as the Trustees may determine.
The right, title and interest of the Trustees in the Trust
Property shall vest automatically in each individual who may hereafter become a
Trustee upon his due election and qualification. Upon the resignation, removal
or death of a Trustee, such resigning, removed or deceased Trustee shall
automatically cease to have any right, title or interest in any Trust Property,
and the right, title and interest of such resigning, removed or deceased Trustee
in the Trust Property shall vest automatically in the remaining Trustees. Such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered.
3.4. Sale and Increases of Interests. The Trustees, in their
discretion, may, from time to time, without a vote of the Holders, permit any
Institutional Investor to purchase an Interest in a Series, or increase such
Interest, for such type of consideration, including cash or property, at such
time or times (including, without limitation, each business day), and on such
terms as the Trustees may deem best, and may in such manner acquire other assets
(including the acquisition of assets subject to, and in connection with the
assumption of, liabilities) and businesses. Individuals, S corporations,
partnerships and grantor trusts that are beneficially owned by any individual, S
corporation or partnership may not purchase Interests. The Trustees, in their
discretion, may refuse to sell an Interest in a Series to any person without any
cause or reason therefor. A Holder which has redeemed its Interest in a Series
may not be permitted to purchase an Interest in such Series until the later of
60 calendar days after the date of such Redemption or the first day of the
Fiscal Year next succeeding the Fiscal Year during which such Redemption
occurred.
3.5 Decreases and Redemptions of Interests. Subject to Article
VII hereof, the Trustees, in their discretion, may, from time to time, without a
vote of the Holders, permit a Holder to redeem its Interest in a Series, or
decrease such Interest, for either cash or property, at such time or times
(including, without limitation, each business day), and on such terms as the
Trustees may deem best.
3.6. Borrow Money. The Trustees shall have power to borrow
money or otherwise obtain credit and to secure the same by mortgaging, pledging
or otherwise subjecting as security the Trust Property or the assets belonging
to a particular Series, as appropriate, including the lending of portfolio
securities, and to endorse, guarantee, or undertake the performance of any
obligation, contract or engagement of any other Person.
3.7. Delegation; Committees. The Trustees shall have power,
consistent with their continuing exclusive and absolute control over the Trust
Property and over the business of the Portfolio-Trust or any Series, to delegate
from time to time to such of their number or to officers, employees, agents or
independent contractors of the Portfolio-Trust or any Series the doing of such
things and the execution of such instruments in either the name of the
Portfolio-Trust or any Series or the names of the Trustees or otherwise as the
Trustees may deem expedient.
3.8. Collection and Payment. The Trustees shall have power to
collect all property due to the Portfolio-Trust or any Series; and to pay all
claims, including taxes, against the Trust Property; to prosecute, defend,
compromise or abandon any claims relating to the Portfolio-Trust or any Series
or the Trust Property; to foreclose any security interest securing any
obligation, by virtue of which any property is owed to the Portfolio-Trust or
any Series; and to enter into releases, agreements and other instruments.
3.9. Expenses. The Trustees shall have power to incur and pay
any expenses from the Trust Property or the assets belonging to a particular
Series which in the opinion of the Trustees are necessary or incidental to carry
out any of the purposes of this Declaration, and to pay reasonable compensation
from the Trust Property or the assets belonging to a particular Series to
themselves as Trustees. Permitted expenses of the Portfolio-Trust or a
particular Series include, but are not limited to, interest charges, taxes,
brokerage fees and commissions; expenses of sales, increases, decreases or
redemptions of Interests; certain insurance premiums; applicable fees, interest
charges and expenses of third parties, including the Portfolio-Trust's
investment advisers, managers, administrators, placement agents, custodians
transfer agents and fund accountants; fees of pricing, interest, dividend,
credit and other reporting services; costs of membership in trade associations;
telecommunications expenses; costs of forming the Portfolio-Trust and its Series
and maintaining its existence; costs of preparing and printing the registration
statements and Holder reports of the Portfolio-Trust and each Series and
delivering them to Holders; expenses of meetings of Holders; costs of
maintaining books and accounts; costs of reproduction, stationery and supplies;
fees and expenses of the Trustees; compensation of the Portfolio-Trust's
officers and employees and costs of other personnel performing services for the
Portfolio-Trust or any Series; costs of Trustee meetings; Commission
registration fees and related expenses; state or foreign securities laws
registration fees and related expenses; and for such non-recurring items as may
arise, including litigation to which the Portfolio-Trust or a Series (or a
Trustee or officer of the Portfolio-Trust acting as such) is a party, and for
all losses and liabilities by them incurred in administering the
Portfolio-Trust. Subject to Section 17(h) of the 1940 Act, the Trustees shall
have a lien on the assets belonging to the appropriate Series, or in the case of
an expense allocable to more than one Series, on the assets of each such Series,
prior to any rights or interests of the Holders thereto, for the reimbursement
to them of such expenses, disbursements, losses and liabilities. The Trustees
shall fix the compensation of all officers, employees and Trustees. The Trustees
may pay themselves such compensation for special services, including legal and
brokerage services, as they in good faith may deem reasonable, and reimbursement
for expenses reasonably incurred by themselves on behalf of the Portfolio-Trust
or any Series.
3.10. Miscellaneous Powers. The Trustees shall have power to:
(a) employ or contract with such Persons as the Trustees may deem appropriate
for the transaction of the business of the Portfolio-Trust or any Series and
terminate such employees or contractual relationships as they consider
appropriate; (b) enter into joint ventures, partnerships and any other
combinations or associations; (c) purchase, and pay for out of Trust Property,
insurance policies insuring the Investment Adviser, Administrator, placement
agent, Holders, Trustees, officers, employees, agents or independent contractors
of the Portfolio-Trust or any Series any or against all claims arising by reason
of holding any such position or by reason of any action taken or omitted by any
such Person in such capacity, whether or not the Portfolio-Trust would have the
power to indemnify such Person against such liability; (d) establish pension,
profit-sharing and other retirement, incentive and benefit plans for the
Trustees, officers, employees or agents of the Portfolio-Trust or any Series;
(e) prosecute, defend and settle lawsuits in the name of the Portfolio-Trust or
any Series and pay settlements and judgments out of the Trust Property; (f) to
the extent permitted by law, indemnify out of the assets of the appropriate
Series any Person with whom the Portfolio-Trust or any Series has dealings,
including the Investment Adviser, Administrator, placement agent, Holders,
Trustees, officers, employees, agents or independent contractors of the
Portfolio-Trust or any Series, to such extent as the Trustees shall determine;
(g) guarantee indebtedness or contractual obligations of others; (h) determine
and change the Fiscal Year of the Portfolio-Trust or any Series and the method
by which its accounts shall be kept; and (i) adopt a seal for the
Portfolio-Trust or any Series, but the absence of such a seal shall not impair
the validity of any instrument executed on behalf of the Portfolio-Trust or such
Series.
3.11. Further Powers. The Trustees shall have power to conduct
the business of the Portfolio-Trust or any Series and carry on its operations in
any and all of its branches and maintain offices, whether within or without the
State of New York, in any and all states of the United States of America, in the
District of Columbia, and in any and all commonwealths, territories,
dependencies, colonies, possessions, agencies or instrumentalities of the United
States of America and of foreign governments, and to do all such other things
and execute all such instruments as they deem necessary, proper, appropriate or
desirable in order to promote the interests of the Portfolio-Trust or any Series
although such things are not herein specifically mentioned. Any determination as
to what is in the interests of the Portfolio-Trust or any Series which is made
by the Trustees in good faith shall be conclusive. In construing the provisions
of this Declaration, the presumption shall be in favor of a grant of power to
the Trustees. The Trustees shall not be required to obtain any court order in
order to deal with Trust Property.
ARTICLE IV
Investment Advisory, Administration
and Placement Agent Arrangements; Custodian
4.1. Investment Advisory and Other Arrangements. The Trustees
may in their discretion, from time to time, enter into investment advisory and
administration contracts or placement agent agreements whereby the other party
to such contract or agreement shall undertake to furnish with respect to one or
more particular Series such investment advisory, administration, placement agent
and/or other services as the Trustees shall, from time to time, consider
appropriate or desirable and all upon such terms and conditions as the Trustees
may in their sole discretion determine. Notwithstanding any provision of this
Declaration, the Trustees may authorize any Investment Adviser (subject to such
general or specific instructions as the Trustees may, from time to time, adopt)
to employ one or more subadvisers and to effect purchases, sales, loans or
exchanges of Trust Property on behalf of any Series or may authorize any
officer, employee or Trustee to effect such purchases, sales, loans or exchanges
pursuant to recommendations of any such Investment Adviser (all without any
further action by the Trustees).
4.2. Parties to Contract. Any contract of the character
described in Section 4.1 or Section 4.3 hereof or in the By-Laws of the
Portfolio-Trust may be entered into with any corporation, firm, trust or
association, although one or more of the Trustees or officers of the
Portfolio-Trust may be an officer, director, Trustee, shareholder or member of
such other party to the contract, and no such contract shall be invalidated or
rendered voidable by reason of the existence of any such relationship, nor shall
any individual holding such relationship be liable merely by reason of such
relationship for any loss or expense to the Portfolio-Trust or any Series under
or by reason of any such contract or accountable for any profit realized
directly or indirectly therefrom, provided that the contract when entered into
was reasonable and fair and not inconsistent with the provisions of this Article
IV or the By-Laws. The same Person may be the other party to one or more
contracts entered into pursuant to Section 4.1 or Section 4.3 hereof or the
By-Laws, and any individual may be financially interested or otherwise
affiliated with Persons who are parties to any or all of the contracts mentioned
in this Section 4.2 or in the By-Laws.
4.3 Custodian. The Trustees shall at all times place and
maintain the securities and similar investments of the Portfolio-Trust and of
each Series in custody meeting the requirements of Section 17(f) of the 1940 Act
and the rules and orders thereunder. The Trustees, on behalf of the
Portfolio-Trust or any Series, may enter into an agreement with a custodian on
terms and conditions acceptable to the Trustees, providing for the custodian,
among other things, (a) to hold the securities owned by the Portfolio-Trust or
any Series and deliver the same upon written order or oral order confirmed in
writing, (b) to receive and receipt for any moneys due to the Portfolio-Trust or
any Series and deposit the same in its own banking department or elsewhere, (c)
to disburse such funds upon orders or vouchers, and (d) to employ one or more
subcustodians.
4.4. 1940 Act Governance. Any contract referred to in Section
4.1 hereof shall be consistent with and subject to the applicable requirements
of Section 15 of the 1940 Act and the rules and orders thereunder with respect
to its continuance in effect, its termination, and the method of authorization
and approval of such contract or renewal. No amendment to a contract referred to
in Section 4.1 hereof shall be effective unless assented to in a manner
consistent with the requirements of Section 15 of the 1940 Act, and the rules
and orders thereunder.
ARTICLE V
Liability of Holders; Limitations of
Liability of Trustees, Officers, etc.
5.1. Liability of Holders; Indemnification. Each Holder of an
Interest in a Series shall be jointly and severally liable with every other
Holder of an Interest in that Series (with rights of contribution inter se in
proportion to their respective Interests in the Series) for the liabilities and
obligations of that Series (and of no other Series) in the event that the
Portfolio-Trust fails to satisfy such liabilities and obligations from the
assets of that Series; provided, however, that, to the extent assets of that
Series are available in the Portfolio-Trust, the Portfolio-Trust shall indemnify
and hold each Holder harmless from and against any claim or liability to which
such Holder may become subject by reason of being or having been a Holder of an
Interest in that Series to the extent that such claim or liability imposes on
the Holder an obligation or liability which, when compared to the obligations
and liabilities imposed on other Holders of Interests in that Series, is greater
than such Holder's Interest (proportionate share), and shall reimburse such
Holder for all legal and other expenses reasonably incurred by such Holder in
connection with any such claim or liability. The rights accruing to a Holder
under this Section 5.1 shall not exclude any other right to which such Holder
may be lawfully entitled, nor shall anything contained herein restrict the right
of the Portfolio-Trust to indemnify or reimburse a Holder in any appropriate
situation even though not specifically provided herein. Notwithstanding the
indemnification procedure described above, it is intended that each Holder of an
Interest in a Series shall remain jointly and severally liable to the creditors
of that Series as a legal matter. The liabilities of a particular Series and the
right to indemnification granted hereunder to Holders of Interests in such
Series shall not be enforceable against any other Series or Holders of Interests
in any other Series.
5.2. Limitations of Liability of Trustees, Officers,
Employees, Agents, Independent Contractors to Third Parties. No Trustee,
officer, employee, agent or independent contractor (except in the case of an
agent or independent contractor to the extent expressly provided by written
contract) of the Portfolio-Trust or any Series shall be subject to any personal
liability whatsoever to any Person, other than the Portfolio-Trust or the
Holders, in connection with Trust Property or the affairs of the
Portfolio-Trust; and all such Persons shall look solely to the Trust Property
for satisfaction of claims of any nature against a Trustee, officer, employee,
agent or independent contractor (except in the case of an agent or independent
contractor to the extent expressly provided by written contract) of the
Portfolio-Trust arising in connection with the affairs of the Portfolio-Trust.
5.3. Limitations of Liability of Trustees, Officers or
Employees to Portfolio-Trust, Holders, etc. No Trustee, officer or employee of
the Portfolio-Trust shall be liable to the Portfolio-Trust or the Holders for
any action or failure to act (including, without limitation, the failure to
compel in any way any former or acting Trustee to redress any breach of trust)
except for such Person's own bad faith, willful misfeasance, gross negligence or
reckless disregard of such Person's duties.
5.4. Mandatory Indemnification. The Portfolio-Trust shall
indemnify, to the fullest extent permitted by law (including the 1940 Act), each
Trustee, officer or employee of the Portfolio-Trust (including any Person who
serves at the Portfolio-Trust's request as a director, officer or trustee of
another organization in which the Portfolio-Trust has any interest as a
shareholder, creditor or otherwise) against all liabilities and expenses
(including amounts paid in satisfaction of judgments, in compromise, as fines
and penalties, and as counsel fees) reasonably incurred by such Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, in which such Person may be involved or
with which such Person may be threatened, while in office or thereafter, by
reason of such Person being or having been such a Trustee, officer, employee,
agent or independent contractor, except with respect to any matter as to which
such Person shall have been adjudicated to have acted in bad faith, willful
misfeasance, gross negligence or reckless disregard of such Person's duties,
such liabilities and expenses being liabilities only of the Series out of which
such claim for indemnification arises; provided, however, that as to any matter
disposed of by a compromise payment by such Person, pursuant to a consent decree
or otherwise, no indemnification either for such payment or for any other
expenses shall be provided unless there has been a determination that such
Person did not engage in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Person's office
(i) by the court or other body approving the settlement or other disposition; or
(ii) based upon a review of readily available facts (as opposed to a full
trial-type inquiry), by written opinion from independent legal counsel approved
by the Trustees; or (iii) by a majority of the Trustees who are neither
Interested Persons of the Portfolio-Trust nor parties to the matter, based upon
a review of readily available facts (as opposed to a full trial-type inquiry).
The rights accruing to any Person under these provisions shall not exclude any
other right to which such Person may be lawfully entitled; provided that no
Person may satisfy any right of indemnity or reimbursement granted in this
Section 5.4 or in Section 5.2 hereof or to which such Person may be otherwise
entitled except out of the Trust Property. The rights of indemnification
provided herein may be insured against by policies maintained by the
Portfolio-Trust. The Trustees may make advance payments in connection with
indemnification under this Section 5.4, provided that the indemnified Person
shall have given a written undertaking to reimburse the Portfolio-Trust in the
event it is subsequently determined that such Person is not entitled to such
indemnification, and provided further that either (i) such Person shall have
provided appropriate security for such undertaking, or (ii) the Portfolio-Trust
is 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
Portfolio-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 Person will not be disqualified from indemnification
under this Section 5.4.
5.5. No Bond Required of Trustees. No Trustee shall, as such,
be obligated to give any bond or surety or other security for the performance of
any of such Trustee's duties hereunder.
5.6. No Duty of Investigation; Notice in Portfolio-Trust
Instruments, etc. In the absence of fraud, no purchaser, lender or other Person
dealing with any Trustee, officer, employee, agent or independent contractor of
the Portfolio-Trust or any Series shall be bound to make any inquiry concerning
the validity of any transaction purporting to be made by such Trustee, officer,
employee, agent or independent contractor or be liable for the application of
money or property paid, loaned or delivered to or on the order of such Trustee,
officer, employee, agent or independent contractor. Every obligation, contract,
instrument, certificate or other interest or undertaking of the Portfolio-Trust
or any Series, and every other act or thing whatsoever executed in connection
with the Portfolio-Trust or any Series shall be conclusively taken to have been
executed or done by the executors thereof only in their capacity as Trustees,
officers, employees, agents or independent contractors of the Portfolio-Trust or
any Series. Every written obligation, contract, instrument, certificate or other
interest or undertaking of the Portfolio-Trust or any Series made or sold by any
Trustee, officer or employee of the Portfolio-Trust or any Series, in such
capacity, shall contain an appropriate recital to the effect that the Trustee,
officer or employee of the Portfolio-Trust or any Series shall not personally be
bound by or liable thereunder, nor shall resort be had to their private property
for the satisfaction of any obligation or claim thereunder, and appropriate
references shall be made therein to the Declaration, and may contain any further
recital which they may deem appropriate, but the omission of such recital shall
not operate to impose personal liability on any Trustee, officer or employee of
the Portfolio-Trust or any Series. Subject to the provisions of the 1940 Act,
the Portfolio-Trust may maintain insurance for the protection of the Trust
Property, the Holders, and the Trustees, officers or employees of the
Portfolio-Trust and any Series in such amount and for such purposes as the
Trustees shall deem adequate to cover possible tort liability, and such other
insurance as the Trustees in their sole judgment shall deem advisable.
5.7. Reliance on Experts, etc. Each Trustee, officer or
employee of the Portfolio-Trust and any Series shall, in the performance of such
Person's duties, be fully and completely justified and protected with regard to
any act or any failure to act resulting from reliance in good faith upon the
books of account or other records of the Portfolio-Trust or any Series (whether
or not the Portfolio-Trust or any Series would have the power to indemnify such
Persons against such liability), upon an opinion of counsel, or upon reports
made to the Portfolio-Trust or any Series by any of its officers or employees or
by any Investment Adviser or Administrator, accountant, appraiser or other
experts or consultants selected with reasonable care by the Trustees, officers
or employees of the Portfolio-Trust or any Series, regardless of whether such
counsel or expert may also be a Trustee.
5.8. No Repeal or Modification. Any repeal or modification of
this Article V by the Holders, or adoption or modification of any other
provision of this Declaration or the By-Laws inconsistent with this Article V,
shall be prospective only, to the extent that such repeal or modification would,
if applied retrospectively, adversely affect any limitation on the liability of
any Person or indemnification available to any indemnified Person with respect
to any act or omission which occurred prior to such repeal, modification or
adoption.
ARTICLE VI
Interests
6.1. Interests. The beneficial interest in the Trust Property
shall consist of non-transferable Interests. Interests may be sold only to
Institutional Investors, as may be approved by the Trustees, for cash or other
consideration acceptable to the Trustees, subject to the requirements of the
1940 Act. The Interests shall be personal property giving only the rights in
this Declaration specifically set forth or established by the Trustees. The
value of an Interest shall be equal to the Book Capital Account balance of the
Holder of the Interest.
The Trustees shall have authority, from time to time, to
establish Series, each of which shall be a separate subtrust and the Interests
in which shall be separate and distinct from the Interests in any other Series.
The Series shall include, without limitation, those Series specifically
established and designated pursuant to Section 6.2 hereof, and such other Series
as the Trustees may deem necessary or desirable. The Trustees shall have
exclusive power without the requirement of Holder approval to establish and
designate such separate and distinct Series, and, subject to the provisions of
this Declaration and the 1940 Act, to fix and determine the rights of Holders of
Interests in such Series, including with respect to the price, terms and manner
of purchase and redemption, dividends and other distributions, rights on
liquidation, sinking or purchase fund provisions, conversion rights and
conditions under which the Holders of the several Series shall have separate
voting rights or no voting rights.
6.2. Establishment and Designation of Series. The
establishment and designation of any Series shall be effective upon the
execution by the Secretary or an Assistant Secretary of the Portfolio-Trust,
pursuant to authorization by a majority of the Trustees, of an instrument
setting forth such establishment and designation and the relative rights and
preferences of the Interests in such Series, or as otherwise provided in such
instrument. At any time that there are no Interests outstanding of any
particular Series previously established and designated, the Trustees may by
resolution adopted by a majority of their number, and evidenced by an instrument
executed by the Secretary or an Assistant Secretary of the Portfolio-Trust,
abolish that Series and the establishment and designation thereof. Each
instrument referred to in this paragraph shall have the status of an amendment
to this Declaration of Trust.
Without limiting the authority of the Trustees set forth above
to establish and designate further Series, the Trustees hereby establish and
designate the Series set forth on Schedule A hereto. The Interests in each of
these Series and any Interests in any further Series that may from time to time
be established and designated by the Trustees shall (unless the Trustees
otherwise determine with respect to some further Series at the time of
establishing and designating the same) have the following relative rights and
preferences:
(a) Assets Belonging to Series. All consideration
received by the Portfolio-Trust for the issue or sale of Interests in a
particular Series, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall be held by the Trustees in a separate
trust for the benefit of the Holders of Interests in that Series and shall
irrevocably belong to that Series for all purposes, and shall be so recorded
upon the books of account of the Portfolio-Trust. Such consideration, assets,
income, earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds, in whatever form the same may
be, are herein referred to as "assets belonging to" that Series. No Series shall
have any right to or interest in the assets belonging to any other Series, and
no Holder shall have any right or interest with respect to the assets belonging
to any Series in which it does not hold an Interest.
(b) Liabilities Belonging to Series. The assets
belonging to each particular Series shall be charged with the liabilities in
respect of that Series and all expenses, costs, charges and reserves
attributable to that Series. The liabilities, expenses, costs, charges and
reserves so charged to a Series are herein referred to as "liabilities belonging
to" that Series. No Series shall be liable for or charged with the liabilities
belonging to any other Series, and no Holder shall be subject to any liabilities
belonging to any Series in which it does not hold an Interest.
(c) Voting. On each matter submitted to a vote of
the Holders of a Series (if such matter relates solely to such Series or if
required by law to be submitted solely to such Series), each Holder of an
Interest in such Series shall be entitled to a vote proportionate to its
Interest in such Series as recorded on the books of the Portfolio-Trust and all
Holders of Interests in each Series shall vote as a separate class except as to
voting for Trustees and as otherwise required by the 1940 Act. As to any matter
which does not affect the interest of a particular Series, only the Holders of
Interests in the one or more affected Series shall be entitled to vote. On each
matter submitted to a vote of the Holders of the Portfolio-Trust or of a Series,
a Holder shall apportion its vote for and against a proposal in the same
proportion as its own shareholders voted for and against that proposal.
6.3. Non-Transferability. A Holder may not transfer its
Interest.
6.4. Register of Interests. A register shall be kept at the
Portfolio-Trust under the direction of the Trustees which shall contain the
name, address and Book Capital Account balance of each Holder in each Series.
Such register shall be conclusive as to the identity of the Holders. No Holder
shall be entitled to receive payment of any distribution, nor to have notice
given to it as herein provided, until it has given its address to such officer
or agent of the Portfolio-Trust as is keeping such register for entry thereon.
ARTICLE VII
Increases, Decreases And Redemptions of Interests
Subject to applicable law, to the provisions of this
Declaration and to such restrictions as may from time to time be adopted by the
Trustees, each Holder may vary its Interest in any Series at any time by
increasing (through a capital contribution) or decreasing (through a capital
withdrawal) or by a Redemption of its Interest. An increase in the Interest of a
Holder in a Series shall be reflected as an increase in the Book Capital Account
balance of that Holder in that Series and a decrease in the Interest of a Holder
in a Series or the Redemption of the Interest of that Holder shall be reflected
as a decrease in the Book Capital Account balance of that Holder in that Series.
The Portfolio-Trust shall, upon appropriate and adequate notice from any Holder,
increase, decrease or redeem such Holder's Interest for an amount determined by
the application of a formula adopted for such purpose by resolution of the
Trustees; provided that (a) the amount received by the Holder upon any such
decrease or Redemption shall not exceed the decrease in the Holder's Book
Capital Account balance effected by such decrease or Redemption of its Interest,
and (b) if so authorized by the Trustees, the Portfolio-Trust may, at any time
and from time to time, charge fees for effecting any such decrease or
Redemption, at such rates as the Trustees may establish, and may, at any time
and from time to time, suspend such right of decrease or Redemption. The
procedures for effecting decreases or Redemptions shall be as determined by the
Trustees from time to time.
ARTICLE VIII
Determination of Book Capital Account
Balances and Distributions
8.1. Book Capital Account Balances. The Book Capital Account
balance of Holders with respect to a particular Series shall be determined on
such days and at such time or times as the Trustees may determine. The Trustees
shall adopt resolutions setting forth the method of determining the Book Capital
Account balance of each Holder. The power and duty to make calculations pursuant
to such resolutions may be delegated by the Trustees to the Investment Adviser
or Administrator, custodian, or such other Person as the Trustees may determine.
Upon the Redemption of an Interest, the Holder of that Interest shall be
entitled to receive the balance of its Book Capital Account. A Holder may not
transfer its Book Capital Account balance.
8.2. Allocations and Distributions to Holders. The Trustees
shall, in compliance with the Code, the 1940 Act and generally accepted
accounting principles, establish the procedures by which the Portfolio-Trust
shall make with respect to each Series (i) the allocation of unrealized gains
and losses, taxable income and tax loss, and profit and loss, or any item or
items thereof, to each Holder, (ii) the payment of distributions, if any, to
Holders, and (iii) upon liquidation, the final distribution of items of taxable
income and expense. Such procedures shall be set forth in writing and be
furnished to the Portfolio-Trust's accountants. The Trustees may amend the
procedures adopted pursuant to this Section 8.2 from time to time. The Trustees
may retain from the net profits of each Series such amount as they may deem
necessary to pay the liabilities and expenses of that Series.
8.3. Power to Modify Foregoing Procedures. Notwithstanding any
of the foregoing provisions of this Article VIII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the net
income and net assets of the Portfolio-Trust and of each Series, the allocation
of income of the Portfolio-Trust and of each Series, the Book Capital Account
balance of each Holder, or the payment of distributions to the Holders as they
may deem necessary or desirable to enable the Portfolio-Trust or a Series to
comply with any provision of the 1940 Act or any order of exemption issued by
the Commission or with the Code.
ARTICLE IX
Holders
9.1. Rights of Holders. The ownership of the Trust Property
and the right to conduct any business described herein are vested exclusively in
the Trustees, and the Holders shall have no right or title therein other than
the beneficial interest conferred by their Interests and they shall have no
power or right to call for any partition or division of any Trust Property.
Every Holder by virtue of having become a Holder shall be held
expressly to have assented and agreed to the terms of this Declaration.
The Portfolio-Trust shall be entitled to treat a record Holder of any
Interest as the holder in fact thereof, and shall not be bound to recognize any
equitable or other claim of interest in such Interest on the part of any other
entity except as may be otherwise expressly provided by law.
In addition, the Holders shall have power to vote only with respect to
(a) the election of Trustees as provided in Article II, Section 2.4; (b) the
removal of Trustees as provided in Article II, Section 2.3; (c) any investment
advisory contract as provided in Article IV, Section 4.1; (d) any dissolution of
a Series as provided in Article X, Section 10.2; (e) the amendment of this
Declaration to the extent and as provided in Article X, Section 10.4; (f) any
merger, consolidation or sale of assets as provided in Article X, Section 10.5;
and (g) such additional matters relating to the Portfolio-Trust as may be
required or authorized by law, by this Declaration or the By-Laws or any
registration statement of the Portfolio-Trust filed with the Commission, or as
the Trustees may consider desirable.
9.2. Meetings of Holders. Meetings of Holders may be called at
any time by a majority of the Trustees and shall be called by any Trustee upon
written request of Holders holding, in the aggregate, not less than 10% of the
Interests in a Series (if the meeting relates solely to that Series), or not
less than 10% of the Interests in the Portfolio-Trust (if the meeting relates to
the Portfolio-Trust and not solely to a particular Series), such request
specifying the purpose or purposes for which such meeting is to be called. Any
such meeting shall be held within or without the State of New York and within or
without the United States of America on such day and at such time as the
Trustees shall designate. Holders of at least one-third of the Interests in the
Series (if the meeting relates solely to that Series) or Holders of at least
one-third of the Interests in the Portfolio-Trust (if the meeting relates to the
Portfolio-Trust and not solely to a particular Series), present in person or by
proxy, shall constitute a quorum for the transaction of any business, except as
may otherwise be required by the 1940 Act, other applicable law, this
Declaration or the By-Laws. If a quorum is present at a meeting, an affirmative
vote of the Holders present, in person or by proxy, holding more than 50% of the
total Interests of the Holders present, either in person or by proxy, at such
meeting constitutes the action of the Holders, unless a greater number of
affirmative votes is required by the 1940 Act, other applicable law, this
Declaration or the By-Laws, and except that a plurality of the total Interests
of the Holders present shall elect a Trustee. All or any one of more Holders may
participate in a meeting of Holders by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other and participation in a meeting by means of such
communications equipment shall constitute presence in person at such meeting.
9.3. Notice of Meetings. Notice of each meeting of Holders,
stating the time, place and purposes of the meeting, shall be given by the
Trustees by mail to each Holder of the Series or the Portfolio-Trust, as the
case may be, at its registered address, mailed at least 10 days and not more
than 60 days before the meeting. Notice of any meeting may be waived in writing
by any Holder either before or after such meeting. The attendance of a Holder at
a meeting shall constitute a waiver of notice of such meeting except in the
situation in which a Holder attends a meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting was
not lawfully called or convened. At any meeting, any business properly before
the meeting may be considered whether or not stated in the notice of the
meeting. Any adjourned meeting may be held as adjourned without further notice.
9.4. Record Date for Meetings, Distributions, etc. For the
purpose of determining the Holders who are entitled to notice of and to vote at
any meeting, or to participate in any distribution, or for the purpose of any
other action, the Trustees may from time to time fix a date, not more than 90
days prior to the date of any meeting of Holders or the payment of any
distribution or the taking of any other action, as the case may be, as a record
date for the determination of the Persons to be treated as Holders of the Series
or the Portfolio-Trust, as the case may be, for such purpose.
9.5. Proxies, etc. At any meeting of Holders, any Holder
entitled to vote thereat may vote by proxy, provided that no proxy shall be
voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Portfolio-Trust as the
Secretary may direct, for verification prior to the time at which such vote is
to be taken. A proxy may be revoked by a Holder at any time before it has been
exercised by placing on file with the Secretary, or with such other officer or
agent of the Portfolio-Trust as the Secretary may direct, a later dated proxy or
written revocation. Pursuant to a resolution of a majority of the Trustees,
proxies may be solicited in the name of the Portfolio-Trust or of one or more
Trustees or of one or more officers of the Portfolio-Trust. Only Holders on the
record date shall be entitled to vote. Each such Holder shall be entitled to a
vote proportionate to its Interest in the Series or the Portfolio-Trust, as the
case may be. When an Interest is held jointly by several Persons, any one of
them may vote at any meeting in person or by proxy in respect of such Interest,
but if more than one of them is present at such meeting in person or by proxy,
and such joint owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Interest. A proxy
purporting to be executed by or on behalf of a Holder shall be deemed valid
unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger.
9.6. Reports. As to each Series, the Trustees shall cause to
be prepared and furnished to each Holder thereof, at least annually as of the
end of each Fiscal Year, a report of operations containing a balance sheet and a
statement of income of such Series prepared in conformity with generally
accepted accounting principles and an opinion of an independent public
accountant on such financial statements. The Trustees shall, in addition, with
respect to each Series furnish to each Holder of such Series at least
semi-annually interim reports of operations containing an unaudited balance
sheet as of the end of such period and an unaudited statement of income for the
period from the beginning of the then-current Fiscal Year to the end of such
period.
9.7. Inspection of Records. The records of the
Portfolio-Trust shall be open to inspection by Holders during normal business
hours for any purpose not harmful to the Portfolio-Trust.
9.8. Holder Action by Written Consent. Any action which may be
taken on behalf of the Portfolio-Trust or any Series by Holders may be taken
without a meeting if Holders holding more than 50% of all Interests entitled to
vote (or such larger proportion thereof as shall be required by any express
provision of this Declaration or of applicable law) consent to the action in
writing and the written consents are filed with the records of the meetings of
Holders. Such consents shall be treated for all purposes as a vote taken at a
meeting of Holders. Each such written consent shall be executed by or on behalf
of the Holder delivering such consent and shall bear the date of such execution.
No such written consent shall be effective to take the action referred to
therein unless, within one year of the earliest dated consent, written consents
executed by a sufficient number of Holders to take such action are filed with
the records of the meetings of Holders.
9.9. Notices. Any and all communications, including any and
all notices to which any Holder may be entitled, shall be deemed duly served or
given if mailed, postage prepaid, addressed to a Holder at its last known
address as recorded on the register of the Portfolio-Trust or if delivered to a
Holder by courier or by facsimile or other similar electronic mechanism.
ARTICLE X
Duration; Termination; Dissolution;
Amendment; Mergers; Etc.
10.1. Duration. Subject to possible dissolution or
termination in accordance with the provisions of Section 10.2 and Section 10.3
hereof, respectively, the Portfolio-Trust created hereby shall continue until
the expiration of 20 years after the death of the last survivor of the initial
Trustees named herein and the following named persons:
<TABLE>
<CAPTION>
Date of
Name Address Birth
<S> <C> <C>
Nicole Catherine Rumery 18 Rio Vista Street 12/21/91
North Billerica, MA 01862
Nelson Stewart Ruble 65 Duck Pond Road 04/10/91
Glen Cove, NY 11542
Shelby Sara Wyetzner 8 Oak Brook Lane 10/18/90
Merrick, NY 11566
Amanda Jehan Sher Coolidge 483 Pleasant Street, No. 9 08/16/89
Belmont, MA 02178
David Cornelius Johnson 752 West End Avenue, Apt. 10J 05/02/89
New York, NY 10025
Conner Leahy McCabe 100 Parkway Road, Apt. 3C 02/22/89
Bronxville, NY 10708
Andrea Hellegers 530 East 84th Street, Apt. 5H 12/22/88
New York, NY 10028
Emilie Blair Ruble 65 Duck Pond Road 02/24/89
Glen Cove, NY 11542
Brian Patrick Lyons 152-48 Jewel Avenue 01/20/89
Flushing, NY 11367
Caroline Bolger Cima 11 Beechwood Lane 12/23/88
Scarsdale, NY 10583
</TABLE>
10.2. Dissolution. Any Series shall be dissolved (i) by the
affirmative vote of the Holders of not less than two-thirds of the Interests in
the Series at any meeting of the Holders or by an instrument in writing, without
a meeting, signed by a majority of the Trustees and consented to by the Holders
of not less than two-thirds of such Interests, (ii) by the Trustees by written
notice of dissolution to the Holders of the Interests in the Series, or (iii)
upon the bankruptcy or expulsion of a Holder of an Interest in the Series,
unless the Holders of Interests in such Series, by majority vote, agree to
continue the Series.
10.3. Termination.
(a) Upon an event of dissolution of the
Portfolio-Trust or a Series, unless the Portfolio-Trust or Series is continued
in accordance with the proviso to Section 10.2 above, the Portfolio-Trust or
Series, as applicable, shall be terminated in accordance with the following
provisions:
(i) the Portfolio-Trust or Series, as
applicable, shall carry on no business except for the purpose
of winding up its affairs;
(ii) the Trustees shall proceed to wind up
the affairs of the Portfolio-Trust or Series, as applicable,
and all of the powers of the Trustees under this Declaration
shall continue until the affairs of the Portfolio-Trust or
Series have been wound up, including the power to fulfill or
discharge the contracts of the Portfolio-Trust or Series,
collect the assets of the Portfolio-Trust of Series, sell,
convey, assign, exchange or otherwise dispose of all or any
part of the Trust Property affected to one or more Persons at
public or private sale for consideration which may consist in
whole or in part of cash, securities or other property of any
kind, discharge or pay the liabilities of the Portfolio-Trust
or Series, and do all other acts appropriate to liquidate the
business of the Portfolio-Trust or Series; provided that any
sale, conveyance, assignment, exchange or other disposition of
all or substantially all the Trust Property or substantially
all of the assets belonging to a particular Series, other than
for cash, shall require approval of the principal terms of the
transaction and the nature and amount of the consideration by
the vote of Holders holding more than 50% of the total
Interests in the Portfolio-Trust or Series, as applicable; and
(iii) after paying or adequately providing
for the payment of all liabilities of the Portfolio-Trust or
of the Series being terminated, and upon receipt of such
releases, indemnities and refunding agreements as they deem
necessary for their protection, the Trustees shall distribute
the remaining Trust Property of the Portfolio-Trust or Series,
as applicable, in cash or in kind or partly each, among the
Holders according to their respective rights as set forth in
the procedures established pursuant to Section 8.2 hereof.
(b) Upon termination of the Portfolio-Trust or
Series and distribution to the Holders as herein provided, a majority of the
Trustees shall execute and file with the records of the Portfolio-Trust an
instrument in writing setting forth the fact of such termination and
distribution. Upon termination of the Portfolio-Trust, the Trustees shall
thereupon be discharged from all further liabilities and duties hereunder, and
the rights and interests of all Holders shall thereupon cease.
10.4. Amendment Procedure.
(a) All rights granted to Holders hereunder are
granted subject to a right to amend this Declaration, except as otherwise
provided. The Trustees may, without any vote of Holders, amend or otherwise
supplement this Declaration by an instrument in writing executed by a majority
of the Trustees, provided that Holders shall have the right to vote on any
amendment (a) which would affect the voting rights of Holders granted in Article
IX, Section 9.1, (b) to this Section 10.4, (c) required to be approved by
Holders by law or by the Portfolio-Trust's registration statement filed with the
Commission, or (d) submitted to them by the Trustees. Any amendment submitted to
Holders which the Trustees determine would affect the Holders of any Series
shall be authorized by vote of the Holders of such Series and no vote shall be
required of Holders of a Series not affected. Notwithstanding anything else
herein, any amendment to Article V which would have the effect of reducing the
indemnification and other rights provided thereby and any repeal or amendment of
this sentence shall each require the affirmative vote of the Holders of
two-thirds of the Interests entitled to vote thereon.
(b) No amendment may be made under Section 10.4(a)
hereof which would change any rights with respect to any Interest by reducing
the amount payable thereon upon liquidation of the Portfolio-Trust or any Series
or by diminishing or eliminating any voting rights pertaining thereto, except
with the vote or consent of Holders of two-thirds of all Interests which would
be so affected by such amendment.
(c) A certification in recordable form executed by a
majority of the Trustees setting forth an amendment and reciting that it was
duly adopted by the Holders or by the Trustees as aforesaid or a copy of the
Declaration, as amended, in recordable form, and executed by a majority of the
Trustees, shall be conclusive evidence of such amendment when filed with the
records of the Portfolio-Trust.
Notwithstanding any other provision hereof, until such time as
Interests are first sold, this Declaration may be terminated or amended in any
respect by the affirmative vote of a majority of the Trustees at any meeting of
Trustees or by an instrument executed by a majority of the Trustees.
10.5. Merger, Consolidation and Sale of Assets. The
Portfolio-Trust or any Series may merge or consolidate with any other
corporation, association, trust or other organization or may sell, lease or
exchange all or substantially all of the Trust Property, or assets belonging to
such Series, as applicable, including good will, upon such terms and conditions
and for such consideration when and as authorized at any meeting of Holders
called for such purpose by Majority Interests Vote of Interests in the Series
affected by such action, or by an instrument in writing without a meeting,
consented to by Holders of not less than a majority of the Interests in the
Series affected by such action, and any such merger, consolidation, sale, lease
or exchange shall be deemed for all purposes to have been accomplished under and
pursuant to the law of the State of New York.
10.6. Incorporation. Upon a Majority Interests Vote, the
Trustees may cause to be organized or assist in organizing a corporation or
corporations under the law of any jurisdiction or a trust, partnership,
association or other organization to take over the Trust Property or to carry on
any business in which the Portfolio-Trust directly or indirectly has any
interest, and to sell, convey and transfer the Trust Property to any such
corporation, trust, partnership, association or other organization in exchange
for the equity interests thereof or otherwise, and to lend money to, subscribe
for the equity interests of, and enter into any contract with any such
corporation, trust, partnership, association or other organization, or any
corporation, trust, partnership, association or other organization in which the
Portfolio-Trust holds or is about to acquire equity interests. The Trustees may
also cause a merger or consolidation between the Portfolio-Trust or any
successor thereto and any such corporation, trust, partnership, association or
other organization if and to the extent permitted by law. Nothing contained
herein shall be construed as requiring approval of the Holders for the Trustees
to organize or assist in organizing one or more corporations, trusts,
partnerships, associations or other organizations and selling, conveying or
transferring a portion of the Trust Property to one or more of such
organizations or entities.
ARTICLE XI
Miscellaneous
11.1. Certificate of Designation; Agent for Service of
Process. If required by New York law, the Portfolio-Trust shall file, with the
Department of State of the State of New York, a certificate, in the name of the
Portfolio-Trust and executed by an officer of the Portfolio-Trust, designating
the Secretary of State of the State of New York as an agent upon whom process in
any action or proceeding against the Portfolio-Trust or any Series may be
served.
11.2. Governing Law. This Declaration is executed by the
Trustees and delivered in the State of New York and with reference to the law
thereof, and the rights of all parties and the validity and construction of
every provision hereof shall be subject to and construed in accordance with the
law of the State of New York and reference shall be specifically made to the
trust law of the State of New York as to the construction of matters not
specifically covered herein or as to which an ambiguity exists.
11.3. Counterparts. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any one such original
counterpart.
11.4. Reliance by Third Parties. Any certificate executed by
an individual who, according to the records of the Portfolio-Trust or of any
recording office in which this Declaration may be recorded, appears to be a
Trustee hereunder, certifying to: (a) the number or identity of Trustees or
Holders, (b) the due authorization of the execution of any instrument or
writing, (c) the form of any vote passed at a meeting of Trustees or Holders,
(d) the fact that the number of Trustees or Holders present at any meeting or
executing any written instrument satisfies the requirements of this Declaration,
(e) the form of any By-Laws adopted by or the identity of any officer elected by
the Trustees, or (f) the existence of any fact or facts which in any manner
relate to the affairs of the Portfolio-Trust, shall be conclusive evidence as to
the matters so certified in favor of any Person dealing with the Trustees.
11.5. Provisions in Conflict with Law or Regulations.
(a) The provisions of this Declaration are
severable, and if the Trustees shall determine, with the advice of counsel, that
any of such provisions is in conflict with the 1940 Act, or with other
applicable law and regulations, the conflicting provision shall be deemed never
to have constituted a part of this Declaration; provided, however, that such
determination shall not affect any of the remaining provisions of this
Declaration or render invalid or improper any action taken or omitted prior to
such determination.
(b) If any provision of this Declaration shall be
held invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any manner affect such provision in any other jurisdiction or any
other provision of this Declaration in any jurisdiction.
IN WITNESS WHEREOF, the undersigned have executed this
Declaration of Trust of BT Investment Portfolios as of the day and year first
above written.
----------------------------------
Philip W. Coolidge
As Trustee and not individually
----------------------------------
James B. Craver
As Trustee and not individually
----------------------------------
Linda T. Gibson
As Trustee and not individually
<PAGE>
SCHEDULE A
BT INVESTMENT PORTFOLIOS
Initial Series
Liquid Assets Portfolio
Mortgage-Backed Portfolio
Growth and Income Portfolio
Global High Yield Securities Portfolio
100% Treasury Portfolio
Asset Management Portfolio II
Asset Management Portfolio III
International Bond Portfolio
Latin America Portfolio
<PAGE>
CERTIFICATE OF AMENDMENT TO
DECLARATION OF TRUST OF BT INVESTMENT PORTFOLIOS
AMENDMENT NO. 1
DATED AS OF JULY 12, 1993
The undersigned, being an Assistant Secretary of BT Investment
Portfolios (the "Trust), and duly authorized in accordance with the provisions
of Section 6.2 of the Declaration of Trust dated as of March 27, 1993, hereby
certifies that the Trustees of the Trust, by a majority of their number,
authorized an amendment to the initial series designation appended to the
Declaration of Trust of the Trust in order to change the name of the Latin
America Portfolio to "Latin American Equity Portfolio".
The undersigned has executed this certificate as of the year and date
first written above.
----------------------------------
Thomas M. Lenz
<PAGE>
CERTIFICATE OF AMENDMENT NO. 2 TO DECLARATION OF TRUST
OF BT INVESTMENT PORTFOLIOS
DATED AS OF AUGUST 6, 1993
The undersigned, being an Assistant Secretary of BT Investment
Portfolios (the "Trust") hereby certifies that, in accordance with the
provisions of Section 6.2 of the Declaration of Trust dated as of March 27, 1993
(the "Declaration"), the Trustees of the Trust, by a majority of their number,
authorized the establishment and designation of three additional series of the
Trust. The series of the Trust shall be as follows:
Liquid Assets Portfolio
Mortgage-Backed Portfolio
Growth and Income Portfolio
Global High Yield Securities Portfolio
100% Treasury Portfolio
Asset Management Portfolio II
Asset Management Portfolio III
International Bond Portfolio
Latin American Equity Portfolio
Small Cap Portfolio
European Equity Portfolio
Pacific Basin Equity Portfolio
An Interest (as defined in the Declaration) in each series of the Trust
shall have the relative rights and preferences as are set forth in Sections 6.1
through 6.4 of the Declaration.
The undersigned has executed this certificate as of the year and date
first written above.
--------------------------------
Thomas M. Lenz
<PAGE>
AMENDMENT NO. 3 TO DECLARATION OF TRUST OF
BT INVESTMENT PORTFOLIOS
The undersigned, being a majority of the Trustees of BT Investment
Portfolios (the "Trust"), a trust established under the laws of the State of New
York pursuant to a Declaration of Trust dated as of March 27, 1993 (the
"Declaration"), pursuant to the last paragraph of Section 10.4 of the
Declaration, the Trustees hereby amend in its entirety clause (iii) of Section
10.2 of the Trust's Declaration as follows:
"(iii) upon the bankruptcy or expulsion of a Holder of an
Interest in the Series, unless the remaining Holders owning a
majority of Interests in such Series agree to continue the
Series within 120 days after such bankruptcy or expulsion."
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of August 6, 1993.
--------------------------------
Philip W. Coolidge
As Trustee, and not individually
--------------------------------
Charles P. Biggar
As Trustee, and not individually
--------------------------------
S. Leland Dill
As Trustee, and not individually
<PAGE>
CERTIFICATE OF AMENDMENT NO. 4 TO DECLARATION OF TRUST
OF BT INVESTMENT PORTFOLIOS
DATED AS OF OCTOBER 27, 1993
The undersigned, being an Assistant Secretary of BT Investment
Portfolios (the "Trust), and duly authorized in accordance with the provisions
of Section 6.2 of the Declaration of Trust dated as of March 27, 1993, hereby
certifies that the Trustees of the Trust, by a majority of their number,
authorized an amendment to the series designation appended to the Declaration of
Trust of the Trust in order to change the name of the Mortgage-Backed Portfolio
to "Mortgage-Backed Securities Portfolio". The series of the Trust shall be as
follows:
Liquid Assets Portfolio
Mortgage-Backed Securities Portfolio
Growth and Income Portfolio
Global High Yield Securities Portfolio
100% Treasury Portfolio
Asset Management Portfolio II
Asset Management Portfolio III
International Bond Portfolio
Latin American Equity Portfolio
Small Cap Portfolio
European Equity Portfolio
Pacific Basin Equity Portfolio
An Interest (as defined in the Declaration) in each series of the Trust
shall have the relative rights and preferences as are set forth in Sections 6.1
through 6.4 of the Declaration.
The undersigned has executed this certificate as of the year and date
first written above.
--------------------------------
Thomas M. Lenz
<PAGE>
AMENDMENT NO. 5 TO DECLARATION OF TRUST OF
BT INVESTMENT PORTFOLIOS
The undersigned, being a majority of the Trustees of BT Investment
Portfolios (the "Trust"), a trust established under the laws of the State of New
York pursuant to a Declaration of Trust dated as of March 27, 1993 (the
"Declaration"), pursuant to the last paragraph of Section 10.4 of the
Declaration, the Trustees hereby amend in its entirety clause (iii) of Section
10.2 of the Trust's Declaration as follows:
"(iii) upon the bankruptcy or expulsion of a Holder of an
Interest in the Series. However, the remaining Holders owning
more than 50% of the Interests in such Series may agree to
continue the business of the Series within 120 days after such
bankruptcy or expulsion."
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of December 30, 1994.
AMENDMENT NO. 3 TO DECLARATION OF TRUST OF BT INVESTMENT PORTFOLIOS
ADOPTED BY AFFIRMATIVE VOTE OF A MAJORITY OF THE TRUSTEES
AUGUST 6, 1993, NEW YORK, NEW YORK
RESOLVED: That pursuant to the last paragraph of Section 10.4 of the
Declaration of Trust dated as of March 27, 1993 (the "Declaration") of BT
Investment Portfolios (the "Trust"), the Trustees hereby amend in its entirety
clause (iii) of Section 10.2 of the Trust's Declaration as follows:
"(iii) upon the bankruptcy or expulsion of a Holder of an
Interest in the Series, unless the remaining Holders owning a
majority of Interests in such Series agree to continue the
Series within 120 days after such bankruptcy or expulsion."
--------------------------------
Philip W. Coolidge
As Trustee, and not individually
--------------------------------
Charles P. Biggar
As Trustee, and not individually
--------------------------------
S. Leland Dill
As Trustee, and not individually
<PAGE>
AMENDMENT NO. 6 TO DECLARATION OF TRUST
OF BT INVESTMENT PORTFOLIOS
DATED AS OF FEBRUARY 8, 1995
The undersigned, being a majority of the Trustees of BT Investment
Portfolios (the "Trust"), a trust established under the laws of the State of New
York pursuant to a Declaration of Trust dated as of March 27, 1993 (the
"Declaration"), pursuant to the last paragraph of Section 10.4 of the
Declaration, the Trustees hereby amend the series designation appended to the
Declaration of Trust of the Trust in order to remove the Mortgage-Backed
Securities Portfolio. The series of the Trust shall be as follows:
Liquid Assets Portfolio
Growth and Income Portfolio
Global High Yield Securities Portfolio
100% Treasury Portfolio
Asset Management Portfolio II
Asset Management Portfolio III
International Bond Portfolio
Latin American Equity Portfolio
Small Cap Portfolio
European Equity Portfolio
Pacific Basin Equity Portfolio
An Interest (as defined in the Declaration) in each series of the Trust
shall have the relative rights and preferences as are set forth in Sections 6.1
through 6.4 of the Declaration.
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of February 8, 1995.
--------------------------------
Philip W. Coolidge
As Trustee, and not individually
--------------------------------
Charles P. Biggar
As Trustee, and not individually
--------------------------------
S. Leland Dill
As Trustee, and not individually
<PAGE>
AMENDMENT NO. 7 TO DECLARATION OF TRUST
OF BT INVESTMENT PORTFOLIOS
DATED AS OF AUGUST 2, 1995
The undersigned, being a majority of the Trustees of BT Investment
Portfolios (the "Trust"), a master trust fund established under the laws of the
State of New York pursuant to a Declaration of Trust dated as of March 27, 1993
(the "Declaration"), pursuant to Section 6.2 of the Declaration, the Trustees
hereby establish and designate four additional series of the Trust: Equity 500
Equal Weighted Portfolio, Small Cap Index Portfolio, Bond Index Portfolio and
International Equity Index Portfolio. The series of the Trust shall be as
follows:
Liquid Assets Portfolio
Growth and Income Portfolio
Global High Yield Securities Portfolio
100% Treasury Portfolio
Asset Management Portfolio II
Asset Management Portfolio III
International Bond Portfolio
Latin American Equity Portfolio
Small Cap Portfolio
European Equity Portfolio
Pacific Basin Equity Portfolio
Equity 500 Equal Weighted Portfolio
Small Cap Index Portfolio
Bond Index Portfolio
International Equity Index Portfolio
An Interest (as defined in the Declaration) in each series of the Trust
shall have the relative rights and preferences as are set forth in Sections 6.1
through 6.4 of the Declaration.
This Amendment may be simultaneously executed in several counterparts,
each of which shall be deemed to be an original, and such counterparts,
together, shall constitute one and the same instrument, which shall be
sufficiently evidenced by any one such original counterpart.
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of August 2, 1995.
-------------------------------- --------------------------------
Philip W. Coolidge Charles P. Biggar
As Trustee, and not individually As Trustee, and not individually
--------------------------------
S. Leland Dill
As Trustee, and not individually
<PAGE>
EXHIBIT 99.2
BT INVESTMENT PORTFOLIOS
-------------------------
BY-LAWS
As Adopted March 27, 1993
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I -- Meetings of Holders . . . . . . . . . . . . . . . 1
-------------------
Section 1.1 Fixing Record Dates . . . . . 1
Section 1.2 Records at Holder Meetings. . . 1
Section 1.3 Inspectors of Election . . . . 1
Section 1.4 Proxies; Voting . . . . . . 2
ARTICLE II -- Meetings of Trustees . . . . . . . . . . . . . . 2
--------------------
Section 2.1 Annual and Regular Meetings . . 2
Section 2.2 Notice . . . . . . . . . 2
ARTICLE III -- Officers . . . . . . . . . . . . . . . . . . 2
--------
Section 3.1 Officers of the Trust . . . . 2
Section 3.2 Election and Tenure . . . . . 2
Section 3.3 Removal of Officers . . . . . 2
Section 3.4 Bonds and Surety . . . . . . 3
Section 3.5 Chairman, President and Vice
President . . . . . . . 3
Section 3.6 Secretary . . . . . . . . 3
Section 3.7 Treasurer . . . . . . . . 4
Section 3.8 Other Officers and Duties . . . 4
ARTICLE IV -- Miscellaneous . . . . . . . . . . . . . . . . . 4
-------------
Section 4.1 Depositories . . . . . . . 4
Section 4.2 Signatures . . . . . . . . 4
Section 4.3 Seal . . . . . . . . . . 4
Section 4.4 Indemnification . . . . . . 5
Section 4.5 Distribution Disbursing Agents and
the Like . . . . . . . . 5
ARTICLE V -- Regulations; Amendment of By-Laws . . . . . . . . . . 5
---------------------------------
Section 5.1 Regulations . . . . . . . 5
Section 5.2 Amendment and Repeal of By-Laws . 5
<PAGE>
BY-LAWS
OF
BT INVESTMENT PORTFOLIOS
These By-Laws are made and adopted pursuant to Section 2.7 of
the Declaration of Trust establishing BT Investment Portfolios (the "Trust"),
dated as of March 27, 1993, as from time to time amended (the "Declaration").
All words and terms capitalized in these By-Laws shall have the meaning or
meanings set forth for such words or terms in the Declaration.
ARTICLE I
Meetings of Holders
Section 1.1. Fixing Record Dates. If the Trustees do not,
prior to any meeting of the Holders, fix a record date, then the date of mailing
notice of the meeting shall be the record date.
Section 1.2. Records at Holder Meetings. At each meeting of
the Holders there shall be open for inspection the minutes of the last previous
meeting of Holders of the Trust and a list of the Holders of the Trust,
certified to be true and correct by the Secretary or other proper agent of the
Trust, as of the record date of the meeting. Such list of Holders shall contain
the name of each Holder in alphabetical order and the address and Interest owned
by such Holder on such record date.
Section 1.3. Inspectors of Election. In advance of any meeting
of the Holders, the Trustees may appoint Inspectors of Election to act at the
meeting or any adjournment thereof. If Inspectors of Election are not so
appointed, the chairman, if any, of any meeting of the Holders may, and on the
request of any Holder or his proxy shall, appoint Inspectors of Election. The
number of Inspectors of Election shall be either one or three. If appointed at
the meeting on the request of one or more Holders or proxies, a Majority
Interests Vote shall determine whether one or three Inspectors of Election are
to be appointed, but failure to allow such determination by the Holders shall
not affect the validity of the appointment of Inspectors of Election. In case
any individual appointed as an Inspector of Election fails to appear or fails or
refuses to so act, the vacancy may be filled by appointment made by the Trustees
in advance of the convening of the meeting or at the meeting by the individual
acting as chairman of the meeting. The Inspectors of Election shall determine
the Interest owned by each Holder, the Interests represented at the meeting, the
existence of a quorum, the authenticity, validity and effect of proxies, shall
receive votes, ballots or consents, shall hear and determine all challenges and
questions in any way arising in connection with the right to vote, shall count
and tabulate all votes or consents, shall determine the results, and shall do
such other acts as may be proper to conduct the election or vote with fairness
to all Holders. If there are three Inspectors of Election, the decision, act or
certificate of a majority is effective in all respects as the decision, act or
certificate of all. On request of the chairman, if any, of the meeting, or of
any Holder or his proxy, the Inspectors of Election shall make a report in
writing of any challenge or question or matter determined by them and shall
execute a certificate of any facts found by them.
Section 1.4. Proxies; Voting. No proxy shall be valid after
one year from the date of its execution, unless a longer period is expressly
stated in such proxy.
ARTICLE II
Meetings of Trustees
Section 2.1. Annual and Regular Meetings. The Trustees shall
hold an annual meeting for the election of officers and the transaction of other
business which may come before such meeting.
Section 2.2. Notice. Notice of a meeting shall be given by
mail, by telegram (which term shall include a cablegram), by telecopier or
delivered personally (which term shall include by telephone). Neither the
business to be transacted at, nor the purpose of, any meeting of the Trustees
need be stated in the notice or waiver of notice of such meeting, and no notice
need be given of action proposed to be taken by written consent.
ARTICLE III
Officers
Section 3.1. Officers of the Trust. The officers of the Trust
shall consist of a Chairman, if any, a President, a Secretary, a Treasurer and
such other officers or assistant officers, including Vice Presidents, as may be
elected by the Trustees. Any two or more of the offices may be held by the same
person. The Trustees may designate a Vice President as an Executive Vice
President and may designate the order in which the other Vice Presidents may
act. The Chairman shall be a Trustee, but no other officer of the Trust,
including the President, need be a Trustee.
Section 3.2. Election and Tenure. At the initial organization
meeting and thereafter at each annual meeting of the Trustees, the Trustees
shall elect the Chairman, if any, the President, the Secretary, the Treasurer
and such other officers as the Trustees shall deem necessary or appropriate in
order to carry out the business of the Trust. Such officers shall hold office
until the next annual meeting of the Trustees and until their successors have
been duly elected and qualified. The Trustees may fill any vacancy in office or
add any additional officer at any time.
Section 3.3. Removal of Officers. Any officer may be removed
at any time, with or without cause, by action of a majority of the Trustees.
This provision shall not prevent the making of a contract of employment for a
definite term with any officer and shall have no effect upon any cause of action
which any officer may have as a result of removal in breach of a contract of
employment. Any officer may resign at any time by notice in writing signed by
such officer and delivered or mailed to the Chairman, if any, the President or
the Secretary, and such resignation shall take effect immediately, or at a later
date according to the terms of such notice in writing.
Section 3.4. Bonds and Surety. Any officer may be required by
the Trustees to be bonded for the faithful performance of his duties in such
amount and with such sureties as the Trustees may determine.
Section 3.5. Chairman, President and Vice Presidents. The
Chairman, if any, shall, if present, preside at all meetings of the Holders and
of the Trustees and shall exercise and perform such other powers and duties as
may be from time to time assigned to him by the Trustees. Subject to such
supervisory powers, if any, as may be given by the Trustees to the Chairman, if
any, the President shall be the chief executive officer of the Trust and,
subject to the control of the Trustees, shall have general supervision,
direction and control of the business of the Trust and of its employees and
shall exercise such general powers of management as are usually vested in the
office of President of a corporation. In the absence of the Chairman, if any,
the President shall preside at all meetings of the Holders and, in the absence
of the Chairman, the President shall preside at all meetings of the Trustees.
The President shall be, ex officio, a member of all standing committees of
Trustees. Subject to the direction of the Trustees, the President shall have the
power, in the name and on behalf of the Trust, to execute any and all loan
documents, contracts, agreements, deeds, mortgages and other instruments in
writing, and to employ and discharge employees and agents of the Trust. Unless
otherwise directed by the Trustees, the President shall have full authority and
power to attend, to act and to vote, on behalf of the Trust, at any meeting of
any business organization in which the Trust holds an interest, or to confer
such powers upon any other person, by executing any proxies duly authorizing
such person. The President shall have such further authorities and duties as the
Trustees shall from time to time determine. In the absence or disability of the
President, the Vice Presidents in order of their rank or the Vice President
designated by the Trustees, shall perform all of the duties of the President,
and when so acting shall have all the powers of and be subject to all of the
restrictions upon the President. Subject to the direction of the President, each
Vice President shall have the power in the name and on behalf of the Trust to
execute any and all loan documents, contracts, agreements, deeds, mortgages and
other instruments in writing, and, in addition, shall have such other duties and
powers as shall be designated from time to time by the Trustees or by the
President.
Section 3.6. Secretary. The Secretary shall keep the minutes
of all meetings of, and record all votes of, Holders, Trustees and the Executive
Committee, if any. The results of all actions taken at a meeting of the
Trustees, or by written consent of the Trustees, shall be recorded by the
Secretary. The Secretary shall be custodian of the seal of the Trust, if any,
and (and any other person so authorized by the Trustees) shall affix the seal
or, if permitted, a facsimile thereof, to any instrument executed by the Trust
which would be sealed by a New York corporation executing the same or a similar
instrument and shall attest the seal and the signature or signatures of the
officer or officers executing such instrument on behalf of the Trust. The
Secretary shall also perform any other duties commonly incident to such office
in a New York corporation, and shall have such other authorities and duties as
the Trustees shall from time to time determine.
Section 3.7. Treasurer. Except as otherwise directed by the
Trustees, the Treasurer shall have the general supervision of the monies, funds,
securities, notes receivable and other valuable papers and documents of the
Trust, and shall have and exercise under the supervision of the Trustees and of
the President all powers and duties normally incident to his office. The
Treasurer may endorse for deposit or collection all notes, checks and other
instruments payable to the Trust or to its order and shall deposit all funds of
the Trust as may be ordered by the Trustees or the President. The Treasurer
shall keep accurate account of the books of the Trust's transactions which shall
be the property of the Trust, and which together with all other property of the
Trust in his possession, shall be subject at all times to the inspection and
control of the Trustees. Unless the Trustees shall otherwise determine, the
Treasurer shall be the principal accounting officer of the Trust and shall also
be the principal financial officer of the Trust. The Treasurer shall have such
other duties and authorities as the Trustees shall from time to time determine.
Notwithstanding anything to the contrary herein contained, the Trustees may
authorize the Investment Manager and Administrator to maintain bank accounts and
deposit and disburse funds on behalf of the Trust.
Section 3.8. Other Officers and Duties. The Trustees may elect
such other officers and assistant officers as they shall from time to time
determine to be necessary or desirable in order to conduct the business of the
Trust. Assistant officers shall act generally in the absence of the officer whom
they assist and shall assist that officer in the duties of his office. Each
officer, employee and agent of the Trust shall have such other duties and
authorities as may be conferred upon him by the Trustees or delegated to him by
the President.
ARTICLE IV
Miscellaneous
Section 4.1. Depositories. The funds of the Trust shall be
deposited in such depositories as the Trustees shall designate and shall be
drawn out on checks, drafts or other orders signed by such officer, officers,
agent or agents (including the Investment Manager and Administrator) as the
Trustees may from time to time authorize.
Section 4.2. Signatures. All contracts and other instruments
shall be executed on behalf of the Trust by such officer, officers, agent or
agents as provided in these By-Laws or as the Trustees may from time to time by
resolution provide.
Section 4.3. Seal. The seal of the Trust, if any, may be
affixed to any document, and the seal and its attestation may be lithographed,
engraved or otherwise printed on any document with the same force and effect as
if it had been imprinted and attested manually in the same manner and with the
same effect as if done by a New York corporation.
Section 4.4. Indemnification. Insofar as the conditional
advancing of indemnification monies under Section 5.4 of the Declaration for
actions based upon the 1940 Act may be concerned, such payments will be made
only on the following conditions: (i) the advances must be limited to amounts
used, or to be used, for the preparation or presentation of a defense to the
action, including costs connected with the preparation of a settlement; (ii)
advances may be made only upon receipt of a written promise by, or on behalf of,
the recipient to repay the amount of the advance which exceeds the amount to
which it is ultimately determined that he is entitled to receive from the Trust
by reason of indemnification; and (iii) (a) such promise must be secured by a
surety bond, other suitable insurance or an equivalent form of security which
assures that any repayment may be obtained by the Trust without delay or
litigation, which bond, insurance or other form of security must be provided by
the recipient of the advance, or (b) a majority of a quorum of the Trust's
disinterested, non-party Trustees, or an independent legal counsel in a written
opinion, shall determine, based upon a review of readily available facts, that
the recipient of the advance ultimately will be found entitled to
indemnification.
Section 4.5. Distribution Disbursing Agents and the Like. The
Trustees shall have the power to employ and compensate such distribution
disbursing agents, warrant agents and agents for the reinvestment of
distributions as they shall deem necessary or desirable. Any of such agents
shall have such power and authority as is delegated to any of them by the
Trustees.
ARTICLE V
Regulations; Amendment of By-Laws
Section 5.1. Regulations. The Trustees may make such
additional rules and regulations, not inconsistent with these By-Laws, as they
may deem expedient concerning the sale and purchase of Interests of the Trust.
Section 5.2. Amendment and Repeal of By-Laws. In accordance
with Section 2.7 of the Declaration, the Trustees shall have the power to alter,
amend or repeal the By-Laws or adopt new By-Laws at any time. Action by the
Trustees with respect to the By-Laws shall be taken by an affirmative vote of a
majority of the Trustees. The Trustees shall in no event adopt By-Laws which are
in conflict with the Declaration.
The Declaration refers to the Trustees as Trustees, but not as
individuals or personally; and no Trustee, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of the Trust.
<PAGE>
EXHIBIT 99.5
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of April 28, 1993 by and between BT
INVESTMENT PORTFOLIOS, a New York 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 its
series of beneficial interests as listed on Exhibit A hereto (each a "Portfolio"
and collectively, the "Portfolios"), 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 the Trust 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 each Portfolio, including investment research and
management with respect to all securities, investments, cash and cash
equivalents in the Portfolio. The Investment Adviser will determine from time to
time what securities and other investments will be purchased, retained or sold
by each Portfolio. The Investment Adviser will provide the services rendered by
it hereunder in accordance with the investment objective(s) and policies of that
Portfolio as stated in the Trust's then-current Registration Statement on Form
N-1A. The Investment Adviser further agrees that it:
(a) will conform with all applicable Rules and
Regulations of the Securities and Exchange Commission (herein called the
"Rules") and with the Securities Act of 1933, the Securities Exchange Act of
1934, the Investment Company Act of 1940 (the "1940 Act") and the Investment
Advisers Act of 1940, all as amended, 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 Portfolio either directly with the issuer or with any
broker or dealer selected by it. In placing orders with brokers and dealers, the
Investment Adviser will use its reasonable best efforts to obtain the best net
price and the most favorable execution of its orders, after taking into account
all factors it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, both for the specific transaction and on a continuing basis. Consistent
with this obligation, the Investment Adviser may, to the extent permitted by
law, purchase and sell portfolio securities to and from brokers and dealers who
provide brokerage and research services (within the meaning of Section 28(e) of
the Securities Exchange Act of 1934) 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 Portfolio 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 management 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 Investment Advisers Act of 1940 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 securities (including brokerage
commissions, if any) purchased for a Portfolio.
In addition, if the aggregate expenses of a Portfolio and any
registered investment company investing substantially all of its assets in the
Portfolio (a "Feeder Fund") exceed in any fiscal year of such Feeder Fund, the
applicable expense limitations imposed by the securities regulations of any
state in which the shares of such Feeder Fund are registered or qualified for
sale to the public, the Investment Adviser shall reimburse the Feeder Fund for
the excess expense to the extent required by state law.
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 percentages
of the Portfolios' respective average daily net assets as listed on Exhibit A
hereto.
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 Portfolio 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
Portfolio(s) 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 such
Portfolio(s), 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
Portfolio(s) or its(their) 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 the Portfolio(s); 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
Portfolio 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 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 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 Portfolio as of the date the Portfolio commences investment operations
after this Agreement shall have been approved by the Board of Trustees of the
Trust and the investor(s) in the Portfolio 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 the Trust 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 "Majority of the
Outstanding Voting Securities," "Interested Person" and "Assignment" shall have
the same meanings as such terms have in the 1940 Act and the rules and
regulatory constructions thereunder.)
9. Amendment of this Agreement. No material term of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, and no amendment of a
material term of this Agreement shall be effective with respect to a Portfolio,
until approved by vote of a Majority of the Outstanding Voting Securities of
that Portfolio.
10. (a) Representations and Warranties. The
Investment Adviser hereby represents and warrants as follows:
(i) The Investment Adviser is exempt from
registration under the Investment Advisers Act of 1940;
(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
Investment Advisers Act of 1940; 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 at 280 Park Avenue, New York, New
York 10015 or (b) to the Trust at 6 St. James Avenue, 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 any
Portfolio or any Feeder Fund, other than beneficial interests in a Portfolio or
shares of beneficial interest in a Feeder Fund at their then net asset value,
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,
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 State of New York, without reference to principles
of conflicts of law. The Trust is organized under the laws of the State of New
York pursuant to a Declaration of Trust dated March 27, 1993. 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.
<PAGE>
Attest: BT INVESTMENT PORTFOLIOS
By:
---------------------------------- ----------------------------------
Philip W. Coolidge
President
Attest: BANKERS TRUST COMPANY
By:
---------------------------------- ----------------------------------
Michael Baresich
Managing Director
<PAGE>
EXHIBIT A
BT INVESTMENT PORTFOLIOS
SCHEDULE OF FEES UNDER INVESTMENT ADVISORY AGREEMENT
Latin American Equity Portfolio 1.00%
Small Cap Portfolio 0.65%
European Equity Portfolio 0.65%
Pacific Basin Equity Portfolio 0.75%
Asset Management Portfolio II 0.65%
Asset Management Portfolio III 0.65%
Liquid Assets Portfolio 0.15%
Global High Yield Securities Portfolio 0.80%
International Bond Portfolio 0.65%
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This Schedule contains Summary Financial information extracted from the BT
Investment Asset Managment Portfolio II Annual Report dated March 31, 1995 and
is qualified in its entirety by reference to such Annual Report.
</LEGEND>
<CIK>0000906619
<NAME>BT INVESTMENT PORTFOLIOS
<SERIES>
<NUMBER> 3
<NAME> ASSET MANAGEMENT PORTFOLIO II
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 27,093,366
<INVESTMENTS-AT-VALUE> 27,041,997
<RECEIVABLES> 137,284
<ASSETS-OTHER> 18,106
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 27,197,387
<PAYABLE-FOR-SECURITIES> 46,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,592,997
<TOTAL-LIABILITIES> 1,592,997
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25,522,878
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 81,512
<NET-ASSETS> 25,604,390
<DIVIDEND-INCOME> 163,473
<INTEREST-INCOME> 1,041,198
<OTHER-INCOME> 0
<EXPENSES-NET> 144,389
<NET-INVESTMENT-INCOME> 1,060,282
<REALIZED-GAINS-CURRENT> (692,504)
<APPREC-INCREASE-CURRENT> 1,002,727
<NET-CHANGE-FROM-OPS> 1,370,505
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6,429,024
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 156,421
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 210,137
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This Schedule contains Summary Financial Information extracted from the BT
Investment Asset Management portfolio III Annual Report dated March 31, 1995 and
is qualified in tis entirety by reference to such Annual Report.
</LEGEND>
<CIK>0000906619
<NAME> BT INVESTMENT PORTFOLIOS
<SERIES>
<NUMBER> 4
<NAME>ASSET MANAGEMENT PORTFOLIO III
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<INVESTMENTS-AT-COST> 26,709,353
<INVESTMENTS-AT-VALUE> 26,577,067
<RECEIVABLES> 182,980
<ASSETS-OTHER> 19,598
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 26,779,645
<PAYABLE-FOR-SECURITIES> 5,540,037
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38,008
<TOTAL-LIABILITIES> 21,201,600
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 21,363,199
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
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</TABLE>
