SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
BT INVESTMENT PORTFOLIOS
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
2
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August 23, 1999
Dear Shareholder:
On June 4, 1999, Bankers Trust merged with Deutsche Bank A.G. As a result of the
merger, we are asking shareholders of BT Mutual Funds to approve new advisory
agreements. Enclosed is further information relating to these changes, including
a Questions & Answers section and proxy card(s).
IMPORTANT INFORMATION ABOUT THE CHANGES:
o The merger has no effect on the number of shares you own or the value
of those shares.
o The advisory fees payable under the new advisory agreements have not
increased.
o The investment objective and policies of your mutual fund investment
have not changed.
In addition to the change in advisory agreements, shareholders are also being
asked to approve other changes outlined in the enclosed Proxy Statement. The
Board of Trustees of your BT Mutual Fund believes that the proposals are
important and recommends that you read the enclosed materials carefully and then
vote for all proposals.
WHAT YOU NEED TO DO:
o Read all enclosed materials including the Questions & Answers
section.
o Choose one of the following options to vote:
1. By Mail: Complete the enclosed proxy card and return in
postage-paid envelope provided.
2. By Telephone: Call the Toll-Free # on your proxy card.
3. By Internet: Logon to www.proxyvote.com.
4. Attend Shareholder Meeting (details enclosed)
PLEASE NOTE: IF YOU OWN SHARES OF MORE THAN ONE FUND, YOU WILL RECEIVE MORE THAN
ONE PROXY CARD. PLEASE SIGN AND RETURN EACH PROXY CARD YOU RECEIVE.
Sincerely,
[INSERT MR. HIRSCH'S SIGNATURE]
Daniel O. Hirsch
Secretary
BT Mutual Funds
<PAGE>
QUESTIONS AND ANSWERS
August 23, 1999
IMPORTANT NEWS
FOR SHAREHOLDERS OF BT MUTUAL FUNDS
Here is a brief overview of some matters affecting your Fund
which require a shareholder vote. We encourage you to read the full text of the
enclosed Proxy Statement, and to vote your shares.
Q. WHAT HAS HAPPENED TO REQUIRE A SHAREHOLDER VOTE?
A. On June 4, 1999, Bankers Trust became a subsidiary of Deutsche Bank
A.G. The combined entity now ranks as the fourth largest investment
manager in the world with $670 billion in assets in a full range of
active and index strategies.
To ensure that Bankers Trust or an affiliate may continue to serve as
investment adviser of the BT Mutual Funds, we are seeking shareholder
approval of new advisory agreements.
THE BOARD MEMBERS OF YOUR FUND RECOMMEND THAT YOU VOTE FOR THESE PROPOSALS.
Q. WHY AM I BEING ASKED TO VOTE ON THE NEW ADVISORY AGREEMENTS?
A. The Investment Company Act, which regulates investment companies in the
United States such as your BT Mutual Fund, requires a shareholder vote
to approve a new advisory agreement following certain types of business
combinations. Each of the new advisory agreements became effective
immediately upon consummation of the merger and will continue in effect
only upon shareholder approval.
Q. HOW DOES THE MERGER AFFECT MY BT MUTUAL FUND?
A. Your BT Mutual Fund and its respective investment objectives have not
changed as a result of the merger. You still own the same shares in the
same Fund as you did prior to the merger. Each of the new advisory
agreements contains substantially the same terms and conditions as the
agreement in effect prior to the merger, except for the dates of
execution and termination. If shareholders do not approve the new
advisory agreements, the agreements will no longer continue and the
governing Boards of your Fund will take such action as they deem to be
in the best interests of the Fund, and their respective shareholders.
<PAGE>
Q. HAVE THE INVESTMENT ADVISORY FEES REMAINED THE SAME?
A. Yes.
Q. WHAT ARE THE BENEFITS OF THE MERGER?
A. There are several potential positive aspects of the merger you may be
interested in. Most notably, the combined institution will be one of
the largest financial institutions in the world, as well as a leader in
a number of important categories, including asset management. The
financial strength of the combined institution coupled with the
increased breadth and depth of its resources and capabilities are
advantages the acquisition brings. Further, as a truly global
institution, the combined entity will be in a unique position to
provide coverage, services and products.
Q. HOW DOES THE BOARD OF TRUSTEES OF MY BT MUTUAL FUND RECOMMEND THAT I VOTE?
A. After careful consideration, the Board of Trustees of your BT Mutual
Fund recommends that you vote in favor of all the proposals on the
enclosed proxy card(s).
Q. WHOM DO I CALL FOR MORE INFORMATION?
A. If you need more information, please call Shareholder Communications
Corporation, your Fund's information agent, at 1-800-732-6168.
Q. HOW CAN I VOTE MY SHARES?
A. You may choose from one of the following options to vote your shares:
o By mail, with the enclosed proxy card(s) and return envelope.
o By telephone, with a toll-free call to the telephone number that
appears on your proxy card.
o Through the Internet, by using the Internet address located on your
proxy card and following the instructions on the site.
o In person at the shareholder meeting (see details enclosed in proxy
statement).
Q. WILL MY BT MUTUAL FUND PAY FOR THE PROXY SOLICITATION AND LEGAL COSTS
ASSOCIATED WITH THIS TRANSACTION?
A. No, Bankers Trust will bear these costs.
Q. WHAT HAPPENS IF I OWN SHARES IN MORE THAN ONE BT MUTUAL FUND?
A. If you have more than one BT Mutual Fund in your name at the same
address, you will receive separate proxy cards for each Fund but only
one proxy statement for the account.
PLEASE VOTE ALL ISSUES ON EACH PROXY CARD THAT YOU RECEIVE. THANK YOU FOR
MAILING YOUR PROXY CARD(S) PROMPTLY.
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BT INVESTMENT PORTFOLIOS
SMALL CAP INDEX PORTFOLIO
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 8, 1999
A Special Meeting of shareholders of Small Cap Index Portfolio (the
"Portfolio") will be held at the offices of BT Alex. Brown Incorporated, One
South Street, 30th Floor, Baltimore, Maryland 21202 on October 8, 1999 at 11:00
a.m. (the "Special Meeting"). The Portfolio is organized as a separate series of
BT Investment Portfolios (the "Trust"), an open-end management investment
company established as a trust under the laws of the State of New York.
The Special Meeting is being held to consider and vote on the following
matters for the Portfolio, as indicated below and more fully described under the
corresponding Proposals in the Proxy Statement, and such other matters as may
properly come before the meeting or any adjournments thereof:
<TABLE>
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PROPOSAL I: To approve or disapprove new investment advisory agreements
---------- (each a "New Advisory Agreement" and together the "New
Advisory Agreements") for the Portfolio:
A. To approve or disapprove a New Advisory Agreement between
the Trust and Bankers Trust Company ("Bankers Trust") (the
"New BT Advisory Agreement").
B. To approve or disapprove a New Advisory Agreement between
the Trust and Morgan Grenfell Inc. ("MGI" and, together with
Bankers Trust, the "Advisers") (the "New MGI Advisory
Agreement") to be implemented within two years of the date of
the Special Meeting upon approval of the members of the
Trust's Board of Trustees, who are not "interested persons"
("Independent Trustees") (as defined in the Investment Company
Act of 1940, as amended (the "Act")).
C. To approve or disapprove a new sub-investment advisory
agreement (the "New Sub-advisory Agreement," which term,
unless otherwise specified, is included within the meaning of
New Advisory Agreements) among the Trust, MGI and Bankers
Trust under which Bankers Trust may perform certain of MGI's
responsibilities, at MGI's expense, under the New MGI Advisory
Agreement with the Trust upon approval of the Independent
Trustees.
PROPOSAL II: To elect Trustees of the Trust to hold office until their
----------- respective successors have been duly elected and qualified or
until their earlier resignation or removal.
PROPOSAL III: To ratify or reject the selection of PricewaterhouseCoopers
------------ LLP as the independent accountants for the Portfolio's current
fiscal year.
</TABLE>
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The appointed proxies will vote in their discretion on any other
business as may properly come before the Special Meeting or any adjournment
thereof.
THE NEW ADVISORY AGREEMENTS DESCRIBED IN PROPOSALS IA, IB AND IC,
RESPECTIVELY, WILL CONTAIN SUBSTANTIALLY THE SAME TERMS AND CONDITIONS, EXCEPT
FOR THE PARTIES AND DATES OF EXECUTION, EFFECTIVENESS AND INITIAL TERM, AS THE
PRIOR INVESTMENT ADVISORY AGREEMENT PURSUANT TO WHICH SERVICES WERE PROVIDED TO
THE PORTFOLIO. IN ADDITION, THE FORM OF NEW SUB-ADVISORY AGREEMENT AUTHORIZES
THE APPLICABLE INVESTMENT ADVISER TO ADJUST THE DUTIES, THE AMOUNTS OF ASSETS TO
BE MANAGED AND THE FEES PAID TO THE INVESTMENT SUBADVISER WITH AND UPON THE
APPROVAL OF THE INDEPENDENT TRUSTEES. AS MORE FULLY DISCUSSED IN THE
ACCOMPANYING PROXY STATEMENT, APPROVAL OF THE NEW ADVISORY AGREEMENTS, WHICH
PROVIDE FOR THE SAME SERVICES TO BE PROVIDED AT THE SAME FEES, IS GENERALLY
OCCASIONED BY THE MERGER OF CIRCLE ACQUISITION CORPORATION, A WHOLLY OWNED
SUBSIDIARY OF DEUTSCHE BANK A.G. ("DEUTSCHE BANK"), WITH AND INTO BANKERS TRUST
CORPORATION, THE PARENT COMPANY OF BANKERS TRUST. MGI IS, AND AS A RESULT OF
THIS TRANSACTION, BANKERS TRUST BECAME, AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
DEUTSCHE BANK. THE NEW ADVISORY AGREEMENT WITH MGI DESCRIBED IN PROPOSAL IB AND
THE NEW SUB-ADVISORY AGREEMENT WITH BANKERS TRUST DESCRIBED IN PROPOSAL IC WILL
PERMIT DEUTSCHE BANK, UPON THE APPROVAL OF THE INDEPENDENT TRUSTEES, TO SIMPLIFY
THE ORGANIZATIONAL STRUCTURE OF ITS U.S. MUTUAL FUND OPERATIONS, ENHANCE THE
EFFICIENCY OF THEIR ADMINISTRATION AND PROMOTE CONSISTENCY OF INTERNAL CONTROLS,
COMPLIANCE AND REGULATORY OVERSIGHT. THE DEFERRAL IN IMPLEMENTING THE NEW
ADVISORY AGREEMENT WITH MGI IS NEEDED TO PERMIT DEUTSCHE BANK A SUFFICIENT
AMOUNT OF TIME TO PLAN, PREPARE AND INSTITUTE THE NECESSARY ARRANGEMENTS FOR MGI
TO CONSOLIDATE DEUTSCHE BANK'S U.S. MUTUAL FUND OPERATIONS.
The close of business on July 22, 1999 has been fixed as the record
date for the determination of the shareholders of the Portfolio entitled to
notice of, and to vote at, the Special Meeting. You are cordially invited to
attend the Special Meeting.
IF YOU HAVE ANY QUESTIONS CONCERNING THE PROXY STATEMENT OR THE PROCEDURES TO BE
FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT SHAREHOLDER
COMMUNICATIONS CORPORATION AT 1-800-732-6168.
This notice and related proxy material are first being mailed to
shareholders on or about August 23, 1999. This proxy is being solicited on
behalf of the Board of Trustees of the Trust.
By Order of the Board of Trustees,
Daniel O. Hirsch, SECRETARY
New York, New York
August 23, 1999
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WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN
THE ENCLOSED ENVELOPE IN ORDER TO ASSURE REPRESENTATION
OF YOUR SHARES (UNLESS YOU ARE VOTING BY TELEPHONE OR
THROUGH THE INTERNET). NO POSTAGE NEED BE AFFIXED
IF THE PROXY CARD IS MAILED IN THE UNITED STATES.
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<PAGE>
BT INVESTMENT PORTFOLIOS
SMALL CAP INDEX PORTFOLIO
One South Street
Baltimore, Maryland 21202
PROXY STATEMENT FOR THE SPECIAL MEETING OF SHAREHOLDERS
OCTOBER 8, 1999
This Proxy Statement ("Proxy Statement") is being furnished in
connection with the solicitation of proxies by the Board of Trustees of BT
Investment Portfolios (the "Trust") with respect to Small Cap Index Portfolio
(the "Portfolio") for use at the special meeting of the Portfolio to be held at
the offices of BT Alex. Brown Incorporated, One South Street, 30th Floor,
Baltimore, Maryland 21202 on October 8, 1999 at 11:00 a.m. (the "Special
Meeting") and at any adjournments thereof. This Proxy Statement and accompanying
proxy card(s) ("Proxy") are expected to be mailed to shareholders on or about
August 23, 1999.
The Portfolio is organized as a separate series of the Trust, an
open-end management investment company established as a trust under the laws of
the State of New York.
For simplicity, actions are described in this Proxy Statement as being
taken by the Portfolio although all actions are actually taken by the Trust on
behalf of the Portfolio. Your vote and the vote of other shareholders of the
Portfolio determines how the Portfolio will vote with respect to itself and the
Trust. See "Background."
The Special Meeting is being held to consider and vote on the following
matters for the Portfolio, as indicated below and described more fully under the
corresponding Proposals discussed herein, and such other matters as may properly
come before the meeting or any adjournments thereof:
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<TABLE>
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<S> <C>
PROPOSAL I: To approve or disapprove new investment advisory agreements
---------- (each a "New Advisory Agreement" and together the "New
Advisory Agreements") for the Portfolio:
A. To approve or disapprove a New Advisory Agreement between
the Trust and Bankers Trust Company ("Bankers Trust") (the
"New BT Advisory Agreement").
B. To approve or disapprove a New Advisory Agreement between
the Trust and Morgan Grenfell Inc. ("MGI" and, together with
Bankers Trust, the "Advisers") (the "New MGI Advisory
Agreement") to be implemented within two years of the date of
the Special Meeting upon approval of the members of the
Portfolio's Board of Trustees, who are not "interested
persons" thereof ("Independent Trustees") (as defined in the
Investment Company Act of 1940, as amended (the "Act")).
C. To approve or disapprove a new sub-investment advisory
agreement (the "New Sub-advisory Agreement," which term,
unless otherwise specified, is included within the meaning of
the New Advisory Agreements) among the Trust, MGI and Bankers
Trust under which Bankers Trust may perform certain of MGI's
responsibilities, at MGI's expense, under the New MGI Advisory
Agreement with the Trust upon approval of the Independent
Trustees.
PROPOSAL II: To elect Trustees of the Trust to hold office until their
----------- respective successors have been duly elected and qualified or
until their earlier resignation or removal.
PROPOSAL III: To ratify or reject the selection of PricewaterhouseCoopers
------------ LLP as the independent accountants for the Portfolio for the
current fiscal year.
</TABLE>
The appointed proxies will vote on any other business as may properly
come before the Special Meeting or any adjournment thereof.
Among other proposals, the shareholders of the Portfolio are to
consider the election of Charles S. Biggar, S. Leland Dill, Martin J. Gruber,
Richard Hale, Richard J. Herring, Bruce E. Langton, Philip Saunders, Jr. and
Harry Van Benschoten (the "Trustee Nominees") as Trustees of the Trust. Messrs.
Biggar, Dill and Saunders currently serve on the Board of the Trust (the
"Board"). To ensure adherence by the Portfolio to Section 15(f) of the Act, only
Mr. Hale will be an "interested person" (within the meaning of Section 2(a)(19)
of the Act) of the Board following the Merger (as defined herein) and the
approval of the New Advisory Agreements.
Notice of the Special Meeting and a Proxy accompany this Proxy
Statement. Proxy solicitations will be made primarily by mail, but solicitations
may also be made by telephone, telegraph, through the Internet or in person by
officers or agents of the Portfolio. All costs of solicitation, including (a)
printing and mailing of this Proxy Statement and accompanying material, (b) the
reimbursement of brokerage firms and others for their expenses in forwarding
solicitation material to the beneficial owners of the Portfolio's shares, (c)
payment to Shareholder Communications
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Corporation for its services in soliciting proxies and (d) supplementary
solicitations to submit Proxies, will be borne by Bankers Trust. If the
Portfolio records votes by telephone or through the Internet, it will use
procedures designed to authenticate shareholders' identities, to allow
shareholders to authorize the voting of their shares in accordance with their
instructions, and to confirm that their instructions have been properly
recorded. Proxies voted by telephone or through the Internet may be revoked at
any time before they are voted in the same manner that proxies voted by mail may
be revoked.
THE ANNUAL REPORT OF THE PORTFOLIO CONTAINING AUDITED FINANCIAL
STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998, AS WELL AS THE
SEMI-ANNUAL REPORT OF THE PORTFOLIO (EACH A "REPORT"), HAVE PREVIOUSLY BEEN
FURNISHED TO THE PORTFOLIO'S SHAREHOLDERS. AN ADDITIONAL COPY OF EACH REPORT
WILL BE FURNISHED WITHOUT CHARGE UPON REQUEST BY WRITING TO THE PORTFOLIO AT THE
ADDRESS SET FORTH ON THE COVER OF THIS PROXY STATEMENT OR BY CALLING
1-800-730-1313.
If the enclosed Proxy is properly executed and returned in time to be
voted at the Special Meeting, the shares represented thereby will be voted in
accordance with the instructions marked on the Proxy. Shares of the Portfolio
are entitled to one vote each at the Special Meeting and fractional shares are
entitled to proportionate shares of one vote. If no instructions are marked on
the Proxy with respect to a specific Proposal, the Proxy will be voted "FOR" the
approval of such Proposal and in accordance with the judgment of the persons
appointed as proxies with respect to any other matter that may properly come
before the Special Meeting. Any shareholder giving a Proxy has the right to
attend the Special Meeting to vote his/her shares in person (thereby revoking
any prior Proxy) and also the right to revoke the Proxy at any time by written
notice received by the Portfolio prior to the time it is voted.
Bankers Trust will vote any shares in accounts as to which it has
investment authority, and shares in any other accounts as to which Bankers Trust
is the agent of record, which are not otherwise represented in person or by
proxy at the Special Meeting. Bankers Trust will vote shares of the Portfolio
over which it has investment discretion in accord with its fiduciary and other
legal obligations, and in its discretion may consult with the beneficial owners
or other fiduciaries. Bankers Trust will vote shares of the Portfolio for which
it is the owner of record but does not have investment discretion, with respect
to each Proposal on which shareholders of the Portfolio are entitled to vote,
which are otherwise represented in person or by proxy at the Special Meeting.
These shares will be voted by Bankers Trust for, against, or abstaining, in the
same proportion as the votes cast by holders of all shares in the Portfolio
otherwise represented at the Special Meeting. This practice is commonly referred
to as "mirror" or "echo" voting.
In the event that a quorum is not present at the Special Meeting, or if
a quorum is present but sufficient votes to approve a Proposal are not received,
the persons named as proxies may propose one or more adjournments of the Special
Meeting to permit further solicitation of Proxies with respect to the Proposal.
In determining whether to adjourn the Special Meeting, the following factors may
be considered: the nature of the proposals that are the subject of the Special
Meeting, the percentage of votes actually cast, the percentage of negative votes
actually cast, the nature of any further solicitation and the information to be
provided to shareholders with respect to the reasons for the solicitation. Any
adjournment will require the affirmative vote of a majority of those shares
represented at the Special Meeting in person or by Proxy. The persons named as
proxies will vote those Proxies that they are entitled to vote "FOR" any
Proposal in favor of an adjournment and will vote those Proxies required to be
voted "AGAINST" any such Proposal against any adjournment. A shareholder vote
may be taken on one or more of the Proposals in the Proxy Statement prior to any
adjournment if sufficient votes have been received and it is otherwise
appropriate. A quorum of shareholders is constituted by the presence in person
or by proxy of the holders of one-third of the outstanding shares of the
Portfolio
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entitled to vote at the Special Meeting. For purposes of determining the
presence of a quorum for transacting business at the Special Meeting,
abstentions and broker "non-votes" (that is, proxies from brokers or nominees
indicating that these persons have not received instructions from the beneficial
owner or other persons entitled to vote shares on a particular matter with
respect to which the brokers or nominees do not have discretionary power) will
be treated as shares that are present but which have not been voted. (See "Vote
Required" for a further discussion of abstentions and broker non-votes.)
Shareholders of record at the close of business on July 22, 1999 (the
"Record Date") are entitled to notice of, and to vote at, the Special Meeting.
As of the Record Date, 8,323,665.347 shares of the Portfolio were issued and
outstanding.
In order that your shares may be represented, you are requested to
(unless you are voting by telephone or through the Internet):
o indicate your instructions on the Proxy;
o date and sign the Proxy; and
o mail the Proxy promptly in the enclosed envelope.
BENEFICIAL OWNERSHIP OF SHARES OF THE FUNDS
Annex I attached hereto sets forth information as of the Record Date
regarding the beneficial ownership of the Portfolio's shares by (i) the only
persons known by the Portfolio to beneficially own more than five percent of the
outstanding shares of the Portfolio, (ii) the Trustees and Trustee Nominees,
(iii) the executive officers of the Portfolio, and (iv) the Trustees and
executive officers of the Portfolio as a group. The number of shares
beneficially owned by each Trustee, Trustee Nominee or executive officer is
determined under rules of the Securities and Exchange Commission (the
"Commission"), and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under these rules, beneficial ownership
includes any shares as to which the individual has the sole or shared voting
power or investment power and also any shares which the individual has the right
to acquire within 60 days of the Record Date through the exercise of any stock
option or other right. Unless otherwise indicated, each person has sole
investment and voting power (or shares this power with his or her spouse) with
respect to the shares set forth in Annex I. The inclusion herein of any shares
deemed beneficially owned does not constitute an admission of beneficial
ownership of the shares.
Collectively, the Trustees and officers of the Portfolio own less than
1% of the its outstanding shares.
BACKGROUND
THE PORTFOLIO. As indicated earlier, the Portfolio is a series of the
Trust, which is an open-end management investment company established as a trust
under the laws of the State of New York. The Portfolio and the other series of
the Trust will vote together with respect to the election of Trustees of the
Trust and separately with respect to the approval of the New Advisory Agreements
and the ratification of the Portfolio's accountants. Bankers Trust, a banking
corporation organized under the laws of the State of New York, located at 130
Liberty Street (One Bankers Trust Plaza), New York, New York 10006, serves as
the investment adviser, custodian and administrator of the Portfolio. Bankers
Trust is a wholly owned subsidiary of Bankers Trust Corporation ("BT
Corporation"), located at 130 Liberty Street (One Bankers Trust Plaza), New
York, New York 10006, a registered bank
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holding company organized under the laws of the State of New York. As discussed
later in this Proxy Statement, as a result of the Merger (as defined herein), BT
Corporation became a wholly owned subsidiary of Deutsche Bank, A.G. ("Deutsche
Bank"), located at 31 West 52 Street, New York, NY 10019. ICC Distributors,
Inc., located at Two Portland Square, Portland, Maine 04101, serves as the
principal underwriter of the Portfolio. ICC Distributors, Inc. is not affiliated
with Bankers Trust, Deutsche Bank or any of their affiliates.
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<PAGE>
PROPOSALS IA, IB AND IC
APPROVAL OF NEW ADVISORY AGREEMENTS
THE NEW ADVISORY AGREEMENTS WILL CONTAIN SUBSTANTIALLY THE SAME TERMS
AND CONDITIONS, EXCEPT FOR THE PARTIES AND THE DATES OF EXECUTION, EFFECTIVENESS
AND INITIAL TERM, AS THE PRIOR INVESTMENT ADVISORY AGREEMENT PURSUANT TO WHICH
SERVICES WERE PROVIDED TO THE PORTFOLIO. IN ADDITION, THE FORM OF NEW
SUB-ADVISORY AGREEMENT AUTHORIZES THE APPLICABLE INVESTMENT ADVISER TO ADJUST
THE DUTIES, THE AMOUNT OF ASSETS TO BE MANAGED AND THE FEES PAID TO THE
APPLICABLE INVESTMENT SUBADVISER WITH AND UPON THE APPROVAL OF THE BOARD AND THE
INDEPENDENT TRUSTEES. AS MORE FULLY DISCUSSED BELOW, APPROVAL OF THE NEW
ADVISORY AGREEMENTS, WHICH PROVIDE FOR THE SAME SERVICES TO BE PROVIDED AT THE
SAME FEES, IS GENERALLY OCCASIONED BY THE MERGER (AS DEFINED HEREIN) PURSUANT TO
WHICH BANKERS TRUST BECAME AN INDIRECT SUBSIDIARY OF DEUTSCHE BANK. THE NEW MGI
ADVISORY AGREEMENT DESCRIBED IN PROPOSAL IB AND THE NEW SUB-ADVISORY AGREEMENT
WITH BANKERS TRUST DESCRIBED IN PROPOSAL IC WILL PERMIT DEUTSCHE BANK, UPON THE
APPROVAL OF THE INDEPENDENT TRUSTEES, TO SIMPLIFY THE ORGANIZATIONAL STRUCTURE
OF ITS U.S. MUTUAL FUND OPERATIONS, ENHANCE THE EFFICIENCY OF THEIR
ADMINISTRATION AND PROMOTE CONSISTENCY OF INTERNAL CONTROLS, COMPLIANCE AND
REGULATORY OVERSIGHT. THE DEFERRAL IN IMPLEMENTING THE NEW MGI ADVISORY
AGREEMENT IS NEEDED TO PERMIT DEUTSCHE BANK A SUFFICIENT AMOUNT OF TIME TO PLAN,
PREPARE AND INSTITUTE THE NECESSARY ARRANGEMENTS FOR MGI TO CONSOLIDATE DEUTSCHE
BANK'S U.S. MUTUAL FUND OPERATIONS.
THE PRIOR ADVISORY AGREEMENT
THE PRIOR ADVISORY AGREEMENT. Prior to June 4, 1999, Bankers Trust
served as investment adviser to the Portfolio (as discussed earlier) pursuant to
an investment advisory agreement between Bankers Trust and the Trust (the "Prior
Advisory Agreement"). The Prior Advisory Agreement was initially approved by the
Board, including a majority of the Independent Trustees.
The date of the Prior Advisory Agreement was April 28, 1993. The Prior
Advisory Agreement was most recently approved by the Trustees on March 8, 1999.
The advisory fee rate is 0.15%. The fee paid by the Trust to Bankers Trust for
the Portfolio's last fiscal year was $151,232.(1)
THE MERGER. On November 30, 1998, BT Corporation, Deutsche Bank and
Circle Acquisition Corporation entered into an Agreement and Plan of Merger (the
"Merger Agreement"). Pursuant to the terms of the Merger Agreement, Circle
Acquisition Corporation, a wholly owned New York subsidiary of Deutsche Bank,
merged with and into BT Corporation on June 4, 1999, with BT Corporation
continuing as the surviving entity (the "Merger"). Under the terms of the
Merger, each outstanding share of BT Corporation common stock was converted into
the right to receive $93 in cash, without interest. Since the Merger, BT
Corporation, along with its affiliates, has continued to offer the range of
financial products and services, including investment advisory services, that it
offered prior to the Merger.
As a result of the Merger, BT Corporation became a wholly owned
subsidiary of Deutsche Bank. Deutsche Bank is a banking company with limited
liability organized under the laws of the Federal Republic of Germany. Deutsche
Bank is the parent company of a group consisting of banks,
(1) The Portfolio's total fund operating expenses are capped pursuant to an
Expense Limitation Agreement between Bankers Trust and the Trust. The fee
rate and fee paid do not reflect the cap.
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capital markets companies, fund management companies, mortgage banks, a property
finance company, installment financing and leasing companies, insurance
companies, research and consultancy companies and other domestic and foreign
companies (the "Deutsche Bank Group"). At March 31, 1999, the Deutsche Bank
Group had total assets of US $727 billion. The Deutsche Bank Group's capital and
reserves at March 31, 1999, were US $19.6 billion.
IMPACT OF THE MERGER ON THE PRIOR ADVISORY AGREEMENT. Section 15(a) of
the Act provides, in pertinent part, that "[i]t shall be unlawful for any person
to serve or act as investment adviser of a registered investment company, except
pursuant to a written contract, which contract, whether with such registered
company or with an investment adviser of such registered company, has been
approved by the vote of a majority of the outstanding voting securities of such
registered company . . . ." Section 15(a)(4) of the Act further requires that
such written contract provide for automatic termination in the event of its
assignment. Section 2(a)(4) of the Act defines "assignment" to include any
direct or indirect transfer of a contract by the assignor.
While it may be argued otherwise, consummation of the Merger may have
resulted in an "assignment" of the Prior Advisory Agreement within the meaning
of the Act, terminating the agreement according to its terms and the Act as of
June 4, 1999. Specifically, as Bankers Trust is a wholly owned subsidiary of BT
Corporation, the merger of Circle Corporation with and into BT Corporation could
be deemed to have resulted in an "assignment" of the Prior Advisory Agreement
with Bankers Trust.
On May 25, 1999, Bankers Trust was granted an exemptive order (the
"Exemptive Order") by the Commission permitting implementation, without
obtaining prior shareholder approval, of the New BT Advisory Agreement during an
interim period commencing on the date of the closing of the Merger and
continuing, for a period of up to 150 days, through the date on which the New BT
Advisory Agreement is approved or disapproved by the shareholders of the
Portfolio (the "Interim Period"). Under the terms of the Exemptive Order,
Bankers Trust was allowed to receive advisory fees during the Interim Period
pursuant to the New BT Advisory Agreement, provided that these fees would be
held in escrow pending shareholder approval of the New BT Advisory Agreement. In
accordance with the Exemptive Order, any advisory fees charged to the Portfolio
and paid to Bankers Trust under the New BT Advisory Agreement have been held in
an interest-bearing escrow account and the Trust expects to continue to deposit
these fees in such account until approval of the New BT Advisory Agreement by
the shareholders of the Portfolio has been obtained. If the New BT Advisory
Agreement is not approved by the shareholders by the expiration of the Interim
Period, the fees held in escrow will be remitted to the Portfolio. As of June
30, 1999, the amount in escrow totaled $84,714.15.
The shareholders of the Portfolio are not being asked to approve or
disapprove the Merger or the Merger Agreement; rather, they are being asked
under these Proposals to approve and continue the New BT Advisory Agreement and
to approve the New Advisory Agreements for the Portfolio. OTHER THAN THE PARTIES
AND THE DATES OF EXECUTION, EFFECTIVENESS, AND INITIAL TERM OF THE AGREEMENT,
THE NEW ADVISORY AGREEMENTS WILL CONTAIN SUBSTANTIALLY THE SAME TERMS AND
CONDITIONS AS THE PRIOR ADVISORY AGREEMENT. In addition, the form of New
Sub-advisory Agreement authorizes the investment adviser to adjust the duties,
the amounts of assets to be managed and the fees paid to the investment
subadviser with and upon the approval of the Independent Trustees. The advisory
fee rate charged to the Trust under the Prior Advisory Agreement has continued
to apply under the New BT Advisory Agreement and would continue to apply under
the New MGI Advisory Agreement. MGI, and not the Trust, would be solely
responsible for paying the sub-advisory fees, which may vary from time to time
as approved by the Independent Trustees. The sub-advisory fees would be paid by
MGI directly to the subadviser.
-7-
<PAGE>
In addition, the Advisers have advised the Portfolio that it can expect to
continue to receive the same level and quality of services under the New BT
Advisory Agreement as it received under the Prior Advisory Agreement. The
Advisers have represented to the Board that in the event of any material change
in the investment management personnel of the Advisers responsible for providing
services to the Portfolio, the Advisers will apprise and consult with the Board
to ensure that the Board, including a majority of the Board's Independent
Trustees, is satisfied that the services provided by the Advisers will not be
diminished in scope and quality.
THE NEW ADVISORY AGREEMENTS
THE NEW ADVISORY AGREEMENTS. The form of New Advisory and Sub-advisory
Agreement is attached to this Proxy Statement as Exhibit A. If shareholders
approve the New Advisory Agreements, each of the agreements will remain in
effect for an initial term of two years from its effective date, and may be
renewed annually thereafter by specific approval of the Board or shareholders of
the Portfolio, provided that they are also approved by a majority of the
Independent Trustees. The terms and conditions of the New Advisory Agreements,
other than the parties and the dates of execution, effectiveness and initial
term, are substantially the same as those of the Prior Advisory Agreement. In
addition, the form of New Sub-advisory Agreement authorizes the applicable
investment adviser to adjust the duties, the amount of assets to be managed and
the fees paid to the investment subadviser with and upon approval of the Board
and the Independent Trustees. The New BT Advisory Agreement became effective as
of June 4, 1999, the date of the consummation of the Merger.
If the New MGI Advisory Agreement and/or the New Sub-advisory Agreement
is approved, Bankers Trust will continue to perform its advisory duties under
the New BT Advisory Agreement until the New MGI Advisory Agreement and/or the
New Sub-advisory Agreement, as applicable, is implemented. MGI, as Adviser, and
Bankers Trust, as subadviser, would perform its respective advisory duties and
be paid its respective advisory fees only upon implementation of the applicable
New Advisory Agreement.
Under the terms of the New Advisory Agreement, as under the Prior
Advisory Agreement, each of the Advisers agrees to furnish the Portfolio with
investment advisory and other services in connection with a continuous
investment program for the Portfolio, including investment research and
management with respect to all securities, investments, cash and cash
equivalents in the portfolios. Subject to the supervision and control of the
Board, each of the Advisers agrees to (a) conform to all applicable rules and
regulations of the Commission, including all applicable provisions of the
Securities Act of 1933, as amended (the "1933 Act"), the Securities Exchange Act
of 1934 (the "Exchange Act"), the Act and the Investment Advisers Act of 1940,
as amended (the "Advisers Act"), and will conduct its activities under the New
Advisory Agreement in accordance with applicable regulations of the Board of
Governors of the Federal Reserve System pertaining to the investment advisory
activities of bank holding companies and their subsidiaries, (b) provide the
services rendered by it in accordance with the Portfolio's investment objectives
and policies as stated in the Prospectus and Statement of Additional Information
of the Portfolio, as from time to time in effect, and the Portfolio's then
current registration statement on Form N-1A as filed with the Commission and the
then current offering Memorandum if the Portfolio is not registered under the
1933 Act, (c) place orders pursuant to its investment determinations for the
Portfolio either directly with the issuer or with any broker or dealer selected
by it, (d) determine from time to time what securities or other investments will
be purchased, sold or retained by the Portfolio, and (e) maintain books and
records with respect to the securities transactions of the Portfolio and render
to the Board such periodic and special reports as they may request.
-8-
<PAGE>
THE ADVISORY FEE. THE INVESTMENT ADVISORY FEE RATE CHARGED TO THE TRUST
UNDER THE NEW BT ADVISORY AGREEMENT AND THE NEW MGI ADVISORY AGREEMENT IS THE
SAME AS THE INVESTMENT ADVISORY FEE RATE CHARGED UNDER THE PRIOR ADVISORY
AGREEMENT. AS NOTED ABOVE, THE INVESTMENT ADVISORY FEE PAYABLE UNDER THE NEW
SUB-ADVISORY AGREEMENT WOULD BE PAID BY MGI, NOT THE TRUST, AND MAY VARY FROM
TIME TO TIME, SUBJECT TO APPROVAL OF THE BOARD INCLUDING A MAJORITY OF ITS
INDEPENDENT TRUSTEES.
Bankers Trust is paid a fee under the New Advisory Agreements for its
services, calculated daily and paid monthly, equal, on an annual basis, to 0.15%
of the Portfolio's average daily net assets.
GENERALLY. If approved, the New Advisory Agreements, as applicable,
will remain in effect for an initial term of two years (unless sooner
terminated), and shall remain in effect from year to year thereafter if approved
annually (1) by the Board or by the holders of a majority of the Portfolio's
outstanding voting securities and (2) by a majority of the Independent Trustees
who are not parties to such contract or agreement. Like the Prior Advisory
Agreement, the New Advisory Agreements will terminate upon assignment by any
party and are terminable, without penalty, on 60 days' written notice by the
Board or by a "majority" vote of the shareholders of the Portfolio (as defined
in the Act) or upon 60 days' written notice by the applicable Adviser.
The services of the Advisers are not deemed to be exclusive and nothing
in the New Advisory Agreements prevents them or their affiliates from providing
similar services to other investment companies and other clients (whether or not
their investment objectives and policies are similar to those of the Portfolio)
or from engaging in other activities. In addition, the Advisers are obligated to
pay expenses associated with providing the services contemplated by the New
Advisory Agreements. The Trust bears certain other expenses including the fees
of the Board. The Trust also pays any extraordinary expenses incurred.
Under the New Advisory Agreements, each of the Advisers will exercise
its best judgment in rendering its advisory services. The Advisers shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Portfolio in connection with the matters to which the New Advisory
Agreements relate, provided that nothing therein shall be deemed to protect or
purport to protect the Advisers against any liability to the Portfolio or to its
shareholders to which the Advisers could otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence on their part in the
performance of their duties or by reason of the Advisers' reckless disregard of
their obligations and duties under the New Advisory Agreements.
THE ADVISERS
BANKERS TRUST. Bankers Trust is the principal banking subsidiary of BT
Corporation. Bankers Trust is a bank and, therefore, not required to register as
an investment adviser under the Advisers Act. Bankers Trust provides a broad
range of commercial banking and financial services, including originating loans
and other forms of credit, accepting deposits and arranging financings. Bankers
Trust also engages in trading currencies, securities, derivatives and
commodities. In addition to providing investment advisory services to the
Portfolio, Bankers Trust serves as investment adviser to 31 other investment
companies and investment subadviser to 34 other investment companies. (See Annex
II for a list of those investment companies that Bankers Trust advises that have
investment objectives similar to those of the Portfolio, together with
information regarding the fees charged to those companies.) As of March 31,
1999, Bankers Trust had over $313 billion of assets under management.
-9-
<PAGE>
The names, businesses addresses and principal occupations of the
current directors and chief executive officer of Bankers Trust are set forth
below.
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
<S> <C>
Josef Ackermann Chairman of the Board, Chief Executive Officer and
Deutsche Bank A.G. President, Bankers Trust Company; Member, Board of Managing
Taunusanlage 12 Directors, Deutsche Bank A.G.
D-60262 Frankfurt am Main
Federal Republic of Germany
Hans Angermueller Shearman & Sterling, of counsel
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Mr. George B. Beitzel Director, Computer Task Group, Inc.; Director, Phillips
29 King Street Petroleum Company; Director, TIG Holdings Inc.
Chappaqua, NY 10514-3432
Mr. William R. Howell Chairman Emeritus, J.C. Penney Company, Inc.; Director,
J.C. Penney Company, Inc. Exxon Corporation; Director, Halliburton Company; Director,
P.O. Box 10001 National Organization on Disability; Director, National
Dallas, TX 75301-1109 Retail Federation; Director and Chairman, Southern Methodist
University Board of Trustees; Director, Warner-Lambert
Company; Director, The Williams Companies, Inc.
Hermann-Josef Lamberti Member, Board of Managing Directors, Deutsche Bank A.G.
Deutsche Bank A.G.
Taunusanlage 12
D-60262 Frankfurt am Main
Federal Republic of Germany
John A. Ross Regional Chief Executive Officer, Deutsche Bank Americas
Deutsche Bank A.G. Holding Corp.
31 West 52nd Street
New York, NY 10019
Ronaldo H. Schmitz Member, Board of Managing Directors, Deutsche Bank A.G.
Deutsche Bank A.G.
Taunusanlage 12
D-60262 Frankfurt am Main
Federal Republic of Germany
</TABLE>
In addition to serving as investment adviser to the Portfolio, Bankers
Trust also serves as administrator, transfer agent and custodian of the
Portfolio. These services will continue to be provided by Bankers Trust after
approval of the New Advisory Agreements. The Trust paid fees to Bankers Trust in
the amount of $50,411 for these services for the most recently completed fiscal
year.
-10-
<PAGE>
MGI. MGI is a corporation organized under the laws of the State of
Delaware and is a registered investment adviser under the Advisers Act. It is
located at 885 Third Avenue, 32nd Floor, New York, NY 10022. MGI provides a full
range of investment advisory services to institutional clients. MGI serves as
investment adviser to ten other investment companies and is subadviser to five
other investment companies. MGI is a subsidiary of Morgan Grenfell Asset
Management Ltd. ("MGAM"), located at 20 Finsbury Circus, London, England, a
wholly owned subsidiary of Deutsche Morgan Grenfell Group PLC, located at Great
Winchester Street, London, England, an investment holding company, which is, in
turn, a wholly owned subsidiary of Deutsche Bank. MGAM currently manages
approximately $16.5 billion for a wide range of pension, corporate, insurance,
local authority, government and private clients worldwide. (See Annex II for a
list of those investment companies that MGI advises that have investment
objectives similar to those of the Portfolio, together with information
regarding the fees charged to those companies.)
The names, business addresses and principal occupations of the current
directors and chief executive officer of MGI are set forth below. Except as
otherwise indicated, the business address of the individuals named below is 885
Third Avenue, 32nd Floor, New York, NY 10022 and their positions at MGI
constitute their principal occupation.
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
<S> <C>
Richard Marin President and Director, Morgan Grenfell
280 Park Avenue Inc.; Managing Director, Bankers Trust
New York, NY 10017 Company
David Westover Baldt Executive Vice President and Director,
Morgan Grenfell Inc.
Joan A. Binstock Chief Operating Officer, Secretary,
Treasurer and Director, Morgan Grenfell Inc.
Audrey Mary Theresa Jones Executive Vice President, Portfolio Manager
and Director, Morgan Grenfell Inc.
Robert H. Smith Chairman and Director, Morgan Grenfell Inc.;
Chief Executive Officer, Morgan Grenfell
Asset Management; Chairman and Chief
Executive Officer, Morgan Grenfell
Development Capital
Steven Schneider Managing Director, Bankers Trust Company
280 Park Avenue
New York, NY 10017
</TABLE>
-11-
<PAGE>
SECTION 15(F) OF THE ACT
Section 15(f) of the Act provides that when a change of control of an
investment adviser to an investment company occurs, the investment adviser or
any of its affiliated persons may receive an amount or benefit in connection
therewith as long as two conditions are satisfied.
First, no "unfair burden" may be imposed on the investment company as a
result of the transaction relating to the change of control, or any express or
implied terms, conditions or understandings applicable thereto. As defined in
the Act, the term "unfair burden" includes any arrangement during the two (2)
year period after the change in control whereby the investment adviser (or
predecessor or successor adviser), or any "interested person" (as defined in the
Act) of such adviser, receives or is entitled to receive any compensation,
directly or indirectly, from the investment company or its security holders
(other than fees for bona fide investment advisory or other services), or from
any person in connection with the purchase or sale or other property to, or on
behalf of the investment company (other than fees for bona fide brokerage and
principal underwriting services). The Advisers have advised the Boards that
there are no circumstances arising from the Merger that might result in an
"unfair burden" (within the meaning of section 15(f) of the Act) being imposed
on the Portfolio. After conducting its reviews of the Advisers and of Bankers
Trust's performance, and after reviewing materials specifically provided by
Bankers Trust as a result of the termination of the Prior Advisory Agreement and
its request that the Board approve the New Advisory Agreements, the Board was
satisfied that they had received and appropriately considered the relevant
factors and, after consultation with counsel, the Board determined to approve
the New Advisory Agreements.
The second condition is that, during the three (3) year period
immediately following the Merger, at least 75% of the members of the Board must
not be "interested persons" of the Advisers within the meaning of the Act. All
current members of the Board are not, and have continued not to be since the
Merger, "interested persons" of the Advisers.
ADDITIONAL INFORMATION
On March 11, 1999, Bankers Trust announced that it had reached an
agreement with the United States Attorney's Office in the Southern District of
New York to resolve an investigation concerning inappropriate transfers of
unclaimed funds and related record-keeping problems that occurred between 1994
and early 1996. Bankers Trust pleaded guilty to misstating entries in the bank's
books and records and agreed to pay a $63.5 million fine to state and federal
authorities. On July 26, 1999, the federal criminal proceedings were concluded
with Bankers Trust's formal sentencing. The events leading up to the guilty
pleas did not arise out of the investment advisory or mutual fund management
activities of Bankers Trust or its affiliates.
As a result of the plea, absent an order from the Commission, Bankers
Trust would not be able to continue to provide investment advisory services to
the Portfolio. The Commission has granted Bankers Trust a temporary order under
Section 9(c) of the Act to permit Bankers Trust and its affiliates to continue
to provide investment advisory services to registered investment companies, and
Bankers Trust, pursuant to Section 9(c) of the Act, has filed an application for
a permanent order. On May 7, 1999, the Commission extended the temporary order
under Section 9(c) of the Act until the Commission takes final action on the
application for a permanent order or, if earlier, November 8, 1999. However,
there is no assurance that the Commission will grant a permanent order. If the
Commission refuses to grant a permanent order, shareholders will receive
supplemental proxy materials
-12-
<PAGE>
requesting approval to release any amounts held in escrow up to the time of the
refusal and such other action as deemed appropriate by the Board.
RECOMMENDATION OF THE BOARD
At a meeting of the Board held on March 8, 1999 called for the purpose
of, among other things, voting on approval of the New BT Advisory Agreement, the
Board, including the Independent Trustees, unanimously approved the New BT
Advisory Agreement. In reaching this conclusion, the Board obtained from BT
Corporation, Deutsche Bank and Bankers Trust such information as it deemed
reasonably necessary to approve Bankers Trust as investment adviser to the
Portfolio. Additionally, the Board considered a number of factors, including,
among other things, the continuity of the management of the Portfolio after the
Merger; the nature, scope and quality of services that Bankers Trust would
likely provide to the Portfolio; the quality of the personnel of Bankers Trust;
Bankers Trust's commitment to continue to provide these services in the future;
the maintenance of the identical advisory fee rates; and the fact that the New
BT Advisory Agreement contains substantially the same terms and conditions as
the Prior Advisory Agreement. Based on the factors discussed above and others,
the Board determined that the New BT Advisory Agreement is fair and reasonable
and in the best interest of the Portfolio and its shareholders.
At meetings of the Board held on July 15 and July 27, 1999 called for
the purpose of, among other things, discussing and voting on approval of the New
MGI Advisory Agreement and the New Sub-advisory Agreement, the Board obtained
from Deutsche Bank and MGI such information as it deemed reasonably necessary to
approve MGI as investment adviser to the Fund. Representatives of Deutsche Bank
and MGI made detailed presentations at the July 15th and July 27th meetings with
respect to, among other factors, the organizational structure, assets under
management, asset management services, financial condition and business plan of
MGI. The Board considered the same factors described above for the New BT
Advisory Agreement with regard to the New MGI Advisory Agreement and the New
Sub-advisory Agreement. The Board also considered a number of other factors,
including the capacity of MGI to perform its duties under the New Advisory
Agreements; the high degree of continuity of investment management personnel
expected to be available to the Fund because most of the personnel of Bankers
Trust who provided services under the Prior Advisory Agreement will be employed
by MGI; the financial standings of Deutsche Bank and MGI; the benefits to the
Fund and the Trust from technological advances being instituted by Deutsche Bank
on a world-wide basis; the experience and expertise of MGI as an investment
adviser, as reflected in its amount of assets under management, and the new
organizational structure proposed to be created as a component of the Merger and
the benefits that may accrue to the shareholders as a result thereof. With
respect to the last factor, the Board considered that the proposed
organizational structure may simplify the organizational structure of Deutsche
Bank's U.S. mutual fund operations, enhance the efficiency of their
administration and promote consistency of internal controls, compliance and
regulatory oversight. Additionally, the eventual implementation of the New MGI
Advisory Agreement will provide the Fund and the Trust with an investment
adviser registered under the Advisers Act.
The Board was apprised that the deferral in implementing the New MGI
Advisory Agreement is needed to permit Deutsche Bank a sufficient amount of time
to plan, prepare and institute the necessary arrangements for MGI to consolidate
Deutsche Bank's U.S. mutual fund operations. The Advisers also emphasized to the
Board that the New MGI Advisory Agreement and the New Sub-advisory Agreement
would be implemented only upon the approval of the Independent Trustees based on
information they then deemed adequate and necessary to consider these
arrangements. At the July 27th meeting of the
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<PAGE>
Board, a majority of the Board, including a majority of the Independent
Trustees, approved the New MGI Advisory Agreement and the New Sub-advisory
Agreement.
Based on the factors discussed above and others, the Board determined
that the New MGI Advisory Agreement and the New Sub-Advisory Agreement are fair
and reasonable and in the best interest of the shareholders.
In addition, at meetings held on March 24 and April 21, 1999 the Board,
including the Independent Trustees, also were apprised of the guilty pleas
discussed above and the exemptive relief sought by Bankers Trust.
THEREFORE, AFTER CAREFUL CONSIDERATION, THE BOARD, INCLUDING THE
INDEPENDENT TRUSTEES, RECOMMENDS THAT THE SHAREHOLDERS OF THE PORTFOLIO VOTE
"FOR" THE APPROVAL OF THE NEW ADVISORY AGREEMENTS AS SET FORTH IN THESE
PROPOSALS.
IF THE NEW BT ADVISORY AGREEMENT IS APPROVED BY THE SHAREHOLDERS, IT
WILL CONTINUE IN EFFECT AS DESCRIBED ABOVE. IF THE NEW BT ADVISORY AGREEMENT IS
NOT APPROVED BY THE SHAREHOLDERS, THE ADVISORY FEES HELD IN ESCROW WITH RESPECT
TO THE NEW BT ADVISORY AGREEMENT WILL BE PAID OVER TO THE PORTFOLIO. IN SUCH
EVENT, THE BOARD WILL CONSIDER WHAT OTHER ACTION IS APPROPRIATE BASED UPON THE
INTERESTS OF THE SHAREHOLDERS. IF THE NEW MGI ADVISORY AGREEMENT AND/OR THE NEW
SUB-ADVISORY AGREEMENT ARE NOT APPROVED BY THE SHAREHOLDERS, THE NEW BT ADVISORY
AGREEMENT, IF IT HAS BEEN APPROVED BY THE SHAREHOLDERS, WILL CONTINUE IN EFFECT
IN ACCORDANCE WITH ITS TERMS WHILE THE BOARD CONSIDERS WHETHER AND THE EXTENT TO
WHICH OTHER ACTION IS APPROPRIATE BASED UPON THE INTERESTS OF THE SHAREHOLDERS.
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<PAGE>
PROPOSAL II
ELECTION OF BOARD OF TRUSTEES OF THE TRUST
Trustees constituting the entire Board of the Trust are to be elected
at the Special Meeting to serve until their successors have been duly elected
and qualified or until their earlier resignation or removal. The Trustee
Nominees were recently selected by the Independent Trustees and nominated by the
full Board at a meeting held on July 27, 1999. The names and ages of the Trustee
Nominees, their principal occupations during the past five years and certain of
their other affiliations are provided below. Of the Trustee Nominees, Charles P.
Biggar, S. Leland Dill and Philip Saunders, Jr. are currently Trustees of the
Portfolio. No Trustee or Trustee Nominee serves or will serve as an officer of
the Portfolio. Each of the Trustee Nominees has agreed to serve if elected at
the Special Meeting. It is the intention of the persons designated as proxies in
the Proxy, unless otherwise directed therein, to vote at the Special Meeting for
the election of the Trustee Nominees named below as the entire Board. If any
Trustee Nominee is unable or unavailable to serve, the persons named in the
Proxies will vote the Proxies for such other person as the Board may recommend.
The following table sets forth the names, ages, position with the
Trust, and principal occupation of each Trustee Nominee:
<TABLE>
<CAPTION>
TRUSTEE NOMINEES
POSITION WITH
NAME AND AGE PORTFOLIO PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
------------ --------- --------------------------------------------
<S> <C> <C>
Charles P. Biggar(1)+ Trustee of Portfolio Retired; formerly, Vice President of International Business Machines
Age: 68 since the date of its ("IBM") and President of the National Services and Field Engineering
inception Divisions of IBM.
S. Leland Dill(1)+ Trustee of Portfolio Retired; Director, Coutts (U.S.A.) International; Trustee, Phoenix-Zweig
Age: 69 since the date of its Trust(4) and Phoenix-Euclid Market Neutral Fund(4); former Partner of KPMG
inception Peat Marwick; Director, Vintners International Company Inc.; Director,
Coutts Trust Holdings Ltd.; Director, Coutts Group; General Partner,
Pemco(4).
Martin J. Gruber(2) Nomura Professor of Finance, Leonard N. Stern School of Business, New York
Age: 62 University (since 1964); Trustee, TIAA(4); Trustee, SG Cowen Mutual
Funds(4); Trustee, Japan Equity Fund(4); Trustee, Taiwan Equity Fund(4).
Richard Hale* Managing Director, Deutsche Asset Management; Director, Flag Investors
Age: 54 Fund(4); Managing Director, BT Alex. Brown Incorporated; Director and
President, Investment Company Capital Corp.
Richard J. Herring(2) Jacob Safra Professor of International Banking, Professor of Finance and
Age: 53 Vice Dean, The Wharton School, University of Pennsylvania (since 1972).
Bruce E. Langton(2) Retired; Trustee, Allmerica Financial Mutual Funds (1994 to present);
Age: 68 Member, Pension & Thrift Plans and Investment Committee, Unilever U.S.
Corporation (1989 to present)(3); Director, TWA Pilots Directed Account
Plan and 401K Plan (1988 to present)(4).
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
TRUSTEE NOMINEES
POSITION WITH
NAME AND AGE PORTFOLIO PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
------------ --------- --------------------------------------------
<S> <C> <C>
Philip Saunders, Jr.(1)+ Trustee of Portfolio Principal, Philip Saunders Associates (Economic and Financial Analysis);
Age: 63 since the date of its Former Director, Financial Industry Consulting, Wolf and Company;
inception President, John Hancock Home Mortgage Corporation; Senior Vice President of
Treasury and Financial Services, John Hancock Mutual Life Insurance
Company, Inc.
Harry Van Benschoten(2) Retired; Director, Canada Life Insurance Corporation of New York.
Age: 71
</TABLE>
- ------------------
* "Interested Person" within the meaning of Section 2(a)(19) of the Act. Mr.
Hale is a Managing Director of Deutsche Asset Management, the U.S. asset
management unit of Deutsche Bank and its affiliates.
+ Member of the Audit Committee.
(1) Holds one other trusteeship in the Bankers Trust Fund Complex, as defined
herein.
(2) Holds two other trusteeships in the Bankers Trust Fund Complex, as defined
herein.
(3) A publicly held company with securities registered pursuant to Section 12 of
the Exchange Act.
(4) An investment company registered under the Act.
The Board has established an Audit Committee that meets with the
Portfolio's independent accountants to review its financial statements, the
adequacy of internal controls and the accounting procedures and policies of the
Portfolio, and reports on these matters to the Board. The Independent Trustees,
who constitute 100% of the membership of the current Board, select and nominate
the new trustee nominees who are not "interested persons," as defined under the
Act, of the Portfolio. The Board does not have a compensation committee. During
1998, the Board held six meetings and the Audit Committee held two meetings. No
Trustee attended less than 75% of the applicable meetings.
If Richard Hale is elected, he will not be a member of the Audit
Committee.
The following table sets forth the compensation received by the Trustee
Nominees for their services to the Portfolio and Bankers Trust Fund Complex (as
defined below) during the most recent calendar year ended December 31, 1998. In
addition to the fees listed below, the Trustees are also reimbursed for all
reasonable expenses incurred during the execution of their duties for the
Portfolio and Bankers Trust Fund Complex.*
-16-
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Aggregate Estimated
Compensation Pension or Retirement Annual Total Compensation
from the Benefits Accrued as Benefits upon From the Complex*
Name of Trustee Portfolio Part of Trust Expenses Retirement Paid to Trustees
- -------------------------- ---------------- ------------------------- -------------- ------------------------
<S> <C> <C> <C> <C>
Charles S. Biggar $25,142.655 N/A N/A $36,250
- -------------------------- ---------------- ------------------------- -------------- ------------------------
S. Leland Dill $21,278.75 N/A N/A $36,250
- -------------------------- ---------------- ------------------------- -------------- ------------------------
Martin J. Gruber N/A N/A N/A $36,250
- -------------------------- ---------------- ------------------------- -------------- ------------------------
Richard Hale N/A N/A N/A N/A
- -------------------------- ---------------- ------------------------- -------------- ------------------------
Richard J. Herring N/A N/A N/A $35,000
- -------------------------- ---------------- ------------------------- -------------- ------------------------
Bruce E. Langton N/A N/A N/A $35,000
- -------------------------- ---------------- ------------------------- -------------- ------------------------
Philip Saunders, Jr. $21,424.54 N/A N/A $36,250
- -------------------------- ---------------- ------------------------- -------------- ------------------------
Harry Van Benschoten N/A N/A N/A $36,250
- -------------------------- ---------------- ------------------------- -------------- ------------------------
</TABLE>
- ------------------
* The "Bankers Trust Fund Complex" consists of the Portfolio, as well as BT
Investment Funds, BT Pyramid Mutual Funds, BT Advisor Funds , BT Institutional
Funds and BT Insurance Funds Trust (collectively, the "BT Funds"), as well as
the portfolios into which those series of the BT Funds which have a
master-feeder structure invest.
The following table sets forth the names, ages, position with the Trust
and length of service in such position, and principal occupations during the
past five years, of the officers of the Trust.
NAME AND AGE POSITION WITH TRUST AND PRINCIPAL OCCUPATIONS
- ------------ ---------------------------------------------
John A. Keffer President and Chief Executive Officer
Age: 57 since 1998; President, Forum Financial Group
L.L.C. and its affiliates; President, ICC
Distributors, Inc.*
Daniel O. Hirsch Secretary since 1998; Director, Deutsche Asset
Age: 45 Management since 1999; Director, BT Alex. Brown
Incorporated and Investment Company
Capital Corporation, 1998-99; Associate
General Counsel, Office of General Counsel, United
States Securities and Exchange Commission,1993-1998.
Charles A. Rizzo Treasurer since 1999; Vice President and Department
Age: 41 Head, Deutsche Asset Management since 1998; Senior
Manager, PricewaterhouseCoopers LLP 1993-98.
- ------------------
* Underwriter/distributor for the Trust. Mr. Keffer owns 100% of the
shares of ICC Distributors, Inc.
RECOMMENDATION OF THE BOARD
At a meeting of the Board held on July 27, 1999, the Board, based on a
recommendation of the incumbent Independent Trustees, unanimously approved the
nomination of the Trustee Nominees. In reaching this conclusion, the Board
obtained from the Trustee Nominees such information as they deemed reasonably
necessary to approve the Trustee Nominees and considered a number of factors,
including, among other things: the nature, scope and quality of services that
the Trustee Nominees would likely provide to the Portfolio and the desirability
of maintaining adherence to Section 15(f) of
-17-
<PAGE>
the Act. Based on the factors discussed above and others, the Board determined
that the election of the Trustee Nominees is in the best interest of the
Portfolio and its shareholders.
THEREFORE, AFTER CAREFUL CONSIDERATION, THE BOARD, INCLUDING THE
INDEPENDENT TRUSTEES, RECOMMEND THAT THE SHAREHOLDERS OF THE PORTFOLIO VOTE
"FOR" THE ELECTION OF THE TRUSTEE NOMINEES AS SET FORTH IN THIS PROPOSAL.
IF THE TRUSTEE NOMINEES ARE ELECTED BY THE APPLICABLE SHAREHOLDERS,
EACH TRUSTEE NOMINEE WILL SERVE UNTIL HIS SUCCESSOR IS DULY ELECTED AND
QUALIFIED OR UNTIL HIS EARLIER RESIGNATION OR REMOVAL. IF THE TRUSTEE NOMINEES
ARE NOT ELECTED, THE BOARD WILL CONSIDER WHAT ACTION IS APPROPRIATE BASED UPON
THE INTERESTS OF THE PORTFOLIO'S SHAREHOLDERS.
-18-
<PAGE>
PROPOSAL III
RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT ACCOUNTANTS FOR THE PORTFOLIO
The Board, including a majority of the Independent Trustees, has
approved the selection of PricewaterhouseCoopers LLP to serve as independent
accountants for the Portfolio for the current fiscal year.
PricewaterhouseCoopers LLP has served as independent accountants of the
Portfolio since the date of the Portfolio's inception and has advised the
Portfolio that they have no direct or indirect financial interest in the
Portfolio. Representatives of PricewaterhouseCoopers LLP are not expected to be
present at the Special Meeting and, thus, are not expected to make a statement;
however, one or more representatives will be available by telephone to respond
to appropriate questions posed by shareholders or management.
THEREFORE, AFTER CAREFUL CONSIDERATION, THE BOARD, INCLUDING THE
INDEPENDENT TRUSTEES, RECOMMENDS THAT THE SHAREHOLDERS OF THE PORTFOLIO VOTE
"FOR" THE RATIFICATION OF THE INDEPENDENT ACCOUNTANTS AS SET FORTH IN THIS
PROPOSAL.
-19-
<PAGE>
VOTE REQUIRED
Approval of Proposals IA, IB and IC with respect to the Portfolio's New
Advisory Agreements requires the affirmative vote of a "majority" of the
outstanding shares of the Portfolio. "Majority" (as defined in the Act) means
(as of the Record Date) the lesser of (a) 67% or more of the shares of the
Portfolio present at the special meeting, if the holders of more than 50% of the
outstanding shares of the Portfolio are present in person or by proxy, or (b)
more than 50% of the outstanding shares of the Portfolio present and voting at
the special meeting. Because abstentions and broker non-votes are treated as
shares present but not voting, any abstentions and broker non-votes will have
the effect of votes against Proposals IA, IB and IC, which requires the approval
of a specified percentage of the outstanding shares of the Portfolio.
Approval of Proposal II with respect to the Trustee Nominees requires
the affirmative vote of a plurality of the votes cast in person or by proxy at
the Special Meeting. Because abstentions and broker non-votes are not treated as
shares voted, abstentions and broker non-votes will have no impact on Proposal
II.
Approval of Proposal III with respect to the selection of the
independent accountants of the Portfolio requires the affirmative vote of a
majority of the votes cast in person or by proxy at the Special Meeting for the
Portfolio. Because abstentions and broker non-votes are not treated as shares
voted, abstentions and broker non-votes will have no impact on Proposal III.
- --------------------------------------------------------------------------------
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, RECOMMEND THAT THE
SHAREHOLDERS VOTE "FOR" APPROVAL OF PROPOSALS IA, IB, IC, II AND III.
ANY UNMARKED PROXIES WILL BE SO VOTED.
- --------------------------------------------------------------------------------
The Board is not aware of any other matters that will come before the
Special Meeting. Should any other matter properly come before the Special
Meeting, it is the intention of the persons named in the accompanying Proxy to
vote the Proxy in accordance with their judgment on such matters.
SUBMISSION OF SHAREHOLDER PROPOSALS
The Portfolio does not hold regular shareholders' meetings.
Shareholders wishing to submit proposals for inclusion in a proxy statement for
a subsequent shareholders' meeting should send their written proposals to the
Secretary of the Portfolio at the address set forth on the cover of this Proxy
Statement.
Proposals must be received at a reasonable time prior to the date of a
meeting of shareholders to be considered for inclusion in the materials for the
Portfolio's meeting. Timely submission of a proposal does not, however,
necessarily mean that such proposal will be included.
SHAREHOLDERS' REQUEST FOR SPECIAL MEETING
Shareholders holding at least 10% of the Trust's outstanding voting
securities (as defined in the Act) may require the calling of a meeting of
shareholders for the purpose of voting on the removal of any Trustee of the
Trust. Meetings of shareholders for any other purpose also shall be called by
the Board when requested in writing by shareholders holding at least 10% of the
shares then outstanding.
-20-
<PAGE>
IF YOU HAVE ANY QUESTIONS CONCERNING THE PROXY STATEMENT OR THE PROCEDURES TO BE
FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT SHAREHOLDER
COMMUNICATIONS CORPORATION AT 1-800-732-6168.
- --------------------------------------------------------------------------------
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE SPECIAL MEETING AND
WHO WISH TO HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN
THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, UNLESS
THEY ARE VOTING BY TELEPHONE OR THROUGH THE INTERNET.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
- --------------------------------------------------------------------------------
By Order of the Board of Trustees,
Daniel O. Hirsch, SECRETARY
August 23, 1999
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES OF THE TRUST HOPES THAT SHAREHOLDERS WILL ATTEND
THE SPECIAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED
TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE (UNLESS YOU ARE VOTING BY TELEPHONE
OR THROUGH THE INTERNET).
- --------------------------------------------------------------------------------
21
<PAGE>
ANNEX I
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(i) 5% SHAREHOLDERS
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES BENEFICIALLY PERCENT OWNERSHIP
------------------------------------ ------------------- -----------------
OWNED OF OUTSTANDING SHARES
----- ---------------------
Small Cap Index Fund - Institutional Class 8,323,665.347 73.217%
One South Street
Baltimore, MD 21202
Northwestern University 1,977,603.668 22.454%
633 Clark Street
Evanston, Illinois 60208
(ii) TRUSTEES AND TRUSTEE NOMINEES *
Charles P. Biggar *
S. Leland Dill *
Martin J. Gruber *
Richard Hale *
Richard J. Herring *
Bruce E. Langton *
Philip Saunders, Jr. *
Harry Van Benschoten *
</TABLE>
-21-
<PAGE>
(iii) EXECUTIVE OFFICERS *
John A. Keffer *
Daniel O. Hirsch *
Charles A. Rizzo *
(iv) TRUSTEES AND EXECUTIVE OFFICERS *
AS A GROUP
* The Trustees, the Trustee Nominees, the executive officers of the Trust
and the Trustees and executive officers as a group own less than 1% of the
Fund's outstanding shares.
<PAGE>
ANNEX II
SMALL CAP INDEX PORTFOLIO
BANKERS TRUST
<TABLE>
<CAPTION>
Net Assets (As of Most AdvisoryFee as
Recently Completed Fiscal a Percentage of
Year) Average Daily
Net Asset
<S> <C> <C>
Small Cap Index Portfolio:
Includes the following feeder fund:
BT Small Cap Index Fund $115,475,476.00 0.25%
BT Insurance Small Cap Index Fund $36,743,759.00 0.35%
American General Series Portfolio - Small Cap Index $223,185,980.64 NOTE A
Fund (VALIC)
American General Series Portfolio 2 - Small Cap Index $6,109,550.02 NOTE B
Fund (VALIC)
American General Series Portfolio 2 - Small Cap Value $2,904,138.62 NOTE B
Fund (VALIC)
EQ Advisors Trust - Small Company Index Fund $41,807,938.79 0.05%s
(Equitable)
</TABLE>
NOTE A A monthly fee computed at the annual rate of 0.03% on the first $300
million and 0.02% on assets over $300 million for the MidCap Index Fund, 0.02%
on the first $2 billion and 0.01% on assets over $2 billion for the Stock Index
Fund and 0.03% on the first $150 million and 0.02% on assets over $150 million
for the Small Cap Index Fund. Notwithstanding the above provision, VALIC is
required to pay a minimum annual sub-advisory fee of $50,000 to BTC for the
Small Cap Index Fund. There are no minimum sub-advisory fees for the Stock Index
Fund, MidCap Index Fund. The Investment Sub-Advisory Agreements require that
each Sub-Adviser promptly reduce its monthly fee by the amount of any
commission, tender and exchange offer solicitation fees, other fees or similar
payments received by the Sub-Adviser, or any affiliated person of the
Sub-Adviser, in connection with Sub-Advised Fund portfolio transactions.
NOTE B A monthly fee computed at the annual rate of 0.03% of the average daily
net asset values of the portion of the Small Cap Value Fund portfolio that BT
manages. With respect to the Stock Index Fund, VALIC shall pay to Bankers Trust,
a monthly fee computed at the annual rate of 0.02% of the first $2 billion and
0.01% of average daily net asset values on the excess over $2 billion. VALIC
shall pay Bankers Trust, a monthly fee computed at the annual rate of 0.03% of
the first $300 million and 0.02% of average daily net asset values on the excess
over
<PAGE>
$300 million of the Mid Cap Index Fund, and 0.03% of the first $150 million and
0.02% of average daily net asset values on the excess over $150 million of the
Small Cap Index Fund.
MORGAN GRENFELL INC.
None.
<PAGE>
EXHIBIT A
[FORM OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENT]
AGREEMENT made as of [_________________] by and between [Trust Name], a
(state of organization) (herein called the "Trust") and [________________]
(herein called the "Investment Adviser") [and [______________] (herein called
the "Investment Subadviser")].
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940;
WHEREAS, the Trust desires to retain the Investment Adviser to render
investment advisory and other services to the Trust with respect to certain of
its series of shares of beneficial interests as may currently exist or be
created in the future (each, a "Portfolio") as listed on Exhibit A hereto, and
the Investment Adviser is willing to so render such services on the terms
hereinafter set forth;
[WHEREAS, the Investment Adviser desires to retain the Investment
Subadviser to perform certain of the Investment Adviser's duties under this
Agreement, and the Investment Subadviser is willing to so render such services
on the terms hereinafter set forth;](1)
NOW, THEREFORE, this Agreement
W I T N E S S E T H:
In consideration of the promises and mutual covenants herein contained,
it is agreed between the parties hereto as follows:
1. Appointment. The [Trust] [Investment Adviser] hereby appoints the
[Investment Adviser] [Investment Subadviser] to act as [investment adviser]
[investment subadviser] to each [Portfolio] for the period and on the terms set
forth in this Agreement. The [Investment Adviser] [Investment Subadviser]
accepts such appointment and agrees to render the services herein set forth for
the compensation herein provided.
2. Management. Subject to the supervision of the [Board of Trustees of
the Trust] [Investment Adviser], the [Investment Adviser] [Investment
Subadviser] will provide a continuous investment program for the [Portfolio],
including investment research and management with respect to all securities,
investments, cash and cash equivalents in the [Portfolio]. The [Investment
Adviser] [Investment Subadviser] will determine from time to time what
securities and other investments will be purchased, retained or sold by each
[Portfolio]. The [Investment Adviser] [Investment Subadviser] will provide the
services rendered by it hereunder in accordance with the investment objective(s)
and policies of each [Portfolio] as stated in the [Portfolio]'s then-current
prospectus and statement of additional information (or the [Portfolio]'s then
current registration statement on Form N-1A as filed with the Securities and
Exchange Commission (the "SEC") and the then-current offering memorandum if the
[Portfolio] is not registered under the Securities Act of 1933, as amended
("1933 Act"). The [Investment Adviser] [Investment Subadviser] further agrees
that:
(a) it will conform with all applicable rules and regulations of
the SEC (herein called the "Rules") and with all applicable provisions of the
1933 Act; as amended, the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Investment Company Act of 1940, as amended (the "1940 Act"); and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and will, in
addition, conduct its activities under this Agreement in accordance with
applicable regulations of the Board of Governors of the Federal Reserve
(1) Contained in the form of Investment Sub-advisory Agreement only.
<PAGE>
System pertaining to the investment advisory activities of bank holding
companies and their subsidiaries;
(b) it will place orders pursuant to its investment
determinations for each [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] [Investment Subadviser] will use its reasonable best
efforts to obtain the best net price and the most favorable execution of its
orders, after taking into account all factors it deems relevant, including the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the specific transaction and
on a continuing basis. Consistent with this obligation, the [Investment Adviser]
[Investment Subadviser] may, to the extent permitted by law, purchase and sell
portfolio securities to and from brokers and dealers who provide brokerage and
research services (within the meaning of Section 28(e) of the 1934 Act) to or
for the benefit of any portfolio and/or other accounts over which the
[Investment Adviser] [Investment Subadviser] or any of its affiliates exercises
investment discretion. Subject to the review of the [Trust's Board of Trustees]
[Investment Adviser] from time to time with respect to the extent and
continuation of the policy, the [Investment Adviser] [Investment Subadviser] is
authorized to pay to a broker or dealer who provides such brokerage and research
services a commission for effecting a securities transaction which is in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction if the [Investment Adviser] [Investment Subadviser]
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the overall
responsibilities of the [Investment Adviser] [Investment Subadviser] with
respect to the accounts as to which it exercises investment discretion; and
(c) it will maintain books and records with respect to the
securities transactions of each [Portfolio] and will render to the [Trust's
Board of Trustees] [Investment Adviser] such periodic and special reports as the
Board may request.
3. [Subject to the provisions of this Agreement, the duties of the
Investment Subadviser, the portion of portfolio assets that the Subadviser shall
manage, and the fees to be paid the Investment Subadviser by the Investment
Adviser under and pursuant to this Agreement may be adjusted from time to time
by the Investment Adviser with and upon the approval of the Board and the
members of the Trust's Board of Trustees who are not "interested persons," as
defined in the Act ].(2)
4. Services Not Exclusive. The investment advisory services rendered by
the [Investment Adviser] [Investment Subadviser] hereunder are not to be deemed
exclusive, and the [Investment Adviser] [Investment Subadviser] shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3
of the Rules under the 1940 Act, the [Investment Adviser] [Investment
Subadviser] hereby agrees that all records which it maintains for the Trust are
the property of the Trust and further agrees to surrender promptly to the
[Trust] [Investment Adviser] any of such records upon request of the [Trust]
[Investment Adviser]. The [Investment Adviser] [Investment Subadviser] further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by Rule 31a-1 under the 1940 Act and to
comply in full with the requirements of Rule 204-2 under the Advisers Act
pertaining to the maintenance of books and records.
6. Expenses. During the term of this Agreement, the [Investment
Adviser] [Investment Subadviser] will pay all expenses incurred by it in
connection with its activities under this Agreement other than the cost of
purchasing securities (including brokerage commissions, if any) for the
[Portfolio].
7. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, the
(2) Provision contained in the form of Investment Sub-advisory Agreement only.
<PAGE>
[Trust] [Investment Adviser] will pay the [Investment Adviser] [Investment
Subadviser], and the [Investment Adviser] [Investment Subadviser] will accept as
full compensation therefor, fees, computed daily and payable monthly, on an
annual basis equal to the percentage set forth on Exhibit A hereto of that
Fund's average daily net assets.
8. Limitation of Liability of the [Investment Adviser] [Investment
---------------------------------------------------------------
Subadviser]: Indemnification.
- -----------------------------
(a) The [Investment Adviser] [Investment Subadviser] shall not
be liable for any error of judgment or mistake of law or for any loss suffered
by a [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] [Investment Subadviser] in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement;
(b) Subject to the exceptions and limitations contained in
Section 7(c) below:
(i) the [Investment Adviser] [Investment Subadviser]
(hereinafter referred to as a "Covered Person") shall be indemnified by the
respective [Portfolio] to the fullest extent permitted by law, against liability
and against all expenses reasonably incurred or paid by him in connection with
any claim, action, suit or proceeding in which he becomes involved, as a party
or otherwise, by virtue of his being or having been the [Investment Adviser]
[Investment Subadviser] of the [Portfolio], and against amounts paid or incurred
by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened while in office or
thereafter, and the words "liability" and "expenses" shall include, without
limitation, attorneys' fees, costs, judgments, amounts paid in settlement,
fines, penalties and other liabilities.
(c) No indemnification shall be provided hereunder to a
Covered Person:
(i) who shall have been adjudicated by a court or
body before which the proceeding was brought (A) to be liable to the [Trust]
[Investment Adviser] or to one or more [Portfolio]s' investors by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, or (B) not to have acted in good
faith in the reasonable belief that his action was in the best interest of a
[Portfolio]; 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] [Investment Adviser],
shall be severable, shall not be exclusive of or affect any other rights to
<PAGE>
which any Covered Person may now or hereafter be entitled, shall continue as to
a person who has ceased to be a Covered Person and shall inure to the benefit of
the successors and assigns of such person. Nothing contained herein shall affect
any rights to indemnification to which Trust personnel and any other persons,
other than a Covered Person, may be entitled by contract or otherwise under law.
(e) Expenses in connection with the preparation and
presentation of a defense to any claim, suit or proceeding of the character
described in subsection (b) of this Section 7 may be paid by the [Trust]
[Investment Adviser] on behalf of the respective [Portfolio] from time to time
prior to final disposition thereto upon receipt of an undertaking by or on
behalf of such Covered Person that such amount will be paid over by him to the
[Trust] [Investment Adviser] on behalf of the respective [Portfolio] if it is
ultimately determined that he is not entitled to indemnification under this
Section 7; provided, however, that either (i) such Covered Person shall have
provided appropriate security for such undertaking or (ii) the [Trust]
[Investment Adviser] shall be insured against losses arising out of any such
advance payments, or (iii) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the matter, or independent legal
counsel in a written opinion, shall have determined, based upon a review of
readily available facts as opposed to a trial-type inquiry or full
investigation, that there is reason to believe that such Covered Person will be
entitled to indemnification under this Section 7.
9. Duration and Termination. This Agreement shall be effective as to a
[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
with respect to that [Portfolio] 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
such [Portfolio] for successive periods of 12 months each, provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Board of Trustees of the Trust who are not
parties to this Agreement or Interested Persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, or (b) by
Vote of a Majority of the Outstanding Voting Securities of the Trust; provided,
however, that this Agreement may be terminated by the Trust at any time, without
the payment of any penalty, by the Board of Trustees of the Trust, by Vote of a
Majority of the Outstanding Voting Securities of the Trust on 60 days' written
notice to the [Investment Adviser] [Investment Subadviser], or by the
[Investment Adviser] [Investment Subadviser] as to the [Trust] [Investment
Adviser] at any time, without payment of any penalty, on 90 days' written notice
to the [Trust] [Investment Adviser]. This Agreement will immediately terminate
in the event of its assignment (as used in this Agreement, the terms "Vote of a
Majority of the Outstanding Voting Securities," "Interested Person" and
"Assignment" shall have the same meanings as such terms have in the 1940 Act and
the rules and regulatory constructions thereunder.)
10. Amendment of this Agreement. No material term of this Agreement may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of a material term of this
Agreement shall be effective with respect to a [Portfolio], until approved by
Vote of a Majority of the Outstanding Voting Securities of that [Portfolio].
11. Representations and Warranties. The [Investment Adviser]
[Investment Subadviser] hereby represents and warrants as follows:
(a) [The [Investment Adviser] [Investment Subadviser] is
exempt from registration under the 1940 Act:]
(b) The [Investment Adviser] [Investment Subadviser] has all
requisite authority to enter into, execute, deliver and perform its obligations
under this Agreement;
(c) This Agreement is legal, valid and binding, and
enforceable in accordance with its terms; and
<PAGE>
(d) The performance by the [Investment Adviser] [Investment
Subadviser] of its obligations under this Agreement does not conflict with any
law to which it is subject.
12. Covenants. The [Investment Adviser] [Investment Subadviser] hereby
covenants and agrees that, so long as this Agreement shall remain in effect:
(a) The [Investment Adviser] [Investment Subadviser] shall
remain either exempt from, or registered under, the registration provisions of
the Advisers Act; and
(b) The performance by the [Investment Adviser] [Investment
Subadviser] of its obligations under this Agreement shall not conflict with any
law to which it is then subject.
13. Notices. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid, (a) to the Investment Adviser, Mutual Funds Services, 130 Liberty
Street (One Bankers Trust Plaza), New York, New York 10006 , [(b) to the
Subadviser, [Address] or ](c) to the Trust, c/o BT Alex. Brown, Incorporated,
One South Street, Baltimore, Maryland 21202.
14. Waiver. With full knowledge of the circumstances and the effect of
its action, the [Investment Adviser] [Investment Subadviser] hereby waives any
and all rights which it may acquire in the future against the property of any
investor in a [Portfolio], other than shares in that [Portfolio], which arise
out of any action or inaction of the [Trust] [Investment Adviser] under this
Agreement.
15. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and shall be governed by the
laws of the ______________________________, without reference to principles of
conflicts of law. The Trust is organized under the laws of
_________________________________ pursuant to a ______________ dated
______________. No Trustee, officer or employee of the Trust shall be personally
bound by or liable hereunder, nor shall resort be had to their private property
for the satisfaction of any obligation or claim hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
[SIGNATORIES]
<PAGE>
EXHIBIT A
---------
TO
INVESTMENT ADVISORY AGREEMENT
MADE AS OF ____________________
BETWEEN
[Trust Name] AND [______________]
Portfolio Investment Advisory Fee
- --------- -----------------------
<PAGE>
FORM OF PROXY CARD
------------------
<TABLE>
<CAPTION>
<S> <C>
[BANKERS TRUST LOGO] BT INVESTMENT PORTFOLIOS
BT ALEX. BROWN
MUTUAL FUND SERVICES -- LEGAL DEPARTMENT SMALL CAP INDEX PORTFOLIO
MS 1-18-8
One South Street
One South Street Baltimore, Maryland 21202
Baltimore, Maryland 21202-3220
PROXY FOR THE SPECIAL MEETING OF STOCKHOLDERS
11:00 a.m., Eastern time, on October 8, 1999
The undersigned hereby appoints Daniel O. Hirsch and
Amy M. Olmert and each of them, with full power of
substitution, as proxies of the undersigned to vote all
shares of stock that the undersigned is entitled in any
capacity to vote at the above-stated special meeting, and at
any and all adjournments or postponements thereof (the
"Special Meeting"), on the matters set forth on this Proxy
Card, and, in their discretion, upon all matters incident to
the conduct of the Special Meeting and upon such other
matters as may properly be brought before the Special
Meeting. This proxy revokes all prior proxies given by the
undersigned.
ALL PROPERLY EXECUTED PROXIES WILL BE VOTED AS
DIRECTED. IF NO INSTRUCTIONS ARE INDICATED ON A PROPERLY
EXECUTED PROXY, THE PROXY WILL BE VOTED FOR APPROVAL OF
PROPOSALS IA, IB, IC, II AND III. ALL ABSTAIN VOTES WILL BE
COUNTED IN DETERMINING THE EXISTENCE OF A QUORUM AT THE
SPECIAL MEETING AND, FOR PROPOSALS IA, IB AND IC, AS VOTES
AGAINST THE APPLICABLE PROPOSAL.
To vote by Telephone THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES WITH RESPECT TO YOUR PORTFOLIO.
1) Read the Proxy Statement and have the Proxy card below at THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR
hand. PROPOSALS IA, IB, IC, II AND III. ---
2) Call 1-800-690-6903. UNLESS VOTING BY TELEPHONE OR INTERNET,
3) Enter the 12-digit control number set forth on the Proxy PLEASE SIGN AND DATE BELOW AND MAIL THIS
card and follow the simple instructions. PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com.
3) Enter the 12-digit control number set forth on the Proxy card and follow
the simple instructions.
DO NOT RETURN YOUR PROXY CARD IF YOU VOTE BY
PHONE OR INTERNET.
TO VOTE, MARK BLOCKS IN BLUE OR BLACK INK AS
FOLLOWS:
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KEEP THIS PORTION FOR YOUR RECORDS.
DETACH AND RETURN THIS PORTION ONLY.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
SMALL CAP INDEX PORTFOLIO
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND MAIL THIS PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(JOINT OWNERS SHOULD EACH SIGN. PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEARS ON
THIS CARD. WHEN SIGNING AS ATTORNEY, TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN
OR CORPORATE OFFICER, PLEASE GIVE YOUR FULL TITLE BELOW.)
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VOTE ON TRUSTEES
II. Election of Messrs. (01) Biggar, (02) Dill, (03) Hale, For All Withhold All For All Except: To withhold authority
(04) Langton, (05) Saunders, and (06) Van Benschoten to vote, mark "For
and Drs. (07) Gruber and (08) Herring as Trustees of [] [] [] All Except" and write
the Boards. the nominee's number
on the line below.
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VOTE ON PROPOSALS
IA. Approval of New III. Ratification of the
Investment Advisory selection of
Agreement with Bankers PricewaterhouseCoopers
Trust Company FOR [] AGAINST [] ABSTAIN [] LLP as the independent
accountants of the
Portfolio.
FOR [] AGAINST [] ABSTAIN []
IB. Approval of New
Investment Advisory
Agreement with Morgan FOR [] AGAINST [] ABSTAIN [] The appointed proxies will vote on any other business as may
Grenfell Inc. properly come before the Special Meeting
IC. Approval of New Receipt of the Notice and the Proxy Statement, dated August 23,
Investment Sub-advisory 1999 (the "Proxy Statement"), is hereby acknowledged.
Agreement with Bankers
Trust Company FOR [] AGAINST [] ABSTAIN []
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Signature (Please sign within box) Date Signature (Joint Owners) Date
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