<PAGE>
SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF THE
SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
<TABLE>
<S><C>
| | Preliminary Information Statement |_| Confidential, for use of the Commission
only (as permitted by Rule 14c-5(d)(2))
|X| Definitive Information Statement
</TABLE>
MORGAN GRENFELL INVESTMENT TRUST (File Nos. 33-68704, 811-08006)
-----------------------------------------------------
Names of Registrant as Specified in Its Charter
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
December 3, 1999
Dear Shareholder:
On December 2, 1999, the majority shareholders of the Morgan Greenfell
European Equity Growth Fund approved a change of the Fund's investment
adviser from Deutsche Asset Management Investment Services Limited to
Deutsche Asset Management, Inc. Those shareholders have also approved a new
investment policy that would allow the Fund to invest all of its investable
assets in a master portfolio. Enclosed is further information relating to
these changes.
Important information about the changes:
- There is no effect on the number of shares you own or the value of
those shares.
- The investment objective and policies of the Fund have generally not
changed.
In addition to the advisory agreement and investment policy,
shareholders are also being informed of other changes in the enclosed
Information Statement. The Trustees of the Fund believe these proposals are
important and recommend that you read the enclosed materials carefully. No
action on your part is required.
Sincerely,
/s/ Daniel O. Hirsch
Daniel O. Hirsch
Secretary
Morgan Grenfell Investment Trust
<PAGE>
MORGAN GRENFELL EUROPEAN EQUITY GROWTH FUND
(A SERIES OF MORGAN GRENFELL INVESTMENT TRUST)
885 THIRD AVENUE
NEW YORK, NEW YORK 10022
TELEPHONE: (800) 550-6426
INFORMATION STATEMENT
GENERAL INFORMATION
This information statement is being distributed by the Trustees of Morgan
Grenfell Investment Trust (the "Trust") to inform you that the Majority
Shareholders (as defined below) of Morgan Grenfell European Equity Growth
Fund (the "Fund"), a series of the Trust, voted by written consent to:
(1) Approve a new investment advisory agreement between the Trust, on behalf
of the Fund, and Deutsche Asset Management, Inc.;
(2) Adopt and implement a new investment policy to authorize the Fund to invest
all of its investable assets in a specific corresponding series (the
"Portfolio") of an open-end management investment company (the "Portfolio
Trust"), having substantially the same investment objective, policies and
restrictions as the Fund; and
(3) Authorize the Trust to vote, on behalf of the Fund, as a holder of an
interest in the Portfolio to:
(A) elect Trustees of the Portfolio Trust;
(B) ratify the selection of PricewaterhouseCoopers LLP as the independent
accountants of the Portfolio Trust; and
(C) approve the investment advisory agreement between the Portfolio Trust,
on behalf of the Portfolio, and its investment adviser, Deutsche Asset
Management, Inc.
The written consent will be effective on or about December 23, 1999. This
information statement is being mailed to shareholders of record on or about
December 3, 1999.
The Trustees have set November 29, 1999 (the "Record Date") as the record
date for determining the number of shares and the shareholders of the Fund
entitled to give written consent and to receive this information statement.
The Fund offers two classes of shares: Institutional shares and Service
shares, which are both offered to the public without a sales charge. On the
Record Date there were 46,445 Institutional shares and no Service shares of
the Fund outstanding. Holders of 26,877 shares or approximately 57.9% of the
outstanding Institutional shares (the "Majority Shareholders") have consented
in writing to the proposals described in this information statement. As a
result, these proposals were approved as required by applicable law and no
further votes or consents are needed.
THIS DOCUMENT IS REQUIRED UNDER THE FEDERAL SECURITIES LAWS AND IS PROVIDED
SOLELY FOR YOUR INFORMATION. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY.
1
<PAGE>
To the Trust's knowledge, on the Record Date the Trustees and officers of the
Trust owned less than 1% of the Fund's outstanding shares. Information
concerning the Majority Shareholders and the shareholders who were known to be
the beneficial owners of more than 5% of the Fund's shares as of the Record Date
is set forth below.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Name and Address of Beneficial Owner Number of Shares Percent of Fund's
Beneficially Owned Outstanding Shares
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
National Investor Services Corp. for the 16,003 34.5%
benefit of its customers
55 Water Street, Floor 32
New York, NY 10041-3299
- -------------------------------------------------------------------------------------------------------------
Robert L. Reiner* 7,905 17.0%
666 Greenwich Street, Apt. 822
New York, NY 10014
- -------------------------------------------------------------------------------------------------------------
Caroline E. Altmann* 7,905 17.0%
153 Mercer Street, Apt. 5
New York, NY 10012
- -------------------------------------------------------------------------------------------------------------
Michael Levy & Jeffry Vonwald JTWROS* 7,905 17.0%
P.O. Box 220
Croton Hudson, NY 10520
- -------------------------------------------------------------------------------------------------------------
Ross C. Youngman 3,162 6.8%
155 W. 68th Street, Apt. 930
New York, NY 10023
- -------------------------------------------------------------------------------------------------------------
Julie Wang* 3,162 6.8%
188 E. 76th Street, Apt. 10B
New York, NY 10021
- -------------------------------------------------------------------------------------------------------------
</TABLE>
* A Majority Shareholder consenting to the proposals described in this
Information Statement.
Under the Investment Company Act of 1940, as amended (the "1940 Act"),
Proposals 1 and 2 required the approval by a "vote of a majority of the
outstanding voting securities" of the Fund, which is defined under the 1940
Act as the lesser of the vote of (i) 67% or more of the shares of the Fund
entitled to vote thereon present at the meeting if the holders of more than
50% of such outstanding shares of the Fund are present in person or
represented by proxy; or (ii) more than 50% of the outstanding shares of the
fund entitled to vote thereon.
Approval of Proposals 3(A) and 3(B) required the affirmative vote of a
majority of the outstanding interests in the Portfolio Trust. Approval of
Proposal 3(C) required a "vote of a majority of the outstanding voting
securities," as defined above, of the Portfolio.
All of the proposals were approved on November 18, 1999 by the Board of
Trustees of the Trust, including a majority of those Trustees who are not
"interested persons" or affiliates (as defined in the 1940 Act) of any party
to the proposals (the "Independent Trustees"). The Trustees unanimously
determined to submit the proposals for consideration by the shareholders of
the Fund. The Majority Shareholders approved the proposals by written consent.
A copy of the Fund's Annual Report for the most recent fiscal year for which
it is available and a copy of the Fund's Semi-Annual Report for any
subsequent period are available without charge upon request and may be
obtained by calling 1-800-550-6426 or by writing the Trust at the address
above.
PROPOSAL 1
APPROVE A NEW INVESTMENT ADVISORY AGREEMENT
BETWEEN THE TRUST, ON BEHALF OF THE FUND, AND
DEUTSCHE ASSET MANAGEMENT, INC.
The Trustees of the Trust and the Majority Shareholders have each approved a
new investment management contract between the Trust, on behalf of the Fund,
and Deutsche Asset Management, Inc. Effective on or about December 23, 1999,
Deutsche Asset Management, Inc. ("DAMI" or the "Adviser"), 855 Third Avenue, New
York, New York, 10022, is expected to serve as investment adviser to the Fund
pursuant to an investment advisory agreement (the "Proposed Advisory
Agreement") between the Adviser and the Trust to manage the Fund's
investments and affairs subject to the supervision of the Trustees of the
Trust. DAMI is a Delaware corporation and is a registered investment adviser
under the Investment Advisers Act of 1940. DAMI is an indirect wholly-owned
subsidiary of Deutsche Bank AG, an international commercial and investment
banking group.
The Adviser provides a full range of investment advisory services to
institutional clients. As of September 30, 1999, the Adviser managed
approximately $17.2 billion in assets for various individual and
institutional accounts, including the Morgan Grenfell SMALLCap Fund, Inc., a
registered, closed-end investment company for which it acts as investment
adviser.
2
<PAGE>
Pursuant to a management contract (the "Current Management Contract") between
the Trust, on behalf of the Fund, and Deutsche Asset Management Investment
Services Limited ("DAMIS"), DAMIS currently serves as the Fund's investment
adviser. DAMIS is an affiliate of DAMI and an indirect, wholly-owned subsidiary
of Deutsche Bank AG. The Current Management Contract was initially approved by
the Board, including a majority of the Independent Trustees. The date of the
Current Management Contract is January 3, 1994 and it was most recently
approved by the Fund's Trustees on November 18, 1999.
At a meeting held on November 18, 1999, the Trustees, including a majority of
the Independent Trustees, also approved the Proposed Advisory Agreement. In
recommending that the shareholders of the Fund approve the Proposed Advisory
Agreement, the Trustees considered and evaluated, among other things, the
staff and professional personnel of the Adviser, comparative fees charged to
other investment companies by other investment advisers; comparative
performance results; and expense ratio data comparing the Fund with other
investment companies of similar size and with similar investment objectives.
The Trustees conducted a review of the various documents, reports and other
materials submitted to them by the Adviser, information that they were
familiar with as Trustees, and information obtained from independent sources
such as Lipper, Inc.
TERMS OF THE PROPOSED ADVISORY AGREEMENT
The terms of the Proposed Advisory Agreement and the Current Management
Contract are substantially similar. A comparison of the terms of the Proposed
Advisory Agreement to the Current Management Contract is presented below. The
adoption of the Proposed Advisory Agreement will not result in an increase in
the advisory fee paid by the Fund.
The following description of the terms of the Proposed Advisory Agreement is
qualified in its entirety by reference to the copy attached to this
information statement as Exhibit A.
<TABLE>
<CAPTION>
- ---------------------------------------- -------------------------------------- --------------------------------------
CURRENT MANAGEMENT CONTRACT PROPOSED ADVISORY AGREEMENT
- ---------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Adviser Deutsche Asset Management Investment Deutsche Asset Management, Inc.
Services Limited
- ---------------------------------------- -------------------------------------- --------------------------------------
Advisory services Subject to the supervision of the Trustees, the Adviser provides a
continuous investment program for the Fund, including investment research
and management.
- ---------------------------------------- -----------------------------------------------------------------------------
Compensation The Adviser will receive compensation at an annual rate equal to 0.70% of
the average daily net assets of the Fund.
-----------------------------------------------------------------------------
The advisory fee is computed monthly The advisory fee is computed daily
and paid monthly. and paid monthly.
-------------------------------------- --------------------------------------
The Adviser has voluntarily agreed to limit the aggregate annual operating
expenses of the Fund (excluding brokerage commissions, taxes and
extraordinary expenses) on Institutional shares to 1.25% and on Service
shares to 1.50%.
- ---------------------------------------- -------------------------------------- --------------------------------------
Expenses The Adviser will pay (i) Trustee The Adviser will pay all expenses
fees for any Trustee affiliated with incurred by it in connection with
the Adviser and (ii) any expenses its activities under the agreement,
not specifically assumed by the except brokerage commissions
Trust. incurred in purchasing securities
for the Fund.
The Trust specifically assumes a
number of expenses including, among Although the contract provisions
other things, expenses related to differ in terminology, it is not
overhead, the Fund's auditors, contemplated there will be any
printing of annual reports and proxy difference in the expenses charged.
statements and payment of
registration expenses.
- ---------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------- -------------------------------------- --------------------------------------
CURRENT MANAGEMENT CONTRACT PROPOSED ADVISORY AGREEMENT
- ---------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Standard of care The Adviser shall not be liable for any loss, error of judgment or mistake
of law or for any loss suffered by the Fund in connection with the matters
to which the agreement relates, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation or a loss
resulting from willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under the agreement.
- ---------------------------------------- -----------------------------------------------------------------------------
Indemnification The agreement does not contain any The Adviser is indemnified against
indemnification provision. liability and reasonable expenses
incurred in connection with any claim,
action or suit in which it is involved by
virtue of its being the Adviser of the
Fund, unless the Adviser is found to have
breached the standard of care described
above.
- ---------------------------------------- -------------------------------------- --------------------------------------
Term The initial term of the agreement is two years; with renewals from year to
year thereafter.
- ---------------------------------------- -------------------------------------- --------------------------------------
Termination The agreement may be terminated by The agreement may be terminated by
either party on 60 days' written the Fund on 60 days' or by the
notice. Adviser on 90 days' written notice
- ---------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
ADVISORY FEES AND EXPENSE LIMITATION. The rate at which the advisory fee is
payable by the Fund under the Proposed Advisory Agreement is the same as the
rate at which the advisory fee is payable by the Fund under the Current
Management Contract. The advisory fee under the Current Management Contract
is payable by the Fund at a rate equal on an annual basis to 0.70% of the
Fund's average daily net assets. The fee is computed monthly and paid
monthly. For the fiscal year ended October 31, 1999, the advisory fee paid by
the Fund amounted to $312,589 which represented 0.70% of the
Fund's average daily net assets.*
The advisory fee under the Proposed Advisory Agreement will be payable
monthly by the Portfolio at a rate equal on an annual basis to 0.70% of the
Portfolio's average daily net assets.
DAMI, like DAMIS, has voluntarily agreed to limit the aggregate annual
operating expenses of the Fund (excluding brokerage commissions, taxes and
extraordinary expenses) on Institutional shares to 1.25% and on Service
shares to 1.50%. In the absence of this agreement, Management Fees and Total
Operating Expenses are estimated to be approximately 0.70% and 30.82%,
respectively. DAMI will enter into supplemental contracts obligating it to
maintain the expense limitations described above at no less than the current
level for a fixed period that expires approximately one year from the
effective date of the Fund's next prospectus (on or about March 1, 2001).
When the supplemental contract expires, DAMI may discontinue or modify such
limitation in the future at its discretion, although it has no current
intention to do so.
PORTFOLIO MANAGEMENT
Michael Levy will serve as the Fund's lead portfolio manager. Mr. Levy
will be primarily responsible for the day-to-day management of the Fund's
portfolio. Mr. Levy is a Managing Director of Bankers Trust Company and
co-lead manager of International Equity Portfolio, which invests a
substantial portion of its assets in European equities. Mr. Levy joined
Bankers Trust in 1993 and is the firm's international equity strategist,
overseeing the design and implementation of the firm's proprietary
international stock selection process. Currently, a committee made up of
investment professionals and analysts employed by DAMIS makes all of the
Fund's investment decisions. Mr. Levy intends to manage the Fund with
generally the same investment strategy as that currently employed by the
investment committee.
Caroline Altmann will serve as co-portfolio manager of the Fund. Ms. Altmann is
a Director of Bankers Trust and an analyst specializing in Europe, Japan and the
financial services industry. Ms. Altmann joined Bankers Trust in 1999. Prior
to 1999, Ms. Altmann was a portfolio manager with Clay Finlay, Inc.
Clare Brody will serve as co-portfolio manager of the Fund. Ms. Brody is a Vice
President of Bankers Trust and portfolio manager for International Collective
Investment Fund. Ms. Brody joined Bankers Trust in 1993 and specializes in
European markets.
Matthias Knerr will serve as co-portfolio manager of the Fund. Mr. Knerr is an
Assistant Vice President of Bankers Trust and a portfolio manager specializing
in European markets. Mr. Knerr joined Bankers Trust in 1995.
* All figures presented in this Information Statement are unaudited.
4
<PAGE>
Affiliations of the officers of the Trust and DAMI are shown in Exhibit B.
The names, business addresses and principal occupations of the current
directors and chief executive officer of DAMI are set forth in Exhibit C.
PAYMENT TO AFFILIATES
The Fund currently retains the services of DAMI under an administration
agreement. Under the administration agreement, DAMI provides the Fund with
general office facilities and supervises the overall administration of the
Fund. For these services, DAMI receives compensation at a rate equal on an
annual basis to 0.30% of the Fund's average daily net assets.
Since November 23, 1999, the Fund has retained the services of
Investment Company Capital Corporation, an affiliate of DAMI, under a
transfer agency agreement. Under the transfer agency agreement, Investment
Company Capital Corporation will maintain shareholder accounts and make
periodic reports to the Trust's Board of Trustees concerning the operations
of the Fund.
PROPOSAL 2
TO ADOPT AND IMPLEMENT A NEW INVESTMENT POLICY
TO AUTHORIZE THE FUND TO ADOPT A MASTER-FEEDER STRUCTURE
The Trustees of the Trust and the Majority Shareholders have each approved
the adoption and implementation of a new investment policy for the Fund and
an amendment of the Fund's fundamental investment restrictions to permit the
Fund to pursue its investment objective through a fund structure commonly
known as a "master-feeder" structure and to invest all of its investable
assets ("Investable Assets") in the DP European Equity Portfolio (the
"Portfolio"). The Portfolio, a series of DP Trust (the "Portfolio Trust"),
will have substantially the same investment objective, policies and
restrictions as the Fund. Because the Majority Shareholders have approved the
proposal, the Trustees intend to invest all of the Fund's Investable Assets
in the Portfolio, thereby converting the Fund to the master-feeder structure.
In the master-feeder fund structure, the Fund would seek to achieve its
investment objective by investing in the Portfolio, rather than through
investing directly in securities. The Portfolio in turn would invest in
securities in accordance with its investment objective, policies and
restrictions. Interests in the Portfolio are not available for purchase
directly by members of the general public.
The Portfolio Trust is a New York trust registered as an open-end management
investment company under the 1940 Act. As approved by the Majority
Shareholders in Proposal 1, Deutsche Asset Management, Inc. ("DAMI" or the
"Adviser") will serve as the Fund's investment adviser effective December 24,
1999 and, after the implementation of the master feeder structure, will serve
as the Portfolio's investment adviser.
As required by applicable law or the Trust's Declaration of Trust, the
Majority Shareholders have approved this Proposal, which will authorize the
Trustees of the Trust to implement the Fund's conversion to the master-feeder
fund structure.
The officers of the Fund expect to implement the Fund's conversion to the
master-feeder fund structure by causing the Fund to exchange all of its
Investable Assets (securities and cash) as well as certain other assets
(including receivables for securities sold and interest on securities) for an
interest in the Portfolio. The value of a shareholder's investment in the
Fund will be the same immediately after the Fund's investment in the
Portfolio as immediately before that investment. Of course, the value of a
shareholder's investment in the Fund may fluctuate thereafter.
The Trustees intend to convert the Fund to the master-feeder fund structure
during the first half of the year 2000.
5
<PAGE>
MODIFICATION OF FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Certain of the Fund's existing fundamental investment restrictions, such as
those limiting investments by the Fund in a single issuer, presently prevent
the Fund from using a master-feeder structure. To provide the Fund with the
flexibility to use a master-feeder structure, the Board of Trustees has
approved a modification to the Fund's investment restrictions by adding the
following new investment policy to the fundamental investment restrictions of
the Fund:
"Notwithstanding the investment policies and restrictions of the Fund, upon
approval of the Board of Trustees, the Fund may invest all or part of its
investable assets in a management investment company with substantially the
same investment objective, policies and restrictions as the Fund."
This additional investment policy would also apply to any non-fundamental
investment policies or restrictions of the Fund which would otherwise
preclude the Fund being part of a master-feeder structure.
THE MASTER-FEEDER STRUCTURE
THE INVESTMENT ADVISER AND ADMINISTRATOR. To the extent that the Fund invests
all of its Investable Assets in the Portfolio, the Fund would no longer
directly require investment advisory services. For this reason, once the Fund
invests all of its Investable Assets in the Portfolio, the Fund will
terminate its investment advisory agreement with the Adviser. The investment
advisory function will then be performed by the Adviser under an investment
advisory contract with the Portfolio Trust. The Fund will, therefore,
indirectly bear its proportionate share of the advisory fees paid by the
Portfolio pursuant to its investment advisory agreement with the Adviser
rather than pay the Adviser directly for advisory services.
Pursuant to the Portfolio's investment advisory agreement, the Adviser will
be paid a fee at the same rate and calculated in the same manner as the fee
currently being paid by the Fund.
Upon exchange of its Investable Assets for interests in the Portfolio, the
Fund will retain the services of DAMI under an administration agreement.
Under the administration agreement, DAMI would provide the Fund with general
office facilities and supervise the overall administration of the Fund. For
these services, DAMI receives compensation at a rate equal on an annual basis
to 0.30% of the Fund's average daily net assets.
NET ASSET VALUE. Like the Fund, the Portfolio determines its net asset value
on each day on which the New York Stock Exchange is open. The net asset value
is determined as of the close of regular trading on the New York Stock
Exchange. The Portfolio's net asset value is computed by determining the
value of the Portfolio's total assets (the securities it holds plus any cash
or other assets, including interest accrued but not yet received), and
subtracting all of the Portfolio's liabilities (including accrued expenses).
The Fund's net asset value is determined at the same time and on the same
days that the net asset value of the Portfolio is calculated. The Fund's net
asset value per share is calculated by determining the value of the Fund's
assets (e.g., its investment in the Portfolio and other assets), subtracting
all of the Fund's liabilities (including accrued expenses), and dividing the
result by the total number of shares outstanding at such time.
VOTING RIGHTS. Interests in the Portfolio Trust are fully paid and
non-assessable. The Portfolio Trust normally will not hold meetings of
holders of such interests except as required under the 1940 Act. The
Portfolio Trust would be required to hold a meeting of holders in the event
that at any time less than a majority of its Trustees holding office have
been elected by holders. The Trustees of the Portfolio Trust continue to hold
office until their successors are elected and are qualified. Holders holding
a specified percentage of interests in the Portfolio Trust may call a meeting
of holders in the Portfolio Trust for the purpose of removing any Trustee. A
Trustee of the Portfolio Trust may be removed upon the affirmative vote of
two-thirds of the interests held by holders in the Portfolio Trust qualified
to vote in the election. The 1940 Act requires the Portfolio Trust to assist
its holders in calling such a meeting. Upon liquidation
6
<PAGE>
of the Portfolio, holders in the Portfolio would be entitled to share pro
rata in the net assets of the Portfolio available for distribution to holders.
Each holder in the Portfolio is entitled to a vote in proportion to its
percentage interest in the Portfolio. Except as described below, whenever the
Fund is requested to vote on matters pertaining to the Portfolio, the Fund
will hold a meeting of its shareholders and will cast its votes
proportionately as instructed by Fund shareholders that voted at the Fund
meeting. Fund shareholders who do not vote at the Fund meeting will not
affect the Fund's votes at the Portfolio meeting. The percentage of the
Fund's votes representing Fund shareholders not voting will be voted by the
Trustees of the Trust in the same proportion as the Fund's shareholders who
do, in fact, vote.
Subject to applicable statutory and regulatory requirements, the Fund would
not be required to request a vote of its shareholders with respect to (a) any
proposal relating to the Portfolio, which proposal, if made with respect to
the Fund, would not require the vote of the shareholders of the Fund, or (b)
any proposal with respect to the Portfolio that is identical in all material
respects to a proposal that has previously been approved by shareholders of
the Fund. Any proposal submitted to holders in the Portfolio that is not
required to be voted on by shareholders of the Fund would nonetheless be
voted on by the Trustees of the Trust.
INTEREST HOLDER LIABILITY. Investments in the Portfolio may not be
transferred, but a holder may withdraw all or any portion of its investment
at any time at net asset value. Each holder in the Portfolio, including the
Fund, will be liable under the Portfolio Trust's declaration of trust for the
obligations of the Portfolio only up to the amount of its interest in the
Portfolio. However, because the Portfolio Trust's declaration of trust
disclaims holder liability and provides for indemnification against such
liability, the risk of a holder in the Portfolio incurring financial loss on
account of such liability is limited to circumstances in which both
inadequate insurance existed and the Portfolio itself was unable to meet its
obligations. As such, it is unlikely that the Fund would experience liability
from the new investment structure itself. In any event, shareholders of the
Fund will continue to remain shareholders of a Delaware business trust, and
the Delaware business trust statute provides that the liabilities of
shareholders of a Delaware business trust is limited to the same degree as
that of shareholders of a corporation.
COMPARATIVE EXPENSES
The following table shows the annual expenses for the Fund for the fiscal
year ended October 31, 1999, estimated expenses under a revised expense
limitation in effect beginning on or about December 23, 1999 for the Fund and
a pro forma adjustment thereof assuming that the Fund had invested all of its
Investable Assets in the Portfolio for the six month period then ended. The pro
forma adjustment includes the estimated costs of operating the Fund in the
master-feeder fund structure. The pro forma adjustment assumes that: (i)
there were no holders of interests in the Portfolio other than the Fund; (ii)
the average daily net assets of the Fund and the Portfolio were equal to the
actual average daily net assets of the Fund during the period and (iii) that
the average daily net assets invested by the Fund in the Portfolio were
$44,724,551.
<TABLE>
<CAPTION>
- ---------------------------------------- ------------------------- ----------------------- -------------------------
AVERAGE ANNUAL FUND ESTIMATED AVERAGE
OPERATING EXPENSES (AS ANNUAL FUND OPERATING AGGREGATE PRO FORMA
OF 10/31/99)(1) EXPENSES(2) EXPENSES(3)
- ---------------------------------------- ------------------------- ----------------------- -------------------------
Institutional Service Institutional Service Institutional Service
shares shares shares shares shares shares
- ---------------------------------------- ------------- ----------- -------------- -------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.70% 0.70% 0.70% 0.70% 0.70% 0.70%
- ---------------------------------------- ------------- ----------- -------------- -------- -------------- ----------
Administrative Fees 0.30% 0.30% 0.30% 0.30% 0.30% 0.30%
- ---------------------------------------- ------------- ----------- -------------- -------- -------------- ----------
12b-1 Distribution or Service Expenses none 0.25% none 0.25% none 0.25%
- ---------------------------------------- ------------- ----------- -------------- -------- -------------- ----------
Other Expenses (0.10)%* (0.10)%* 0.25%* 0.25%* 0.25%* 0.25%*
- ---------------------------------------- ------------- ----------- -------------- -------- -------------- ----------
Total Operating Expenses 0.90%* 1.15%* 1.25%* 1.50%* 1.25%* 1.50%*
- ---------------------------------------- ------------- ----------- -------------- -------- -------------- ----------
</TABLE>
(1) For the fiscal year ended October 31, 1999 DAMIS voluntarily agreed to
limit the Fund's total operating expenses on Institutional shares to 0.90% and
on Service shares to 1.15%.
7
<PAGE>
(2) Effective on or about December 23, 1999, the limits on the Fund's total
operating expenses will be 1.25% on Institutional share and 1.50% on Service
shares.
(3) Pro forma expenses show the projected annual expenses after the conversion
to master-feeder structure.
* After expense limitation. See "Expense Limitation" below.
EXPENSE LIMITATION. DAMI has voluntarily agreed to limit the Portfolio's
total operating expenses on Institutional shares to 1.25% and on Service
shares to 1.50%. In the absence of this agreement, based on the Fund's net
assets at October 31, 1999, the Management Fee is estimated to be, on a pro
forma basis approximately 0.70% and the Total Operating Expenses of
Institutional and Service shares are estimated to be, on a pro forma basis,
30.82% and 31.07%, respectively. DAMI will enter into supplemental contracts
obligating it to maintain the expense limitations described above at no less
than the current level for a fixed period that expires approximately one year
after the effective date of the Fund's next prospectus (on or about March 1,
2001). When the supplemental contract expires, DAMI may discontinue or modify
such limitation in the future at its discretion, although it has no current
intention to do so.
EXAMPLE:
Hypothetically assume that the Fund's annual return is 5% and that its total
operating expenses are exactly as described in the column captioned
"Aggregate Pro Forma Expenses." For every $10,000 invested, an investor would
have paid the following expenses if an account were closed after the number
of years indicated:
<TABLE>
<CAPTION>
- -------------- ----------------------- ----------------------- ----------------------- -----------------------------
1 year 3 years 5 years 10 years
----------------------- ----------------------- ----------------------- -----------------------------
Institutional Service Institutional Service Institutional Service Institutional Service
shares shares shares shares shares shares shares shares
- -------------- ------------- --------- ------------- --------- ------------- --------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CURRENT $ 127 $ 153 $ 397 $ 474 $ 686 $ 818 $ 1,511 $ 1,791
STRUCTURE*
- -------------- ------------- --------- ------------- --------- ------------- --------- -------------- --------------
PRO FORMA $ 127 $ 153 $ 397 $ 474 $ 686 $ 818 $ 1,511 $ 1,791
- -------------- ------------- --------- ------------- --------- ------------- --------- -------------- --------------
</TABLE>
* Assumes expenses under a revised expense limitation in effect beginning on
or about December 23, 1999.
The purpose of the table is to assist shareholders in understanding the
various costs and expenses that a shareholder in the Fund will bear directly
and indirectly both under the current structure and on a pro forma basis in
the master-feeder structure. The example is included solely for illustrative
purposes and should not be considered a representation of future performance
or expenses. Actual expenses may be more or less than those shown.
If the Fund is converted to the master-feeder structure, the Fund would
receive the same administrative services under the master-feeder structure at
the same fees as are currently provided to the Fund. Under the Proposed
Advisory Agreement, the Fund would receive the same investment advisory
services at the same fee rates as are currently provided to the Fund. The
Proposed Advisory Agreement would, however, be between the Adviser and the
Portfolio, rather than the Trust.
If the Fund is converted to the master-feeder fund structure, actual Total
Operating Expenses to be incurred may vary from the pro forma Total Operating
Expenses indicated above due to changes in the Fund's and the Portfolio's
expenses and net asset value between October 31, 1999 and the conversion
date. Assuming that the Fund was the only holder of an interest in the
Portfolio and that the Fund was fully invested therein, the net asset value
per share, distributions per share and net investment income per share of the
Fund would have been approximately the same on a pro forma basis as the
actual net asset value, distributions and net investment income per share of
the Fund during the period indicated.
8
<PAGE>
TAX CONSIDERATIONS
The Trust anticipates that its contribution of the Fund's Investable Assets
to the Portfolio in exchange for an interest in the Portfolio in the manner
contemplated will not result in the recognition of gain or loss to the Fund
for federal income tax purposes.
As a regulated investment company under the Internal Revenue Code of 1986, as
amended (the "Code"), the Fund does not pay federal income or excise taxes to
the extent that it distributes to shareholders its net investment income and
net realized capital gains in accordance with the timing and other
requirements imposed by the Code. The Portfolio is organized and intends to
conduct its operations in a manner such that (i) it also will not be required
to pay any federal income or excise taxes and (ii) the Fund, by investing all
of its Investable Assets in the Portfolio, will be able to continue to
qualify as a regulated investment company under the Code.
DESCRIPTION OF THE PORTFOLIO
The Portfolio Trust is a no-load, open-end management investment company
registered under the 1940 Act. The Portfolio Trust was organized as a master
trust fund under New York law on November 18, 1999. The investment objective
of the Portfolio, a series of the Portfolio Trust, is the same as the
investment objective of the Fund. The Portfolio seeks to achieve its
investment objective through investments limited to the types of securities
in which the Fund is authorized to invest. The investment restrictions or
policies of the Portfolio are such that the Portfolio may not invest in any
security or engage in any transaction which would not be permitted by the
investment restrictions and policies of the Fund if the Fund were to invest
directly in such a security or engage directly in such a transaction.
The investment objective of the Portfolio is not a fundamental policy. The
approval of the Portfolio's investors (i.e., the Fund and other holders of
interests in the Portfolio) would be required to change any of its
fundamental investment policies or restrictions; however, any change in
non-fundamental investment policies or restrictions would not require such
approval. The Fund would be able to withdraw its investment in the Portfolio
at any time if the Trustees determine, without shareholder approval, that it
is in the best interests of the Fund to do so (including if as a result of
the changes, the Fund's or the Portfolio's investment objectives, policies or
restrictions were no longer substantially the same). Upon any such
withdrawal, the Trustees would consider what action might be taken, including
investing all the Investable Assets of the Fund in another pooled investment
entity having substantially the same investment objective as the Fund or the
retention of an investment adviser to manage directly the Fund's assets in
accordance with its investment objective (as is presently the case).
The Portfolio has its own Board of Trustees, including a majority of Trustees
who are not "interested persons" (as defined in the 1940 Act) of the
Portfolio (the "Independent Trustees"). The Trustees of the Portfolio Trust
are identical to the present Trustees of the Trust and are listed under
Proposal 3(A) of this information statement.
PROPOSAL 3
AUTHORIZATION TO VOTE AS A PORTFOLIO INVESTOR
The Majority Shareholders of the Fund authorized the Fund to vote on certain
matters as the initial holder in the Portfolio. Such vote is expected to take
place just after the Fund's investment in the Portfolio. Specifically, it is
expected that the Portfolio will ask its holders to vote to:
(A) Elect a Board of Trustees of the Portfolio Trust;
(B) Ratify the selection of PricewaterhouseCoopers LLP as the independent
accountants of the Portfolio; and
9
<PAGE>
(C) Approve the investment advisory agreement between the Portfolio Trust, on
behalf of the Portfolio, and its investment adviser, Deutsche Asset
Management, Inc.
As authorized by the Majority Shareholders, the Trust, on behalf of the Fund,
will cast its votes in favor of each of these proposals. At the present time
it is anticipated that the Fund will initially own substantially all of the
interests in the Portfolio.
PROPOSAL 3(A)
AUTHORIZATION TO ELECT TRUSTEES OF THE PORTFOLIO TRUST
As authorized by the Majority Shareholders, the Trust will vote FOR the
election of the five nominees indicated below as Trustees of the Portfolio
Trust. Each Trustee so elected will hold office for a term of unlimited
duration until his successor is elected and qualified, as provided in the
Portfolio Trust's declaration of trust. Please note that each nominee
currently serves as a Trustee of both the Trust and the Portfolio Trust.
Pursuant to the declaration of trust of the Portfolio Trust, the Trustees
have the power to establish and alter the number and the terms of office of
the Trustees (subject to certain removal procedures, including a vote by
holders of interests), to appoint successor Trustees and to fill vacancies,
including vacancies existing by reason of an increase in the number of
Trustees, provided that always at least a requisite majority of the Trustees
has been elected by the holders of interests. Generally, there will not be
meetings of holders of interests of the Portfolio Trust for the purpose of
electing Trustees.
The following table sets forth certain information about the Trustees:
<TABLE>
<CAPTION>
- ------------------------------ ---------- ----------------------------------------------------------------------------
Name Age Business Experience During Past Five Years
- ------------------------------ ---------- ----------------------------------------------------------------------------
<S> <C> <C>
Paul K. Freeman 48 Senior Research Scholar, International Institute for Applied Systems
Analysis (since 1998); Chief Executive Officer, The Eric Group Inc.
(environmental insurance) (1986-1998).
- ------------------------------ ---------- ----------------------------------------------------------------------------
Graham E. Jones 65 Senior Vice President, BGK Realty Inc. (since 1995); Financial Manager,
Practice Management Systems (medical information services) (1988-95);
Director, 12 closed-end funds managed by Morgan Stanley Asset Management;
Trustee, 10 open-end mutual funds managed by Weiss, Peck & Greer; Trustee,
6 open-end mutual funds managed by Sun Capital Advisers, Inc.
- ------------------------------ ---------- ----------------------------------------------------------------------------
Hugh G. Lynch 61 Managing Director, International Investments, General Motors Investment
Management Corporation (since September 1990).
- ------------------------------ ---------- ----------------------------------------------------------------------------
William N. Searcy 52 Pension & Savings Trust Officer, Sprint Corporation (telecommunications)
(since 1989) ; Trustee, 6 open-end mutual funds managed by Sun Capital
Advisers, Inc.
- ------------------------------ ---------- ----------------------------------------------------------------------------
Edward T. Tokar 51 Vice President-Investments, Allied Signal, Inc. (advanced technology and
manufacturer) (since 1985).
- ------------------------------ ---------- ----------------------------------------------------------------------------
</TABLE>
One meeting of the Portfolio Trust has been held since its formation on
November 18, 1999. All of the trustees attended the meeting. Messrs. Freeman,
Jones and Searcy are members of the Committee of Independent Trustees of the
Portfolio Trust, which is chaired by Mr. Searcy. The Committee of Independent
Trustees, among other things:
(1) serves as the liaison between the independent auditors and the Portfolio
Trust's management to
(i) review the arrangements for and scope of the annual audit and any
special audits;
(ii) discuss matters of concern relating to each series' financial
statements, including any adjustments to such statements recommended
by the accountants, or other results of said audit(s);
(iii) consider the accountants' comments with respect to the Portfolio
Trust's financial policies, procedures and internal accounting
controls;
(iv) review the form of opinion the accountants propose to render to the
Portfolio Trust;
(2) considers the effect upon the Portfolio Trust of any changes in accounting
principles or practices proposed by management or the accountants;
10
<PAGE>
(3) reviews the audit and non-audit services provided to the Portfolio Trust
by such accountants and the fees charged for such services;
(4) recommends to the full Board, accountants to be retained for the next
fiscal year and, in connection therewith, to evaluate the independence of
such accountants and assist the public accountants in preserving their
independence;
(5) oversees the Portfolio Trust's periodic reporting process;
(6) reviews all material contracts for services entered into by the Portfolio;
(7) reports its activities to the full Board on a regular basis and makes such
recommendations with respect to the above and other matters as the
Committee of Independent Trustees may deem necessary or appropriate;
(8) reviews, if applicable, the valuations by a series' investment adviser of
any security for which market quotations are not readily available; and
(9) nominates and elects those trustees of the Portfolio Trust who are not
"interested persons" of the Portfolio Trust (as defined in the 1940 Act).
As of November 30, 1999, no officer or Trustee of either the Trust or the
Portfolio Trust, individually or as a group, directly or indirectly owned
beneficially more than 1% of the outstanding shares of the Fund or the
Portfolio.
No fees have been paid by the Portfolio to date to the Trustees of the
Portfolio Trust. The following table estimates the amount of compensation to
be paid to the Portfolio Trust's Trustees by the Portfolio for the fiscal
year ending October 31, 2000. In addition, each Trustee will be reimbursed
for out-of-pocket expenses associated with attending Trustee meetings.
<TABLE>
<CAPTION>
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Aggregate Compensation Pension or Retirement Total Compensation from
from the Portfolio Benefits Accrued as Part Portfolio and Other Funds
Name of Trustee of Portfolio Expenses in Complex
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
Paul K. Freeman $22,000 $0 $41,000
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Graham E. Jones 22,000 0 43,000
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Hugh G. Lynch 17,000 0 37,000
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
William N. Searcy 22,000 0 44,000
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Edward T. Tokar 19,000 0 37,000
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>
PROPOSAL 3(B)
RATIFICATION OF SELECTION OF ACCOUNTANTS
On November 18, 1999, the Trustees of the Portfolio Trust, including a
majority of the Independent Trustees, selected PricewaterhouseCoopers LLP, as
independent accountants for the fiscal year ending October 31, 2000. The
employment of such auditors is expressly conditioned upon the right of the
Portfolio by the "vote of a majority of the outstanding voting securities"
(as defined above) of the Portfolio at any meeting called for the purpose to
terminate such employment without any penalty. The selection was made
pursuant to the provisions of Section 32(a) of the 1940 Act, and is subject
to ratification or rejection by the holders of interests in the Portfolio.
PricewaterhouseCoopers LLP currently serves as the independent accountants of
the Fund. The Fund has been informed that no member of PricewaterhouseCoopers
LLP has any direct or material indirect interest in the Fund or the Portfolio.
The Portfolio Trust's independent accountants provide customary professional
services in connection with the audit function for a management investment
company such as the Portfolio Trust, and their fees for such services include
fees for work leading to the expression of opinions on the financial
statements included in annual reports to the holders of interests in the
Portfolio Trust, opinions on the financial statements and other data included
in the Portfolio's annual report to the Securities and Exchange Commission,
opinions on financial statements included in amendments to the Portfolio
Trust's registration statement, and preparation of the Portfolio's federal
and state income tax returns.
11
<PAGE>
As authorized by the Majority Shareholders, the Trust will vote FOR the
ratification of the selection of PricewaterhouseCoopers LLP as independent
accountants for the fiscal year ending October 31, 2000.
PROPOSAL 3(C)
APPROVAL OF AN INVESTMENT ADVISORY AGREEMENT
BETWEEN THE PORTFOLIO TRUST, ON BEHALF OF THE PORTFOLIO, AND
DEUTSCHE ASSET MANAGEMENT, INC.
As authorized by the Majority Shareholders, the Trust will vote FOR the
approval of the investment advisory agreement between the Portfolio Trust, on
behalf of the Portfolio, and Deutsche Asset Management, Inc.
Effective upon the Fund's conversion to a master-feeder structure, Deutsche
Asset Management, Inc. ("DAMI" or the "Adviser"), 855 Third Avenue, New York,
New York, 10022, is expected to serve as investment adviser to the Portfolio
pursuant to an investment advisory agreement between the Adviser and the
Portfolio Trust to manage the Portfolio's investments and affairs subject to
the supervision of the Trustees of the Portfolio Trust. Pursuant to Proposal
1, DAMI will also serve as investment adviser to the Fund immediately prior
to its conversion to the master-feeder structure. See Proposal 1 for
information concerning the ownership and control of DAMI.
At a meeting held on November 18, 1999, the Trustees, including a majority of
the Independent Trustees, approved the Portfolio's advisory agreement. In
recommending that the shareholders of the Fund authorize the Fund to approve
the Portfolio's advisory agreement, the Trustees considered and evaluated,
among other things, the staff and professional personnel of the Adviser,
comparative fees charged to other investment companies by other investment
advisers; comparative performance results; and expense ratio data comparing
the Fund (as the equivalent of the Portfolio for this purpose) with other
investment companies of similar size and with similar investment objectives.
The Trustees conducted a review of the various documents, reports and other
materials submitted to them by the Adviser, information that they were
familiar with as Trustees, and information obtained from independent sources
such as Lipper, Inc.
TERMS OF THE ADVISORY AGREEMENT BETWEEN DAMI AND THE PORTFOLIO TRUST
As described in Proposal 2, once the Fund converts to the master-feeder
structure by investing its assets in the Portfolio, the Fund would no longer
directly require investment advisory services. For this reason, upon
conversion to the master-feeder structure, the Fund will terminate its
investment advisory agreement with the Adviser. The investment advisory
function will then be performed by the Adviser under an investment advisory
agreement with the Portfolio Trust. The terms of the Portfolio's advisory
agreement are substantially identical to the terms of the Proposed Advisory
Agreement (described in Proposal 1), except for the parties (the Portfolio is
substituted for the Fund and the Portfolio Trust is substituted for the
Trust), the date of execution and the initial term. See Proposal 1 for a
description of the terms of the Proposed Advisory Agreement. Pursuant to the
Portfolio's advisory agreement, the Adviser will be paid a fee at the same
rate and calculated in the same manner as the fee which will be paid by the
Fund immediately prior to its conversion to the master-feeder structure under
the Proposed Advisory Agreement. The approval by the Fund shareholders of
this proposal did not result in an increase in the rate at which the advisory
fee will be indirectly borne by the Fund after the proposed conversion to the
master-feeder structure.
Upon exchange of its Investable Assets for interests in the Portfolio, the
Fund will retain the services of DAMI under an administration agreement.
Under the administration agreement, DAMI will provide the Fund with general
office facilities and supervise the overall administration of the Fund. For
these services, DAMI receives compensation at a rate equal on an annual basis
to 0.30% of the Fund's average daily net assets.
12
<PAGE>
EXPENSES
The Portfolio and the Fund, as the case may be, will each be responsible for
all of its respective costs and expenses not assumed by DAMI under the
advisory agreement with the Portfolio or the administration agreement with
the Fund. Among other expenses, the Portfolio will pay investment advisory
fees; bookkeeping, share pricing and custodian fees and expenses; and
expenses of notices and reports to interest-holders. The Fund will pay fees
and disbursements of the Fund's transfer agent and dividend disbursing agent
or registrar, shareholder servicing fees and expenses; expenses of
prospectuses, statements of additional information and shareholder reports
which are furnished to shareholders. Each of the Fund and Portfolio will pay
legal and auditing fees; registration and reporting fees and expenses; and
Trustees' fees and expenses. Expenses of the Trust or the Portfolio Trust
which relate to more than one of their respective series are allocated among
such series by the Adviser in an equitable manner, primarily on the basis of
relative net asset values. For the fiscal year ended October 31, 1999,
expenses borne by the Fund amounted to $402,815 which represented 0.90% of
the Fund's average daily net assets.
RELATED INFORMATION
AFFILIATED BROKER TRANSACTIONS
The brokerage commissions paid by the Fund for the fiscal year ended October
31, 1999 were $176,478. During the fiscal year ended October 31, 1999, the
Fund paid $1,666 to Bankers Trust, an affiliated broker. This amount equaled
less than 1% of the Fund's aggregate brokerage commissions during the period.
SOFT DOLLARS
Pursuant to the Proposed Advisory Agreement, the Adviser will select
broker-dealers in accordance with guidelines established by the Trustees from
time to time and in accordance with Section 28(e) of the Securities Exchange
Act of 1934, as amended. In assessing the terms available for any
transaction, the Adviser shall consider all factors it deems relevant,
including the breadth of the market in the security, the price of the
security, the financial condition and the execution capability of the
broker-dealer, and the reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. The Adviser may also, subject
to periodic review by the Trustees, cause the Fund to pay a broker-dealer
which furnishes brokerage and research services a higher commission than that
charged by another broker-dealer for effecting the same transaction. In
paying the higher commission, the Adviser must determine in good faith that
the commission is reasonable in relation to the value of the brokerage and
research services provided, viewed in terms of either the particular
transaction or the overall responsibilities of the Adviser to the Fund. Such
brokerage and research services may consist of pricing information, reports
and statistics on specific companies or industries, general summaries of
groups of bonds and their comparative earnings and yields, or broad overviews
of the securities markets and the economy.
Supplemental research information used by the Adviser is in addition to, and
not in lieu of, services required to be performed by the Adviser and does not
reduce the advisory fees payable to the Adviser. The Trustees periodically
review the commissions paid by the Fund to consider whether the commissions
paid appear to be reasonable in relation to the benefits inuring to the Fund.
Certain of the supplemental research or services received may primarily
benefit one or more other investment companies or other accounts of the
Adviser for which investment discretion is exercised. Conversely, the Fund
may be the primary beneficiary of research or other services received as a
result of portfolio transactions effected for such other account or
investment company. During the period ended September 30, 1999, the Adviser
paid $7,988 in brokerage commissions for research services for the Fund.
13
<PAGE>
SHAREHOLDER PROPOSALS
The Portfolio Trust is not required, and does not intend, to hold annual
meetings of shareholders. Shareholders wishing to submit a proposal to be
considered for presentation at the next meeting of shareholders should send
their written proposals to DP Trust, One South Street, Baltimore, MD 21202,
Attention: Daniel O. Hirsch, so that they are received within a reasonable
time before any such meeting.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
By Order of the Board of Trustees
/s/ Daniel O. Hirsch
Daniel O. Hirsch
Secretary
Baltimore, Maryland
December 3, 1999
14
<PAGE>
EXHIBIT A
FORM OF INVESTMENT MANAGEMENT AGREEMENT
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of __________ by and between MORGAN GRENFELL
INVESTMENT TRUST, a Delaware business trust (herein called the "Trust") and
DEUTSCHE ASSET MANAGEMENT, INC. (herein called the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end management
investment company under the Investment Company Act of 1940;
WHEREAS, the Trust desires to retain the Investment Adviser to
render investment advisory and other services to the Trust with respect to
certain of its series of shares of beneficial interests as may currently
exist or be created in the future (each, a "Fund") as listed on Exhibit A
hereto, and the Investment Adviser is willing to so render such services on
the terms hereinafter set forth;
NOW, THEREFORE, this Agreement
W I T N E S S E T H:
In consideration of the promises and mutual covenants herein contained,
it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Trust hereby appoints the Investment Adviser to
act as investment adviser to each Fund for the period and on the terms set
forth in this Agreement. The Investment Adviser accepts such appointment and
agrees to render the services herein set forth for the compensation herein
provided.
2. MANAGEMENT. Subject to the supervision of the Board of Trustees
of the Trust, the Investment Adviser will provide a continuous investment
program for the Fund, including investment research and management with
respect to all securities, investments, cash and cash equivalents in the
Fund. The Investment Adviser will determine from time to time what securities
and other investments will be purchased, retained or sold by each Fund. The
Investment Adviser will provide the services rendered by it hereunder in
accordance with the investment objective(s) and policies of each Fund as
stated in the Fund's then-current prospectus and statement of additional
information (or the Fund's then current registration statement on Form N-1A
as filed with the Securities and Exchange Commission (the "SEC") and the
then-current offering memorandum if the Fund is not registered under the
Securities Act of 1933, as amended ("1933 Act"). The Investment Adviser
further agrees that it:
(a) will conform with all applicable rules and regulations
of the SEC (herein called the "Rules") and with 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
1
<PAGE>
its activities under this Agreement in accordance with regulations of the
Board of Governors of the Federal Reserve System pertaining to the investment
advisory activities of bank holding companies and their subsidiaries;
(b) will place orders pursuant to its investment
determinations for each Fund either directly with the issuer or with any
broker or dealer selected by it. In placing orders with brokers and dealers,
the Investment Adviser will use its reasonable best efforts to obtain the
best net price and the most favorable execution of its orders, after taking
into account all factors it deems relevant, including the breadth of the
market in the security, the price of the security, the financial condition
and execution capability of the broker or dealer, and the reasonableness of
the commission, if any, both for the specific transaction and on a continuing
basis. Consistent with this obligation, the Investment Adviser may, to the
extent permitted by law, purchase and sell portfolio securities to and from
brokers and dealers who provide brokerage and research services (within the
meaning of Section 28(e) of the 1934 Act) to or for the benefit of any fund
and/or other accounts over which the Investment Adviser or any of its
affiliates exercises investment discretion. Subject to the review of the
Trust's Board of Trustees from time to time with respect to the extent and
continuation of the policy, the Investment Adviser is authorized to pay to a
broker or dealer who provides such brokerage and research services a
commission for effecting a securities transaction which is in excess of the
amount of commission another broker or dealer would have charged for
effecting that transaction if the Investment Adviser determines in good faith
that such commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer, viewed in terms of
either that particular transaction or the overall responsibilities of the
Investment Adviser with respect to the accounts as to which it exercises
investment discretion; and
(c) will maintain books and records with respect to the
securities transactions of each Fund and will render to the Trust's Board of
Trustees such periodic and special reports as the Board may request.
3. SERVICES NOT EXCLUSIVE. The investment advisory services rendered
by the Investment Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser shall be free to render similar services to others so long
as its services under this Agreement are not impaired thereby.
4. BOOKS AND RECORDS. In compliance with the requirements of Rule
31a-3 of the Rules under the 1940 Act, the Investment Adviser hereby agrees
that all records which it maintains for the Trust are the property of the
Trust and further agrees to surrender promptly to the Trust any of such
records upon request of the Trust. The Investment Adviser further agrees to
preserve for the periods prescribed by Rule 31 a-2 under the 1940 Act the
records required to be maintained by Rule 31 a-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.
2
<PAGE>
5. EXPENSES. During the term of this Agreement, the Investment
Adviser will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of purchasing securities
(including brokerage commissions, if any) for the Fund.
6. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, the Trust will pay the Investment Adviser, and
the Investment Adviser will accept as full compensation therefor, fees,
computed daily and payable monthly, on an annual basis equal to the
percentage set forth on Exhibit A hereto of that Fund's average daily net
assets.
7. LIMITATION OF LIABILITY OF THE INVESTMENT ADVISER: INDEMNIFICATION.
(a) The Investment Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by a Fund in
connection with the matters to which this Agreement relates, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Investment Adviser in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement;
(b) Subject to the exceptions and limitations contained in
Section 7(c) below:
(i) the Investment Adviser (hereinafter referred to
as a "Covered Person") shall be indemnified by the respective Fund to the
fullest extent permitted by law, against liability and against all expenses
reasonably incurred or paid by him in connection with any claim, action, suit
or proceeding in which he becomes involved, as a party or otherwise, by
virtue of his being or having been the Investment Adviser of the Fund, and
against amounts paid or incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened while in office
or thereafter, and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(c) No indemnification shall be provided hereunder to a
Covered Person:
(i) who shall have been adjudicated by a court or
body before which the proceeding was brought (A) to be liable to the Trust or
to one or more Funds' investors by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties
3
<PAGE>
involved in the conduct of his office, or (B) not to have acted in good faith
in the reasonable belief that his action was in the best interest of a Fund;
or
(ii) in the event of a settlement, unless there has
been a determination that such Covered Person did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office;
(A) by the court or other body approving the
settlement;
or
(B) by at least a majority of those Trustees who
are neither Interested Persons of the Trust nor are parties to the matter
based upon a review of readily available facts (as opposed to a full
trial-type inquiry); or
(C) by written opinion of independent legal
counsel based upon a review of readily available facts (as opposed to a full
trial-type inquiry); provided, however, that any investor in a Fund may, by
appropriate legal proceedings, challenge any such determination by the
Trustees or by independent counsel.
(d) The rights of indemnification herein provided may be
insured against by policies maintained by the Trust, shall be severable,
shall not be exclusive of or affect any other rights to which any Covered
Person may now or hereafter be entitled, shall continue as to a person who
has ceased to be a Covered Person and shall inure to the benefit of the
successors and assigns of such person. Nothing contained herein shall affect
any rights to indemnification to which Trust personnel and any other persons,
other than a Covered Person, may be entitled by contract or otherwise under
law.
(e) Expenses in connection with the preparation and
presentation of a defense to any claim, suit or proceeding of the character
described in subsection (b) of this Section 7 may be paid by the Trust on
behalf of the respective Fund from time to time prior to final disposition
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 on behalf of the
respective Fund if it is ultimately determined that he is not entitled to
indemnification under this Section 7; provided, however, that either (i) such
Covered Person shall have provided appropriate security for such undertaking
or (ii) the Trust shall be insured against losses arising out of any such
advance payments, or (iii) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the matter, or independent
legal counsel in a written opinion, shall have determined, based upon a
review of readily available facts as opposed to a trial-type inquiry or full
investigation, that there is reason to believe that such Covered Person will
be entitled to indemnification under this Section 7.
8. DURATION AND TERMINATION. This Agreement shall be effective as to
a Fund as of
4
<PAGE>
the date the Fund commences investment operations after this Agreement shall
have been approved by the Board of Trustees of the Trust with respect to that
Fund and the Investor(s) in the Fund in the manner contemplated by Section 15
of the 1940 Act and, unless sooner terminated as provided herein, shall
continue until the second anniversary of such date. Thereafter, if not
terminated, this Agreement shall continue in effect as to such Fund for
successive periods of 12 months each, provided such continuance is
specifically approved at least annually (a) by the vote of a majority of
those members of the Board of Trustees of the Trust who are not parties to
this Agreement or Interested Persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval, or (b) by Vote of
a Majority of the Outstanding Voting Securities of the Trust; provided,
however, that this Agreement may be terminated by the Trust at any time,
without the payment of any penalty, by the Board of Trustees of the Trust, by
Vote of a Majority of the Outstanding Voting Securities of the Trust on 60
days' written notice to the Investment Adviser, or by the Investment Adviser
as to the Trust at any time, without payment of any penalty, on 90 days'
written notice to the Trust. This Agreement will immediately terminate in the
event of its assignment (as used in this Agreement, the terms "Vote of a
Majority of the Outstanding Voting Securities," "Interested Person" and
"Assignment' shall have the same meanings as such terms have in the 1940 Act
and the rules and regulatory constructions thereunder.)
9. AMENDMENT OF THIS AGREEMENT. No material term of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, and no amendment of a
material term of this Agreement shall be effective with respect to a Fund,
until approved by Vote of a Majority of the Outstanding Voting Securities of
that Fund.
10. REPRESENTATIONS AND WARRANTIES. The Investment Adviser hereby
represents and warrants as follows:
(a) The Investment Adviser is registered as an investment
adviser under the Advisers Act:
(b) The Investment Adviser has all requisite authority to
enter into, execute, deliver and perform its obligations under this Agreement;
(c) This Agreement is legal, valid and binding, and
enforceable in accordance with its terms; and
(d) The performance by the Investment Adviser of its
obligations under this Agreement does not conflict with any law to which it
is subject.
11. COVENANTS. The Investment Adviser hereby covenants and agrees
that, so
5
<PAGE>
long as this Agreement shall remain in effect:
(a) The Investment Adviser shall remain registered under,
the registration provisions of the Advisers Act; and
(b) The performance by the Investment Adviser of its
obligations under this Agreement shall not conflict with any law to which it
is then subject.
12. NOTICES. Any notice required to be given pursuant to this
Agreement shall be deemed duly given if delivered or mailed by registered
mail, postage prepaid, (a) to the Investment Adviser, 885 Third Avenue, New
York, New York 10022, or (b) to the Trust, c/o Deutsche Asset Management
Inc., One South Street, Baltimore, Maryland 21202.
13. WAIVER. With full knowledge of the circumstances and the effect
of its action, the Investment Adviser hereby waives any and all rights which
it may acquire in the future against the property of any investor in a Fund,
other than shares in that Fund, which arise out of any action or inaction of
the Trust under this Agreement.
14. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby.
This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and shall be governed
by the laws of the state of New York, without reference to principles of
conflicts of law. The Trust is organized under the laws of Delaware pursuant
to a Declaration of Trust dated September 13, 1993. No Trustee, officer or
employee of the Trust shall be personally bound by or liable hereunder, nor
shall resort be had to their private property for the satisfaction of any
obligation or claim hereunder.
6
<PAGE>
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.
MORGAN GRENFELL INVESTMENT
TRUST, on behalf of European
Equity Growth Fund
By:
----------------------------
Name: Daniel O. Hirsch
Title: Secretary
DEUTSCHE ASSET MANAGEMENT, INC.
By:
----------------------------
Name:
Title:
7
<PAGE>
EXHIBIT A
TO
INVESTMENT ADVISORY AGREEMENT
MADE AS OF ____________________
BETWEEN
MORGAN GRENFELL INVESTMENT TRUST AND DEUTSCHE ASSET
MANAGEMENT, INC.
<TABLE>
<CAPTION>
Fund Investment Advisory Fee
- ---- ----------------------
<S> <C>
European Equity Growth Fund 0.70%
</TABLE>
<PAGE>
EXHIBIT B
OFFICERS OF THE TRUST
The officers of the Trust who are also directors, officers or employees of
the Adviser are listed below. The address of each such person is c/o Deutsche
Asset Management, Inc., 885 Third Avenue, New York, New York, 10022.
<TABLE>
<CAPTION>
- ---------------------------------------- -------------------------------------- --------------------------------------
Name Position with the Trust Position with the Adviser
- ---------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
David W. Baldt Vice President Executive Vice President and Director
- ---------------------------------------- -------------------------------------- --------------------------------------
James Grifo Vice President Executive Vice President and Director
- ---------------------------------------- -------------------------------------- --------------------------------------
Neil P. Jenkins Vice President Director
- ---------------------------------------- -------------------------------------- --------------------------------------
Amy M. Olmert Treasurer, Chief Financial Officer Vice President
- ---------------------------------------- -------------------------------------- --------------------------------------
Daniel O. Hirsch Secretary Principal
- ---------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
<PAGE>
EXHIBIT C
DIRECTORS AND CHIEF EXECUTIVE OFFICER OF DEUTSCHE ASSET MANAGEMENT INC.
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 Deutsche Asset Management, Inc. constitute their principal occupation.
<TABLE>
<CAPTION>
- ---------------------------------------- ---------------------------------------------------------
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------------------------------- ---------------------------------------------------------
<S> <C>
Richard Marin Director and Chairman of the Board, Deutsche Asset
280 Park Avenue Management, Inc.; Managing Director, Bankers Trust
New York, NY 10017 Company
- ---------------------------------------- ---------------------------------------------------------
David W. Baldt Director, Deutsche Asset Management, Inc.
- ---------------------------------------- ---------------------------------------------------------
Audrey Mary Theresa Jones Director, Deutsche Asset Management, Inc.
- ---------------------------------------- ---------------------------------------------------------
Steven Schneider Director, Deutsche Asset Management, Inc.; Managing
280 Park Avenue Director, Bankers Trust Company
New York, NY 10017
- ---------------------------------------- ---------------------------------------------------------
Josh Weinreich Director and President, Deutsche Asset Management, Inc.
280 Park Avenue Managing Director, Bankers Trust Company
New York, NY 10017
- ---------------------------------------- ---------------------------------------------------------
</TABLE>
