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 ADVISOR FUNDS
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) filing Proxy Statement, if other than Registrant)
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[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:
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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):
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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:
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BT ADVISOR FUNDS
EAFE(R) Equity Index Fund ("EAFE Fund")
Small Cap Index Fund ("Small Cap Fund")
U.S. Bond Index Fund ("Bond Fund")
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held October 8, 1999
A Special Meeting of shareholders of BT Advisor Funds (the "Trust")
will be held at the offices of BT Alex.Brown Incorporated, 30th Floor,
Baltimore, Maryland 21202 on October 8, 1999 at 11:00 a.m. (the "Special
Meeting"). The Trust is an open-end management investment company, organized
under the laws of the Commonwealth of Massachusetts, that is comprised of the
above three series (each a "Fund," and collectively, the "Funds"). Each Fund
consists of an institutional class and an advisory class. The advisory class of
each Fund is not active at this time. Each Fund operates as a feeder fund in a
master-feeder fund arrangement with a corresponding master fund portfolio (each
a "Portfolio," and collectively, the "Portfolios"). As feeder funds, each Fund
seeks to achieve its respective investment objectives by investing all of its
investable assets in a corresponding Portfolio with the same investment
objective and policies. The Portfolios in which the Funds invest are organized
as separate series of BT Investment Portfolios, an open-end management
investment company established as a trust under the laws of the State of New
York. Pursuant to the requirements of the Investment Company Act of 1940, as
amended, applicable to master-feeder arrangements, each Fund's voting rights
with respect to the Portfolio interests that it holds must be passed through to
the Fund's own shareholders.
The Special Meeting is being held to consider and vote on the
following matters for each Fund, as indicated below and more fully described
under the corresponding Proposals in the Proxy Statement, and such other matters
as may properly come before the meeting or any adjournments thereof:
PROPOSAL I: To approve or disapprove new investment
(All Funds) advisory agreements (each a "New Advisory
Agreement" and collectively the "New Advisory
Agreements") for each Fund's corresponding
Portfolio:
A. To approve or disapprove a New Advisory
Agreement between each Fund's corresponding
Portfolio and Bankers Trust Company ("Bankers
Trust").
B. To approve or disapprove a New Advisory
Agreement between each Fund's corresponding
Portfolio and Morgan Grenfell Inc. ("MGI") to
be implemented within two years of the date
of the Special Meeting upon approval of the
members of the Trust's and the Portfolio's
Boards of Trustees, respectively, who are not
"interested persons" ("Independent Trustees")
(as defined in the Investment Company Act of
1940, as amended).
<PAGE>
C. To approve or disapprove a new
sub-investment advisory agreement (the "New
Sub-advisory Agreements," which term, unless
otherwise specified, is included within the
meaning of New Advisory Agreements) among
each Fund's corresponding Portfolio, MGI and
Bankers Trust under which Bankers Trust may
perform certain of MGI's responsibilities, at
MGI's expense, under the applicable New MGI
Advisory Agreement with the applicable
Portfolio upon approval of the Independent
Trustees of the Trust and the Portfolio.
PROPOSAL II: To elect Trustees of the Trust and the
(All Funds) Portfolios 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
(All Funds) PricewaterhouseCoopers LLP as the independent
accountants for the Funds and their
corresponding Portfolios for the current
fiscal year.
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 the dates of execution, effectiveness and initial term, as
the prior investment advisory agreements pursuant to which services were
provided to the Portfolios. 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 the approval of the Boards and the Independent Trustees. As more fully
discussed in the accompanying Joint 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 Agreements with MGI
described in Proposal IB and the New Sub-advisory Agreements with Bankers Trust
described in Proposal IC will permit Deutsche Bank, upon the approval of the
Independent Trustees of the Trust and the Portfolios, 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 Agreements with MGI is needed to permit Deutsche Bank a sufficient
amount of time (which will vary for different Portfolios) 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 each Fund entitled to notice
of, and to vote at, the Special Meeting. You are cordially invited to attend the
Special Meeting.
IF YOU HAVE ANY QUESTIONS CONCERNING THE PROXY STATEMENT OR THE
PROCEDURES TO BE FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT
SHAREHOLDER COMMUNICATIONS CORPORATION AT 1-800-732-6168.
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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 ADVISOR FUNDS
EAFE(R) Fund ("EAFE Fund")
Small Cap Index Fund ("Small Cap Fund")
U.S. Bond Index Fund ("Bond Fund")
One South Street
Baltimore, Maryland 21202
PROXY STATEMENT FOR THE SPECIAL MEETING OF SHAREHOLDERS
October 8, 1999
This Joint Proxy Statement ("Proxy Statement") is being furnished in
connection with the solicitation of proxies by the Board of Trustees of BT
Advisor Funds (the "Trust") with respect to the above three series thereof (each
a "Fund," and collectively, the "Funds") for use at the special meeting of the
Trust to be held at the offices of BT Alex.Brown Incorporated, One South Street,
30th Floor, Baltimore, Maryland 21202 on October 8, 1999 at 11:00 a.m. (the
"Special Meeting") and at any adjournments thereof. This Proxy Statement and
accompanying proxy card(s) ("Proxy") are expected to be mailed to shareholders
on or about August 23, 1999.
Each Fund operates as a feeder fund in a master-feeder fund
arrangement with a corresponding master fund portfolio (each a "Portfolio," and
collectively, the "Portfolios"). The Portfolios in which the Funds invest are
organized as separate series of BT Investment Portfolios ("BT Portfolios"), an
open-end management investment company established as a trust under the laws of
the State of New York. As feeder funds, each Fund seeks to achieve its
respective investment objectives by investing all of its investable assets in a
corresponding Portfolio with the same investment objectives and policies.
For simplicity, actions are described in this Proxy Statement as
being taken by a Fund, which is a series of the Trust, although all actions are
actually taken by the Trust on behalf of the applicable series or Fund. Some
actions described as taken by or with respect to a Fund are actually actions to
be taken by the corresponding Portfolio in which the Fund invests all of its
assets and on which the Fund votes as a shareholder. Further, actions described
as being taken by the shareholders of the Trust with respect to its Board of
Trustees will also be taken by the Funds as shareholders of the Portfolios with
respect to the Portfolios' respective Boards of Trustees. Your vote and the vote
of other shareholders of the relevant Fund determines how the Fund will vote
with respect to itself and its corresponding Portfolio. See "Background."
The Special Meeting is being held to consider and vote on the
following matters for each Fund, as indicated below and described more fully
under the corresponding Proposals discussed herein, and such other matters as
may properly come before the meeting or any adjournments thereof:
PROPOSAL I: To approve or disapprove new investment
(All Funds) advisory agreements (each a "New Advisory
Agreement" and collectively the "New Advisory
Agreements") for each Fund's corresponding
Portfolio:
<PAGE>
A. To approve or disapprove a New Advisory
Agreement between each Fund's corresponding
Portfolio and Bankers Trust Company ("Bankers
Trust") (the "New BT Advisory Agreements").
B. To approve or disapprove a New Advisory
Agreement between each Fund's corresponding
Portfolio and Morgan Grenfell Inc. ("MGI"
and, together with Bankers Trust, the
"Advisers") (the "New MGI Advisory
Agreements") to be implemented within two
years of the date of the Special Meeting upon
approval of the members of the Trust's and
the Portfolio's Boards of Trustees,
respectively, 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 Agreements," which term, unless
otherwise specified, is included within the
meaning of New Advisory Agreements) among
each Fund's corresponding Portfolio, MGI and
Bankers Trust under which Bankers Trust may
perform certain of MGI's responsibilities, at
MGI's expense, under the applicable New MGI
Advisory Agreement with the applicable
Portfolio upon approval of the Independent
Trustees of the Trust and the Portfolio.
PROPOSAL II: To elect Trustees of the Trust and the
(All Funds) Portfolios 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
(All Funds) PricewaterhouseCoopers LLP as the independent
accountants for the applicable Funds and
their corresponding Portfolios for the
current fiscal year.
The appointed proxies will vote on any other business as may properly
come before the Special Meeting or any adjournment thereof.
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The Funds' shareholders are to consider the approval of New Advisory
Agreements for each Fund's corresponding Portfolio, as indicated in the table
below:
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Fund Corresponding Portfolio
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EAFE Fund EAFE(R) Equity Index Portfolio ("EAFE Portfolio")
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Small Cap Fund Small Cap Index Portfolio ("Small Cap Portfolio")
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Bond Fund U.S. Bond Index Portfolio ("Bond Portfolio")
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The shareholders of the Trust are also 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 and Portfolios.1 Drs. Herring and
Gruber and Messrs. Langton and Van Benschoten currently serve on the Board of
the Trust. Messrs. Biggar, Dill and Saunders currently serve on the Board of the
Portfolios and serve as Trustees of various other investment companies within
the Bankers Trust family of funds. To ensure adherence by the Trust and the
Portfolios with 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 Funds or
Portfolios 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 Funds. 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 Funds' shares, (c) payment
to Shareholder Communications Corporation for its services in soliciting proxies
and (d) supplementary solicitations to submit Proxies, will be borne by Bankers
Trust. If the Funds record votes by telephone or through the Internet, they 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 each Fund containing audited financial
statements for the fiscal year ended December 31, 1998 as well as the
Semi-Annual Report of each Fund (each a "Report"), have previously been
furnished to the Funds' respective shareholders. An additional copy of each
Report will be furnished without charge upon request by writing to the Trust at
the address set forth on the cover of this Proxy Statement or by calling
1-800-368-4031.
If the enclosed Proxy is properly executed and returned in time to be
voted at the Special Meeting, the shares represented thereby will be voted in
accordance with the instructions marked on the Proxy. Shares of a Fund are
entitled to one vote each at the Special Meeting and fractional shares are
entitled to proportionate shares of one vote. If no instructions are marked on
the Proxy with
1 Unless otherwise indicated, references in this Proxy Statement to the
"Trustee Nominees" includes the Trustee Nominees of both the Trust
and the Portfolios.
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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 applicable Fund prior to the time it is voted.
Bankers Trust will vote any shares in accounts as to which it has
investment authority, and shares in any other accounts as to which Bankers Trust
is the agent of record, which are not otherwise represented in person or by
proxy at the Special Meeting. Bankers Trust will vote shares of each Fund over
which it has investment discretion in accord with its fiduciary and other legal
obligations, and in its discretion may consult with the beneficial owners or
other fiduciaries. Bankers Trust will vote shares of each Fund for which it is
the owner of record but does not have investment discretion, with respect to
each Proposal on which shareholders of the applicable Fund are entitled to vote,
which are not otherwise represented in person or by proxy at the Special
Meeting. These shares will be voted by Bankers Trust for, against, or
abstaining, in the same proportion as the votes cast by holders of all shares in
the Fund otherwise represented at the Special Meeting. This practice is commonly
referred to as "mirror" or "echo" voting.
In the event that a quorum is not present at the Special Meeting, or
if a quorum is present but sufficient votes to approve a Proposal are not
received, the persons named as proxies may propose one or more adjournments of
the Special Meeting to permit further solicitation of Proxies with respect to
the Proposal. In determining whether to adjourn the Special Meeting, the
following factors may be considered: the nature of the proposals that are the
subject of the Special Meeting, the percentage of votes actually cast, the
percentage of negative votes actually cast, the nature of any further
solicitation and the information to be provided to shareholders with respect to
the reasons for the solicitation. Any adjournment will require the affirmative
vote of a majority of those shares represented at the Special Meeting in person
or by Proxy. The persons named as proxies will vote those Proxies that they are
entitled to vote "FOR" any Proposal in favor of an adjournment and will vote
those Proxies required to be voted "AGAINST" any such Proposal against any
adjournment. A shareholder vote may be taken on one or more of the Proposals in
the Proxy Statement prior to any adjournment if sufficient votes have been
received and it is otherwise appropriate. A quorum of shareholders is
constituted by the presence in person or by proxy of the holders of a majority
of the outstanding shares of the Trust or a Fund thereof (as applicable)
entitled to vote at the Special Meeting. For purposes of determining the
presence of a quorum for transacting business at the Special Meeting,
abstentions and broker "non-votes" (that is, proxies from brokers or nominees
indicating that these persons have not received instructions from the beneficial
owner or other persons entitled to vote shares on a particular matter with
respect to which the brokers or nominees do not have discretionary power) will
be treated as shares that are present but which have not been voted. (See "Vote
Required" for a further discussion of abstentions and broker non-votes.)
Shareholders of record at the close of business on July 22, 1999 (the
"Record Date") are entitled to notice of, and to vote at, the Special Meeting.
As of the Record Date, the following number of shares of each Fund were issued
and outstanding:
EAFE Fund ........................... 5,195,253.334 shares
Small Cap Fund ...................... 8,323,665.347 shares
U.S. Bond Fund ...................... 5,876,247.627 shares
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<PAGE>
This Proxy Statement is being used in order to reduce the
preparation, printing, handling and postage expenses that would result from the
use of a separate statement for each Fund and, because shareholders may own
shares of more than one Fund, the combined statement may avoid burdening
shareholders with more than one proxy statement. To the extent information
relating to common ownership is available to the Funds, a shareholder that owns
of record shares in two or more of the Funds will receive a package containing a
Proxy Statement and Proxies for the Funds in which such shareholder is a record
owner. If the information relating to common ownership is not available to the
Funds, a shareholder that beneficially owns of record shares in two or more
Funds may receive two or more packages each containing a Proxy Statement and a
Proxy for each Fund in which the shareholder is a beneficial owner. It is
essential that shareholders complete, date, sign and return each enclosed Proxy
(unless a shareholder is voting by telephone or through the Internet).
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 (or Proxies);
o date and sign the Proxy (or Proxies); and
o mail the Proxy (or Proxies) 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 Funds' shares by (i) the only persons
known by each Fund to beneficially own more than five percent of the outstanding
shares of the Fund, (ii) the Trustees and Trustee Nominees, (iii) the executive
officers of each Fund, and (iv) the Trustees and executive officers of each Fund
as a group. The number of shares beneficially owned by each Trustee, Trustee
Nominee or executive officer is determined under rules of the Securities and
Exchange Commission (the "Commission"), and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under these rules,
beneficial ownership includes any shares as to which the individual has the sole
or shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days of the Record Date through
the exercise of any stock option or other right. Unless otherwise indicated,
each person has sole investment and voting power (or shares this power with his
or her spouse) with respect to the shares set forth in Annex I. The inclusion
herein of any shares deemed beneficially owned does not constitute an admission
of beneficial ownership of the shares.
Collectively, the Trustees and officers of the Trust own less than 1%
of each Fund's outstanding shares.
Background
Master-Feeder Structure. Shareholders of the Funds are being asked to
approve the New Advisory Agreements, as applicable, and to elect new Boards of
Trustees of the Trust and the Portfolios (together, the "Boards"). As indicated
earlier, each Fund operates as a feeder fund in a master-feeder fund arrangement
with the Portfolios, which serve as master funds. As feeder funds, the Funds
seek to achieve their respective investment objectives by investing all of their
investable assets in a corresponding Portfolio with the same investment
objectives and policies. The Portfolios invest directly in investment securities
and other investments. Pursuant to the requirements of the Act applicable to
master-feeder arrangements, each Fund's voting rights with respect to the
Portfolio shares that it holds must be passed through to the Fund's own
shareholders. Other feeder funds of a particular
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<PAGE>
Portfolio will also vote in accordance with their respective charters and/or
other applicable requirements with respect to the approval of the applicable New
Advisory Agreement(s), the election of Trustees of the Portfolios and the
ratification of the Portfolios' independent accountants.
The Portfolios. As indicated earlier, the Portfolios are separate
series of BT Portfolios. 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 each 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 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 52nd Street, New York, New York 10019. ICC
Distributors, Inc., located at Two Portland Square, Portland, Maine 04101,
serves as the principal underwriter of each 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 agreements pursuant to which
services were provided to the Portfolios. 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 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 Agreements described in Proposal IB and the New Sub-advisory Agreements
with Bankers Trust described in Proposal IC will permit Deutsche Bank, upon the
approval of the Independent Trustees of the Trust and the applicable Portfolio,
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 Agreements is needed to permit Deutsche Bank a
sufficient amount of time (which will vary for different Portfolios) to plan,
prepare and institute the necessary arrangements for MGI to consolidate Deutsche
Bank's U.S. mutual fund operations.
The Prior Advisory Agreements.
The Prior Advisory Agreements. Prior to June 4, 1999, Bankers Trust
served as investment adviser to each of the Portfolios (as discussed earlier)
pursuant to separate investment advisory agreements between Bankers Trust and
the applicable Portfolios (the "Prior Advisory Agreements"). The Prior Advisory
Agreements were initially approved by the Boards of the applicable Portfolio and
the Trust, including a majority of the Independent Trustees of the Portfolio or
the Trust, respectively.
The following table lists: (i) the date of each Prior Advisory
Agreement; (ii) the most recent date on which each Prior Advisory Agreement was
approved by the applicable Portfolio's Trustees, including a majority of the
Independent Trustees, and shareholders; (iii) the most recent date on which each
Prior Advisory Agreement was approved by the applicable Fund's Trustees,
including a majority of the Independent Trustees, and shareholders; and (iv) the
amount paid by the Portfolios to Bankers Trust for services rendered pursuant to
the Prior Advisory Agreements (for each Portfolio's last fiscal year):
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<PAGE>
<TABLE>
<CAPTION>
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Date of Prior
Portfolio (Fiscal Year) Advisory Agreement Date Last Approved By Portfolio's Date Last Approved By Fund's Fee
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Trustees Shareholders* Trustees Shareholders*
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<S> <C> <C> <C> <C> <C> <C>
EAFE Portfolio (12/31/98) 4/28/93 3/8/99 4/28/93 3/8/99 4/28/93 $6,594
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Small Cap Portfolio
(12/31/98) 4/28/93 3/8/99 4/28/93 3/8/99 4/28/93 $151,232
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Bond Portfolio (12/31/98) 4/28/93 3/8/99 4/28/93 3/8/99 4/28/93 $67,925
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</TABLE>
* Shareholders voted to approve the Prior Advisory Agreements on their
respective dates of inception.
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, 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 Agreements. 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 Agreements within the meaning
of the Act, terminating the agreements according to their respective 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 Agreements with Bankers Trust.
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<PAGE>
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 Agreements 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 each of
the New BT Advisory Agreements are approved or disapproved by the respective
shareholders of each 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 Agreements, provided that these
fees would be held in escrow pending shareholder approval of the New BT Advisory
Agreements. In accordance with the Exemptive Order, the advisory fees charged to
the Portfolios and paid to Bankers Trust under the New BT Advisory Agreements
have been held in an interest-bearing escrow account and the Portfolios expect
to continue to deposit these fees in such account until approval of the New BT
Advisory Agreements by the respective shareholders of the Portfolios has been
obtained. If the New BT Advisory Agreements are not approved by the shareholders
by the expiration of the Interim Period, the fees held in escrow will be
remitted to the applicable Fund. As of June 30, 1999, the amount in escrow for
EAFE Fund totalled $10,642.25, for Small Cap Fund totalled $84,014.15 and for
Bond Fund totalled $1,940.64.
The Funds, as shareholders of the Portfolios, 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
Agreements and to approve the New Advisory Agreements for the Portfolios. Other
than the parties and the dates of execution, effectiveness, and initial term of
the agreements, the New Advisory Agreements contain substantially the same terms
and conditions as the Prior Advisory Agreements. 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 the approval of the Board and the
Independent Trustees. The advisory fee rates charged to the Portfolios under the
Prior Advisory Agreements have continued to apply under the New BT Advisory
Agreements and would continue to apply under the New MGI Advisory Agreements.
MGI, and not the Portfolios, 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. In addition, the Advisers have advised the Portfolios that they can
expect to continue to receive the same level and quality of services under the
New Advisory Agreements as they received under the Prior Advisory Agreements.
The Advisers have represented to the Boards that in the event of any material
change in the investment management personnel of the Advisers responsible for
providing services to the Funds, the Advisers will apprise and consult with the
relevant Board or Boards to ensure that the applicable Board, including a
majority of the Board's Independent Trustees, is satisfied that the services
provided by the Advisers will not be diminished in scope and quality.
The New Advisory Agreements
The New Advisory Agreements. The form of the New Advisory Agreement
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 respective Board
or shareholders of the applicable Portfolio, provided that they are also
approved by a majority of the Independent Trustees. The terms and conditions of
the New Advisory Agreements, including the New Sub-advisory Agreements, other
than the parties and their dates of execution, effectiveness and initial term,
are substantially the same as those of the Prior Advisory Agreements. In
addition, the form of New Sub-advisory Agreement authorizes the applicable
investment adviser to adjust the duties
-9-
<PAGE>
paid to the investment subadviser with and upon the approval of the Board and
the Independent Trustees. The New BT Advisory Agreements and the New MGI
Advisory Agreements will be between the Trust and either Bankers Trust or MGI,
as applicable; the New Sub-advisory Agreements will be among the Trust, MGI (as
Adviser) and Bankers Trust (as sub-adviser). Each of the New BT Advisory
Agreements became effective as of June 4, 1999, the date of the consummation of
the Merger.
If the New MGI Advisory Agreements and/or the New Subadvisory
Agreements are approved, Bankers Trust will continue to perform its advisory
duties under the New BT Advisory Agreements until the New MGI Advisory
Agreements and/or the New Subadvisory Agreements, as applicable, are
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 Agreements, as under the Prior
Advisory Agreements, each of the Advisers agrees to furnish the Portfolios with
investment advisory and other services in connection with a continuous
investment program for the Portfolios, 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
Portfolios' Boards, 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 Agreements 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 applicable Portfolio's investment
objectives and policies as stated in Prospectuses and Statements of Additional
Information of the relevant Funds, as from time to time in effect, and the
Portfolios' then current registration statements 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 each 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 each Portfolio, and
(e) maintain books and records with respect to the securities transactions of
each Portfolio and render to the Board of Trustees of the Trust such periodic
and special reports as they may request.
The Advisory Fees. The investment advisory fee rate charged to the
Portfolios under the New BT Advisory Agreements and the New MGI Advisory
Agreements is the same as the investment advisory fee rate charged under the
Prior Advisory Agreements. As noted above, the investment advisory fee payable
under the New Sub-advisory Agreements would be paid by MGI, not the Portfolios,
and may vary from time to time, subject to the approval of the applicable
Portfolio's Board of Trustees, including a majority of its Independent Trustees.
As under the Prior Advisory Agreements, Bankers Trust or MGI, as
applicable, is paid a fee under the New Advisory Agreements for its services,
calculated daily and paid monthly, equal, on an annual basis, to the following:
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<PAGE>
--------------------------------------------------------------
PORTFOLIO ADVISORY AGREEMENT FEE*
--------------------------------------------------------------
EAFE Portfolio 0.25%
--------------------------------------------------------------
Small Cap Portfolio 0.15%
--------------------------------------------------------------
Bond Portfolio 0.15%
--------------------------------------------------------------
--------------------------
* Pursuant to the Expense Limitation Agreement between
Bankers Trust and the Trust, the total fund operating
expenses for each Fund are capped for the current fiscal
year. The fee rates shown do not reflect the cap.
Generally. If approved, the New Advisory Agreements, as applicable,
will remain in effect for an initial two year period (unless sooner terminated),
and shall remain in effect from year to year thereafter if approved annually (1)
by the Portfolios' Boards or by the holders of a majority of the Portfolios'
respective outstanding voting securities (i.e., in most cases, the Funds) and
(2) by a majority of the Independent Trustees who are not parties to such
contract or agreement. Like the Prior Advisory Agreements, the New Advisory
Agreements will terminate upon assignment by any party and are terminable,
without penalty, on 60 days' written notice by the Portfolios' Boards or by a
"majority" vote of the shareholders of the Portfolios (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 Portfolios) 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 Portfolios bear certain other
expenses including the fees of the Portfolios' Boards. The Portfolios also pay
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 Portfolios 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 Portfolios 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
Portfolios, Bankers Trust serves as investment adviser to 31 other investment
companies and as 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 Portfolios, 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, including
approximately $315 million of assets in the Portfolios.
-11-
<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
Deutsche Bank A.G.
Taunusanlage 12
D-60262 Frankfurt am Main Chairman of the Board, Chief Executive Officer and President, Bankers
Federal Republic of Germany Trust Company; Member, Board of Managing Directors, Deutsche Bank A.G.
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 Petroleum
29 King Street Company; Director, TIG Holdings Inc.
Chappaqua, NY 10514-3432
Mr. William R. Howell Chairman Emeritus, J.C. Penney Company, Inc.; Director, Exxon
J.C. Penney Company, Inc. Corporation; Director, Halliburton Company; Director, National
P.O. Box 10001 Organization on Disability; Director, National Retail Federation;
Dallas, TX 75301-1109 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 Holding Corp.
Deutsche Bank A.G.
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 Portfolios,
Bankers Trust also serves as administrator, transfer agent and custodian of each
Portfolio and Fund. These services will continue to be provided by Bankers Trust
after approval of the New Advisory Agreements. (Annex III sets forth
-12-
<PAGE>
the fees paid to Bankers Trust by the Portfolios and the Funds for these
services for the most recently completed fiscal year.)
MGI. MGI is a corporation organized under the laws of the State of
Delaware and is a registered investment adviser under the Advisers Act. It is
located at 885 Third Avenue, 32nd Floor, New York, NY 10022. MGI provides a full
range of investment advisory services to institutional clients. MGI serves as
investment adviser to ten other investment companies and as investment
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 23 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 Portfolios, 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 Inc.;
280 Park Avenue Managing Director, Deutsche Bank, A.G.
New York, NY 10017
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 New York, NY 10017
280 Park Avenue Deutsche Bank A.G.
Managing Director,
</TABLE>
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<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 Portfolios. 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 Agreements
and its request that the Board approve the New Advisory Agreements, the Boards
were satisfied that they had received and appropriately considered the relevant
factors and, after consultation with counsel, the Boards 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 Portfolios'
Boards must not be "interested persons" of the Advisers within the meaning of
the Act. All current members of the Boards 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 Portfolios or the Funds. 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
-14-
<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 Boards.
Recommendation of the Boards
At a meeting of the Boards held on March 8, 1999 called for the
purpose of, among other things, voting on approval of the New BT Advisory
Agreements, the Boards, including the Independent Trustees, unanimously approved
the New BT Advisory Agreements. In reaching this conclusion, the Boards obtained
from BT Corporation, Deutsche Bank and Bankers Trust such information as they
deemed reasonably necessary to approve Bankers Trust as investment adviser to
the Portfolios. Additionally, the Boards considered a number of factors,
including, among other things, the continuity of the management of the
Portfolios after the Merger; the nature, scope and quality of services that
Bankers Trust would likely provide to the Portfolios; 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 Agreements contain substantially
the same terms and conditions as the Prior Advisory Agreements. Based on the
factors discussed above and others, the Boards determined that the New BT
Advisory Agreements are fair and reasonable and in the best interest of the
Portfolios and their respective shareholders.
At meetings of the Boards 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 Agreements and the New Sub-advisory Agreements, the Boards
obtained from Deutsche Bank and MGI such information as they deemed reasonably
necessary to approve MGI as investment advisers to the Portfolios.
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 Boards considered the same
factors described above for the New BT Advisory Agreements with regard to the
New MGI Advisory Agreements and the New Sub-advisory Agreements. The Boards 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 Portfolios
because most of the personnel of Bankers Trust who provided services under the
Prior Management Agreements will be employed by MGI; the financial standings of
Deutsche Bank and MGI; the benefits to the Funds and Portfolios 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 Boards 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 Agreements will provide the
Funds and the Portfolios with an investment adviser registered under the
Advisers Act.
The Boards were apprised that the deferral in implementing the New
MGI Advisory Agreements is needed to permit Deutsche Bank a sufficient amount of
time (which will vary for different Portfolios) 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 Boards that the New MGI
Advisory Agreements and the New Sub-advisory Agreements would be implemented
only upon the approval of the applicable Portfolio's Independent Trustees based
on information they then
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<PAGE>
deemed adequate and necessary to consider these arrangements. At the July 27th
meeting of the Boards, a majority of the Boards, including a majority of the
Independent Trustees, approved the New MGI Advisory Agreements and the New
Sub-advisory Agreements.
Based on the factors discussed above and others, the Boards
determined that the New MGI Advisory Agreements and the New Sub-Advisory
Agreements are fair and reasonable and in the best interest of the Portfolios
and their respective shareholders.
In addition, at meetings held on March 24 and April 21, 1999 the
Boards, 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 Boards, including the
Independent Trustees of each, recommend that the respective shareholders of the
Funds vote "FOR" the approval of the New Advisory Agreements as set forth in
these Proposals.
If the New BT Advisory Agreements are approved by the shareholders,
each agreement will continue in effect as described above. If any New BT
Advisory Agreement is not approved by the shareholders, the advisory fees held
in escrow with respect to that New BT Advisory Agreement will be paid over to
the applicable Portfolio. In such event, the applicable Board(s) will consider
what other action is appropriate based upon the interests of the shareholders.
If any New MGI Advisory Agreements and/or New Sub-advisory Agreements are not
approved by the shareholders, the applicable New BT Advisory Agreement(s), if
they have been approved by the shareholders, will continue in effect in
accordance with their terms while the Boards consider whether and the extent to
which other action is appropriate based upon the interests of the shareholders.
If shareholders of a Fund do not approve the applicable New Advisory Agreements
at the same time that shareholders of other investment companies approve the
applicable New Advisory Agreements with respect to a common Portfolio in a
manner sufficient to implement the New Advisory Agreements for that Portfolio,
the applicable Fund will remain a participant in that Portfolio while the
Board(s) consider what other action, if any, is appropriate based upon the
interests of the shareholders of the applicable Fund.
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<PAGE>
PROPOSAL II
ELECTION OF BOARDS OF TRUSTEES OF THE TRUST AND THE PORTFOLIOS
Trustees constituting the entire Board of Trustees of the Trust and
of each Portfolio 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 of the Boards and nominated by the full Boards at a meeting
held on July 15, 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, Martin J. Gruber,
Richard J. Herring, Bruce E. Langton and Harry Van Benschoten are currently
Trustees of the Trust and Charles P. Biggar, S. Leland Dill and Philip Saunders,
Jr. are currently Trustees of the Portfolios. No Trustee or Trustee Nominee of
the Trust or the Portfolios serves or will serve as an officer of the Trust or
any 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 of Trustees
of the Trust and of each Portfolio. 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 Boards may recommend.
The following table sets forth the names, ages, position with the
Trust/Portfolios, and principal occupation of each Trustee Nominee; each Trustee
Nominee is proposed to be elected as such for the Trust and for each Portfolio.
TRUSTEE NOMINEES
<TABLE>
<CAPTION>
Position with
Name, and Age Trust/Portfolios Principal Occupations During Last Five Years
- ------------- ---------------- --------------------------------------------
<S> <C> <C>
Charles P. Biggar+ Trustee of Portfolios Retired; formerly, Vice President of International Business Machines
Age: 68 since inception of each ("IBM") and President of the National Services and Field Engineering
Portfolio Divisions of IBM.
S. Leland Dill(1)+ Trustee of the Trust Retired; Director, Coutts (U.S.A.) International; Director, Phoenix-
Age: 69 since 1986 and Trustee Zweig Trust(3) and Phoenix-Euclid Market Neutral Fund(3); former
of the Portfolios since Partner of KPMG Peat Marwick; Director, Vintners International Company
inception of each Inc.; Director, Coutts Trust Holdings Ltd.; Director, Coutts Group;
Portfolio General Partner, Pemco(2).
Martin J. Gruber (1)+ Trustee of the Trust Nomura Professor of Finance, Leonard N. Stern School of Business, New
Age: 61 since 1992 York University (since 1964); Trustee, TIAA(3); Trustee, SG Cowen
Mutual Funds(43; Trustee, Japan Equity Fund(3); Trustee, Taiwan Equity
Fund(3).
Richard Hale* Managing Director, Deutsche Asset Management; Director, Flag Investors
Age: 53 Fund(3); Managing Director, BT Alex. Brown Incorporated; Director and
President, Investment Company Capital Corp.
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<PAGE>
Richard J. Herring (1)+ Trustee of the Trust Jacob Safra Professor of International Banking, Professor of Finance
Age: 53 since 1995 and Vice Dean, The Wharton School, University of Pennsylvania (since
1972).
Bruce E. Langton (1)+ Trustee of the Trust Retired; Trustee, Allmerica Financial Mutual Funds (1994 to present);
Age: 68 since 1995 Member, Pension & Thrift Plans and Investment Committee, Unilever U.S.
Corporation (1989 to present)(2); Director, TWA Pilots Directed
Account Plan and 401K Plan (1988 to present)(3).
Philip Saunders, Jr.(1)+ Trustee of the Trust Principal, Philip Saunders Associates (Economic and Financial
Age: 63 since 1986 and Analysis); Former Director, Financial Industry Consulting, Wolf and
Trustee of the Company; President, John Hancock Home Mortgage Corporation; Senior
Portfolios since Vice President of Treasury and Financial Services, John Hancock Mutual
inception of each Life Insurance Company, Inc.
Portfolio
Harry Van Benschoten(1)+ Trustee of the Trust
Age: 71 since 1992 Retired; Director, Canada Life Insurance Corporation of New York.
</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.
+ Drs. Gruber and Herring and Messrs. Langton and Van Benschoten are
members of the Audit Committee of the Trust and Messrs. Biggar, Dill
and Saunders are members of the Audit Committee of the Portfolios.
(1) Holds one other trusteeship in the Bankers Trust Fund Complex, as
defined herein.
(2) A publicly held company with securities registered pursuant to
Section 12 of the Exchange Act.
(3) An investment company registered under the Act.
Each Board has established an Audit Committee that meets with the
Trust's/Portfolios' independent accountants to review the financial statements
of the Trust/Portfolios, the adequacy of internal controls and the accounting
procedures and policies of the Trust/Portfolios, and reports on these matters to
the Board. The Independent Trustees of each Board, who constitute 100% of the
membership of each current Board, select and nominate the new Trustee nominees
who are not "interested persons," as defined under the Act, of the Trust or
Portfolios, as applicable. The Boards do not have compensation committees.
During 1998, the Boards 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 Trust, Portfolios and Bankers Trust
Fund Complex (as defined below) during the most recent calendar/fiscal year. In
addition to the fees listed below, the Trustees are also reimbursed for all
reasonable expenses incurred during the execution of their duties for the Trust,
Portfolios and Bankers Trust Fund Complex.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Aggregate
Aggregate Compensation Pension or Retirement Estimated Annual Total Compensation From
Compensation from the Benefits Accrued as Part of Benefits upon the Complex
Name of Trustee from the Trust Portfolios Trust Expenses Retirement Paid to Trustees
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Charles P. Biggar N/A N/A N/A N/A $36,250
- ------------------------------------------------------------------------------------------------------------------------------------
S. Leland Dill N/A $3,882 N/A N/A $36,250
- ------------------------------------------------------------------------------------------------------------------------------------
Martin J. Gruber $13,687.50 N/A N/A N/A $36,250
- ------------------------------------------------------------------------------------------------------------------------------------
Richard Hale N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Richard J. Herring $11,375.01 N/A N/A N/A $35,000
- ------------------------------------------------------------------------------------------------------------------------------------
Bruce E. Langton $11,374.97 N/A N/A N/A $35,000
- ------------------------------------------------------------------------------------------------------------------------------------
Philip Saunders, Jr. N/A $3,910 N/A N/A $36,250
- ------------------------------------------------------------------------------------------------------------------------------------
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<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
Harry Van Benschoten $13,687.52 N/A N/A N/A $36,250
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------
* The "Bankers Trust Fund Complex" consists of the Trust and the Portfolios, as
well as BT Institutional Funds, BT Pyramid Mutual Funds, BT Investment Funds and
BT Insurance Funds Trust.
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.
<TABLE>
<CAPTION>
Name and Age Position with Trust and Principal Occupations
- ------------ ---------------------------------------------
<S> <C>
John A. Keffer President and Chief Executive Officer
Age: 56 since 1998; President, Forum Financial Group L.L.C. and its
affiliates; President, ICC Distributors, Inc.*
Daniel O. Hirsch Secretary since 1998; Director, Deutsche Asset Management since
Age: 45 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 Head,
Age: 41 Deutsche Asset Management since 1998; Senior Manager,
PricewaterhouseCoopers LLP, 1993-98.
</TABLE>
- ------------------
* Underwriter/distributor for the Trust. Mr. Keffer owns 100% of the
shares of ICC Distributors, Inc.
Recommendation of the Boards
At a meeting of the Boards held on July 27, 1999, the Boards, based
on a recommendation of the incumbent Independent Trustees of each, unanimously
approved the nomination of the Trustee Nominees. In reaching this conclusion,
the Boards 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: alignment of the members of the Boards
of the Trust and the Portfolios; the nature, scope and quality of services that
the Trustee Nominees would likely provide to the Trust and the Portfolios; and
the desirability of maintaining adherence to Section 15(f) of the Act. Based on
the factors discussed above and others, the Boards determined that the election
of the Trustee Nominees is in the best interest of the Trust and the Portfolios
and their respective shareholders.
Therefore, after careful consideration, the Boards, including the
Independent Trustees of each, recommend that the respective shareholders of the
Trust and the Portfolios vote "FOR" the election of the Trustee Nominees as set
forth in this Proposal.
-19-
<PAGE>
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 applicable Board(s) will consider what action is
appropriate based upon the interests of the Trust's or Portfolios' shareholders,
as applicable.
-20-
<PAGE>
PROPOSAL III
RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
ACCOUNTANTS FOR ALL FUNDS AND PORTFOLIOS
The Boards of the Trust and BT Portfolios, including a majority of
the Independent Trustees of each, have approved the selection of
PricewaterhouseCoopers LLP to serve as independent accountants for the Funds and
the Portfolios for the current fiscal year. PricewaterhouseCoopers LLP has
served as independent accountants of each Fund and each Portfolio since the date
of the applicable Fund and Portfolio's inception and has advised the Trust and
BT Portfolios that they have no direct or indirect financial interest in any
Fund or 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 Boards, including the
Independent Trustees of each, recommend that the respective shareholders of the
Trust and the Portfolios vote "FOR" the ratification of the independent
accountants as set forth in this Proposal.
-21-
<PAGE>
VOTE REQUIRED
In view of the master-feeder structure discussed earlier, approval of
each of Proposals IA, IB and IC with respect to a particular Portfolio's New
Advisory Agreements requires the affirmative vote of a "majority" of the
outstanding shares of the Portfolio's various feeder funds as shareholders 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 applicable 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 (with respect to the applicable
feeder funds) determined by reference to the shares outstanding of the various
feeder funds. 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 require the approval of a
specified percentage of the outstanding shares of a Portfolio.
Approval of Proposal II with respect to the Trustee Nominees of the
Trust requires the affirmative vote of a plurality of the votes cast in person
or by proxy at the Special Meeting for all Funds voting collectively. Approval
of Proposal II with respect to the Trustee Nominees of the Portfolios requires
the affirmative vote of a plurality of the votes cast in person or by proxy at
the special meetings of shareholders of all the Portfolios' various feeder funds
voting collectively. 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 applicable Funds requires the affirmative vote of
a majority of the votes cast in person or by proxy at the Special Meeting for
each Fund. Approval of Proposal III with respect to the selection of the
independent accountants of the applicable Portfolios requires the affirmative
vote of a majority of the votes cast in person or by proxy at the special
meetings of shareholders of each Portfolio's various feeder funds. 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 BOARDS, INCLUDING THE INDEPENDENT TRUSTEES OF EACH, 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 Funds do not hold regular shareholders' meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a subsequent
shareholders' meeting should send their written proposals to the Secretary of
the Trust at the address set forth on the cover of this Proxy Statement.
Proposals must be received at a reasonable time prior to the date of
a meeting of shareholders to be considered for inclusion in the materials for a
Fund's meeting. Timely submission of a proposal does not, however, necessarily
mean that such proposal will be included.
-22-
<PAGE>
SHAREHOLDERS' REQUEST FOR SPECIAL MEETING
Shareholders holding at least 10% of each Fund's outstanding voting
securities (as defined in the Act) may require the calling of a meeting of
shareholders for the purpose of voting on the removal of any Trustee of the
Fund. Meetings of shareholders for any other purpose also shall be called by the
applicable Board of Trustees when requested in writing by shareholders holding
at least 10% of the shares then outstanding.
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.
- --------------------------------------------------------------------------------
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 EACH ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE (UNLESS YOU ARE VOTING BY TELEPHONE
OR THROUGH THE INTERNET).
- --------------------------------------------------------------------------------
<PAGE>
Annex I
<TABLE>
<CAPTION>
EAFE FUND:
Shares Beneficially Percent Ownership
Name and Address of Beneficial Owner Owned of Outstanding Shares
- ------------------------------------ ------------------- ---------------------
<S> <C> <C>
(i) 5% Shareholders 2,428,441.2660 46.743%
Bankers Trust as Trustee
Pacificorp Master Retirement
Trust Dated 10/1/94
300 S. Grand Ave 40th
Attn: Diane Severino
Los Angeles, CA 90071-3109
Swiss Bank Corporation 1,035,434.7060 19.93%
Attn: Kenneth Anderson
10 East 50th Street SBT-32-B
New York, NY 10022-6831
Branch Banking & Trust Co. Cust. 561,887.2170 10.815%
FBO API Trust Growth Fund
c/o Trust Securities Operations
PO Box 2887
223 West Nash Street
Wilson, NC 27894-2887
SMALL CAP FUND:
Shares Beneficially Percent Ownership
Name and Address of Beneficial Owner Owned of Outstanding Shares
- ------------------------------------ -------------------- ---------------------
(i) 5% Shareholders
Merck & Co Union 4,649,045.5930 55.853
100 Plaza One
Jersey City, NJ 07311-3901
BOND FUND:
Shares Beneficially Percent Ownership
Name and Address of Beneficial Owner Owned of Outstanding Shares
- ------------------------------------ -------------------- ---------------------
(i) 5% Shareholders
-23-
<PAGE>
Bankers Trust Co. 1,856,847.6170 31.599
U/A DTD 01/01/1986
GTE Foundation
GTE Investment Management
695 Main Street, Ste 600
Box 120029
Stamford, CT 06901-2141
Bankers Trust Co. Cust 401(k) 638,792.6940 10.871
Framatome Technologies
Attn: Tom Arnold
648 Grassmere Park
Recordkeeping
Nashville, TN 37211-3658
Baptist Health Systems Inc. 555,459.0750 9.453
PO Box 830605
Birmingham, AL 35283-0605
FTC & Co 509,792.7870 8.675
Datalynx House Acct
PO Box 173736
Denver, CO 80217-3736
(ii) Trustees and Trustee Nominees *
Charles P. Biggar *
S. Leland Dill *
Martin J. Gruber *
Richard Hale *
Richard J. Herring *
Bruce E. Langston *
Philip Saunders, Jr. *
Harry Van Benschaten *
(iii) Executive Officers
John A. Keffer *
Daniel O. Hirsch *
Charles A. Rizzo *
*
(iv) Trustees and Executive Officers
as a Group *
</TABLE>
* The Trustees, the Trustee Nominess, 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
[To Come]
<PAGE>
II. Morgan Grenfell Inc.
[To Come]
-2-
<PAGE>
<TABLE>
<CAPTION>
Annex III
- ------------------------------------------------------------------------------------------------------------------------------
FUND FEE PORTFOLIO FEE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
EAFE Fund $55,785 EAFE Portfolio $2,637
- ------------------------------------------------------------------------------------------------------------------------------
Small Cap Fund $142,203 Small Cap Portfolio $50,411
- ------------------------------------------------------------------------------------------------------------------------------
Bond Fund $37,679 Bond Portfolio $22,642
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT A
[FORM OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENT]
AGREEMENT made as of [_________________] by and between [Trust Name],
a (state of organization) (herein called the "Trust") and [________________]
(herein called the "Investment Adviser") [and [______________] (herein called
the "Investment Subadviser")].
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940;
WHEREAS, the Trust desires to retain the Investment Adviser to render
investment advisory and other services to the Trust with respect to certain of
its series of shares of beneficial interests as may currently exist or be
created in the future (each, a "Fund") as listed on Exhibit A hereto, and the
Investment Adviser is willing to so render such services on the terms
hereinafter set forth;
[WHEREAS, the Investment Adviser desires to retain the Investment
Subadviser to perform certain of the Investment Adviser's duties under this
Agreement, and the Investment Subadviser is willing to so render such services
on the terms hereinafter set forth;]
NOW, THEREFORE, this Agreement
W I T N E S S E T H:
In consideration of the promises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. Appointment. The [Trust] [Investment Adviser] hereby appoints the
[Investment Adviser] [Investment Subadviser] to act as [investment adviser]
[investment subadviser] to each Fund for the period and on the terms set forth
in this Agreement. The [Investment Adviser] [Investment Subadviser] accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided.
2. Management. Subject to the supervision of the [Board of Trustees
of the Trust] [Investment Adviser], the [Investment Adviser] [Investment
Subadviser] will provide a continuous investment program for the Fund, including
investment research and management with respect to all securities, investments,
cash and cash equivalents in the Fund. The [Investment Adviser] [Investment
Subadviser] will determine from time to time what securities and other
investments will be purchased, retained or sold by each Fund. The [Investment
Adviser] [Investment Subadviser] will provide the services rendered by it
hereunder in accordance with the investment objective(s) and policies of each
Fund as stated in the Fund's then-current prospectus and statement of additional
information (or the Fund's then current registration statement on Form N-1A as
filed with the Securities and Exchange Commission (the "SEC") and the
then-current offering memorandum if the Fund is not registered under the
Securities Act of 1933, as amended ("1933 Act"). The [Investment Adviser]
[Investment Subadviser] further agrees that:
(a) it will conform with all applicable rules and regulations of the SEC (herein
called the "Rules") and with all applicable provisions of the 1933 Act; as
amended, the Securities Exchange Act of 1934, as amended (the "1934 Act"), the
Investment Company Act of 1940, as amended (the "1940 Act"); and the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), and will, in addition,
conduct its activities under this Agreement in accordance with applicable
regulations of the Board of Governors of the Federal Reserve System pertaining
to the investment advisory activities of bank holding companies and their
subsidiaries;
<PAGE>
(b) it will place orders pursuant to its investment determinations for each Fund
either directly with the issuer or with any broker or dealer selected by it. In
placing orders with brokers and dealers, the [Investment Adviser] [Investment
Subadviser] will use its reasonable best efforts to obtain the best net price
and the most favorable execution of its orders, after taking into account all
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. Consistent with this
obligation, the [Investment Adviser] [Investment Subadviser] may, to the extent
permitted by law, purchase and sell portfolio securities to and from brokers and
dealers who provide brokerage and research services (within the meaning of
Section 28(e) of the 1934 Act) to or for the benefit of any fund and/or other
accounts over which the [Investment Adviser] [Investment Subadviser] or any of
its affiliates exercises investment discretion. Subject to the review of the
[Trust's Board of Trustees] [Investment Adviser] from time to time with respect
to the extent and continuation of the policy, the [Investment Adviser]
[Investment Subadviser] is authorized to pay to a broker or dealer who provides
such brokerage and research services a commission for effecting a securities
transaction which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the [Investment
Adviser] [Investment Subadviser] determines in good faith that such commission
was reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or the overall responsibilities of the [Investment Adviser]
[Investment Subadviser] with respect to the accounts as to which it exercises
investment discretion; and
(c) it will maintain books and records with respect to the securities
transactions of each Fund and will render to the [Trust's Board of Trustees]
[Investment Adviser] such periodic and special reports as the Board may request.
3. [Subject to the provisions of this Agreement, the duties of the
Investment Subadviser, the portion of portfolio assets that the Subadviser shall
manage, and the fees to be paid the Investment Subadviser by the Investment
Adviser under and pursuant to this Agreement may be adjusted from time to time
by the Investment Adviser with and upon the approval of the Board and the
members of the Trust's Board of Trustees who are not "interested persons," as
defined in the Act ].1
4. Services Not Exclusive. The investment advisory services rendered
by the [Investment Adviser] [Investment Subadviser] hereunder are not to be
deemed exclusive, and the [Investment Adviser] [Investment Subadviser] shall be
free to render similar services to others so long as its services under this
Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule
31a-3 of the Rules under the 1940 Act, the [Investment Adviser] [Investment
Subadviser] hereby agrees that all records which it maintains for the Trust are
the property of the Trust and further agrees to surrender promptly to the
[Trust] [Investment Adviser] any of such records upon request of the [Trust]
[Investment Adviser]. The [Investment Adviser] [Investment Subadviser] further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by Rule 31a-1 under the 1940 Act and to
comply in full with the requirements of Rule 204-2 under the Advisers Act
pertaining to the maintenance of books and records.
6. Expenses. During the term of this Agreement, the [Investment
Adviser] [Investment Subadviser] will pay all expenses incurred by it in
connection with its activities under this Agreement other than the cost of
purchasing securities (including brokerage commissions, if any) for the Fund.
7. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, the [Trust] [Investment Adviser] will pay the
[Investment Adviser] [Investment Subadviser], and the [Investment Adviser]
[Investment Subadviser] will accept as full compensation therefor, fees,
computed daily and payable monthly, on an annual basis equal to the percentage
set forth on Exhibit A hereto of that Fund's average daily net assets.
1 Provision contained in the form of Investment Subadvisory Agreement
only.
-2-
<PAGE>
8. Limitation of Liability of the [Investment Adviser] [Investment
Subadviser]: Indemnification.
(a) The [Investment Adviser] [Investment Subadviser] shall not be liable for any
error of judgment or mistake of law or for any loss suffered by a Fund in
connection with the matters to which this Agreement relates, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the [Investment Adviser] [Investment
Subadviser] in the performance of its duties or from reckless disregard by it of
its obligations and duties under this Agreement;
(b) Subject to the exceptions and limitations contained in Section 7(c) below:
(i) the [Investment Adviser] [Investment
Subadviser] (hereinafter referred to as a "Covered Person") shall be indemnified
by the respective Fund to the fullest extent permitted by law, against liability
and against all expenses reasonably incurred or paid by him in connection with
any claim, action, suit or proceeding in which he becomes involved, as a party
or otherwise, by virtue of his being or having been the [Investment Adviser]
[Investment Subadviser] of the Fund, and against amounts paid or incurred by him
in the settlement thereof;
(ii) the words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits
or proceedings (civil, criminal or other, including appeals), actual or
threatened while in office or thereafter, and the words "liability" and
"expenses" shall include, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and other liabilities.
(c) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or
body before which the proceeding was brought (A) to be liable to the [Trust]
[Investment Adviser] or to one or more Funds' investors by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office, or (B) not to have acted in good faith in
the reasonable belief that his action was in the best interest of a Fund; or
(ii) in the event of a settlement, unless there
has been a determination that such Covered Person did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office;
(A) by the court or other body approving the
settlement; or
(B) by at least a majority of those Trustees
who are neither Interested Persons of the Trust nor are parties to the matter
based upon a review of readily available facts (as opposed to a full trial-type
inquiry); or
(C) by written opinion of independent legal
counsel based upon a review of readily available facts (as opposed to a full
trial-type inquiry); provided, however, that any investor in a Fund may, by
appropriate legal proceedings, challenge any such determination by the Trustees
or by independent counsel.
(d) The rights of indemnification herein provided may be insured against by
policies maintained by the [Trust] [Investment Adviser], shall be severable,
shall not be exclusive of or affect any other rights to which any Covered Person
may now or hereafter be entitled, shall continue as to a person who has ceased
to be a Covered Person and shall inure to the benefit of the successors and
assigns of such person. Nothing contained herein shall affect any rights to
indemnification to which Trust personnel and any other persons, other than a
Covered Person, may be entitled by contract or otherwise under law.
-3-
<PAGE>
(e) Expenses in connection with the preparation and presentation of a defense to
any claim, suit or proceeding of the character described in subsection (b) of
this Section 7 may be paid by the [Trust] [Investment Adviser] on behalf of the
respective Fund from time to time prior to final disposition thereto upon
receipt of an undertaking by or on behalf of such Covered Person that such
amount will be paid over by him to the [Trust] [Investment Adviser] on behalf of
the respective Fund if it is ultimately determined that he is not entitled to
indemnification under this Section 7; provided, however, that either (i) such
Covered Person shall have provided appropriate security for such undertaking or
(ii) the [Trust] [Investment Adviser] shall be insured against losses arising
out of any such advance payments, or (iii) either a majority of the Trustees who
are neither Interested Persons of the Trust nor parties to the matter, or
independent legal counsel in a written opinion, shall have determined, based
upon a review of readily available facts as opposed to a trial-type inquiry or
full investigation, that there is reason to believe that such Covered Person
will be entitled to indemnification under this Section 7.
9. Duration and Termination. This Agreement shall be effective as to
a Fund as of the date the Fund commences investment operations after this
Agreement shall have been approved by the Board of Trustees of the Trust with
respect to that Fund and the Investor(s) in the Fund in the manner contemplated
by Section 15 of the 1940 Act and, unless sooner terminated as provided herein,
shall continue until the second anniversary of such date. Thereafter, if not
terminated, this Agreement shall continue in effect as to such Fund for
successive periods of 12 months each, provided such continuance is specifically
approved at least annually (a) by the vote of a majority of those members of the
Board of Trustees of the Trust who are not parties to this Agreement or
Interested Persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval, or (b) by Vote of a Majority of the
Outstanding Voting Securities of the Trust; provided, however, that this
Agreement may be terminated by the Trust at any time, without the payment of any
penalty, by the Board of Trustees of the Trust, by Vote of a Majority of the
Outstanding Voting Securities of the Trust on 60 days' written notice to the
[Investment Adviser] [Investment Subadviser], or by the [Investment Adviser]
[Investment Subadviser] as to the [Trust] [Investment Adviser] at any time,
without payment of any penalty, on 90 days' written notice to the [Trust]
[Investment Adviser]. This Agreement will immediately terminate in the event of
its assignment (as used in this Agreement, the terms "Vote of a Majority of the
Outstanding Voting Securities," "Interested Person" and "Assignment" shall have
the same meanings as such terms have in the 1940 Act and the rules and
regulatory constructions thereunder.)
10. Amendment of this Agreement. No material term of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, and no amendment of a
material term of this Agreement shall be effective with respect to a Fund, until
approved by Vote of a Majority of the Outstanding Voting Securities of that
Fund.
11. Representations and Warranties. The [Investment Adviser]
[Investment Subadviser] hereby represents and warrants as follows:
(a) [The [Investment Adviser] [Investment Subadviser] is
exempt from registration under the 1940 Act:]
(b) The [Investment Adviser] [Investment Subadviser] has
all requisite authority to enter into, execute, deliver and perform its
obligations under this Agreement;
(c) This Agreement is legal, valid and binding, and
enforceable in accordance with its terms; and
(d) The performance by the [Investment Adviser] [Investment
Subadviser] of its obligations under this Agreement does not conflict with any
law to which it is subject.
12. Covenants. The [Investment Adviser] [Investment Subadviser]
hereby covenants and agrees that, so long as this Agreement shall remain in
effect:
-4-
<PAGE>
(a) The [Investment Adviser] [Investment Subadviser] shall
remain either exempt from, or registered under, the registration provisions of
the Advisers Act; and
(b) The performance by the [Investment Adviser] [Investment
Subadviser] of its obligations under this Agreement shall not conflict with any
law to which it is then subject.
13. Notices. Any notice required to be given pursuant to this
Agreement shall be deemed duly given if delivered or mailed by registered mail,
postage prepaid, (a) to the Investment Adviser, Mutual Funds Services, 130
Liberty Street (One Bankers Trust Plaza), New York, New York 10006 , [(b) to the
Subadviser, [Address] or ](c) to the Trust, c/o BT Alex. Brown, Incorporated,
One South Street, Baltimore, Maryland 21202.
14. Waiver. With full knowledge of the circumstances and the effect
of its action, the [Investment Adviser] [Investment Subadviser] hereby waives
any and all rights which it may acquire in the future against the property of
any investor in a Fund, other than shares in that Fund, which arise out of any
action or inaction of the [Trust] [Investment Adviser] under this Agreement.
15. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.
This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and shall be governed by
the laws of the ______________________________, without reference to principles
of conflicts of law. The Trust is organized under the laws of
_________________________________ pursuant to a ______________ dated
______________. No Trustee, officer or employee of the Trust shall be personally
bound by or liable hereunder, nor shall resort be had to their private property
for the satisfaction of any obligation or claim hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
[SIGNATORIES]
-5-
<PAGE>
EXHIBIT A
TO
INVESTMENT ADVISORY AGREEMENT
MADE AS OF ____________________
BETWEEN
[Trust Name] AND [______________]
Fund Investment Advisory Fee
- ---- -----------------------
-6-
<PAGE>
FORM OF PROXY CARD
<PAGE>
FORM OF PROXY CARD
[BANKERS TRUST LOGO]
[BT ALEX. BROWN]
MUTUAL FUND SERVICES -- LEGAL DEPARTMENT
MS 1-18-8
Baltimore, Maryland 21202-3220
One South Street
BT Advisor Funds
Small Cap Index Fund
One South Street
Baltimore, Maryland 21202
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.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES WITH RESPECT TO YOUR
FUND.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS IA, IB, IC, II AND III.
UNLESS VOTING BY TELEPHONE OR INTERNET, PLEASE SIGN AND DATE BELOW AND MAIL THIS
PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903.
3) Enter the 12-digit control number set forth on the Proxy card and
follow the simple instructions.
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:
KEEP THIS PORTION FOR YOUR RECORDS.
<PAGE>
DETACH AND RETURN THIS PORTION ONLY.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
SMALL CAP INDEX FUND
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.)
Vote on Trustees
II. Election of Messrs. (01) Biggar, (02) Dill, (03) Hale, (04)
Langton, (05) Saunders, and (06) Van Benschoten and Drs. (07)
Gruber and (08) Herring as Trustees of the Boards.
For All Withhold All For All Except: To withhold authority
to vote, mark "For All
Except" and write the
nominee's number on the
line below.
__________________
Vote on Proposals
IA. Approval of New Investment
Advisory Agreement with
Bankers Trust Company FOR AGAINST ABSTAIN
IB. Approval of New Investment
Advisory Agreement with
Morgan Grenfell Inc. FOR AGAINST ABSTAIN
IC. Approval of New Investment
Sub-advisory Agreement with
Bankers Trust Company FOR AGAINST ABSTAIN
- ---------------------------------------------------------
- ---------------------------------------------------------
Signature (Please sign within box) Date
III. Ratification of the
selection of
PricewaterhouseCoopers LLP
as the independent
accountants of the Fund and
its corresponding Portfolio. FOR [ ] AGAINST [ ] ABSTAIN [ ]
The appointed proxies will vote on any other business as may properly come
before the Special Meeting
Receipt of the Notice and the Joint Proxy Statement, dated August 23, 1999
(the "Proxy Statement"), is hereby acknowledged.
- -----------------------------------------------------
- -----------------------------------------------------
Signature (Joint Owners) Date
<PAGE>
FORM OF PROXY CARD
[BANKERS TRUST LOGO]
[BT ALEX BROWN]
MUTUAL FUND SERVICES - LEGAL DEPARTMENT
MS 1-18-8
One South Street
Baltimore, Maryland 21202
BT Advisor Funds
EAFE(R) Equity Index Fund
One South Street
Baltimore, Maryland 21202
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 One South Street
instructions are indicated on a properly executed proxy, the proxy will be
Baltimore, Maryland 21202-3220 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.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES WITH RESPECT TO YOUR
FUND.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS IA, IB, IC, II AND III.
UNLESS VOTING BY TELEPHONE OR INTERNET, PLEASE SIGN AND DATE BELOW AND MAIL THIS
PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903.
3) Enter the 12-digit control number set forth on the Proxy card and
follow the simple instructions.
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:
KEEP THIS PORTION FOR YOUR RECORDS.
<PAGE>
DETACH AND RETURN THIS PORTION ONLY.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
EAFE(R) EQUITY INDEX FUND
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.)
Vote on Trustees
II. Election of Messrs. (01) Biggar, (02) Dill, (03) Hale, (04)
Langton, (05) Saunders, and (06) Van Benschoten and Drs. (07)
Gruber and (08) Herring as Trustees of the Boards.
For All Withhold All For All Except: To withhold authority
to vote, mark "For All
Except" and write the
nominee's number on the
line below.
__________________
Vote on Proposals
IA. Approval of New Investment
Advisory Agreement with
Bankers Trust Company FOR AGAINST ABSTAIN
IB. Approval of New Investment
Advisory Agreement with
Morgan Grenfell Inc. FOR AGAINST ABSTAIN
IC. Approval of New Investment
Sub-advisory Agreement with
Bankers Trust Company FOR AGAINST ABSTAIN
- ------------------------------------------ --------------
- ------------------------------------------ --------------
Signature (Please sign within box) Date
III. Ratification of the
selection of
PricewaterhouseCoopers LLP
as the independent
accountants of the Fund and
its corresponding Portfolio. FOR [ ] AGAINST [ ] ABSTAIN [ ]
The appointed proxies will vote on any other business as may properly come
before the Special Meeting
Receipt of the Notice and the Joint Proxy Statement, dated August 23, 1999
ABSTAIN (the "Proxy Statement"), is hereby acknowledged.
- ------------------------------------------ --------------
- ------------------------------------------ --------------
Signature (Please sign within box) Date
<PAGE>
FORM OF PROXY CARD
[BANKERS TRUST LOGO]
[BT ALEX BROWN]
MUTUAL FUND SERVICES - LEGAL DEPARTMENT
MS 1-18-8
One South Street
Baltimore, Maryland 21202
BT Advisor Funds
U.S. Bond Equity Index Fund
One South Street
Baltimore, Maryland 21202
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 One South Street
instructions are indicated on a properly executed proxy, the proxy will be
Baltimore, Maryland 21202-3220 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.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES WITH RESPECT TO YOUR
FUND.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS IA, IB, IC, II AND III.
UNLESS VOTING BY TELEPHONE OR INTERNET, PLEASE SIGN AND DATE BELOW AND MAIL THIS
PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903.
3) Enter the 12-digit control number set forth on the Proxy card and
follow the simple instructions.
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:
KEEP THIS PORTION FOR YOUR RECORDS.
<PAGE>
DETACH AND RETURN THIS PORTION ONLY.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
U.S. BOND INDEX FUND
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.)
Vote on Trustees
II. Election of Messrs. (01) Biggar, (02) Dill, (03) Hale, (04)
Langton, (05) Saunders, and (06) Van Benschoten and Drs. (07)
Gruber and (08) Herring as Trustees of the Boards.
For All Withhold All For All Except: To withhold authority
to vote, mark "For All
Except" and write the
nominee's number on the
line below.
__________________
Vote on Proposals
IA. Approval of New Investment
Advisory Agreement with
Bankers Trust Company FOR AGAINST ABSTAIN
IB. Approval of New Investment
Advisory Agreement with
Morgan Grenfell Inc. FOR AGAINST ABSTAIN
IC. Approval of New Investment
Sub-advisory Agreement with
Bankers Trust Company FOR AGAINST ABSTAIN
- ------------------------------------------ --------------
- ------------------------------------------ --------------
Signature (Please sign within box) Date
III. Ratification of the
selection of
PricewaterhouseCoopers LLP
as the independent
accountants of the Fund and
its corresponding Portfolio. FOR [ ] AGAINST [ ] ABSTAIN [ ]
The appointed proxies will vote on any other business as may properly come
before the Special Meeting
Receipt of the Notice and the Joint Proxy Statement, dated August 23, 1999
ABSTAIN (the "Proxy Statement"), is hereby acknowledged.
- ------------------------------------------ --------------
- ------------------------------------------ --------------
Signature (Please sign within box) Date
<PAGE>
[zz]
August 23, 1999
IMPORTANT NEWS
FOR SHAREHOLDERS OF BT ADVISOR 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
AG. Deutsche Bank, a banking company organized under the laws of the
Federal Republic of Germany, provides a comprehensive range of global
banking and financial services.
Deutsche Bank 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. Deutsche Asset Management handles the investment
management activities of Deutsche Bank in the Americas, United
Kingdom and Asia and will manage $256 billion in assets globally.
To ensure that Bankers Trust 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.
<PAGE>
Please vote all issues on each proxy card that you receive. Thank you for
mailing your proxy card(s) promptly.
<PAGE>
August 23, 1999
Dear Shareholder:
On June 4, 1999, Bankers Trust merged with Deutsche Bank AG. 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
by (DD/MM/YY).
3. By Internet: Logon to WWW.PROXYVOTE.COM by (DD/MM/YY)
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
