File No. 811-8227
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Flag Investors Funds, Inc. (formerly, Deutsche Funds, Inc.)
-----------------------------------------------------------
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement., if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: __________________________________________
2) Form, Schedule or Registration Statement No.:_____________________
3) Filing Party: ____________________________________________________
4) Date Filed: ______________________________________________________
FLAG INVESTORS FUNDS, INC.
Flag Investors Top 50 World
Flag Investors Top 50 Europe
Flag Investors Top 50 Asia
Flag Investors Top 50 US
Flag Investors European Mid-Cap Fund
Flag Investors Japanese Equity Fund
Flag Investors US Money Market Fund
---------------------------
One South Street
Baltimore, Maryland 21202
February 25, 2000
Dear Shareholder:
The Board of Directors of Flag Investors Funds, Inc. (the "Fund"), on
behalf of its above named series (each a "Series," and collectively the
"Series"), voted to change the investment advisor of the portfolios in which
each Series invests. Because of the proposed change in investment advisor, all
current investment advisory and sub-advisory agreements for the portfolios must
be revised and approved. In addition, the Board of Directors also voted to
change the investment sub-advisor of the portfolios in which the Flag Investors
US Money Market Fund and the Flag Investors Top 50 US invest, requiring further
revisions to the investment sub-advisory agreements for those two portfolios.
As a result of the Directors' decisions, we are asking shareholders of the Fund
to approve new investment advisory and investment sub-advisory agreements for
the portfolios in which the Series invest, as applicable. Enclosed is further
information relating to these changes, including a Questions & Answers section,
proxy statement and proxy card(s).
Important information about the changes:
o The advisory and sub-advisory fees payable under the new investment
advisory and investment sub-advisory agreements have not increased.
o The investment objective of each Series has not changed.
In addition to the revisions in investment advisory and investment
sub-advisory agreements, shareholders are also being asked to approve other
changes outlined in the enclosed Proxy Statement. The Board of Directors of the
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 it in the
postage-paid envelope provided.
2. By Telephone: Call the toll-free number on your proxy card.
3. By Internet: Log on to www.proxyvote.com.
4. Attend the Shareholder Meeting (details enclosed).
Sincerely,
Richard T. Hale
President
February 25, 2000
IMPORTANT NEWS
FOR SHAREHOLDERS OF
FLAG INVESTORS FUNDS, INC.
While we encourage you to read the full text of the enclosed Proxy
Statement, here is a brief overview of some matters affecting the Fund that
require a shareholder vote.
Q. What has happened to require a shareholder vote?
A. On June 4, 1999, Deutsche Bank AG ("Deutsche Bank") combined with Bankers
Trust Corporation. Deutsche Bank is the parent company of Deutsche Fund
Management, Inc. ("DFM"), the current investment manager to the Flag
Investors Portfolios Trust (the "Flag Portfolios") in which the Flag
Investors Funds, Inc. (the "Fund"), on behalf of its series, (each a
"Series", and collectively, the "Series") invests. We are proposing new
investment advisory agreements and new investment sub-advisory agreements in
order to permit Deutsche Bank 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. These agreements are described in detail in Proposals 3 and 4.
Q. Why am I being asked to vote on the new investment advisory and investment
sub-advisory agreements?
A. The Investment Company Act of 1940, which regulates investment companies in
the United States such as the Fund and Flag Portfolios, requires a
shareholder vote to approve new investment advisory and investment
sub-advisory agreements.
Q. How do these changes affect the Series?
A. The Series, their investment objectives and the current portfolio managers of
the Flag Portfolios in which they invest will not change as a result of the
proposed new investment advisory and sub-advisory agreements. The new
investment advisory and investment sub-advisory agreements contain
substantially the same terms and conditions, including the same aggregate
fees, as the current investment advisory and investment sub-advisory
agreements. If shareholders do not approve the new investment advisory and
investment sub-advisory agreements, the current agreements will continue and
the Board of Directors will take such action as it deems to be in the best
interests of the Series and their shareholders.
Q. How do the Boards of Directors and Trustees recommend that I vote?
A. After careful consideration, the Boards recommend that you vote in favor of
all the proposals on the enclosed proxy card.
Q. Where can I get more information?
A. If you need more information, please call Shareholder Communications
Corporation, the 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 the Fund pay for the proxy solicitation and other costs associated with
this transaction?
A. The Fund will pay for those costs associated with the election of directors
and trustees and the ratification of independent accountants. The proposed
new investment advisor, Investment Company Capital Corp., will pay for all
other costs associated with the vote to approve the new advisory and
sub-advisory agreements.
Please vote all issues on each proxy card that you receive. Thank you for
mailing your proxy card promptly.
FLAG INVESTORS FUNDS, INC.
Flag Investors Top 50 World
Flag Investors Top 50 Europe
Flag Investors Top 50 Asia
Flag Investors Top 50 US
Flag Investors European Mid-Cap Fund
Flag Investors Japanese Equity Fund
Flag Investors US Money Market Fund
One South Street
Baltimore, Maryland 21202
---------------------------
Notice of Annual Meeting of Shareholders
to be held on March 28, 2000
TO THE SHAREHOLDERS OF FLAG INVESTORS FUNDS, INC.:
You are cordially invited to the annual meeting (the "Meeting") of the
shareholders of Flag Investors Funds, Inc. (the "Fund"). The Meeting will be
held on March 28, 2000, at 1:00 p.m. Eastern Time in the conference room on the
30th Floor of The Alex. Brown Building, One South Street, Baltimore, Maryland
21202. The Fund is an open-end management investment company, organized under
the laws of the State of Maryland, that comprises the above seven series (each
a "Series," and collectively, the "Series") all of which are addressed in the
accompanying Joint Proxy Statement ("Proxy Statement"). Each Series operates as
a spoke fund in a Hub and Spoke(R)* fund arrangement with a corresponding hub
fund portfolio (each a "Portfolio," and collectively, the "Portfolios"). As
spoke funds, each Series 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 Series
invest are organized as separate series of Flag Investors Portfolios Trust
("Flag 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, (the "1940 Act") applicable
to hub and spoke arrangements, each Series' voting rights with respect to the
Portfolio interests that it holds must be passed through to the Series' own
shareholders.
The purpose of the Meeting is to consider the following proposals and to
transact such other business as may be properly brought before the Meeting.
- ----------------
* Hub & Spoke is a registered service mark of Signature Financial Group, Inc.
and refers to the multi-tiered investment structure developed by Signature. A
patent has been granted by the U.S. Patent and Trademark Office in connection
therewith.
PROPOSAL 1: To elect Board Members of the Fund and the Flag Portfolios.
PROPOSAL 2: To ratify or reject the selection of PricewaterhouseCoopers
LLP as the independent accountants for the applicable Series
and their corresponding Portfolios for the current fiscal year.
PROPOSAL 3A: To approve a new Investment Advisory Agreement between the
Portfolios and Deutsche Fund Management, Inc. ("DFM").
PROPOSAL 3B: To approve a new Investment Advisory Agreement between the
Portfolios and Investment Company Capital Corp. ("ICCC") to be
implemented within two years of the date of the Meeting upon
approval of the respective members of the Flag Portfolios' and
Fund's Board who are not "interested persons" thereof (as
defined in the 1940 Act) ("Independent Directors and
Trustees").
PROPOSAL 4A: For shareholders of the Flag Investors Top 50 World; Flag
Investors Top 50 Europe; Flag Investors Top 50 Asia; Flag
Investors European Mid-Cap Fund; Flag Investors Japanese Equity
Series:
i) To approve a new Investment Sub-Advisory Agreement between
DFM and DWS International Portfolio Management GmbH
("DWS").
ii) To approve a new Investment Sub-Advisory Agreement between
ICCC and DWS to be implemented within two years of the
date of the Meeting upon approval of the Independent
Directors and Trustees.
PROPOSAL 4B: For shareholders of the Flag Investors Top 50 US Series only:
i) To approve a new Investment Sub-Advisory Agreement between
DFM and Deutsche Asset Management, Inc. ("DeAM Inc.").
ii) To approve a new Investment Sub-Advisory Agreement between
ICCC and DeAM Inc. to be implemented within two years of
the date of the Meeting upon approval of the Independent
Directors and Trustees.
PROPOSAL 4C: For shareholders of the Flag Investors US Money Market Series
only:
i) To approve a new Investment Sub-Advisory Agreement between
DFM and Bankers Trust Company ("Bankers Trust").
ii) To approve a new Investment Sub-Advisory Agreement between
ICCC and Bankers Trust to be implemented within two years
of the date of the Meeting upon approval of the
Independent Directors and Trustees.
Only shareholders of the Fund at the close of business on February 4, 2000
are entitled to notice of, and to vote at, this Meeting or any adjournment
thereof.
Whether or not you expect to be present at the Meeting, please complete
and promptly return the enclosed proxy card. A postage-paid envelope is
enclosed for your convenience. You may also vote easily and quickly by
telephone or through the Internet. To do so, please follow the instructions
accompanying your enclosed proxy card. It is most important and in your
interest for you to vote so that a quorum will be present and a maximum number
of shares may be voted. The proxy is revocable at any time prior to its use.
Amy M. Olmert
Assistant Secretary
Dated: February 25, 2000
FLAG INVESTORS FUNDS, INC.
Flag Investors Top 50 World
Flag Investors Top 50 Europe
Flag Investors Top 50 Asia
Flag Investors Top 50 US
Flag Investors European Mid-Cap Fund
Flag Investors Japanese Equity Fund
Flag Investors US Money Market Fund
One South Street
Baltimore, Maryland 21202
---------------------------
JOINT PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MARCH 28, 2000
This Joint Proxy Statement ("Proxy Statement") is furnished by the Board
of Directors of Flag Investors Funds, Inc. (the "Fund") in connection with the
solicitation of proxies with respect to the seven series thereof (each a
"Series," and collectively, the "Series") for use at the annual meeting of
shareholders of the Fund to be held on March 28, 2000, at 1:00 p.m. Eastern
Time, or at any adjournment thereof (the "Meeting"), in the conference room on
the 30th Floor of The Alex. Brown Building, One South Street, Baltimore,
Maryland 21202. It is expected that the Notice of Meeting, the Proxy Statement
and a Proxy Card will be mailed to shareholders on or about February 25, 2000.
Summary
-------
Each Series operates as a spoke fund in a hub and spoke fund arrangement
with a corresponding hub fund portfolio (each a "Portfolio," and collectively,
the "Portfolios"). The Portfolios in which the Series invest are organized as
separate series of Flag Investors Portfolios Trust ("Flag Portfolios"), an
open-end management investment company established as a trust under the laws of
the State of New York. As spoke funds, each Series 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.
Pursuant to the requirements of the Investment Company Act of 1940, as amended
(the "1940 Act"), applicable to hub and spoke arrangements, each Series' voting
rights with respect to the Portfolio interests that it holds must be passed
through to the Series' own shareholders. Other spoke funds of a particular
Portfolio will also vote in accordance with their respective charters and/or
other applicable requirements with respect to the approval of the proposals.
For simplicity, actions are described in this Proxy Statement as being
taken by a Series, although all actions are actually taken by the Fund on
behalf of the applicable
1
Series. Some actions described as taken by or with respect to a Series are
actually actions to be taken by the corresponding Portfolio in which the Series
invests all of its assets and on which the Series votes as an interest holder.
Further, actions described as being taken by the shareholders of the Series
with respect to its Board of Directors will also be taken by the Series as
interest holders of the Portfolios with respect to the Portfolios' respective
Boards of Trustees. Your vote and the vote of other shareholders of the
relevant Series determine how the Fund will vote with respect to itself and its
corresponding Portfolio.
The Meeting is being held to consider and vote on the following matters
for each Series, 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 Summary Eligible Voters
- ------------------------------- ------------------------------------ ----------------------------------
1. Election of Fund Directors To elect Directors of the Fund Shareholders of all Series of the
and Portfolio Trustees and Trustees of the Portfolios to Fund are eligible to vote for the
hold office until their respective Directors and Trustees.
successors have been duly
elected and qualified or until
their earlier resignation or
removal.
2. Ratification of Auditors To ratify or reject the selection Shareholders of all Series of the
of PricewaterhouseCoopers LLP Fund are eligible to vote for the
as the independent accountants ratification of the auditors.
for the Fund and the Portfolios
for the current fiscal year.
2
Proposal Summary Eligible Voters
- ------------------------- --------------------------------- ----------------------------------
3. Change in Investment A. To approve or disapprove a Shareholders of all Series of the
Advisor new Investment Advisory Fund are eligible to vote for the
Agreement between the New Investment Advisory
Portfolios and Deutsche Agreements.
Fund Management, Inc.
("DFM") (the "New DFM
Advisory Agreement").
B. To approve or disapprove a
new Investment Advisory
Agreement between the
Portfolios and Investment
Company Capital
Corporation ("ICCC") (the
"New ICCC Advisory
Agreement") to be
implemented within two
years of the date of the
Meeting upon approval of
the members of the
Portfolios' and the Fund's
Boards of Trustees and
Directors, respectively, who
are not "interested persons"
thereof (as defined in the
1940 Act) (the "Independent
Directors and Trustees").
These agreements are referred to
collectively as the "New
Advisory Agreements."
3
Proposal Summary Eligible Voters
- -------------------------------- --------------------------------- ---------------------------------
4A. New Investment i) To approve or disapprove a Shareholders (all classes) of
Sub-Advisory Agreements new Investment Flag Investors Top 50 World;
for Flag Investors Top 50 Sub-Advisory Agreement Flag Investors Top 50 Europe;
World Portfolio (US between DFM and DWS Flag Investors Top 50 Asia; Flag
Dollar); Flag Investors Top International Portfolio Investors European Mid-Cap;
50 Europe Portfolio (US Management GmbH Flag Investors Japanese Equity
Dollar); Flag Investors Top ("DWS") Series are eligible to vote for
50 Asia Portfolio (US ii) To approve or disapprove a the New Investment
Dollar); Flag Investors new Investment Sub-Advisory Agreements.
Provesta Portfolio (US Sub-Advisory Agreement
Dollar); Flag Investors between ICCC and DWS to
Japanese Equity Portfolio be implemented within two
(US Dollar) years of the date of the
Meeting, upon approval of
the Independent Directors
and Trustees, upon the
change of Investment
Advisor from DFM to ICCC.
These agreements, along with
those covered in Proposals 4B
and 4C, may be collectively
referred to as the "New
Investment Sub-Advisory
Agreements."
4B.Change in Investment i) To approve or disapprove a Shareholders (all classes) of
Sub-Advisor new Investment Flag Investors Top 50 US Series
Top 50 US Portfolio Sub-Advisory Agreement are eligible to vote for the New
(US Dollar) only between DFM and Deutsche Investment Sub-Advisory
Asset Management, Inc. Agreements.
("DeAM Inc.") to be
implemented immediately
upon shareholder approval.
ii) To approve or disapprove the
implementation of a new
Investment Sub-Advisory
Agreement between ICCC
and DeAM Inc. to be
implemented within two
years of the date of the
Meeting, upon approval of
the Independent Directors
and Trustees, upon the
change of Investment
Advisor from DFM to ICCC.
4
Proposal Summary Eligible Voters
- ------------------------------ --------------------------------- ------------------------------
4C. Change in Investment i) To approve or disapprove a Shareholders (all classes) of
Sub-Advisor new Investment Flag Investors US Money
US Money Market Portfolio Sub-Advisory Agreement Market Series are eligible to
(US Dollar) only between DFM and Bankers vote for the New Investment
Trust Company ("Bankers Sub-Advisory Agreements.
Trust") to be implemented
immediately upon
shareholder approval.
ii) To approve or disapprove the
implementation of a new
Investment Sub-Advisory
Agreement between ICCC
and Bankers Trust to be
implemented within two
years of the date of the
Meeting, upon approval of
the Independent Directors
and Trustees, upon the
change of Investment
Advisor from DFM to ICCC.
If you do not expect to be present at the Meeting and wish your shares to
be voted, please vote your proxy (the "Proxy") by mail, telephone or Internet,
allowing sufficient time for the Proxy to be received at or before 1:00 p.m.
Eastern Time on March 28, 2000. If your Proxy is properly returned, shares
represented by it will be voted at the Meeting in accordance with your
instructions. However, if no instructions are specified on the Proxy with
respect to a specific Proposal, the Proxy will be voted FOR the approval of
such Proposal and in accordance with the judgment of the persons appointed as
proxies upon any other matter that may properly come before the Meeting.
Shareholders may revoke their Proxies at any time prior to the time they are
voted by giving written notice to the Secretary of the Fund, by delivering a
subsequently dated Proxy or by attending and voting at the Meeting.
In the event that a quorum is not present at the 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 Meeting to
permit further solicitation of Proxies with respect to the Proposal. In
determining whether to adjourn the Meeting, the following factors may be
considered: the nature of the proposals that are the subject of the 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 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
5
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 Fund or a Series thereof (as applicable)
entitled to vote at the Meeting. For purposes of determining the presence of a
quorum for transacting business at the 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.)
The close of business on February 4, 2000 has been fixed as the record
date (the "Record Date") for the determination of shareholders entitled to
notice of, and to vote at, the Meeting and at any adjournment thereof. Each
full share will be entitled to one vote at the Meeting and each fraction of a
share will be entitled to the fraction of a vote equal to the proportion of a
full share represented by the fractional share. As of the Record Date, the
following number of shares of each Series were issued and outstanding:
Top 50 World .................. 307,918.611 shares
Top 50 Europe ................. 884,744.495 shares
Top 50 Asia ................... 1,684,880.595 shares
Top 50 US ..................... 383,040.036 shares
European Mid-Cap Fund ......... 1,475,760.208 shares
Japanese Equity Fund .......... 633,855.107 shares
US Money Market Fund .......... 13,708,092.850 shares
This Joint 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 Series, and because shareholders may own
shares of more than one Series. 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 Fund, a shareholder that owns
of record shares in two or more of the Series will receive a package containing
a Proxy Statement and Proxies for the Series in which such shareholder is a
record owner. If the information relating to common ownership is not available
to the Fund, a shareholder that beneficially owns of record shares in two or
more Series may receive two or more packages, each containing a Proxy Statement
and a Proxy for each Series 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.
The Fund will pay for those costs associated with the election of
directors and trustees and the ratification of independent accountants. The
proposed investment
6
advisor, ICCC, will pay for all other costs associated with the advisory and
sub-advisory agreements. The Fund will bear those expenses related to
reimbursement to brokerage firms and others for expenses in forwarding Proxy
solicitation materials to beneficial owners. The solicitation of Proxies will
be largely by mail, but may include telephonic, telegraphic or oral
communication by employees and officers of Deutsche Asset Management.
Additional solicitation may be made by Shareholder Communications Corporation
("Shareholder Communications"), a solicitation firm located in New York, New
York, which has been engaged by the Fund to assist in proxy solicitation.
Upon request, the Fund will furnish to shareholders, without charge, a
copy of the Annual Report for its fiscal year ended August 31, 1999. To receive
a copy of the Fund's Annual Report, please contact Flag Investors Funds, Inc.
by calling 1-800-776-3524.
PROPOSAL 1: Election of Directors of the Fund and Trustees of the Portfolios.
Directors and Trustees constituting the entire Board of Directors of the
Fund and Trustees of the Flag Portfolios, respectively, are to be elected at
the Meeting to serve until their successors have been duly elected and
qualified or until their earlier resignation or removal. The Director and
Trustee Nominees were recently selected by the Independent Directors and
Trustees of the Boards and nominated by the full Boards at meetings held on
October 14, 1999 and January 31, 2000. Information on the Director and Trustee
Nominees is provided in the following chart. Of the Director and Trustee
Nominees, Richard R. Burt and Robert H. Wadsworth are currently Directors and
Trustees of the Fund and the Flag Portfolios. Each of the Director and Trustee
Nominees has agreed to serve if elected at the Meeting. The persons designated
as proxies in the Proxy, unless otherwise directed therein, intend to vote at
the Meeting for the election of the Director and Trustee Nominees named in the
following chart as the entire Board of Directors and Trustees of the Fund and
the Flag Portfolios. If any Director or 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.
At meetings held on October 7, 1999 and February 16, 2000, the
shareholders of all other funds in the Flag Investors family of funds voted to
approve these Directors to serve as directors of each other fund within the
Flag Investors family of funds. The other Flag Investor funds are advised by
ICCC, an indirect subsidiary of Deutsche Bank.
7
Information Regarding Nominees
The following information is provided for each Nominee as of December 31,
1999.
Name and Position Business Experience
with the Fund During the Past Five Years
and Flag Portfolios Birth Date (including all directorships)
- ------------------------------------ ------------ --------------------------------------------------------
Richard R. Burt 2/3/47 Chairman, IEP Advisors, Inc.; Chairman of the Board,
Director of the Fund and Trustee Weirton Steel Corporation; Member of the Board,
of the Flag Portfolios since Archer Daniels Midland Company (agribusiness
10/9/98 operations), Hollinger International Inc. (publishing),
Homestake Mining Company (mining and
exploration), HCL Technologies (information
technology) and Anchor Gaming (gaming software
and equipment); Director, Mitchell Hutchins family of
funds (registered investment companies); and Member,
Textron Corporation International Advisory Council.
Formerly, Partner, McKinsey & Company
(consulting), 1991-1994; and U.S. Chief Negotiator in
Strategic Arms Reduction Talks (START) with former
Soviet Union and U.S. Ambassador to the Federal
Republic of Germany, 1985-1991. Director of eight
funds in the Flag Family of Funds.
Richard T. Hale* 7/17/45 Managing Director, Deutsche Asset Management and
Nominee DB Alex. Brown LLC (formerly BT Alex. Brown
Incorporated); Director and President, Investment
Company Capital Corp. (registered investment
advisor). Chartered Financial Analyst. Formerly,
Director, ISI Family of Funds (registered investment
companies). Director of eight funds in the Flag
Family of Funds.
Joseph R. Hardiman 5/27/37 Private Equity Investor and Capital Markets
Nominee Consultant; Director, Wit Capital Group (registered
broker-dealer), The Nevis Fund and ISI Family of
Funds (registered investment companies). Formerly,
Director, Circon Corp. (medical instruments),
November 1998-January 1999; President and Chief
Executive Officer, The National Association of
Securities Dealers, Inc. and The NASDAQ Stock
Market, Inc., 1987-1997; Chief Operating Officer
(1985-1987) and General Partner (1976-1985) of Alex.
Brown & Sons Incorporated (now DB Alex. Brown
LLC). Director of eight funds in the Flag Family of
Funds.
8
Name and Position Business Experience
with the Fund During the Past Five Years
and Flag Portfolios Birth Date (including all directorships)
- --------------------- ------------ --------------------------------------------------------
Louis E. Levy 11/16/32 Director, Kimberly-Clark Corporation (personal
Nominee consumer products), Household International (finance
and banking) and ISI Family of Funds (registered
investment companies). Formerly, Chairman of the
Quality Control Inquiry Committee and American
Institute of Certified Public Accountants, 1992-1998;
Trustee, Merrill Lynch Funds for Institutions,
1991-1993; Adjunct Professor, Columbia
University-Graduate School of Business, 1991-1992;
and Partner, KPMG Peat Marwick, retired 1990.
Director of eight funds in the Flag Family of Funds.
Eugene J. McDonald 7/14/32 President, Duke Management Company (investments);
Nominee Executive Vice President, Duke University (education,
research and health care); Executive Vice Chairman
and Director, Central Carolina Bank & Trust
(banking); and Director, Victory Funds (registered
investment companies). Formerly, Director, AMBAC
Treasurers Trust (registered investment company), DP
Mann Holdings (insurance) and ISI Family of Funds
(registered investment companies). Director of eight
funds in the Flag Family of Funds.
Rebecca W. Rimel 4/10/51 President and Chief Executive Officer, The Pew
Nominee Charitable Trusts (charitable foundation); and Director
and Executive Vice President, The Glenmede Trust
Company (investment trust and wealth management).
Formerly, Executive Director, The Pew Charitable
Trusts and Director, ISI Family of Funds (registered
investment companies). Director of eight funds in the
Flag Family of Funds.
Truman T. Semans* 10/27/26 Vice Chairman, Brown Investment Advisory & Trust
Nominee Company (formerly, Alex. Brown Capital Advisory &
Trust Company); Director, Investment Company
Capital Corp. (registered investment advisor); and
Director and Chairman, the Executive Committee of
Virginia Hot Springs, Inc. (property management).
Formerly, Managing Director and Vice Chairman,
Alex. Brown & Sons Incorporated (now DB Alex.
Brown LLC) and Director, ISI Family of Funds
(registered investment companies). Director of eight
funds in the Flag Family of Funds.
9
Name and Position Business Experience
with the Fund During the Past Five Years
and Flag Portfolios Birth Date (including all directorships)
- ------------------------------------ ------------ ------------------------------------------------------
Robert H. Wadsworth 1/29/40 President, Investment Company Administration, LLC;
Director of the Fund and Trustee President and Director, First Fund Distributors, Inc.
of the Flag Portfolios since (registered broker-dealer); Director, The Germany
inception Fund, Inc., The New Germany Fund, Inc. and The
Central European Equity Fund, Inc.; and Vice
President, Professionally Managed Portfolios and
Advisors Series Trust (registered investment
companies). Formerly, Director, Guinness Flight
Investment Funds, Inc. (registered broker-dealer) and
President, The Wadsworth Group (registered
investment advisor). Director of eight funds in the
Flag Family of Funds.
- ----------------
* Denotes an individual who is an "interested person" as defined in the 1940
Act.
On June 4, 1999, Bankers Trust Corporation became an indirect, wholly
owned subsidiary of Deutsche Bank AG. On that date, to Fund management's
knowledge as provided by the Directors and Nominees of the Fund, the following
Director/Trustee Nominees of the Fund beneficially owned shares of Bankers
Trust that were converted to the right to receive $93 in cash, without
interest, pursuant to the terms of the merger. Mr. Hale, a Director/Trustee
Nominee, beneficially owned 74,190 shares of Bankers Trust. Mr. Semans, a
Director/Trustee Nominee, beneficially owned 329 shares of Bankers Trust.
Compensation of Directors and Trustees
Each Independent Director and Trustee receives an aggregate annual fee
(plus reimbursement for reasonable out-of-pocket expenses incurred in
connection with his or her attendance at Board and committee meetings) from the
Fund, the Flag Portfolios and all of the other funds in the Fund Complex for
which he or she serves. Payment of such fees and expenses is allocated among
all such funds in proportion to their relative net assets. Officers of the Fund
receive no direct remuneration from the Fund. Officers of the Fund who are
employees of Deutsche Asset Management or its affiliates may be considered to
have received remuneration indirectly.
10
The aggregate compensation payable by the Fund and Flag Portfolios as well
as by the Fund Complex to each of the Fund's Directors and the Portfolio's
Trustees serving during the fiscal year ended August 31, 1999 is set forth in
the compensation table below.
Total
Aggregate Compensation Number of
Compensation Payable from Funds in the
Payable from the Fund, Fund Complex
the Fund the Flag Portfolios for which
and the and the Director/Trustee
Name and Position Flag Portfolios Fund Complex (2) Serves (2)
- ------------------------------------------------ ----------------- --------------------- -----------------
Richard R. Burt, Director/Trustee $14,000 $27,000 Seven
Edward C. Schmults, Esq., Director/Trustee $13,500 $41,500 Nine
G. Richard Stamberger, Director/Trustee (1)(3) $ 0 $ 0 Ten
Christian Strenger, Director/Trustee (1)(3) $ 0 $ 0 Ten
Robert Wadsworth, Director/Trustee $14,500 $64,000 Ten
Werner Walbrol, Director/Trustee $14,000 $45,250 Nine
- ----------------
(1) A Director/Trustee who is an "interested person" as defined in the 1940
Act.
(2) As of August 31, 1999, the Fund Complex consisted of the Fund, the Flag
Portfolios, The New Germany Fund, Inc., The Central European Equity Fund,
Inc. and The Germany Fund, Inc.
(3) Mr. Strenger and Mr. Stamberger resigned as Director of the Fund and as
Trustee of the Flag Portfolios effective October 14, 1999 and August 6,
1999, respectively.
Meetings and Committees of the Board of Directors and Trustees
There were four regular meetings of the Board of Directors and Trustees
held during the fiscal year ended August 31, 1999. All Directors and Trustees
standing for reelection attended 75% or more of those meetings.
The Board of Directors and Trustees has an Audit Committee. The Audit
Committee makes recommendations to the full Board of Directors and Trustees
with respect to the engagement of independent accountants. The Committee
reviews, with the independent accountants, the results of the audit engagement
and matters having a material effect on the Fund's or the Flag Portfolios'
financial operations. The members of the Audit Committee during the fiscal year
ended August 31, 1999, were Richard Burt, Edward Schmults, Robert Wadsworth and
Werner Walbrol, each of whom is an Independent Director and Trustee. If
elected, Messrs. Hardiman, Levy and McDonald and Ms. Rimel will become members
of the Audit Committee. The Audit Committee did not meet during the fiscal year
ended August 31, 1999.
The Board of Directors and Trustees has a Nominating Committee. The
Nominating Committee makes recommendations to the full Board of Directors and
Trustees with respect to candidates for the Board. The members of the
Nominating Committee during the fiscal year ended August 31, 1999, were Richard
Burt, Edward
11
Schmults, Robert Wadsworth and Werner Walbrol, each of whom is an Independent
Director and Trustee. If elected, Messrs. Hardiman, Levy and McDonald and Ms.
Rimel will become members of the Nominating Committee. The Nominating Committee
met twice during the fiscal year ended August 31, 1999. All incumbent members
attended the meetings.
Board Approval of the Election of Directors and Trustees
At meetings of the Board of Directors and Trustees held on October 14,
1999 and January 31, 2000, the Board of Directors and Trustees recommended that
shareholders vote FOR each of the Nominees named herein. In recommending that
shareholders elect the Nominees, the Board considered the Nominees' experience
and qualifications.
Therefore, after careful consideration, the Boards, including the
Independent Directors and Trustees of each, recommend that the
shareholders of the Fund and the Flag Portfolios vote "FOR" the election
of the Directors and Trustees.
PROPOSAL 2: Ratification of PricewaterhouseCoopers LLP as Independent
Accountants for the Fund and Flag Portfolios
The Boards of the Fund and the Flag Portfolios, including a majority of
the Independent Directors and Trustees of each, have approved the selection of
PricewaterhouseCoopers LLP to serve as independent accountants for the Fund and
the Flag Portfolios for the current fiscal year. PricewaterhouseCoopers LLP has
served as independent accountants of the Fund and the Flag Portfolios since the
date of the Fund's and Flag Portfolio's inception and has advised the Fund and
the Flag Portfolios that it has no direct or indirect financial interest in the
Fund or the Flag Portfolios. Representatives of PricewaterhouseCoopers LLP are
not expected to be present at the 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 Directors and Trustees of each, recommend that the
shareholders of the Fund and the Flag Portfolios vote "FOR" the
ratification of the Independent Accountants as set forth in this Proposal.
PROPOSAL 3A: Change in Investment Advisory Agreement. To approve new agreement
between the Portfolios and Deutsche Fund Management, Inc.
PROPOSAL 3B: Change in Investment Advisory Agreement. To approve new agreement
between the Portfolios and Investment Company Capital Corp.
12
General Information
On June 4, 1999, Deutsche Bank AG ("Deutsche Bank") combined with Bankers
Trust Corporation (the "Merger"). Deutsche Bank is the parent company of
Deutsche Fund Management, Inc. ("DFM"), the current investment manager to the
Portfolios in which the Fund invests, as well as of Investment Company Capital
Corp. ("ICCC"), the proposed investment advisor. The New ICCC Investment
Advisory Agreement is being proposed as a means to 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. The New ICCC Investment Advisory
Agreement is to be implemented within two years of the date of the Meeting upon
approval of the Independent Directors and Trustees. The deferral in
implementing the New ICCC Investment Advisory Agreement may be needed to permit
Deutsche Bank a sufficient amount of time to plan, prepare and institute the
necessary arrangements for ICCC to consolidate Deutsche Bank's U.S. mutual fund
operations.
In the near term, ICCC may acquire a controlling interest in DFM, which is
currently held through another Deutsche Bank subsidiary. It is possible that
the change in direct control of DFM (even though it would remain a Deutsche
Bank subsidiary) combined with anticipated additions of current ICCC personnel
to DFM, could be deemed an assignment of the current DFM investment advisory
agreement. Accordingly, shareholder approval is also sought for a New DFM
Investment Advisory Agreement.
The Current DFM Investment Advisory Agreement
Currently DFM serves as investment manager to the Portfolios pursuant to
an Investment Advisory Agreement between DFM and the Portfolios, dated as of
July 28, 1997 (the "Current Investment Advisory Agreement"). The Current
Investment Advisory Agreement was initially approved by the shareholders of the
Series/Portfolios on September 24, 1997. The Current Investment Advisory
Agreement was last approved by the Board of Directors and Trustees, including a
majority of the Independent Directors and Trustees, on July 12, 1999.
Additional Information on the Current Investment Advisor
Deutsche Fund Management, Inc. DFM is a registered investment advisor that
had under management as of December 31, 1999 approximately $554.6 million,
including assets of the Fund and the assets of DFM's other clients. DFM is an
indirect wholly owned subsidiary of Deutsche Bank. The principal address of DFM
is 31 West 52nd Street, New York, New York 10019 and the principal address of
Deutsche Bank is Aktiengesellschaft, Taunusalage 12, D-60262 Frankfurt am Main,
Federal Republic of Germany.
13
Deutsche Asset Management is an operating unit of Deutsche Bank consisting
of ICCC, DFM and other asset management affiliates of Deutsche Bank.
The following information is provided for each Director and principal
executive officer of DFM.
Name, Address and Position with DFM Principal Occupation
- ------------------------------------- -------------------------------------------------------
Udo Behrenwaldt, Director o Director, DFM
65719 Germanenstrabe 8 o Managing Director, DWS
Hofheim, Germany o Executive Director, DB Investment Mgmt. S.A.
o Managing Director, DWS Gesellschaft fuer Wertpapier-
sparen mbH
Richard T. Hale, President o Managing Director, Deutsche Asset Management
1 South Street o Managing Director, DB Alex. Brown LLC
Baltimore, Maryland 21202 o Director and President, Investment Company Capital
Corp.
Holger Naumann, Director o Head of Participations, DWS Gessellschaft fuer
60325 Goiollesttrasse 67 Wertpapiersparen mbH
Frankfurt, Germany o Director, DFM
Ross Youngman, Director o Managing Director, Deutsche Asset Management
130 Liberty Street
New York, New York 10006
Daniel O. Hirsch, o Director, Deutsche Asset Management
Vice President and Secretary
1 South Street
Baltimore, Maryland 21202
Jim Knell, Treasurer o Vice President, Deutsche Asset Management
1 South Street
Baltimore, Maryland 21202
Information on the Proposed Investment Advisor
Investment Company Capital Corp. ICCC is a registered investment advisor
that had under management as of December 31, 1999 approximately $11 billion,
including the assets of ICCC's other clients. ICCC is an indirect wholly owned
subsidiary of Deutsche Bank AG. The principal address of ICCC is One South
Street, Baltimore, Maryland, 21202 and the principal address of Deutsche Bank
is Deutsche Bank Aktiengesellschaft, Taunusalage 12, D-60262 Frankfurt am Main,
Federal Republic of Germany.
14
The following information is provided for each Director and principal
executive officer of ICCC. Unless otherwise noted, the address for each is One
South Street, Baltimore, Maryland 21202.
Name, Address and Position with ICCC Principal Occupation
- ----------------------------------------- -----------------------------------------------------
James T. Byrne, Jr., Secretary o Corporate Secretary, DB Alex. Brown LLC
Richard T. Hale, Director and President o Managing Director, Deutsche Asset Management
o Managing Director, DB Alex. Brown LLC
o Director and President, Investment Company Capital
Corp.
Margaret-Mary V. Preston, Director o Managing Director, DB Alex. Brown LLC
Mayo A. Shattuck III, Director o Co-CEO and Chairman, DB Alex. Brown LLC
Truman T. Semans, Director o Vice Chairman, Brown Investment Advisory & Trust
Furness House Company
19 South Street
Baltimore, Maryland 21202
Edward J. Veilleux, Executive Vice o Director, Deutsche Asset Management
President
The New Investment Advisory Agreements
The New DFM Investment Advisory Agreement is identical to the Current
Investment Advisory Agreement with the exception of the dates of execution,
effectiveness and initial term.
The New ICCC Investment Advisory Agreement contains the following
provisions that differ from those of the Current Investment Advisory Agreement:
o The parties, dates of execution, effectiveness, initial term and
termination notice period are different.
o ICCC is permitted to delegate its investment management duties to other
affiliates, subject (if required by the 1940 Act) to the approval of the
Trustees and unitholders of the Portfolios.
o ICCC may provide additional services not otherwise required under the
New Investment Advisory Agreement upon request of the Flag Portfolios'
Board. ICCC will be entitled to payment for such additional services as
authorized by the Board.
o ICCC is permitted to delegate its non-advisory services to third parties
that it supervises. ICCC is responsible for compensating such third
parties for their services.
The terms of the New Investment Advisory Agreements are summarized below
and are qualified by reference to Exhibit A. In the following discussion the
term "Advisor" refers to each of DFM and ICCC.
15
The New Investment Advisory Agreements between the Portfolios and DFM or
ICCC, as applicable, provide that the Advisor, in return for its fee, will (a)
manage or appoint a sub-advisor to manage the investment operations of the
Portfolios in accordance with each Portfolio's respective objective and
policies; (b) provide certain supervisory and administrative services to the
Portfolios in connection with negotiating, maintaining, evaluating and
coordinating contractual arrangements with third-party service providers; (c)
pay all expenses including personnel costs and overhead, incurred by it in
connection with the performance of its obligations under the agreement and
extraordinary expenses and shall pay the salaries of any Trustees or officers
of the Portfolios who are affiliated persons of the Advisor; and (d) review all
registration statements, amendments thereto and other documents as may be
required for compliance by the Portfolios. However, the Advisor shall not be
deemed to assume any duties under the agreement with respect to any duties or
functions specifically assumed by any administrator, fund accounting agent,
custodian, private placement agent or transfer agent to the Portfolios.
Advisory Fees. The investment advisory fee as a percentage of net assets
payable by the Portfolios will be the same under the New Investment Advisory
Agreements as under the Current Investment Advisory Agreement.
Under the New Investment Advisory Agreements, the Portfolios pay the
Advisor an annual fee based on the Portfolios' respective average daily net
assets. This fee is calculated and accrued daily and the amounts of the daily
accruals shall be paid monthly, at the annual rate for each Portfolio listed
below. The Advisor may, from time to time, voluntarily waive a portion of its
management fee to preserve or enhance the performance of the Portfolios.
Gross Fee
Paid to DFM
Annual (fiscal year
Portfolio Rate ended 8/31/99)
- --------- ---------- ---------------
Flag Investors Top 50 World (US Dollar) 1.00% $153,724
Flag Investors Top 50 Europe (US Dollar) 1.00% $272,729
Flag Investors Top 50 Asia (US Dollar) 1.00% $389,911
Flag Investors Provesta (US Dollar) (European Mid-Cap) 0.85% $188,736
Flag Investors Japanese Equity (US Dollar) 0.85% $ 54,632
Flag Investors Top 50 US (US Dollar) 0.85% $210,939
Flag Investors US Money Market (US Dollar) 0.15% $374,550
The services of the Advisor are not to be deemed exclusive, and the
Advisor is free to render investment management and corporate administrative or
other services to others (including other investment companies), and to engage
in other activities, so long as its services under the agreement are not
impaired thereby. The Advisor's officers or directors may serve as officers or
trustees of the Portfolio, and the Portfolio's officers or trustees may serve
as officers or directors of the Advisor, to the extent permitted by law. In
addition, the Advisor is obligated to pay expenses associated with providing
the services contemplated by the New Investment Advisory Agreement. The
Portfolios bear certain other expenses including the fees of the Portfolios'
Board.
16
ICCC is the investment advisor for other investment companies ("Similar
Funds") with investment objectives and strategies that are similar to certain
of the Portfolios. The following table identifies each such Similar Fund and
Portfolio, and the advisory fee paid to ICCC.
Advisory
Similar Fund Assets (1) Fee (2) Portfolio
- ------------ ---------- -------- ---------
Deutsche Bank Alex. Brown Cash $5,475,933,761 0.26% Flag Investors US Money Market
Reserve Fund, Inc. -- Prime Series (US Dollar)
Equity Partners Fund, Inc. $ 464,827,346 0.77% Flag Investors Top 50 US
(US Dollar)
- ----------------
(1) As of December 31, 1999.
(2) As a percentage of daily net assets for the most recently completed fiscal
year.
In addition, the New ICCC Investment Advisory Agreement contains
additional provisions to permit ICCC to delegate its advisory duties to other
affiliates and to delegate its non-advisory services to third parties that it
supervises. These changes are incorporated in Sections 4 and 5 of the New ICCC
Investment Advisory Agreement contained in Exhibit A.
Following the expiration of its initial two-year term, each of the New
Investment Advisory Agreements continues in full force and effect from year to
year, provided that such continuance is specifically approved at least annually
in conformity with the requirements of the 1940 Act.
The New Investment Advisory Agreements may be terminated (1) at any time,
and without any penalty, by vote of a majority of all the Trustees of the
Portfolios, or by vote of a majority of the Portfolios' outstanding voting
securities, on 60 days' written notice to the Advisor or (2) by the Advisor, at
any time without the payment of a penalty, on 90 days' notice (for the New DFM
Advisory Agreement) or on 60 days' notice (for the New ICCC Advisory Agreement)
to the Portfolios. The Agreements automatically and immediately terminate in
the event of assignment.
The New Investment Advisory Agreements obligate the Advisor to use the
same skill and care in the management of each Portfolio's investments as it
uses in the administration of other accounts for which it has investment
responsibility as agent, but the Advisor shall not be liable for any error in
judgment or mistake of law or for any loss or expense suffered by the
Portfolios in connection with the matters to which the Agreement relates,
except a loss or expense resulting from willful misfeasance, bad faith or gross
negligence on its part or in the performance of its duties or from reckless
disregard by it of its obligations and duties under the Agreement.
Board Considerations. The Boards held a meeting on January 31, 2000, at
which the Boards, including the Independent Trustees and Directors, unanimously
approved the New Investment Advisory Agreements and recommended the New
Investment Advisory Agreements for approval by the shareholders of the
17
Portfolio/Fund. In evaluating the New Investment Advisory Agreements, the
Boards based their determination primarily on their conclusion that there would
be a high degree of continuity of services to the Portfolios and took into
account that the Current Investment Advisory Agreement and the New Investment
Advisory Agreements, including their terms relating to the services to be
provided thereunder and the fees and expenses payable by the Fund, are
substantially identical. The Board further considered how the New ICCC
Investment Advisory Agreement could help simplify the organizational structure
of Deutsche Bank's U.S. mutual fund operations, enhance the efficiency of its
administration and promote consistency of internal controls, compliance and
regulatory oversight.
The Boards were informed that pursuant to Sections 15(a) and 2(a)(4) of
the 1940 Act, the change in control of DFM may be deemed an assignment of the
Current Investment Advisory Agreement and, therefore, would necessitate the
implementation of a New DFM Investment Advisory Agreement.
The Boards were apprised that the possible deferral in implementing the
New ICCC Investment Advisory Agreement may be needed to permit Deutsche Bank a
sufficient amount of time to plan, prepare and institute the necessary
arrangements for ICCC to consolidate Deutsche Bank's U.S. mutual fund
operations. The Advisor also emphasized to the Boards that the New ICCC
Investment Advisory Agreement would be implemented only upon the approval of
the Independent Trustees and Directors, based on information they then deemed
adequate and necessary to consider these arrangements.
After consideration of the above factors and such other factors and
information that the Boards deemed relevant, the Boards, including the
Independent Trustees and Directors, unanimously approved the New Investment
Advisory Agreements and voted to recommend their approval to the shareholders.
Additional Information. On March 11, 1999, Bankers Trust, a separate
subsidiary of Bankers Trust Corporation, 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. ICCC became an affiliate of Bankers Trust, and Deutsche Bank
acquired Bankers Trust Corporation, after these events took place. Bankers
Trust Company plead 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 Company's formal sentencing. The events leading up to the
guilty pleas did not arise out of the investment advisory or management
activities provided by DFM to the Portfolios or the proposed management
activities, which would be provided by ICCC.
18
As a result of the pleas, absent an order from the SEC, neither DFM nor
ICCC would be able to continue as Advisor. The SEC granted Bankers Trust a
temporary order to permit Bankers Trust and its affected affiliates to continue
to provide investment advisory services to registered investment companies.
There is no assurance that the SEC will grant a permanent order.
Therefore, after careful consideration, the Boards, including the
Independent Directors and Trustees of each, recommend that the respective
shareholders of the Series and the Flag Portfolios vote "FOR" the approval
of the New Investment Advisory Agreements in Proposals 3A and 3B.
PROPOSAL 4a: To approve new Investment Sub-Advisory Agreements on behalf of Flag
Investors Top 50 World, Top 50 Europe, Top 50 Asia, Provesta and
Japanese Equity Portfolios (US Dollar) Between DWS International
Portfolio Management GmbH and:
(i) Deutsche Fund Management, Inc.
(ii) Investment Company Capital Corp.
PROPOSAL 4b: To approve new Investment Sub-Advisory Agreements on behalf of Flag
Investors Top 50 US Portfolio (US Dollar) Between Deutsche Asset
Management, Inc. and
(i) Deutsche Fund Management, Inc.
(ii) Investment Company Capital Corp.
PROPOSAL 4c: To approve new Investment Sub-Advisory Agreements on behalf of Flag
Investors US Money Market Portfolio (US Dollar) Between Bankers
Trust Company and:
(i) Deutsche Fund Management, Inc.
(ii) Investment Company Capital Corp.
General Information
As discussed previously, the Boards have approved implementing New
Investment Advisory Agreements between the Portfolios and DFM as well as
replacing DFM with ICCC. Therefore, New Investment Sub-Advisory Agreements with
respect to the Portfolios will also be required upon the restructuring of DFM
and upon the ultimate replacement of DFM with ICCC. The implementation of the
New ICCC Investment Advisory Agreement, and thus, the New Investment
Sub-Advisory Agreement with ICCC, may be deferred to permit Deutsche Bank a
sufficient amount of time to plan, prepare and institute the necessary
arrangements for the consolidation of Deutsche Bank's U.S. mutual fund
operations.
19
In line with its efforts to consolidate the operations of its U.S. mutual
funds business, Deutsche Bank has decided that Deutsche Bank Investment
Management, Inc. ("DBIM"), the current sub-advisor to the Top 50 US Portfolio
and the US Money Market Portfolio, will no longer provide investment advice to
the U.S. mutual funds but will focus its efforts on advising bank clientele. As
such, it is proposed that Deutsche Asset Management, Inc. ("DeAM Inc.") and
Bankers Trust, other investment advisory subsidiaries of Deutsche Bank, will
assume the sub-advisory services for the Top 50 US Portfolio and US Money
Market Portfolio, respectively. The following table lists the current and
proposed investment sub-advisors for the Portfolios.
Current Proposed
Portfolio Sub-Advisor Sub-Advisor
- --------- ----------- -----------
Flag Investors Top 50 World (US Dollar) DWS DWS
Flag Investors Top 50 Europe (US Dollar) DWS DWS
Flag Investors Top 50 Asia (US Dollar) DWS DWS
Flag Investors Provesta (US Dollar) (European Mid-Cap) DWS DWS
Flag Investors Japanese Equity (US Dollar) DWS DWS
Flag Investors Top 50 US (US Dollar) DBIM DeAM Inc.
Flag Investors US Money Market (US Dollar) DBIM Bankers Trust
The Current Investment Sub-Advisory Agreement
The current Investment Sub-Advisory Agreement among DFM, DWS and DBIM is
dated as of July 28, 1997 (the "Current Investment Sub-Advisory Agreement"). It
was initially approved by the shareholders of the Portfolios on September 24,
1997, and was last approved by the Flag Portfolios' Board of Trustees,
including a majority of the Independent Trustees, on July 12, 1999.
The New Investment Sub-Advisory Agreements
The New Investment Sub-Advisory Agreements are identical to the Current
Investment Sub-Advisory Agreement with the exception of the parties, dates of
execution, effectiveness, initial term and an additional provision that allows
the Advisor, with the approval of the Independent Trustees, to adjust the
portion of the assets managed and the fees paid to the sub-advisor. The New
Investment Sub-Advisory Agreement initially will be among DFM as Investment
Advisor and DWS, DeAM Inc. and Bankers Trust (each a "Sub-Advisor"). Upon
replacement of DFM with ICCC as Investment Advisor, a New Investment
Sub-Advisory Agreement among ICCC as Investment Advisor and each Sub-Advisor
will be implemented. The Boards have approved implementing the New Investment
Sub-Advisory Agreements. The terms of the New Investment Sub-Advisory
Agreements are summarized below and are qualified by reference to Exhibit B.
20
The New Investment Sub-Advisory Agreements provide that the Sub-Advisor,
in return for its fee, will (a) manage the investment operations of the
Portfolios in accordance with each applicable Portfolio's respective objective
and policies; (b) furnish a continuous investment program for each applicable
Portfolio; (c) determine the securities or other investments to be purchased,
sold or lent by the applicable Portfolios and as agent of the Portfolios, and
effect portfolio transactions pursuant to its determinations; and (d) maintain
a set of books and records with respect to each applicable Portfolio's
securities transactions. However, the Sub-Advisor shall not be deemed to assume
any duties under the agreement to make any business, operational or management
decisions on behalf of the Portfolios other than with respect to the investment
operations and composition of an applicable Portfolio's holdings of securities
and other investments.
Investment Sub-Advisory Fees. The investment sub-advisory fee as a
percentage of net assets payable to the Sub-Advisor will be the same under the
New Investment Sub-Advisory Agreements as under the Current Investment
Sub-Advisory Agreement. The annual fee is based on the Fund's average daily net
assets. This fee is calculated and accrued daily and paid at the end of each
calendar month, at the following annual rates.
Portfolio Annual Rate
--------- -----------
Flag Investors Top 50 World (US Dollar) 0.75%
Flag Investors Top 50 Europe (US Dollar) 0.75%
Flag Investors Top 50 Asia (US Dollar) 0.75%
Flag Investors Provesta (US Dollar) (European Mid-Cap) 0.60%
Flag Investors Japanese Equity (US Dollar) 0.60%
Flag Investors Top 50 US (US Dollar) 0.60%
Flag Investors US Money Market (US Dollar) 0.1125%
The Advisor may, with the approval of the Sub-Advisor and Independent
Directors and Trustees, from time to time adjust the duties of the Sub-Advisor,
the portion of Portfolio assets that such Sub-Advisor shall manage and the fees
to be paid the Sub-Advisor by the Advisor.
The services of the Sub-Advisor are not to be deemed exclusive, and the
Sub-Advisor is free to render investment advisory services and to engage in
other activities, so long as its services under the agreement are not impaired
thereby.
21
Following the expiration of its initial two-year term, each of the New
Investment Sub-Advisory Agreements continues in full force and effect from year
to year, provided that such continuance is specifically approved at least
annually in conformity with the requirements of the 1940 Act.
The New Investment Sub-Advisory Agreements may be terminated, without the
payment of any penalty, with respect to any Portfolio (a) by the Advisor; (b)
by the Portfolios upon a vote of the Portfolios' Board of Trustees, or by a
vote of a majority of a Portfolio's or all Portfolios' (as the case may be)
outstanding voting securities on 60 days' written notice to the Sub-Advisor or
(c) by the Sub-Advisor, without the payment of any penalty on 90 days' written
notice (for the sub-advisory agreement with DFM) or 60 days' written notice
(for the sub-advisory agreement with ICCC) to the Advisor and the Portfolios.
The agreement automatically and immediately terminates in the event of its
assignment.
The New Investment Sub-Advisory Agreements obligate the Sub-Advisor to
exercise care and diligence and to act in good faith and to use its best
efforts within reasonable limits to ensure the accuracy of all services
performed under the agreement, but the Sub-Advisor is not liable for any act or
omission which does not constitute willful misfeasance, bad faith or gross
negligence on the part of Sub-Advisor or its officers, directors or employees
or reckless disregard by the Sub-Advisor of its duties under the agreement.
Board Considerations
The Boards held a meeting on January 31, 2000, at which the Boards,
including the Independent Directors and Trustees, approved the New Investment
Sub-Advisory Agreements for each Portfolio and recommended the New Investment
Sub-Advisory Agreements for approval by the shareholders of the Portfolios and
the Funds. In evaluating the New Investment Sub-Advisory Agreements, the Boards
considered substantially the same factors that led them to approve the New
Advisory Agreements, particularly the continuity of services. In this regard,
the Boards took into account that the Current Investment Sub-Advisory Agreement
and the New Investment Sub-Advisory Agreements, including their terms relating
to the services to be provided thereunder by each Sub-Advisor and the fees and
expenses, are identical except for the parties involved and the dates.
The Boards were apprised that the New Investment Sub-Advisory Agreement
between DFM and each Sub-Advisor would be implemented upon shareholder approval
and that a New Investment Sub-Advisory Agreement between ICCC and each
Sub-Advisor will be needed upon the implementation of the New Advisory
Agreement with ICCC. The deferral of the New Investment Advisory Agreement with
ICCC may be needed to permit Deutsche Bank a sufficient amount of time to plan,
prepare and institute the necessary arrangements for the consolidation of
Deutsche
22
Bank's U.S. mutual fund operations. The Advisor also emphasized to the Boards
that the New Investment Sub-Advisory Agreement with ICCC would be implemented
only upon the approval of the Independent Trustees and Directors, based on
information they then deemed adequate and necessary to consider these
arrangements.
Additional Information on Each Sub-Advisor
Deutsche Bank Investment Management Inc. DBIM is a registered investment
advisor. For the fiscal year ended August 31, 1999, DFM paid DBIM an aggregate
fee of $388,069 for investment advisory services, of which $107,156 was for the
Top 50 US Portfolio and $280,913 was for the US Money Market Portfolio. The
names, business addresses and principal occupations of the current directors
and executive officers of DBIM are set forth below. Except as otherwise
indicated, the business address of the individuals named below is 31 West 52nd
Street, New York, NY 10019.
Name and Address Principal Occupation
- ---------------- --------------------
Kenneth J. Tarr o Chairman of the Board, Deutsche Bank Investment Management Inc.
o Executive Vice President, Deutsche Bank, AG
Hanspeter Ackermann o Managing Director and Chief Investment Officer, Deutsche Bank
Investment Management Inc.
o Managing Director, Deutsche Bank Securities Inc.
Douglas H. Lemmonds o Managing Director and Director, Deutsche Bank Investment
Management Inc.
o President and Chief Operating Officer, Deutsche Bank Trust
Company
o Managing Director, Deutsche Bank AG
Michael C. Lowengrub o Treasurer, Deutsche Bank Investment Management Inc.
o Treasurer, Deutsche Fund Management, Inc.
o Treasurer, Deutsche Bank Trust Company
o Director, Deutsche Bank AG
Mary N. Owen o Managing Director and Chief Compliance Officer, Deutsche Bank
Investment Management Inc.
o Managing Director and Chief Compliance Officer, Deutsche Bank
Securities Inc.
Robert R. Gambee o Secretary, Deutsche Bank Investment Management Inc.
o Assistant Secretary, DB New World Fund Limited
o Chief Operating Officer and Secretary, The Germany Fund Inc.,
The Central European Equity Fund Inc. and
The New Germany Fund Inc.
23
DWS International Portfolio Management GmbH. DWS is a registered
investment advisor. For the fiscal year ended August 31, 1999, DFM paid DWS an
aggregate fee of $162,352 for investment advisory services. This fee was
allocated among the applicable Portfolios as follows:
Gross Fee Paid to DWS
Portfolio (Fiscal year ended 8/31/99)
- --------- ---------------------------
Flag Investors Top 50 World (US Dollar) $23,057
Flag Investors Top 50 Europe (US Dollar) $47,461
Flag Investors Top 50 Asia (US Dollar) $57,526
Flag Investors Provesta (US Dollar) (European Mid-Cap) $26,595
Flag Investors Japanese Equity (US Dollar) $ 7,713
The following information is provided for each director and principal
executive officer of DWS. Unless otherwise indicated, the business address of
the individuals named below is Gruenebergweg 113-115, D-60323 Frankfurt am
Main, Federal Republic of Germany.
Name Principal Occupation
- ---- --------------------
Udo Behrenwaldt o Managing Director, DWS
o Director, Deutsche Fund Management, Inc.
o Managing Director, DWS Deutsche Gesellschaft fuer
Wertpapiersparen mbH
o Executive Director, DB Investment Management S.A.
Axel-Guenter Benkner o Managing Director, DWS
o Managing Director, Deutsche Vermoegensbildungsgesellschaft mbH
o Managing Director, DWS Deutsche Gesellschaft fuer
Wertpapiersparen mbH
Heinz-Wilhelm Fesser o Senior Portfolio Manager, DWS
o Head of Fixed Income, DWS Deutsche Gesellschaft fuer
Wertpapiersparen mbH
Matthias Geuckler o Chief Compliance Officer, DWS
o Chief Compliance Officer, DWS Deutsche Gesellschaft fuer
Wertpapiersparen mbH
Klaus Kaldemorgen o Senior Portfolio Manager, DWS
o Head of Equities-Global, DWS Deutsche Gesellschaft fuer
Wertpapiersparen mbH
Klaus Martini o Senior Portfolio Manager, DWS
o Head of Equities-Europe, DWS Deutsche Gesellschaft fuer
Wertpapiersparen mbH
Gerhard Seifreid o Chief Operations Officer, DWS
o Head of Fund Administration, DWS Deutsche Gesellschaft fuer
Wertpapiersparen mbH
24
Name Principal Occupation
- ---- --------------------
Christian Strenger o Managing Director, DWS
o Managing Director/Spokesman, DWS Deutsche Gesellschaft fuer
Wertpapiersparen mbH
Reinhold Volk o Chief Financial Officer, DWS
o Head of Controlling, DWS Deutsche Gesellschaft fuer
Wertpapiersparen mbH
Elisabeth Weisenhorn o Senior Portfolio Manager, DWS
o Head of Equities-Germany, DWS Deutsche Gesellschaft fuer
Wertpapiersparen mbH
Deutsche Asset Management, Inc. DeAM Inc. is a registered investment
advisor. The names, business addresses and principal occupations of the current
directors and principal executive officers of DeAM Inc. 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 DeAM Inc. constitute their principal occupation.
Name and Address Principal Occupation
- --------------------------- ---------------------------------------------------------------------
Richard Marin o President and Director, Deutsche Asset Management, Inc.
280 Park Avenue o Managing Director, Deutsche Bank, AG
New York, NY 10017
David Westover Baldt o Executive Vice President and Director, Deutsche Asset Management,
Inc.
o Director, Morgan Grenfell Asset Management Ltd.
o Vice President, Bankers Trust Company
Audrey Mary Theresa Jones o Executive Vice President, Portfolio Manager and Director, Deutsche
Asset Management, Inc.
Robert H. Smith o Chairman and Director, Deutsche Asset Management Inc.
o Chief Executive Officer, Morgan Grenfell Asset Management
o Chairman and Chief Executive Officer, Morgan Grenfell
Development Capital
Steven Schneider o Director and Vice President, Deutsche Asset Management, Inc.
Bankers Trust. Bankers Trust is a United States commercial bank and is
regulated by the New York State Banking Department. The names, business
addresses and principal occupations of the current directors and chief
executive officer of Bankers Trust are set forth in the next chart.
25
Name and Address Principal Occupation
- ---------------------------- ----------------------------------------------------------------
Josef Ackermann o Chairman of the Board, Chief Executive Officer and President,
Deutsche Bank AG Bankers Trust Company
Taunusanlage 12 o Member, Board of Managing Directors, Deutsche Bank AG.
D-60262 Frankfurt am Main
Federal Republic of Germany
Hans Angermueller o Director, Bankers Trust
Shearman & Sterling o Director of various corporations
599 Lexington Avenue o Shearman & Sterling, of counsel
New York, NY 10022
George B. Beitzel o Director, Bankers Trust
29 King Street o Director of various corporations
Chappaqua, NY 10514-3432
William R. Howell o Director, Bankers Trust
J.C. Penny Company, Inc. o Chairman Emeritus, J.C. Penney Company, Inc.
P.O. Box 10001 o Director of various corporations
Dallas, TX 75301-1109
Hermann-Josef Lamberti o Director, Bankers Trust
Deutsche Bank, AG o Member, Board of Managing Directors, Deutsche Bank AG.
Taunusanlage 12
D-60262 Frankfurt am Main
Federal Republic of Germany
John A. Ross o Director, Bankers Trust
Deutsche Bank o Regional Chief Executive Officer, Deutsche Bank Americas
31 West 52nd Street Holding Corp.
New York, NY 10019
Ronaldo H. Schmitz o Director Bankers Trust
Deutsche Bank AG o Member, Board of Managing Directors, Deutsche Bank AG
Taunusanlage 12
D-60262 Frankfurt am Main
Federal Republic of Germany
Therefore, after careful consideration, the Boards, including the
Independent Directors and Trustees of each, recommend that the respective
shareholders of the Series and the Flag Portfolios vote "FOR" the approval
of the New Investment Advisory Agreements in Proposals 4A, 4B and 4C.
ADDITIONAL INFORMATION
Directors and Executive Officers of the Fund and the Portfolios
Information about the Fund's and the Portfolios' current Directors and
Trustees and principal executive officers is set forth in the next chart. Each
officer of the Fund and the Portfolios will hold such office until the
respective Board of Directors and Trustees has elected a successor. Directors
and Trustees and officers of the Fund and the Portfolios are also directors and
officers of some or all of the other investment companies managed, administered
or advised by ICCC or its affiliates.
26
Shares
Name, Position and Beneficially
Term With the Birth Business Experience During Owned as of
Fund/Portfolio Date the Past Five Years 12/31/99
- ----------------------- --------- -------------------------------------------------- -------------
Richard R. Burt 2/3/47 See information provided under Proposal 1. None*
Director/Trustee
Since 1998
Edward C. Schmults 2/16/31 Director, Green Point Financial Corp., BT None*
Director/Trustee Insurance Funds Trust, the Germany Fund, Inc.
Since inception and The Central European Equity Fund, Inc.;
Chairman of the Board, The Edna McConnell
Clark Foundation. Formerly, Senior Vice President
-- External Affairs and General Counsel, GTE
Corporation, 1984-1994.
Werner Walbrol 8/28/37 President and Chief Executive, German American None*
Director/Trustee Chamber of Commerce, Inc.; President, European
Since inception American Chamber of Commerce; Member,
United States German Youth Exchange Council;
Director, TUV Rheinland of North America, Inc.,
the Germany Fund, Inc. DB New York World Fund,
Limited and LDC, The Central European Equity
Fund, Inc. and BT Insurance Funds; President and
Director, German American Partnership Program.
Robert H. Wadsworth 1/29/40 See information provided under Proposal 1. None*
Director/Trustee
Since inception
Robert R. Gambee 8/26/42 Director, Deutsche Bank Securities, Inc.; Chief None*+
Secretary Operating Officer and Secretary, The Germany
Since inception Fund, Inc., The Central European Equity Fund,
Inc. and The New Germany Fund, Inc. (since
1997); Secretary, Deutsche Bank Investment
Management, Inc.
Amy M. Olmert 5/14/63 Vice President, Deutsche Asset Management since None*
Assistant Secretary 1999; and Vice President, DB Alex. Brown LLC
Since 1999 (formerly BT Alex. Brown Incorporated), 1997-
1999. Formerly, Senior Manager, Coopers &
Lybrand L.L.P. (now PricewaterhouseCoopers
LLP), 1992-1997.
Joseph Parascondola 6/5/63 Assistant Vice President, Deutsche Fund None*
Treasurer Management, Inc. Formerly, Assistant Vice
Since 1999 President and Assistant Manager, Weiss, Peck &
Greer L.L.C., 1995-1998; and Mututal Fund
Accounting Manager, Concord Financial Group
1991-1995.
Daniel O. Hirsch 3/27/54 Director, Deutsche Asset Management since 1999; None*
Assistant Secretary and Principal, DB Alex. Brown LLC (formerly BT
Since 1999 Alex. Brown Incorporated), 1998-1999. Formerly,
Assistant General Counsel, United States
Securities and Exchange Commission, 1993-1998.
* As of December 31, 1999, the Directors and Trustees and officers of the Fund
and Portfolios as a group beneficially owned an aggregate of less than 1%
the Fund/Portfolios.
+ As of December 31, 1999, Mr. Gambee owned 400 shares of Deutsche Bank, the
parent company of DFM, ICCC, DWS, DBIM and Bankers Trust.
27
Principal Underwriter
ICC Distributors, Inc, located at Two Portland Square, Portland, Maine,
04104, acts as the Fund's principal underwriter and the Portfolio's exclusive
placement agent.
Portfolio Transactions
For the fiscal year ended, August 31, 1999, DBIM directed brokerage
transactions to certain brokers due to research services they provided. The
total amount of these transactions directed by DBIM was $168,093,236 for which
the Portfolios paid $89,992 in brokerage commissions.
On August 31, 1999, the Portfolios (including the Investa, Global Bond and
European Bond Portfolios that closed and liquidated) owned securities of the
following regular broker/dealers: $388,050, Merrill Lynch & Co., Inc.; and
$2,564,249, Nomura Securities Co., Ltd.
For the fiscal year ended August 31, 1999, the Portfolios (including the
Investa, Global Bond and European Bond Portfolios that closed and liquidated)
paid $13,670 in brokerage commissions to Deutsche Bank AG, an affiliated
broker, which represents 2.60% of the aggregate brokerage commissions paid and
22.81% of the aggregate principal amount of trades by affiliated brokers.
For the fiscal year ended August 31, 1999, the Portfolios (including the
Investa, Global Bond and European Bond Portfolios that closed and liquidated)
paid $6,781 in brokerage commissions to Deutsche Bank Securities, New York, an
affiliated broker, which represents 1.29% of the aggregate brokerage
commissions paid and 1.38% of the aggregate principal amount of trades by
affiliated brokers.
For the fiscal year ended August 31, 1999, and 1998, the Portfolios
(including the Investa, Global Bond and European Bond Portfolios that closed
and liquidated) paid $69,541 in brokerage commissions to Deutsche Morgan
Grenfell, an affiliated broker, which represents 13.21% of the aggregate
brokerage commissions paid and 26.69% of the aggregate principal amount of
trades by affiliated brokers.
Independent Accountants
PricewaterhouseCoopers LLP, located at 1177 Avenue of the Americas, New
York, New York 10036, are the independent accountants for the Fund and the
Portfolios for the fiscal year ending August 31, 2000.
Beneficial Ownership of Shares of the Fund
Annex I attached hereto sets forth information as of the Record Date
regarding the beneficial ownership of the Series' shares by the only persons
known by each
28
Series to beneficially own more than five percent of the outstanding shares of
the Series. To the knowledge of Fund management, as of the Record Date, no
other person beneficially owned 5% or more of the outstanding shares of the
Fund.
Submission of Shareholder Proposals
The Fund is incorporated under the laws of the State of Maryland. Under
Maryland General Corporation Law, a corporation registered under the 1940 Act,
such as the Fund, is not required to hold an annual meeting in any year in
which the election of Directors is not required to be acted upon under the 1940
Act. The Fund has availed itself of this provision and achieves cost savings by
eliminating printing costs, mailing charges and other expenses involved in
routine annual meetings.
Even with the elimination of routine annual meetings, the Board of
Directors may call special meetings of shareholders for action by shareholder
vote as may be required by the 1940 Act, or as required or permitted by the
Articles of Incorporation and By-Laws of the Fund. As described above,
shareholder meetings will be held, in compliance with the 1940 Act, to elect
Directors under certain circumstances. Shareholder meetings may also be held by
the Fund for other purposes, including to approve investment policy changes, a
new investment advisory agreement, a new investment sub-advisory agreement or
other matters requiring shareholder action under the 1940 Act.
A meeting may also be called by shareholders holding at least 10% of the
shares entitled to vote at the meeting for the purpose of voting upon the
removal of Directors. Upon written request by ten or more shareholders, who
have been shareholders for at least six months and who hold shares constituting
at least 1% of the outstanding shares, stating that such shareholders wish to
communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a Director, the
Fund has undertaken to provide a list of shareholders or to disseminate
appropriate materials. In addition, Maryland General Corporation Law provides
for the calling of a special meeting by the written request of shareholders
holding at least 25% of the shares entitled to vote at the meeting.
Shareholders who wish to present a proposal for action at the next meeting
or suggestions as to nominees for the Board of Directors should submit the
proposal or suggestions to be considered to the Fund within a reasonable time
in advance of any such meeting for inclusion in the Fund's proxy statement and
form of proxy for such meeting as is held. The Nominating Committee of the
Board of Directors will give consideration to shareholder suggestions as to
nominees for the Board of Directors.
Required Vote
Approval of Proposal 1 requires the affirmative vote of a plurality of all
votes cast at the Meeting, provided that a majority of the shares entitled to
vote are present in person or by Proxy at the Meeting. Because abstentions and
broker non-votes are not treated as shares voted, abstentions and broker
non-votes will have no impact on Proposal 1.
29
Approval of Proposal 2 as to a Series requires the affirmative vote of a
majority of the votes cast in person or by proxy at the Meeting for that Series
and its corresponding Portfolio. Because abstentions and broker non-votes are
not treated as shares voted, abstentions and broker non-votes will have no
impact on Proposal 2.
Approval of Proposals 3a, 3b, 4a(i), 4a(ii), 4b(i), 4b(ii) and 4c(i) and
4c(ii) require the affirmative vote of a majority of the outstanding voting
securities of that Fund. As defined in the 1940 Act, the vote of a "majority of
the outstanding voting securities" of a Fund means the vote of (i) 67% or more
of the Fund's outstanding shares present at a meeting, if the holders of more
than 50% of the outstanding shares of the Fund are present or represented by
proxy, or (ii) more than 50% of the Fund's outstanding shares, whichever is
less.
Abstentions and "broker non-votes" will not be counted for or against the
Proposals but will be counted for purposes of determining whether a quorum is
present. Abstentions will be counted as votes present for purposes of
determining a "majority of the outstanding voting securities" present at the
Meeting and will therefore have the effect of counting against Proposals 3,
4a(i), 4a(ii), 4b(i), 4b(ii) and 4c(i) and 4c(ii).
Other Matters
No business other than the matters described previously is expected to
come before the Meeting, but should any matter incident to the conduct of the
Meeting or any question as to an adjournment of the Meeting arise, the persons
named in the enclosed Proxy will vote thereon according to their best judgment
in the interest of the Fund.
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE ANNUAL MEETING AND WHO WISH
TO HAVE THEIR SHARES VOTED ARE REQUESTED TO VOTE BY MAIL, TELEPHONE OR INTERNET
AS EXPLAINED IN THE INSTRUCTIONS INCLUDED ON THE PROXY CARD.
By Order of the
Directors,
[GRAPHIC OMITTED]
Amy M. Olmert
Assistant Secretary
Date: February 25, 2000
30
EXHIBIT A
Form of Current and New Investment Advisory Agreement
Flag Investors Portfolios Trust
INVESTMENT MANAGEMENT [ADVISORY](1) AGREEMENT
Agreement, made as of _________, 20_____, between Flag Investors
Portfolios Trust (formerly Deutsche Portfolios), a trust organized under New
York law (the "Trust"), and Deutsche Fund Management, Inc., [Investment Company
Capital Corp.,] a Delaware [Maryland] corporation (the "Investment Manager"
["Adviser"]), registered as an investment adviser under the Investment Advisers
Act of 1940 (the "Advisers Act").
W I T N E S S E T H:
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), and
consists on the date hereof of the seven sub-trusts listed on Schedule A to
this Agreement (each such sub-trust, together with each other sub-trust of the
Trust hereafter established by the Trustees of the Trust and made subject to
this Agreement in accordance with Section 13 hereof, individually a "Portfolio"
and, collectively, the "Portfolios"); and
WHEREAS, the Board of Trustees of the Trust desires to retain the
Investment Manager [Adviser] to render various investment management services
to each Portfolio, and the Investment Manager [Adviser] is willing to render
such services;
NOW, THEREFORE, in consideration of the premises and mutual promises
hereinafter set forth, the parties hereto agree as follows:
1. The Trust hereby appoints the Investment Manager [Adviser] to act as
investment manager [adviser] to each of the Portfolios for the period and the
terms set forth in this Agreement, with the understanding that it may appoint a
[sub-] adviser to perform certain services relating to the management of the
investment operations of the Portfolios as set forth in Section 4. The
Investment Manager [Adviser] accepts such appointment and agrees to render or
provide the services herein set forth, for the compensation herein provided.
2. The activities of the Investment Manager [Adviser] or any [sub-]
adviser appointed hereunder shall at all times be subject to the supervision of
the Trustees of the Trust.
- ----------------
(1) The language of this agreement applies to the version of the agreement that
will take effect following stockholder approval. The bracketed alternative
language applies to the version that will take effect at such time as
Investment Company Capital Corp. becomes Investment Adviser, within two
years of such stockholder approval.
A-1
3. The Investment Manager [Adviser] shall manage, or appoint a [sub-]
adviser to manage, the investment operations of the Portfolios and the
composition of each Portfolio's holdings of securities and investments,
including cash, the purchase, retention and disposition thereof and agreements
relating thereto, in accordance with such Portfolio's investment objectives and
policies as stated in the Registration Statement (as defined in paragraph 6(d)
of this Agreement). The Investment Manager [Adviser], or in case it appoints a
[sub-] adviser, such [sub-] adviser, shall perform such services (the person
performing such services being referred to herein as the "[Sub-] Adviser"
subject to the following understandings:
(a) The [Sub-] Adviser in the performance of its duties and
obligations under this Agreement, shall act in conformity with the
Declaration of Trust and By-Laws of the Trust and the Registration
Statement and with the instructions and directions of the Trustees of the
Trust and will conform to and comply with the requirements of the 1940 Act
and all other applicable federal and state laws and regulations;
[(b) the Adviser shall furnish a continuous investment program for each
Portfolio and determine from time to time what securities, instruments and
other investments, including futures contracts, will be purchased,
retained, sold or lent by such Portfolio, and what portion of the assets
will be invested or held uninvested as cash;(2)]
(b) the [Sub-] Adviser shall use the same skill and care in the
management of each Portfolio's investments as it uses in the
administration of other accounts for which it has investment
responsibility as agent;
(c) the [Sub-] Adviser shall determine the securities or other
investments to be purchased, sold or lent by each Portfolio and as agent
for each Portfolio will effect portfolio transactions pursuant to its
determinations either directly with the issuer or with any broker and/or
dealer in such securities, including a broker affiliated with the [Sub-]
Adviser; in placing orders with brokers and/or dealers the [Sub-] Adviser
intends to seek best price and execution for purchases and sales; the
[Sub-] Adviser shall also determine whether or not a Portfolio shall enter
into repurchase or reverse repurchase agreements;
On occasions when the [Sub-] Adviser deems the purchase or sale of a
security or other investment to be in the best interest of a Portfolio as well
as other customers of the [Sub-] Adviser, the [Sub-] Adviser may, to the extent
permitted by applicable laws and regulations, but shall not be obligated to,
aggregate the securities to be so sold or purchased on behalf of such Portfolio
and such other customer of the [Sub-] Adviser in order to obtain best
execution, including lower brokerage commissions, if applicable. In such event,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the [Sub-] Adviser in the
- ----------------
(2) Striked-through language is language which is in the current agreement but
will not be in either New Agreement.
A-2
manner it considers to be the most equitable and consistent with its fiduciary
obligations to a Portfolio;
(d) the [Sub-] Adviser shall maintain a set of books and records with
respect to each Portfolio's securities and other investment transactions
as required by the Investment Advisers Act of 1940 and other applicable
laws and regulations and shall render to the Trustees of the Trust such
periodic and special reports as the Trustees may reasonably request; and
(e) the services of the [Sub-] Adviser to the Trust under this
Agreement are not to be deemed exclusive, and the [Sub-] Adviser shall be
free to render similar services to others.
4. The Investment Manager [Adviser] is authorized to appoint an investment
adviser to carry out the aforementioned investment operations of each
Portfolio, as [Sub-] Adviser, on the above terms pursuant to an investment
advisory contract conforming to the requirements of the 1940 Act and subject to
approval of the Board of Trustees and the holders of beneficial interests in
the Trust as required by the 1940 Act. Any such investment advisory contract
shall provide that the [Sub-]Adviser is not authorized to make any business,
operational or management decisions on behalf of the Trust or any Portfolio
other than with respect to the investment operations and composition of a
Portfolio's holdings of securities and other investments as set forth herein.
The compensation of any such [Sub-]Adviser will be paid by the Investment
Manager [Adviser].
[Subject to the approval of the Board of Trustees and holders of
beneficial interests of the Trust, to the extent required by the 1940 Act, the
Investment Adviser may delegate to any company that it controls, is controlled
by, or is under common control with (or to more than on such company), or to
specified employees of any such companies, certain of its duties enumerated
herein provided that the Investment Adviser shall continue to supervise the
performance of any such company and shall regularly report thereon to the
Trust's Board of Trustees].
[The Investment Adviser may, but shall not be under any duty to, perform
services on behalf of any Portfolio which are not required by this Agreement
upon the request of the Trust's Board of Trustees. Such services will be
performed on behalf of such Portfolio and the Investment Adviser's charge in
rendering such services may be billed monthly to the Trust, subject to
examination by the Trust's independent accountant. Payment or assumption by the
Investment Adviser of any Trust expense that the Investment Adviser is not
required to pay or assume under this Agreement shall not relieve the Investment
Adviser of any of its obligations to such Portfolio nor obligate the Investment
Adviser to pay or assume any similar Portfolio's expenses on any subsequent
occasions].
A-3
5. The Investment Manager [Adviser] shall also provide certain supervisory
and administrative services to the Trust, including:
(a) negotiating, maintaining, evaluating and coordinating contractual
arrangements with third-party service providers, including, but not
limited to, administrators, custodians, transfer agents, fund accounting
agents, independent accountants, attorneys, printers and insurers;
(b) assisting the various third-party service providers retained by or
for the Trust by, among other things, providing any information to such
service providers as the Trustees of the Trust deem appropriate, including
information concerning Portfolio performance and administration;
(c) reviewing agendas for and minutes of meetings of Trustees and
committees of Trustees; and preparing such supporting documents for such
meetings as the Trustees may request the Investment Manager [Adviser] to
prepare;
(d) arranging, if desired by the Trust, for directors, officers or
employees of the Investment Manager [Adviser] to serve as Trustees,
officers or agents of the Trust if duly elected or appointed to such
positions and subject to their individual consent and to any limitations
imposed by law; and
(e) reviewing all registration statements, amendments thereto and
other documents as may be required for compliance by the Trust and each
Portfolio with all applicable laws and regulations and preparing such
portions thereof as the Trustees of the Trust may request the Investment
Manager [Adviser] to prepare.
Notwithstanding the foregoing, the Investment Manager [Adviser] shall not
be deemed to have assumed any duties under this Agreement with respect to, and
shall not be responsible for, functions specifically assumed by any
administrator, fund accounting agent, custodian, private placement agent or
transfer agent of the Trust.
[As to any of the services contemplated by this Section 5 to be provided
by the Investment Adviser, it may instead retain a third party to perform those
services on its behalf and expense, subject to its supervision of such third
party].
6. The Trust has delivered copies of each of the following documents to
the Investment Manager [Adviser] and will promptly notify and deliver to it all
future amendments and supplements, if any:
(a) Declaration of Trust of the Trust (such Declaration of Trust, as
presently in effect and as amended from time to time, is herein called the
"Declaration of Trust");
(b) By-Laws of the Trust (such By-Laws, as presently in effect and as
amended from time to time, are herein called the "By-Laws");
A-4
(c) Certified resolutions of the Trustees of the Trust authorizing the
appointment of the Investment Manager [Adviser] and approving the form of
this Agreement;
(d) The Trust's Notification of Registration on Form N-8A under the
1940 Act, its Registration Statement on Form N-1A under the 1940 Act (No.
811-8375) and the Registration Statement on Form N-1A of Deutsche Funds,
Inc. (No. 333-27709) under the Securities Act of 1933, as amended, and the
1940 Act, as filed with the Securities and Exchange Commission (the
"Commission") on May 23, 1997, including all amendments thereto (together
with the Registration Statement of the Trust, the "Registration
Statement").
7. The [Sub-]Adviser shall keep the books and records required to be
maintained by it pursuant to paragraph 3(e). The Investment Manager [Adviser]
agrees that all records which it maintains for the Trust are the property of
the Trust and it will promptly surrender any of such records to the Trust upon
request. The [Sub-] Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 of the Commission under the 1940 Act any such records
as are required to be maintained by the [Sub-] Adviser with respect to the
Portfolios by Rule 31a-2 of the Commission under the 1940 Act.
8. During the term of this Agreement the Investment Manager [Adviser] will
pay all expenses, including personnel costs and overhead, incurred by it in
connection with the performance of its obligations under this Agreement other
than the cost of securities and investments purchased for each Portfolio
(including taxes and brokerage commissions, if any) and extraordinary expenses
and shall pay the salaries of Trustees and officers of the Trust who are
affiliated persons (as defined in the 1940 Act) of the Investment Manager
[Adviser]. The Investment Manager [Adviser] shall not be required to pay
expenses of any activity which is intended primarily to result in sales of
shares of the Portfolio.
9. For the services provided and the expenses borne pursuant to this
Agreement, each Portfolio will pay to the Investment Manager [Adviser] as full
compensation therefor a fee, computed daily and paid monthly in arrears, at an
annual rate equal to the percentage of the average daily net assets of such
Portfolio specified in Schedule A hereto.
10. The Investment Manager [Adviser] shall not be liable for any error of
judgment or mistake of law or for any loss or expense suffered by the Trust or
any Portfolio in connection with the matters to which this Agreement relates,
except a loss or expense resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
11. This Agreement shall continue in effect until the date two years after
its execution and shall continue in effect from year to year thereafter with
respect to each
A-5
Portfolio if such continuance is specifically approved at least annually in
conformity with the requirements of the 1940 Act; provided, however, that this
Agreement may be terminated by the Trust in its entirety or with respect to any
Portfolio, at any time, without the payment of any penalty, by vote of a
majority of all the Trustees of the Trust or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Trust or such
Portfolio, as the case may be, on 60 days' written notice to the Investment
Manager [Adviser] or by the Investment Manager [Adviser] at any time, without
the payment of any penalty, on 90 [60]days' written notice to the Trust. This
Agreement will automatically and immediately terminate in the event of its
assignment (as defined in the 1940 Act).
12. The Investment Manager [Adviser] shall for all purposes herein be
deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized by the Trustees of the Trust from time to time,
have no authority to act for or represent the Trust or any Portfolio in any way
or otherwise be deemed an agent of the Trust or any Portfolio.
13. This Agreement may be amended by mutual consent, but the consent of
the Trust must be approved (a) by vote of a majority of those 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
amendment, and (b) by vote of a majority of the outstanding voting securities
of the Trust or, in the case of an amendment to this Agreement affecting only
one or several Portfolios, a majority of the outstanding voting securities of
each such Portfolio. In the event that the Trustees of the Trust establish one
or more additional sub-trusts with respect to which they wish to retain the
Investment Manager [Adviser] to act as investment Manager [Adviser], the Trust
and the Investment Manager [Adviser] may amend Schedule A hereto to add each
such sub-trust and specify the fee payable to the Investment Manager [Adviser]
in respect thereof, in which event such sub-trust shall become subject to the
provisions of this Agreement and be deemed a "Portfolio" hereunder to the same
extent as the existing Portfolios, except to the extent that such provisions
may be modified with respect to any additional Portfolio in writing by the
Trust and the Investment Manager [Adviser] at the time of the addition of the
Portfolio.
14. Notices of any kind to be given to the Investment Manager [Adviser] by
the Trust shall be in writing and shall be duly given if mailed or delivered to
the Investment Manager [Adviser] at One South Street, Baltimore Maryland 21202,
Attention: President, or at such other address or to such other individual as
shall be specified by the Investment Manager [Adviser] to the Trust. Notices of
any kind to be given to the Trust by the Investment Manager [Adviser] shall be
in writing and shall be duly given if mailed or delivered to the Trust at
Cardinal Avenue, Grand Cayman, Cayman Islands, BWI or at such other address or
to such other individual as shall be specified by the Trust to the Investment
Manager [Adviser].
15. The Trustees of the Trust have authorized the execution of this
Agreement in their capacity as Trustees and not individually and the Investment
Manager[Adviser]
A-6
agrees that neither the holders of interests in the Trust nor the Trustees nor
any officer, employee, representative or agent of the Trust shall be personally
liable upon, or shall resort be had to their private property for the
satisfaction of, obligations given, executed or delivered on behalf of or by
the Trust or any Portfolio, that the interest holders of the Portfolios and the
trustees, officers, employees, representatives and agents of the Trust shall
not be personally liable hereunder, and that the Investment Manager [Adviser]
shall look solely to the property of the Trust for the satisfaction of any
claim hereunder.
16. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original.
17. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the date first set forth
above.
FLAG INVESTORS PORTFOLIOS TRUST
By:__________________________________
DEUTSCHE FUND MANAGEMENT, INC.
[INVESTMENT COMPANY CAPITAL CORP.]
By:__________________________________
By:__________________________________
A-7
Schedule A
Fee
Portfolio (annualized % of average daily net assets)
- ----------------------------- -------------------------------------------
Top 50 World Portfolio 1.00%
Top 50 Europe Portfolio 1.00
Top 50 Asia Portfolio 1.00
Top 50 US Portfolio 0.85
Provesta Portfolio 0.85
Japanese Equity Portfolio 0.85
U.S. Money Market Portfolio 0.15
A-8
EXHIBIT B
Form of Current and New Sub-Advisory Agreement
Flag Investors Portfolios Trust
INVESTMENT ADVISORY [SUB-ADVISORY](1) AGREEMENT
Agreement made as of ________, 2000 by and among Deutsche Fund Management,
Inc., a Delaware corporation [Investment Company Capital Corp., a Maryland
corporation] (the "Investment Manager" ["Adviser"]"), DWS International
Portfolio Management GmbH, a company organized under the laws of the Federal
Republic of Germany (hereinafter called the "DWS Adviser [Sub-] Adviser"),
[Deutsche Bank Investment Management, Inc. ("DBIM Adviser")(2)] Deutsche Asset
Management, Inc., a Delaware corporation (hereinafter called "DeAM,
Inc.[Adviser] [Sub-]Adviser and Bankers Trust Company, a New York banking
corporation (hereinafter called the "BTCo. [Sub-Adviser"].
W I T N E S S E T H:
WHEREAS, the Investment Manager[Adviser] has entered into an Investment
Management [Advisory] Agreement dated as of ______________. (the "Investment
Management [Advisory] Agreement") with the Flag Investors Portfolios Trust
(formerly Deutsche Portfolios), an open-end management investment company
registered under the Investment Company Act of 1940 (the "1940 Act") and
organized as a trust under the laws of the State of New York (the "Trust") on
behalf of its seven existing non-diversified sub-trusts named herein (each such
sub-trust, together with each sub-trust hereafter established by the Trustees
of the Trust and made subject to this Agreement in accordance with Section 11
hereof, individually a "Portfolio" and, collectively, the "Portfolios"),
pursuant to which the Investment Manager[Adviser] will act as investment
Manager [Adviser] to the sub-trusts named in the Investment Management
[Advisory] Agreement;
WHEREAS, the Investment Management [Advisory] Agreement contemplates that
the Investment Manager[Adviser] may appoint a [Sub-] Adviser to perform certain
services relating to the management of the investment operations of the
sub-trusts of the Trust, and the each of the DWS [Sub-] Adviser, [and the DBIM
Adviser] the DeAM, Inc. [Sub-] Adviser and the BTCo. [Sub-] Adviser is willing
to render such investment advisory services to the respective Portfolios
designated herein; and
- ----------------
1. The language of this agreement applies to the version of the agreement that
will take effect following stockholder approval. The bracketed alternative
applies to the version that will take effect at such time as Investment
Company Capital Corp. becomes Investment Adviser, within two years of such
stockholder approval.
2. Striked-through language is language which is in the current agreement but
will not be in either New Agreement.
B-1
WHEREAS, each of the DWS [Sub-] Advisers [and the DBIM [Adviser]] and the
DeAM, Inc. [Sub-] Adviser is registered as an investment Adviser under the
Investment Advisers Act of 1940 and the BTCo. [Sub-] Adviser is exempt from
such registration.
NOW, THEREFORE, in consideration of the premises and mutual promises
hereinafter set forth, the parties hereto agree as follows:
1. The Investment Manager [Adviser] hereby appoints (a) the DWS [Sub-]
Adviser to act as Adviser to the Portfolios set forth under its name on
Schedule A, (b) the DeAM, Inc. [Sub-] Adviser to act as [Sub-] Adviser to the
Portfolio set forth under its name on Schedule A, and (c) the BTCo. [Sub-]
Adviser to act as [Sub-] Adviser to the Portfolio set forth under its name on
Schedule A, [and (b) the DBIM Adviser to act as Adviser to the Portfolios set
forth under its name on Schedule A] in each case for the period and on the terms
set forth in this Agreement. Each of the DWS [Sub]-Adviser [and the DMGIM
[Adviser],] the DeAM, Inc. [Sub-] Adviser and the BTCo. [Sub-] Adviser accepts
such appointment and agrees to render the services herein set forth, for the
compensation herein provided. In this Agreement, the term "[Sub-] Adviser"
shall hereinafter refer to the DWS [Sub-] Adviser, with respect to the
Portfolios for which it is appointed to act as Adviser under this Section 1, to
the DeAM, Inc. [Sub-] Adviser, with respect to the Portfolio for which it is
appointed to act as [Sub-] Adviser under this Section 1, and to the BTCo.
[Sub-] Adviser, with respect to the Portfolio for which it is appointed to act
as [Sub-] Adviser under this Section 1 [and to the DBIM Adviser with respect to
the Portfolios for which is appointed to act as Adviser under this Section 1.]
2. Subject to the general supervision of the Trustees of the Trust and the
Investment Manager [Adviser], the [Sub-] Adviser shall manage the investment
operations of each Portfolio and the composition of each Portfolio's holdings
of securities and other investments, including cash, the purchase, retention
and disposition thereof and agreements relating thereto, in accordance with
such Portfolio's investment objective and policies as stated in the
Registration Statement (as defined in paragraph 3(d) of this Agreement) and
subject to the following understandings:
[(b) the Adviser shall furnish a continuous investment program for each
Portfolio and determine from time to time what securities, instruments and
other investments including future contracts will be purchased, retained,
sold or lent by such Portfolio, and what portion of the assets will be
invested or held uninvested as cash;]
(a) the [Sub-] Adviser, in the performance of its duties and
obligations under this Agreement, shall act in conformity with the
Declaration of Trust and By-Laws of the Trust and the Registration
Statement and with the instructions and directions of the Trustees of the
trust and will conform to and comply with the requirements of the 1940 Act
and all other applicable federal and state laws and regulations;
B-2
(b) the [Sub-] Adviser shall use the same skill and care in the
management of each Portfolio's investments as it uses in the
administration of other accounts for which it has investment
responsibility as agent;
(c) the [Sub-] Adviser shall determine the securities or other
investments to be purchased, sold or lent by the Portfolio and as agent
for each Portfolio will effect portfolio transactions pursuant to its
determinations either directly with the issuer or with any broker and/or
dealer in such securities, including a broker affiliated with the [Sub-]
Adviser; in placing orders with brokers and/or dealers the [Sub-] Adviser
intends to seek best price and execution for purchases and sales; the
[Sub-] Adviser shall also determine whether or not a Portfolio shall enter
into repurchase or reverse repurchase agreements;
On occasions when the [Sub-] Adviser deems the purchase or sale of a
security or other investment to be in the best interest of a Portfolio as
well as other customers of the [Sub-] Adviser, the [Sub-] Adviser may, to
the extent permitted by applicable laws and regulations, but shall not be
obligated to, aggregate the securities to be so sold or purchased on
behalf of such Portfolio and such other customer of the [Sub-] Adviser in
order to obtain best execution, including lower brokerage commissions, if
applicable. In such event, allocation of the securities so purchased or
sold, as well as the expenses incurred in the transaction, will be made by
the [Sub-] Adviser in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to a Portfolio;
(d) the [Sub-] Adviser shall maintain a set of books and records with
respect to each Portfolio's securities transactions as required by the
Investment Advisers Act of 1940 and other applicable laws and regulations
and shall render to the Trustees of the Trust such periodic and special
reports as the Trustees may reasonably request; and
(e) the services of the [Sub-] Adviser to the Trust under this
Agreement are not to be deemed exclusive, and the [Sub-] Adviser shall be
free to render similar services to others.
Notwithstanding the foregoing, the [Sub-] Adviser is not authorized,
and shall not be deemed to have assumed any duties under this Agreement,
to make any business, operational or management decisions on behalf of the
Trust or any Portfolio other than with respect to the investment
operations and composition of a Portfolio's holdings of securities and
other investments as set forth herein.
3. The Investment Manager [Adviser] has delivered copies of each of the
following documents to the [Sub-] Adviser and will promptly notify and deliver
to it all future amendments and supplements, if any:
(a) Declaration of Trust of the Trust (such Declaration of Trust, as
presently in effect and as amended from time to time, is herein called the
"Declaration of Trust");
B-3
(b) By-laws of the Trust (such By-laws, as presently in effect and as
amended from time to time, are herein called the "By-laws");
(c) Certified resolutions of the Trustees of the Trust authorizing the
appointment of the [Sub-] Adviser and approving the form of this
Agreement;
(d) The Trust's Notification of Registration on Form N-8A under the
1940 Act, its Registration Statement on Form N-1A under the 1940 Act (No.
811-8375) and the Registration Statement on Form N-1A of Deutsche Funds,
Inc. (now Flag Investors Funds, Inc.) (No. 333-27709) under the Securities
Act of 1933, as amended, and the 1940 Act, as filed with the Securities
and Exchange Commission (the "Commission") on May 23, 1997, including all
amendments thereto (together with the Registration Statement of the Trust,
the "Registration Statement").
4. The [Sub-]Adviser shall keep the books and records required to be
maintained by it pursuant to paragraph 2(e) of this Agreement. The
[Sub-]Adviser agrees that all records that it maintains for the Trust are the
property of the Trust and it will promptly surrender any of such records to the
Trust or to the Investment Manager[Adviser] upon request. The [Sub-]Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 of the
Commission under the 1940 Act any such records as are required to be maintained
by the [Sub-]Adviser with respect to the Portfolios by Rule 31a-2 of the
Commission under the 1940 Act.
5. During the term of this Agreement, the [Sub-] Adviser will pay all
expenses, including personnel costs and overhead, incurred by it in connection
with its activities under this Agreement, other than the cost of securities and
investments purchased or sold for the Portfolios (including taxes and brokerage
commissions, if any) and extraordinary expenses.
6. The Investment Manager [Adviser] shall continue to have responsibility
for all services to be provided to the Portfolios pursuant to the Investment
Management [Advisory] Agreement and shall oversee and review the
[Sub-]Adviser's performance of its duties under this Agreement.
7. For the services provided and the expenses borne pursuant to this
Agreement, the Investment Manager[Adviser] will pay to the [Sub-] Adviser, as
full compensation therefor a fee, calculated daily and payable monthly in
arrears, at an annual rate equal to the percentage of the average daily net
assets of each Portfolio specified in Schedule A hereto.
[Subject to the provisions of this Agreement, the duties of each
Sub-Adviser, the portion of Portfolio assets that such Sub-Adviser shall manage
and the fees to be paid such Sub-Adviser 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 such Sub-Adviser and the members of the
Trust's Board of Trustees who are not "interested persons" (as defined in the
1940 Act) of any party to this Agreement].
B-4
8. The [Sub-] Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Investment Manager, [Adviser],
[Sub-] Adviser, the Trust or any Portfolio in connection with the matters to
which this Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
9. This Agreement shall continue in effect until the date two years after
the date of its execution and shall continue in effect from year to year
thereafter with respect to each Portfolio if such continuance is specifically
approved at least annually in conformity with the requirements of the 1940 Act;
provided, however, that this Agreement may be terminated with respect to the
Trust in its entirety or with respect to any Portfolio, at any time, without
the payment of any penalty, (a) by the Investment Manager[Adviser] or (b) by
the Trust, by vote of a majority of all the Trustees of the Trust or by vote of
a majority of the outstanding voting securities (as defined in the 1940 Act) of
the Trust or such Portfolio, as the case may be, in each case on 60 days'
written notice to the [Sub-] Adviser or (c) by the [Sub-] Adviser, with respect
to its respective Portfolios, at any time, without the payment of any penalty,
on 90 [60] days' written notice to the Investment Manager [Adviser] and to the
Trust. This Agreement will automatically and immediately terminate in the event
of its "assignment" (as defined in the 1940 Act) or upon termination of the
Investment Management [Advisory] Agreement.
10. The [Sub-] Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided herein or
authorized by the Trustees of the Trust and the Investment Manager [Adviser]
from time to time, have no authority to act for or represent the Trust or any
Portfolio in any way or otherwise be deemed an agent of the Trust or any
Portfolio.
11. This Agreement may be amended by the mutual consent of the parties.
Any such amendment shall also require the consent of the Trust, which must be
approved (a) by vote of a majority of those 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 amendment, and (b)
by vote of a majority of the outstanding voting securities of the Trust or, in
the case of any such amendment affecting only one or several Portfolios, a
majority of the outstanding voting securities of each such Portfolio. In the
event that the Trustees of the Trust establish one or more additional
sub-trusts with respect to which they retain the Investment Manager [Adviser]
to act as investment adviser, the Investment Manager [Adviser] and the DWS
[Sub-] Adviser, the DeAM, Inc. [Sub-] Adviser, or the BTCo. [Sub-] Adviser, [or
the DBIM Adviser,] as the case may be, may amend Schedule A hereto to add each
such sub-trust and specify the fee payable to such [Sub-]Adviser in respect
thereof, in which event such sub-trust shall become subject to the provisions
of this Agreement and be deemed a "Portfolio" hereunder to the same extent as
the existing Portfolios,
B-5
except to the extent that such provisions may be modified with respect to any
additional Portfolio in writing by the Investment Manager [Adviser] and such
[Sub-] Adviser at the time of the addition of the Portfolio.
12. Notices of any kind to be given hereunder shall be in writing and
shall be duly given if mailed or delivered as follows: (a) to the DWS [Sub-]
Adviser at Grueneburgweg 113-115, Frankfurt am Main 60323, Germany, Attention:
President, with a copy to the Investment Manager [Adviser]; (b) to the DeAM,
Inc. [Sub-] Adviser One South Street Baltimore, Maryland, 21201 Attention:
President and Managing Director, with a copy to the Investment Manager
[Adviser]; [(b) to the DBIM Adviser 31 West 52nd Street, New York, New York
10019] (c) to the BTCo. [Sub-] Adviser at One Bankers Trust Plaza, 31st Floor,
New York, New York 10006, Attention: Deputy General Counsel B Asset Management,
with a copy to the Investment Manager [Adviser]; (d) to the Investment Manager
[Adviser] One South Street, Baltimore, Maryland 21202, Attention: President;
(e) to the Trust at Cardinal Avenue, George Town, Grand Cayman, Cayman Islands,
BWI; or (f) at such other address or to such other individual as any of the
foregoing shall designate by notice to the others.
13. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original.
14. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
B-6
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the date first set forth
above.
DEUTSCHE FUND MANAGEMENT, Inc.
[INVESTMENT COMPANY CAPITAL CORP.]
By: ________________________________
By: ________________________________
DWS INTERNATIONAL PORTFOLIO MANAGEMENT GmbH
By: _________________________________
By: _________________________________
[DEUTSCHE BANK INVESTMENT MANAGEMENT, Inc.] DEUTSCHE ASSET MANAGEMENT, INC.
By: _________________________________
By: _________________________________
BANKERS TRUST COMPANY
By: _________________________________
By: _________________________________
Acknowledged and Confirmed.
FLAG INVESTORS PORTFOLIOS TRUST
By:________________________
B-7
Schedule A
Fee
Portfolio (annualized % of average daily net assets)
- --------------------------- -------------------------------------------
DWS [SUB-] ADVISER
Top 50 World Portfolio 0.75%
Top 50 Europe Portfolio 0.75
Top 50 Asia Portfolio 0.75
Provesta Portfolio 0.60
Japanese Equity Portfolio 0.60
DeAM, Inc. [SUB-] ADVISER
Top 50 US Portfolio 0.60%
BTCo. [SUB-] ADVISER
US Money Market Portfolio 0.1125%
[DBIM ADVISOR
Top 50 US Portfolio 0.60%
US Money Marker Portfolio 0.1125%]
B-8
ANNEX I
As of February 4, 2000, the shareholders listed in the following chart
owned of record, beneficially, or both, 5% or more of outstanding shares of the
corresponding series. Shareholders owning 25% or more of outstanding shares may
be in control and be able to affect the outcome of certain matters presented
for a vote of shareholders.
Percentage
Series Shareholder Name and Address Share Class Owned
- --------------- -------------------------------------- ------------- -----------
Top 50 World Fidelity Investments Institutional Class A 19.73%
Operations Co. Inc.
Covington, KY
Donaldson Lufkin Jenrette Securities Class A 6.91%
Corporation Inc.
Jersey City, NJ
Merrill Lynch Pierce Fenner & Smith Class B 20.96%
Jacksonville, FL
Parker Hunter Incorporated Class B 16.86%
New Castle, PA
Top 50 Europe Fidelity Investments Institutional Class A 36.79%
Operations Co. Inc.
Covington, KY
Batrus & Co. Class A 18.36%
New York, NY
Merrill Lynch Pierce Fenner & Smith Class A 17.58%
Jacksonville, FL Class B 53.02%
Class C 79.46%
Domingo Pagan Class A 6.03%
San Juan, PR
Advest Inc. Class C 5.49%
Hartford, CT
Top 50 Asia Deutsche Bank Securities, Inc. Class A 64.78%
New York, NY
Merrill Lynch Pierce Fenner & Smith Class A 13.16%
Jacksonville, FL Class B 77.88%
Fidelity Investments Institutional Class A 10.56%
Operations Co. Inc.
Covington, KY
I-1
Percentage
Fund Shareholder Name and Address Share Class Owned
- ----------------- -------------------------------------- ------------- -----------
Top 50 US Fidelity Investments Institutional Class A 28.01%
Operations Co. Inc.
Covington, KY
Batrus & Co. Class A 14.35%
New York, NY
Donaldson Lufkin Jenrette Securities Class A 12.25%
Corporation Inc.
Jersey City, NJ
Deutsche Bank Securities, Inc. Class A 10.12%
New York, NY
Parker Hunter Incorporated Class B 48.47%
Pittsburgh, PA
Advest Inc. Class C 57.86%
Hartford, CT
Merrill Lynch Pierce Fenner & Smith Class C 39.85%
Jacksonville FL
European Deutsche Bank Securities, Inc. Class A 63.34%
Mid-Cap Fund New York, NY
Merrill Lynch Pierce Fenner & Smith Class A 14.15%
Jacksonville, FL Class B 66.31%
Class C 85.63%
Donaldson Lufkin Jenrette Securities Class C 5.65%
Corporation Inc.
Jersey City, NJ
Japanese Equity Merrill Lynch Pierce Fenner & Smith Class A 28.28%
Fund Jacksonville, FL Class B 73.48%
Wexford Clearing Services Corp. Class A 25.61%
Chicago, IL
Wendel & Co. Class A 6.59%
New York, NY
DB Alex. Brown LLC Class B 12.69%
Baltimore, MD
I-2
Percentage
Fund Shareholder Name and Address Share Class Owned
- ------------- ------------------------------------ ------------- -----------
US Money Fidelity Investments Institutional Class A 85.22%
Market Fund Operations Co. Inc.
Covington, KY
Deutsche Bank AG Class A 5.14%
New York, NY
Sterne Agee & Leach, Inc. Class B 50.63%
Birmingham, AL
John Moy Class B 34.93%
Arlington Heights, IL
Investors Bank & Trust Co. Class B 10.63%
Arlington Heights, IL
I-3
33832F796
33832F788
33832F887
33832F879
33832F861
33832F820
33832F812
33832F606
33832F705
33832F804
33832F101
33832F200
33832F309
33832F408
33832F507
33832F846
33832F838
BUCKSLIP TEXT
Three Ways To Vote Your Proxy
Proxy Voting Quick & Easy
The enclosed proxy statement provides details on important issues affecting your
Series. The Board of your Series recommends that you vote FOR all proposals.
We are offering three ways to vote: by automated touch-tone phone, the World
Wide Web or mail. Voting by telephone or Web may be quicker and more cost
effective than the traditional method of mailing back your proxy card; however,
that option is still available to you.
Your proxy vote is important! Please vote today.
How to Vote:
By Automated Touch-Tone Phone*
Using our automated touch-tone phone system, dial the number provided on your
proxy card and follow the directions given.
By the Web*
Visit www.proxyvote.com and enter the 12-digit control number located on your
proxy card.
By Mail
Simply return your executed proxy in the enclosed postage-paid envelope.
* Do not mail the Proxy Card if voting by Web or telephone.
FORM OF PROXY CARD for
European Mid-Cap Fund - Class A, Class B, Class C
Japanese Equity Fund - Class A, Class B,
Top 50 World - Class A, Class B
Top 50 Asia - Class A, Class B
Top 50 Europe - Class A, Class B, Class C
FLAG INVESTORS
Investment Company Capital Corporation
MS 1-18-8
One South Street
Baltimore, MD 21202-3220
PROXY SERVICES
51 Mercedes Way
Edgewood, NY 11717
FLAG INVESTORS FUNDS, INC.
[Fund and Class Name]
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
1 p.m. Eastern Time, March 28, 2000
THIS PROXY IS SOLICITED BY THE BOARDS OF DIRECTORS AND TRUSTEES
This proxy is for your use in voting on various matters relating to the Fund and
the Portfolio. The undersigned shareholder(s) of the Fund, revoking previous
proxies, hereby appoint(s) Edward J. Veilleux, Amy M. Olmert and Daniel O.
Hirsch and each of them (with full power of substitution) the proxies of the
undersigned to attend the Annual Meeting of Shareholders of the Fund to be held
on March 28, 2000 (the "Meeting") and any adjournments thereof, to vote all of
the shares of the Fund that the signer would be entitled to vote if personally
present at the Meeting and on any matter incident to the conduct of the Meeting,
all as set forth in the Notice of Annual Meeting of Shareholders and Proxy
Statement of the Boards of Directors and Trustees. Said proxies are directed to
vote or refrain from voting pursuant to the Proxy Statement as indicated upon
the matters set forth below.
This proxy will be voted as indicated below. If no indication is made, this
proxy will be voted FOR the proposals set forth below. The undersigned
acknowledges receipt with this proxy of a copy of the Notice of Annual Meeting
of Shareholders and the Proxy Statement of the Board of Directors and Trustees.
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.
NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.
[Fund and Class Name]
UNLESS VOTING BY TELEPHONE OR INTERNET, PLEASE COMPLETE, SIGN, DATE AND RETURN
THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X]
KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
DETACH AND RETURN THIS PORTION ONLY
Vote on Directors of the Fund and Trustees of the Portfolio
1. Proposal to elect a Board of Directors of the Fund and a Board of Trustees
of the Portfolio.
1) Richard R. Burt 5) Eugene J. McDonald
2) Richard T. Hale 6) Rebecca W. Rimel
3) Joseph R. Hardiman 7) Truman T. Semans
4) Louis E. Levy 8) Robert H. Wadsworth
[ ] FOR ALL
[ ] WITHHOLD ALL
[ ] FOR ALL EXCEPT:
To withhold authority to vote for a specific nominee(s), mark
"FOR ALL EXCEPT" and write the nominee's number on the line below.
Vote on Proposals
2. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants for the Fund and the Portfolio.
[ ] For [ ] Against [ ] Abstain
3A. To approve a new Investment Advisory Agreement between the Portfolio and
Deutsche Fund Management, Inc.
[ ] For [ ] Against [ ] Abstain
3B. To approve a new Investment Advisory Agreement between the Portfolio and
Investment Company Capital Corp.
[ ] For [ ] Against [ ] Abstain
4A. (i) To approve a new Investment Sub-Advisory Agreement between DWS
International Portfolio Management GmbH and Deutsche Fund Management, Inc.
[ ] For [ ] Against [ ] Abstain
4A. (ii) To approve a new Investment Sub-Advisory Agreement between DWS
International Portfolio Management GmbH and Investment Company Capital
Corp.
[ ] For [ ] Against [ ] Abstain
The appointed proxies will vote on any other business as may properly come
before the Meeting or any adjournments thereof.
Please print and sign your name in the space provided to authorize the voting of
your shares as indicated and return promptly. When signing on behalf of a
corporation, partnership, estate, trust or in any other representative capacity,
please sign your name and title. For joint accounts, each joint owner must sign
exactly as your name(s) appears on this card.
Signature
[PLEASE SIGN WITHIN BOX] Date
Signature (Joint Owners) Date
FORM OF PROXY CARD for Top 50 US - Class A, Class B, Class C
FLAG INVESTORS
Investment Company Capital Corporation
MS 1-18-8
One South Street
Baltimore, MD 21202-3220
PROXY SERVICES
51 Mercedes Way
Edgewood, NY 11717
FLAG INVESTORS FUNDS, INC.
[Fund and Class Name]
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
1 p.m. Eastern Time, March 28, 2000
THIS PROXY IS SOLICITED BY THE BOARDS OF DIRECTORS AND TRUSTEES
This proxy is for your use in voting on various matters relating to the Fund and
the Portfolio. The undersigned shareholder(s) of the Fund, revoking previous
proxies, hereby appoint(s) Edward J. Veilleux, Amy M. Olmert and Daniel O.
Hirsch and each of them (with full power of substitution) the proxies of the
undersigned to attend the Annual Meeting of Shareholders of the Fund to be held
on March 28, 2000 (the "Meeting") and any adjournments thereof, to vote all of
the shares of the Fund that the signer would be entitled to vote if personally
present at the Meeting and on any matter incident to the conduct of the Meeting,
all as set forth in the Notice of Annual Meeting of Shareholders and Proxy
Statement of the Boards of Directors and Trustees. Said proxies are directed to
vote or refrain from voting pursuant to the Proxy Statement as indicated upon
the matters set forth below.
This proxy will be voted as indicated below. If no indication is made, this
proxy will be voted FOR the proposals set forth below. The undersigned
acknowledges receipt with this proxy of a copy of the Notice of Annual Meeting
of Shareholders and the Proxy Statement of the Board of Directors and Trustees.
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.
NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.
[Fund and Class Name]
UNLESS VOTING BY TELEPHONE OR INTERNET, PLEASE COMPLETE, SIGN, DATE AND RETURN
THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X]
KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
DETACH AND RETURN THIS PORTION ONLY
Vote on Directors of the Fund and Trustees of the Portfolio
1. Proposal to elect a Board of Directors of the Fund and a Board of Trustees
of the Portfolio.
1) Richard R. Burt 5) Eugene J. McDonald
2) Richard T. Hale 6) Rebecca W. Rimel
3) Joseph R. Hardiman 7) Truman T. Semans
4) Louis E. Levy 8) Robert H. Wadsworth
[ ] FOR ALL
[ ] WITHHOLD ALL
[ ] FOR ALL EXCEPT:
To withhold authority to vote for a specific nominee(s), mark "FOR
ALL EXCEPT" and write the nominee's number on the line below.
Vote on Proposals
3. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants for the Fund and the Portfolio.
[ ] For [ ] Against [ ] Abstain
3A. To approve a new Investment Advisory Agreement between the Portfolio and
Deutsche Fund Management, Inc.
[ ] For [ ] Against [ ] Abstain
3B. To approve a new Investment Advisory Agreement between the Portfolio and
Investment Company Capital Corp.
[ ] For [ ] Against [ ] Abstain
4B. (i) To approve a new Investment Sub-Advisory Agreement between Deutsche
Asset Management, Inc. and Deutsche Fund Management, Inc.
[ ] For [ ] Against [ ] Abstain
4B. (ii) To approve a new Investment Sub-Advisory Agreement between Deutsche
Asset Management, Inc. and Investment Company Capital Corp.
[ ] For [ ] Against [ ] Abstain
The appointed proxies will vote on any other business as may properly come
before the Meeting or any adjournments thereof.
Please print and sign your name in the space provided to authorize the voting of
your shares as indicated and return promptly. When signing on behalf of a
corporation, partnership, estate, trust or in any other representative capacity,
please sign your name and title. For joint accounts, each joint owner must sign
exactly as your name(s) appears on this card.
Signature
[PLEASE SIGN WITHIN BOX] Date
Signature (Joint Owners) Date
FORM OF PROXY CARD for US Money Market Fund- Class A, Class B
FLAG INVESTORS
Investment Company Capital Corporation
MS 1-18-8
One South Street
Baltimore, MD 21202-3220
PROXY SERVICES
51 Mercedes Way
Edgewood, NY 11717
FLAG INVESTORS FUNDS, INC.
[Fund and Class Name]
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
1 p.m. Eastern Time, March 28, 2000
THIS PROXY IS SOLICITED BY THE BOARDS OF DIRECTORS AND TRUSTEES
This proxy is for your use in voting on various matters relating to the Fund and
the Portfolio. The undersigned shareholder(s) of the Fund, revoking previous
proxies, hereby appoint(s) Edward J. Veilleux, Amy M. Olmert and Daniel O.
Hirsch and each of them (with full power of substitution) the proxies of the
undersigned to attend the Annual Meeting of Shareholders of the Fund to be held
on March 28, 2000 (the "Meeting") and any adjournments thereof, to vote all of
the shares of the Fund that the signer would be entitled to vote if personally
present at the Meeting and on any matter incident to the conduct of the Meeting,
all as set forth in the Notice of Annual Meeting of Shareholders and Proxy
Statement of the Boards of Directors and Trustees. Said proxies are directed to
vote or refrain from voting pursuant to the Proxy Statement as indicated upon
the matters set forth below.
This proxy will be voted as indicated below. If no indication is made, this
proxy will be voted FOR the proposals set forth below. The undersigned
acknowledges receipt with this proxy of a copy of the Notice of Annual Meeting
of Shareholders and the Proxy Statement of the Board of Directors and Trustees.
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.
NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.
[Fund and Class Name]
UNLESS VOTING BY TELEPHONE OR INTERNET, PLEASE COMPLETE, SIGN, DATE AND RETURN
THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X]
KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED.
DETACH AND RETURN THIS PORTION ONLY
Vote on Directors of the Fund and Trustees of the Portfolio
1. Proposal to elect a Board of Directors of the Fund and a Board of Trustees
of the Portfolio.
1) Richard R. Burt 5) Eugene J. McDonald
2) Richard T. Hale 6) Rebecca W. Rimel
3) Joseph R. Hardiman 7) Truman T. Semans
4) Louis E. Levy 8) Robert H. Wadsworth
[ ] FOR ALL
[ ] WITHHOLD ALL
[ ] FOR ALL EXCEPT:
To withhold authority to vote for a specific nominee(s), mark "FOR
ALL EXCEPT" and write the nominee's number on the line below.
Vote on Proposals
4. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants for the Fund and the Portfolio.
[ ] For [ ] Against [ ] Abstain
3A. To approve a new Investment Advisory Agreement between the Portfolio and
Deutsche Fund Management, Inc.
[ ] For [ ] Against [ ] Abstain
3B. To approve a new Investment Advisory Agreement between the Portfolio and
Investment Company Capital Corp.
[ ] For [ ] Against [ ] Abstain
4C. (i) To approve a new Investment Sub-Advisory Agreement between Bankers
Trust Company and Deutsche Fund Management, Inc.
[ ] For [ ] Against [ ] Abstain
4B. (ii) To approve a new Investment Sub-Advisory Agreement between Bankers
Trust Company and Investment Company Capital Corp.
[ ] For [ ] Against [ ] Abstain
The appointed proxies will vote on any other business as may properly come
before the Meeting or any adjournments thereof.
Please print and sign your name in the space provided to authorize the voting of
your shares as indicated and return promptly. When signing on behalf of a
corporation, partnership, estate, trust or in any other representative capacity,
please sign your name and title. For joint accounts, each joint owner must sign
exactly as your name(s) appears on this card.
Signature
[PLEASE SIGN WITHIN BOX] Date
Signature (Joint Owners) Date
FLAG INVESTORS FUNDS, INC.
Flag Investors Top 50 World
Flag Investors Top 50 Europe
Flag Investors Top 50 Asia
Flag Investors Top 50 US
Flag Investors European Mid-Cap Fund
Flag Investors Japanese Equity Fund
Flag Investors US Money Market Fund
Proxy Update
Important News About the Flag Investors Funds (formerly Deutsche Funds) Proxy
Your Clients Will Receive
In early March, your clients will receive a proxy statement seeking shareholder
votes to approve new investment advisory and sub-advisory agreements for the
Funds. The new agreements will not change the investment style of the Funds,
their portfolio managers, their advisory fees, the number of fund shares your
clients own or the value of those shares.
Nevertheless, the new agreements are needed to permit Deutsche Bank to simplify
the organizational structure of its U.S. mutual fund operations and to enhance
administrative efficiencies.
If the new agreements are approved, the new Fund advisor and sub-advisors will
be as follows:
Advisor: Investment Company Capital Corp. (ICCC)
Sub-Advisor - Top 50 US: Deutsche Asset Management Inc. (DeAM Inc.)
Sub-Advisor - US Money Market: Bankers Trust Company (Bankers Trust)
Sub-Advisor - All others: DWS International Portfolio Management GmbH
Because ICCC may not immediately take over as Fund advisor, we are also asking
shareholders to approve new agreements with the Fund's current Advisor as well.
Finally, we are taking this opportunity to ask shareholders to vote for
Directors/Trustees and to ratify PricewaterhouseCoopers as independent
accountants for the Funds.
Proxies and Proxy Cards
We plan to begin mailing proxies and proxy cards in the last week of February to
each Fund's shareholders of record as of February 4, 2000. Your clients will
receive a separate proxy card for each Fund and share class they own. The
shareholder meetings are scheduled to take place at 1 p.m. Eastern Time at One
South Street, Baltimore, Maryland on March 28, 2000.
FOR BROKER USE ONLY
This material is prepared for broker use only and may not be quoted, reproduced
or shown to members of the public, nor used in written form as sales literature
for public use.
The Solicitation Process
We have retained Shareholder Communications Corporation (SCC) to assist with our
solicitation efforts.
Starting in mid-March, SCC will begin to call registered fund shareholders who
have not voted to remind them to vote. SCC will start with shareholders owning
the largest number of shares. Your clients will be given the opportunity to vote
over the phone after satisfactorily answering a series of questions for
identification purposes.
Rest assured, SCC only obtains shareholder records from your firm. If your firm
has shareholders who have asked you not to release their account registration
information, SCC will not call those individuals. We would, however, appreciate
your assistance in obtaining those votes.
Voting Methods
Phone
Shareholders who receive their proxy from ADP can vote by phone by calling the
number provided on their card and providing their control number as instructed.
Shareholders who have instructed their investment representative not to release
their names may not vote by phone.
Internet
All shareholders who receive their proxy from ADP also can vote via the Internet
by accessing the website www.proxyvote.com, and entering the 12-digit control
number located on their proxy card, and following instructions on the website.
Shareholders who have instructed their investment representative not to release
their names may not vote by Internet.
Mail
All shareholders can vote by mail by completing the proxy card and returning it
in the postage-paid envelope.
For More Information
If you have additional questions about the proxy process, please call SCC at
800-732-6168.
To order copies of the proxies, please call us at 800-767-FLAG or SCC.
Proposal Summary
A chart summarizing the proposals that we are asking shareholders to vote on is
attached.
FOR BROKER USE ONLY
This material is prepared for broker use only and may not be quoted, reproduced
or shown to members of the public, nor used in written form as sales literature
for public use.
Summary of Proxy Proposals
Funds/Portfolio Issue Reason
All Funds/Portfolios Elect Directors/Trustees. Shareholders have the opportunity
to elect directors who oversee matters
relating to their funds and their
respective portfolios.
All Funds/Portfolios Ratify Accountant. The law requires that shareholders ratify
the selection of independent accountants.
All Funds/Portfolios a) Approve new investment advisory a) As a result of a possible change in control,
agreement with current advisor, the present agreement could be deemed to
DFM. No change in fees is terminate automatically. Shareholders are
proposed. being asked to approve a new agreement on
terms substantially identical to the current
b) Approve new investment advisory agreement.
agreement with new advisor, ICCC.
No change in fees is proposed. b) In an effort to consolidate Deutsche Bank's mutual fund
operations, ICCC will become the investment advisor of
the Funds. Agreement to take effect within two years
after shareholder approval.
All Funds/Portfolios a) Approve new sub-advisory agreement Same as above.
except Top 50 US between DFM and current sub-advisor,
and US Money DWS. No change in fees is proposed.
Market Fund
b) Approve new sub-advisory agreement
between ICCC and DWS Inc. No
change in fees is proposed.
Top 50 US (US Dollar) a) Approve new sub-advisory a) In an effort to consolidate and provide consistency
only agreement between DFM and DeAM Inc. among Deutsche Bank's U.S. mutual fund
No change in fees is proposed. operations, DeAM Inc. will become the fund's
investment sub-advisor. We are asking
b) Approve new sub-advisory shareholders to approve a new sub-advisory
. agreement between ICCC and DeAM Inc. agreement between DeAM Inc. and DFM because
No change in fees is proposed. ICCC may not become the fund's advisor immediately.
b) In an effort to consolidate and provide consistency
among Deutsche Bank's U.S. mutual fund
operations, DeAM Inc. will become the fund's
investment sub-advisor. Agreement to take effect
within two years after shareholder approval.
US Money Market a) Approve new sub-advisory agreement a) In an effort to consolidate and provide consistency
Fund only between DFM and new sub-advisor, among Deutsche Bank's U.S. mutual fund operations,
Bankers Trust. No change in fees Bankers Trust will become the fund's investment
is proposed. sub-advisor. We are asking shareholders to approve
a new sub-advisory agreement between Bankers Trust
b) Approve new sub-advisory agreement and DFM because ICCC may not become the fund's
between ICCC and Bankers Trust. No advisor immediately.
change in fees is proposed.
b) In an effort to consolidate and provide consistency
among Deutsche Bank's U.S. mutual fund operations,
Bankers Trust will become the fund's investment
sub-advisor. Agreement to take effect within two
years after shareholder approval.
FOR BROKER USE ONLY
This material is prepared for broker use only and may not be quoted, reproduced
or shown to members of the public, nor used in written form as sales literature
for public use.