SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO.)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
BT INVESTMENT FUNDS
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) filing Proxy Statement, if other than Registrant)
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:
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computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
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[ ] 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:
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(4) Date Filed:
[LOGO] Deutsche Asset Management
A Member of the Deutsche Bank Group
June 2002
Dear Shareholder:
Your fund and certain other funds within the Deutsche Asset Management Fund
Complex ('DeAM Fund Complex') are holding shareholder meetings at which
shareholders will be asked to vote on certain proposals.
You will be asked to elect members of the Board governing your fund. This
proposal is part of an overall plan to coordinate and enhance the efficiency of
governance by the boards of the DeAM Fund Complex. Your Board also believes
that your fund will benefit from the greater diversity and the expertise of the
nominees that would be included on the expanded boards.
As you know, your investment advisor's parent, Deutsche Bank AG, has through
acquisitions such as Zurich Scudder Investments, and through internal
reorganizations, sought to enhance its global research and investment
management capabilities. Consistent with these changes, you will also be asked
to approve a new advisory agreement with your fund's investment advisor. Under
the new advisory agreement, your advisor would be authorized to appoint certain
affiliates as sub-advisors. This would allow your fund's advisor to take
advantage of the strengths of other entities within the Deutsche Asset
Management organization by permitting the advisor to delegate certain portfolio
management services to these entities. Shareholders of the International Equity
Fund will also be asked to approve a sub-advisory agreement between their
fund's advisor and Deutsche Asset Management Investment Services Limited.
The enclosed proxy statement details these proposals. For your convenience,
we've provided a question and answer section that offers a brief overview of
the issues for which your vote is requested. The proxy statement itself
provides greater detail about the proposals, why they are being made and how
they apply to your fund. Please read these materials carefully.
Please be assured that:
. These proposals will have no effect on the number of shares you own or the
value of those shares.
. The advisory fees applicable to your fund will not change.
. The members of your fund's Board carefully reviewed each proposal prior to
recommending that you vote in favor of each proposal.
To vote, simply complete the enclosed proxy card(s)--be sure to sign and
date it--and return it to us in the enclosed postage-paid envelope. Or, you can
save time by voting through the internet or by telephone as described on your
proxy card.
Your vote is very important to us. If we do not hear from you, our proxy
solicitor may contact you. Thank you for your response and for your continued
investment.
Respectfully,
/s/ Daniel O. Hirsch
Daniel O. Hirsch
Secretary
The attached proxy statement contains more detailed information about each
of the proposals relating to your fund. Please read it carefully.
Deutsche Asset Management is the marketing name in the US for the asset
management activities of Deutsche Bank AG, Deutsche Bank Trust Company
Americas, Deutsche Bank Securities Inc., Deutsche Asset Management Inc.,
Deutsche Asset Management Investment Services Ltd., Deutsche Investment
Management Americas Inc. and Scudder Trust Company.
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QUESTIONS AND ANSWERS
Q. What is the purpose of this proxy solicitation?
A. The purpose of this proxy solicitation is to ask you to vote on the
following issues:
. to elect eleven members of the Board of Trustees of BT Investment
Funds (the 'Trust'), of which your fund is a series, and the Board of
Trustees of each master fund, or portfolio, into which your fund
invests its investable assets (the 'Portfolios'), whose terms will be
effective beginning July 30, 2002 or on such later date as
shareholder approval is obtained;
. to approve a new investment advisory agreement between each fund's
corresponding Portfolio and Deutsche Asset Management, Inc. ('DeAM,
Inc.'), the investment advisor for the Portfolios; and
. for International Equity Fund only, to approve a sub-advisory
agreement between DeAM, Inc. and Deutsche Asset Management Investment
Services Limited ('DeAMIS').
Your fund operates as a feeder fund in a master-feeder fund arrangement with
one of the Portfolios. Under the Investment Company Act of 1940, as amended,
your fund's voting rights with respect to the Portfolio interests that it holds
must be passed through to the fund's own shareholders.
THE BOARD MEMBERS OF THE TRUST AND OF EACH PORTFOLIO RECOMMEND THAT YOU VOTE
FOR THESE PROPOSALS.
I. BOARD PROPOSAL TO ELECT NEW BOARD MEMBERS
Q. Why am I being asked to vote for Board members?
A. Deutsche Asset Management recommended to the Boards, and the Boards agreed,
that the Trust and the Portfolios, along with certain other funds
that are managed, advised, subadvised or administered by Deutsche
Asset Management and certain other funds managed, advised or
administered by Investment Company Capital Corporation (the 'DeAM
Funds') should be governed by boards comprised of the same group
of individuals. To attain the goal of having identical boards for
all DeAM Funds, we need shareholder approval to add certain
persons to the Trust's Board and your Portfolios' Boards. The
Trust's Board and the Portfolios' Boards agreed to submit this
proposal to shareholders.
Q. Why did the Trust's Board and the Portfolios' Boards approve management's
recommendation?
A. Deutsche Asset Management recommended this proposal as part of an overall
plan to coordinate and enhance the efficiency of the governance of
the DeAM Funds. The Boards considered, among other factors, that a
unified group board structure benefits the Trust, the Portfolios
and your fund and the other series of the Trust by creating an
experienced group of Board members who understand the operations
of the DeAM, Inc. fund complex and are exposed to the wide variety
of issues that arise from overseeing different types of funds.
Adopting a unified group board structure will also enable
management to use time more efficiently. There may also be cost
savings in avoiding duplication of effort involved in preparing
and conducting board meetings.
Q. If the Board proposal is approved by shareholders, how many Trustees will
sit on the Board?
A. If all nominees are elected, the Trust's Board and the Portfolios' Boards
will consist of eleven individuals. Five of these persons currently
serve as members of each Board; six persons will be new to the Trust's
Board and the Portfolios' Boards but have experience serving on the
boards of various other investment companies within the Deutsche Asset
Management family of funds.
II. PROPOSAL RELATED TO APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENTS
Q. Why am I being asked to vote for a new investment advisory agreement?
A. DeAM, Inc. recommended to the Boards that they approve the new investment
advisory agreements in order to provide DeAM, Inc. with maximum
flexibility to utilize Deutsche Asset Management's global
organization. The proposed new advisory agreements described in the
proxy statement will contain substantially similar provisions and do
not differ in terms of services to be provided or fees to be paid
therefor from
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the current advisory agreements pursuant to which services are provided
to the Portfolios, except for the dates of execution, effectiveness and
initial term, and except that, under the new advisory agreements, DeAM,
Inc. would be authorized, to the extent permissible by law and subject
to further approval by the Board of Trustees of the applicable
Portfolio, to appoint certain affiliates as sub-advisors. Currently,
under limited circumstances, an advisor may delegate duties to a
sub-advisor without obtaining shareholder approval at the time such
delegation is made. The proposed delegation provision is also intended
to authorize the selection of sub-advisors under circumstances yet to be
approved or identified by the Securities and Exchange Commission or its
staff. In addition, the new advisory agreements will not contain a
provision under which DeAM, Inc. could seek indemnification from the
Portfolio or the Trust.
In determining to recommend that the shareholders approve the new
advisory agreements, the Board of the Trust and the Board of your
Portfolio considered, among other factors, the potential benefits to the
Portfolios of providing DeAM, Inc. more flexibility in structuring
portfolio management services for each Portfolio. In addition, the
Boards considered that DeAM, Inc. will be able to take advantage of the
strengths of other entities within the Deutsche Asset Management
organization by permitting DeAM, Inc. to delegate certain portfolio
management services to such entities.
Q. Will the investment advisory fees remain the same?
A. Yes. The investment advisory fee rate proposed to be charged to the
Portfolios under the new advisory agreements is the same as the
investment advisory fee rate charged under the current advisory
agreements.
III. INTERNATIONAL EQUITY FUND SHAREHOLDERS ONLY--PROPOSAL RELATED TO APPROVAL
OF SUB-ADVISORY AGREEMENT
Q. Why am I being asked to vote for a sub-advisory agreement?
A. DeAM, Inc. has proposed entering into a sub-advisory agreement on behalf of
the International Equity Portfolio and International Equity Fund with
DeAMIS pursuant to which DeAMIS would furnish information, investment
recommendations, advice and assistance to the International Equity
Portfolio and to DeAM, Inc. In addition DeAM, Inc. will remain fully
responsible for DeAMIS' actions under the proposed sub-advisory
agreement.
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Q. Will the investment advisory fees remain the same?
A. Yes. The sub-advisory fee will be paid by DeAM, Inc., not by your fund, the
Portfolio or the Trust, and has no effect on the investment advisory
fees paid by your fund to DeAM, Inc.
IV. GENERAL QUESTIONS
Q. What are the Boards' recommendations?
A. The Boards recommend that all shareholders vote 'FOR' the nominees for the
Boards and 'FOR' the approval of the new advisory agreements. The
Boards also recommend that International Equity Fund shareholders vote
'FOR' the approval of the sub-advisory agreement.
Q. Will my fund pay for the proxy solicitation and legal costs associated with
this solicitation?
A. No, DeAM, Inc. will bear these costs.
Q. How can I vote?
A. You can vote in any one of four ways:
. Through the internet by going to the web site listed on your proxy
card;
. By telephone, with a toll-free call to the number listed on your
proxy card;
. By mail, with the enclosed proxy card; or
. In person at the special meeting.
We encourage you to vote over the internet or by telephone, using the
voting control number that appears on your proxy card. These voting
methods will save your fund money. Whichever method you choose, please
take the time to read the full text of the proxy statement before you
vote.
Q. I plan to vote by mail. How should I sign my proxy card?
A. Please see the instructions at the end of the Notice of Special Meeting of
Shareholders, which is attached.
Q. I plan to vote by telephone. How does telephone voting work?
A. To vote by telephone, please read and follow the instructions on your
enclosed proxy card(s).
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Q. I plan to vote through the internet. How does internet voting work?
A. To vote through the internet, please read and follow the instructions on
your enclosed proxy card(s).
Q. Whom should I call with questions?
A. Please call Georgeson Shareholder Communications at 1-866-333-0889 with
any additional questions about the proxy statement or the procedures to
be followed to execute and deliver a proxy.
Q. Why am I receiving proxy information on Funds that I do not own?
A. Since shareholders of all of the Trust's series are being asked to
approve certain of the same proposals, most of the information that must
be included in a proxy statement for your fund needs to be included in a
proxy statement for the other funds as well. Therefore, in order to save
money and to promote efficiency, one proxy statement has been prepared
for most of the Trust's series.
The attached proxy statement contains more detailed information about
each of the proposals relating to your fund. Please read it carefully.
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BT INVESTMENT FUNDS
Cash Management Fund Investment
Treasury Money Fund Investment
International Equity Fund
. Class A, B and C
. Investment Class
Lifecycle Long Range Fund--Investment Class
Lifecycle Mid Range Fund--Investment Class
Lifecycle Short Range Fund--Investment Class
Quantitative Equity Fund
. Investment Class
. Institutional Class
PreservationPlus Income Fund
One South Street
Baltimore, Maryland 21202
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held July 30, 2002
A special meeting of shareholders of BT Investment Funds (the 'Trust') will
be held at the offices of Deutsche Asset Management, One South Street, 30th
Floor, Baltimore, Maryland 21202 on July 30, 2002 at 9:30 am (Eastern time)
(the 'Special Meeting'). The Trust is an open-end management investment
company, organized under the laws of the Commonwealth of Massachusetts. The
Trust is comprised of the above eight series (each, a 'Fund,' and collectively,
the 'Funds') and Tax Free Money Fund Investment, NY Tax Free Money Fund
Investment, Mid Cap Fund--Investment and Institutional Classes, Small Cap
Fund--Investment Class, and Global Equity Fund--Institutional Class and Class
A, B and C, which are not addressed in the accompanying Joint Proxy Statement.
Each Fund operates as a feeder fund in a master-feeder fund arrangement with a
corresponding master fund portfolio (each, a 'Portfolio,' and collectively, the
'Portfolios'). Each Fund seeks to achieve its respective investment objectives
by investing all of its investable assets in a corresponding Portfolio with the
same investment objective and policies. The Portfolios in which the Funds
invest are organized as registered open-end management investment companies
established as a trust or as a series of a trust under the laws of the State of
New York. Pursuant to the requirements of the Investment Company Act of 1940,
as amended, applicable to master-feeder arrangements, each Fund's voting rights
with respect to the Portfolio interests that it holds must be passed through to
the Fund's own shareholders.
The Special Meeting is being held to consider and vote on the following
matters for each Fund, as indicated below and more fully described under the
corresponding Proposals in the Proxy Statement, and such other matters as may
properly come before the Special Meeting or any adjournments thereof:
PROPOSAL I: (All Funds) To elect eleven Trustees of the Trust and the
Portfolios to hold office until their respective
successors have been duly elected and qualified
or until their earlier resignation or removal,
whose terms will be effective on the date of the
Special Meeting or, in the event of an
adjournment or adjournments of the Special
Meeting, such later date as shareholder approval
is obtained.
PROPOSAL II: (All Funds) To approve new investment advisory agreements
(each, a 'New Advisory Agreement' and
collectively, the 'New Advisory Agreements')
between each Fund's corresponding Portfolio and
Deutsche Asset Management, Inc. ('DeAM, Inc.').
PROPOSAL To approve a sub-advisory agreement between DeAM,
III: (International Equity Inc. and Deutsche Asset Management Investment
Fund ONLY) Services Limited.
The appointed proxies will vote in their discretion on any other business as
may properly come before the Special Meeting or any adjournment thereof.
The New Advisory Agreements described in Proposal II will contain
substantially similar provisions and do not differ in substance from the
current advisory agreements pursuant to which services are provided to the
Portfolios, except for the dates of execution, effectiveness and initial term,
and except that, under the New Advisory Agreements, DeAM, Inc. would be
authorized, to the extent permissible by law and subject to further approval by
the Board of Trustees of the applicable Portfolio, to appoint certain
affiliates as sub-advisors. In addition, the new Advisory Agreements will not
contain a provision under which DeAM, Inc. could seek indemnification from the
applicable Portfolio or Trust.
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The close of business on May 20, 2002 has been fixed as the record date for
the determination of the shareholders of each Fund entitled to notice of, and
to vote at, the Special Meeting. You are cordially invited to attend the
Special Meeting.
The Board of Trustees of the Trust recommends that shareholders vote FOR
each applicable Proposal and FOR the election of each nominee to the Boards of
Trustees of the Trust and the Portfolios.
This notice and related proxy material are first being mailed to
shareholders of the Funds on or about June 13, 2002. This proxy is being
solicited on behalf of the Board of Trustees of the Trust.
By Order of the Board of Trustees,
/s/ Daniel O. Hirsch
Daniel O. Hirsch, Secretary
New York, New York
June 10, 2002
WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE,
DATE AND SIGN EACH ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED
ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES (UNLESS YOU ARE
VOTING BY TELEPHONE OR THROUGH THE INTERNET). NO POSTAGE NEED BE
AFFIXED IF THE PROXY CARD IS MAILED IN THE UNITED STATES.
IF YOU HAVE ANY QUESTIONS CONCERNING THE PROXY STATEMENT OR THE PROCEDURES
TO BE FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT GEORGESON
SHAREHOLDER COMMUNICATIONS AT 1-866-333-0889.
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YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on each enclosed proxy card, sign
and date the card(s) and return it or them in the envelope provided. If you
sign, date and return the proxy card(s) but give no voting instructions, your
shares will be voted 'FOR' the approval of a new investment advisory agreement
with Deutsche Asset Management, Inc.; for International Equity Fund, 'FOR' a
new sub-advisory agreement between Deutsche Asset Management, Inc. and
Deutsche Asset Management Investment Services Limited; 'FOR' the nominees for
Trustee named in the attached Proxy Statement; and, in the discretion of the
persons appointed as proxies, either 'FOR' or 'AGAINST' any other business
that may properly arise at the special meeting or any adjournments thereof. In
order to avoid the additional expense of further solicitation, we ask your
cooperation in mailing your proxy card(s) promptly. As an alternative to using
the paper proxy card to vote, you may vote shares that are registered in your
name, as well as shares held in 'street name' through a broker, via the
internet or telephone.
See your proxy card(s) for instructions for internet voting.
You may also call 1-866--333-0889 and vote by telephone.
If we do not receive your completed proxy card(s), our proxy solicitor,
Georgeson Shareholder Communications, Inc., may contact you. Our proxy
solicitor will remind you to vote your shares or will record your vote over
the phone if you choose to vote in that manner.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense to the Trust, the Portfolios and the Funds
involved in validating your vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to the name shown in the registration on the
proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration.
For example:
Registration Valid Signature
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Corporate Accounts
(1) ABC Corp. ABC Corp. John Doe, Treasurer
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp. c/o John Doe, Treasurer John Doe
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
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Partnership Accounts
(1) The XYZ Partnership Jane B. Smith, Partner
(2) Smith and Jones, Limited Partnership Jane B. Smith, General Partner
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Trust Accounts
(1) ABC Trust Account Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d 12/28/78 Jane B. Doe
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Custodial or Estate Accounts
(1) John B. Smith, Cust. F/b/o John B. Smith Jr.
UGMA/UTMA John B. Smith
(2) Estate of John B. Smith John B. Smith, Jr., Executor
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BT INVESTMENT FUNDS
Cash Management Fund Investment ('Cash Fund')
Treasury Money Fund Investment ('Treasury Money Fund')
International Equity Fund ('International Fund')
. Class A, B and C
. Investment Class
Lifecycle Long Range Fund--Investment Class ('Lifecycle Long Range Fund')
Lifecycle Mid Range Fund--Investment Class ('Lifecycle Mid Range Fund')
Lifecycle Short Range Fund--Investment Class ('Lifecycle Short Range Fund')
Quantitative Equity Fund ('Quantitative Equity Fund')
. Investment Class
. Institutional Class
PreservationPlus Income Fund ('PreservationPlus Income Fund')
One South Street
Baltimore, Maryland 21202
PROXY STATEMENT FOR THE SPECIAL MEETING
OF SHAREHOLDERS
July 30, 2002
This joint proxy statement ('Proxy Statement') is being furnished in
connection with the solicitation by the Board of Trustees of BT Investment
Funds (the 'Trust') with respect to the above eight series (each, a 'Fund' and
collectively, the 'Funds') of proxies to be used at the special meeting of the
Trust to be held at the offices of Deutsche Asset Management, One South Street,
30th Floor, Baltimore, Maryland 21202 on July 30, 2002 at 9:30 am (Eastern
time) and at any adjournments thereof (the 'Special Meeting'). This Proxy
Statement and accompanying proxy card(s) ('Proxy') are expected to be mailed to
shareholders on or about June 13, 2002.
Each Fund operates as a feeder fund in a master--feeder fund arrangement
with a corresponding master fund portfolio (each, a 'Portfolio,' and
collectively, the 'Portfolios'). The Portfolios in which the Funds invest are
organized as registered open-end management investment companies established as
a trust or as a series of a trust under the laws of the State of New York. Each
Fund seeks to achieve its respective investment objectives by investing all of
its investable assets in a corresponding Portfolio with the same investment
objectives and policies.
For simplicity, actions are described in this Proxy Statement as being taken
by a Fund, which is a series of the Trust, although all actions are actually
taken by the
Trust on behalf of the applicable Fund. Some actions described as taken by or
with respect to a Fund are actually actions to be taken by the corresponding
Portfolio in which the Fund invests all of its assets and on which the Fund
votes as a shareholder. Further, actions described as being taken by the
shareholders of the Trust with respect to its Board of Trustees will also be
taken by the Funds as shareholders of the Portfolios with respect to the
Portfolios' respective Boards of Trustees. For the Funds, your vote and the
vote of other shareholders of the relevant Fund determines how the Fund will
vote with respect to itself and its corresponding Portfolio. See 'Background.'
Each of International Fund (4 classes) and Quantitative Equity Fund (2
classes) is comprised of multiple separate share classes, each with its own
expense structure. However, since the proposals presented in this Proxy
Statement uniformly affect each class, shareholders of each class may vote on
all the proposals, and each vote regardless of its class has equal weight.
The Special Meeting is being held to consider and vote on the following
matters for each Fund, as indicated below and described more fully under the
corresponding Proposals discussed herein, and such other matters as may
properly come before the meeting or any adjournments thereof:
PROPOSAL I: To elect eleven Trustees of the Trust and the Portfolios to hold
(All Funds) office until their respective successors have been duly elected
and qualified or until their earlier resignation or removal,
whose terms will be effective on the date of the Special
Meeting or, in the event of an adjournment or adjournments of
the Special Meeting, such later date as shareholder approval
is obtained
PROPOSAL II: To approve new investment advisory agreements (each, a 'New
(All Funds) Advisory Agreement' and collectively, the 'New Advisory
Agreements') between each Fund's corresponding Portfolio
and Deutsche Asset Management, Inc. ('DeAM, Inc.').
PROPOSAL III: To approve a sub-advisory agreement (the 'Sub-Advisory
(International Agreement') between DeAM, Inc. and Deutsche Asset
Fund ONLY) Management Investment Services Limited ('DeAMIS').
The appointed proxies will vote on any other business as may properly come
before the Special Meeting or any adjournment thereof.
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The Funds' shareholders are to consider the approval of the New Advisory
Agreements between DeAM, Inc., the current investment advisor for the
Portfolios, and the applicable Portfolio, as indicated in the table below:
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Fund Corresponding Portfolio
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Cash Fund Cash Management Portfolio ('Cash Portfolio')
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Treasury Money Fund Treasury Money Portfolio ('Treasury Portfolio')
- ---------------------------------------------------------------------------------
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International Fund International Equity Portfolio ('International
Portfolio')
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Lifecycle Long Range Fund Asset Management Portfolio ('Asset Portfolio')
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Lifecycle Mid Range Fund Asset Management Portfolio II ('Asset Portfolio II')
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Lifecycle Short Range Fund Asset Management Portfolio III ('Asset Portfolio
III')
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Quantitative Equity Fund Quantitative Equity Portfolio ('Quantitative Equity
Portfolio')
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
PreservationPlus Income Fund PreservationPlus Income Portfolio
('PreservationPlus Income Portfolio')
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In addition, the shareholders of the International Fund are to consider the
approval of the Sub-Advisory Agreement between DeAM, Inc. and DeAMIS.
The shareholders of the Trust are also to consider the election of Richard
R. Burt, S. Leland Dill, Martin J. Gruber, Richard T. Hale, Joseph R. Hardiman,
Richard J. Herring, Graham E. Jones, Rebecca W. Rimel, Philip Saunders, Jr.,
William N. Searcy and Robert H. Wadsworth (the 'Trustee Nominees') as Trustees
of the Trust and Portfolios./1/ Messrs. Dill and Hale and Drs. Gruber, Herring
and Saunders currently serve on the Boards of the Trust and the Portfolios. Mr.
Hale is currently an 'interested person' (an 'Interested Trustee'), as defined
in the Investment Company Act of 1940, as amended (the '1940 Act'), of the
Trust and the Portfolios and, if elected, will be the Chairman of the Board of
the Trust and the Portfolios. Messrs. Burt, Hardiman, Jones, Searcy and
Wadsworth and Ms. Rimel currently serve as Trustees of various other investment
companies within the Deutsche Asset Management family of funds.
VOTING INFORMATION
Notice of the Special Meeting and a Proxy accompany this Proxy Statement. In
addition to solicitations made by mail, solicitations may also be made by
telephone, telegraph, through the internet or in person by officers or
employees of the Funds and
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/1/ Unless otherwise indicated, references in this Proxy Statement to the
'Trustee Nominees' includes the Trustee Nominees of both the Trust and the
Portfolios.
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certain financial services firms and their representatives, who will receive no
extra compensation for their services. All costs of solicitation, including (a)
printing and mailing of this Proxy Statement and accompanying material, (b) the
reimbursement of brokerage firms and others for their expenses in forwarding
solicitation material to the beneficial owners of the Funds' shares, (c)
payment to Georgeson Shareholder Communications, Inc., a proxy solicitation
firm, for its services in soliciting Proxies and (d) supplementary
solicitations to submit Proxies, will be borne by DeAM, Inc. DeAM, Inc. has
engaged Georgeson Shareholder Communications, Inc. at an estimated total cost
of $177,600. However, the exact cost will depend on the amount and types of
services rendered. If the Funds record votes by telephone or through the
internet, they will use procedures designed to authenticate shareholders'
identities, to allow shareholders to authorize the voting of their shares in
accordance with their instructions, and to confirm that their instructions have
been properly recorded. Proxies voted by telephone or through the internet may
be revoked at any time before they are voted in the same manner that Proxies
voted by mail may be revoked.
The most recent Annual Report of each Fund containing audited financial
statements for the fiscal year ended March 31, 2001 (for Lifecycle Long Range
Fund, Lifecycle Mid Range Fund and Lifecycle Short Range Fund), September 30,
2001 (for Preservation Plus Income Fund), October 31, 2001 (for International
Fund) or December 31, 2001 (for the other Funds) as well as the most recent
Semi-Annual Report succeeding the Annual Report, if any, of each Fund (each, a
'Report'), have previously been furnished to the Funds' respective
shareholders. An additional copy of each Report will be furnished without
charge upon request by writing to the Trust at the address set forth on the
cover of this Proxy Statement or by calling 1-800-730-1313. Each Report is also
available on the Deutsche Asset Management website at www.deam-us.com.
If the enclosed Proxy is properly executed and returned in time to be voted
at the Special Meeting, the shares represented thereby will be voted in
accordance with the instructions marked on the Proxy. Shares of a Fund are
entitled to one vote each at the Special Meeting and fractional shares are
entitled to proportionate shares of one vote. If no instructions are marked on
the Proxy with respect to a specific Proposal, the Proxy will be voted 'FOR'
the approval of such Proposal and in accordance with the judgment of the
persons appointed as proxies with respect to any other matter that may properly
come before the Special Meeting. Any shareholder giving a Proxy has the right
to attend the Special Meeting to vote his/her shares in person (thereby
revoking any prior Proxy) and also the right to revoke the Proxy at any time
prior to its exercise by executing a superseding Proxy or by submitting a
written notice of revocation to the Trust's secretary (the 'Secretary'). To be
effective, such revocation must be received by the Secretary prior to the
Special Meeting. Merely attending the Special Meeting without voting will not
revoke a prior Proxy.
4
Deutsche Bank Trust Company Americas (formerly, Bankers Trust Company)
('Deutsche Bank Trust') may vote any shares in accounts as to which Deutsche
Bank Trust has voting authority, which are not otherwise represented in person
or by proxy at the Special Meeting. Accordingly, for each Proposal, if Deutsche
Bank Trust votes shares of the Fund over which it has voting discretion, it
will do so in accordance with its fiduciary and other legal obligations, and in
its discretion may consult with the beneficial owners or other fiduciaries.
In the event that a quorum is not present at the Special Meeting, or if a
quorum is present but sufficient votes to approve a Proposal are not received,
the persons named as proxies may propose one or more adjournments of the
Special Meeting to permit further solicitation of Proxies with respect to the
Proposal. In determining whether to adjourn the Special Meeting, the following
factors may be considered: the nature of the proposals that are the subject of
the Special Meeting, the percentage of votes actually cast, the percentage of
negative votes actually cast, the nature of any further solicitation and the
information to be provided to shareholders with respect to the reasons for the
solicitation. Any adjournment will require the affirmative vote of a majority
of those shares represented at the Special Meeting in person or by Proxy. The
persons named as proxies will vote those Proxies that they are entitled to vote
'FOR' any Proposal in favor of an adjournment and will vote those Proxies
required to be voted 'AGAINST' any such Proposal against any adjournment. A
shareholder vote may be taken on one or more of the Proposals in the Proxy
Statement prior to any adjournment if sufficient votes have been received and
it is otherwise appropriate. A quorum of shareholders is constituted by the
presence in person or by proxy of the holders of, for the Trust, a majority of
the outstanding shares of the Trust entitled to vote at the Special Meeting.
For purposes of determining the presence of a quorum for transacting business
at the Special Meeting, abstentions and broker 'non-votes' (that is, Proxies
from brokers or nominees indicating that these persons have not received
instructions from the beneficial owner or other persons entitled to vote shares
on a particular matter with respect to which the brokers or nominees do not
have discretionary power) will be treated as shares that are present but which
have not been voted. (See 'Vote Required' for a further discussion of
abstentions and broker non-votes.)
5
Shareholders of record at the close of business on May 20, 2002 (the 'Record
Date') are entitled to notice of, and to vote at, the Special Meeting. The
number of shares of each class of each Fund that were issued and outstanding as
of the Record Date are set forth in Exhibit A to this Proxy Statement.
This Proxy Statement is being used in order to reduce the preparation,
printing, handling and postage expenses that would result from the use of a
separate statement for each Fund and, because shareholders may own shares of
more than one Fund, the combined statement may avoid burdening shareholders
with more than one Proxy Statement. To the extent information relating to
common ownership is available to the Funds, a shareholder that owns of record
shares in two or more of the Funds will receive a package containing a Proxy
Statement and Proxies for the Funds in which such shareholder is a record
owner. If the information relating to common ownership is not available to the
Funds, a shareholder that beneficially owns of record shares in two or more
Funds may receive two or more packages each containing a Proxy Statement and a
Proxy for each Fund in which the shareholder is a beneficial owner. It is
essential that shareholders complete, date, sign and return each enclosed Proxy
(unless a shareholder is voting by telephone or through the internet).
In order that your shares may be represented, you are requested to (unless
you are voting by telephone or through the internet):
. indicate your instructions on the Proxy (or Proxies);
. date and sign the Proxy (or Proxies); and
. mail the Proxy (or Proxies) promptly in the enclosed envelope.
Instructions for voting by telephone or through the internet are included in
the attachment to the Notice of Special Meeting of Shareholders and on the
Proxy (or Proxies) enclosed with this Proxy Statement.
Beneficial Ownership of Shares of the Funds
Exhibit B to this Proxy Statement sets forth information as of the Record
Date regarding the beneficial ownership of the Funds' shares by the only
persons known by each Fund to beneficially own more than five percent of the
outstanding shares of the Fund. Except for Mr. Hardiman who owns $21,736.56,
which constitutes 1.16%, of the institutional class of the Quantitative Equity
Fund, the other Trustees, Trustee Nominees and executive officers of the Trust
collectively own less than 1% of the institutional class of the Quantitative
Equity Fund. Collectively, all Trustees, Trustee Nominees and executive
officers of the Trust own less than 1% of each of the other Funds' outstanding
shares. The number of shares beneficially owned by each Trustee, Trustee
Nominee or executive officer is determined under rules of the Securities and
Exchange Commission (the 'Commission'), and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under these rules,
beneficial
6
ownership includes any shares as to which the individual has the sole or shared
voting power or investment power and also any shares which the individual has
the right to acquire within 60 days of the Record Date through the exercise of
any stock option or other right. Unless otherwise indicated, each person has
sole investment and voting power (or shares this power with his or her spouse)
with respect to the shares set forth in Exhibit B. The inclusion therein of any
shares deemed beneficially owned does not constitute an admission of beneficial
ownership of the shares.
Background
Trust, Portfolio and Fund Structure. The Trust is an open-end management
investment company, organized under the laws of the Commonwealth of
Massachusetts. The Trust is comprised of the Funds and Tax Free Money Fund
Investment, NY Tax Free Money Fund Investment, Mid Cap Fund - Investment and
Institutional Classes, Small Cap Fund - Investment Class, and Global Equity
Fund -- Institutional Class and Class A, B and C, which are not addressed in
the accompanying Joint Proxy Statement. As indicated earlier, each Portfolio is
a registered open-end management investment company established as a trust or
as a series of a trust. DeAM, Inc., located at 280 Park Avenue, New York, New
York 10017, acts as the investment advisor to each Portfolio pursuant to the
terms of an investment advisory agreement (the 'Current Advisory Agreements').
Pursuant to the Current Advisory Agreements, DeAM, Inc. supervises and assists
in the management of the assets of each Portfolio and furnishes each Portfolio
with research, statistical, advisory and managerial services. DeAM, Inc. pays
the ordinary office expenses of each Portfolio and the compensation, if any, of
all officers and employees of each Portfolio and all Trustees who are
Interested Trustees of the Funds.
Master-Feeder Structure. Shareholders of the Funds are being asked to
approve a New Advisory Agreement, as applicable, and to elect the Trustee
Nominees to the Boards of Trustees of the Trust and the Portfolios.
Shareholders of the International Fund are also being asked to approve the
Sub-Advisory Agreement. As indicated earlier, each Fund operates as a feeder
fund in a master-feeder fund arrangement with the Portfolios, which serve as
master funds. The Funds seek to achieve their respective investment objectives
by investing all of their investable assets in a corresponding Portfolio with
the same investment objectives and policies. The Portfolios invest directly in
investment securities and other investments. Pursuant to the requirements of
the 1940 Act applicable to master-feeder arrangements, each Fund's voting
rights with respect to the Portfolio shares that it holds must be passed
through to the Fund's own shareholders. Other feeder funds of a particular
Portfolio will also vote in accordance with their respective charters and/or
other applicable requirements with respect to the approval of the applicable
New Advisory Agreement(s), the election of Trustees of the Trust and the
Portfolios and, for International Portfolio, the approval of the Sub-Advisory
Agreement.
7
PROPOSAL I
ELECTION OF NOMINEES TO THE BOARDS OF TRUSTEES OF THE TRUST AND THE PORTFOLIOS
It is proposed that eleven Trustee Nominees are to be elected to comprise
the entire Board of Trustees of the Trust and of each Portfolio at the Special
Meeting to serve until their successors have been duly elected and qualified or
until their earlier resignation or removal. The Trustee Nominees who are not
'interested persons' (as defined in the 1940 Act) of the Trust, the Portfolios
or DeAM, Inc. (the 'Independent Trustees') were recently selected by a
Nominating Committee of the Boards comprised entirely of the Independent
Trustees of the Boards and nominated by the full Boards at a meeting held on
April 5, 2002. If elected, the terms of the eleven Trustee Nominees will begin
on the date of the Special Meeting or, in the event of an adjournment or
adjournments of the Special Meeting, such later date as shareholder approval is
obtained, upon their respective acceptances of their election in writing (the
'Effective Date'); until that time, the current Board members will continue
their terms. It is anticipated that Messrs. Biggar, Langton and Van Benschoten,
each a current member of the Boards of Trustees, will no longer serve effective
the Effective Date if Proposal I is approved by the shareholders of the Trust
and the Portfolios. It is also anticipated that Richard T. Hale will become
Chairman of the Board of the Trust and the Portfolios if Proposal I is approved
by the shareholders of the Trust and the Portfolios. The names and ages of the
Trustee Nominees, their principal occupations during the past five years and
certain of their other affiliations are provided below. No Independent Trustee
or Independent Trustee Nominee of the Trust or the Portfolios serves or will
serve as an officer of the Trust or any Portfolio. Each of the Trustee Nominees
has agreed to serve if elected at the Special Meeting. It is the intention of
the persons designated as proxies in the Proxy, unless otherwise directed
therein, to vote at the Special Meeting for the election of the Trustee
Nominees named below. If any Trustee Nominee is unable or unavailable to serve,
the persons named in the Proxies will vote the Proxies for such other (persons)
as the Boards of Trustees may recommend.
The nomination of these persons to serve as the Board of Trustees of the
Trust reflects an overall plan to coordinate and enhance the efficiency of the
governance of the Trust and of certain other investment companies that are
managed, advised, sub-advised or administered by DeAM, Inc. (along with certain
other investment management companies managed, advised or administered by
Investment Company Capital Corporation ('ICCC')) (the 'DeAM Funds'). ICCC is
also an indirect wholly owned subsidiary of Deutsche Bank, AG ('Deutsche
Bank'). The proposal concerning the size and composition of the Boards of
Trustees was suggested to the Boards by Deutsche Asset Management and reviewed
by the current Independent Trustees of
8
each Board. Messrs. Dill and Hale (an Interested Trustee) and Drs. Gruber,
Herring and Saunders are currently members of the Boards of Trustees of the
Trust and the Portfolios. Each of the other Independent Trustee Nominees
already serves as an independent board member for one or more other DeAM Funds
and understands the operations of the fund complex.
Deutsche Asset Management recommended, and the Board agreed, that the Trust
and the Portfolios should be governed by larger Boards of Trustees composed of
the same members as are expected to govern certain other DeAM Funds. Presently,
the Board membership of the Trust and the Portfolios and the board membership
of the other DeAM Funds are not identical. Eight persons currently serve on the
Board of Trustees of the Trust and the Portfolios, and between five and nine
persons currently serve on the boards of the other DeAM Funds. If shareholders
elect each of the Trustee Nominees, certain of the existing Trustees will be
joined by certain of the board members of the other DeAM Funds.
Although the election of the Trustee Nominees is not in any way conditioned
on similar action being taken by other funds, it is currently anticipated that
the boards of the other DeAM Funds will approve the expansions of their boards
and the appointment of new board members so that each of the DeAM Funds' boards
is ultimately identically comprised.
The following information is provided for each Trustee Nominee and executive
officer of the Trust's and the Portfolio's Boards as of the end of the most
recently completed calendar year. The first section of the table lists
information for each Trustee Nominee who is an Independent Trustee Nominee.
Information for the Interested Trustee Nominee follows. The Interested Trustee
Nominee is considered to be an interested persons as defined by the 1940 Act
because of his employment with Deutsche Asset Management. The mailing address
for the Trustee Nominees and the executive officers with respect to
Trust/Portfolio operations is One South Street, Baltimore, Maryland, 21202.
9
INFORMATION CONCERNING TRUSTEE NOMINEES AND OFFICERS
Term of Number of
Office/1/ Portfolios
and in Fund
Length Complex
Position of Time Overseen
with the Served by Trustee
Trust and on the or Other Directorships Held by
Name and Birth each Trust Principal Occupation(s) Nominee Trustee or Nominee for
Date Portfolio Board During Past 5 Years for Trustee Trustee/2/
- --------------- --------- -------- ---------------------------- ----------- -----------------------------
Independent Trustee Nominees
Richard R. Burt Trustee N/A Chairman, IEP Advisors, 86 Member of the Board,
2/3/47 Nominee Inc. (July 1998 to present); Hollinger International,
Chairman of the Board, Inc./3/ (publishing) (1995 to
Weirton Steel Corporation/3/ present), HCL Technologies
(April 1996 to present); Limited (information
Formerly, Partner, technology) (April 1999 to
McKinsey & Company present), UBS Mutual Funds
(consulting) (1991-1994) (formerly known as Brinson
and US Chief Negotiator in and Mitchell Hutchins
Strategic Arms Reduction families of funds) (1995 to
Talks (START) with present); The Central
former Soviet Union and European Equity Fund, Inc.
US Ambassador to the (registered investment
Federal Republic of company) (2000 to present)
Germany (1985-1991). and The German Fund, Inc.
(registered investment
company) (2000 to present)
and Member, Textron
Corporation/3/ International
Advisory Council (July 1996
to present); Member of the
Board, Homestake Mining/3/
(mining and exploration)
(1998 to February 2001),
Archer Daniels Midland
Company/3/ (agribusiness
operations) (October 1996 to
June 2001) and Anchor
Gaming (gaming software
and equipment) (March
1999 to December 2001).
S. Leland Dill Trustee Since Retired (since 1986); 84 Trustee, Phoenix Zweig
3/28/30 1999 formerly Partner, KPMG Series Trust (registered
Peat Marwick (June 1956- investment company) (since
June 1986); General September 1989); Trustee,
Partner, Pemco Phoenix Euclid Market
(investment company) Neutral Fund (registered
(June 1979-June 1986). investment company) (since
May 1998); Director,
Vintners International
Company Inc. (June 1989-
May 1992); Coutts (USA)
International (January 1992-
March 2000); Coutts Trust
Holdings Ltd., and Coutts
Group (March 1991-March
1999).
10
Term of Number of
Office/1/ Portfolios
and in Fund
Length Complex
Position of Time Overseen
with the Served by Trustee
Trust and on the or Other Directorships Held by
Name and Birth each Trust Principal Occupation(s) Nominee Trustee or Nominee for
Date Portfolio Board During Past 5 Years for Trustee Trustee/2/
- ------------------ --------- -------- -------------------------- ----------- ---------------------------
Martin J. Gruber Trustee Since Nomura Professor of 84 Member of the Board, CREF
7/15/37 1999 Finance, Leonard N. Stern (registered investment
School of Business, New company) (since 2000); S.G.
York University (since Cowen Mutual Funds (1985
1964). to 2001); Japan Equity
Fund, Inc. (since 1992);
Thai Capital Fund, Inc.
(registered investment
company) (since 2000); and
Singapore Fund, Inc.
(registered investment
company) (since 2000).
Joseph R. Hardiman Trustee N/A Private Equity Investor 84 Director, Southview
05/27/37 Nominee (1997 to present); Technology Group Inc.
President and Chief (investment banking) (July
Executive Officer, The 1998 to present), Corvis
National Association of Corporation/3/ (optical
Securities Dealers, Inc. networking equipment) (July
and The NASDAQ Stock 2000 to present), Brown
Market, Inc., (1987 to Investment Advisory & Trust
1997); Chief Operating Company (investment
Officer of Alex. Brown & advisor) (February 2001 to
Sons Incorporated (now present), The Nevis Fund
Deutsche Banc Alex. (registered investment
Brown Inc.) (1985 to company) (July 1999 to
1987); General Partner, present), and ISI Family of
Alex. Brown & Sons Funds (registered
Incorporated (now investment companies)
Deutsche Bank Securities, (March 1998 to present).
Inc.) (1976 to 1985). Formerly, Director, Circon
Corp. /3/ (medical
instruments), November
1998-January 1999.
Richard J. Herring Trustee Since Jacob Safra Professor of 84 N/A
2/18/46 1990 International Banking and
Professor, Finance
Department, The Wharton
School, University of
Pennsylvania (since 1972);
Director, Lauder Institute
of International
Management Studies
(since 2000); Co-Director,
Wharton Financial
Institutions Center (since
2000); Vice Dean and
Director, Wharton
Undergraduate Division
(1995 to 2000).
11
Term of Number of
Office/1/ Portfolios
and in Fund
Length Complex
Position of Time Overseen
with the Served by Trustee
Trust and on the or Other Directorships Held by
Name and Birth each Trust Principal Occupation(s) Nominee Trustee or Nominee for
Date Portfolio Board During Past 5 Years for Trustee Trustee/2/
- -------------------- --------- -------- -------------------------- ----------- ---------------------------
Graham E. Jones Trustee N/A Senior Vice President, 84 Trustee, 8 open-end mutual
01/31/33 Nominee BGK Realty, Inc. funds managed by Weiss,
(commercial real estate) Peck & Greer (since 1985);
(since 1995). Trustee of 22 open-end
mutual funds managed by
Sun Capital Advisers, Inc.
(since 1998).
Rebecca W. Rimel Trustee N/A President and Chief 84 Formerly, Director, ISI
4/10/51 Nominee Executive Officer, The Family of Funds (registered
Pew Charitable Trusts investment companies)
(charitable foundation) (1997 to 1999).
(1994 to present) and
Director and Executive
Vice President, The
Glenmede Trust Company
(investment trust and
wealth management) (1994
to present). Formerly,
Executive Director, The
Pew Charitable Trusts
(1988 to 1994).
Philip Saunders, Jr. Trustee Since Principal, Philip Saunders 84 N/A
10/11/35 1999 Associates (Economic and
Financial Consulting)
(since 1988); former
Director, Financial
Industry Consulting, Wolf
& Company (1987 to
1988); President, John
Hancock Home Mortgage
Corporation (1984 to
1986); Senior Vice
President of Treasury and
Financial Services, John
Hancock Mutual Life
Insurance Company, Inc.
(1982 to 1986).
William N. Searcy Trustee N/A Pension & Savings Trust 84 Trustee of 22 open-end
09/03/46 Nominee Officer, Sprint mutual funds managed by
Corporation/3/ Sun Capital Advisers, Inc.
(telecommunications) (since 1998).
(since 1989).
12
Term of Number of
Office/1/ Portfolios
and in Fund
Length Complex
Position of Time Overseen
with the Served by Trustee
Trust and on the or Other Directorships Held by
Name and Birth each Trust Principal Occupation(s) Nominee Trustee or Nominee for
Date Portfolio Board During Past 5 Years for Trustee Trustee/2/
- ------------------- --------- -------- --------------------------- ----------- -----------------------------
Robert H. Wadsworth Trustee N/A President, Robert H. 84 Director, The Germany Fund
1/29/40 Nominee Wadsworth Associates, Inc. (1986 to present), The
Inc. (consulting firm) New Germany Fund, Inc.
(1982 to present); (1992 to present) and
President and Director, Central European Equity
Trust for Investment Fund, Inc. (1990 to present).
Managers (registered
investment company)
(1999 to present). Formerly
President, Investment
Company Administration,
LLC (1992* to July 2001);
President, Treasurer and
Director, First Fund
Distributors, Inc. (1990 to
January 2002); Vice
President, Professionally
Managed Portfolios (1999
to 2002) and Advisors
Series Trust (1997 to 2002)
(registered investment
companies) and President,
Guinness Flight
Investment Funds, Inc.
(registered investment
companies).
* Inception date of the
corporation which was the
predecessor to the LLC.
Interested Trustee Nominee
Richard T. Hale/4/ Trustee Since Managing Director, 84 Director, Deutsche Global
7/17/45 1999 Deutsche Bank Securities, Funds, Ltd. (2000 to
Inc. (formerly Deutsche present); Director, CABEI
Banc Alex. Brown Inc.) Fund (2000 to present) and
and Deutsche Asset North American Income
Management (1999 to Fund (2000 to present)
present); Director and (registered investment
President, Investment companies); Formerly,
Company Capital Corp. Director, ISI Family of
(registered investment Funds (registered
advisor) (1996 to present); investment companies)
Vice President, Deutsche (1992 to 1999).
Asset Management, Inc.
(2000 to present).
Chartered Financial
Analyst.
13
Term of
Office/1/
and Number of
Length Portfolios
of in Fund
Time Complex
Position Served Overseen
with the on by Trustee
Trust and the or Other Directorships Held by
Name and Birth each Trust Principal Occupation(s) Nominee Trustee or Nominee for
Date Portfolio Board During Past 5 Years for Trustee Trustee/2/
- ---------------- ----------- --------- -------------------------- ----------- ---------------------------
Officers
Richard T. Hale President Since See information provided
2000 under Interested Trustee
Nominee.
Daniel O. Hirsch Vice Secretary Managing Director, N/A N/A
3/27/54 President / since Deutsche Asset
Secretary 1999; Management (since April
Vice 2002) and Director,
President Deutsche Global Funds,
since Ltd. (since 2002).
2000 Formerly, Director,
Deutsche Asset
Management (1999 to
2000); Principal, BT Alex.
Brown Incorporated (now
Deutsche Banc Alex.
Brown Inc.), (1998 to
1999); General Counsel,
United States Securities
and Exchange Commission
(1993 to 1998).
Charles A. Rizzo Treasurer Since Director, Deutsche Asset N/A N/A
8/5/57 1999 Management (April 2000
to present); Certified
Public Accountant;
Certified Management
Accountant. Formerly,
Vice President and
Department Head, BT
Alex. Brown Incorporated
(Deutsche Banc Alex.
Brown Inc.), (1998 to
1999); Senior Manager,
Coopers & Lybrand LLP
(PricewaterhouseCoopers
LLP), (1993 to 1998).
- --------
/1/ Each Trustee and Officer serve until his or her respective successor has
been duly elected and qualified.
/2/ As of March 31, 2002, the total number of funds in the Deutsche Asset
Management Fund Complex (the 'Fund Complex') is 89.
14
/3/ A publicly held company with securities registered pursuant to Section 12
of the Securities Exchange Act of 1934.
/4/ Mr. Hale is a trustee who is an 'interested person' within the meaning of
Section 2(a)(19) of the 1940 Act. Mr. Hale is Vice President of DeAM, Inc.
and a Managing Director of Deutsche Asset Management, the US asset
management unit of Deutsche Bank and its affiliates.
As reported to the Trust, Exhibit C to this Proxy Statement sets forth
ownership by the Independent Trustee Nominees and their immediate family
members of certain securities as of May 31, 2002.
Trustee Compensation Table
The following table sets forth the compensation paid to the Independent
Trustees by the Trust and the Portfolios and the Fund Complex for the 12 months
ended March 31, 2002.
Pension or
Retirement
Aggregate Benefits Estimated
Compensation Accrued Annual Total
from BT as Part of Benefits Compensation
Investment Fund Upon from Fund
Trustee Funds Expenses Retirement Complex
--------------------------------------------------------------------
S. Leland Dill $17,400 N/A N/A $61,250
Martin J. Gruber $17,400 N/A N/A $61,250
Richard J. Herring $17,400 N/A N/A $61,250
Philip Saunders, Jr. $17,400 N/A N/A $61,250
Each Board has established an Audit Committee, a Nominating Committee and a
Valuation Committee. The Audit Committee and the Nominating Committee of each
Board currently are each composed of the Independent Trustees of that Board.
The Valuation Committee is composed of Messrs. Biggar and Dill and Dr.
Saunders. Each of the other Independent Trustees and the Interested Trustee
serves as an alternate to the Valuation Committee. In accordance with its
written charter adopted by the applicable Board of Trustees, each Audit
Committee assists the Board in fulfilling its responsibility for oversight of
the quality and integrity of the accounting, auditing and financial reporting
practices of the applicable Portfolio and Fund. It also makes recommendations
to the Board as to the selection of the independent public accountants, reviews
the methods, scope and result of the audits and audit fees charged, and reviews
the Portfolio's and Fund's internal accounting procedures and controls. Each
Audit Committee also considers the scope and amount of non-audit services
provided to the applicable Portfolio and Fund, its investment advisor and
affiliates by the independent public accountants. Each Nominating Committee is
charged with the duty of making all nominations for Independent Trustees to the
applicable Board of Trustees. The Nominating Committee of each Board will
consider Trustee nominees
15
recommended by shareholders. Shareholders who wish to suggest nominees to the
Boards of Trustees should submit their suggestions to be considered to the
Trust or the applicable Portfolio 60 days in advance of a meeting for inclusion
in the applicable Portfolio or Fund's proxy statement and form of proxy for
such meeting as is held. Each Valuation Committee considers and acts upon all
questions relating to valuation of the securities in the applicable Portfolio
which may arise between meetings of the Board. The Boards do not have
compensation committees. During each Portfolio and Fund's most recent fiscal
year, the Boards of the Trust and the Portfolios held five meetings, the Audit
Committee of each Board held four meetings and the Valuation Committee of each
Board held one meeting. The Nominating Committee of each Board did not meet
during the most recent fiscal year. No Trustee attended less than 75% of the
applicable meetings. If the Nominees are elected to the Boards, the Boards will
consider whether other committees should be organized after it has reviewed the
needs of the Portfolios.
Mr. Hale, if elected, will not be a member of the Audit Committee or the
Nominating Committee.
Recommendation of the Boards of Trustees
The Boards of Trustees believe that coordinated governance through a unified
board structure will benefit the Trust, the Portfolios and the Funds.
In their deliberations, the Boards of Trustees considered various matters
related to the management and long-term welfare of the Trust, the Portfolios
and the Funds. The Boards considered, among other factors, that coordinated
governance within the DeAM Fund Complex will reduce the possibility that the
separate boards might arrive at conflicting or inconsistent decisions regarding
the policies, strategies, operations and management of the Trust, the
Portfolios, the Funds and the other DeAM Funds, and that this will help avoid
costs, confusion and complexity resulting from different or conflicting
decisions. The Board also considered that operating with a unified group board
eliminates the potential for these types of conflicts while preserving the
insights and experience that can be contributed by individual members. In
addition, the Boards considered that a unified group board would also allow
management to reduce the total number of board meetings it is required to
attend and at which it would make repetitive presentations each year across the
Fund Complex which can be expected to make the governance process more
efficient. Deutsche Asset Management expends a significant amount of time and
effort preparing and coordinating materials and presentations for board
meetings. In many instances, presentations need to be made more than once on
identical or similar issues. Adopting a unified group board structure would
enable management and the Boards to use time more efficiently. There may also
be cost savings to the Trust, the Portfolios and the Funds because Trustees
will serve an increased number of investment companies.
16
The Boards also considered that a unified group board structure benefits the
Trust, the Portfolios and the Funds by creating an experienced group of Board
members who understand the operations of each Fund and the Fund Complex and are
exposed to the wide variety of issues that arise from overseeing different
types of funds.
The Boards gave considerable weight to their expectation that the Trust, the
Portfolios and the Funds will benefit from the diversity and experience of the
Trustee Nominees that would be included in the expanded Boards and from the
experience that each Trustee Nominee will gain by serving on the boards of a
diverse group of funds. The Boards also considered, in light of the following
transaction, the importance of greater breadth and depth of expertise on the
Board. On April 5, 2002, Deutsche Bank acquired 100% of US-based asset manager
Zurich Scudder Investments ('Scudder') (the 'Transaction'). The combined
organization is the fourth largest asset manager in the world, with
approximately $900 billion in assets under management. The Transaction is
anticipated to provide greater breadth and geographic reach to the asset
management services presently provided by the asset management entities of
Deutsche Bank by making available additional investment expertise more
effectively leveraged globally through a stronger investment platform in which
research is fundamentally integrated with portfolio management. Because of the
increased size and scope of Deutsche Asset Management after the Transaction,
Deutsche Asset Management will seek to attract and retain talented people by
providing a challenging work environment, competitive compensation and reward
systems and professional development opportunities. Management intends to build
a culture of teamwork, commitment, performance and mutual respect.
The Trustee Nominees have had distinguished careers in accounting, finance,
marketing and other areas and will bring a wide range of expertise to the
Boards. Ten of the eleven nominees, if elected, would be Independent Trustees.
Independent Trustees are charged with special responsibilities to provide an
independent check on management and to approve advisory, distribution and
similar agreements between the Trust and management.
In addition, the Boards considered certain other advantages of enlarging the
Boards. These included that enlarging each Board will afford an increased range
of experience among Board members and makes it more likely that each Board will
be able to ensure appropriate continuity over the years as incumbent members
reach mandatory retirement age or otherwise retire and that, should the Boards
determine to revise their structures through increased establishment of
committees, an enlarged Board will provide an increased choice of potential
members of such committees. As part of their deliberations, the Boards also
recognized that increased numbers of
17
Board members could result in less collegial meetings and longer discussions.
On balance, each Board concluded that these possible detriments of size were
outweighed by the benefits anticipated from the unified and enlarged Boards.
Therefore, after careful consideration, the Boards, including the
Independent Trustees of each, recommend that the respective shareholders of the
Trust and the Portfolios vote 'FOR' the election of the Trustee Nominees as set
forth in this Proposal.
If the Trustee Nominees are elected by the applicable shareholders, each
Trustee Nominee will serve, effective the Effective Date, until his or her
successor is duly elected and qualified or until his or her earlier resignation
or removal. If the Trustee Nominees are not elected, the applicable Board(s)
will consider what action is appropriate based upon the interests of the
Trust's or Portfolios' shareholders, as applicable.
18
PROPOSAL II
APPROVAL OF NEW ADVISORY AGREEMENTS
The New Advisory Agreements will contain substantially similar provisions
and do not differ in substance from the Current Advisory Agreements pursuant to
which services are provided to the Portfolios except for the dates of
execution, effectiveness and initial term and except that, under the New
Advisory Agreements, DeAM, Inc. would be authorized, to the extent permissible
by law and subject to further approval by the Board of Trustees of the
applicable Portfolio, to appoint certain affiliates as sub-advisors. In
addition, New Advisory Agreements will not contain a provision under which
DeAM, Inc. could seek indemnification from the applicable Portfolio or Trust.
See 'Differences Between the Current and New Advisory Agreements.'
The Advisory Agreements
The Current Advisory Agreements. DeAM, Inc. serves as investment advisor to
each of the Portfolios (as discussed earlier) pursuant to the Current Advisory
Agreements. The Current Advisory Agreements were initially approved by the
Boards of the applicable Portfolio and the Trust, including a majority of the
Independent Trustees.
Exhibit D to this Proxy Statement lists: (i) the date of each Current
Advisory Agreement; and (ii) the most recent date on which each Current
Advisory Agreement was approved by the applicable Portfolio's and Fund's
Trustees, including a majority of the Independent Trustees of the Portfolio and
Fund, and the Fund's and Portfolio's shareholders.
The New Advisory Agreements. The form of the New Advisory Agreement is
attached to this Proxy Statement as Exhibit E. A description of the New
Advisory Agreements is set forth below and is qualified in its entirety by
reference to Exhibit E. If shareholders approve the New Advisory Agreements,
each of the agreements will remain in effect for an initial term of two years
from its effective date, and may be renewed annually thereafter only if
specifically approved at least annually by the vote of 'a majority of the
outstanding voting securities' (as defined in the 1940 Act; see 'Vote Required'
below) of each Fund, or by the Board of Trustees of the applicable Portfolio
and, in either event, the vote of a majority of the Independent Trustees of the
applicable Portfolio, cast in person at a meeting called for such purpose. The
terms and conditions -- including the services to be provided and the fees to
be paid therefor -- of the New Advisory Agreements contain substantially
similar provisions and do not differ in substance from the Current Advisory
19
Agreements except for the dates of execution, effectiveness and initial term
and except that, under the New Advisory Agreements, DeAM, Inc. would be
authorized, to the extent permissible by law and subject to further approval by
the Board of Trustees of the applicable Portfolio, to appoint certain
affiliates as sub-advisors. In addition, New Advisory Agreements will not
contain a provision under which DeAM, Inc. could seek indemnification from the
applicable Portfolio or Trust.
Differences Between the Current and New Advisory Agreements. As stated
above, the terms of the New Advisory Agreement for each Fund contain
substantially similar provisions and do not differ in substance from the
corresponding Current Advisory Agreement, except that, to the extent
permissible by law and subject to further Board approval, pursuant to each New
Advisory Agreement DeAM, Inc. would be authorized to appoint certain of its
affiliates as sub-advisors to perform certain of DeAM, Inc.'s duties. In such
cases, DeAM, Inc. would also be authorized to adjust the duties, the amount of
assets to be managed and the fees paid by DeAM, Inc. to any such affiliated
sub-advisors. These affiliated sub-advisors must be entities that DeAM, Inc.
controls, is controlled by, or is under common control with, and any such
appointments are subject to the further approval of the Independent Trustees
and the full Board of the applicable Portfolio. Shareholders of a Fund that are
affected by any adjustment would receive appropriate disclosure of any such
change in a timely fashion following approval by the Independent Trustees. The
advisory fee rates paid by the Funds would not increase as a result of any such
action; all fees incurred by a sub-advisor will continue to be the
responsibility of DeAM, Inc. DeAM, Inc. will retain full responsibility for the
actions of any such sub-advisor.
Unlike the Current Advisory Agreements, the New Advisory Agreements make
explicit that DeAM, Inc. would be permitted to delegate certain advisory duties
to an affiliated sub-advisor. Currently, under limited circumstances, an
advisor may delegate duties to a sub-advisor without obtaining shareholder
approval at the time such delegation is made. Such circumstances include (a)
under Rule 2a-6 of the 1940 Act, where a proposed sub-advisor is under common
control with the advisor, and the same persons involved in the management of
the assets are employed at both the advisor and the sub-advisor; and (b)
pursuant to certain interpretations of the staff of the Commission, where
investment responsibility is delegated by the advisor to other entities, or
employees of such entities, that are wholly owned subsidiaries of the advisor's
parent company. The New Advisory Agreements would also permit DeAM, Inc. to
appoint certain affiliates as sub-advisors, i.e., entities that DeAM, Inc.
controls, is controlled by, or is under common control with, under
circumstances not currently contemplated by Rule 2a-6 or the aforementioned
staff interpretations. However, DeAM, Inc. will not delegate to a sub-advisor
unless such delegation is
20
then consistent with any amendments to the 1940 Act or the rules and
regulations thereunder or interpretations thereof.
Deutsche Asset Management anticipates that it will seek to utilize the
talents of its employees throughout the world and without regard to the
specific subsidiary of Deutsche Bank that employs such persons. Accordingly,
DeAM, Inc. believes that shareholders could benefit from an authorization
permitting DeAm, Inc. to delegate such functions to affiliated advisory
organizations.
In addition, the New Advisory Agreements will differ from the Current
Advisory Agreements in that there will not be an indemnification provision in
the New Advisory Agreements under which DeAM, Inc. could seek indemnification
from the applicable Portfolio or Trust. With the acquisition of Scudder, DeAM,
Inc. has become a substantially larger manager of investment company assets. It
believes that, at least for purposes of the indemnification provision, it is
desirable for all the investment companies under its management to have
substantially similar investment advisory contracts. The funds historically
managed by Scudder have recently approved new advisory agreements which are
substantially similar to the proposed New Advisory Agreements, except that
these newly approved agreements did not and do not provide for indemnification
for the investment manager. Accordingly, DeAM, Inc. informed the Boards of the
Portfolios and Trust that it would not seek such provision in the New Advisory
Agreements. DeAM, Inc. assured the Boards of the Portfolios and Trust that the
nature and quality of management historically rendered by it would be unchanged
notwithstanding the deletion of the indemnification provision.
Under the terms of the New Advisory Agreements, DeAM, Inc. agrees to provide
the Portfolios with investment advisory services, including the investment and
reinvestment of the cash, securities or other properties comprising a
Portfolio's assets. Subject to the supervision and control of the applicable
Portfolio's Board of Trustees, DeAM, Inc. agrees, in carrying out its
obligations, to conform to (a) all applicable provisions of the 1940 Act and
any rules and regulations adopted thereunder, (b) the provisions of the
Portfolios' registration statements, (c) the provisions of the Trust's
Declaration of Trust, (d) any other applicable provisions of state and federal
law, and (e) the provisions of the applicable Portfolio's Agreement of Trust.
Under the terms of the New Advisory Agreements, DeAM, Inc. agrees to (a)
supervise and manage all aspects of a Portfolio's operations, except for
distribution services; (b) formulate and implement continuing programs for the
purchases and sales of securities, consistent with the investment objective and
policies of the applicable Portfolio, (c) provide the Trust with, or obtain for
it, adequate office space and all necessary office equipment and services for
the Trust's principal office; (d) obtain and evaluate pertinent information
about significant developments and certain other
21
information, whether affecting the economy generally or a particular Portfolio;
(e) for each Portfolio, determine which issuers and securities will be
represented in the portfolio and regularly report thereon to the Trust's and
Portfolio's Board of Trustees; and (f) take all actions necessary to carry into
effect a Portfolio's purchase and sale programs.
The investment advisory fee rate proposed to be charged to the Portfolios
under the New Advisory Agreements is the same as the investment advisory fee
rate charged under the Current Advisory Agreements.
The advisory fee rate paid to DeAM, Inc. under the Current Advisory
Agreements and the advisory fee paid by the applicable Portfolio or Fund for
the most recent fiscal year is set forth in Exhibit F to this Proxy Statement.
Generally. If approved, the New Advisory Agreements, as applicable, will
each remain in effect for an initial term of two years (unless sooner
terminated), and shall remain in effect from year to year thereafter if
approved annually (1) by the applicable Portfolio's Board of Trustees or by the
holders of a majority of the applicable Portfolio's outstanding voting
securities (i.e., in most cases, the Funds) and (2) by a majority of the
Independent Trustees who are not parties to such contract or agreement. Like
the Current Advisory Agreements, the New Advisory Agreements will terminate
upon assignment by any party and are terminable, without penalty, on 60 days'
written notice by the applicable Portfolio's Board of Trustees or by vote of a
majority of the outstanding voting securities (as defined in the 1940 Act) of
the applicable Portfolio or upon 90 days' written notice by DeAM, Inc.
The services of DeAM, Inc. are not deemed to be exclusive and nothing in the
Current Advisory Agreements or the New Advisory Agreements prevents it or its
affiliates from providing similar services to other investment companies and
other clients (whether or not their investment objectives and policies are
similar to those of the Portfolios) or from engaging in other activities. In
addition, DeAM, Inc. is obligated to pay expenses associated with providing the
services contemplated by the New Advisory Agreements. The Portfolios bear
certain other expenses including the fees of the Portfolios' Boards. The
Portfolios also pay any extraordinary expenses incurred.
Under the New Advisory Agreements, DeAM, Inc. will exercise its best
judgment in rendering its advisory services. DeAM, Inc. will not be liable for
any error of judgment or mistake of law or for any loss suffered by the
Portfolios in connection with the matters to which the New Advisory Agreements
relate, provided that nothing therein shall be deemed to protect or purport to
protect DeAM, Inc. against any liability to the Portfolios or to their
shareholders to which DeAM, Inc. could otherwise
22
be subject by reason of willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or by reason of DeAM, Inc.'s reckless
disregard of its obligations and duties under the New Advisory Agreements.
Since each Fund invests all of its investable assets in its corresponding
Portfolio, portfolio transactions occur at the Portfolio level only. As
investment advisor, DeAM, Inc. will allocate and place all orders for portfolio
transactions of each Portfolio's securities (except that, if Proposal III to
approve a sub-advisory agreement with DeAMIS is approved by the shareholders,
DeAMIS, under the supervision of DeAM, Inc. will allocate and place all
orders). When it can be done consistently with the policy of obtaining the most
favorable net results, DeAM, Inc. may place such orders with brokers and
dealers who provide market, statistical and other research information to the
applicable Portfolio or DeAM, Inc. DeAM, Inc. is authorized, under certain
circumstances, when placing portfolio transactions for equity securities to pay
a brokerage commission (to the extent applicable) in excess of that which
another broker might charge for executing the same transaction on account of
the receipt of market, statistical and other research information. When it can
be done consistently with the policy of obtaining the most favorable net
result, in selecting brokers and dealers with which to place portfolio
transactions for the applicable Portfolio, DeAM, Inc. may consider its
affiliates and also firms that sell shares of mutual funds advised by DeAM,
Inc. or recommend the purchase of such funds. Exhibit F sets forth the amount
of any commission paid by each Portfolio to its affiliated broker(s) for the
Portfolio's most recently completed fiscal year.
Management of the Portfolios
The Advisor. Under the supervision of the Board, DeAM, Inc., located at 280
Park Avenue, New York, New York 10017, acts as the investment advisor to each
Fund and Portfolio. As investment advisor, DeAM, Inc. makes each Fund's
investment decisions. It buys and sells securities for each Fund and conducts
the research that leads to the purchase and sale decisions. DeAM, Inc. is also
responsible for selecting brokers and for negotiating brokerage commissions and
dealer charges. DeAM, Inc. is registered with the Commission as an investment
advisor and provides a full range of investment advisory services to
institutional and retail clients. In addition to providing investment advisory
services to the Funds and the Portfolios, DeAM, Inc. serves as investment
advisor to 35 other investment companies and investment sub-advisor to 50 other
investment companies. See Exhibit G to this Proxy Statement for a list of those
investment companies that DeAM, Inc. advises or subadvises that have investment
objectives similar to those of the Portfolios, together with information
regarding the fees charged to those companies. As of April 30, 2002, DeAM, Inc.
had approximately $93.8 billion of assets under management. DeAM, Inc. is an
indirect wholly-owned subsidiary of Deutsche Bank.
23
The principal occupations of each director and principal executive officer
of DeAM, Inc. are set forth in Exhibit H to this Proxy Statement. The principal
business address of each director and principal executive officer as it relates
to his or her duties at DeAM, Inc., is 280 Park Avenue, New York, New York
10017.
The Funds' advisor and administrator have agreed to limit their expenses for
sixteen (16) months from each Fund's fiscal year end to the amounts listed in
Exhibit F.
Administrator, Transfer Agent and Custodian. ICCC serves as administrator
and transfer agent and provides fund accounting services, and Deutsche Bank
Trust serves as custodian, of each Portfolio and Fund. It is expected that
these services will continue to be provided by the same service providers after
approval of the New Advisory Agreements. ICCC is paid an administrative fee for
its services from which it pays for custodian services provided by Deutsche
Bank Trust. (Exhibit F to this Proxy Statement sets forth the fees paid to ICCC
by the Portfolios and the Funds for these services for the most recently
completed fiscal year.)
Deutsche Bank. Deutsche Bank, Aktiengesellschaft, Taunusalage 12, D-6 0
262, Frankfurt am Main, Federal Republic of Germany, is an international
commercial and investment banking group and a leading integrated provider of
financial services to institutions and individuals throughout the world. It is
organized in Germany and is a publicly traded entity. Its shares trade on many
exchanges including the New York Stock Exchange and Xetra (German Stock
Exchange). It is engaged in a wide range of financial services, including
retail, private and commercial banking, investment banking and insurance.
Deutsche Bank has combined all of its investment management businesses to form
Deutsche Asset Management.
Trustees and Officers. Biographical information about the Trustee Nominees
and the executive officers is provided under Proposal I in this Proxy
Statement. Certain other information about the Trustee Nominees and each
executive officer of the Trust and the Portfolio is provided in Exhibit C to
this Proxy Statement.
Recommendation of the Boards
At a meeting of the Boards of Trustees of the Trust and the Portfolios held
on June 7, 2002 called for the purpose of, among other things, voting on
approval of the New Advisory Agreements, a majority of the Boards, including a
majority of the Independent Trustees, approved, subject to shareholder
approval, the New Advisory Agreements. In reaching this conclusion, the Boards
of Trustees obtained from DeAM, Inc. such information as they deemed reasonably
necessary to approve DeAM, Inc. as investment advisor to the Portfolios. In
approving the New Advisory Agreements, the Independent Trustees considered
numerous factors, including, among others, the
24
nature, quality and extent of services provided under the Current Advisory
Agreements and proposed to be provided by DeAM, Inc. to the Portfolios under
the New Advisory Agreements; that the investment advisory fees paid by the
Portfolios will remain the same under the New Advisory Agreement as under the
Current Advisory Agreements; investment performance, both of the Portfolios
themselves and relative to appropriate peer groups and market indices; staffing
and capabilities of DeAM, Inc. to manage the Portfolios; investment advisory
fees, provided under the Current Advisory Agreements and current expense ratios
and asset sizes of the Portfolios themselves and relative to appropriate peer
groups; and DeAM, Inc.'s profitability from managing the Portfolios (both
individually and collectively) and the other investment companies managed by
DeAM, Inc. before marketing expenses paid by DeAM, Inc. The Boards also
considered other benefits earned by DeAM, Inc. and its affiliates relating to
its management of the Funds and Portfolios, including brokerage fees, fees for
custody, transfer agency and other services as well as soft dollar benefits
received from third parties that aid in the management of assets.
In addition, each Board considered the potential benefit to the Portfolios
of providing DeAM, Inc. more flexibility in structuring portfolio management
services for each Portfolio. Each Board recognized that it may be beneficial to
the Portfolios to allow DeAM, Inc. to take advantage of the strengths of other
entities within the Deutsche Asset Management organization by permitting DeAM,
Inc. to delegate certain portfolio management services to such entities, and to
do so, to the extent permissible, without incurring the expense of obtaining
further shareholder approval. In addition, the Boards considered that (i) any
restructuring of the provision of portfolio management services provided to the
Portfolios would require the prior approval of a majority of the members of a
Portfolio's Board, including a majority of the Independent Trustees; (ii) the
investment advisory expenses incurred by the Portfolios would not be affected
by any action taken to delegate services to other Deutsche Bank entities or
their employees in reliance on the New Advisory Agreements because any fees
paid to a sub-advisor would be paid by DeAM, Inc. and not by the Portfolios;
and (iii) DeAM, Inc. will retain full responsibility for the actions of any
such sub-advisor.
Based on the factors discussed above, and others, the Boards of Trustees
determined that the New Advisory Agreements are fair and reasonable and in the
best interest of the Portfolios and their respective shareholders. Based on all
of the foregoing, at a meeting on June 7, 2002, a majority of the Board of
Trustees of each Portfolio, including a majority of the Independent Trustees of
each Portfolio, voted to approve the New Advisory Agreements and to recommend
them to the shareholders for their approval.
25
Therefore, after careful consideration, the Boards of Trustees, including
the Independent Trustees of each Portfolio, recommend that the respective
shareholders of the Funds vote 'FOR' the approval of the New Advisory
Agreements as set forth in this Proposal.
If the New Advisory Agreements are approved by the shareholders, each
agreement will remain in effect as described above. If any New Advisory
Agreement is not approved by the shareholders, the Current Advisory Agreement
will continue in effect, subject to any requisite approval(s) of the applicable
Board of Trustees or its respective shareholders, and the applicable Board(s)
of Trustees will consider what other action is appropriate based upon the
interests of the shareholders. If shareholders of a Fund do not approve the
applicable New Advisory Agreement at the same time that shareholders of other
investment companies approve the applicable New Advisory Agreement with respect
to a common Portfolio in a manner sufficient to implement the New Advisory
Agreement for that Portfolio, the applicable Fund will remain a participant in
that Portfolio while the Boards consider what other action, if any, is
appropriate based upon the interests of the shareholders of the applicable Fund.
26
PROPOSAL III
APPROVAL OF A SUB-ADVISORY AGREEMENT BETWEEN DEUTSCHE ASSET MANAGEMENT, INC.
AND DEUTSCHE ASSET MANAGEMENT INVESTMENT SERVICES LIMITED
DeAM, Inc. has proposed entering into a sub-advisory agreement on behalf of
the International Portfolio and International Fund with DeAMIS pursuant to
which DeAMIS would furnish information, investment recommendations, advice and
assistance to the Portfolios and to DeAM, Inc. The Sub-Advisory Agreement was
approved by a majority of the Board of Trustees of the International Portfolio,
including a majority of the Independent Trustees, at a meeting held on June 7,
2002. The form of Sub-Advisory Agreement is attached hereto as Exhibit E. A
description of the Sub- Advisory Agreement is set forth below and is qualified
in its entirety by reference to Exhibit E.
The fee to be paid DeAMIS under the proposed Sub-Advisory Agreement is paid
by DeAM, Inc. and has no effect on the investment advisory fees paid by the
International Fund to DeAM, Inc., pursuant to the Current Advisory Agreement or
proposed to be paid pursuant to the New Advisory Agreement. In no case will the
investment advisory fees paid to DeAMIS by DeAM, Inc. be greater than those
paid by the International Fund to DeAM, Inc. pursuant to the Current Advisory
Agreement or proposed New Advisory Agreements. DeAM, Inc. will remain
responsible for the actions of DeAMIS pursuant to the Sub-Advisory Agreement.
The Sub-Advisory Agreement has been approved by the Board of Trustees of the
International Portfolio and is now being submitted for approval by the
shareholders of the International Fund. If it is approved by the shareholders
of the International Portfolio, the Sub-Advisory Agreement would continue in
effect for an initial term of two years (unless earlier terminated), and will
remain in effect from year to year thereafter, subject to approval annually by
the Board of Trustees of the International Portfolio or by holders of a
majority of the outstanding voting securities of the International Portfolio,
and also, in either event, approval by a majority of the Independent Trustees
of the International Portfolio at a meeting called for the purpose of voting on
such approval. If the shareholders of the International Fund should fail to
approve the Sub-Advisory Agreement, the Board of Trustees will take such
action, if any, as it considers to be in the best interests of the
International Fund.
27
Board Considerations
On June 7, 2002, a majority of the Board of Trustees of the International
Portfolio, included a majority of the Independent Trustees, voted to approve
the Sub-Advisory Agreement proposed by DeAM, Inc. and to recommend its approval
to shareholders of the International Fund.
In considering whether to approve the Sub-Advisory Agreement, the Board
considered the factors it considered in approving the New Advisory Agreements,
to the extent applicable. (See Proposal II for more information regarding the
Boards' evaluation.) In addition, the Board considered the recommendation of
DeAM, Inc. and various information and materials provided by each of DeAM, Inc.
and DeAMIS. Furthermore, the Board considered that approval of the Sub-Advisory
Agreement would not affect the advisory fees paid by the International Fund,
and that DeAM, Inc. would remain fully responsible for DeAMIS' actions under
the Sub-Advisory Agreement.
Description of the Sub-Advisory Agreement
Under the Sub-Advisory Agreement, DeAMIS shall furnish DeAM, Inc. with
information, investment recommendations, advice and assistance, as DeAM, Inc.
from time to time reasonably requests.
As noted above, the sub-advisory fee payable under the Sub-Advisory
Agreement would be paid by DeAM, Inc., not the International Fund, and will be
set, and may vary from time to time thereafter, subject to the approval of the
International Portfolio's Board, including a majority of its Independent
Trustees.
Under the Sub-Advisory Agreement, DeAMIS will exercise its best judgment in
rendering its sub-advisory services. DeAMIS will not be liable for error of
judgment or mistake of law or for any loss suffered by International Fund in
connection with the matters to which the Sub-Advisory Agreement relates,
provided that nothing therein shall protect or purport to protect DeAMIS
against any liability to International Fund or to its shareholders to which
DeAMIS could be subject by reason of willful misfeasance, bad faith or gross
negligence on the part of DeAMIS in the performance of its duties or by reason
of reckless disregard by DeAMIS of its obligations and duties under the
Sub-Advisory Agreement.
If approved, the Sub-Advisory Agreement will remain in effect for an initial
term of two years (unless sooner terminated), and shall remain in effect from
year to year thereafter if approved annually (1) by the International
Portfolio's Board of Trustees or by the holders of a majority of the
International Portfolio's outstanding voting securities and (2) by a majority
of the Independent Trustees who are not parties to such contract or agreement.
The Sub-Advisory Agreement may be terminated without penalty upon 60 days'
written notice by DeAM, Inc. to DeAMIS or upon 90 days' written notice by
DeAMIS to DeAM, Inc., or by a majority vote of the outstanding
28
voting securities of the International Portfolio, and automatically terminates
in the event of the termination of the International Portfolio's Advisory
Agreement or in the event of its assignment.
Information about DeAMIS
DeAMIS, with headquarters at One Appold Street, London, EC2A 2UU, England,
provides a full range of international investment advisory services to
institutional and retail clients, and as of March 31, 2002, managed more than
$5 billion in assets. DeAMIS is an indirect wholly-owned subsidiary of Deutsche
Bank.
The principal occupations of each director and principal executive officer
of DeAMIS are set forth in Exhibit I to this Proxy Statement. The principal
business address of each director and principal executive officer, as it
relates to his or her duties at DeAMIS, is One Appold Street, London, EC2A 2UU,
England. No Trustees or officers of the Trust or the Portfolios are employees,
officers, directors or shareholders of DeAMIS.
Exhibit J sets forth the fees and other information regarding investment
companies advised or sub-advised by DeAMIS that have similar investment
objectives to the International Fund.
Portfolio Transactions
Since the International Fund invests all of its investable assets in the
International Portfolio, portfolio transactions occur at the International
Portfolio level only. DeAMIS will allocate and place all orders for portfolio
transactions of the International Portfolio's securities. When it can be done
consistently with the policy of obtaining the most favorable net results,
DeAMIS may place such orders with brokers and dealers who provide market,
statistical and other research information to the International Portfolio or
DeAMIS. DeAMIS is authorized, under certain circumstances, when placing
portfolio transactions for equity securities to pay a brokerage commission (to
the extent applicable) in excess of that which another broker might charge for
executing the same transaction on account of the receipt of market, statistical
and other research information. When it can be done consistently with the
policy of obtaining the most favorable net result, in selecting brokers and
dealers with which to place portfolio transactions for the International
Portfolio, DeAMIS may consider its affiliates and also firms that sell shares
of mutual funds advised by DeAMIS or recommend the purchase of such funds.
Allocation of portfolio transactions is supervised by DeAM, Inc.
29
Required Vote
Approval of the Sub-Advisory Agreement requires the affirmative vote of a
'majority of the outstanding voting securities' (as defined in the 1940 Act;
see 'Vote Required') of the International Fund.
Therefore, after careful consideration, the Board of Trustees of the
International Portfolio, including its Independent Trustees, recommends that
the shareholders of the International Fund vote 'FOR' the approval of the
Sub-Advisory Agreement.
If the Sub-Advisory Agreement is approved by the shareholders, it will
remain in effect as described above. If the Sub-Advisory Agreement is not
approved by the shareholders, the Board of Trustees will consider what other
action is appropriate based upon the interests of the shareholders. If
shareholders of the International Fund do not approve the Sub-Advisory
Agreement at the same time that shareholders of other investment companies
which are shareholders of the International Portfolio approve the Sub-Advisory
Agreement in a manner sufficient to implement the Sub-Advisory Agreement, the
International Fund will remain a participant in the International Portfolio
while the Board considers what other action, if any, is appropriate based upon
the interests of the shareholders of the International Fund.
30
INFORMATION CONCERNING INDEPENDENT AUDITORS
Except for the PreservationPlus Income and Quantitative Equity Funds and
Portfolios, the Funds and Portfolios' financial statements for their most
recent fiscal years were audited by PricewaterhouseCoopers LLP ('PwC'),
independent auditors. The PreservationPlus Income and Quantitative Equity Funds
and Portfolios' financial statements for their most recent fiscal years were
audited by Ernst & Young LLP ('E&Y'), independent auditors. In addition, PwC
and E&Y prepares the respective Funds and Portfolios' federal and state annual
income tax returns and provides certain non-audit services to the Trust, the
Funds and the Portfolios. During the Boards' most recent consideration of the
selection of auditors for each Fund and Portfolio, the Board considered whether
the provision of non-audit services to the Trust, the Funds and the Portfolios
was compatible with maintaining PwC's and E&Y's independence. The Boards of
Trustees of the Trust and of each Portfolio have selected PwC and E&Y as the
independent auditors for the applicable Fund and Portfolio for its respective
fiscal year ending 2002. E&Y has been the PreservationPlus Income and
Quantitative Equity Funds' and Portfolios' independent auditors since
inception. PwC has been the independent auditors for the other Funds and
Portfolios since inception. Each of PwC and E&Y has informed the Trust that it
has no material direct or indirect financial interest in the Trust or the
Portfolios.
Representatives of PwC and E&Y are not expected to be present at the Special
Meeting but have been given the opportunity to make a statement if they so
desire and will be available should any matter arise requiring their presence.
Audit Fees. The aggregate fees billed by PwC and E&Y for professional
services rendered for the audit of the Funds' and Portfolios' annual financial
statements for the most recent fiscal year and the review of the financial
statements included in the Funds' and Portfolios' reports to shareholders are
$161,000 and $45,000, respectively.
Financial Information Systems Design and Implementation Fees. There were no
fees billed by PwC or E&Y for the most recent fiscal year for professional
services rendered for financial information systems design and implementation
services provided to the Trust, the Funds or the Portfolios, DeAM, Inc. or
entities that control, are controlled by or are under common control with DeAM,
Inc. that provide services to the Trust, the Funds or the Portfolios.
All Other Fees. There were $2,876,305 and $219,000 in fees billed by PwC
and E&Y, respectively, for the most recent fiscal year for other services
provided to the Trust, the Funds and the Portfolios, DeAM, Inc. and entities
that control, are controlled by or are under common control with DeAM, Inc.
that provide services to the Trust, the Funds or the Portfolios.
31
VOTE REQUIRED
In view of the master-feeder structure discussed earlier, approval of each
of Proposal II with respect to a particular Portfolio's New Advisory Agreements
and, for International Fund, Proposal III with respect to approval of the
Sub-Advisory Agreement, requires the affirmative vote of a 'majority' of the
outstanding shares of the Portfolio's various feeder funds as shareholders of
the Portfolio. 'Majority' (as defined in the 1940 Act) means (as of the Record
Date) the lesser of (a) 67% or more of the shares of the applicable Portfolio
present at the special meeting, if the holders of more than 50% of the
outstanding shares of the Portfolio are present in person or by proxy, or (b)
more than 50% of the outstanding shares of the Portfolio (with respect to the
applicable feeder funds), determined by reference to the shares outstanding of
the various feeder funds. Because abstentions and broker non-votes are treated
as shares present but not voting, any abstentions and broker non-votes will
have the effect of votes against Proposals II and III, which require the
approval of a specified percentage of the outstanding shares of a Portfolio.
Approval of Proposal I requires the affirmative vote of a plurality of the
votes cast in person or by proxy at the special meetings of shareholders of all
the Portfolios' various feeder funds voting collectively. Because abstentions
and broker non-votes are not treated as shares voted, abstentions and broker
non-votes will have no impact on Proposal I.
THE BOARDS, INCLUDING THE INDEPENDENT TRUSTEES OF EACH, RECOMMEND THAT THE
SHAREHOLDERS VOTE 'FOR' APPROVAL OF PROPOSALS I, II, AND III. ANY UNMARKED
PROXIES WILL BE SO VOTED.
The Board is not aware of any other matters that will come before the
Special Meeting. Should any other matter properly come before the Special
Meeting, it is the intention of the persons named in the accompanying Proxy to
vote the Proxy in accordance with their judgment on such matters.
SUBMISSION OF SHAREHOLDER PROPOSALS
The Funds do not hold regular shareholders' meetings. Shareholders wishing
to submit proposals for inclusion in a proxy statement for a subsequent
shareholders' meeting should send their written proposals to the Secretary of
the Trust at the address set forth on the cover of this Proxy Statement.
Proposals must be received at a reasonable time prior to the date of a
meeting of shareholders to be considered for inclusion in the materials for a
Fund's meeting.
32
Timely submission of a proposal does not, however, necessarily mean that such
proposal will be included.
SHAREHOLDERS' REQUEST FOR SPECIAL MEETING
Shareholders holding at least 10% of each Fund's outstanding voting
securities (as defined in the 1940 Act) may require the calling of a meeting of
shareholders for the purpose of voting on the removal of any Trustee of the
Fund. Meetings of shareholders for any other purpose also shall be called by
the applicable Board of Trustees when requested in writing by shareholders
holding at least 10% of the shares then outstanding.
IF YOU HAVE ANY QUESTIONS CONCERNING THE PROXY STATEMENT OR THE PROCEDURES
TO BE FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT GEORGESON
SHAREHOLDER COMMUNICATIONS AT 1-866-333-0889.
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE SPECIAL MEETING AND WHO
WISH TO HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, OR FOLLOW THE INSTRUCTIONS FOR
VOTING BY TELEPHONE OR THROUGH THE INTERNET ON THE ENCLOSED PROXY.
By Order of the Board of Trustees,
/s/ Daniel O. Hirsch
Daniel O. Hirsch, Secretary
June 10, 2002
THE BOARD OF TRUSTEES OF THE TRUST HOPES THAT SHAREHOLDERS WILL ATTEND THE
SPECIAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE,
DATE, SIGN AND RETURN EACH ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE (OR
FOLLOW THE INSTRUCTIONS FOR VOTING BY TELEPHONE OR THROUGH THE INTERNET ON THE
ENCLOSED PROXY).
33
Exhibit A
-----------------------------------------------------------------------
SHARES OUTSTANDING AS OF RECORD DATE
-----------------------------------------------------------------------
-----------------------------------------------------------------------
FUND NUMBER OF SHARES OUTSTANDING
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Cash Fund 180,735,257.150
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Treasury Money Fund 291,168,812.580
-----------------------------------------------------------------------
-----------------------------------------------------------------------
International Fund--Class A 1,326,121.576
-----------------------------------------------------------------------
-----------------------------------------------------------------------
International Fund--Class B 47,180.103
-----------------------------------------------------------------------
-----------------------------------------------------------------------
International Fund--Class C 16,608.069
-----------------------------------------------------------------------
-----------------------------------------------------------------------
International Fund--Investment Class 32,628,869.949
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Lifecycle Long Range Fund 9,311,892.089
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Lifecycle Mid Range Fund 6,746,057.580
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Lifecycle Short Range Fund 2,286,728.666
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Quantitative Equity Fund--Investment Class 531,071.928
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Quantitative Equity Fund--
Institutional Class 211,141.168
-----------------------------------------------------------------------
-----------------------------------------------------------------------
PreservationPlus Income Fund 30,400,736.174
-----------------------------------------------------------------------
A-1
Exhibit B
5% Shareholders
- -------------------------------------- ------------------- ---------------------
CASH FUND:
- -------------------------------------- ------------------- ---------------------
Name and Address of Shares Beneficially Percent Ownership
Beneficial Owner Owned of Outstanding Shares
- -------------------------------------- ------------------- ---------------------
Private Bank Sweep Investment Advisory 84,195,125.73 51.58%
Linda Anderson
1 BT Plaza
17th Floor
New York, NY 10015
Private Bank Sweep Custody 52,396,554.37 32.10%
Linda Anderson
1 BT Plaza
17th Floor
New York, NY 10015
- -------------------------------------- ------------------- ---------------------
TREASURY MONEY FUND:
- -------------------------------------- ------------------- ---------------------
Name and Address Shares Beneficially Percent Ownership
of Beneficial Owner Owned of Outstanding Shares
- -------------------------------------- ------------------- ---------------------
Private Bank Sweep 45,069,717.85 18.71%
Custody, Attn: Linda Anderson
1 BT Plaza
17th Floor
New York, NY 10015
Private Bank Sweep 43,166,556.90 17.92%
Investment Advisory
Attn: Linda Anderson
1 BT Plaza
17th Floor
New York, NY 10015
Vendee1992-1/Master Reserve 27,126,776.93 11.26%
C/O Bankers Trust Company
3 Park Plaza
16th Floor
Irving, CA 92614-8505
B-1
INTERNATIONAL FUND--CLASS A:
----------------------------- ------------------- ---------------------
Name and Address Shares Beneficially Percent Ownership
of Beneficial Owner Owned of Outstanding Shares
----------------------------- ------------------- ---------------------
Salomon Smith Barney Inc 151,407.0740 13.87%
00131513164
333 West 34th St.--3rd Floor
New York, NY 10001-2483
Cuper & Co. 112,886.5980 10.34%
A Nominee Partnership
C/O Salisbury Bank & Trust Co
PO Box 1868
Lakeville CT 06039-1868
Salomon Smith Barney Inc 92,816.3430 8.50%
00131513910
333 West 34th St.--3rd Floor
New York, NY 10001-2483
Deutsche Bank Securities Inc. 77,757.4800 7.12%
FBO 201-16294-13
PO Box 1346
Baltimore MD 21203-1346
Deutsche Bank Securities Inc. 69,061.8440 6.33%
FBO 201-16298-19
PO Box 1346
Baltimore MD 21203-1346
INTERNATIONAL FUND--CLASS B:
----------------------------- ------------------- ---------------------
Name and Address Shares Beneficially Percent Ownership
of Beneficial Owner Owned of Outstanding Shares
----------------------------- ------------------- ---------------------
Bear Stearns Securities Corp 4,931.10710 10.88%
FBO 784-14377-13 1
Metrotech Ctr N
Brooklyn, NY 11201-3870
Dean Witter Reynolds 3,234.3340 7.13%
Cust for Joel D Rossi
PO Box 250
New York, NY 10008-0250
B-2
INTERNATIONAL FUND--CLASS C:
----------------------------- ------------------- ---------------------
Name and Address Shares Beneficially Percent Ownership
of Beneficial Owner Owned of Outstanding Shares
----------------------------- ------------------- ---------------------
Deutsche Bank Securities Inc. 1,764.4270 10.62%
FBO 223-22082-11
PO Box 1346
Baltimore, MD 21203-1346
Deutsche Bank Securities Inc. 1,642.8960 9.89%
FBO 201-18939-10
PO Box 1346
Baltimore, MD 21203-1346
Deutsche Bank Securities Inc. 1,365.2040 8.22%
FBO 222-08951-10
PO Box 1346
Baltimore, MD 21203-1346
Deutsche Bank Securities Inc. 1,278.7580 7.70%
FBO 223-22180-12
PO Box 1346
Baltimore, MD 21203-1346
Deutsche Bank Securities Inc. 1,001.3770 6.03%
FBO 247-22510-12
PO Box 1346
Baltimore, MD 21203-1346
Deutsche Bank Securities Inc. 987.2380 5.94%
FBO 201-81576-16
PO Box 1346
Baltimore, MD 21203-1346
Deutsche Bank Securities Inc. 978.8120 5.89%
FBO 201-81592-16
PO Box 1346
Baltimore, MD 21203-1346
Deutsche Bank Securities Inc. 927.8680 5.59%
FBO 201-18937-12
PO Box 1346
Baltimore, MD 21203-1346
B-3
INTERNATIONAL FUND-- INVESTMENT CLASS:
- ------------------------------------------------------------------ ---------------------
Name and Address Shares Beneficially Percent Ownership
of Beneficial Owner Owned of Outstanding Shares
- ---------------------------------------------- ------------------- ---------------------
Charles Schwab & Co. 9,254,779.09 28.31%
Omnibus Account Reinvest
Attn: Mutual Fund Acct. Mgmt Team
101 Montgomery St.
San Francisco, CA 94104-4122
National Financial Services Corporation for 1,974,605.27 6.04%
Exclusive Benefit of Our Customers
Attn: Mutual Funds
PO Box 3908
Church Street Station
New York, NY 10008-3908
LIFECYCLE LONG RANGE FUND:
- ---------------------------------------------- ------------------- ---------------------
Name and Address Shares Beneficially Percent Ownership
of Beneficial Owner Owned of Outstanding Shares
- ---------------------------------------------- ------------------- ---------------------
Partnershare Plan of Bankers Trust Co 3,240,206.70 34.85%
Attn: Justin Lake
100 Plaza One
Jersey City, NJ 07311-3901
Bankers Trust Co As Trustee for Westinghouse 2,227,444.62 23.96%
Savannah River Inc Savings and Investment Plan
34 Exchange PL MS 3064
Jersey City, NJ 07302-3885
Charles Schwab & Co/Schwab 2,541,642.21 16.58%
Omnibus Account Reinvest
Attn: Mutual Fund Acct Mgmt Team
101 Montgomery Street, 333-8
San Francisco, CA 94104
Mac & Co Cust 506,043.16 5.44%
Westinghouse Electric Sav & Invest Plan
Attn: Mutual Funds Operations
A/C WSPF1801112
PO Box 3198
Pittsburgh, PA 15230-3198
B-4
LIFECYCLE MID RANGE FUND:
- ---------------------------------------------- ------------------- ---------------------
Name and Address Shares Beneficially Percent Ownership
of Beneficial Owner Owned of Outstanding Shares
- ---------------------------------------------- ------------------- ---------------------
Charles Schwab & Co/Schwab 3,383,737.10 50.05%
Omnibus Account Reinvest
Attn: Mutual Fund Acct Mgmt Team
101 Montgomery Street, 333-8
San Francisco, CA 94104
Bankers Trust Co As Trustee for Westinghouse 847,843.84 12.54%
Savannah River Inc Savings and Investment Plan
34 Exchange PL MS 3064
Jersey City, NJ 07302-3885
Partnershare Plan of Bankers Trust Co 763,936.59 11.30%
Attn: Justin Lake
100 Plaza One
Jersey City, NJ 07311-3901
Mac & Co Cust 639,814.94 9.46%
Westinghouse Electric Sav & Invest Plan
Attn: Mutual Funds Operations
A/C WSPF1801112
PO Box 3198
Pittsburgh, PA 15230-3198
Bechtel Bettis Inc. Savings Plan 384,280.22 5.68%
c/o Bankers Trust Company
100 Plaza One
Jersey City, NJ 07311-3901
B-5
LIFECYCLE SHORT RANGE FUND:
- ---------------------------------------------- ------------------- ---------------------
Name and Address Shares Beneficially Percent Ownership
of Beneficial Owner Owned of Outstanding Shares
- ---------------------------------------------- ------------------- ---------------------
Partnershare Plan of Bankers Trust Co 483,919.76 21.12%
Attn: Justin Lake
100 Plaza One
Jersey City, NJ 07311-3901
Mac & Co Cust 416,264.05 18.17%
Westinghouse Electric Sav & Invest Plan
Attn: Mutual Funds Operations
A/C WSPF1801112
PO Box 3198
Pittsburgh, PA 15230-3198
Charles Schwab & Co 411,853.98 17.98%
Omnibus Account Reinvest
Attn: Mutual Fund Acct Mgmt Team
101 Montgomery Street, 333-8
San Francisco, CA 94104
Bankers Trust Co As Trustee for Westinghouse 303,205.52 13.23%
Savannah River/Bechtel
Savannah River Inc Savings and Investment Plan
34 Exchange PL MS 3064
Jersey City, NJ 07302-3885
Bechtel Bettis Inc. Savings Plan 169,187.42 7.08%
c/o Bankers Trust Company
100 Plaza One
Jersey City, NJ 07311-3901
Chase Manhattan Bank 134,023.20 5.85%
MetLife Defined Contribution Group Trust
4 New York Plz
New York, NY 10004-2423
- ---------------------------------------------- ------------------- ---------------------
QUANTITATIVE EQUITY FUND--INVESTMENT CLASS:
- ------------------------------------------------------------------ ---------------------
Name and Address Shares Beneficially Percent Ownership
of Beneficial Owner Owned of Outstanding Shares
- ---------------------------------------------- ------------------- ---------------------
National Financial Services Corporation 461,463.18 86.94%
For Exclusive Benefit of our Customers
Attn Mutual Funds
PO Box 3908
Church Street Station
New York, NY 10008-3908
B-6
- --------------------------------------- ------------------- ---------------------
QUANTITATIVE EQUITY FUND--INSTITUTIONAL CLASS:
- ----------------------------------------------------------- ---------------------
Name and Address Shares Beneficially Percent Ownership
of Beneficial Owner Owned of Outstanding Shares
- --------------------------------------- ------------------- ---------------------
National Financial Services Corporation 106,501.97 50.71%
For Exclusive Benefit of our Customers
55 Water Street
32nd Floor
New York, NY 10041-3299
National Financial Services Corporation 41,177.95 19.61%
For Exclusive Benefit of our Customers
Attn Mutual Funds
PO Box 3908
Church Street Station
New York, NY 10008-3908
Charles Schwab & Co 31,799.84 15.14%
Omnibus Account
Attn: Mutual Fund Acct MGMT Team
101 Montgomery Street, 333-8
San Francisco, CA 94104
Deutsche Bank Trust Company Americas 21,009.97 10.00%
FBO 2406902424
PO Box 9005
New York, NY 10007
- --------------------------------------- ------------------- ---------------------
PRESERVATIONPLUS INCOME FUND:
- --------------------------------------- ------------------- ---------------------
Name and Address Shares Beneficially Percent Ownership
of Beneficial Owner Owned of Outstanding Shares
- --------------------------------------- ------------------- ---------------------
Charles Schwab & Co 7,738,491.46 24.46%
Omnibus Account Reinvest
Attn: Mutual Fund Acct M
101 Montgomery Street, 333-8
San Francisco, CA 94104
B-7
Exhibit C
Aggregate Dollar Range of
Equity Securities as of
May 31, 2002 in all Funds
Overseen or to be Overseen by
Dollar Range of Equity Trustee or Nominee in
Name of Trustee or Nominee Securities in the Fund(s)/1/ Family of Investment Companies/2/
- -------------------------------------------------------------------------------------------
Independent Trustee Nominees
Richard R. Burt/3/ None over $100,000
S. Leland Dill None over $100,000
Martin J. Gruber None $10,001-$50,000
Joseph R. Hardiman/3/ None over $100,000
Richard J. Herring None over $100,000
Graham E. Jones None over $100,000
Rebecca W. Rimel/3/ None over $100,000
Philip Saunders, Jr. None $50,001-$100,000
William N. Searcy None $10,001-$50,000
Robert H. Wadsworth/3/ None Over $100,000
Interested Trustee Nominee
Richard T. Hale None Over $100,000
- --------
/1/ Securities beneficially owned as defined under the Securities Exchange Act
of 1934 (the '1934 Act') include direct and or indirect ownership of
securities where the trustee's economic interest is tied to the securities,
employment ownership and securities when the trustee can exert voting power
and when the trustee has authority to sell the securities. The dollar
ranges are: None, $1-$10,000, $10,001-$50,000, $50,001-$100,000, over
$100,000.
/2/ The dollar ranges are: None, $1-$10,000, $10,001-$50,000, $50,001-$100,000,
over $100,000. The funds overseen or to be overseen by the trustees and
nominees in the family of investment companies consist of the following:
Flag Investors Communications Fund, Flag Investors Equity Partners Fund,
Flag Investors Value Builder Fund, Emerging Growth Fund, Real Estate
Securities Fund, Short-Intermediate Income Fund, Deutsche Bank Alex. Brown
Cash Reserve Fund Prime Series, Deutsche Bank Alex. Brown Cash Reserve Fund
Tax-Free Series, Deutsche Bank Alex. Brown Cash Reserve Fund Treasury
Series, Top 50 World Fund, Top 50 World Portfolio, Top 50 US Fund, Top 50
US Portfolio, Top 50 Asia Fund, Top 50 Asia Portfolio, Top 50 Europe Fund,
Top 50 Europe Portfolio, European Mid-Cap Fund, European Mid-Cap Portfolio,
Japanese Equity Fund, Japanese Equity Portfolio, Global Financial Services
Fund, Global Biotechnology Fund, Global Technology Fund, Growth Opportunity
Fund, BT Investment Funds: Cash Management Fund, Tax Free Money Fund,
Treasury Money Fund, International Equity Fund, Mid Cap Fund, Lifecycle
Long Range Fund, Lifecycle Mid Range Fund, Lifecycle Short Range Fund,
Small Cap Fund, Quantitative Equity Fund, PreservationPlus Income Fund,
Global Equity Fund; BT Advisor Funds: EAFE(R) Equity Index Fund, US Bond
Index Fund; BT Pyramid Mutual Funds: Money Market Fund, Equity 500 Index
Fund, Asset Management Fund, PreservationPlus Fund; BT Institutional Funds:
Cash Management Fund, Cash Reserves Fund, Treasury Money Fund,
International Equity Fund, Equity 500 Index Fund, Liquid Assets Fund, Daily
Assets Fund, Treasury and Agency Fund, Morgan Grenfell Investment Trust:
Fixed Income Fund, Short-Term Fixed Income Fund, Municipal Bond Fund,
Short-Term Municipal Bond Fund, High Yield Bond Fund, Total Return Bond
Fund, European Equity Fund, Micro Cap Fund, International Select Equity
Fund, Emerging Markets Equity Fund, Emerging Markets Debt Fund; and
Deutsche Asset Management VIT Funds: Equity 500 Index Fund, Global
Biotechnology Fund, International Select Equity Fund, Small Cap Index Fund,
EAFE Equity Index Fund, Managed Assets, NASDAQ-100 Index Fund and US Bond
Index Fund.
/3/ The amount shown includes share equivalents of funds in which the Board
member is deemed to be invested pursuant to a fund's deferred compensation
plan. The inclusion therein of any shares deemed beneficially owned does
not constitute an admission of beneficial ownership of the shares.
C-1
Exhibit D
- -------------------------------------------------------------------------------------------------------------
Date Last Approved By Portfolio's and Fund's
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Date of Prior Advisory
Portfolio (Fiscal Year) Agreement Trustees Shareholders*
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Cash Portfolio 12/31 4/30/01 6/12/01 9/21/99
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Treasury Money Portfolio
12/31 4/30/01 6/12/01 9/21/99
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
International Portfolio
10/31 4/30/01 6/12/01 9/21/99
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Asset Portfolio 3/31 4/30/01 6/12/01 9/21/99
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Asset Portfolio II 3/31 4/30/01 6/12/01 9/21/99
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Asset Portfolio III 3/31 4/30/01 6/12/01 9/21/99
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Preservation Plus Income
Portfolio 9/30 4/30/01 6/12/01 9/21/99
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Quantitative Equity
Portfolio 12/31 4/30/01 6/12/01 9/21/99
- -------------------------------------------------------------------------------------------------------------
- --------
* Submitted for shareholder vote because the merger on June 4, 1999 between
Bankers Trust Company, the then-current advisor to the Portfolios, and a US
subsidiary of Deutsche Bank AG may have arguably resulted in an assignment
and, therefore, termination of the investment advisory agreements.
D-1
Exhibit E
[FORM OF [INVESTMENT ADVISORY] [SUB-ADVISORY] AGREEMENT]
THIS AGREEMENT is made as of the day of , by and between
, a [state of organization] (the 'Trust'), and DEUTSCHE ASSET MANAGEMENT,
INC., a corporation (the 'Advisor') [and (the 'Sub-Advisor')].
WHEREAS, the Trust is registered as an open-end,
[diversified][non-diversified], management investment company under the
Investment Company Act of 1940, as amended (the '1940 Act'), consisting of
several series of shares, each having its own investment policies;
WHEREAS, the Advisor [and the Sub-Advisor] is [each] registered as an
investment advisor under the Investment Advisers Act of 1940, as amended, and
engages in the business of acting as an investment advisor; and
WHEREAS, the Trust and the Advisor desire to enter into an agreement to
provide investment advisory services for the series listed in Schedule A to
this Agreement on the terms and conditions hereinafter set forth ; [and]
[WHEREAS, the Advisor desires to retain the Sub-Advisor to perform certain
of the Advisor's duties under this Agreement, and the Sub-Advisor is willing to
so render such services on the terms and conditions hereinafter set forth.]/1/
NOW THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
1. Appointment of Investment [Advisor] [Sub-Advisor]. The [Trust]
[Advisor] hereby appoints the [Advisor] [Sub-Advisor] to act as the investment
[advisor] [sub-advisor] of each series listed in Schedule A to this Agreement
(each such series, together with all other series subsequently established by
the Trust and made subject to this Agreement in accordance with section 11,
being herein referred to as 'a Series', and collectively as 'the Series'). The
[Advisor] [Sub-Advisor, subject to the supervision of the Advisor,] shall
manage a Series' affairs and shall supervise all aspects of a Series'
operations (except as otherwise set forth herein), including the investment and
reinvestment of the cash, securities or other properties comprising a Series'
assets, subject at all times to the policies and control of the Board of
Trustees. The [Advisor] [Sub-Advisor] shall give a Series the benefit of its
best judgment, efforts and facilities in rendering its services as [Advisor]
[Sub-Advisor].
- --------
/1/ Contained in the form of sub-advisory agreement only.
E-1
2. Delivery of Documents. The Trust [Advisor] has furnished the Advisor
[Sub-Advisor] with copies properly certified or authenticated of each of the
following:
(a) The Trust's Declaration of Trust, filed with the State of
on , and all amendments thereto (such Declaration of
Trust, as presently in effect and as it shall from time to time be
amended, is herein called the 'Declaration of Trust');
(b) [The Trust's Agreement of Trust and all amendments thereto (such
Agreement of Trust, as presently in effect and as it shall from time to
time be amended, is herein called the 'Trust Agreement');]
(c) Resolutions of the Trust's Board of Trustees and shareholders
authorizing the appointment of the [Advisor] [Sub-Advisor] and approving
this Agreement;
(d) The Trust's Registration Statement on Form N-1A under the Securities Act
of 1933, as amended (the '1933 Act') (File No. - ) and under
the 1940 Act as filed with the Securities and Exchange Commission
('SEC') relating to the shares of the Trust and its series, and all
amendments thereto; and
(e) Each Series' most recent prospectus (such prospectus, as presently in
effect, and all amendments and supplements thereto are herein called
'Prospectus').
The [Trust] [Advisor] will furnish the [Advisor] [Sub-Advisor] from time to
time with copies, properly certified or authenticated, of all amendments or
supplements to the foregoing, if any, and all documents, notices and reports
filed with the SEC.
The [Advisor] [Sub-Advisor] will provide the Trust with copies of its Form
ADV, including all amendments thereto, as filed with the SEC.
3. Duties of Investment [Advisor] [Sub-Advisor]. In carrying out its
obligations under Section 1 hereof, the [Advisor] [Sub-Advisor, subject to the
supervision of the Advisor,] shall:
(a) supervise and manage all aspects of a Series' operations, except for
distribution services;
(b) formulate and implement continuing programs for the purchases and sales
of securities, consistent with the investment objective and policies of a
Series;
E-2
(c) provide the Trust with, or obtain for it, adequate office space and all
necessary office equipment and services, including telephone service,
utilities, stationery, supplies and similar items for the Trust's
principal office;
(d) obtain and evaluate pertinent information about significant developments
and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or a Series, and
whether concerning the individual issuers whose securities are included
in a Series portfolio or the activities in which they engage, or with
respect to securities which the [Advisor] [Sub-Advisor] considers
desirable for inclusion in a Series' portfolio;
(e) determine which issuers and securities shall be represented in a Series'
portfolio and regularly report thereon to the Trust's Board of Trustees;
and
(f) take all actions necessary to carry into effect a Series' purchase and
sale programs.
4. Portfolio Transactions. The [Advisor] [Sub-Advisor] is authorized to
select the brokers or dealers that will execute the purchases and sales of
portfolio securities for a Series and is directed to use its reasonable best
efforts to obtain the best net results as described from time to time in a
Series' prospectus and statement of additional information. The [Advisor]
[Sub-Advisor] will promptly communicate to the Administrator and to the
officers and the Trustees of the Trust such information relating to portfolio
transactions as they may reasonably request.
It is understood that the [Advisor] [Sub-Advisor] will not be deemed to have
acted unlawfully, or to have breached a fiduciary duty to the Trust or be in
breach of any obligation owing to the Trust under this Agreement, or otherwise,
solely by reason of its having directed a securities transaction on behalf of a
Series to a broker-dealer in compliance with the provisions of Section 28(e) of
the Securities Exchange Act of 1934 or as otherwise permitted from time to time
by a Series' prospectus and statement of additional information.
Subject to the policies established by the Board in compliance with
applicable law, the [Advisor] [Sub-Advisor] may direct DB Securities, Inc. ('DB
Securities') or any of its affiliates to execute portfolio transactions for a
Series on an agency basis. The commissions paid to DB Securities or any of its
affiliates must be, as required by Rule 17e-1 under the 1940 Act, 'reasonable
and fair compared to the commission, fee or other remuneration received or to
be received by other brokers in connection with comparable transactions
involving similar securities . . . during a comparable period of time.' If the
purchase or sale of securities consistent with the investment policies of a
Series or one or more other accounts of the [Advisor] [Sub-Advisor] is
considered at or about the same time, transactions in such securities will be
allocated
E-3
among the accounts in a manner deemed equitable by the [Advisor] [Sub-Advisor].
DB Securities or any of its affiliates and the [Advisor] [Sub-Advisor] may
combine such transactions, in accordance with applicable laws and regulations,
in order to obtain the best net price and most favorable execution.
The Trust on behalf of a Series will not deal with the [Advisor]
[Sub-Advisor] or DB Securities or any of its affiliates in any transaction in
which the [Advisor] [Sub-Advisor] or DB Securities or any of its affiliates
acts as a principal with respect to any part of a Series' order, except in
compliance with rules of the SEC. If DB Securities or any of its affiliates is
participating in an underwriting or selling group, a Series may not buy
portfolio securities from the group except in accordance with policies
established by the Board in compliance with rules of the SEC.
5. Control by Board of Trustees. Any management or supervisory activities
undertaken by the [Advisor] [Sub-Advisor] pursuant to this Agreement, as well
as any other activities undertaken by the [Advisor] [Sub-Advisor] on behalf of
a Series pursuant thereto, shall at all times be subject to any applicable
directives of the Board.
6. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the [Advisor] [Sub-Advisor] shall at all
times conform to:
(a) all applicable provisions of the 1940 Act and any rules and regulations
adopted thereunder;
(b) the provisions of the Registration Statement of the Trust on behalf of a
Series under the 1933 Act and the 1940 Act;
(c) the provisions of the Declaration of Trust;
(d) [the provisions of the Trust Agreement; and]
(e) any other applicable provisions of state and federal law.
7. Expenses. The expenses connected with the Trust on behalf of a Series
shall be allocable between the Trust and the [Advisor] [Sub-Advisor] as follows:
(a) The [Advisor] [Sub-Advisor] shall furnish, at its expense and without
cost to the Trust, the services of one or more officers of the [Advisor]
[Sub-Advisor], to the extent that such officers may be required by the
Trust on behalf of a Series for the proper conduct of its affairs.
(b) The Trust assumes and shall pay or cause to be paid all other expenses
of the Trust on behalf of a Series, including, without limitation:
payments to the Trust's distributor under the Trust's plan of
distribution; the charges and expenses of any registrar, any custodian
or depository appointed by the
E-4
Trust for the safekeeping of a Series' cash, portfolio securities and
other property, and any transfer, dividend or accounting agent or agents
appointed by the Trust; brokers' commissions chargeable to the Trust on
behalf of a Series in connection with portfolio securities transactions
to which the Trust is a party; all taxes, including securities issuance
and transfer taxes, and fees payable by the Trust to Federal, State or
other governmental agencies; the costs and expenses of engraving or
printing of certificates representing shares of the Trust; all costs and
expenses in connection with the registration and maintenance of
registration of the Trust and its shares with the SEC and various states
and other jurisdictions (including filing fees, legal fees and
disbursements of counsel); the costs and expenses of printing, including
typesetting, and distributing prospectuses and statements of additional
information of the Trust and supplements thereto to the Trust's
shareholders; all expenses of shareholders' and Trustees' meetings and
of preparing, printing and mailing of proxy statements and reports to
shareholders; fees and travel expenses of Trustees or Trustee members of
any advisory board or committee; all expenses incident to the payment of
any dividend, distribution, withdrawal or redemption, whether in shares
or in cash; charges and expenses of any outside service used for pricing
of the Trust's shares; charges and expenses of legal counsel, including
counsel to the Trustees of the Trust who are not interested persons (as
defined in the 1940 Act) of the Trust and of independent certified
public accountants, in connection with any matter relating to the Trust;
membership dues of industry associations; interest payable on Trust
borrowings; postage; insurance premiums on property or personnel
(including officers and Trustees) of the Trust which inure to its
benefit; extraordinary expenses (including but not limited to, legal
claims and liabilities and litigation costs and any indemnification
related thereto); and all other charges and costs of the Series' or
Trust's operation unless otherwise explicitly provided herein.
8. [Delegation] [Adjustment] of [Advisory] [Sub-Advisory] Services.
[Subject to the prior approval of a majority of the members of the Trust's and
the Series' Boards of Trustees, including a majority of the Trustees who are
not 'interested persons,' as defined in the 1940 Act, the Advisor may, through
a sub-advisory agreement or other arrangement, delegate to any other company
that the Advisor controls, is controlled by, or is under common control with,
or to specified employees of any such companies, or to more than one such
company, to the extent permitted by applicable law, certain of the Advisor's
duties enumerated in section 1 hereof, and may adjust the duties of such
entity, the portion of portfolio assets of the Series that such entity- shall
manage and the fees to be paid to such entity, subject to the prior approval of
the members of the Trust's and the Series' Board of Trustees who are not
'interested persons,' as defined in the 1940 Act; provided, that the Advisor
shall con-
E-5
tinue to supervise the services provided by such company or employees and any
such delegation shall not relieve the Advisor of any of its obligations
hereunder.]/2/
[Subject to the provisions of this Agreement, the duties of the Sub-Advisor,
the portion of portfolio assets of the Series that the Sub-Advisor shall manage
and the fees to be paid to the Sub-Advisor by the Advisor under and pursuant to
the Sub-Advisory Agreement or other arrangement entered into in accordance with
this Agreement may be adjusted from time to time by the Advisor, subject to the
prior approval of the members of the Trust's and the Series' Board of Trustees
who are not 'interested persons,' as defined in the 1940 Act.]/3/
9. Compensation. For the services to be rendered and the expenses assumed
by the [Advisor] [Sub-Advisor], the [Trust] [Advisor] shall pay to the
[Advisor] [Sub-Advisor] monthly compensation in accordance with Schedule A.
Except as hereinafter set forth, compensation under this Agreement shall be
calculated and accrued daily and the amounts of the daily accruals shall be
paid monthly. If this Agreement becomes effective subsequent to the first day
of a month, compensation for that part of the month this Agreement is in effect
shall be prorated in a manner consistent with the calculation of the fees as
set forth above.
In the event of termination of this Agreement, the [advisory] [sub-advisory]
fee shall be computed on the basis of the period ending on the last business
day on which this Agreement is in effect subject to a pro rata adjustment based
on the number of days elapsed in the current month as a percentage of the total
number of days in such month.
In addition to the foregoing, the [Advisor] [Sub-Advisor] may from time to
time agree not to impose all or a portion of its fee otherwise payable
hereunder (in advance of the time such fee or a portion thereof would otherwise
accrue) and/or undertake to pay or reimburse the [Trust on behalf of the
Series] [Advisor] for all or a portion of its expenses not otherwise required
to be borne or reimbursed by the [Advisor] [Sub-Advisor]. Any such fee
reduction or undertaking may be discontinued or modified by the Advisor at any
time.
All rights of compensation under this Agreement for services performed as of
the termination date shall survive the termination of this Agreement.
10. Non-Exclusivity. The services of the [Advisor] [Sub-Advisor] to the
Trust on behalf of each Series are not to be deemed to be exclusive, and the
[Advisor] [Sub-Advisor] shall be free to render investment advisory or other
services to others (including other investment companies) and to engage in
other activities, so long as
- --------
/2/ Contained in the form of Advisory Agreement only.
/3/ Contained in the form of Sub-Advisory Agreement only.
E-6
its services under this Agreement are not impaired thereby. It is understood an
agreed that officers or directors of the [Advisor] [Sub-Advisor] may serve as
officers or Trustees of the Trust, and that officers or Trustees of the Trust
may serve as officers or directors of the [Advisor] [Sub-Advisor] to the extent
permitted by law; and that the officers and directors of the [Advisor]
[Sub-Advisor] are not prohibited from engaging in any other business activity
or from rendering services to any other person, or from serving as partners,
officers, trustees or directors of any other firm, trust or corporation,
including other investment companies.
11. Additional Series and Classes. In the event that the Trust establishes
one or more series of Shares or one or more classes of Shares after the
effectiveness of this Agreement, such series of shares or classes of shares, as
the case may be, shall become Series and Classes under this Agreement upon
approval of this Agreement by the Board with respect to the series of shares or
class of shares and the execution of an amended Appendix A reflecting the
applicable names and terms.
12. Duration and Termination. This Agreement, unless sooner terminated as
provided herein, shall remain in effect with respect to the Trust on behalf of
a Series until two years from the date first set forth above, and thereafter,
for periods of one year so long as such continuance thereafter is specifically
approved at least annually (a) by the 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 approval, and (b) by the Trustees of the Trust or by vote of a majority of
the outstanding voting securities of a Series, subject to the right of the
Trust and the [Advisor] [Sub-Advisor] to terminate this contract as provided in
this Section 12; provided, however, that if the shareholders of a Series fail
to approve the Agreement as provided herein, the [Advisor] [Sub-Advisor] may
continue to serve hereunder in the manner and to the extent permitted by the
1940 Act as modified or interpreted by any applicable order or orders of the
SEC or any rules or regulations adopted by, or interpretative releases of, the
SEC thereunder. The foregoing requirement that continuance of this Agreement be
'specifically approved at least annually' shall be construed in a manner
consistent with the 1940 Act as modified or interpreted by any applicable order
or orders of the SEC or any rules or regulations adopted by, or interpretative
releases of, the SEC thereunder.
This Agreement may be terminated as to a Series at any time, without the
payment of any penalty by vote of a majority of the Trustees of the Trust or by
vote of a majority of the outstanding voting securities of a Series on not less
than 60 days' written notice to the [Advisor] [Sub-Advisor], or by the
[Advisor] [Sub-Advisor] at any time without the payment of any penalty, on 90
days written notice to the [Trust] [Advisor]. This Agreement will automatically
and immediately terminate in the event
E-7
of its assignment. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the other party at any office
of such party.
As used in this Section 12, the term 'assignment' shall have the meaning as
set forth in the 1940 Act as modified or interpreted by any applicable order or
orders of the SEC or any rules or regulations adopted by, or interpretative
releases of, the SEC.
13. Limitation of Liability of the [Advisor] [Sub-Advisor]. The [Advisor]
[Sub-Advisor] shall not be liable for any error of judgment or mistake of law
or for any loss suffered by a Series in connection with the matters to which
this Agreement relates, except a loss resulting from a breach of fiduciary duty
with respect to the receipt of compensation for services or a loss resulting
from willful misfeasance, bad faith or gross negligence on the part of the
[Advisor] [Sub-Advisor] in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
14. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice.
Currently such addresses are as follows: if to the Trust and the Advisor, One
South Street, Baltimore, Maryland 21202 ; [if to the Sub-Advisor,
].
15. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
16. Entire Agreement. This Agreement states the entire agreement of the
parties hereto, and is intended to be the complete and exclusive statement of
the terms hereof. It may not be added to or changed orally, and may not be
modified or rescinded except by a writing signed by the parties hereto and in
accordance with the 1940 Act as modified or interpreted by any applicable order
or orders of the SEC or any rules or regulations adopted by, or interpretative
releases of, the SEC, when applicable.
17. Reports. [The Trust and the Advisor] [The Advisor and the Sub-Advisor]
agree to furnish to each other, if applicable, current prospectuses, proxy
statements, reports to shareholders, certified copies of their financial
statements, and such other information with regard to their affairs as each may
reasonably request.
18. Certain Records. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated under
E-8
the 1940 Act which are prepared or maintained by the [Advisor] [Sub-Advisor] on
behalf of the Trust are the property of the Trust and will be surrendered
promptly to the Trust on request.
19. Questions of Interpretation. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such term or provision of the 1940 Act and to interpretations thereof, if
any, by the United States Courts or in the absence of any controlling decision
of any such court, by rules, regulations or orders of the SEC issued pursuant
to the 1940 Act. In addition, where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is modified or interpreted by any
applicable order or orders of the SEC or any rules or regulations adopted by,
or interpretative releases of, the SEC thereunder, such provision shall be
deemed to incorporate the effect of such order, rule, regulation or
interpretative release. Otherwise the provisions of this Agreement shall be
interpreted in accordance with the laws of Maryland.
20. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
E-9
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
[SEAL] [TRUST]
Attest: ---------------------------------- By: ----------------------------------
Name: ---------------------------------- Name: ----------------------------------
Title: ----------------------------------
[SEAL] DEUTSCHE ASSET MANAGEMENT, INC.
Attest: ---------------------------------- By: ----------------------------------
Name: ---------------------------------- Name: ----------------------------------
Title: ----------------------------------
[SEAL] [SUB-ADVISOR]
Attest: ---------------------------------- By: ----------------------------------
Name: ---------------------------------- Name: ----------------------------------
Title: ----------------------------------
E-10
EXHIBIT A
TO
INVESTMENT [ADVISORY] [SUB-ADVISORY] AGREEMENT
MADE AS OF
BETWEEN
[Fund Name] AND [ ]
Investment [Advisory]
Series [Sub-Advisory] Fee
-----------------------------------------------------
E-11
Exhibit F
ADVISORY FEES
The table below sets forth, for each Portfolio, the fee paid, on an annual
basis, to DeAM, Inc. for its services under the Current Advisory Agreements,
calculated daily and paid monthly. The table also sets forth the amounts paid
by each Portfolio to DeAM, Inc. for providing investment advisory services for
its most recent fiscal year.
ADVISORY Rate of
AGREEMENT Total
PORTFOLIO FEE Fee Waiver Expenses*
--------------------------------------------------------------------
Cash Portfolio 0.15% $14,288,809 $ 2,046,136
--------------------------------------------------------------------
Treasury Money Portfolio 0.15% $ 1,712,922 $ 75,652
--------------------------------------------------------------------
International Portfolio 0.65% $14,146,440 $ 2,247,091
--------------------------------------------------------------------
Asset Portfolio 0.65% $ 3,611,200 $952,123.95
--------------------------------------------------------------------
Asset Portfolio II 0.65% $ 535,418 $147,629.17
--------------------------------------------------------------------
Asset Portfolio III 0.65% $ 165,968 $ 77,902.69
--------------------------------------------------------------------
Quantitative Equity
Portfolio 0.50% $ 41,119 $ 22,778
--------------------------------------------------------------------
PreservationPlus Income
Portfolio 0.70% $ 1,400,942 $ 427,358
* DeAM, Inc. and ICCC, the Portfolios' and the Funds' administrator, have
agreed, for a 16-month period from each [Portfolio's] [Fund's] fiscal year
end, to waive their fees and reimburse expenses so that total expenses will
not exceed the amount shown.
F-1
ADMINISTRATIVE FEES
ICCC serves as administrator and transfer agent and provides fund accounting
services to each Portfolio. For its services, ICCC was paid the following
amounts as of the most recent fiscal year by the Portfolios and/or Funds, as
applicable. ICCC pays custody fees to Deutsche Bank Trust for each Portfolio
and/or Fund, as applicable, out of the fee paid to it for its services.
Fund Fee Reimbursement
------------------------------------------------------
Cash Fund $ 1,147,392 $ 18,387
------------------------------------------------------
Treasury Money Fund $ 1,690,578 $ 103,433
------------------------------------------------------
International Fund $12,453,022 $1,031,917
------------------------------------------------------
Lifecycle Long Range Fund $ 964,623 $ 371,206
------------------------------------------------------
Lifecycle Mid Range Fund $ 550,054 $ 287,372
------------------------------------------------------
Lifecycle Short Range Fund $ 169,969 $ 136,485
------------------------------------------------------
Quantitative Equity Fund $ 19,959 $ 140,441
------------------------------------------------------
PreservationPlus Income Fund $ 4,731 $ 21,675
AFFILIATED BROKERS FEES
The table below sets forth, for each Portfolio's most recently completed
fiscal year, the aggregate amounts of commissions paid to, each Portfolio's
affiliated brokers, and the percentage of each Portfolio's aggregate brokerage
commissions paid to affiliated brokers. and are considered to be
an affiliated broker of the Portfolios because .
Aggregate Affiliated Percentage of Aggregate
Portfolio Brokerage Commission Brokerage Commissions
--------------------------------------------------------------------------
Cash Portfolio
--------------------------------------------------------------------------
Treasury Money Portfolio
--------------------------------------------------------------------------
International Portfolio
--------------------------------------------------------------------------
Asset Portfolio
--------------------------------------------------------------------------
Asset Portfolio II
--------------------------------------------------------------------------
Asset Portfolio III
--------------------------------------------------------------------------
Quantitative Equity Portfolio
--------------------------------------------------------------------------
PreservationPlus Income
Portfolio
--------------------------------------------------------------------------
F-2
Exhibit G
Investment Companies Advised or Subadvised by DeAM, Inc.
Total Assets as of Contractual
Funds with similar investment objectives/1/ March 31, 2002 Advisory Fees
------------------------------------------ ------------------ -------------
Cash Management Portfolio $ 8,864,978,784.10 0.15%/2/
Cash Management Fund Investment $ 172,157,192.00 --/2/
Money Market Fund Investment $ 467,978,717.10 --/2/
Cash Management Institutional $ 4,106,682,789.00 --/2/
Cash Reserves Fund Institutional $ 4,118,160,086.00 --/2/
ProFunds Money Market $ 329,855,632.21 --/2/
Daily Assets Institutional $13,769,592,056.02 0.10%
Liquid Assets Portfolio $ 3,462,320,142.66 0.15%/4/
Liquid Assets Fund Institutional $ 3,462,320,142.66 --/4/
NY Tax Free Money Fund Investment $ 113,782,609.80 0.15%
Tax Free Money Fund Investment $ 187,131,450.40 0.15%
Treasury Money Fund Institutional $ 560,519,570.00 --/3/
Treasury Money Fund Investment $ 287,537,642.70 --/3/
Treasury Money Portfolio $ 848,057,212.70 0.15%/3/
Treasury and Agency Fund Institutional $ 680,036,526.74 0.15%
- --------
1 Cash Management Portfolio is the master portfolio. Cash Management
Investments, Money Market Investments, Cash Management Institutional, Cash
Reserves Institutional and ProFunds Money Market are feeder funds to the
Cash Management Portfolio. The advisory fee is paid by the master portfolio
under the Advisory Agreement and allocated to the feeder funds
proportionately based upon the feeder fund's interest in the master
portfolio.
2 Treasury Money Portfolio is the master portfolio. Treasury Money Fund
Investment and Treasury Money Fund Institutional are feeder funds to the
Treasury Money Portfolio. The advisory fee is paid by the master portfolio
under the Advisory Agreement and allocated to the feeder funds
proportionately based upon the feeder fund's interest in the master
portfolio.
3 Liquid Assets Portfolio is the master portfolio. Liquid Assets Fund
Institutional is the only feeder fund to the Liquid Assets Portfolio. The
advisory fee is paid by the master portfolio under the Advisory Agreement
and allocated to the feeder fund.
G-1
Total Assets as of Contractual
Funds with similar investment objectives/1/ March 31, 2002 Advisory Fees
------------------------------------------ ------------------ -------------
International Equity Portfolio $1,160,838,157.96 0.65%/5/
International Equity Fund $ 696,665,629.39 --/5/
Global Equity Fund $ 4,108,648.03 0.60%
EAFE Equity Index Portfolio $ 156,882,897.50 0.25%/6/
EAFE Equity Index Premier Class $ 156,882,897.50 --/6/
Quantitative Equity Portfolio $ 7,379,262.76 0.50%/7/
Quantitative Equity Fund $ 5,396,784.30 --/7/
Asset Management Portfolio $ 580,949,849.30 0.65%/8/
Lifecycle Long Range Investment Class $ 143,337,095.20 --/8/
Asset Management Premier Class $ 437,612,754.10 --/8/
- --------
/5/ International Equity Portfolio is the master portfolio. International
Equity Fund Investment and International Equity Fund Institutional are
feeder funds to the International Equity Portfolio. The advisory fee is
paid by the master portfolio under the Advisory Agreement and allocated to
the feeder funds proportionately based upon the feeder fund's interest in
the master portfolio.
/6/ EAFE Equity Index Portfolio is the master portfolio. EAFE Equity Index Fund
Premier is the only feeder fund to the EAFE Equity Index Portfolio. The
advisory fee is paid by the master portfolio under the Advisory Agreement
and allocated to the feeder fund.
/7/ Quantitative Equity Portfolio is the master portfolio. Quantitative Equity
Fund is the feeder fund to the Quantitative Equity Portfolio. The advisory
fee is paid by the master portfolio under the Advisory Agreement and
allocated to the feeder fund.
/8/ Asset Management Portfolio is the master portfolio. Lifecycle Long Range
Fund and Asset Management Fund Premier are the only feeder funds to the
Asset Management Portfolio. The advisory fee is paid by the master
portfolio under the Advisory Agreement and allocated to the feeder fund.
G-2
Total Assets as of Contractual
Funds with similar investment objectives/1/ March 31, 2002 Advisory Fees
------------------------------------------ ------------------ -------------
Asset Management II Portfolio $ 76,021,062.39 0.65%/9/
Lifecycle Mid Range Investment Class $ 76.021,062.39 --/9/
Asset Management III Portfolio $ 26,858,733.92 0.65%/10/
Lifecycle Short Range Investment Class $ 26,858,733.92 --/10/
Flag Investors Value Builder Fund $863,086,067.65 0.74%
PreservationPlus Portfolio $247,343,734.30 0.35%/11/
PreservationPlus Fund $247,343,734.20 --/11/
PreservationPlus Income Portfolio $ 82,687,766.19 0.70%/12/
PreservationPlus Income Fund $ 82,687,766.19 --/12/
Security Capital Preservation Fund $339,121,376.72 --/12/
- --------
/9/ Asset Management II Portfolio is the master portfolio. Lifecycle Mid Range
Fund is the only feeder fund to Asset Management II Portfolio. The advisory
fee is paid by the master portfolio under the Advisory Agreement and
allocated to the feeder fund.
10 Asset Management III Portfolio is the master portfolio. Lifecycle Short
Range is the only feeder fund to Asset Management III Portfolio. The
advisory fee is paid by the master portfolio under the Advisory Agreement
and allocated to the feeder fund.
/11/ PreservationPlus Portfolio is the master portfolio. PreservationPlus Fund
is the only feeder fund to the PreservationPlus Portfolio. The advisory
fee is paid by the master portfolio under the Advisory Agreement and
allocated to the feeder fund.
/12/ PreservationPlus Income Portfolio is the master portfolio.
PreservationPlus Income Fund and Security Capital Preservation Fund are
the feeder funds to the PreservationPlus Income Portfolio. The advisory
fee is paid by the master portfolio under the Advisory Agreement and
allocated to the feeder funds proportionately based upon the feeder fund's
interest in the master portfolio.
G-3
Total Assets as of Contractual
Funds with similar investment objectives/1/ March 31, 2002 Advisory Fees
- ------------------------------------------------- ------------------ -------------
SP Deutsche International Equity $ 32,588,294.00 Note A
Consulting Group Capital Markets Funds--
International Equity Fund $202,924,430.00 Note B
Security Equity Fund--Security International Fund $ 7,177,971.00 Note C
SBL Fund--Series I $ 16,315,987.00 Note D
Security Equity Fund--Security Enhanced Index
Fund $ 40,506,081.02 Note E
SBL Fund--Series H $ 1,091,284.01 Note F
- --------
Note A Annual rate of 0.55% of the average daily net assets of the Portfolio up
to and including $500 million and 0.50% of the average daily net assets
of the portfolio for assets in excess of $500 million.
Note B Annual rate of 0.50%, multiplied by the average daily value of Allocated
Assets.
Note C Annual rate of 0.60% of the combined average daily net assets of the
International Funds of $200 million or less; and an annual rate of 0.55%
of the combined average daily net assets of the International Funds or
more than $200 million.
Note D Annual rate of 0.60% of the combined daily net assets of the
International Funds of $200 million or less; and an annual rate of 0.55%
of the combined average daily net assets of the International Funds or
more than $200 million.
Note E An annual rate of .20% of the combined average daily net assets of the
Enhanced Index Funds of $100 million or less; annual rate of .15% of the
combined average daily net assets of the Enhanced Index funds of more
than $100 million but less than $300 million; and an annual rate of .13%
of the combined average daily net assets of the Enhanced Index funds in
excess of $300 million. (c)
Note F An annual rate of .20% of the combined average daily net assets of the
Enhanced Index Funds of $100 million or less; annual rate of .15% of the
combined average daily net assets of the Enhanced Index funds of more
than $100 million but less than $300 million; and an annual rate of .13%
of the combined average daily net assets of the Enhanced Index funds in
excess of $300 million. (c)
4
Exhibit H
Principal occupations of each director and
principal executive officer of DeAM, Inc.
The names and principal occupations of the current directors and executive
officers of DeAM, Inc. are set forth below. The business address of each person
is 280 Park Avenue, New York, NY 10017.
Name Principal Occupation
Dean Sherman Barr President and Chief
Investment Officer
-----------------------------------------------------
Audrey Theresa Jones Director and Executive
Vice President
-----------------------------------------------------
William George Butterly Secretary and Executive
Vice President
-----------------------------------------------------
Mary Anne Mullin Compliance Officer
-----------------------------------------------------
Gwyn Morgan Thomas Director and Vice
President
-----------------------------------------------------
Lori Callahan Director and Chief
Administrative Officer
-----------------------------------------------------
H-1
Exhibit I
Principal Occupations of Each Director
and Principal Executive Officer of DeAMIS
The names and principal occupations of the current directors and executive
officers of DeAMIS are set forth below. The business address of each person is
One Appold Street, London, England EC2A 2UU.
----------------------------------------------------------------
Name Principal Occupation
----------------------------------------------------------------
Annette Jane Fraser Chairman and Chief
Executive Officer
----------------------------------------------------------------
Matthew Alan Linsey Director. His principal occupation is
Managing Director of
Deutsche Asset Management.
----------------------------------------------------------------
Stephen John Maynard Director and Finance
Officer
----------------------------------------------------------------
Alexander Tedder Director. His principal
occupation is Managing
Director of Deutsche
Asset Management.
----------------------------------------------------------------
Richard Charles Wilson Director. His principal
occupation is Managing
Director of Deutsche
Asset Management.
----------------------------------------------------------------
Simon Kempton Chief Operating Officer
----------------------------------------------------------------
Ian David Clarke Chief Investment
Officer--Fixed Income
----------------------------------------------------------------
Karl Stephen Sternberg Chief Investment
Officer--Equities
----------------------------------------------------------------
Carole Helen Ryan Hofbeck Compliance Officer
----------------------------------------------------------------
Paul Anthony Burke Legal Officer
----------------------------------------------------------------
I-1
Exhibit J
Information Regarding Investment Companies
Advised or Sub-Advised By DeAMIS
[To Come]
J-1
FORM OF PROXY CARD
[DEUTSCHE BANK LOGO] BT Investment Funds
[DEUTSCHE ASSET MANAGEMENT] [Name of Fund]
MUTUAL FUND SERVICES -- LEGAL DEPARTMENT
[Code] One South Street
One South Street Baltimore, Maryland 21202
Baltimore, Maryland 21202-3220 PROXY FOR THE SPECIAL MEETING OF STOCKHOLDERS
To vote by Telephone 9:30 am, Eastern time, on July 30, 2002
1) Read the Proxy Statement and have the Proxy card below at The undersigned hereby appoints Fran Pollack-Matz
hand. and Lisa Hertz and each of them, with full power of
2) Call 1-800-____-_____. substitution, as proxies of the undersigned to vote all
3) Enter the xx-digit control number set forth on the Proxy shares of stock that the undersigned is entitled in any
card and follow the simple instructions. capacity to vote at the above-stated special meeting, and at
To vote by Internet any and all adjournments or postponements thereof (the
1) Read the Proxy Statement and have the Proxy card below at `Special Meeting'), on the matters set forth on this Proxy
hand. Card, and, in their discretion, upon all matters incident to
2) Go to Website www._________.com. the conduct of the Special Meeting and upon such other
3) Enter the xx-digit control number set forth on the Proxy matters as may properly be brought before the Special
card and follow the simple instructions. Meeting. This proxy revokes all prior proxies given by the
undersigned.
DO NOT RETURN YOUR PROXY CARD IF YOU VOTE BY PHONE OR INTERNET. All properly executed proxies will be voted as
directed. If no instructions are indicated on a properly
TO VOTE, MARK BLOCKS IN BLUE OR BLACK INK AS FOLLOWS: executed proxy, the proxy will be voted FOR approval of
Proposals I, II and III. All ABSTAIN votes will be counted in
determining the existence of a quorum at the Special Meeting
and, for Proposal II and III, as votes AGAINST the Proposal.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
WITH RESPECT TO YOUR FUND. THE BOARD OF TRUSTEES RECOMMENDS
A VOTE FOR PROPOSALS I, II AND III.
UNLESS VOTING BY TELEPHONE OR INTERNET, PLEASE SIGN AND DATE
BELOW AND MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
KEEP THIS PORTION FOR YOUR RECORDS.
DETACH AND RETURN THIS PORTION ONLY.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
[NAME OF FUND]
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND MAIL THIS PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(Joint owners should EACH sign. Please sign EXACTLY as your name(s) appears on
this card. When signing as attorney, trustee, executor, administrator, guardian
or corporate officer, please give your FULL title below.)
Vote on Trustees
I. Election of Messrs. (01) Burt, (02) Dill, (03) Hale, For All Withhold All For All Except: To withhold authority
(04) Hardiman, (05) Jones, (06) Searcy and (07) to vote, mark `For
Wadsworth, Drs. (08) Gruber, (09) Herring, and All Except' and write
(10) Saunders and (11) Ms. Rimel as Trustees of the the nominee's number
Boards. on the line below.
------------------
Vote on Proposals III. (International Equity Fund only) Approval of a
II. Approval of a New Advisory Agreement with Deutsche Asset sub-advisory agreement between Deutsche Asset Management, Inc.
Management, Inc. FOR [ ] AGAINST [ ] ABSTAIN [ ] and Deutsche Asset Management Investment Services Limited.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
The appointed proxies will vote on any other business as may
properly come before the Special Meeting
Receipt of the Notice and the Joint Proxy Statement, dated _____
__, 2002 (the `Proxy Statement'), is hereby acknowledged.
- ------------------------------------ ------------ ------------------------------- -------------
- ------------------------------------ ------------ ------------------------------- -------------
Signature (Please sign within box) Date Signature (Joint Owners) Date