SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)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:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(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.
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.
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 (the 'Fund'),
whose terms will be effective beginning July 30, 2002 or on such
later date as shareholder approval is obtained; and
. to approve a new investment advisory agreement between the Fund and
Deutsche Asset Management, Inc. ('DeAM, Inc.'), the investment
advisor for the Funds.
THE BOARD MEMBERS OF THE TRUST 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 Board, and the Board
agreed, that the Trust, 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. The Trust's Board agreed to
submit this proposal to shareholders.
Q: Why did the Trust's Board 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 Board considered, among other factors, that a
unified group board structure benefits the Trust 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 the
preparation and conduct of 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 will consist of eleven
individuals. Five of these persons currently serve as members of the
Board; six persons will be new to the Trust's Board 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 Board 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 the current
advisory agreements pursuant to which services are provided to the
Funds, 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 of the Board of Trustees, 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. In addition, the new advisory
agreements will not contain a provision under which DeAM, Inc. could
seek indemnification from the Trust.
In determining to recommend that the shareholders approve the new
advisory agreements, the Board of the Trust considered, among other
factors, the potential benefits to the Funds of providing DeAM, Inc.
more flexibility in structuring the Fund management services for each
Fund. In addition, the Board 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 under the
new advisory agreements is the same as the investment advisory fee rate
charged under the current advisory agreements.
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III. GENERAL QUESTIONS
Q: What are the Board's recommendations?
A: The Board recommends that all shareholders vote 'FOR' the nominees for
the Board and 'FOR' the approval of the new advisory agreements.
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).
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).
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Q: Whom should I call with questions?
A: Please call Georgeson Shareholder Communications, Inc. 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
Tax Free Money Fund Investment
NY Tax Free Fund Investment
Mid Cap Fund
. Institutional Class
. Investment Class
Small Cap Fund-Investment Class
Global Equity Fund
. Institutional Class
. Class A, B and C
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 a.m. (Eastern time)
(the 'Special Meeting'). The Trust is an open-end management investment
company, organized under the laws of the Commonwealth of Massachusetts. In
addition to the above five series (each, a 'Fund,' and collectively, the
'Funds'), the Trust has eight other series, Cash Management Fund Investment,
Treasury Money Fund Investment, Lifecycle Long Range Fund--Investment Class,
Lifecycle Mid Range Fund--Investment Class, Lifecycle Short Range
Fund--Investment Class, Quantitative Equity Fund--Investment and Institutional
Classes, PreservationPlus Income Fund, and International Equity
Fund--Investment Class and Class A, B and C, which are not addressed in the
accompanying Joint Proxy Statement.
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: To elect eleven Trustees of the Trust 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 adjourn-
ments of the Special Meeting, such later date as share-
holder approval is obtained.
PROPOSAL II: To approve a new investment advisory agreement
(each, a 'New Advisory Agreement' and collectively,
the 'New Advisory Agreements') between each Fund
and Deutsche Asset Management, Inc. ('DeAM, Inc.').
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
Funds, 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, 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 Trust.
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 the
election of each nominee to the Board of Trustees of the Trust and FOR the
Proposal II.
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 SHARE (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, INC. AT 1-866-333-0889.
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' 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 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
BT Investment Funds
Tax Free Money Fund Investment ('Tax Free Fund')
NY Tax Free Money Fund Investment ('NY Tax Free Money Fund')
Mid Cap Fund ('Mid Cap Fund')
. Institutional Class
. Investment Class
Small Cap Fund ('Small Cap Fund')--Investment Class
Global Equity Fund ('Global Equity Fund')
. Institutional Class
. Class A, B and C
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 five 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 a.m. (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.
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 Fund.
Each of Global Equity Fund (4 classes) and Mid Cap Fund (2 classes) is
comprised of multiple separate classes of shares, 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 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: To approve a new investment advisory agreement (each, a 'New
Advisory Agreement' and collectively, the 'New Advisory
Agreements') between each Fund and Deutsche Asset Manage-
ment, Inc. ('DeAM, Inc.').
The appointed proxies will vote on any other business as may properly come
before the Special Meeting or any adjournment thereof.
The Funds' shareholders are to consider the approval of the New Advisory
Agreements between DeAM, Inc., the current investment advisor for the Funds,
and the Funds.
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. Messrs. Dill and Hale and Drs. Gruber, Herring and Saunders
currently serve on the Board of Trustees of the Trust. 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, if elected,
will be the Chairman of the Trust. 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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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 September 30, 2001 (for Mid Cap and Small
Cap Funds), October 31, 2001 (for Global Equity Fund) or December 31, 2001 (for
Tax Free and NY Tax Free 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 1-866-333-0889. The Reports are 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.
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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.)
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
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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 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 May 31,
2002 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. Collectively, the Trustees, Trustee Nominees
and executive officers of the Trust own less than 1% of each Fund's 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 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.
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PROPOSAL I
ELECTION OF NOMINEES TO THE BOARD OF TRUSTEES
OF THE TRUST
It is proposed that eleven Trustee Nominees are to be elected to comprise
the entire Board of Trustees of the Trust 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 or DeAM, Inc. (the 'Independent
Trustees') were recently selected by a Nominating Committee of the Board
comprised entirely of the Independent Trustees of the Board and nominated by
the full Board 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 Board of Trustees,
will no longer serve effective the Effective Date if Proposal I is approved by
the shareholders of the Trust. It is also anticipated that Richard T. Hale will
become Chairman of the Board of the Trust if Proposal I is approved by the
shareholders of the Trust. 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 serves or will serve as an officer of the Trust. 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 Board 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 Board of
Trustees was suggested to the Board by DeAM and reviewed by the current
Independent Trustees of the Board. Messrs. Dill and Hale (an Interested
Trustee) and Drs. Gruber, Herring and Saunders are currently members of the
Board of Trustees of the Trust. 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.
6
Deutsche Asset Management recommended, and the Board agreed, that the Trust
should be governed by a larger Board 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 board membership of the other DeAM Funds are
not identical. Eight persons currently serve on the Board of Trustees of the
Trust, 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 Board 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 person 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 operations is One
South Street, Baltimore, Maryland, 21202.
7
INFORMATION CONCERNING TRUSTEE NOMINEES AND OFFICERS
TERM OF
OFFICE/1/ NUMBER OF
AND PORTFOLIOS IN
LENGTH OF FUND
TIME COMPLEX
SERVED OVERSEEN
POSITION ON THE BY TRUSTEE OTHER DIRECTORSHIPS HELD
WITH THE TRUST PRINCIPAL OCCUPATION(S) OR NOMINEE BY TRUSTEE OR NOMINEE
NAME AND BIRTH DATE TRUST BOARD DURING PAST 5 YEARS FOR TRUSTEE/2/ FOR TRUSTEE
- ------------------- -------- --------- ----------------------- ------------- ------------------------
Independent Trustee Nominees
Richard R. Burt Trustee N/A Chairman, IEP 86 Member of the Board,
2/3/47 Nominee Advisors, Inc. Hollinger International,
(July 1998 to Inc./3/ (publishing)
present) and (1995 to present), HCL
Chairman of the Technologies Limited
Board, Weirton (information
Steel Corporation/3/ technology) (April
(April 1996 to 1999 to present), UBS
present). Formerly, Mutual Funds (formerly
Partner, McKin- known as Brinson and
sey & Company Mitchell Hutchins
(consulting) families of funds) (1995
(1991-1994) and to present) and
US Chief Negotia- Member, Textron
tor in Strategic Corporation/3/
Arms Reduction International Advisory
Talks (START) Council (July 1996 to
with former Soviet present). Member of
Union and US the Board, Homestake
Ambassador to Mining/3/ (mining and
the Federal exploration) (1998 to
Republic of February 2001),
Germany Archer Daniels
(1985-1991). Midland Company/3/
(agribusiness
operations) (October
1996 to June 2001) and
Anchor Gaming
(gaming software and
equipment) (March
1999 to December
2001).
8
TERM OF
OFFICE/1/ NUMBER OF
AND PORTFOLIOS IN
LENGTH OF FUND
TIME COMPLEX
SERVED OVERSEEN
POSITION ON THE BY TRUSTEE OTHER DIRECTORSHIPS HELD
WITH THE TRUST PRINCIPAL OCCUPATION(S) OR NOMINEE BY TRUSTEE OR NOMINEE
NAME AND BIRTH DATE TRUST BOARD DURING PAST 5 YEARS FOR TRUSTEE/2/ FOR TRUSTEE
- ------------------- -------- --------- ------------------------- ------------- ------------------------
S. Leland Dill Trustee Since Retired (since 1986); 84 Trustee, Phoenix Zweig
3/28/30 1986 formerly Partner, KPMG Series Trust (registered
Peat Marwick investment company)
(June 1956-June 1986); (since September 1989);
General Partner, Pemco Trustee, Phoenix Euclid
(investment company) Market Neutral Fund
(June 1979-June 1986). (registered investment
company) (since May
1998); Director,
Vintners International
Company Inc. (June
1989-May 1992);
Coutts (USA) Inter
national
(January 1992-March
2000); Coutts Trust
Holdings Ltd. and
Coutts Group (March
1991-March 1999).
Martin J. Gruber Trustee Since Nomura Professor of 85 Member of the Board,
7/15/37 1999 Finance, Leonard N. CREF (registered
Stern School of Business, investment company)
New York University (since 2000); S.G.
(since 1964). Cowen Mutual Funds
(1985 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).
9
TERM OF
OFFICE/1/ NUMBER OF
AND PORTFOLIOS IN
LENGTH OF FUND
TIME COMPLEX
SERVED OVERSEEN
POSITION ON THE BY TRUSTEE OTHER DIRECTORSHIPS HELD
WITH THE TRUST PRINCIPAL OCCUPATION(S) OR NOMINEE BY TRUSTEE OR NOMINEE
NAME AND BIRTH DATE TRUST BOARD DURING PAST 5 YEARS FOR TRUSTEE/2/ FOR TRUSTEE
- ------------------- -------- --------- -------------------------- ------------- ------------------------
Joseph R. Hardiman Trustee N/A Private Equity Investor 82 Director, Southview
5/27/37 Nominee (1997 to present); Technology Group
President and Chief Inc. (investment
Executive Officer, The banking) (July 1998
National Association of to present), Corvis
Securities Dealers, Inc. Corporation/3/ (optical
and The NASDAQ Stock networking equip
Market, Inc. (1987-1997); ment) (July 2000 to
Chief Operating Officer of present), Brown
Alex. Brown & Sons Investment Advisory
Incorporated (now & Trust Company
Deutsche Banc Alex. (investment advisor)
Brown Inc.) (1985-1987) (February 2001 to
and General Partner, present), The Nevis
Alex. Brown & Sons Fund (registered
Incorporated (now investment company)
Deutsche Bank (July 1999 to
Securities, Inc.) (1976- present), and ISI
1985). Family of Funds
(registered invest
ment companies)
(March 1998 to
present). 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 1999 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 Under
graduate Division (1995-
2000).
10
TERM OF
OFFICE/1/ NUMBER OF
AND PORTFOLIOS IN
LENGTH OF FUND
TIME COMPLEX
SERVED OVERSEEN
POSITION ON THE BY TRUSTEE OTHER DIRECTORSHIPS HELD
WITH THE TRUST PRINCIPAL OCCUPATION(S) OR NOMINEE BY TRUSTEE OR NOMINEE
NAME AND BIRTH DATE TRUST BOARD DURING PAST 5 YEARS FOR TRUSTEE/2/ FOR TRUSTEE
- -------------------- -------- --------- ----------------------- ------------- ------------------------
Graham E. Jones Trustee N/A Senior Vice President, 84 Trustee, 8 open-end
1/31/33 Nominee BGK Realty, Inc. (com mutual funds managed
mercial real estate) by Weiss, Peck &
(since 1995). Greer (since 1985);
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
Pew Charitable Trusts (registered investment
(charitable foundation) companies) (1997-
(1994 to present) and 1999).
Director and Executive
Vice President, The
Glenmede Trust
Company (investment
trust and wealth
management) (1994 to
present). Formerly,
Executive Director, The
Pew Charitable Trusts
(1988-1994).
Philip Saunders, Jr. Trustee Since Principal, Philip 84 N/A
10/11/35 1986 Saunders Associates
(Economic and
Financial Consulting)
(since 1988); former
Director, Financial
Industry Consulting,
Wolf & Company (1987-
1988); President, John
Hancock Home
Mortgage Corporation
(1984-1986); Senior
Vice President of
Treasury and Financial
Services, John Hancock
Mutual Life Insurance
Company, Inc. (1982-
1986).
William N. Searcy Trustee N/A Pension & Savings Trust 84 Trustee of 22 open-
9/03/46 Nominee Officer, Sprint end mutual funds
Corporation/3/ managed by Sun
(telecommunications) Capital Advisers, Inc.
(since 1989). (since 1998).
11
TERM OF
OFFICE/1/ NUMBER OF
AND PORTFOLIOS IN
LENGTH OF FUND
TIME COMPLEX
SERVED OVERSEEN
POSITION ON THE BY TRUSTEE OTHER DIRECTORSHIPS HELD
WITH THE TRUST PRINCIPAL OCCUPATION(S) OR NOMINEE BY TRUSTEE OR NOMINEE
NAME AND BIRTH DATE TRUST BOARD DURING PAST 5 YEARS FOR TRUSTEE/2/ FOR TRUSTEE
- ------------------- -------- --------- ------------------------- ------------- ------------------------
Robert H. Wadsworth Trustee N/A President, Robert H. 87 N/A
1/29/40 Nominee Wadsworth Associates,
Inc. (consulting firm)
(1982 to present);
President and Director,
Trust for Investment
Managers (registered
investment company)
(1999 to present).
Formerly President,
Investment Company
Administration, L.L.C.
(1992*-July 2001);
President, Treasurer and
Director, First Fund
Distributors, Inc. (1990-
January 2002); Vice
President, Professionally
Managed Portfolios
(1999-2002) and
Advisors Series Trust
(1997-2002) (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.
12
TERM OF
OFFICE/1/ NUMBER OF
AND PORTFOLIOS IN
LENGTH OF FUND
TIME COMPLEX
SERVED OVERSEEN
POSITION ON THE BY TRUSTEE OTHER DIRECTORSHIPS HELD
WITH THE TRUST PRINCIPAL OCCUPATION(S) OR NOMINEE BY TRUSTEE OR NOMINEE
NAME AND BIRTH DATE TRUST BOARD DURING PAST 5 YEARS FOR TRUSTEE/2/ FOR TRUSTEE
- ------------------- ---------- --------- -------------------------- ------------- ------------------------
Interested Trustee Nominee
Richard T. Hale/4/ Trustee Since Managing Director, 84 Director, Deutsche
7/17/45 1999 Deutsche Bank Global Funds, Ltd.
Securities, Inc. (formerly (2000 to present);
Deutsche Banc Alex. Director, CABEI
Brown Inc.) and Fund (2000 to
Deutsche Asset present) and North
Management (1999 to American Income
present); Director and Fund (2000 to
President, Investment present) (registered
Company Capital Corp. investment
(registered investment companies).
advisor) (1996 to Formerly, Director,
present); Vice President, ISI Family of Funds
Deutsche Asset (registered
Management, Inc. (2000 investment
to present). Chartered companies) (1992 to
Financial Analyst. 1999).
Officers
Richard T. Hale President Since See information
2000 provided 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-
2002); Principal, BT
Alex. Brown Incorporated
(now Deutsche Banc
Alex. Brown Inc.) (1998-
1999); Assistant General
Counsel, United States
Securities and Exchange
Commission
(1993-1998).
13
TERM OF
OFFICE/1/ NUMBER OF
AND PORTFOLIOS IN
LENGTH OF FUND
TIME COMPLEX
SERVED OVERSEEN
POSITION ON THE BY TRUSTEE OTHER DIRECTORSHIPS HELD
WITH THE TRUST PRINCIPAL OCCUPATION(S) OR NOMINEE BY TRUSTEE OR NOMINEE
NAME AND BIRTH DATE TRUST BOARD DURING PAST 5 YEARS FOR TRUSTEE/2/ FOR TRUSTEE
- ------------------- --------- --------- ------------------------ ------------- ------------------------
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
(now Deutsche Banc
Alex. Brown Inc.) (1998-
1999), Senior Manager,
Coopers & Lybrand
L.L.P. (now
PricewaterhouseCoopers
LLP) (1993-1998).
- --------
/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.
/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.
14
As reported to the Trust, Exhibit C to this Proxy Statement sets forth
ownership by the 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 Fund Complex for the 12 months ended March 31,
2002.
Pension or
Retirement
Benefits Estimated
Aggregate Accrued as Annual Total
Compensation Part of Benefits Compensation
from BT Fund Upon from Fund
Trustee Investment Funds Expenses Retirement Complex
-------------------- ---------------- ---------- ---------- ------------
S. Leland Dill $27,202 N/A N/A $61,250
Martin J. Gruber $27,202 N/A N/A $61,250
Richard J. Herring $27,202 N/A N/A $61,250
Philip Saunders, Jr. $27,202 N/A N/A $61,250
The Board has established an Audit Committee, a Nominating Committee and a
Valuation Committee. The Audit Committee and the Nominating Committee of the
Board are currently 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 Board of Trustees, the 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 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 Fund's internal accounting
procedures and controls. The Audit Committee also considers the scope and
amount of non-audit services provided to the applicable Fund, its investment
advisor and affiliates by the independent public accountants. The Nominating
Committee is charged with the duty of making all nominations for Independent
Trustees to the Board of Trustees. The Nominating Committee of each Board will
consider Trustee nominees recommended by shareholders. The Valuation Committee
considers and acts upon all questions relating to valuation of the securities
in the applicable Fund which may arise between meetings of the Board. The Board
does not have compensation committees. During each Fund's most recent fiscal
year, the Board of the Trust held five meetings, the Audit Committee of the
Board held four meetings and the Valuation Committee of the Board held one
meeting. The Nominating Committee of the 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 Board, the Board will consider
whether other committees should be organized after it has reviewed the needs of
the Funds.
15
Mr. Hale, if elected, will not be a member of the Audit Committee or the
Nominating Committee.
Recommendation of the Board of Trustees
The Board of Trustees believe that coordinated governance through a unified
board structure will benefit the Trust and the Funds.
In their deliberations, the Board of Trustees considered various matters
related to the management and long-term welfare of the Trust and the Funds. The
Board considered, among other factors, that coordinated governance within the
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 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 Board 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 Board to use time more efficiently. There may also be
cost savings to the Trust and the Funds because Trustees will serve an
increased number of investment companies.
The Board also considered that a unified group board structure benefits the
Trust 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 Board gave considerable weight to their expectation that the Trust and
the Funds will benefit from the diversity and experience of the Trustee
Nominees that would be included in the expanded Board and from the experience
that each Trustee Nominee will gain by serving on the boards of a diverse group
of funds. The Board 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
16
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
Board. 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 Board considered certain other advantages of enlarging the
Board. These included that enlarging the Board will afford an increased range
of experience among Board members and makes it more likely that the 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 Board
determines to revise its structure 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 Board also
recognized that increased numbers of Board members could result in less
collegial meetings and longer discussions. On balance, the Board concluded that
these possible detriments of size were outweighed by the benefits anticipated
from the unified and enlarged Board.
Therefore, after careful consideration, the Board, including the Independent
Trustees, recommends that the shareholders of the Trust vote 'FOR' the election
of the Trustee Nominees as set forth in this Proposal.
If the Trustee Nominees are elected by the 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 Board will consider what action is
appropriate based upon the interests of the Trust's shareholders.
17
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 Funds 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, 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
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 Funds (as discussed earlier) pursuant to the Current Advisory
Agreements. The Current Advisory Agreements were initially approved by the
Board, 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 Fund's Trustees, including a majority of
the Independent Trustees, and the Fund'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 Trust and, in either
event, the vote of a majority of the Independent Trustees of the Trust, 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 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
18
permissible by law and subject to further approval by the Board of Trustees of
Trust, 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 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 Trust. 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 then consistent with any amendments to the 1940 Act
or the rules and regulations thereunder or interpretations thereof.
19
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 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
advisor. Accordingly, DeAM, Inc. informed the Board of the Funds that it would
not seek such provision in the New Advisory Agreements. DeAM, Inc. assured the
Board 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 Funds with investment advisory services, including the investment and
reinvestment of the cash, securities or other properties comprising a Fund's
assets. Subject to the supervision and control of the 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 Funds' registration statements, (c) the provisions of
the Trust's Declaration of Trust, and (d) any other applicable provisions of
state and federal law.
Under the terms of the New Advisory Agreements, DeAM, Inc. agrees to (a)
supervise and manage all aspects of a Fund'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 Fund; (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 information, whether affecting the
economy generally or a particular Fund; (e) for each Fund, determine which
issuers and securities will be represented in the portfolio and regularly
report thereon to the Trust's Board of Trustees; and (f) take all actions
necessary to carry into effect a Fund's purchase and sale programs.
20
The investment advisory fee rate proposed to be charged to the Funds 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 each 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 Board of Trustees or by the holders of a majority
of the applicable Fund's outstanding voting securities 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 Board of Trustees or by vote of a majority of
the outstanding voting securities (as defined in the 1940 Act) of the
applicable Fund 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 Funds) 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 Funds bear certain
other expenses including the fees of the Funds' Board. The Funds 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 Funds
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 Funds or to their shareholders to which
DeAM, Inc. could otherwise 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.
As investment advisor, DeAM, Inc. will allocate and place all orders for
portfolio transactions of each Fund's securities. 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 Fund or DeAM, Inc.
DeAM, Inc. is authorized, under
21
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 Fund, 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.
Management of the Funds
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. 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, 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
Funds, 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.
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 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
22
Proxy Statement sets forth the fees paid to ICCC by the Funds for these
services for the most recently completed fiscal year.)
Deutsche Bank. Deutsche Bank, Aktiengesellschaft, Taunusalage 12, D-60262,
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 investment management,
mutual funds, retail, private and commercial banking, investment banking and
insurance. Deutsche Bank has combined all of its investment management
businesses to form Deutsche Asset Management (the marketing name in the US for
the asset management activities of Deutsche Bank and its subsidiaries).
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 is provided in
Exhibit C to this Proxy Statement.
Recommendation of the Board
At a meeting of the Board of Trustees of the Trust 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 Board, including a majority of the
Independent Trustees, approved, subject to shareholder approval, the New
Advisory Agreements. In reaching this conclusion, the Board of Trustees
obtained from DeAM, Inc. such information as they deemed reasonably necessary
to approve DeAM, Inc. as investment advisor to the Funds. In approving the New
Advisory Agreements, the Independent Trustees considered numerous factors,
including, among others, the nature, quality and extent of services provided
under the Current Advisory Agreements and proposed to be provided by DeAM, Inc.
to the Funds under the New Advisory Agreements; that the investment advisory
fees paid by the Funds will remain the same under the New Advisory Agreement as
under the Current Advisory Agreements; investment performance, both of the
Funds themselves and relative to appropriate peer groups and market indices;
staffing and capabilities of DeAM, Inc. to manage the Funds; investment
advisory fees, provided under the Current Advisory Agreements and current
expense ratios and asset sizes of the Funds themselves and relative to
appropriate peer groups; and DeAM, Inc.'s profitability from managing the Funds
(both individually and collectively) and the other investment companies managed
by DeAM, Inc. before marketing expenses paid by DeAM, Inc. The Board also
considered other benefits earned by DeAM, Inc. and its affiliates relating to
its management
23
of the Funds, 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, the Board considered the potential benefit to the Funds of
providing DeAM, Inc. more flexibility in structuring portfolio management
services for each Fund. The Board recognized that it may be beneficial to the
Funds 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 Board considered that (i) any
restructuring of the provision of portfolio management services provided to the
Funds would require the prior approval of a majority of the members of the
Board, including a majority of the Independent Trustees; (ii) the investment
advisory expenses incurred by the Funds 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 Funds; 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 Board of Trustees
determined that the New Advisory Agreements are fair and reasonable and in the
best interest of the Funds and their respective shareholders. Based on all of
the foregoing, at a meeting on June 7, 2002, a majority of the Board of
Trustees, including a majority of the Independent Trustees, voted to approve
the New Advisory Agreements and to recommend them to the shareholders for their
approval.
Therefore, after careful consideration, the Board of Trustees, including the
Independent Trustees, 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 of the Board of
Trustees or its shareholders, and the Board of Trustees will consider what
other action is appropriate based upon the interests of the shareholders.
24
INFORMATION CONCERNING INDEPENDENT AUDITORS
The Funds' financial statements for their most recent fiscal years were
audited by PricewaterhouseCoopers LLP ('PwC'), independent auditors. In
addition, PwC prepares the Funds' federal and state annual income tax returns
and provides certain non-audit services to the Trust and the Funds. During the
Board's most recent consideration of the selection of auditors for each Fund,
the Board considered whether the provision of non-audit services to the Trust
and the Funds was compatible with maintaining PwC's independence. The Board of
Trustees of the Trust has selected PwC as the independent auditors for each
Fund for its respective fiscal year ending 2002. PwC has been the independent
auditors for the Funds since inception. PwC has informed the Trust that it has
no material direct or indirect financial interest in the Trust.
Representative of PwC 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 for professional services
rendered for the audit of the Funds' annual financial statements for the most
recent fiscal year and the review of the financial statements included in the
Funds' reports to shareholders are $111,000.
Financial Information Systems Design and Implementation Fees. There were no
fees billed by PwC for the most recent fiscal year for professional services
rendered for financial information systems design and implementation services
provided to the Trust or the Funds, DeAM, Inc. or entities that control, are
controlled by or are under common control with DeAM, Inc. that provide services
to the Trust or the Funds.
All Other Fees. There were $2,861,450 in fees billed by PwC, for the most
recent fiscal year for other services provided to the Trust, the Funds, DeAM,
Inc. and entities that control, are controlled by or are under common control
with DeAM, Inc. that provide services to the Trust or the Funds.
VOTE REQUIRED
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 the
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.
25
Approval of Proposal II with respect to a particular Fund's New Advisory
Agreements requires the affirmative vote of a 'majority' of the outstanding
shares of the Fund. '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 Fund
present at the special meeting, if the holders of more than 50% of the
outstanding shares of the Fund are present in person or by proxy, or (b) more
than 50% of the outstanding shares of the Fund. 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 Proposal II, which
requires the approval of a specified percentage of the outstanding shares of a
Fund.
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, RECOMMEND THAT THE SHAREHOLDERS
VOTE 'FOR' APPROVAL OF PROPOSALS I and II. ANY UNMARKED PROXIES WILL BE SO
VOTED.
The Board is not aware of any other matters that will come before the
Special Meeting. Should any other matter properly come before the Special
Meeting, it is the intention of the persons named in the accompanying Proxy to
vote the Proxy in accordance with their judgment on such matters.
SUBMISSION OF SHAREHOLDER PROPOSALS
The Funds do not hold regular shareholders' meetings. Shareholders wishing
to submit proposals for inclusion in a proxy statement for a subsequent
shareholders' meeting should send their written proposals to the Secretary of
the Trust at the address set forth on the cover of this Proxy Statement.
Proposals must be received at a reasonable time prior to the date of a
meeting of shareholders to be considered for inclusion in the materials for a
Fund's meeting. Timely submission of a proposal does not, however, necessarily
mean that such proposal will be included.
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 Board of Trustees when requested in writing by shareholders holding at
least 10% of the shares then outstanding.
26
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, INC. 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).
27
Exhibit A
SHARES OUTSTANDING AS OF RECORD DATE
--------------------------------------------------------------------
FUND NUMBER OF SHARES OUTSTANDING
--------------------------------------------------------------------
Tax Free Fund 159,142,953.570
--------------------------------------------------------------------
NY Tax Free Fund 122,615,183.230
--------------------------------------------------------------------
Mid Cap Fund--Institutional Class 18,464,030.355
--------------------------------------------------------------------
Mid Cap Fund--Investment Class 3,160,628.228
--------------------------------------------------------------------
Small Cap Fund--Investment Class 12,941,563.11
--------------------------------------------------------------------
Global Equity Fund--Class A 6,605,157.00
--------------------------------------------------------------------
Global Equity Fund--Class B 6,284.831
--------------------------------------------------------------------
Global Equity Fund--Class C 5,000.00
--------------------------------------------------------------------
Global Equity Fund--Institutional Class 500,645,995.00
A-1
Exhibit B
5% Shareholders
-----------------------------------------------------------------------------
TAX FREE FUND:
-----------------------------------------------------------------------------
Name and Address Shares Beneficially Percent Ownership
of Owner Owned of Outstanding Shares
-----------------------------------------------------------------------------
Private Bank Sweep*
Custody
Attn. Linda Anderson
280 Park Avenue--22 West
New York, NY 10017-1216 92,591,136.17 56.98%
Private Bank Sweep*
Investment Advisory
Linda Anderson
280 Park Avenue--22 West
New York, NY 10017-1216 48,720,367.99 29.98%
NY TAX FREE FUND:
-----------------------------------------------------------------------------
Name and Address Shares Beneficially Percent Ownership
of Owner Owned of Outstanding Shares
-----------------------------------------------------------------------------
Private Bank Sweep, Custody*
Attn: Linda Anderson
1 BT Plaza, 17/th/ Floor
New York, NY 10015 47,014,175.94 44.62%
Private Bank Sweep*
Investment Advisory
New York, NY 10015
Attn: Linda Anderson 33,366,912.57 31.67%
MID CAP FUND--INSTITUTIONAL SHARES:
-----------------------------------------------------------------------------
Name and Address Shares Beneficially Percent Ownership
of Owner Owned of Outstanding Shares
-----------------------------------------------------------------------------
Northern Telecom Omnibus Account
c/o Bankers Trust Company
Attn: John Sawicki
Mailstop 3064
34 Exchange Place 6/th/ Floor
Jersey City, NJ 07302-3885 13,362,998.86 72.75%
B-1
- --------------------------------------------------------------------------------
Name and Address Shares Beneficially Percent Ownership
of Owner Owned of Outstanding Shares
- --------------------------------------------------------------------------------
Bankers Trust Company, as Trustee for
Westinghouse Savannah River/Bechtel
Savannah River Inc. Savings Investment
Plan
34 Exchange Place, MS 3064
Jersey City, NJ 07302-3885 4,413,218.76 24.03%
SMALL CAP FUND:
- --------------------------------------------------------------------------------
Name and Address Shares Beneficially Percent Ownership
of Owner Owned of Outstanding Shares
- --------------------------------------------------------------------------------
Bankers Trust Company, as Trustee for
Westinghouse Savannah River/Bechtel,
Savannah River Inc. Savings and
Investment Plan
34 Exchange Place, MS 3064
Jersey City, NJ 07302-3885 3,812,033.03 29.38%
National Financial Services Corp.,
for Excl Benefit for our Customers
Attn: Mutual Funds
P.O. Box 3908
Church Street Station
New York, NY 10008-3908 1,013,678.32 7.81%
GLOBAL EQUITY FUND--
INSTITUTIONAL SHARES:
- --------------------------------------------------------------------------------
Name and Address Shares Beneficially Percent Ownership
of Owner Owned of Outstanding Shares
- --------------------------------------------------------------------------------
Deutsche Asset Management Inc.*
Attn: Adam Joffe
18th Floor
130 Liberty Street
New York, NY 10006-1105 500,646.00 100%
GLOBAL EQUITY FUND--
CLASS A SHARES:
- --------------------------------------------------------------------------------
Name and Address Shares Beneficially Percent Ownership
of Owner Owned of Outstanding Shares
- --------------------------------------------------------------------------------
NFSC FEEO #679-280224
Peconic Offshore Fund Corp.
PO Box SS-6238
Nassau, Bahamas 104,972.38 94.08%
B-2
GLOBAL EQUITY FUND--
CLASS B SHARES:
---------------------------------------------------------------------------
Name and Address Shares Beneficially Percent Ownership
of Owner Owned of Outstanding Shares
---------------------------------------------------------------------------
Investment Company Capital Corp.*
Attn: Julie Thomas
MS 1602
1 South Street
Baltimore, MD 20202-3298 5,000.00 79.56%
National Investor Services
FBO 590-02456-13
55 Water Street, Fl. 32
New York, NY 10041-0028 964.55 15.35%
GLOBAL EQUITY FUND--
CLASS C SHARES:
---------------------------------------------------------------------------
Name and Address Shares Beneficially Percent Ownership
of Owner Owned of Outstanding Shares
---------------------------------------------------------------------------
Investment Company Capital Corp.*
Attn: Julie Thomas
MS 1602
1 South Street
Baltimore, MD 20202-3298 5,000.00 100%
- --------
*Not believed by the Funds to be the beneficial owner.
B-3
Exhibit C
Aggregate Dollar Range of
Equity Securities as of
May 31, 2002 in all Funds
Dollar Range of Overseen or to be Overseen by
Equity Securities Trustee or Nominee in
Name of Trustee or Nominee in the Fund(s)/1/ Family of Investment Companies/2/
-------------------------- ----------------- --------------------------------
Independent Trustee Nominees
Richard R. Burt/3/ None Over $100,000
S. Leland Dill Tax Free Fund Over $100,000
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. Small Cap Fund $50,001-$100,000
$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.
/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 the Fund's
- -------------------------------------------------------------------------------------------------------------
Fund Date of Current Advisory
(Fiscal Year) Agreement Trustees Shareholders*
- -------------------------------------------------------------------------------------------------------------
Tax Free Fund (12/31) 4/30/01 6/7/02 9/21/99
- -------------------------------------------------------------------------------------------------------------
NY Tax Free Fund (12/31) 4/30/01 6/7/02 9/21/99
- -------------------------------------------------------------------------------------------------------------
Mid Cap Fund (9/30) 4/30/01 6/7/02 9/21/99
- -------------------------------------------------------------------------------------------------------------
Small Cap Fund (9/30) 4/30/01 6/7/02 9/21/99
- -------------------------------------------------------------------------------------------------------------
Global Equity Fund (10/31) 4/30/01 6/7/02 9/21/99
- -------------------------------------------------------------------------------------------------------------
- --------
* Submitted for shareholder vote because the merger on June 4, 1999 between
Bankers Trust Company, the then-current advisor to the Funds, 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].
2. Delivery of Documents. The Trust [Advisor] has furnished the Advisor
[Sub-Advisor] with copies properly certified or authenticated of each of the
following:
- --------
/1./ Contained in the form of sub-advisory agreement only.
E-1
(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;
(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
E-2
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 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
E-3
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 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
E-4
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 continue 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/
- --------
/2./ Contained in the form of Advisory Agreement only.
/3./ Contained in the form of Sub-Advisory Agreement only.
E-5
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 its services under this Agreement are not impaired
thereby. It is understood and 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.
E-6
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 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
E-7
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 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
E-8
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.
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-9
EXHIBIT A
TO
INVESTMENT [ADVISORY] [SUB-ADVISORY] AGREEMENT
MADE AS OF
BETWEEN
[Fund Name] AND [ ]
Investment [Advisory]
Series [Sub-Advisory] Fee
------------------------- -------------------------
E-10
Exhibit F
Advisory Fees
The table below sets forth the fee rate paid, on an annual basis, to the
advisor for its services under the Current Advisory Agreements, calculated
daily and paid monthly. The table also sets forth the amounts paid by each Fund
to the advisor for providing investment advisory services for its most recent
fiscal year.
NET
ADVISORY EXPENSES
AGREEMENT OF THE
FUND RATE FEE FUND/1/
--------------------------------------------------------------------
Tax Free Money Investment 0.15% $ 160,942 0.75%
--------------------------------------------------------------------
NY Tax Free Money Investment 0.15% $ 118,474 0.75%
--------------------------------------------------------------------
Small Cap Portfolio/2/ 0.65% $1,802,294
--------------------------------------------------------------------
Small Cap Investment 1.25%
--------------------------------------------------------------------
Capital Appreciation Portfolio/3/ 0.65% $2,216,885
--------------------------------------------------------------------
Mid Cap Investment (formerly Capital
Appreciation) 1.25%
--------------------------------------------------------------------
Mid Cap Institutional (formerly Equity
Appreciation) 1.00%
--------------------------------------------------------------------
Global Equity Fund 0.60% $ 22,012
--------------------------------------------------------------------
Global Equity Institutional 1.15%
--------------------------------------------------------------------
Global Equity Class A 1.40%
--------------------------------------------------------------------
Global Equity Class B 2.15%
--------------------------------------------------------------------
Global Equity Class C 2.15%
/1/ For each Fund, the investment advisor and the administrator have agreed
for a 16 month period from the Fund's fiscal year end, to waive their fees
and reimburse expenses to the extent necessary to maintain the Fund's
expense ratio at the level indicated as 'Net Expenses'. The aggregate
amounts of the advisory and administrative fees waived or reimbursed to
the Fund are listed in the 'Waiver and/or Reimbursements Table' below.
/2/ Until March 28, 2002, the Small Cap Fund was a feeder fund that invested
all of its investable assets in the Small Cap Portfolio, a master
portfolio. The advisory fee was paid by the master portfolio and allocated
to the feeder funds proportionately based upon each feeder fund's interest
in the master portfolio. The Small Cap Portfolio was closed on March 28,
2002.
/3/ Until March 28, 2002, the Mid Cap Fund was a feeder fund that invested all
of its investable assets in the Capital Appreciation Portfolio, a master
portfolio. The advisory fee was paid by the master portfolio and allocated
to the feeder funds proportionately based upon each feeder fund's interest
in the master portfolio. The Capital Appreciation Portfolio was closed on
March 28, 2002.
F-1
Administrative Fees
ICCC serves as administrator and transfer agent and provides fund accounting
services to each Fund. For its services, ICCC was paid the following amounts as
of the most recent fiscal year by the Funds. ICCC pays custody fees to Deutsche
Bank Trust for each Fund out of the fee paid to it for its services.
Administration
Agreement
Fund Rate Fee
----------------------------------------------------------------
Tax Free Money Investment 0.60% $ 976,939
----------------------------------------------------------------
NY Tax Free Money Investment 0.60% $ 675,738
----------------------------------------------------------------
Small Cap Portfolio/1/ $ 281,662
----------------------------------------------------------------
Small Cap Investment 0.65% $1,829,235
----------------------------------------------------------------
Capital Appreciation Portfolio/2/ 0.10% $ 348,234
----------------------------------------------------------------
Mid Cap Fund $1,502,201
----------------------------------------------------------------
Mid Cap Investment (formerly Capital
Appreciation) 0.65%
----------------------------------------------------------------
Mid Cap Institutional (formerly Equity
Appreciation) 0.40%
----------------------------------------------------------------
Global Equity Fund $ 31,308
----------------------------------------------------------------
Global Equity Institutional 0.85%
----------------------------------------------------------------
Global Equity Class A 1.00%
----------------------------------------------------------------
Global Equity Class B 1.00%
----------------------------------------------------------------
Global Equity Class C 1.00%
/1/ Until March 28, 2002, the Small Cap Fund was a feeder fund that invested
all of its investable assets in the Small Cap Portfolio, a master
portfolio. The advisory fee was paid by the master portfolio and allocated
to the feeder funds proportionately based upon each feeder fund's interest
in the master portfolio. The Small Cap Portfolio was closed on March 28,
2002.
/2/ Until March 28, 2002, the Mid Cap Fund was a feeder fund that invested all
of its investable assets in the Capital Appreciation Portfolio, a master
portfolio. The advisory fee was paid by the master portfolio and allocated
to the feeder funds proportionately based upon each feeder fund's interest
in the master portfolio. The Capital Appreciation Portfolio was closed on
March 28, 2002.
F-2
Waiver and/or Reimbursement
DeAM, Inc., the Fund's advisor and ICCC, the Funds' administrator, have agreed,
for the 16 month period from each Fund's fiscal year end, to waive their fees
and reimburse expenses so that total expenses do not exceed the Net Expenses
listed in the 'Advisory Fee' table above. For their most recent fiscal year,
the Funds were reimbursed the following amounts by the advisor and/or the
administrator.
Waiver and/or
Fund Reimbursement
-----------------------------------------------
Tax Free Money Investment $ 68,216
-----------------------------------------------
NY Tax Free Money Investment $ 40,005
-----------------------------------------------
Small Cap Portfolio/1/ $453,459
-----------------------------------------------
Small Cap Investment $131,541
-----------------------------------------------
Capital Appreciation Portfolio/2/ $520,549
-----------------------------------------------
Mid Cap Fund $117,302
-----------------------------------------------
Global Equity Fund $123,991
-----------------------------------------------
/1/ Until March 28, 2002, the Small Cap Fund was a feeder fund that invested
all of its investable assets in the Small Cap Portfolio, a master
portfolio. The advisory fee was paid by the master portfolio and allocated
to the feeder funds proportionately based upon each feeder fund's interest
in the master portfolio. The Small Cap Portfolio was closed on March 28,
2002.
/2/ Until March 28, 2002, the Mid Cap Fund was a feeder fund that invested all
of its investable assets in the Capital Appreciation Portfolio, a master
portfolio. The advisory fee was paid by the master portfolio and allocated
to the feeder funds proportionately based upon each feeder fund's interest
in the master portfolio. The Capital Appreciation Portfolio was closed on
March 28, 2002.
F-3
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
------------------------------------------ ------------------ -------------
NY Tax Free Money Investment $ 113,782,609.80 0.15%
Tax Free Money Fund Investment $ 187,181,450.40 0.15%
Cash Management Portfolio $ 9,194,834,416.31 0.15%/2/
Cash Management Investment $ 172,157,192.00 --/2/
Money Market Investment $ 467,978,717.10 --/2/
Cash Management Institutional $ 4,106,682,789.00 --/2/
Cash Reserves Institutional $ 4,118,160,086.00 --/2/
ProFund Money Market $ 329,855,632.21 --/2/
Treasury Money Portfolio $ 848,057,212.70 0.15%/3/
Treasury Money Institutional $ 560,519,570.00 --/3/
Treasury Money Investment $ 287,537,642.70 --/3/
Treasury and Agency Institutional $ 680,036,526.74 0.15%
Daily Assets Institutional $13,769,592,056.02 0.10%
Liquid Assets Portfolio $ 3,462,320,142.66 0.15%/4/
Liquid Assets Institutional $ 3,462,320,142.66 --/4/
Small Cap Fund $ 288,943,053.00 0.65%
The SmallCap Fund, Inc. $ 125,523,512.00 1.00%
- --------
/1./ There may be additional funds and/or portfolios that are advised or
subadvised by DeAM, Inc. with similar investment objectives to the
Portfolios that are not listed below. These funds are scheduled to close
on or about August 17, 2002.
/2./ Cash Management Portfolio is the master portfolio. Cash Management
Investment, Money Market Investment, Cash Management Institutional, Cash
Reserves Institutional and ProFund 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.
/3./ Treasury Money Portfolio is the master portfolio. Treasury Money
Investment and Treasury Money 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.
/4./ Liquid Assets Portfolio is the master portfolio. Liquid Assets
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
Investment Companies Advised or Subadvised by DeAM, Inc.
Total Assets as of Contractual
Funds with similar investment objectives/1/ March 31, 2002 Advisory Fees
------------------------------------------ ------------------ -------------
Mid Cap Fund $ 300,358,963.80 0.65%
Growth Opportunity Fund $ 4,114,840.59 0.85%
Emerging Growth Fund $ 48,823,971.58 0.85%
Global Equity Fund $ 4,108,648.03 0.60%
International Equity Portfolio $1,160,838,151.96 0.65%/5/
International Equity Fund Investment $ 696,665,629.39 ----/5/
International Equity Fund Institutional $ 464,172,522.57 ----/5/
- --------
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 fund's interest in the master portfolio.
G-2
Investment Companies Advised or Subadvised by DeAM, Inc.
Total Assets as of Contractual
Funds with similar investment objectives/1/ March 31, 2002 Advisory Fees
------------------------------------------ ------------------ -------------
AST DeAM Small Cap Growth Portfolio $ 61,755,671.86 Note A
ASAF DeAM Small Cap Growth Fund $557,999,910.74 Note B
Federated Mid-Cap $442,216,144.29 0.035%
Deutsche International Equity $ 32,588,294.00 Note C
Consulting Group Capital Markets Funds--
International Equity Fund $202,924,430.00 Note D
Security Equity Fund--Security
International Fund $ 7,177,971.00 Note E
SBL Fund--Series I $ 16,315,987.00 Note F
- --------
Note A) .35% of the Portion of the combined average daily net assets not in
excess of $100 million; plus .30% of the portion over $100 million but not
in excess of $300 million; plus .25% of the portion over $300 million but
not in excess of $500 million; plus .20% of the portion in excess of $500
million.
Note B) .35% of the Portion of the combined average daily net assets not in
excess of $100 million; plus .30% of the portion over $100 million but not
in excess of $300 million; plus .25% of the portion over $300 million but
not in excess of $500 million; plus .20% of the portion in excess of $500
million.
Note C) 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 D) Annual rate of 0.50%, multiplied by the average daily value of
Allocated Assets.
Note E) 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 F) 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.
G-3
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
For more information please call your Fund's information agent,
Georgeson Shareholder Communications at (866) 333-0889.
BT Inv Trust #2
A Member of
Deutsche Asset Management [/]
[Name of Fund]
One South Street, Baltimore, Maryland 21202
Vote by Touch-Tone Phone, by Mail, or via the Internet!!
CALL: To vote by phone call toll-free 1-800-________ and use the control
number on the front of your proxy card.
INTERNET: Vote on the internet at www.________.com and use the control
number on the front of your proxy card.
MAIL: Return the signed proxy card in the enclosed envelope.
*** CONTROL NUMBER: 999 999 999 999 99 ***
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
FUND NAME PRINTS HERE To Be Held July 30, 2002 at _________, Eastern time
The undersigned hereby appoints Fran Pollack-Matz and Lisa Hertz and each of
them, with the full power of substitution, as proxies of the undersigned to vote
all shares of stock that the undersigned is entitled in any capacity to vote at
the above-stated Special Meeting, and at any and all adjournments or
postponements thereof (the 'Special Meeting'), on the matters set forth on this
Proxy Card, and, in their discretion, upon all matters incident to the conduct
of the Special Meeting and upon such other matters as may properly be brought
before the Special Meeting. This proxy revokes all prior proxies given by the
undersigned.
All properly executed proxies will be voted as directed. If no instructions are
indicated on a properly executed proxy, the proxy will be voted FOR approval of
Proposals I and II. All ABSTAIN votes will be counted in determining the
existence of a quorum at the Special Meeting and, for Proposal II, will
have the effect of 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 and II.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
Dated: _____________________________________
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Signature(s)(Titles(s), if applicable)
Joint owners should each sign. Please sign exactly as your name or names appear
on this card. When signing as an attorney, executor, administrator, trustee,
guardian or corporate officer please give your full title as such.
Please fill in box(es) as shown using black or blue ink or number 2 pencil. [X]
PLEASE DO NOT USE FINE POINT PENS.
The Special Meeting is being held to consider and vote on the following matters
for the Funds, 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:
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
PROPOSAL I: To elect eleven Trustees of the [_] [_] [_]
Trust 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.
(01) Richard R. Burt (05) Joseph R. Hardiman (09) Philip Saunders, Jr.
(02) S. Leland Dill (06) Richard J. Herring (10) William N. Searcy
(03) Martin J. Gruber (07) Graham E. Jones (11) Robert H. Wadsworth
(04) Richard T. Hale (08) Rebecca W. Rimel
To withhold authority to vote, mark "For All Except" and write the nominee's
number on the line below.
----------------------------------------------------------------
FOR AGAINST ABSTAIN
PROPOSAL II: To approve a new investment [_] [_] [_]
advisory agreement (a 'New Advisory
Agreement') between each Fund
and Deutsche Asset Management, Inc.