UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-12
BT ADVISOR FUNDS
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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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.
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[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 Advisor Funds
(the 'Trust'), of which your fund is a series, and the Board of
Trustees of each master fund, or portfolio, into which your fund
invests its investable assets (the 'Portfolios'), whose terms will be
effective beginning July 30, 2002 or on such later date as
shareholder approval is obtained; and
. to approve new investment advisory agreements between each fund's
corresponding Portfolio and Deutsche Asset Management, Inc. ('DeAM,
Inc.'), the investment advisor for the Portfolios.
Your fund operates as a feeder fund in a master-feeder fund arrangement with
one of the Portfolios. Under the Investment Company Act of 1940, as amended,
your fund's voting rights with respect to the Portfolio interests that it holds
must be passed through to the fund's own shareholders.
THE BOARD MEMBERS OF THE TRUST AND OF EACH PORTFOLIO RECOMMEND THAT YOU VOTE
FOR THESE PROPOSALS.
I. BOARD PROPOSAL TO ELECT NEW BOARD MEMBERS
Q: Why am I being asked to vote for Board members?
A: Deutsche Asset Management recommended to the Boards, and the Boards
agreed, that the Trust and the Portfolios, along with certain other
funds that are managed, advised, subadvised or administered by Deutsche
Asset Management and certain other funds managed, advised or
administered by Investment Company Capital Corporation (the 'DeAM
Funds') should be governed by boards comprised of the same group of
individuals. To attain the goal of having identical boards for all DeAM
Funds, we need shareholder approval to add certain persons to the
Trust's Board and your Portfolios' Boards. The Trust's Board and the
Portfolios' Boards agreed to submit this proposal to shareholders.
Q: Why did the Trust's Board and the Portfolios' Boards approve
management's recommendation?
A: Deutsche Asset Management recommended this proposal as part of an
overall plan to coordinate and enhance the efficiency of the governance
of the DeAM Funds. The Boards considered, among other factors, that a
unified group board structure benefits the Trust, the Portfolios and
your fund and the other series of the Trust by creating an experienced
group of Board members who understand the operations of the DeAM 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 and the Portfolios'
Boards will consist of eleven individuals. Five of these persons
currently serve as members of your Board; six persons will be new to the
Trust's Board and the Portfolios' Boards but have experience serving on
the boards of various other investment companies within the Deutsche
Asset Management family of funds.
II. PROPOSAL RELATED TO APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENTS
Q: Why am I being asked to vote for a new investment advisory agreement?
A: DeAM, Inc. recommended to the Boards that they approve the new
investment advisory agreements in order to provide DeAM, Inc. with
maximum flexibility to utilize Deutsche Asset Management's global
organization. The proposed new advisory agreements described in the
proxy statement will cover 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 Portfolios, except for the dates of execution,
effectiveness and initial term, and except that, under the new advisory
agreements, DeAM, Inc. would be authorized, to the extent permissible by
law and subject to further approval by the Board of Trustees of the
applicable Portfolio, to appoint certain affiliates as sub-advisors.
Currently, under limited circumstances, an
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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 Portfolio or the Trust.
In determining to recommend that the shareholders approve the new
advisory agreements, the Board of the Trust and the Board of your
Portfolio considered, among other factors, the potential benefits to the
Portfolios of providing DeAM, Inc. more flexibility in structuring
portfolio management services for each Portfolio. In addition, the
Boards considered that DeAM, Inc. will be able to take advantage of the
strengths of other entities within the Deutsche Asset Management
organization by permitting DeAM, Inc. to delegate certain portfolio
management services to such entities.
Q: Will the investment advisory fees remain the same?
A: Yes. The investment advisory fee rate proposed to be charged to the
Portfolios under the new advisory agreements is the same as the
investment advisory fee rate charged under the current advisory
agreements.
III. GENERAL QUESTIONS
Q: What are the Boards' recommendations?
A: The Boards recommend that all shareholders vote 'FOR' the nominees for
the Boards and 'FOR' the approval of the new advisory agreements.
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 website listed on your proxy
card;
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. 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. 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).
Q: Whom should I call with questions?
A: Please call Georgeson Shareholder Communications at 1-866-333-0889 with
any additional questions about the proxy statement or the procedures to
be followed to execute and deliver a proxy.
Q: Why am I receiving proxy information for a fund that I do not own?
A: Since shareholders of both 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 fund as well. Therefore, in order to save
money and to promote efficiency, one proxy statement has been prepared
for both 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 ADVISOR FUNDS
US Bond Index Fund--Premier Class
EAFE (R) Equity Index Fund--Premier Class
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 Advisor 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 10:30 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. The
Trust is comprised of the above two series (each, a 'Fund,' and together, the
'Funds'). Each Fund operates as a feeder fund in a master-feeder fund
arrangement with a corresponding master fund portfolio (each, a 'Portfolio,'
and collectively, the 'Portfolios'). Each Fund seeks to achieve its respective
investment objectives by investing all of its investable assets in a
corresponding Portfolio with the same investment objective and policies. The
Portfolios in which the Funds invest are organized as registered open-end
management investment companies established as series of a trust under the laws
of the State of New York. Pursuant to the requirements of the Investment
Company Act of 1940, as amended, applicable to master-feeder arrangements, each
Fund's voting rights with respect to the Portfolio interests that it holds must
be passed through to the Fund's own shareholders.
The Special Meeting is being held to consider and vote on the following
matters for each Fund, as indicated below and more fully described under the
corresponding Proposals in the Proxy Statement, and such other matters as may
properly come before the Special Meeting or any adjournments thereof:
PROPOSAL I: To elect eleven Trustees
of the Trust and the
Portfolios to hold office
until their respective
successors have been duly
elected and qualified or
until their earlier
resignation or removal,
whose terms will be
effective on the date of
the Special Meeting or,
in the event of an
adjournment or
adjournments of the
Special Meeting, such
later date as shareholder
approval is obtained.
PROPOSAL II: To approve new investment
advisory agreements
(each, a "New Advisory
Agreement" and
collectively, the "New
Advisory Agreements")
between each Fund's
corresponding Portfolio
and Deutsche Asset
Management, Inc. ("DeAM,
Inc.").
The appointed proxies will vote in their discretion on any other business as
may properly come before the Special Meeting or any adjournment thereof.
The New Advisory Agreements described in Proposal II will contain
substantially similar provisions and do not differ in substance from the
current advisory agreements pursuant to which services are provided to the
Portfolios, except for the dates of execution, effectiveness and initial term,
and except that, under the New Advisory Agreements, DeAM, Inc. would be
authorized, to the extent permissible by law and subject to further approval by
the Board of Trustees of the applicable Portfolio, to appoint certain
affiliates as sub-advisors. In addition, the New Advisory Agreements will not
contain a provision under which DeAM, Inc. could seek indemnification from the
applicable Portfolio or Trust.
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 Boards of Trustees of the Trust and the
Portfolios and FOR 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 13, 2002
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WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE,
DATE AND SIGN EACH ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED
ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES (UNLESS YOU ARE
VOTING BY TELEPHONE OR THROUGH THE INTERNET). NO POSTAGE NEED BE
AFFIXED IF THE PROXY CARD IS MAILED IN THE UNITED STATES.
IF YOU HAVE ANY QUESTIONS CONCERNING THE PROXY STATEMENT OR THE PROCEDURES
TO BE FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT GEORGESON
SHAREHOLDER COMMUNICATIONS, INC. AT 1-866-333-0889.
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YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on each enclosed proxy card, sign
and date the card(s) and return it or them in the envelope provided. If you
sign, date and return the proxy card(s) but give no voting instructions, your
shares will be voted 'FOR' the nominees for Trustee named in the attached
Proxy Statement; 'FOR' the approval of a new investment advisory agreement
with Deutsche Asset Management, Inc.; and, in the discretion of the persons
appointed as proxies, either 'FOR' or 'AGAINST' any other business that may
properly arise at the special meeting or any adjournments thereof. In order to
avoid the additional expense of further solicitation, we ask your cooperation
in mailing your proxy card(s) promptly. As an alternative to using the paper
proxy card to vote, you may vote shares that are registered in your name, as
well as shares held in 'street name' through a broker, via the internet or
telephone.
See your proxy card(s) for instructions for internet voting.
You may also call 1-866-333-0889 and vote by telephone.
If we do not receive your completed proxy card(s), our proxy
solicitor, Georgeson Shareholder Communications, Inc., may contact you. Our
proxy solicitor will remind you to vote your shares or will record your vote
over the phone if you choose to vote in that manner.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense to the Trust, the Portfolios and the Funds
involved in validating your vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party signing
should conform exactly to the name shown in the registration on the proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration.
For example:
Registration Valid Signature
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Corporate Accounts
(1) ABC Corp. ABC Corp. John Doe, Treasurer
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp. c/o John Doe, Treasurer John Doe
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
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Partnership Accounts
(1) The XYZ Partnership Jane B. Smith, Partner
(2) Smith and Jones, Limited Partnership Jane B. Smith, General Partner
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Trust Accounts
(1) ABC Trust Account Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d 12/28/78 Jane B. Doe
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Custodial or Estate Accounts
(1) John B. Smith, Cust. F/b/o John B. Smith Jr.
UGMA/UTMA John B. Smith
(2) Estate of John B. Smith John B. Smith, Jr., Executor
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BT ADVISOR FUNDS
US Bond Index Fund--Premier Class ('US Bond Index Fund')
EAFE (R) Equity Index Fund--Premier Class ('EAFE (R) Equity Index Fund')
One South Street
Baltimore, Maryland 21202
PROXY STATEMENT FOR THE SPECIAL MEETING
OF SHAREHOLDERS
July 30, 2002
This joint proxy statement ('Proxy Statement') is being furnished in
connection with the solicitation by the Board of Trustees of BT Advisor Funds
(the 'Trust') with respect to the above two 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 10:30 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.
Each Fund operates as a feeder fund in a master-feeder fund arrangement with
a corresponding master fund portfolio (each, a 'Portfolio,' and collectively,
the 'Portfolios'). The Portfolios in which the Funds invest are organized as
registered open-end management investment companies established as a series of
a trust under the laws of the State of New York. Each Fund seeks to achieve its
respective investment objectives by investing all of its investable assets in a
corresponding Portfolio with the same investment objectives and policies.
For simplicity, actions are described in this Proxy Statement as being taken
by a Fund, which is a series of the Trust, although all actions are actually
taken by the Trust on behalf of the applicable Fund. Some actions described as
taken by or with respect to a Fund are actually actions to be taken by the
corresponding Portfolio in which the Fund invests all of its assets and on
which the Fund votes as a shareholder. Further, actions described as being
taken by the shareholders of the Trust with respect to its Board of Trustees
will also be taken by the Funds as shareholders of the Portfolios with respect
to the Portfolios' respective Boards of Trustees. For the Funds, your vote and
the vote of other shareholders of the relevant Fund determines how the Fund
will vote with respect to itself and its corresponding Portfolio. See
'Background.'
The Special Meeting is being held to consider and vote on the following
matters for each Fund, as indicated below and described more fully under the
corresponding Proposals discussed herein, and such other matters as may
properly come before the meeting or any adjournments thereof:
PROPOSAL I: To elect eleven Trustees of the Trust and the Portfolios to
hold office until their respective successors have been duly
elected and qualified or until their earlier resignation or
removal, whose terms will be effective on the date of the
Special Meeting or, in the event of an adjournment or
adjournments of the Special Meeting, such later date as
shareholder approval is obtained.
PROPOSAL II: To approve new investment advisory agreements (each, a
'New Advisory Agreement' and collectively, the 'New
Advisory Agreements') between each Fund's corresponding
Portfolio and Deutsche Asset Management, 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 shareholders of the Trust are to consider the election of Richard R.
Burt, S. Leland Dill, Martin J. Gruber, Richard T. Hale, Joseph R. Hardiman,
Richard J. Herring, Graham E. Jones, Rebecca W. Rimel, Philip Saunders, Jr.,
William N. Searcy and Robert H. Wadsworth (the 'Trustee Nominees') as Trustees
of the Trust and Portfolios./1/ Messrs. Dill and Hale and Drs. Gruber, Herring
and Saunders currently serve on the Boards of Trustees of the Trust and the
Portfolios. Mr. Hale is currently an 'interested person' (an 'Interested
Trustee'), as defined in the Investment Company Act of 1940, as amended (the
'1940 Act'), of the Trust and the Portfolios and, if elected, will be the
Chairman of the Board of the Trust and the Portfolios. Messrs. Burt, Hardiman,
Jones, Searcy and Wadsworth and Ms. Rimel currently serve as Trustees of
various other investment companies within the Deutsche Asset Management family
of funds.
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/1/ Unless otherwise indicated, references in this Proxy Statement to the
"Trustee Nominees' include the Trustee Nominees of both the Trust and the
Portfolios.
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The Funds' shareholders are also to consider the approval of the New
Advisory Agreements between DeAM, Inc., the current investment advisor for the
Portfolios, and the applicable Portfolio, as indicated in the table below:
Fund Corresponding Portfolio
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US Bond Index Fund US Bond Index Portfolio
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EAFE (R) Equity Index Fund EAFE (R) Equity Index Portfolio
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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 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 December 31, 2001 (each, a 'Report'), has
previously been furnished to the Funds' respective shareholders. An additional
copy of each Report will be furnished without charge upon request by writing to
the Trust at the address set forth on the cover of this Proxy Statement or by
calling 1-800-730-1313. Each Report is also available on the Deutsche Asset
Management website at www.deam-us.com.
If the enclosed Proxy is properly executed and returned in time to be voted
at the Special Meeting, the shares represented thereby will be voted in
accordance with the instructions marked on the Proxy. Shares of a Fund are
entitled to one vote each at the Special Meeting and fractional shares are
entitled to proportionate shares of
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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.
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 dis-
4
cretionary 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 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 both Funds will receive a package containing a Proxy Statement and
Proxies for both 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 both Funds may receive
two 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 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'),
5
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.
Background
Trust, Portfolio and Fund Structure. The Trust is an open-end management
investment company, organized under the laws of the Commonwealth of
Massachusetts. As indicated earlier, each Portfolio is a registered open-end
management investment company established as a series of a trust. DeAM, Inc.,
located at 280 Park Avenue, New York, New York 10017, acts as the investment
advisor to each Portfolio pursuant to the terms of investment advisory
agreements (the 'Current Advisory Agreements'). Pursuant to the Current
Advisory Agreements, DeAM, Inc. supervises and assists in the management of the
assets of each Portfolio and furnishes each Portfolio with research,
statistical, advisory and managerial services. DeAM, Inc. pays the ordinary
office expenses of each Portfolio and the compensation, if any, of all officers
and employees of each Portfolio and all Trustees who are Interested Trustees of
the Funds.
Master-Feeder Structure. Shareholders of the Funds are being asked to
approve a New Advisory Agreement, as applicable, and to elect the Trustee
Nominees to the Boards of Trustees of the Trust and the Portfolios. As
indicated earlier, each Fund operates as a feeder fund in a master-feeder fund
arrangement with the Portfolios, which serve as master funds. The Funds seek to
achieve their respective investment objectives by investing all of their
investable assets in a corresponding Portfolio with the same investment
objectives and policies. The Portfolios invest directly in investment
securities and other investments. Pursuant to the requirements of the 1940 Act
applicable to master-feeder arrangements, each Fund's voting rights with
respect to the Portfolio shares that it holds must be passed through to the
Fund's own shareholders. Other feeder funds of a particular Portfolio will also
vote in accordance with their respective charters and/or other applicable
requirements with respect to the approval of the applicable New Advisory
Agreement(s), and the election of Trustees of the Trust and the Portfolios.
6
PROPOSAL I
ELECTION OF NOMINEES TO THE BOARDS OF TRUSTEES OF THE TRUST AND THE PORTFOLIOS
It is proposed that eleven Trustee Nominees are to be elected to comprise
the entire Board of Trustees of the Trust and of each Portfolio at the Special
Meeting to serve until their successors have been duly elected and qualified or
until their earlier resignation or removal. The Independent Trustee Nominees
were recently selected by a Nominating Committee of the Boards comprised
entirely of the Independent Trustees of the Boards and nominated by the full
Boards at a meeting held on April 5, 2002. If elected, the terms of the eleven
Trustee Nominees will begin on the date of the Special Meeting or, in the event
of an adjournment or adjournments of the Special Meeting, such later date as
shareholder approval is obtained, upon their respective acceptances of their
election in writing (the 'Effective Date'); until that time, the current Board
members will continue their terms. It is anticipated that Messrs. Biggar,
Langton and Van Benschoten, each a current member of the Boards of Trustees,
will no longer serve effective the Effective Date if Proposal I is approved by
the shareholders of the Trust and the Portfolios. The names and ages of the
Trustee Nominees, their principal occupations during the past five years and
certain of their other affiliations are provided below. No Independent Trustee
or Independent Trustee Nominee of the Trust or the Portfolios serves or will
serve as an officer of the Trust or any Portfolio. Each of the Trustee Nominees
has agreed to serve if elected at the Special Meeting. It is the intention of
the persons designated as proxies in the Proxy, unless otherwise directed
therein, to vote at the Special Meeting for the election of the Trustee
Nominees named below. If any Trustee Nominee is unable or unavailable to serve,
the persons named in the Proxies will vote the Proxies for such other persons
as the Boards of Trustees may recommend.
The nomination of these persons to serve as the Board of Trustees of the
Trust and the Portfolios reflects an overall plan to coordinate and enhance the
efficiency of the governance of the Trust and the Portfolios 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'), another indirect wholly-owned subsidiary of Deutsche
Bank) (the 'DeAM Funds'). The proposal concerning the size and composition of
the Boards of Trustees was suggested to the Boards by Deutsche Asset Management
and reviewed by the current Independent Trustees of each Board. Messrs. Dill
and Hale (an Interested Trustee) and Drs. Gruber, Herring and Saunders are
currently members of the Boards of Trustees of the Trust and the Portfolios.
Each of the other Independent Trustee Nominees already serves as an independent
board member for one or more other DeAM Funds and understands the operations of
the fund complex.
7
Deutsche Asset Management recommended, and the Board agreed, that the Trust
and the Portfolios should be governed by larger Boards of Trustees composed of
the same members as are expected to govern certain other DeAM Funds. Presently,
the Board membership of the Trust and the Portfolios and the board membership
of the other DeAM Funds are not identical. Eight persons currently serve on the
Board of Trustees of the Trust and the Portfolios, and between five and nine
persons currently serve on the boards of the other DeAM Funds. If shareholders
elect each of the Trustee Nominees, certain of the existing Trustees will be
joined by certain of the board members of the other DeAM Funds.
Although the election of the Trustee Nominees is not in any way conditioned
on similar action being taken by other funds, it is currently anticipated that
the boards of the other DeAM Funds will approve the expansions of their boards
and the appointment of new board members so that each of the DeAM Funds' boards
is ultimately identically comprised.
The following information is provided for each Trustee Nominee and executive
officer of the Trust's and the Portfolio's Boards as of the end of the most
recently completed calendar year. The first section of the table lists
information for each Trustee Nominee who is an Independent Trustee Nominee.
Information for the Interested Trustee Nominee follows. The Interested Trustee
Nominee is considered to be an interested 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/Portfolio operations is One South Street, Baltimore, Maryland, 21202.
8
INFORMATION CONCERNING TRUSTEE NOMINEES AND OFFICERS
NUMBER OF
TERM OF FUNDS OR
OFFICE/1/ PORTFOLIOS
POSITION AND IN FUND
WITH THE LENGTH OF COMPLEX
BT ADVISOR TIME OVERSEEN
TRUST AND SERVED ON BY TRUSTEE OTHER DIRECTORSHIPS HELD BY
NAME AND BIRTH EACH THE TRUST PRINCIPAL OCCUPATION(S) OR NOMINEE TRUSTEE OR NOMINEE FOR
DATE PORTFOLIO BOARD DURING PAST 5 YEARS FOR TRUSTEE/2/ TRUSTEE
- --------------- ---------- --------- --------------------------- ------------- ---------------------------
Independent Trustee Nominees
Richard R. Burt Trustee N/A Chairman, IEP Advisors, 86 Member of the Board,
2/3/47 Nominee Inc. (since July 1998); Archer Daniels Midland
Chairman of the Board, Company/3/ (agribusiness
Weirton Steel operations) (October
Corporation/3/ (since April 1996 to June 2001),
1996). Formerly, Partner, Hollinger International,
McKinsey & Company Inc./3/ (publishing) (since
(consulting) (1991 to 1995), Homestake
1994) and US Chief Mining/3/ (mining and
Negotiator in Strategic exploration) (1998 to
Arms Reduction Talks February 2001), HCL
(START) with former Technologies Limited
Soviet Union and US (information technology)
Ambassador to the (since April 1999),
Federal Republic of Anchor Gaming (gaming
Germany (1985 to 1991). software and equipment)
(March 1999 to
December 2001);
Director, UBS Mutual
Funds (formerly known as
Brinson and Mitchell
Hutchins families of
funds) (registered
investment companies)
(since 1995); and
Member, Textron Inc./3/
International Advisory
Council (since July
1996).
S. Leland Dill Trustee Since Retired (since 1986); 84 Trustee, Phoenix Zweig
3/28/30 1999 formerly Partner, KPMG Series Trust (since
Peat Marwick (June 1956 September 1989),
to June 1986); General Phoenix Euclid Market
Partner, Pemco Neutral Fund (since May
(investment company) 1998) (registered
(June 1979 to June investment companies);
1986). Director, Vintners
International Company
Inc. (June 1989 to May
1992), Coutts (USA)
International (January
1992 to March 2000),
Coutts Trust Holdings
Ltd., Coutts Group
(March 1991 to March
1999).
9
NUMBER OF
TERM OF FUNDS OR
OFFICE/1/ PORTFOLIOS
POSITION AND IN FUND
WITH THE LENGTH OF COMPLEX
BT ADVISOR TIME OVERSEEN
TRUST AND SERVED ON BY TRUSTEE OTHER DIRECTORSHIPS HELD BY
NAME AND BIRTH EACH THE TRUST PRINCIPAL OCCUPATION(S) OR NOMINEE TRUSTEE OR NOMINEE FOR
DATE PORTFOLIO BOARD DURING PAST 5 YEARS FOR TRUSTEE/2/ TRUSTEE
- ------------------ ---------- --------- -------------------------- ------------- ---------------------------
Martin J. Gruber Trustee Since Nomura Professor of 85 Member of the Board,
7/15/37 1995 Finance, Leonard N. CREF (since 2000), S.G.
Stern School of Business, Cowen Mutual Funds
New York University (1985 to 2001), Japan
(since 1964). Equity Fund, Inc. (since
1992), Thai Capital
Fund, Inc. (since 2000),
Singapore Fund, Inc.
(since 2000) (registered
investment companies).
Joseph R. Hardiman Trustee N/A Private Equity Investor 82 Director, Soundview
5/27/37 Nominee (since 1997); President Technology Group Inc.
and Chief Executive (investment banking)
Officer, The National (since July 1998), Corvis
Association of Securities Corporation/3/ (optical
Dealers, Inc. and The networking experience)
NASDAQ Stock Market, (since July 2000), Brown
Inc. (1987 to 1997); Investment Advisory &
Chief Operating Officer Trust Company
of Alex. Brown & Sons (investment advisor)
Incorporated (now (since February 2001),
Deutsche Banc Alex. The Nevis Fund
Brown Inc.) (1985 to (registered investment
1987) and General company) (since July
Partner, Alex. Brown & 1999), and ISI Family of
Sons Incorporated (now Funds (registered
Deutsche Banc Alex. investment companies)
Brown Inc.) (1976 to (since March 1998).
1985.) Formerly, Director,
Circon Corp./3/ (medical
instruments) (November
1998 to January 1999).
Richard J. Herring Trustee Since Jacob Safra Professor of 84 N/A
2/18/46 1995 International Banking
and Professor, Finance
Department, The
Wharton School,
University of
Pennsylvania (since
1972); Director, Lauder
Institute of International
Management Studies
(since 2000); Co-
Director, Wharton
Financial Institutions
Center (since 2000);
Vice Dean and Director,
Wharton Undergraduate
Division, (1995 to 2000).
10
NUMBER OF
TERM OF FUNDS OR
OFFICE/1/ PORTFOLIOS
POSITION AND IN FUND
WITH THE LENGTH OF COMPLEX
BT ADVISOR TIME OVERSEEN
TRUST AND SERVED ON BY TRUSTEE OTHER DIRECTORSHIPS HELD BY
NAME AND BIRTH EACH THE TRUST PRINCIPAL OCCUPATION(S) OR NOMINEE TRUSTEE OR NOMINEE FOR
DATE PORTFOLIO BOARD DURING PAST 5 YEARS FOR TRUSTEE/2/ TRUSTEE
- -------------------- ---------- --------- ------------------------- ------------- ---------------------------
Graham E. Jones Trustee N/A Senior Vice President, 84 Trustee, 8 open-end
1/31/33 Nominee BGK Realty, Inc. mutual funds managed by
(commercial real estate) Weiss, Peck & Greer
(since 1995). (since 1985); Trustee, 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 to
(since 1994) and 1999).
Director and Executive
Vice President, The
Glenmede Trust
Company (investment
trust and wealth
management) (since
1994). Formerly,
Executive Director, The
Pew Charitable Trusts
(1988 to 1994).
Philip Saunders, Jr. Trustee Since Principal, Philip 84 N/A
10/11/35 1999 Saunders Associates
(Economic and Financial
Consulting) (since 1988);
former Director,
Financial Industry
Consulting, Wolf &
Company (1987 to 1988);
President, John Hancock
Home Mortgage
Corporation (1984 to
1986); Senior Vice
President of Treasury
and Financial Services,
John Hancock Mutual
Life Insurance Company,
Inc. (1982 to 1986).
William N. Searcy Trustee N/A Pension & Savings Trust 84 Trustee, 22 open-end
9/03/46 Nominee Officer, Sprint mutual funds managed by
Corporation/3/ Sun Capital Advisers,
(telecommunications) Inc. (since 1998).
(since 1989).
11
NUMBER OF
TERM OF FUNDS OR
OFFICE/1/ PORTFOLIOS
POSITION AND IN FUND
WITH THE LENGTH OF COMPLEX
BT ADVISOR TIME OVERSEEN
TRUST AND SERVED ON BY TRUSTEE OTHER DIRECTORSHIPS HELD BY
NAME AND BIRTH EACH THE TRUST PRINCIPAL OCCUPATION(S) OR NOMINEE TRUSTEE OR NOMINEE FOR
DATE PORTFOLIO BOARD DURING PAST 5 YEARS FOR TRUSTEE/2/ TRUSTEE
- ------------------- ---------- --------- -------------------------- ------------- ---------------------------
Robert H. Wadsworth Trustee N/A President, Robert H. 87 N/A
1/29/40 Nominee Wadsworth Associates,
Inc. (consulting firm)
(since 1982); President
and Director, Trust for
Investment Managers
(registered investment
company) (since 1999).
Formerly President,
Investment Company
Administration, LLC
(1992* to July 2001);
President, Treasurer and
Director, First Fund
Distributors, Inc. (1990
to January 2002); Vice
President, Professionally
Managed Portfolios
(1999 to 2002) and
Advisors Series Trust
(1997 to 2002)
(registered investment
companies) and
President, Guinness
Flight Investment Funds,
Inc. (registered
investment companies).
* Inception date of the
corporation which was
the predecessor to the
LLC.
Interested Trustee Nominee
Richard T. Hale/4/ Trustee Since Managing Director, 84 Director, Deutsche
7/17/45 1999 Deutsche Bank Global Funds, Ltd.
Securities, Inc. (formerly (since 2000); Director,
Deutsche Bank Alex. CABEI Fund (since
Brown Inc.) and 2000) and North
Deutsche Asset American Income Fund
Management (since (registered investment
1999); Director and companies) (since
President, Investment 2000); Formerly,
Company Capital Corp. Director, ISI Family of
(registered investment Funds (registered
advisor) (since 1996); investment companies)
Vice President, Deutsche (1992 to 1999).
Asset Management, Inc.
(since 2000). Chartered
Financial Analyst.
12
TERM OF NUMBER OF
OFFICE/1/ FUNDS OR
AND PORTFOLIOS
POSITION LENGTH IN FUND
WITH THE OF TIME COMPLEX
BT ADVISOR SERVED OVERSEEN
TRUST AND ON THE BY TRUSTEE OTHER DIRECTORSHIPS HELD BY
NAME AND BIRTH EACH TRUST PRINCIPAL OCCUPATION(S) OR NOMINEE TRUSTEE OR NOMINEE FOR
DATE PORTFOLIO BOARD DURING PAST 5 YEARS FOR TRUSTEE/2/ TRUSTEE
- ---------------- ---------- --------- ----------------------- ------------- ---------------------------
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
Vice April 2002) and
President Director, Deutsche
since Global Funds, Ltd.
2000 (since 2002). Formerly,
Director, Deutsche
Asset Management
(1999 to 2002);
Principal, BT Alex.
Brown Incorporated
(now Deutsche Banc
Alex. Brown Inc.)
(1998 to 1999);
Assistant General
Counsel, United States
Securities and
Exchange Commission
(1993 to 1998).
13
NUMBER OF
TERM OF FUNDS OR
OFFICE/1/ PORTFOLIOS
POSITION AND IN FUND
WITH THE LENGTH OF COMPLEX
BT ADVISOR TIME OVERSEEN
TRUST AND SERVED ON BY TRUSTEE OTHER DIRECTORSHIPS HELD BY
NAME AND BIRTH EACH THE TRUST PRINCIPAL OCCUPATION(S) OR NOMINEE TRUSTEE OR NOMINEE FOR
DATE PORTFOLIO BOARD DURING PAST 5 YEARS FOR TRUSTEE/2/ TRUSTEE
- ---------------- ---------- --------- ------------------------ ------------- ---------------------------
Charles A. Rizzo Treasurer Since Director, Deutsche Asset N/A N/A
8/5/57 1999 Management (since April
2000); Certified Public
Accountant; Certified
Management Accountant.
Formerly, Vice President
and Department Head,
BT Alex. Brown
Incorporated (now
Deutsche Banc Alex.
Brown Inc.) (1998 to
1999); Senior Manager,
Coopers & Lybrand LLP
(PricewaterhouseCoopers
LLP) (1993 to 1998).
- --------
/1/ Each Trustee and Officer serves 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
Trustee Compensation Table
The following table sets forth the compensation paid to the Independent
Trustees by the Trust and the Portfolios and the Fund Complex for the
twelve-month period ended March 31, 2002.
PENSION OR
RETIREMENT
AGGREGATE BENEFITS ESTIMATED
COMPENSATION ACCRUED AS ANNUAL TOTAL
FROM BT PART OF BENEFITS COMPENSATION
ADVISOR FUND UPON FROM FUND
TRUSTEE FUNDS EXPENSES RETIREMENT COMPLEX
--------------------------------------------------------------------
S. Leland Dill $2,900.06 N/A N/A $61,250
Martin J. Gruber $2,900.06 N/A N/A $61,250
Richard J. Herring $2,900.06 N/A N/A $61,250
Philip Saunders, Jr. $2,900.06 N/A N/A $61,250
Each Board has established an Audit Committee, a Nominating Committee and a
Valuation Committee. The Audit Committee and the Nominating Committee of each
Board currently are each composed of the Independent Trustees of that Board.
The Valuation Committee is composed of Messrs. Biggar and Dill and Dr.
Saunders. Each of the other Independent Trustees and the Interested Trustee
serves as an alternate to the Valuation Committee. In accordance with its
written charter adopted by the applicable Board of Trustees, each Audit
Committee assists the Board in fulfilling its responsibility for oversight of
the quality and integrity of the accounting, auditing and financial reporting
practices of the applicable Portfolio and Fund. It also makes recommendations
to the Board as to the selection of the independent public accountants, reviews
the methods, scope and result of the audits and audit fees charged, and reviews
the Portfolio's and Fund's internal accounting procedures and controls. Each
Audit Committee also considers the scope and amount of non-audit services
provided to the applicable Portfolio and Fund, its investment advisor and
affiliates by the independent public accountants. Each Nominating Committee is
charged with the duty of making all nominations for Independent Trustees to the
applicable Board of Trustees. The Nominating Committee of each Board will
consider Trustee nominees recommended by shareholders. Each Valuation Committee
considers and acts upon all questions relating to valuation of the securities
in the applicable Portfolio which may arise between meetings of the Board. The
Boards do not have compensation committees. During each Portfolio and Fund's
most recent fiscal year, the Boards of the Trust and the Portfolios held five
meetings, the Audit Committee of each Board held four meetings and the
Valuation Committee of each Board held one meeting. The Nominating Committee of
each Board did not meet during each Portfolio's and Fund's most recent fiscal
year. No Trustee attended less than 75% of the applicable
15
meetings. If the Nominees are elected to the Boards, the Boards will consider
whether other committees should be organized after they have reviewed the needs
of the Portfolios.
Mr. Hale, if elected, will not be a member of the Audit Committee or the
Nominating Committee.
Recommendation of the Boards of Trustees
The Boards of Trustees believe that coordinated governance through a unified
board structure will benefit the Trust, the Portfolios and the Funds.
In their deliberations, the Boards of Trustees considered various matters
related to the management and long-term welfare of the Trust, the Portfolios
and the Funds. The Boards considered, among other factors, that coordinated
governance within the DeAM Fund Complex will reduce the possibility that the
separate boards might arrive at conflicting or inconsistent decisions regarding
the policies, strategies, operations and management of the Trust, the
Portfolios, the Funds and the other DeAM Funds, and that this will help avoid
costs, confusion and complexity resulting from different or conflicting
decisions. The Boards also considered that operating with a unified group board
eliminates the potential for these types of conflicts while preserving the
insights and experience that can be contributed by individual members. In
addition, the Boards considered that a unified group board would also allow
management to reduce the total number of board meetings it is required to
attend and at which it would make repetitive presentations each year across the
Fund Complex which can be expected to make the governance process more
efficient. Deutsche Asset Management expends a significant amount of time and
effort preparing and coordinating materials and presentations for board
meetings. In many instances, presentations need to be made more than once on
identical or similar issues. Adopting a unified group board structure would
enable management and the Boards to use time more efficiently. There may also
be cost savings to the Trust, the Portfolios and the Funds because Trustees
will serve in an increased number of investment companies.
The Boards also considered that a unified group board structure benefits the
Trust, the Portfolios and the Funds by creating an experienced group of Board
members who understand the operations of each Fund and the Fund Complex and are
exposed to the wide variety of issues that arise from overseeing different
types of funds.
The Boards gave considerable weight to their expectation that the Trust, the
Portfolios and the Funds will benefit from the diversity and experience of the
Trustee Nominees that would be included in the expanded Boards and from the
experience that each Trustee Nominee will gain by serving on the boards of a
diverse group of funds. The Boards also considered, in light of the following
transaction, the importance of greater breadth and depth of expertise on the
Boards. On April 5, 2002,
16
Deutsche Bank acquired 100% of US-based asset manager Zurich Scudder
Investments ('Scudder') (the 'Transaction'). The combined organization is the
fourth largest asset manager in the world, with approximately $900 billion in
assets under management. The Transaction is anticipated to provide greater
breadth and geographic reach to the asset management services presently
provided by the asset management entities of Deutsche Bank by making available
additional investment expertise more effectively leveraged globally through a
stronger investment platform in which research is fundamentally integrated with
portfolio management. Because of the increased size and scope of Deutsche Asset
Management after the Transaction, Deutsche Asset Management will seek to
attract and retain talented people by providing a challenging work environment,
competitive compensation and reward systems and professional development
opportunities. Management intends to build a culture of teamwork, commitment,
performance and mutual respect. The Trustee Nominees have had distinguished
careers in accounting, finance, marketing and other areas and will bring a wide
range of expertise to the Boards. Ten of the eleven nominees, if elected, would
be Independent Trustees. Independent Trustees are charged with special
responsibilities to provide an independent check on management and to approve
advisory, distribution and similar agreements between the Trust and management.
In addition, the Boards considered certain other advantages of enlarging the
Boards. These included that enlarging each Board will afford an increased range
of experience among Board members and makes it more likely that each Board will
be able to ensure appropriate continuity over the years as incumbent members
reach mandatory retirement age or otherwise retire and that, should the Boards
determine to revise their structures through increased establishment of
committees, an enlarged Board will provide an increased choice of potential
members of such committees. As part of their deliberations, the Boards also
recognized that increased numbers of Board members could result in less
collegial meetings and longer discussions. On balance, each Board concluded
that these possible detriments of size were outweighed by the benefits
anticipated from the unified and enlarged Boards.
Therefore, after careful consideration, the Boards, including the
Independent Trustees of each, recommend that the respective shareholders of the
Trust and the Portfolios vote 'FOR' the election of the Trustee Nominees as set
forth in this Proposal.
If the Trustee Nominees are elected by the applicable shareholders, each
Trustee Nominee will serve, effective the Effective Date, until his or her
successor is duly elected and qualified or until his or her earlier resignation
or removal. If the Trustee Nominees are not elected, the applicable Board(s)
will consider what action is appropriate based upon the interests of the
Trust's or Portfolios' shareholders, as applicable.
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 Portfolios except for the dates of
execution, effectiveness and initial term and except that, under the New
Advisory Agreements, DeAM, Inc. would be authorized, to the extent permissible
by law and subject to further approval by the Board of Trustees of the
applicable Portfolio, to appoint certain affiliates as sub-advisors. In
addition, the New Advisory Agreements will not contain a provision under which
DeAM, Inc. could seek indemnification from the applicable Portfolio or Trust.
See 'Differences Between the Current and New Advisory Agreements.'
The Advisory Agreements
The Current Advisory Agreements. DeAM, Inc. serves as investment advisor to
both of the Portfolios (as discussed earlier) pursuant to the Current Advisory
Agreements. The Current Advisory Agreements were initially approved by the
Boards of the applicable Portfolio and the Trust, including a majority of those
Board members of the Portfolio or the Trust, respectively, who are not
'interested persons' (as defined in the 1940 Act) of the Trust, the Portfolios
or DeAM, Inc. (the 'Independent Trustees').
Exhibit C to this Proxy Statement lists: (i) the date of each Current
Advisory Agreement and (ii) the most recent date on which each Current Advisory
Agreement was approved by the applicable Portfolio's and Fund's Trustees,
including a majority of the Independent Trustees of the Portfolio and Fund, and
the Fund's and Portfolio's shareholders.
The New Advisory Agreements. The form of the New Advisory Agreement is
attached to this Proxy Statement as Exhibit D. A description of the New
Advisory Agreements is set forth below and is qualified in its entirety by
reference to Exhibit D. If shareholders approve the New Advisory Agreements,
each of the agreements will remain in effect for an initial term of two years
from its effective date, and may be renewed annually thereafter only if
specifically approved at least annually by the vote of 'a majority of the
outstanding voting securities' (as defined in the 1940 Act; see 'Vote Required'
below) of each Fund, or by the Board of Trustees of the applicable Portfolio
and, in either event, the vote of a majority of the Independent Trustees of the
applicable Portfolio, cast in person at a meeting called for such purpose. The
terms and conditions--including the services to be provided and the fees to
18
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 permissible by law and subject to further approval by the Board of
Trustees of the applicable Portfolio, to appoint certain affiliates as
sub-advisors. In addition, the New Advisory Agreements will not contain a
provision under which DeAM, Inc. could seek indemnification from the applicable
Portfolio or Trust.
Differences Between the Current and New Advisory Agreements. As stated
above, the terms of the New Advisory Agreement for each Fund contain
substantially similar provisions and do not differ in substance from the
corresponding Current Advisory Agreement, except that, to the extent
permissible by law and subject to further Board approval, pursuant to each New
Advisory Agreement DeAM, Inc. would be authorized to appoint certain of its
affiliates as sub-advisors to perform certain of DeAM, Inc.'s duties. In such
cases, DeAM, Inc. would also be authorized to adjust the duties, the amount of
assets to be managed and the fees paid by DeAM, Inc. to any such affiliated
sub-advisors. These affiliated sub-advisors must be entities that DeAM, Inc.
controls, is controlled by, or is under common control with, and any such
appointments are subject to the further approval of the Independent Trustees
and the full Board of the applicable Portfolio. Shareholders of a Fund that are
affected by any adjustment would receive appropriate disclosure of any such
change in a timely fashion following approval by the Independent Trustees. The
advisory fee rates paid by the Funds would not increase as a result of any such
action; all fees incurred by a sub-advisor will continue to be the
responsibility of DeAM, Inc. DeAM, Inc. will retain full responsibility for the
actions of any such sub-advisor.
Unlike the Current Advisory Agreements, the New Advisory Agreements make
explicit that DeAM, Inc. would be permitted to delegate certain advisory duties
to an affiliated sub-advisor. Currently, under limited circumstances, an
advisor may delegate duties to a sub-advisor without obtaining shareholder
approval at the time such delegation is made. Such circumstances include (a)
under Rule 2a-6 of the 1940 Act, where a proposed sub-advisor is under common
control with the advisor, and the same persons involved in the management of
the assets are employed at both the advisor and the sub-advisor; and (b)
pursuant to certain interpretations of the staff of the Commission, where
investment responsibility is delegated by the advisor to other entities, or
employees of such entities, that are wholly owned subsidiaries of the advisor's
parent company. The New Advisory Agreements would also permit DeAM, Inc. to
appoint certain affiliates as sub-advisors, i.e., entities that DeAM, Inc.
con-trols, is controlled by, or is under common control with, under
circumstances not currently contemplated by Rule 2a-6 or the aforementioned
staff interpretations. How-
19
ever, 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.
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. 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 Boards that it would
not seek such provision in the New Advisory Agreements. DeAM, Inc. assured the
Boards that the nature and quality of management historically rendered by it
would be unchanged notwithstanding the deletion of the indemnification
provision.
Under the terms of the New Advisory Agreements, DeAM, Inc. agrees to provide
the Portfolios with investment advisory services, including the investment and
reinvestment of the cash, securities or other properties comprising a
Portfolio's assets. Subject to the supervision and control of the applicable
Portfolio's Board of Trustees, DeAM, Inc. agrees, in carrying out its
obligations, to conform to (a) all applicable provisions of the 1940 Act and
any rules and regulations adopted thereunder, (b) the provisions of the
Portfolios' registration statements, (c) the provisions of the Trust's
Declaration of Trust, (d) any other applicable provisions of state and federal
law, and (e) the provisions of the applicable Portfolio's Agreement of Trust.
Under the terms of the New Advisory Agreements, DeAM, Inc. agrees to (a)
supervise and manage all aspects of a Portfolio's operations, except for
distribution services; (b) formulate and implement continuing programs for the
purchases and sales of securities, consistent with the investment objective and
policies of the applicable Portfolio, (c) provide the Trust with, or obtain for
it, adequate office space and all necessary office equipment and services for
the Trust's principal office; (d) obtain and evaluate pertinent information
about significant developments and certain other
20
information, whether affecting the economy generally or a particular Portfolio;
(e) for each Portfolio, determine which issuers and securities will be
represented in the portfolio and regularly report thereon to the Trust's and
Portfolio's Board of Trustees; and (f) take all actions necessary to carry into
effect a Portfolio's purchase and sale programs.
The investment advisory fee rate proposed to be charged to the Portfolios
under the New Advisory Agreements is the same as the investment advisory fee
rate charged under the Current Advisory Agreements.
The advisory fee rate paid to DeAM, Inc. under the Current Advisory
Agreements and the advisory fee paid by the applicable Portfolio for the most
recent fiscal year is set forth in Exhibit E to this Proxy Statement.
Generally. If approved, the New Advisory Agreements, as applicable, will
each remain in effect for an initial term of two years (unless sooner
terminated), and shall remain in effect from year to year thereafter if
approved annually (1) by the applicable Portfolio's Board of Trustees or by the
holders of a majority of the applicable Portfolio's outstanding voting
securities (i.e., in most cases, the Funds) and (2) by a majority of the
Independent Trustees who are not parties to such contract or agreement. Like
the Current Advisory Agreements, the New Advisory Agreements will terminate
upon assignment by any party and are terminable, without penalty, on 60 days'
written notice by the applicable Portfolio's Board of Trustees or by vote of a
majority of the outstanding voting securities (as defined in the 1940 Act) of
the applicable Portfolio or upon 90 days' written notice by DeAM, Inc.
The services of DeAM, Inc. are not deemed to be exclusive and nothing in the
Current Advisory Agreements or the New Advisory Agreements prevents it or its
affiliates from providing similar services to other investment companies and
other clients (whether or not their investment objectives and policies are
similar to those of the Portfolios) or from engaging in other activities. In
addition, DeAM, Inc. is obligated to pay expenses associated with providing the
services contemplated by the New Advisory Agreements. The Portfolios bear
certain other expenses including the fees of the Portfolios' Boards. The
Portfolios also pay any extraordinary expenses incurred.
Under the New Advisory Agreements, DeAM, Inc. will exercise its best
judgment in rendering its advisory services. DeAM, Inc. will not be liable for
any error of judgment or mistake of law or for any loss suffered by the
Portfolios in connection with the matters to which the New Advisory Agreements
relate, provided that nothing therein shall be deemed to protect or purport to
protect DeAM, Inc. against any liability to the Portfolios or to their
shareholders to which DeAM, Inc. could otherwise
21
be subject by reason of willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or by reason of DeAM, Inc.'s reckless
disregard of its obligations and duties under the New Advisory Agreements.
Since each Fund invests all of its investable assets in its corresponding
Portfolio, portfolio transactions occur at the Portfolio level only. As
investment advisor, DeAM, Inc. will allocate and place all orders for portfolio
transactions of each Portfolio's securities. When it can be done consistently
with the policy of obtaining the most favorable net results, DeAM, Inc. may
place such orders with brokers and dealers who provide market, statistical and
other research information to the applicable Portfolio or DeAM, Inc. DeAM, Inc.
is authorized, under certain circumstances, when placing portfolio transactions
for equity securities to pay a brokerage commission (to the extent applicable)
in excess of that which another broker might charge for executing the same
transaction on account of the receipt of market, statistical and other research
information. When it can be done consistently with the policy of obtaining the
most favorable net result, in selecting brokers and dealers with which to place
portfolio transactions for the applicable Portfolio, DeAM, Inc. may consider
its affiliates and also firms that sell shares of mutual funds advised by DeAM,
Inc. or recommend the purchase of such funds.
Management of the Portfolios
The Advisor. Under the supervision of the Board, DeAM, Inc., located at 280
Park Avenue, New York, New York 10017, acts as the investment advisor to each
Fund and Portfolio. As investment advisor, DeAM, Inc. makes each Fund's
investment decisions. It buys and sells securities for each Fund and conducts
the research that leads to the purchase and sale decisions. DeAM, Inc. is also
responsible for selecting brokers and for negotiating brokerage commissions and
dealer charges. DeAM, Inc. is registered with the Commission as an investment
advisor and provides a full range of investment advisory services to
institutional and retail clients. In addition to providing investment advisory
services to the Funds and the Portfolios, DeAM, Inc. serves as investment
advisor to 35 other investment companies and investment sub-advisor to 50 other
investment companies. See Exhibit F to this Proxy Statement for a list of those
investment companies that DeAM, Inc. advises or subadvises that have investment
objectives similar to those of the Portfolios, together with information
regarding the fees charged to those companies. As of April 30, 2002, DeAM, Inc.
had approximately $93.8 billion of assets under management. DeAM, Inc., is an
indirect wholly-owned subsidiary of Deutsche Bank.
The principal occupations of each director and principal executive officer
of DeAM, Inc. are set forth in Exhibit G 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.
22
The Funds' advisor and administrator have agreed to limit their expenses for
sixteen (16) months from the Fund's fiscal year end to the amounts listed in
Exhibit E.
Administrator, Transfer Agent and Custodian. ICCC serves as administrator
and transfer agent and provides fund accounting services and Deutsche Bank
Trust serves as custodian of each Portfolio and Fund. It is expected that these
services will continue to be provided by the same service providers after
approval of the New Advisory Agreements. ICCC is paid an administrative fee for
its services from which it pays for custodian services provided by Deutsche
Bank Trust. (Exhibit E to this Proxy Statement sets forth the fees paid to ICCC
by the Portfolios and the Funds for these services for the most recently
completed fiscal year.)
Deutsche Bank. Deutsche Bank, Aktiengesellschaft, Taunusalage 12, D-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 U.S.
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 H to this Proxy Statement.
Recommendation of the Boards
At a meeting of the Boards of Trustees of the Trust and the Portfolios held
on June 7, 2002 called for the purpose of, among other things, voting on
approval of the New Advisory Agreements, a majority of each Board, including a
majority of the Independent Trustees, approved, subject to shareholder
approval, the New Advisory Agreements. In reaching this conclusion, the Boards
of Trustees obtained from DeAM, Inc. such information as they deemed reasonably
necessary to approve DeAM, Inc. as investment advisor to the Portfolios. In
approving the New Advisory Agreements, the Independent Trustees considered
numerous factors, including, among others, the nature, quality and extent of
services provided under the Current Advisory Agreements and proposed to be
provided by DeAM, Inc. to the Portfolios under the New Advisory Agreements;
that the investment advisory fees paid by the
23
Portfolios will remain the same under the New Advisory Agreements as under the
Current Advisory Agreements; investment performance, both of the Portfolios
themselves and relative to appropriate peer groups and market indices; staffing
and capabilities of DeAM, Inc. to manage the Portfolios; investment advisory
fees provided under the Current Advisory Agreements and current expense ratios
and asset sizes of the Portfolios themselves and relative to appropriate peer
groups; and DeAM, Inc.'s profitability from managing the Portfolios (both
individually and collectively) and the other investment companies managed by
DeAM, Inc. before marketing expenses paid by DeAM, Inc. The Boards also
considered other benefits earned by DeAM, Inc. and its affiliates relating to
its management of the Funds and the Portfolios, including brokerage fees, fees
for custody, transfer agency and other services as well as soft dollar benefits
received from third parties that aid in the management of assets.
In addition, each Board considered the potential benefit to the Portfolios
of providing DeAM, Inc. more flexibility in structuring portfolio management
services for each Portfolio. Each Board recognized that it may be beneficial to
the Portfolios to allow DeAM, Inc. to take advantage of the strengths of other
entities within the Deutsche Asset Management organization by permitting DeAM,
Inc. to delegate certain portfolio management services to such entities, and to
do so, to the extent permissible, without incurring the expense of obtaining
further shareholder approval. In addition, the Boards considered that (i) any
restructuring of the provision of portfolio management services provided to the
Portfolios would require the prior approval of a majority of the members of a
Portfolio's Board, including a majority of the Independent Trustees; (ii) the
investment advisory expenses incurred by the Portfolios would not be affected
by any action taken to delegate services to other Deutsche Bank entities or
their employees in reliance on the New Advisory Agreements because any fees
paid to a sub-advisor would be paid by DeAM, Inc. and not by the Portfolios;
and (iii) DeAM, Inc. will retain full responsibility for the actions of any
such sub-advisor.
Based on the factors discussed above, and others, the Boards of Trustees
determined that the New Advisory Agreements are fair and reasonable and in the
best interest of the Portfolios and their respective shareholders. Based on all
of the foregoing, at a meeting on June 7, 2002, a majority of the Board of
Trustees of the Trust and of each Portfolio, including a majority of the
Independent Trustees of the Trust and of each Portfolio, voted to approve the
New Advisory Agreements and to recommend them to the shareholders for their
approval.
Therefore, after careful consideration, the Boards of Trustees, including
the Independent Trustees of the Trust and of each Portfolio, recommend that the
respective shareholders of the Funds vote 'FOR' the approval of the New
Advisory Agreements as set forth in this Proposal.
24
If the New Advisory Agreements are approved by the shareholders, each
agreement will remain in effect as described above. If any New Advisory
Agreement is not approved by the shareholders, the Current Advisory Agreement
will continue in effect, subject to any requisite approval(s) of the applicable
Board of Trustees or its respective shareholders, and the applicable Board(s)
of Trustees will consider what other action is appropriate based upon the
interests of the shareholders. If shareholders of a Fund do not approve the
applicable New Advisory Agreement at the same time that shareholders of other
investment companies approve the applicable New Advisory Agreement with respect
to a common Portfolio in a manner sufficient to implement the New Advisory
Agreement for that Portfolio, the applicable Fund will remain a participant in
that Portfolio while the Boards consider what other action, if any, is
appropriate based upon the interests of the shareholders of the applicable Fund.
INFORMATION CONCERNING INDEPENDENT AUDITORS
The Portfolios' financial statements for their most recent fiscal years were
audited by PricewaterhouseCoopers LLP ('PwC'), independent auditors. In
addition, PwC prepares the Funds' and the Portfolios' federal and state annual
income tax returns and provides certain non-audit services to the Trust, the
Funds and the Portfolios. During the Boards' most recent consideration of the
selection of auditors for each Fund and Portfolio, the Board considered whether
the provision of non-audit services to the Trust, the Funds and the Portfolios
was compatible with maintaining PwC's independence. The Boards of Trustees of
the Trust and of each Portfolio have selected PwC as the independent auditors
for the applicable Fund and Portfolio for its respective fiscal year ending
2002. PwC has been the Funds' and the Portfolios' independent auditors since
inception of each Fund and Portfolio. PwC has informed the Trust that it has no
material direct or indirect financial interest in the Trust or the Portfolios.
Representatives 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' and Portfolios' annual financial
statements for the most recent fiscal year and the review of the financial
statements included in the Funds' and Portfolios' reports to shareholders were
$59,750.
25
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, the Funds or the Portfolios, DeAM, Inc. or entities that
control, are controlled by or are under common control with DeAM, Inc. that
provide services to the Trust, the Funds or the Portfolios.
All Other Fees. There were $2,851,315 million in fees billed by PwC for the
most recent fiscal year for other services provided to the Trust, the Funds and
the Portfolios, DeAM, Inc. and entities that control, are controlled by or are
under common control with DeAM, Inc. that provide services to the Trust, the
Funds or the Portfolios.
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 all
the Portfolios' various feeder funds voting collectively. Because abstentions
and broker non-votes are not treated as shares voted, abstentions and broker
non-votes will have no impact on Proposal I.
In view of the master-feeder structure discussed earlier, approval of
Proposal II with respect to a particular Portfolio's New Advisory Agreement
requires the affirmative vote of a 'majority' of the outstanding shares of the
Portfolio's various feeder funds as shareholders of the Portfolio. 'Majority'
(as defined in the 1940 Act) means (as of the Record Date) the lesser of (a)
67% or more of the shares of the applicable Portfolio present at the special
meeting, if the holders of more than 50% of the outstanding shares of the
Portfolio are present in person or by proxy, or (b) more than 50% of the
outstanding shares of the Portfolio (with respect to the applicable feeder
funds), determined by reference to the shares outstanding of the various feeder
funds. Because abstentions and broker non-votes are treated as shares present
but not voting, any abstentions and broker non-votes will have the effect of
votes against Proposal II, which requires the approval of a specified
percentage of the outstanding shares of a Portfolio.
26
THE BOARDS, INCLUDING THE INDEPENDENT TRUSTEES OF EACH, 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 applicable Board of Trustees when requested in writing by shareholders
holding at least 10% of the shares then outstanding.
IF YOU HAVE ANY QUESTIONS CONCERNING THE PROXY STATEMENT OR THE PROCEDURES
TO BE FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT GEORGESON
SHAREHOLDER COMMUNICATIONS, INC. AT 1-866-333-0889.
27
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 13, 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).
28
Exhibit A
SHARES OUTSTANDING AS OF RECORD DATE
----------------------------------------------------------------
Fund Number of Shares Outstanding
----------------------------------- ----------------------------
US Bond Index Fund--Premier Class 10,981,434.569
----------------------------------- ----------------------------
EAFE (R) Equity Index Fund--Premier
Class 15,355,021.673
----------------------------------- ----------------------------
A-1
Exhibit B
5% Shareholders
US BOND INDEX FUND--PREMIER CLASS:
Percent Ownership
Name and Address of Owner Shares Owned of Outstanding Shares
- ----------------------------------------------- ------------ ---------------------
Hoechst Celanese Corp., Executive Pension Plan* 2,019,626.35 17.97%
Attn: Frances Bobadilla,
Bankers Trust Co.,
100 Plaza One, Mail Stop 3048,
Jersey City, NJ 07311
IUOE & Pipe Line Employers, H&W Fund* 1,507,247.23 13.41%
1125 17th Street NW
Washington DC 20036-4707
Charles Schwab & Co., Omnibus Account Reinvest* 1,095,988.59 9.75%
Attn: Mutual Fund Account Management Team,
101 Montgomery Street 333-8,
San Francisco, CA 94104
FTC & Co. Datalynx House Acct.* 921,766.23 8.20%
P.O. Box 173736
Denver, CO 80217-3736
Mac & Co., FBO Bell Atlantic Master Trust* 689,039.72 6.13%
A/C NYFF1759442
Mutual Funds Operations,
P.O. Box 3198,
Pittsburgh, PA 15230
Baptist Health Systems Inc. 658,535.48 5.86%
P.O. Box 830605
Attn: Linda Culverhouse,
Birmingham, AL 35283-0605
B-1
EAFE (R) EQUITY INDEX FUND--PREMIER CLASS:
Percent Ownership
Name and Address of Owner Shares Owned of Outstanding Shares
- ----------------------------------------------- ------------ ---------------------
Charles Schwab* 5,590,172.73 35.26%
101 Montgomery Street 333-8,
San Francisco, CA 94104
Daimler Chrysler Serp, Chrysler Corp Serp* 4,965,757.53 31.32%
100 Plaza One,
Mail Stop 3048
Jersey City, NJ 07311
Wells Fargo Bank MN NA Cust* 1,272,460.46 8.03%
CK Blandin Residency
A/C 11596200,
PO Box 1533
Minneapolis, MN 55480-1533
Hoechst Celanese Corp., Executive Pension Plan* 1,207,345.60 7.61%
Attn: Frances Bobadilla,
Bankers Trust Co.,
100 Plaza One, Mail Stop 3048,
Jersey City, NJ 07311-3901
- --------
* Not believed by the Fund to be the beneficial owner.
B-2
Exhibit C
Date Last Approved By
Portfolio's and Fund's
-----------------------------------------------------------------
Date of Current
Portfolio (Fiscal Year) Advisory Agreement Trustees Shareholders
-----------------------------------------------------------------
US Bond Index Fund--
Premier Class (12/31) 4/30/01 6/7/02 10/8/99*
-----------------------------------------------------------------
EAFE (R) Equity Index
Fund--Premier Class
(12/31) 4/30/01 6/7/02 10/8/99*
-----------------------------------------------------------------
- --------
* Submitted for shareholder vote because the merger on June 4, 1999 between
Bankers Trust Company, the then-current advisor to the Portfolios, and a US
subsidiary of Deutsche Bank AG may have arguably resulted in an assignment
and, therefore, termination of the investment advisory agreements.
C-1
Exhibit D
[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
D-1
- --------
/1/ Contained in the form of sub-advisory agreement only.
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:
(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;
D-2
(c) provide the Trust with, or obtain for it, adequate office space and all
necessary office equipment and services, including telephone service,
utilities, stationery, supplies and similar items for the Trust's
principal office;
(d) obtain and evaluate pertinent information about significant developments
and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or a Series, and
whether concerning the individual issuers whose securities are included
in a Series portfolio or the activities in which they engage, or with
respect to securities which the [Advisor] [Sub-Advisor] considers
desirable for inclusion in a Series' portfolio;
(e) determine which issuers and securities shall be represented in a Series'
portfolio and regularly report thereon to the Trust's Board of Trustees;
and
(f) take all actions necessary to carry into effect a Series' purchase and
sale programs.
4. Portfolio Transactions. The [Advisor] [Sub-Advisor] is authorized to
select the brokers or dealers that will execute the purchases and sales of
portfolio securities for a Series and is directed to use its reasonable best
efforts to obtain the best net results as described from time to time in a
Series' prospectus and statement of additional information. The [Advisor]
[Sub-Advisor] will promptly communicate to the Administrator and to the
officers and the Trustees of the Trust such information relating to portfolio
transactions as they may reasonably request.
It is understood that the [Advisor] [Sub-Advisor] will not be deemed to have
acted unlawfully, or to have breached a fiduciary duty to the Trust or be in
breach of any obligation owing to the Trust under this Agreement, or otherwise,
solely by reason of its having directed a securities transaction on behalf of a
Series to a broker-dealer in compliance with the provisions of Section 28(e) of
the Securities Exchange Act of 1934 or as otherwise permitted from time to time
by a Series' prospectus and statement of additional information.
Subject to the policies established by the Board in compliance with
applicable law, the [Advisor] [Sub-Advisor] may direct DB Securities, Inc. ('DB
Securities') or any of its affiliates to execute portfolio transactions for a
Series on an agency basis. The commissions paid to DB Securities or any of its
affiliates must be, as required by Rule 17e-1 under the 1940 Act, 'reasonable
and fair compared to the commission, fee or other remuneration received or to
be received by other brokers in connection with comparable transactions
involving similar securities . . . during a comparable period of time.' If the
purchase or sale of securities consistent with the investment
D-3
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 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
D-4
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
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
D-5
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
priorapproval of the members of the Trust's and the Series' Board of Trustees
who are not 'interested persons,' as defined in the 1940 Act.]/3/
9. Compensation. For the services to be rendered and the expenses assumed
by the [Advisor] [Sub-Advisor], the [Trust] [Advisor] shall pay to the
[Advisor] [Sub-Advisor] monthly compensation in accordance with Schedule A.
Except as hereinafter set forth, compensation under this Agreement shall be
calculated and accrued daily and the amounts of the daily accruals shall be
paid monthly. If this Agreement becomes effective subsequent to the first day
of a month, compensation for that part of the month this Agreement is in effect
shall be prorated in a manner consistent with the calculation of the fees as
set forth above.
In the event of termination of this Agreement, the [advisory] [sub-advisory]
fee shall be computed on the basis of the period ending on the last business
day on which this Agreement is in effect subject to a pro rata adjustment based
on the number of days elapsed in the current month as a percentage of the total
number of days in such month.
In addition to the foregoing, the [Advisor] [Sub-Advisor] may from time to
time agree not to impose all or a portion of its fee otherwise payable
hereunder (in advance of the time such fee or a portion thereof would otherwise
accrue) and/or undertake to pay or reimburse the [Trust on behalf of the
Series] [Advisor] for all or a portion of its expenses not otherwise required
to be borne or reimbursed by the [Advisor] [Sub-Advisor]. Any such fee
reduction or undertaking may be discontinued or modified by the Advisor at any
time.
All rights of compensation under this Agreement for services performed as of
the termination date shall survive the termination of this Agreement.
- --------
/2/ Contained in the form of Advisory Agreement only.
/3/ Contained in the form of Sub-Advisory Agreement only.
D-6
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.
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
D-7
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
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.
D-8
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 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.
D-9
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
[SEAL] [TRUST]
Attest:____________________ By:________________________
Name:______________________ Name:______________________
Title:_____________________
[SEAL] DEUTSCHE ASSET MANAGEMENT,
INC.
Attest:____________________ By:________________________
Name:______________________ Name:______________________
Title:_____________________
[SEAL] [SUB-ADVISOR]
Attest:____________________ By:________________________
Name:______________________ Name:______________________
Title:_____________________
D-10
EXHIBIT A
TO
INVESTMENT [ADVISORY] [SUB-ADVISORY] AGREEMENT
MADE AS OF
BETWEEN
[Fund Name] AND [ ]
Series Investment [Advisory] [Sub-Advisory] Fee
------ ----------------------------------------
D-11
Exhibit E
Advisory Fees*
The table below sets forth, for each Fund's corresponding Portfolio, the fee
rate paid, on an annual basis, to DeAM, Inc. for its services under the Current
Advisory Agreements, calculated daily and paid monthly. The table also sets
forth the amounts paid by each Portfolio to the advisor for providing
investment advisory services for its most recent fiscal year. The Funds invest
all of their assets in their corresponding Portfolios. The advisory fees are
paid by the Portfolios as indicated in the chart below. The advisory fee
represents the aggregate fee for the Portfolio. There may be other funds not
listed in the chart below that invest in the Portfolio. The fee of each
underlying fund, including the Funds, is determined based on the fund's
percentage ownership in the Portfolio. The last column of the table sets forth
the net expenses of the Funds./1/
Advisory Net
Agreement Expenses
Portfolio/Fund Rate Fee of the Fund/1/
------------------------------------------------------------------
U.S. Bond Index Portfolio/2/ 0.15% $157,117
------------------------------------------------------------------
U.S. Bond Index Fund 0.15%
------------------------------------------------------------------
EAFE(R) Equity Index Portfolio// 0.25% $390,480
------------------------------------------------------------------
EAFE(R) Equity Fund 0.40%
------------------------------------------------------------------
/1/ The net expenses for each Fund reflect the expenses of both the Fund and
its corresponding Portfolio. 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
Reimbursement Table' below.
/2/ Investors, other than the Fund listed in the table, invest in the Portfolio.
E-1
Administrative Fees
ICCC serves as administrator and transfer agent and provides fund accounting
services to each Portfolio and Fund. For its services, the administrator was
paid the following amounts as of the most recent fiscal year by the Portfolios
and/or Funds, as applicable. ICCC pays custody fees to Deutsche Bank Trust for
each Portfolio and/or Fund, as applicable, out of the fee paid to it for its
services.
Administration
Agreement
Portfolio/Fund Rate Fee
------------------------------------------------------
U.S. Bond Index Portfolio/1/ 0.05% $ 62,869
------------------------------------------------------
U.S. Bond Index Fund 0.20% $225,175
------------------------------------------------------
EAFE(R) Equity Index Portfolio 0.10% $162,273
------------------------------------------------------
EAFE(R) Equity Index Fund 0.15% $243,357
------------------------------------------------------
Waiver And/Or Reimbursement
DeAM, Inc., the Portfolios' advisor and ICCC, the Portfolios' and 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 above. For their most recent fiscal years,
the Funds and Portfolios were reimbursed the following amounts by the advisor
and/or the administrator.
Portfolio/Fund Waiver and/or Reimbursement
------------------------------------------------------------
U.S Bond Index Portfolio/1/ $170,236
------------------------------------------------------------
U.S. Bond Index Fund $265,662
------------------------------------------------------------
EAFE(R) Equity Index Portfolio $120,212
------------------------------------------------------------
EAFE(R) Equity Index Fund $251,292
------------------------------------------------------------
/1/ Investors, other than the Fund listed in the table, invest in the Portfolio.
E-2
Exhibit F
Investment Companies Advised or Subadvised by DeAM, Inc.
Total Assets as of Contractual
Funds with similar investment objectives/1/ March 31, 2002 Advisory Fees
-------------------------------------------- ------------------ -------------
EAFE Equity Index Portfolio $ 142,699,439.50 0.25%/2/
EAFE Equity Index Premier Class $ 142,699,439.50 --/2/
DeAM VIT EAFE Equity Index $ 99,132,311.66 0.45%
US Bond Index Portfolio $ 127,533,601.67 0.15%
US Bond Index Premier $ 107,195,512.30 --/3/
Fidelity Commonwealth Trust--Spartan 500 $ 8,923,015,727.22 NOTE A
Index Fund
Fidelity Concord Street Trust--Spartan Total $ 1,189,477,521.41 0.0125%
Market Index Fund
Variable Insurance Products Fund II--Index $ 3,515,367,327.67 0.006%
500 Portfolio
Fidelity Concord Street Trust--Spartan U.S. $16,629,280,495.46 0.006%
Equity Index Fund
MML Equity Index Fund $ 385,473,970.68 NOTE B
MassMutual Indexed Equity Fund $ 1,006,755,082.87 NOTE B
Scudder Variable Series II--SVS Index 500 $ 85,090,972.95 NOTE C
Portfolio
Scudder Investors Trust-Scudder S&P 500 $ 261,741,014.13 NOTE D
Stock Fund
USAA S&P 500 Index Fund $ 2,985,047,444.26 NOTE E
- --------
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. These funds are scheduled to close on or about August
17, 2002.
2 EAFE Equity Index Portfolio is the master portfolio. EAFE Equity Index
Premier Class is the only feeder fund to EAFE Equity Index Portfolio. The
advisory fee is paid by the master portfolio under the Advisory Agreement and
allocated to the feeder fund.
3 US Bond Index Portfolio is the master portfolio. US Bond Index Premier is a
feeder fund to the US Bond Index 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.
F-1
NOTE A Manager will pay Sub-Adviser a monthly fee computed at an annual rate of
0.006% (0.6 basis points) of the average daily net assets of the Portfolio
(computed in the manner set forth in the Trust's Declaration of Trust)
throughout the month.
NOTE B An annual rate of .01% on the first $1 billion of aggregate assets; and
...0075% on aggregate assets in excess of $1 billion.
NOTE C A monthly fee based on a percentage of average daily net assets of the
series calculated according to the following annualized fee schedule: on the
first $200 million of the series net assets, an annualized rate of 0.07 of 1%;
then 0.03 of 1% on the next $550 million; then 0.01 of 1% on the balance over
$750 million. Minimum annual fee: $100,000. The minimum annual fee is not
applicable for the first year of the sub-advisory agreement.
NOTE D A monthly fee based on a percentage of average daily net assets of the
series calculated according to the following annualized fee schedule: on the
first $100 million of the series net assets, an annualized rate of 0.07 of 1%;
then 0.03 of 1% on the next $100 million; then 0.01 of 1% on the balance over
$200 million. Minimum annual fee: $50,000 in the first year; $75,000 in the
second year; and $100,000 thereafter.
NOTE E Annual rate of 0.2 of 1% per annum for average net assets up to $2.5
billion; .01 of 1% per annum for the next $1.5 billion of average net assets;
and 0.05 of 1% per annum of the amount by which the average daily net assets of
the USAA S&P 500 Index Fund exceed $4 billion.
F-2
Exhibit G
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
-----------------------------------------------------------------
G-1
Exhibit H
Aggregate Dollar Range
of Equity Securities as of
May 31, 2002 in all Funds
Overseen or to be
Dollar Range of Overseen by Trustee or
Name of Trustee or Equity Securities Nominee in Family of
Nominee in the Fund(s)/1/ Investment Companies/2/
---------------------- ----------------------- --------------------------
Independent Trustee Nominees
Richard R. Burt/3/ None Over $100,000
S. Leland Dill None Over $100,000
Martin J. Gruber None $10,001-$50,000
Joseph R. Hardiman/3/ None Over $100,000
Richard J. Herring EAFE(R) Equity $10,001-
Index Fund-- $50,000
Premier Class Over $100,000
Graham E. Jones None Over $100,000
Rebecca W. Rimel/3/ None Over $100,000
Philip Saunders, Jr. None $50,001-$100,000
William N. Searcy None $10,001-$50,000
Robert H. Wadsworth/3/ None Over $100,000
Interested Trustee Nominee
Richard T. Hale None Over $100,000
- --------
/1/ Securities beneficially owned as defined under the Securities Exchange Act
of 1934 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.
/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.
H-1
For more information please call your Fund's information agent,
Georgeson Shareholder Communications at (866) 333-0889.
BT Advisor #3
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 DIRECTORS 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 and the Portfolios to hold
office until their respective
successors have been duly elected
and qualified or until their
earlier resignation or removal,
whose terms will be effective on
the date of the Special Meeting or,
in the event of an adjournment or
adjournments of the Special
Meeting, such later date as
shareholder approval is obtained.
(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 between each
Fund's corresponding Portfolio and
Deutsche Asset Management, Inc.