SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of Commission Only (as permitted by Rule 14a-6(3)
(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-12
EQUITY 500 INDEX PORTFOLIO
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(Name of Registrant as Specified In Its Charter)
_______________________________________________________________________________
(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(a)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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 Equity 500 Index
Portfolio (the 'Portfolio'), whose terms will be effective beginning
July 30, 2002 or on such later date as interestholder approval is
obtained; and
. to approve a new investment advisory agreement between the Portfolio
and Deutsche Asset Management, Inc. ('DeAM, Inc.'), the investment
advisor for the Portfolio.
THE BOARD MEMBERS OF THE 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 Board of the Portfolio, and
the Portfolio's Board agreed, that the Portfolio, 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
interestholder approval to add certain persons to the Portfolio's Board.
The Portfolio's Board agreed to submit this proposal to interestholders.
Q: Why did the Portfolio's Board approve management's recommendation?
A: Deutsche Asset Management recommended this proposal as part of an overall
plan to coordinate and enhance the efficiency of the governance of the
DeAM Funds. The Portfolio's Board considered, among other factors, that a
unified group board structure benefits the Portfolio 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 interestholders, how many Trustees
will sit on the Board?
A: If all nominees are elected, the Portfolio's Board will consist of eleven
individuals. Five of these persons currently serve as members of your
Board; six persons will be new to the Portfolio's Board but have
experience serving on the boards of various other investment companies
within the Deutsche Asset Management family of funds.
II. PROPOSAL RELATED TO APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT
Q: Why am I being asked to vote for a new investment advisory agreement for
the Portfolio?
A: DeAM, Inc. recommended to the Board of the Portfolio that it approve the
new investment advisory agreement in order to provide DeAM, Inc. with
maximum flexibility to utilize Deutsche Asset Management's global
organization. The proposed new advisory agreement described in the proxy
statement will cover substantially similar provisions and does not differ
in terms of services to be provided or fees to be paid therefor from the
current investment advisory agreement pursuant to which services are
provided to the Portfolio, except for the dates of execution,
effectiveness and initial term, and except that, under the new investment
advisory agreement, DeAM, Inc. would be authorized, to the extent
permissible by law and subject to further approval by the Portfolio's
Board of Trustees, to appoint certain affiliates as sub-advisors.
Currently, under limited circumstances, an advisor may delegate duties to
a sub-advisor without obtaining interestholder approval at the time such
delegation is made. In addition, the new advisory agreement will not
contain a provision under which DeAM, Inc. could seek indemnification
from the Portfolio.
In determining to recommend that the interestholders approve the new
investment advisory agreement, the Board of the Portfolio considered,
among other factors, the potential benefits to the Portfolio of providing
DeAM, Inc. more flexibility in structuring portfolio management services
for the Portfolio. In addition, the Board of the Portfolio 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
Portfolio under the new advisory agreement is the same as the investment
advisory fee rate charged under the current advisory agreement.
III. GENERAL QUESTIONS
Q: What are the Board's recommendations?
A: The Board recommends that all interestholders vote `FOR' the nominees for
the Board and `FOR' the approval of the new advisory agreement.
Q: Will the portfolio pay for the proxy solicitation and legal costs
associated with this solicitation?
A: No, DeAM, Inc. will bear these costs.
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Q: How can I vote?
A: You can vote in any one of two ways:
. By mail, with the enclosed proxy card; or
. In person at the special meeting.
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
Interestholders, which is attached.
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.
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The attached proxy statement contains more detailed information about
each of the proposals relating to the Portfolio. Please read it
carefully.
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EQUITY 500 INDEX PORTFOLIO
One South Street
Baltimore, Maryland 21202
NOTICE OF SPECIAL MEETING OF INTERESTHOLDERS
To Be Held July 30, 2002
A special meeting of Equity 500 Index Portfolio (the
`Portfolio') will be held at the offices of Deutsche Asset Management, One South
Street, 30th Floor, Baltimore, Maryland 21202 on July 30, 2002 at 11:00 a.m.
(Eastern time) (the `Special Meeting'). The Portfolio is organized as a
registered open-end management investment company, established as a trust under
the laws of the State of New York.
The Special Meeting is being held to consider and vote on the
following matters for the Portfolio 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 Portfolio 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 interestholder
approval is obtained.
PROPOSAL II: To approve a new investment advisory agreement
(the `New Advisory Agreement') between the
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 Agreement described in Proposal II will
contain substantially similar provisions and does not differ in substance from
the current advisory agreement pursuant to which services are provided to the
Portfolio, except for the dates of execution, effectiveness and initial term,
and except that, under the New Advisory Agreement, DeAM, Inc. would be
authorized, to the extent permissible by law and subject to further approval by
the Board of Trustees, to appoint certain affiliates as sub-advisors. In
addition, the New Advisory Agreement will not contain a provision under which
DeAM, Inc. could seek indemnification from the Portfolio.
The close of business on May 20, 2002 has been fixed as the
record date for the determination of the interestholders of the Portfolio
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 Portfolio recommends that
interestholders vote FOR the election of each nominee to the Board of Trustees
of the Portfolio and FOR Proposal II.
This notice and related proxy material are first being mailed
to interestholders of the Portfolio on or about June 21, 2002. This proxy is
being solicited on behalf of the Board of Trustees of the Portfolio.
By Order of the Board of Trustees,
Daniel O. Hirsch, Secretary
New York, New York
June 21, 2002
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WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL
MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED
ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF
THE INTERESTS YOU HOLD. NO POSTAGE NEED BE
AFFIXED IF THE PROXY CARD IS MAILED
IN THE UNITED STATES.
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IF YOU HAVE ANY QUESTIONS CONCERNING THE PROXY STATEMENT OR
THE PROCEDURES TO BE FOLLOWED TO EXECUTE AND DELIVER A PROXY CARD, PLEASE
CONTACT GEORGESON SHAREHOLDER COMMUNICATIONS AT 1-866-333-0889.
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YOUR VOTE IS IMPORTANT
Please indicate your voting instructions on the enclosed proxy
card, sign and date the card and return it in the envelope provided. If you
sign, date and return the proxy card but give no voting instructions, the
interests you hold 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 promptly.
If we do not receive your completed proxy card, 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 telephone
if you choose to vote in that manner.
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EQUITY 500 INDEX PORTFOLIO
One South Street
Baltimore, Maryland 21202
PROXY STATEMENT FOR THE SPECIAL MEETING
OF INTERESTHOLDERS
July 30, 2002
This proxy statement (`Proxy Statement') is being furnished in
connection with the solicitation by the Board of Trustees of Equity 500 Index
Portfolio (the "Portfolio") of proxies to be used at the special meeting of the
Portfolio to be held at the offices of Deutsche Asset Management, One South
Street, 30th Floor, Baltimore, Maryland 21202 on July 30, 2002 at 11:00 a.m.
(Eastern time) and at any adjournments thereof (the `Special Meeting'). This
Proxy Statement and accompanying proxy card (`Proxy') are expected to be mailed
to interestholders on or about June 21, 2002.
The Special Meeting is being held to consider and vote on the
following matters for the Portfolio 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 Portfolio 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 interestholder
approval is obtained.
PROPOSAL II: To approve a new investment advisory agreement
(the `New Advisory Agreement') between the
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 interestholders of the Portfolio 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 Portfolio. Messrs. Dill and Hale and Drs. Gruber,
Herring and Saunders currently serve on the Board of Trustees of the Portfolio.
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 Portfolio and, if
elected, will be the Chairman of the Board of the Portfolio. 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.
The Portfolio's interestholders are also to consider the
approval of the New Advisory Agreement between DeAM, Inc., the current
investment advisor for the Portfolio, and the Portfolio.
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 Portfolio 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 Portfolio's interests, (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.
The Portfolio will furnish, without charge, a copy of its most
recent Annual Report containing audited financial statements for the fiscal year
ended December 30, 2001 (the `Report') to an interestholder upon request. Any
such request should be directed to the Portfolio by calling 1-800-730-1313 or by
writing to the Portfolio at the address set forth on the cover of this Proxy
Statement.
If the enclosed Proxy is properly executed and returned in
time to be voted at the Special Meeting, the interests represented thereby will
be voted in accordance with the instructions marked on the Proxy. Interests of
the Portfolio are entitled to one vote each at the Special Meeting and
fractional interests are entitled to proportionate shares of one vote. If no
instructions are marked on the Proxy with respect to a specific Proposal, the
Proxy will be voted `FOR' the approval of such Proposal and in accordance with
the judgment of the persons appointed as proxies with respect to any other
matter that may properly come before the Special Meeting. Any interestholder
giving a Proxy has the right to attend the Special Meeting to vote his/her
interests 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 Portfolio'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 interests in accounts as to which
Deutsche Bank Trust has voting authority which are not otherwise represented in
person or by proxy at the Special
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Meeting. Accordingly, for each Proposal, if Deutsche Bank Trust votes interests
of the Portfolio 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 interestholders with respect
to the reasons for the solicitation. Any adjournment will require the
affirmative vote of a majority of those interests 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. An interestholder 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
interestholders is constituted by the presence in person or by proxy of the
holders of, for the Portfolio, one-third of the outstanding interests of the
Portfolio 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 interests on a particular matter with
respect to which the brokers or nominees do not have discretionary power) will
be treated as interests that are present but which have not been voted. (See
`Vote Required' for a further discussion of abstentions and broker non-votes.)
Interestholders 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 interests of the Portfolio that were issued and
outstanding as of the Record Date are set forth in Exhibit A to this Proxy
Statement.
In order that the interests you hold may be represented, you
are requested to:
. indicate your instructions on the Proxy;
. date and sign the Proxy; and
. mail the Proxy promptly in the enclosed envelope.
Beneficial Ownership of Shares of the Portfolio
Exhibit B to this Proxy Statement sets forth information as of
May 20, 2002 regarding the beneficial ownership of the Portfolio's interests by
the only persons known by the Portfolio to beneficially own more than five
percent of the outstanding interests of the Portfolio. Collectively, the
Trustees, Trustee Nominees and executive officers of the Portfolio own less than
1% of the Portfolio's outstanding interests. The number of interests
beneficially owned by
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each Trustee, Trustee Nominee or executive officer is determined under rules of
the Securities and Exchange Commission (the `Commission'), and the information
is not necessarily indicative of beneficial ownership for any other purpose.
Under these rules, beneficial ownership includes any interests as to which the
individual has the sole or shared voting power or investment power and also any
interests 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 interests set forth in
Exhibit B. The inclusion therein of any interests deemed beneficially owned does
not constitute an admission of beneficial ownership of the interests.
Background
Portfolio Structure. The Portfolio is an open-end management
investment company, organized under the laws of the State of New York. DeAM,
Inc., located at 280 Park Avenue, New York, New York 10017, acts as the
investment advisor to the Portfolio pursuant to the terms of an investment
advisory agreement (the `Current Advisory Agreement'). Pursuant to the Current
Advisory Agreement, DeAM, Inc. supervises and assists in the management of the
assets of the Portfolio and furnishes the Portfolio with research, statistical,
advisory and managerial services. DeAM, Inc. pays the ordinary office expenses
of the Portfolio and the compensation, if any, of all officers and employees of
the Portfolio and all Trustees who are Interested Trustees of the Portfolio.
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PROPOSAL I
ELECTION OF NOMINEES TO THE BOARD OF TRUSTEES
OF THE PORTFOLIO
It is proposed that eleven Trustee Nominees are to be elected
to comprise the entire Board of Trustees of the 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 Board comprised entirely of
the Independent Trustees of the Board and nominated by the full Board at a
meeting held on April 5, 2002. If elected, the terms of the eleven Trustee
Nominees will begin on the date of the Special Meeting or, in the event of an
adjournment or adjournments of the Special Meeting, such later date as
interestholder approval is obtained, upon their respective acceptances of their
election in writing (the `Effective Date'); until that time, the current Board
members will continue their terms. It is anticipated that Messrs. Biggar,
Langton and Van Benschoten, each a current member of the Board of Trustees, will
no longer serve effective the Effective Date if Proposal I is approved by the
interestholders of the Portfolio. 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 Portfolio serves or will serve as an officer of the
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 Board of Trustees may recommend.
The nomination of these persons to serve as the Board of
Trustees of the Portfolio reflects an overall plan to coordinate and enhance the
efficiency of the governance of the Portfolio 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 ICCC, another indirect wholly owned subsidiary of Deutsche Bank)
(the `DeAM Funds'). The proposal concerning the size and composition of the
Board of Trustees was suggested to the Board by Deutsche Asset Management and
reviewed by the current Independent Trustees of the Board. Messrs. Dill and Hale
(an Interested Trustee) and Drs. Gruber, Herring and Saunders are currently
members of the Board of Trustees of the Portfolio. Each of the other Independent
Trustee Nominees already serves as an independent board member for one or more
other DeAM Funds and understands the operations of the fund complex.
Deutsche Asset Management recommended, and the Board agreed,
that the Portfolio should be governed by a larger Board of Trustees composed of
the same members as are expected to govern certain other DeAM Funds. Presently,
the Board membership of the Portfolio and the board membership of the other DeAM
Funds are not identical. Eight persons currently serve on the Board of Trustees
of the Portfolio, and between five and nine persons currently serve on the
boards of the other DeAM Funds. If interestholders elect each of the
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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 Portfolio's Board as of the end of the most
recently completed calendar year. The first section of the table lists
information for each Trustee Nominee who is an Independent Trustee Nominee.
Information for the Interested Trustee Nominee follows. The Interested Trustee
Nominee is considered to be an interested person as defined by the 1940 Act
because of his employment with Deutsche Asset Management. The mailing address
for the Trustee Nominees and the executive officers with respect to Portfolio
operations is One South Street, Baltimore, Maryland, 21202.
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INFORMATION CONCERNING TRUSTEE NOMINEES AND OFFICERS
Number of
Term of Funds in
Office/1/ and Funds
Length of Complex
Timed Served Overseen by
Position with on the Trustee or
Name and Equity 500 Trust Principal Occupation(s) Nominee for Other Directorships Held by
Birth Date Index Portfolio Board During Past 5 Years Trustee/2/ Trustee or Nominee for Trustee
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Independent Trustee Nominees
Richard R. Burt Trustee N/A Chairman, IEP Advisors, 86 Member of the Board, Archer
2/3/47 Nominee Inc. (since July 1998); Daniels Midland Company3
Chairman of the Board, (agribusiness operations)
Weirton Steel Corporation3 (October 1996 to June 2001),
(since April 1996). Hollinger International, Inc./3/
Formerly, Partner, McKinsey (publishing) (since 1995),
& Company (consulting) Homestake Mining/3/ (mining and
(1991 to 1994) and US Chief exploration) (1998 to February
Negotiator in Strategic 2001), HCL Technologies
Arms Reduction Talks Limited (information
(START) with former Soviet technology) (since April
Union and US Ambassador to 1999), Anchor Gaming (gaming
the Federal Republic of software and equipment) (March
Germany (1985 to 1991). 1999 to December 2001);
Director, UBS Mutual Funds
(formerly known as Brinson and
Mitchell Hutchins families of
funds) (since 1995); and
Member, Textron Inc./3/
International Advisory Council
(July 1996 to present).
S. Leland Dill Trustee Since 1999 Retired (since 1986); 84 Trustee, Phoenix Zweig Series
3/28/30 formerly Partner, KPMG Peat Trust (since September 1989),
Marwick (June 1956 to June Phoenix Euclid Market Neutral
1986); General Partner, Fund (since May 1998)
Pemco (investment company) (registered investment
(June 1979 to June 1986). companies); 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).
Martin J. Gruber Trustee Since 1992 Nomura Professor of 85 Member of the Board, CREF
7/15/37 Finance, Leonard N. Stern (since 2000), S.G. Cowen
School of Business, New Mutual Funds (1985 to 2001),
York University (since Japan Equity Fund, Inc. (since
1964). 1992), Thai Capital Fund, Inc.
(since 2000) (registered
investment companies).
Joseph R. Hardiman Trustee N/A Private Equity Investor 82 Director, Soundview Technology
5/27/37 Nominee (since 1997); President and Group Inc. (investment
Chief Executive Officer, banking) (since July 1998),
The National Association of Corvis Corporation3 (optical
Securities Dealers, Inc. networking equipment) (since
and The NASDAQ Stock July 2000), Brown Investment
Market, Inc. (1987 to Advisory & Trust Company
1997); Chief Operating (investment advisor) (since
Officer of Alex. Brown & February 2001), The Nevis Fund
Sons Incorporated (now (registered investment
Deutsche Banc Alex. Brown company) (since July 1999),
Inc.) (1985 to 1987) and and ISI Family of Funds
General Partner, Alex. (registered investment
Brown & Sons Incorporated companies) (since March 1998).
(now Deutsche Banc Alex. Formerly, Director, Circon
Brown Inc.) (1976 to 1985). Corp./3/ (medical instruments)
(November 1998 to January
1999).
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Number of
Term of Funds in
Office/1/ and Funds
Length of Complex
Timed Served Overseen by
Position with on the Trustee or
Name and Equity 500 Trust Principal Occupation(s) Nominee for Other Directorships Held by
Birth Date Index Portfolio Board During Past 5 Years Trustee/2/ Trustee or Nominee for Trustee
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Richard J. Herring Trustee Since 1999 Jacob Safra Professor of 84 N/A
2/18/46 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).
Graham E. Jones Trustee N/A Senior Vice President, BGK 84 Trustee, 8 open-end mutual
1/31/33 Nominee Realty Inc. (commercial funds managed by Weiss, Peck &
real estate) (since 1995). Greer (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 Family
4/10/51 Nominee Executive Officer, The Pew of Funds (registered
Charitable Trusts investment companies) (1997 to
(charitable foundation) 1999).
(since 1994) and 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, Trustee Since 1999 Principal, Philip Saunders 84 N/A
Jr. Associates (Economic and
10/11/35 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, open-end mutual funds
09/03/46 Nominee Officer, Sprint managed by Sun Capital
Corporation/3/ Advisers, Inc. (since 1998).
(telecommunications) (since
1989).
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
8
Number of
Term of Funds in
Office/1/ and Funds
Length of Complex
Timed Served Overseen by
Position with on the Trustee or
Name and Equity 500 Trust Principal Occupation(s) Nominee for Other Directorships Held by
Birth Date Index Portfolio Board During Past 5 Years Trustee/2/ Trustee or Nominee for Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Distributors, Inc. (1990-January
2002); Vice President, Professionally
Manages 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 1999 Managing Director, Deutsche 84 Director, Deutsche Global
7/17/45 Bank Securities Inc. (formerly Funds, Ltd. (since 2000);
Deutsche Bank Alex. Brown Inc.) and Director, CABEI Fund (since
Deutsche Asset Management (since 2000) and North American
1999); Director and President, income Fund (since 2000)
Investment Company Capital Corp. (registered investment
(registered investment advisor) companies); Formerly,
(since 1996). Vice President, Director, ISI Family of Funds.
Deutsche Asset Management, Inc. (registered investment
(since 2000); Chartered Financial companies) (1992 to 1999).
Analyst
Officers
Richard T. Hale President Since 2000 See information provided under
Interested Trustee Nominee.
Daniel O. Hirsch Vice Secretary Managing Director, Deutsche N/A N/A
3/27/54 President/ since 1999; Asset Management (since April 2002)
Secretary Vice and Director, Deutsche Global Funds
President Ltd. (since 2002). Formerly,
since 2000 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).
9
Number of
Term of Funds in
Office/1/ and Funds
Length of Complex
Timed Served Overseen by
Position with on the Trustee or
Name and Equity 500 Trust Principal Occupation(s) Nominee for Other Directorships Held by
Birth Date Index Portfolio Board During Past 5 Years Trustee/2/ Trustee or Nominee for Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Charles A. Rizzo Treasurer Since 1999 Director, Deutsche Asset N/A N/A
8/5/57 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 (now
Pricewaterhouse-Coopers
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.
Trustee Compensation Table
The following table sets forth the compensation paid to the
Independent Trustees by the Portfolio and the Fund Complex for the twelve-month
period ended March 31, 2002.
Pension or
Retirement
Benefits Estimated
Aggregate Accrued as Annual Total
Compensation Part of Benefits Compensation
from Equity 500 Fund Upon from Fund
Trustee Index Portfolio Expenses Retirement Complex
-----------------------------------------------------------------------------------
S. Leland Dill $10,150.24 N/A N/A $61,250.00
Martin J. Gruber $10,150.24 N/A N/A $61,250.00
Richard J. Herring $10,150.24 N/A N/A $61,250.00
Philip Saunders, Jr. $10,150.24 N/A N/A $61,250.00
The Board has established an Audit Committee, a Nominating
Committee and a Valuation Committee. The Audit Committee and the Nominating
Committee of the Board currently are each composed of the Independent Trustees
of the Board. The Valuation Committee is composed of Messrs. Biggar and Dill and
Dr. Saunders. Each of the other
10
Independent Trustees and the Interested Trustee serves as an alternate to the
Valuation Committee. In accordance with its written charter adopted by the Board
of Trustees, the Audit Committee assists the Board in fulfilling its
responsibility for oversight of the quality and integrity of the accounting,
auditing and financial reporting practices of the Portfolio. 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 internal accounting procedures and
controls. The Audit Committee also considers the scope and amount of non-audit
services provided to the Portfolio, its investment advisor and affiliates by the
independent public accountants. The Nominating Committee is charged with the
duty of making all nominations for Independent Trustees to the Board of
Trustees. The Nominating Committee of the Board will consider Trustee nominees
recommended by interestholders. The 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 Board does not have
a compensation committee. During the Portfolio's most recent fiscal year, the
Board held five meetings, the Audit Committee of the Board held four meetings
and the Valuation Committee of the Board held one meeting. No Trustee attended
less than 75% of the applicable meetings. The Nominating Committee of the Board
did not meet during the most recent fiscal year. If the Nominees are elected to
the Board, the Board will consider whether other committees should be organized
after it has reviewed the needs of the Portfolio.
Mr. Hale, if elected, will not be a member of the Audit
Committee or the Nominating Committee.
Recommendation of the Board of Trustees
The Board of Trustees believe that coordinated governance
through a unified board structure will benefit the Portfolio.
In their deliberations, the Board of Trustees considered
various matters related to the management and long-term welfare of the
Portfolio. The Board considered, among other factors, that coordinated
governance within the Fund Complex will reduce the possibility that the separate
boards might arrive at conflicting or inconsistent decisions regarding the
policies, strategies, operations and management of the Portfolio and the other
DeAM Funds, and that this will help avoid costs, confusion and complexity
resulting from different or conflicting decisions. The Board also considered
that operating with a unified group board eliminates the potential for these
types of conflicts while preserving the insights and experience that can be
contributed by individual members. In addition, the Board considered that a
unified group board would also allow management to reduce the total number of
board meetings it is required to attend and at which it would make repetitive
presentations each year across the complex which can be expected to make the
governance process more efficient. Deutsche Asset Management expends a
significant amount of time and effort preparing and coordinating materials and
presentations for board meetings. In many instances, presentations need to be
made more than once on identical or similar issues. Adopting a unified group
board structure would enable management and the Board to use time more
efficiently. There may also be cost savings to the Portfolio because Trustees
will serve an increased number of investment companies.
11
The Board also considered that a unified group board structure
benefits the Portfolio by creating an experienced group of Board members who
understand the operations of the Fund Complex and are exposed to the wide
variety of issues that arise from overseeing different types of funds.
The Board gave considerable weight to its expectation that the
Portfolio will benefit from the diversity and experience of the Trustee Nominees
that would be included in the expanded Board and from the experience that each
Trustee Nominee will gain by serving on the boards of a diverse group of funds.
The Board also considered, in light of the following transaction, the importance
of greater breadth and depth of expertise on the Board. On April 5, 2002,
Deutsche Bank acquired 100% of US-based asset manager Zurich Scudder Investments
(`Scudder') (the `Transaction'). The combined organization is the fourth largest
asset manager in the world, with approximately $900 billion in assets under
management. The Transaction is anticipated to provide greater breadth and
geographic reach to the asset management services presently provided by the
asset management entities of Deutsche Bank by making available additional
investment expertise more effectively leveraged globally through a stronger
investment platform in which research is fundamentally integrated with portfolio
management. Because of the increased size and scope of Deutsche Asset Management
after the Transaction, Deutsche Asset Management will seek to attract and retain
talented people by providing a challenging work environment, competitive
compensation and reward systems and professional development opportunities.
Management intends to build a culture of teamwork, commitment, performance and
mutual respect. The Trustee Nominees have had distinguished careers in
accounting, finance, marketing and other areas and will bring a wide range of
expertise to the Board. Ten of the eleven nominees, if elected, would be
Independent Trustees. Independent Trustees are charged with special
responsibilities to provide an independent check on management and to approve
advisory, distribution and similar agreements between the Portfolio and
management.
In addition, the Board considered certain other advantages of
enlarging the Board. These included that enlarging the Board will afford an
increased range of experience among Board members and makes it more likely that
the Board will be able to ensure appropriate continuity over the years as
incumbent members reach mandatory retirement age or otherwise retire and that,
should the Board determine to revise its structure through increased
establishment of committees, an enlarged Board will provide an increased choice
of potential members of such committees. As part of its deliberations, the Board
also recognized that increased numbers of Board members could result in less
collegial meetings and longer discussions. On balance, the Board concluded that
these possible detriments of size were outweighed by the benefits anticipated
from the unified and enlarged Board.
Therefore, after careful consideration, the Board, including
the Independent Trustees, recommends that the interestholders of the Portfolio
vote `FOR' the election of the Trustee Nominees as set forth in this Proposal.
If the Trustee Nominees are elected by the interestholders,
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
12
elected, the Board will consider what action is appropriate based upon the
interests of the Portfolio's interestholders.
13
PROPOSAL II
APPROVAL OF A NEW ADVISORY AGREEMENT
The New Advisory Agreement will contain substantially similar
provisions and does not differ in substance from the Current Advisory Agreement
pursuant to which services are provided to the Portfolio except for the dates of
execution, effectiveness and initial term and except that, under the New
Advisory Agreement, DeAM, Inc. would be authorized, to the extent permissible by
law and subject to further approval by the Board of Trustees, to appoint certain
affiliates as sub-advisors. In addition, the New Advisory Agreement will not
contain a provision under which DeAM, Inc. could seek indemnification from the
Portfolio. See `Differences Between the Current and New Advisory Agreements.'
The Advisory Agreements
The Current Advisory Agreement. DeAM, Inc. serves as
investment advisor to the Portfolio (as discussed earlier) pursuant to the
Current Advisory Agreement. The Current Advisory Agreement was initially
approved by the Board, including a majority of those Board members of the
Portfolio who are not `interested persons' (as defined in the 1940 Act) of the
Portfolio or DeAM, Inc. (the `Independent Trustees').
Exhibit C to this Proxy Statement lists: (i) the date of the
Current Advisory Agreement and (ii) the most recent date on which the Current
Advisory Agreement was approved by the Board, including a majority of the
Independent Trustees, and the Portfolio's interestholders.
The New Advisory Agreement. The form of the New Advisory
Agreement is attached to this Proxy Statement as Exhibit D. A description of the
New Advisory Agreement is set forth below and is qualified in its entirety by
reference to Exhibit D. If interestholders approve the New Advisory Agreement,
the agreement 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 the
Portfolio, or by the Board of Trustees of the Portfolio and, in either event,
the vote of a majority of the Independent Trustees of the Portfolio, cast in
person at a meeting called for such purpose. The terms and conditions--including
the services to be provided and the fees to be paid therefor--of the New
Advisory Agreement contain substantially similar provisions and do not differ in
substance from the Current Advisory Agreement except for the dates of execution,
effectiveness and initial term and except that, under the New Advisory
Agreement, DeAM, Inc. would be authorized, to the extent permissible by law and
subject to further approval by the Board of Trustees of the Portfolio, to
appoint certain affiliates as sub-advisors. In addition, the New Advisory
Agreement will not contain a provision under which DeAM, Inc. could seek
indemnification from the Portfolio.
Differences Between the Current and New Advisory Agreements.
As stated above, the terms of the New Advisory Agreement for the Portfolio
contain substantially similar
14
provisions and do not differ in substance from the Current Advisory Agreement,
except that, to the extent permissible by law and subject to further Board
approval, pursuant to the 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 Portfolio. Interestholders of the Portfolio
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 Portfolio 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 Agreement, the New Advisory
Agreement makes 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
interestholder 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 Agreement would also permit DeAM,
Inc. to appoint certain affiliates as sub-advisors, i.e., entities that DeAM,
Inc. controls, is controlled by, or is under common control with, under
circumstances not currently contemplated by Rule 2a-6 or the aforementioned
staff interpretations. However, DeAM, Inc. will not delegate to a sub-advisor
unless such delegation is then consistent with any amendments to the 1940 Act or
the rules and regulations thereunder or interpretations thereof.
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 interestholders could benefit from an authorization
permitting DeAM, Inc. to delegate such functions to affiliated advisory
organizations.
In addition, the New Advisory Agreement will differ from the
Current Advisory Agreement in that there will not be an indemnification
provision in the New Advisory Agreement. 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 Agreement, except that these
newly approved agreements did not and do not provide for indemnification for the
investment advisor. Accordingly, DeAM, Inc. informed the Board that it would not
seek such provision in the New Advisory Agreement.
15
DeAM, Inc. assured the Board that the nature and quality of management
historically rendered by it would be unchanged notwithstanding the deletion of
the indemnification provision.
Under the terms of the New Advisory Agreement, DeAM, Inc.
agrees to provide the Portfolio with investment advisory services, including the
investment and reinvestment of the cash, securities or other properties
comprising the Portfolio's assets. Subject to the supervision and control of the
Board of Trustees, DeAM, Inc. agrees, in carrying out its obligations, to
conform to (a) all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder, (b) the provisions of the Portfolio's
registration statements, (c) the provisions of the Portfolio's Declaration of
Trust, and (d) any other applicable provisions of state and federal law.
Under the terms of the New Advisory Agreement, DeAM, Inc.
agrees to (a) supervise and manage all aspects of the 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 Portfolio, (c) provide the Portfolio
with, or obtain for it, adequate office space and all necessary office equipment
and services for the Portfolio's principal office; (d) obtain and evaluate
pertinent information about significant developments and certain other
information, whether affecting the economy generally or the Portfolio; (e)
determine which issuers and securities will be represented in the portfolio and
regularly report thereon to the Portfolio's Board of Trustees; and (f) take all
actions necessary to carry into effect the Portfolio's purchase and sale
programs.
The investment advisory fee rate proposed to be charged to the
Portfolio under the New Advisory Agreement is the same as the investment
advisory fee rate charged under the Current Advisory Agreement.
The advisory fee rate paid to DeAM, Inc. under the Current
Advisory Agreement and the advisory fee paid by the Portfolio for the most
recent fiscal year is set forth in Exhibit E to this Proxy Statement.
Generally. If approved, the New Advisory Agreement will remain
in effect for an initial term of two years (unless sooner terminated), and shall
remain in effect from year to year thereafter if approved annually (1) by the
Board of Trustees or by the holders of a majority of the Portfolio's outstanding
voting securities and (2) by a majority of the Independent Trustees who are not
parties to such contract or agreement. Like the Current Advisory Agreement, the
New Advisory Agreement will terminate upon assignment by any party and is
terminable, without penalty, on 60 days' written notice by the Board of Trustees
or by vote of a majority of the outstanding voting securities (as defined in the
1940 Act) of the 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 Agreement or the New Advisory Agreement 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 Portfolio) 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 Agreement. The Portfolio
bears certain other
16
expenses including the fees of the Portfolio's Board. The Portfolio also pays
any extraordinary expenses incurred.
Under the New Advisory Agreement, 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
Portfolio in connection with the matters to which the New Advisory Agreement
relates, provided that nothing therein shall be deemed to protect or purport to
protect DeAM, Inc. against any liability to the Portfolio or to its
interestholders to which DeAM, Inc. could otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of DeAM, Inc.'s reckless disregard of its
obligations and duties under the New Advisory Agreement.
As investment advisor, DeAM, Inc. will allocate and place all
orders for portfolio transactions of the 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 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 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 Portfolio
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 the Portfolio. As investment advisor, DeAM, Inc. makes the
Portfolio's investment decisions. It buys and sells securities for the Portfolio
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 Portfolio, 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 Portfolio, 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.
17
Administrator, Transfer Agent and Custodian. Investment
Company Capital Corporation (`ICCC') serves as administrator and transfer agent
and provides fund accounting services, and Deutsche Bank Trust serves as
custodian, of the Portfolio. It is expected that these services will continue to
be provided by the same service providers after approval of the New Advisory
Agreement.
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 fund, retail, private and commercial banking,
investment banking and insurance. Deutsche Bank has combined all of its
investment management businesses to form Deutsche Asset Management (the
marketing name in the US for the asset management activities of Deutsche Bank
and its subsidiaries).
Trustees and Officers. Biographical information about the
Trustee Nominees and the executive officers is provided under Proposal I in this
Proxy Statement. Certain other information about the Trustee Nominees is
provided in Exhibit H to this Proxy Statement.
Recommendation of the Board
At a meeting of the Board of Trustees of the Portfolio held on
June 7, 2002 called for the purpose of, among other things, voting on approval
of the New Advisory Agreement, a majority of the Board, including a majority of
the Independent Trustees, approved, subject to interestholder approval, the New
Advisory Agreement. In reaching this conclusion, the Board of Trustees obtained
from DeAM, Inc. such information as it deemed reasonably necessary to approve
DeAM, Inc. as investment advisor to the Portfolio. In approving the New Advisory
Agreement, the Independent Trustees considered numerous factors, including,
among others, the nature, quality and extent of services provided under the
Current Advisory Agreement and proposed to be provided by DeAM, Inc. to the
Portfolio under the New Advisory Agreement; that the investment advisory fees
paid by the Portfolio will remain the same under the New Advisory Agreement as
under the Current Advisory Agreement; investment performance, both of the
Portfolio itself and relative to appropriate peer groups and market indices;
staffing and capabilities of DeAM, Inc. to manage the Portfolio; investment
advisory fees provided under the Current Advisory Agreement and current expense
ratios and asset sizes of the Portfolio itself and relative to appropriate peer
groups; and DeAM, Inc.'s profitability from managing the Portfolio and the other
investment companies managed by DeAM, Inc. before marketing expenses paid by
DeAM, Inc. The Board also considered other benefits earned by DeAM, Inc. and its
affiliates relating to its management of the Portfolio, including brokerage
fees, fees for custody, transfer agency and other services as well as soft
dollar benefits received from third parties that aid in the management of
assets.
In addition, the Board considered the potential benefit to the
Portfolio of providing DeAM, Inc. more flexibility in structuring portfolio
management services for the Portfolio. The Board recognized that it may be
beneficial to the Portfolio to allow DeAM, Inc. to
18
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 interestholder approval. In
addition, the Board considered that (i) any restructuring of the provision of
portfolio management services provided to the Portfolio would require the prior
approval of a majority of the members of the Board, including a majority of the
Independent Trustees; (ii) the investment advisory expenses incurred by the
Portfolio 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
Agreement because any fees paid to a sub-advisor would be paid by DeAM, Inc. and
not by the Portfolio; and (iii) DeAM, Inc. will retain full responsibility for
the actions of any such sub-advisor.
Based on the factors discussed above, and others, the Board of
Trustees determined that the New Advisory Agreement is fair and reasonable and
in the best interest of the Portfolio and its interestholders. Based on all of
the foregoing, at a meeting on June 7, 2002, a majority of the Board of
Trustees, including a majority of the Independent Trustees, voted to approve the
New Advisory Agreement and to recommend it to the interestholders for their
approval.
Therefore, after careful consideration, the Board of Trustees,
including the Independent Trustees, recommend that the interestholders of the
Portfolio vote `FOR' the approval of the New Advisory Agreement as set forth in
this Proposal.
If the New Advisory Agreement is approved by the interestholders, it
will remain in effect as described above. If the New Advisory Agreement is not
approved by the interestholders, the Current Advisory Agreement will continue in
effect, subject to any requisite approval of the Board of Trustees or its
interestholders, and the Board of Trustees will consider what other action is
appropriate based upon the interests of the interestholders.
19
INFORMATION CONCERNING INDEPENDENT AUDITORS
The Portfolio's financial statements for its most recent
fiscal year were audited by PricewaterhouseCoopers LLP (`PwC'), independent
auditors. In addition, PwC prepares the Portfolio's federal and state annual
income tax returns and provides certain non-audit services to the Portfolio.
During the Board's most recent consideration of the selection of auditors for
the Portfolio, the Board considered whether the provision of non-audit services
to the Portfolio was compatible with maintaining PwC's independence. The Board
of Trustees of the Portfolio has selected PwC as the independent auditors for
the Portfolio for its fiscal year ending 2002. PwC has been the independent
auditors for the Portfolio since inception. PwC has informed the Portfolio that
it has no material direct or indirect financial interest in the Trust.
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 Portfolio's annual financial statements
for the most recent fiscal year and the review of the financial statements
included in the Portfolio's reports to interestholders are $24,000.
Financial Information Systems Design and Implementation Fees.
There were no fees billed by PwC for the most recent fiscal year for
professional services rendered for financial information systems design and
implementation services provided to the Portfolio, DeAM, Inc. or entities that
control, are controlled by or are under common control with DeAM, Inc. that
provide services to the Portfolio.
All Other Fees. There were $2,830,400 in fees billed by PwC
for the most recent fiscal year for other services provided to the Portfolio,
DeAM, Inc. and entities that control, are controlled by or are under common
control with DeAM, Inc. that provide services to the Portfolio.
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
interestholders of the Portfolio. Because abstentions and broker non-votes are
not treated as shares voted, abstentions and broker non-votes will have no
impact on Proposal I.
Approval of Proposal II with respect to the Portfolio's New
Advisory Agreement requires the affirmative vote of a `majority' of the
outstanding interests 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 interests of
the Portfolio present at the Special Meeting, if the holders of more than 50% of
the outstanding interests of the Portfolio are present in person or by proxy, or
(b) more than 50% of the outstanding interests of the Portfolio. Because
abstentions and broker non-votes are treated as interests 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 interests of the Portfolio.
20
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THE BOARD, INCLUDING THE INDEPENDENT
TRUSTEES, RECOMMEND THAT THE
INTERESTHOLDERS 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 INTERESTHOLDER PROPOSALS
The Portfolio does not hold regular interestholders' meetings.
Interestholders wishing to submit proposals for inclusion in a proxy statement
for a subsequent interestholders' meeting should send their written proposals to
the Secretary of the Portfolio 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 interestholders to be considered for inclusion in the
materials for the Portfolio's meeting. Timely submission of a proposal does not,
however, necessarily mean that such proposal will be included.
INTERESTHOLDERS' REQUEST FOR SPECIAL MEETING
Interestholders holding at least 10% of the Portfolio's
outstanding voting securities (as defined in the 1940 Act) may require the
calling of a meeting of interestholders for the purpose of voting on the removal
of any Trustee of the Portfolio. Meetings of interestholders for any other
purpose also shall be called by the Board of Trustees when requested in writing
by interestholders holding at least 10% of the interests then outstanding.
IF YOU HAVE ANY QUESTIONS CONCERNING THE PROXY STATEMENT OR
THE PROCEDURES TO BE FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT
GEORGESON SHAREHOLDER COMMUNICATIONS AT 1-866-333-0889.
21
------------------------------------------------------
INTERESTHOLDERS WHO DO NOT EXPECT TO BE
PRESENT AT THE SPECIAL MEETING AND WHO WISH
TO HAVE THEIR INTERESTS 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,
Daniel O. Hirsch, Secretary
June 21, 2002
------------------------------------------------------
THE BOARD OF TRUSTEES OF THE PORTFOLIO HOPES
THAT INTERESTHOLDERS WILL ATTEND THE SPECIAL
MEETING. WHETHER OR NOT YOU PLAN TO ATTEND,
YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE (OR FOLLOW THE
INSTRUCTIONS FOR VOTING BY TELEPHONE OR
THROUGH THE INTERNET ON THE ENCLOSED PROXY).
------------------------------------------------------
22
Exhibit A
--------------------------------------------------------------------
SHARES OUTSTANDING AS OF RECORD DATE
--------------------------------------------------------------------
Equity 500 Index Portfolio
--------------------------------------------------------------------
A-1
Exhibit B
5% Interestholders
- --------------------------------------------------------------------------------
Name and Address of Shares Beneficially Percent Ownership
Beneficial Owner Owned of Outstanding Shares
- --------------------------------------------------------------------------------
Equity 500 Index Fund Investment* 4,860,555.646 6.07%
One South Street
Baltimore, Maryland 21202
- --------------------------------------------------------------------------------
Equity 500 Index Fund-Premier Class* 11,217,062.432 14.01%
One South Street
Baltimore, Maryland 21202
- --------------------------------------------------------------------------------
Scudder S&P 500 Index Fund* 60,957,064.749 76.14%
Two International Place
Boston, Massachusetts 02110-4103
_____________
* Not believed by the Portfolio to be the beneficial owner.
B-1
Exhibit C
--------------------------------------------------------------------------------------
Date Last Approved By the Portfolio's
--------------------------------------------------------------------------------------
Portfolio Date of Current Trustees Interestholders
(Fiscal Year) Advisory Agreement
--------------------------------------------------------------------------------------
Equity 500 Index Portfolio 04/30/01 6/7/02 9/21/99*
--------------------------------------------------------------------------------------
_____________
*Submitted for interestholder vote because the merger on June 4, 1999
between Bankers Trust Company, the then-current advisor to the
Portfolio, and a US subsidiary of Deutsche Bank AG may have arguably
resulted in an assignment and, therefore, termination of the investment
advisory agreement.
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 Series' assets, subject at all times to the
policies and control of the Board of Trustees. The [Advisor] [Sub-Advisor]
shall give a Series the benefit of its best judgment, efforts and
facilities in rendering its services as [Advisor] [Sub-Advisor].
2. Delivery of Documents. The Trust [Advisor] has furnished the Advisor
[Sub-Advisor] with copies properly certified or authenticated of each of
the following:
_____________________
/1/ Contained in the form of sub-advisory agreement only.
D-1
1. 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');
2. [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');]
3. Resolutions of the Trust's Board of Trustees and shareholders
authorizing the appointment of the [Advisor] [Sub-Advisor] and
approving this Agreement;
4. The Trust's Registration Statement on Form N-1A 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
5. 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:
6. supervise and manage all aspects of a Series' operations, except for
distribution services;
7. formulate and implement continuing programs for the purchases and
sales of securities, consistent with the investment objective and
policies of a Series;
8. 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;
9. 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;
D-2
10. determine which issuers and securities shall be represented in a
Series' portfolio and regularly report thereon to the Trust's Board
of Trustees; and
11. take all actions necessary to carry into effect a Series' purchase
and sale programs.
4. Portfolio Transactions. The [Advisor] [Sub-Advisor] is authorized to select
the brokers or dealers that will execute the purchases and sales of
portfolio securities for a Series and is directed to use its reasonable
best efforts to obtain the best net results as described from time to
time in a Series' prospectus and statement of additional information. The
[Advisor] [Sub-Advisor] will promptly communicate to the Administrator
and to the officers and the Trustees of the Trust such information
relating to portfolio transactions as they may reasonably request.
It is understood that the [Advisor] [Sub-Advisor] will not be
deemed to have acted unlawfully, or to have breached a fiduciary duty to the
Trust or be in breach of any obligation owing to the Trust under this Agreement,
or otherwise, solely by reason of its having directed a securities transaction
on behalf of a Series to a broker-dealer in compliance with the provisions of
Section 28(e) of the Securities Exchange Act of 1934 or as otherwise permitted
from time to time by a Series' prospectus and statement of additional
information.
Subject to the policies established by the Board in compliance
with applicable law, the [Advisor] [Sub-Advisor] may direct DB Securities, Inc.
(`DB Securities') or any of its affiliates to execute portfolio transactions for
a Series on an agency basis. The commissions paid to DB Securities or any of its
affiliates must be, as required by Rule 17e-1 under the 1940 Act, `reasonable
and fair compared to the commission, fee or other remuneration received or to be
received by other brokers in connection with comparable transactions involving
similar securities . . . during a comparable period of time.' If the purchase or
sale of securities consistent with the investment policies of a Series or one or
more other accounts of the [Advisor] [Sub-Advisor] is considered at or about the
same time, transactions in such securities will be allocated among the accounts
in a manner deemed equitable by the [Advisor] [Sub-Advisor]. DB Securities or
any of its affiliates and the [Advisor] [Sub-Advisor] may combine such
transactions, in accordance with applicable laws and regulations, in order to
obtain the best net price and most favorable execution.
The Trust on behalf of a Series will not deal with the
[Advisor] [Sub-Advisor] or DB Securities or any of its affiliates in any
transaction in which the [Advisor] [Sub-Advisor] or DB Securities or any of its
affiliates acts as a principal with respect to any part of a Series' order,
except in compliance with rules of the SEC. If DB Securities or any of its
affiliates is participating in an underwriting or selling group, a Series 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.
D-3
6. Compliance with Applicable Requirements. In carrying out its obligations
under this Agreement, the [Advisor] [Sub-Advisor] shall at all times
conform to:
1. all applicable provisions of the 1940 Act and any rules and regulations
adopted thereunder;
2. the provisions of the Registration Statement of the Trust on behalf of a
Series under the 1940 Act;
3. the provisions of the Declaration of Trust;
4. the provisions of the Trust Agreement; and
5. 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:
1. 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.
2. The Trust assumes and shall pay or cause to be paid all other expenses of
the Trust on behalf of a Series, including, without limitation: payments
to the Trust's distributor under the Trust's plan of distribution; the
charges and expenses of any registrar, any custodian or depository
appointed by the Trust for the safekeeping of a Series' cash, portfolio
securities and other property, and any transfer, dividend or accounting
agent or agents appointed by the Trust; brokers' commissions chargeable
to the Trust on behalf of a Series in connection with portfolio
securities transactions to which the Trust is a party; all taxes,
including securities issuance and transfer taxes, and fees payable by the
Trust to Federal, State or other governmental agencies; the costs and
expenses of engraving or printing of certificates representing shares of
the Trust; all costs and expenses in connection with the registration and
maintenance of registration of the Trust and its shares with the SEC and
various states and other jurisdictions (including filing fees, legal fees
and disbursements of counsel); the costs and expenses of printing,
including typesetting, and distributing prospectuses and statements of
additional information of the Trust and supplements thereto to the
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
D-4
inure to its benefit; extraordinary expenses (including but not limited
to, legal claims and liabilities and litigation costs and any
indemnification related thereto); and all other charges and costs of the
Series' or Trust's operation unless otherwise explicitly provided herein.
8. [Delegation] [Adjustment] of [Advisory] [Sub-Advisory] Services. [Subject to
the prior approval of a majority of the members of the Trust's and the
Series' Boards of Trustees, including a majority of the Trustees who are
not `interested persons,' as defined in the 1940 Act, the Advisor may,
through a sub-advisory agreement or other arrangement, delegate to any
other company that the Advisor controls, is controlled by, or is under
common control with, or to specified employees of any such companies, or
to more than one such company, to the extent permitted by applicable law,
certain of the Advisor's duties enumerated in section 1 hereof, and may
adjust the duties of such entity, the portion of portfolio assets of the
Series that such entity shall manage and the fees to be paid to such
entity, subject to the prior approval of the members of the Trust's and
the Series' Board of Trustees who are not `interested persons,' as
defined in the 1940 Act; provided, that the Advisor shall continue to
supervise the services provided by such company or employees and any such
delegation shall not relieve the Advisor of any of its obligations
hereunder.]/2/
[Subject to the provisions of this Agreement, the duties of
the Sub-Advisor, the portion of portfolio assets of the Series that the
Sub-Advisor shall manage and the fees to be paid to the Sub-Advisor by the
Advisor under and pursuant to the Sub-Advisory Agreement or other arrangement
entered into in accordance with this Agreement may be adjusted from time to time
by the Advisor, subject to the prior approval of the members of the Trust's and
the Series' Board of Trustees who are not `interested persons,' as defined in
the 1940 Act.]/3/
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.
___________________
/2/ Contained in the form of Advisory Agreement only.
/3/ Contained in the form of Sub-Advisory Agreement only.
D-5
In addition to the foregoing, the [Advisor] [Sub-Advisor] may
from time to time agree not to impose all or a portion of its fee otherwise
payable hereunder (in advance of the time such fee or a portion thereof would
otherwise accrue) and/or undertake to pay or reimburse the [Trust on behalf of
the Series] [Advisor] for all or a portion of its expenses not otherwise
required to be borne or reimbursed by the [Advisor] [Sub-Advisor]. Any such fee
reduction or undertaking may be discontinued or modified by the Advisor at any
time.
All rights of compensation under this Agreement for services
performed as of the termination date shall survive the termination of this
Agreement.
10. Non-Exclusivity. The services of the [Advisor] [Sub-Advisor] to the Trust
on behalf of each Series are not to be deemed to be exclusive, and the
[Advisor] [Sub-Advisor] shall be free to render investment advisory or
other services to others (including other investment companies) and to
engage in other activities, so long as its services under this
Agreement are not impaired thereby. It is understood and agreed that
officers or directors of the [Advisor] [Sub-Advisor] may serve as
officers or Trustees of the Trust, and that officers or Trustees of the
Trust may serve as officers or directors of the [Advisor] [Sub-Advisor]
to the extent permitted by law; and that the officers and directors of
the [Advisor] [Sub-Advisor] are not prohibited from engaging in any
other business activity or from rendering services to any other person,
or from serving as partners, officers, trustees or directors of any
other firm, trust or corporation, including other investment companies.
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
D-6
applicable order or orders of the SEC or any rules or regulations
adopted by, or interpretative releases of, the SEC thereunder.
This Agreement may be terminated as to a Series at any time,
without the payment of any penalty by vote of a majority of the Trustees of the
Trust or by vote of a majority of the outstanding voting securities of a Series
on not less than 60 days' written notice to the [Advisor] [Sub-Advisor], or by
the [Advisor] [Sub-Advisor] at any time without the payment of any penalty, on
90 days written notice to the [Trust] [Advisor]. This Agreement will
automatically and immediately terminate in the event of its assignment. Any
notice under this Agreement shall be given in writing, addressed and delivered,
or mailed postpaid, to the other party at any office of such party.
As used in this Section 12, the term `assignment' shall have
the meaning as set forth in the 1940 Act as modified or interpreted by any
applicable order or orders of the SEC or any rules or regulations adopted by, or
interpretative releases of, the SEC.
13. Limitation of Liability of the [Advisor] [Sub-Advisor].
The [Advisor] [Sub-Advisor] shall not be liable for any error
of judgment or mistake of law 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-7
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-8
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-9
EXHIBIT A
TO
INVESTMENT [ADVISORY] [SUB-ADVISORY] AGREEMENT
MADE AS OF __________
BETWEEN
[Fund Name] AND [_________]
Series Investment [Advisory] [Sub-Advisory] Fee
- --------------------------------------------------------------------------------
D-10
Exhibit E
Advisory Fee
The table below sets forth the fee rate paid, on an annual basis, to the advisor
for its services under the Current Advisory Agreement, calculated daily and paid
monthly. The table also sets forth the amounts paid by the Portfolio to the
advisor for providing investment advisory services for its most recent fiscal
year.
-------------------------------------------------------------------
Fund Advisory Agreement Rate Fee
-------------------------------------------------------------------
Equity 500 Index Portfolio 0.05% $2,443,519
-------------------------------------------------------------------
E-1
Exhibit F
Investment Companies Advised or Subadvised by DeAM, Inc.
Total Assets as of
Fund with similar investment objectives March 31, 2002 Contractual Advisory Fees
--------------------------------------------------------------------------------------------------------
Equity 500 Index Portfolio $ 3,068,876,050.11 0.05%/1/
Equity 500 Index Investment Fund $ 653,453,877.50 /1/
Equity 500 Index Premier $ 1,483,983,685.00 /1/
Federated Large Cap Index Fund $ 493,839.48 /1/
Homestead Stock Index Fund $ 24,956,958.03 /1/
Scudder S&P 500 Index Fund AARP $ 465,796,094.90 /1/
Scudder S&P 500 Index Fund Class S $ 440,181,495.20 /1/
DeAM VIT Equity 500 Index $ 469,355,509.82 0.20%
Variable Insurance Products Fund II-Index 500 $ 3,515,367,327.67 Note A
Portfolio
Scudder Variable Series II-SVS Index 500 $ 85,090,972.95 Note B
Portfolio
Scudder Investors Trust-Scudder S&P 500 Stock $ 261,741,014.13 Note C
Fund
_________________
1 Equity 500 Index Portfolio is the master portfolio. Equity 500
Index Premier, Equity 500 Index Investment, Federated Large Cap
Index Fund, Homestead Stock Index Fund, and Scudder S&P 500
Index Fund AARP and Class S are the feeder funds to the Equity
500 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.
Note A At an annual rate of 0.006% (0.6 basis points).
Note B 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 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 $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.
F-1
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 Equity Securities Overseen by Trustee or Nominee in
Name of Trustee or Nominee in the Portfolio(s)/1/ Family of Investment Companies/2/
- -------------------------------------------------------------------------------------------------------------
Independent Trustee Nominees
- -------------------------------------------------------------------------------------------------------------
Richard R. Burt None Over $100,000
- -------------------------------------------------------------------------------------------------------------
S. Leland Dill None Over $100,000
- -------------------------------------------------------------------------------------------------------------
Martin J. Gruber None $10,001-$50,000
- -------------------------------------------------------------------------------------------------------------
Joseph R. Hardiman/3/ None Over $100,000
- -------------------------------------------------------------------------------------------------------------
Richard J. Herring None Over $100,000
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Graham E. Jones None Over $100,000
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Rebecca W. Rimel None Over $100,000
- -------------------------------------------------------------------------------------------------------------
Philip Saunders, Jr. None $50,001-$100,000
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William N. Searcy None $10,001-$50,000
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Robert H. Wadsworth None Over $100,000
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Interested Trustee Nominee
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Richard T. Hale None Over $100,000
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_____________
1. Securities beneficially owned as defined under the Securities Exchange Act
of 1934 (the "1934 Act") include direct and or indirect ownership of
securities where the trustee's economic interest is tied to the securities,
employment ownership and securities when the trustee can exert voting power
and when the trustee has authority to sell the securities.
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.
For more information please call your Portfolio's information agent,
Georgeson Shareholder Communications at (866) 333-0889.
A Member of
Deutsche Asset Management [/]
[Name of Portfolio]
One South Street, Baltimore, Maryland 21202
*** CONTROL NUMBER: 999 999 999 999 99 ***
FORM OF PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
PORTFOLIO NAME PRINTS HERE To Be Held July 30, 2002 at _________, Eastern time
The undersigned hereby appoints Fran Pollack-Matz and Lisa Hertz and each of
them, with the full power of substitution, as proxies of the undersigned to vote
all shares of stock that the undersigned is entitled in any capacity to vote at
the above-stated Special Meeting, and at any and all adjournments or
postponements thereof (the 'Special Meeting'), on the matters set forth on this
Proxy Card, and, in their discretion, upon all matters incident to the conduct
of the Special Meeting and upon such other matters as may properly be brought
before the Special Meeting. This proxy revokes all prior proxies given by the
undersigned.
All properly executed proxies will be voted as directed. If no instructions are
indicated on a properly executed proxy, the proxy will be voted FOR approval of
Proposals I and II. All ABSTAIN votes will be counted in determining the
existence of a quorum at the Special Meeting and, for Proposal II, will have the
effect of votes AGAINST the Proposal.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES WITH RESPECT TO YOUR
PORTFOLIO. 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 Portfolio, as indicated below and more fully described under the
corresponding Proposals in the Proxy Statement, and such other matters as may
properly come before the Special Meeting or any adjournments thereof:
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
PROPOSAL I: To elect eleven Trustees of the [_] [_] [_]
Trust to hold office until their
respective successors have been
duly elected and qualified or until
their earlier resignation or removal,
whose terms will be effective on
the date of the Special Meeting or,
in the event of an adjournment or
adjournments of the Special
Meeting, such later date as
shareholder approval is obtained.
(01) Richard R. Burt (05) Joseph R. Hardiman (09) Philip Saunders, Jr.
(02) S. Leland Dill (06) Richard J. Herring (10) William N. Searcy
(03) Martin J. Gruber (07) Graham E. Jones (11) Robert H. Wadsworth
(04) Richard T. Hale (08) Rebecca W. Rimel
To withhold authority to vote, mark "For All Except" and write the nominee's
number on the line below.
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FOR AGAINST ABSTAIN
PROPOSAL II: To approve a new investment [_] [_] [_]
advisory agreement between
the Portfolio and Deutsche Asset
Management, Inc.