SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
BT INSURANCE FUNDS TRUST
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(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:
BT INSURANCE FUNDS TRUST
SMALL CAP INDEX FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 30, 1999
A Special Meeting of shareholders of BT Insurance Funds Trust (the
"Trust") will be held at the offices of BT Alex.Brown Incorporated, One South
Street, 30th Floor, Baltimore, Maryland 21202, on September 30, 1999 at 2:00
p.m. (the "Special Meeting"). The Trust is an open-end management investment
company, organized under the laws of the Commonwealth of Massachusetts, that is
comprised of Small Cap Index Fund (the "Fund"), Equity 500 Index Fund, EAFE(R)
Equity Index Fund, U.S. Bond Index Fund, Small Cap Fund, International Equity
Fund and Managed Assets Fund. Only the Fund is addressed in the accompanying
Proxy Statement ("Proxy Statement"). The U.S. Bond Index Fund, Small Cap Fund,
International Equity Fund and Managed Assets Fund have not commenced operations.
The Special Meeting is being held to consider and vote on the following
matters for the Fund, as indicated below and more fully described under the
corresponding Proposals in the Proxy Statement, and such other matters as may
properly come before the meeting or any adjournments thereof:
PROPOSAL I: To approve or disapprove new investment management
agreements (each a "New Management Agreement" and
collectively the "New Management Agreements") for
the Trust:
A. To approve or disapprove a New Management
Agreement between the Trust and Bankers Trust
Company ("Bankers Trust").
B. To approve or disapprove a New Management
Agreement between the Trust and Morgan Grenfell
Inc. ("MGI") to be implemented within two years of
the date of the Special Meeting upon approval of
the Members of the Trust's Board of Trustees who
are not "interested persons" ("Independent
Trustees") (as defined in the Investment Company
Act of 1940, as amended).
C. To approve or disapprove a new sub-management
agreement (the "New Sub-management Agreement,"
which term, unless otherwise specified, is
included within the meaning of New Management
Agreements) between MGI and Bankers Trust under
which Bankers Trust may perform certain of MGI's
responsibilities, at MGI's expense, under the New
Management Agreement between MGI and the Trust
upon approval of the
Independent Trustees.
PROPOSAL II: To elect six Trustees of the Trust to hold office
until their respective successors have been duly
elected and qualified or until their earlier
resignation or removal.
PROPOSAL III: To ratify or reject the selection of Ernst &
Young LLP as the independent accountants for the
Trust for the current fiscal year.
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 MANAGEMENT AGREEMENTS DESCRIBED IN PROPOSALS IA, IB AND IC,
RESPECTIVELY, WILL CONTAIN SUBSTANTIALLY THE SAME TERMS AND CONDITIONS, EXCEPT
FOR THE PARTIES AND THE DATES OF EXECUTION, EFFECTIVENESS AND INITIAL TERM, AS
THE PRIOR INVESTMENT MANAGEMENT AGREEMENT PURSUANT TO WHICH SERVICES WERE
PROVIDED TO THE FUND. IN ADDITION, THE FORM OF NEW SUB-MANAGEMENT AGREEMENT
AUTHORIZES THE APPLICABLE INVESTMENT ADVISER TO ADJUST THE DUTIES, THE AMOUNT OF
ASSETS TO BE MANAGED AND THE FEES PAID TO THE INVESTMENT SUBADVISER WITH AND
UPON THE APPROVAL OF THE BOARD AND THE INDEPENDENT TRUSTEES. AS MORE FULLY
DISCUSSED IN THE ACCOMPANYING PROXY STATEMENT, APPROVAL OF THE NEW MANAGEMENT
AGREEMENTS, WHICH PROVIDE FOR THE SAME SERVICES TO BE PROVIDED AT THE SAME FEES,
IS GENERALLY OCCASIONED BY THE MERGER OF CIRCLE ACQUISITION CORPORATION, A
WHOLLY OWNED SUBSIDIARY OF DEUTSCHE BANK A.G. ("DEUTSCHE BANK") WITH AND INTO
BANKERS TRUST CORPORATION, THE PARENT COMPANY OF BANKERS TRUST. MGI IS, AND AS A
RESULT OF THIS TRANSACTION, BANKERS TRUST BECAME, AN INDIRECT WHOLLY OWNED
SUBSIDIARY OF DEUTSCHE BANK. THE NEW MANAGEMENT AGREEMENT WITH MGI DESCRIBED IN
PROPOSAL IB AND THE NEW SUB-MANAGEMENT AGREEMENT WITH BANKERS TRUST DESCRIBED IN
PROPOSAL IC WILL PERMIT DEUTSCHE BANK, UPON THE APPROVAL OF THE INDEPENDENT
TRUSTEES, TO SIMPLIFY THE ORGANIZATIONAL STRUCTURE OF ITS U.S. MUTUAL FUND
OPERATIONS, ENHANCE THE EFFICIENCY OF THEIR ADMINISTRATION AND PROMOTE
CONSISTENCY OF INTERNAL CONTROLS, COMPLIANCE AND REGULATORY OVERSIGHT. THE
DEFERRAL IN IMPLEMENTING THE NEW MANAGEMENT AGREEMENT WITH MGI IS NEEDED TO
PERMIT DEUTSCHE BANK A SUFFICIENT AMOUNT OF TIME TO PLAN, PREPARE AND INSTITUTE
THE NECESSARY ARRANGEMENTS FOR MGI TO CONSOLIDATE DEUTSCHE BANK'S U.S. MUTUAL
FUND OPERATIONS.
The close of business on August 6, 1999 has been fixed as the record date
for the determination of the shareholders of the Fund entitled to notice of, and
to vote at, the Special Meeting. You are cordially invited to attend the Special
Meeting.
IF YOU HAVE ANY QUESTIONS CONCERNING THE PROXY STATEMENT OR THE PROCEDURES
TO BE FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT SHAREHOLDER
COMMUNICATIONS CORPORATION AT 1-800-645-1685.
This notice and related proxy material are first being mailed to
shareholders on or about [August 23], 1999. This proxy is being solicited on
behalf of the Board of Trustees of the Trust.
By Order of the Board of Trustees,
Elizabeth A. Russell, Secretary
New York, New York
[August 23], 1999
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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 YOUR SHARES (UNLESS YOU ARE VOTING BY TELEPHONE OR
THROUGH THE INTERNET). NO POSTAGE NEED BE AFFIXED
IF THE PROXY CARD IS MAILED IN THE UNITED STATES.
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BT INSURANCE FUNDS TRUST
SMALL CAP INDEX FUND
101 Federal Street
Boston, Massachusetts, 02110
PROXY STATEMENT FOR THE SPECIAL MEETING OF SHAREHOLDERS
SEPTEMBER 30, 1999
This Proxy Statement ("Proxy Statement") is being furnished in connection
with the solicitation of proxies by the Board of Trustees of BT Insurance Funds
Trust (the "Trust") with respect to Small Cap Index Fund (the "Fund") for use at
the special meeting of the Trust to be held at the offices of BT Alex.Brown
Incorporated, One South Street, 30th Floor, Baltimore, Maryland 21202, on
September 30, 1999 at 2:00 p.m. (the "Special Meeting") and at any adjournments
thereof. This Proxy Statement and accompanying proxy card ("Proxy") are expected
to be mailed to shareholders on or about [August 23], 1999.
The Trust is comprised of several series is a separate series of
the Trust, along with Equity 500 Index Fund and EAFE(R) Equity Index Fund (the
"Other Funds"), which are active and will vote on the matters set forth herein
pursuant to separate proxy statements, and U.S. Bond Index Fund, Small Cap Fund,
International Equity Fund and Managed Assets Fund, which have not commenced
operations.
For simplicity, actions are described in this Proxy Statement as being
taken by the Fund, although all actions are actually taken by the Trust on
behalf of the Fund.
The Special Meeting is being held to consider and vote on the following
matters for the Fund, as indicated below and described more fully under the
corresponding Proposals discussed herein, and such other matters as may properly
come before the meeting or any adjournments thereof:
PROPOSAL I: To approve or disapprove new investment management
agreements (each a "New Management Agreement" and
collectively the "New Management Agreements") for
the Trust:
A. To approve or disapprove a New Management
Agreement between the Trust and Bankers Trust
Company ("Bankers Trust") (the "New BT Management
Agreement").
B. To approve or disapprove a New Management
Agreement between the Trust and Morgan Grenfell
Inc. ("MGI" and, together with Bankers Trust, the
"Advisers") (the "New MGI Management Agreement") to
be implemented within two years of the date of the
Special Meeting upon approval of the members of the
Trust's Board of Trustees who are not "interested
persons" thereof ("Independent Trustees") (as
defined in the Investment Company Act of 1940, as
amended (the "Act")).
C. To approve or disapprove a new sub-management
agreement (the "New Sub-management Agreement,"
which term, unless otherwise specified, is included
within the meaning of New Management Agreements)
between MGI and Bankers Trust under which Bankers
Trust may perform certain of MGI's
responsibilities, at MGI's expense, under the New
Management Agreement between MGI and the Trust
upon approval of the Independent Trustees.
PROPOSAL II: To elect six Trustees of the Trust to hold office
until their respective successors have been duly
elected and qualified or until their earlier
resignation or removal.
PROPOSAL III: To ratify or reject the selection of Ernst & Young
LLP as the independent accountants for the Trust
for the current fiscal year.
The appointed proxies will vote on any other business as may properly come
before the Special Meeting or any adjournment thereof.
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The Fund's shareholders are to consider the approval of New Management
Agreements. Although the New Management Agreements are between the Trust and
Bankers Trust and MGI, the shareholders of the Fund and the shareholders of each
of the other Funds will vote separately to approve or disapprove the New
Management Agreements for their respective Fund.
The shareholders of the Trust are also to consider the election of Robert
R. Coby, Desmond G. FitzGerald, James S. Pasman, Jr., Edward C. Schmults,
William E. Small and Werner Walbroel (the "Trustee Nominees") as Trustees of the
Trust. Messrs. Coby, FitzGerald, Pasman and Small currently serve on the Board
of the Trust (the "Board").(1)
Notice of the Special Meeting and a Proxy accompany this Proxy Statement.
Proxy solicitations will be made primarily by mail, but solicitations may also
be made by telephone, telegraph, through the Internet or in person by officers
or agents of the Fund. All costs of solicitation, including (a) printing and
mailing of this Proxy Statement and accompanying material, (b) the reimbursement
of insurance companies and others for their expenses in forwarding solicitation
material to the beneficial owners of the Fund's shares, (c) payment to
Shareholder Communications Corporation for its services in soliciting proxies
and (d) supplementary solicitations to submit Proxies, will be borne by Bankers
Trust. If the Fund records votes by telephone or through the Internet, it will
use procedures designed to authenticate shareholders' identities, to allow
shareholders to authorize the voting of their shares in accordance with their
instructions, and to confirm that their instructions have been properly
recorded. Proxies voted by telephone or through the Internet may be revoked at
any time before they are voted in the same manner that proxies voted by mail may
be revoked.
The Annual Report of the Fund containing audited financial statements for
the fiscal year ended December 31, 1998, as well as the Semi-Annual Report of
the Fund (each a "Report"), have previously been furnished to the Fund's
shareholders. An additional copy of each Report will be furnished to the Fund's
shareholders without charge upon request by calling the Customer Service Center
at the telephone number shown in the variable annuity or variable life insurance
contract prospectus.
If the enclosed Proxy is properly executed and returned in time to be
voted at the Special Meeting, the shares represented thereby will be voted in
accordance with the instructions marked on the Proxy. Shares of the Fund are
entitled to one vote each at the Special Meeting and fractional shares are
entitled to proportionate shares of one vote. If no instructions are marked on
the Proxy with respect to a specific Proposal, the Proxy will be voted "FOR" the
approval of such Proposal and in accordance with the judgment of the persons
appointed as proxies upon any other matter that may properly come before the
Special Meeting. Any shareholder giving a Proxy has the right to attend the
Special Meeting to vote his/her shares in person (thereby revoking any prior
Proxy) and also the right to revoke the Proxy at any time by written notice
received by the Fund prior to the time it is voted.
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
(1) The shareholders of the Funds, together with the shareholders of the Other
Funds voting in the aggregate on a Trust-wide basis, will vote to elect
the six Trustees of the Trust.
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or more adjournments of the Special Meeting to permit further solicitation of
Proxies with respect to the Proposal. In determining whether to adjourn the
Special Meeting, the following factors may be considered: the nature of the
proposals that are the subject of the Special Meeting, the percentage of votes
actually cast, the percentage of negative votes actually cast, the nature of any
further solicitation and the information to be provided to shareholders with
respect to the reasons for the solicitation. Any adjournment will require the
affirmative vote of a majority of those shares represented at the Special
Meeting in person or by Proxy. The persons named as proxies will vote those
Proxies that they are entitled to vote "FOR" any Proposal in favor of an
adjournment and will vote those Proxies required to be voted "AGAINST" any such
Proposal against any adjournment. A shareholder vote may be taken on one or more
of the Proposals in the Proxy Statement prior to any adjournment if sufficient
votes have been received and it is otherwise appropriate. A quorum of
shareholders is constituted by the presence in person or by proxy of the holders
of a majority of the outstanding shares of the Trust or a Fund thereof (as
applicable) entitled to vote at the Special Meeting. For purposes of determining
the presence of a quorum for transacting business at the Special Meeting,
abstentions and broker "non-votes" (that is, proxies from brokers or nominees
indicating that these persons have not received instructions from the beneficial
owner or other persons entitled to vote shares on a particular matter with
respect to which the brokers or nominees do not have discretionary power) will
be treated as shares that are present but which have not been voted. (See "Vote
Required" for a further discussion of abstentions and broker non-votes.)
Shareholders of record at the close of business on August 6, 1999 (the
"Record Date") are entitled to notice of, and to vote at, the Special Meeting.
As of the Record Date, [_______] shares of the Fund were issued and outstanding.
In order that your shares may be represented, you are requested to (unless
you are voting by telephone or through the Internet):
o indicate your instructions on the Proxy;
o date and sign the Proxy; and
o mail the Proxy promptly in the enclosed envelope.
BENEFICIAL OWNERSHIP OF SHARES OF THE FUNDS
Annex I attached hereto sets forth information as of July 23, 1999
regarding the beneficial ownership of the Fund's and the Other Funds' shares by
(i) the only persons known by the Fund or the Other Funds to beneficially own
more than five percent of the outstanding shares of the Fund or the Other Funds,
as applicable, (ii) the Trustees and Trustee Nominees, (iii) the executive
officers of the Fund, and (iv) the Trustees and executive officers of the Fund
as a group. The number of shares beneficially owned by each Trustee, Trustee
Nominee or executive officer is determined under rules of the Securities and
Exchange Commission (the "Commission"), and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under these rules,
beneficial ownership includes any shares as to which the individual has the sole
or shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days of July 23, 1999 through the
exercise of any stock option or other right. Unless otherwise indicated, each
person has sole investment and voting power (or shares this power with his or
her spouse) with respect to the shares set forth in Annex I. The inclusion
herein of any shares deemed beneficially owned does not constitute an admission
of beneficial ownership of the shares.
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Collectively, the Trustees and officers of the Trust own less than 1% of
the Fund's outstanding shares.
BACKGROUND
THE FUND. As indicated earlier, the Fund is a separate series of the
Trust. Bankers Trust, a banking corporation organized under the laws of the
State of New York, located at 130 Liberty Street (One Bankers Trust Plaza), New
York, New York 10006, serves as the investment adviser and custodian of the
Fund. Bankers Trust is a wholly owned subsidiary of Bankers Trust Corporation
("BT Corporation"), located at 130 Liberty Street (One Bankers Trust Plaza), New
York, New York 10006, a registered bank holding company organized under the laws
of the State of New York. As discussed later in this Proxy Statement, as a
result of the Merger (as defined herein), BT Corporation became a wholly owned
subsidiary of Deutsche Bank, A.G. ("Deutsche Bank"), located at 31 West 52
Street, New York, New York 10019. First Data Investor Services Group, Inc.,
located at 3200 Horizon Drive, King of Prussia, Pennsylvania 19406, serves as
the administrator of the Fund. First Data Distributors, Inc., located at 4400
Computer Drive, Westborough, Massachusetts 01581, serves as the principal
underwriter of the Fund.
For the most recently completed fiscal year, the commissions paid by the
Fund to "affiliated brokers" (as defined in Schedule 14A under the Securities
Exchange Act of 1934 (the "Exchange Act")) were $108.00 paid to Bankers Trust,
which amounted to approximately 0.47% of the aggregate brokerage commissions
paid by the Fund. Bankers Trust is an affiliated broker because it is the
investment adviser of the Fund.
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PROPOSAL I
APPROVAL OF NEW MANAGEMENT AGREEMENTS
THE NEW MANAGEMENT AGREEMENTS WILL CONTAIN SUBSTANTIALLY THE SAME TERMS
AND CONDITIONS, EXCEPT FOR THE PARTIES AND THE DATES OF EXECUTION, EFFECTIVENESS
AND INITIAL TERM, AS THE PRIOR INVESTMENT MANAGEMENT AGREEMENT PURSUANT TO WHICH
SERVICES WERE PROVIDED TO THE FUND. IN ADDITION, THE FORM OF NEW SUB-MANAGEMENT
AGREEMENT AUTHORIZES THE APPLICABLE INVESTMENT ADVISER TO ADJUST THE DUTIES, THE
AMOUNT OF ASSETS TO BE MANAGED AND THE FEES PAID TO THE INVESTMENT SUBADVISER
WITH AND UPON THE APPROVAL OF THE BOARD AND THE INDEPENDENT TRUSTEES. AS MORE
FULLY DISCUSSED BELOW, APPROVAL OF THE NEW MANAGEMENT AGREEMENTS, WHICH PROVIDE
FOR THE SAME SERVICES TO BE PROVIDED AT THE SAME FEES, IS GENERALLY OCCASIONED
BY THE MERGER (AS DEFINED HEREIN) PURSUANT TO WHICH BANKERS TRUST BECAME AN
INDIRECT SUBSIDIARY OF DEUTSCHE BANK. THE NEW MGI MANAGEMENT AGREEMENT DESCRIBED
IN PROPOSAL IB AND THE NEW SUB-MANAGEMENT AGREEMENT WITH BANKERS TRUST DESCRIBED
IN PROPOSAL IC WILL PERMIT DEUTSCHE BANK, UPON THE APPROVAL OF THE INDEPENDENT
TRUSTEES OF THE TRUST, TO SIMPLIFY THE ORGANIZATIONAL STRUCTURE OF ITS U.S.
MUTUAL FUND OPERATIONS, ENHANCE THE EFFICIENCY OF THEIR ADMINISTRATION AND
PROMOTE CONSISTENCY OF INTERNAL CONTROLS, COMPLIANCE AND REGULATORY OVERSIGHT.
THE DEFERRAL IN IMPLEMENTING THE NEW MGI MANAGEMENT AGREEMENT IS NEEDED TO
PERMIT DEUTSCHE BANK A SUFFICIENT AMOUNT OF TIME TO PLAN, PREPARE AND INSTITUTE
THE NECESSARY ARRANGEMENTS FOR MGI TO CONSOLIDATE DEUTSCHE BANK'S U.S. MUTUAL
FUND OPERATIONS.
THE PRIOR MANAGEMENT AGREEMENT.
THE PRIOR MANAGEMENT AGREEMENT. Prior to June 4, 1999, Bankers Trust
served as investment adviser to the Fund (as discussed earlier) pursuant to an
investment management agreement between Bankers Trust and the Trust (the "Prior
Management Agreement"). The Prior Management Agreement was initially approved by
the Board, including a majority of the Independent Trustees.
The date of the Prior Management Agreement was August 15, 1997. The Prior
Management Agreement was most recently approved by the Fund's Trustees on July
16, 1996. The Fund has an agreement with Bankers Trust whereby Bankers Trust has
contractually waived a portion of the fees payable to it for services rendered
pursuant to the Prior Management Agreement by the Fund. The fee paid by the Fund
to Bankers Trust after such waiver for the Fund's last fiscal year was $80,592.
The fee incurred and payable had the waiver not been in effect was $295,312.
THE MERGER. On November 30, 1998, BT Corporation, Deutsche Bank and Circle
Acquisition Corporation entered into an Agreement and Plan of Merger (the
"Merger Agreement"). Pursuant to the terms of the Merger Agreement, Circle
Acquisition Corporation, a wholly owned New York subsidiary of Deutsche Bank,
merged with and into BT Corporation on June 4, 1999, with BT Corporation
continuing as the surviving entity (the "Merger"). Under the terms of the
Merger, each outstanding share of BT Corporation common stock was converted into
the right to receive $93 in cash, without interest. Since the Merger, BT
Corporation, along with its affiliates, has continued to offer the range of
financial products and services, including investment advisory services, that it
offered prior to the Merger.
As a result of the Merger, BT Corporation became a wholly owned subsidiary
of Deutsche Bank. Deutsche Bank is a banking company with limited liability
organized under the laws of the
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Federal Republic of Germany. Deutsche Bank is the parent company of a group
consisting of banks, capital markets companies, fund management companies,
mortgage banks, a property finance company, installment financing and leasing
companies, insurance companies, research and consultancy companies and other
domestic and foreign companies (the "Deutsche Bank Group"). At March 31, 1999,
the Deutsche Bank Group had total assets of US$727 billion. The Deutsche Bank
Group's capital and reserves at March 31, 1999, were US $19.6 billion.
IMPACT OF THE MERGER ON THE PRIOR MANAGEMENT AGREEMENT. Section 15(a) of
the Act provides, in pertinent part, that "[i]t shall be unlawful for any person
to serve or act as investment adviser of a registered investment company, except
pursuant to a written contract, which contract, whether with such registered
company or with an investment adviser of such registered company, has been
approved by the vote of a majority of the outstanding voting securities of such
registered company . . . ." Section 15(a)(4) of the Act further requires that
such written contract provide for automatic termination in the event of its
assignment. Section 2(a)(4) of the Act defines "assignment" to include any
direct or indirect transfer of a contract by the assignor.
While it may be argued otherwise, consummation of the Merger may have
resulted in an "assignment" of the Prior Management Agreement within the meaning
of the Act, terminating the agreement according to its terms and the Act as of
June 4, 1999. Specifically, as Bankers Trust is a wholly owned subsidiary of BT
Corporation, the merger of Circle Corporation with and into BT Corporation could
be deemed to have resulted in an "assignment" of the Prior Management Agreement
with Bankers Trust.
On May 25, 1999, Bankers Trust was granted an exemptive order (the
"Exemptive Order") by the Commission permitting implementation, without
obtaining prior shareholder approval, of the New BT Management Agreement during
an interim period commencing on the date of the closing of the Merger and
continuing, for a period of up to 150 days, through the date on which the New BT
Management Agreement is approved or disapproved by the shareholders of the Fund
(the "Interim Period"). Under the terms of the Exemptive Order, Bankers Trust
was allowed to receive advisory fees during the Interim Period pursuant to the
New BT Management Agreement, provided that these fees would be held in escrow
pending shareholder approval of the New BT Management Agreement. In accordance
with the Exemptive Order, the advisory fees charged to the Fund and paid to
Bankers Trust under the New BT Management Agreement have been held in an
interest-bearing escrow account and the Fund expects to continue to deposit
these fees in such account until approval of the New BT Management Agreement by
the shareholders of the Fund has been obtained. If the New BT Management
Agreement is not approved by the shareholders by the expiration of the Interim
Period, the fees held in escrow will be remitted to the Fund. As of
[__________], 1999, the amount in escrow totaled $[---------].
The shareholders of the Fund are not being asked to approve or disapprove
the Merger or the Merger Agreement; rather, they are being asked under these
Proposals to approve and continue the New BT Management Agreement and to approve
the New Management Agreements for the Trust. OTHER THAN THE PARTIES AND THE
DATES OF EXECUTION, EFFECTIVENESS, AND INITIAL TERM OF THE AGREEMENT, THE NEW
MANAGEMENT AGREEMENTS CONTAIN SUBSTANTIALLY THE SAME TERMS AND CONDITIONS AS THE
PRIOR MANAGEMENT AGREEMENT. In addition, the form of New Sub-management
Agreement authorizes the applicable investment adviser to adjust the duties, the
amount of assets to be managed and the fees paid to the investment subadviser
with and upon the approval of the Board and the Independent Trustees. The
advisory fee rate charged to the Fund under the Prior Management Agreement has
continued to apply under the New BT Management Agreement and would continue to
apply under the
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New MGI Management Agreement. MGI, and not the Trust or the Fund, would be
solely responsible for paying the sub-advisory fees, which may vary from time to
time as approved by the Independent Trustees. In addition, the Advisers have
advised the Fund that it can expect to continue to receive the same level and
quality of services under the New Management Agreements as it received under the
Prior Management Agreement. The Advisers have represented to the Board that in
the event of any material change in the investment management personnel of the
Advisers responsible for providing services to the Fund, the Advisers will
apprise and consult with the Board to ensure that the Board, including a
majority of its Independent Trustees, is satisfied that the services provided by
the Advisers will not be diminished in scope and quality.
THE NEW MANAGEMENT AGREEMENTS
THE NEW MANAGEMENT AGREEMENTS. The form of New Management Agreement and
New Sub-management Agreement is attached to this Proxy Statement as Exhibit A.
If shareholders approve the New Management Agreements, each of the agreements
will remain in effect for an initial term of two years from its effective date,
and may be renewed annually thereafter by specific approval of the Board or
shareholders of the Trust, provided that they are also approved by a majority of
the Independent Trustees. The New BT Management Agreement became effective as of
June 4, 1999, the date of the consummation of the Merger.
Under the terms of the New Management Agreements, as under the Prior
Management Agreement, each of the Advisers agrees to act as the Fund's
investment advisor, to oversee the administration of all aspects of the Fund's
business affairs and to supervise the performance of professional services
provided by others, including the administrator, transfer agent, custodian and
distributor to the Fund. Subject to the supervision and direction of the Board,
the Advisers will have general responsibility for the investment and management
of the Fund's assets. The Advisers agree to keep the Fund informed of
developments materially affecting the Fund's portfolio and to furnish the Trust
with information the Trust may reasonably request with respect to its
investments.
THE ADVISORY FEES. THE INVESTMENT ADVISORY FEE RATE CHARGED TO THE FUND
UNDER THE NEW BT MANAGEMENT AGREEMENT AND THE NEW MGI MANAGEMENT AGREEMENT IS
THE SAME AS THE ADVISORY FEE RATE CHARGED UNDER THE PRIOR MANAGEMENT AGREEMENT.
AS NOTED ABOVE, THE INVESTMENT ADVISORY FEE PAYABLE UNDER THE NEW SUB-MANAGEMENT
AGREEMENT WOULD BE PAID BY MGI, NOT THE TRUST OR THE FUND, AND MAY VARY FROM
TIME TO TIME, SUBJECT TO THE APPROVAL OF THE BOARD, INCLUDING A MAJORITY OF ITS
INDEPENDENT TRUSTEES.
Bankers Trust is paid a fee under the New BT Management Agreement for its
services, calculated daily and paid monthly, equal, on an annual basis, to 0.35%
of the Fund's average daily net assets.
GENERALLY. If approved, the New Management Agreements will remain in
effect for an initial two year period (unless sooner terminated), and shall
remain in effect from year to year thereafter if approved annually (1) by the
Board or by the holders of a majority of the Fund's outstanding voting
securities and (2) by a majority of the Independent Trustees who are not parties
to such contract or agreement, or "interested persons" (as defined in the Act)
of any such party. Like the Prior Management Agreement, the New Management
Agreements will terminate upon assignment by any party and are terminable,
without penalty, on 60 days' written notice by the Board or by a "majority" vote
of the shareholders of the Fund (as defined in the Act) or upon 60 days' written
notice by the applicable Adviser.
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The services of the Advisers are not deemed to be exclusive and nothing in
the New Management Agreements prevents them or their 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 Fund) or
from engaging in other activities. In addition, the Advisers are obligated to
pay expenses associated with providing the services contemplated by the New
Management Agreements. The Trust bears certain other expenses including the fees
of the Board. The Trust also pays any extraordinary expenses incurred.
......Under the New Management Agreements, the Advisers will exercise their best
judgment in rendering their advisory services. The Advisers shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which the New Management Agreements relate,
provided that nothing therein shall be deemed to protect or purport to protect
the Advisers against any liability to the Fund or to its shareholders to which
the Advisers could otherwise be subject by reason of bad faith or gross
negligence on their part in the performance of their duties.
The Advisers
BANKERS TRUST. Bankers Trust is the principal banking subsidiary of BT
Corporation. Bankers Trust is a bank and, therefore, not required to register as
an investment adviser under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"). Bankers Trust provides a broad range of commercial banking and
financial services, including originating loans and other forms of credit,
accepting deposits and arranging financing. Bankers Trust also engages in
trading currencies, securities, derivatives and commodities. In addition to
providing investment advisory services to the Funds, Bankers Trust serves as
investment adviser to [___] other investment companies. (See Annex II for a list
of those investment companies that Bankers Trust advises that have investment
objectives similar to those of the Fund, together with information regarding the
fees charged to those companies.). As of June 30, 1999, Bankers Trust had over
$313 billion of assets under management, including approximately $200.6
million of assets in the Funds and the Other Funds, collectively.
The names, businesses addresses and principal occupations of the current
directors and chief executive officer of Bankers Trust are set forth below.
NAME AND ADDRESS PRINCIPAL OCCUPATION
Josef Ackermann
Deutsche Bank A.G. Chairman of the Board,
Taunusanlage 12 Chief Executive Officer and President
D-60262 Frankfurt am Main Member, Board of Managing Directors
Federal Republic of Germany Deutsche Bank A.G.
Hans Angermueller Shearman & Sterling, of counsel
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
-9-
Mr. George B. Beitzel Director, Computer Task Group, Inc.;
29 King Street Director, Phillips Petroleum Company;
Chappaqua, NY 10514-3432 Director, TIG Holdings Inc.
Mr. William R. Howell Chairman Emeritus
J.C. Penney Company, Inc. J.C. Penney Company, Inc.
P.O. Box 10001 Director, Exxon Corporation;
Dallas, TX 75301-1109 Director, Halliburton Company;
Director, National Organization on
Disability;
Director, National Retail Federation;
Director and Chairman, Southern Methodist
University Board of Trustees;
Director, Warner-Lambert Company;
Director, The Williams Companies, Inc.
Hermann-Josef Lamberti Member, Board of Managing Directors
Deutsche Bank A.G. Deutsche Bank A.G.
Taunusanlage 12
D-60262 Frankfurt am Main
Federal Republic of Germany
John A. Ross Regional Chief Executive Officer
Deutsche Bank A.G. Deutsche Bank Americas Holding Corp.
31 West 52nd Street
New York, NY 10019
Ronaldo H. Schmitz Member, Board of Managing Directors
Deutsche Bank A.G. Deutsche Bank A.G.
Taunusanlage 12
D-60262 Frankfurt am Main
Federal Republic of Germany
In addition to serving as investment adviser to the Funds, Bankers Trust
also serves as the custodian of the Fund. This service will continue to be
provided by Bankers Trust after approval of the New Management Agreements. For
the most recently completed fiscal year, the Fund paid Bankers Trust an
aggregate of $86,590 in fees for this service.
MGI. MGI is a corporation organized under the laws of the State of
Delaware and is a registered investment adviser under the Advisers Act. It is
located at 885 Third Avenue, 32nd Floor, New York, NY 10022. MGI provides a full
range of investment advisory services to institutional clients. MGI serves as
investment adviser to [___] other investment companies. MGI is a subsidiary of
Morgan Grenfell Asset Management Ltd. ("MGAM"), located at 20 Finsbury Circus,
London, England, a wholly owned subsidiary of Deutsche Morgan Grenfell Group
PLC, located at 23 Great Winchester Street, London, England, an investment
holding company, which is, in turn, a wholly owned subsidiary of Deutsche Bank.
MGAM currently manages approximately $[165] billion for a wide range of pension,
corporate, insurance, local authority, government and private clients worldwide.
(See Annex II for a list of those investment companies that MGI advises that
have investment objectives similar to those of the Fund, together with
information regarding the fees charged to those companies.)
-10-
The names, business addresses and principal occupations of the current
directors and chief executive officer of MGI are set forth below. Except as
otherwise indicated, the business address of the individuals named below is 885
Third Avenue, 32nd Floor, New York, NY 10022 and their positions at MGI
constitute their principal occupation.
NAME AND ADDRESS PRINCIPAL OCCUPATION
Richard Marin President and Director,
130 Liberty Street Morgan Grenfell Inc.
New York, NY 10006
David Westover Baldt Executive Vice President and
Director, Morgan Grenfell Inc.
Joan A. Binstock Chief Operating Officer,
Secretary, Treasurer, and
Director, Morgan Grenfell Inc.
Audrey Mary Theresa Jones Executive Vice President,
Portfolio Manager and
Director, Morgan Grenfell Inc.
Robert H. Smith Chairman and Director, Morgan
Grenfell Inc.; Chief Executive
Officer, Morgan Grenfell Asset
Management; Chairman and Chief
Executive Officer, Morgan
Grenfell Development Capital
Steven Schneider Managing Director, Deutsche
[Address] Bank A.G.
Section 15(f) of the Act
Section 15(f) of the Act provides that when a change of control of an
investment adviser to an investment company occurs, the investment adviser or
any of its affiliated persons may receive an amount or benefit in connection
therewith as long as two conditions are satisfied.
First, no "unfair burden" may be imposed on the investment company as a
result of the transaction relating to the change of control, or any express or
implied terms, conditions or understandings applicable thereto. As defined in
the Act, the term "unfair burden" includes any arrangement during the two (2)
year period after the change in control whereby the investment adviser (or
predecessor or successor adviser), or any "interested person" (as defined in the
Act) of the adviser, receives or is entitled to receive any compensation,
directly or indirectly, from the investment company or its security holders
(other than fees for bona fide investment advisory or other services), or from
any person in connection with the purchase or sale or other property to, or on
behalf of the investment company (other than fees for bona fide brokerage and
principal underwriting services). The Board has not been advised by the Advisers
of any circumstances arising from the Merger that might result in an unfair
burden being imposed on the Fund.
-11-
The second condition is that, during the three (3) year period immediately
following the Merger, at least 75% of the members of the Board must not be
"interested persons" of the Advisers within the meaning of the Act. All current
members of the Board are not, and have continued not to be since the Merger,
"interested persons" of the Advisers.
ADDITIONAL INFORMATION
On March 11, 1999, Bankers Trust announced that it had reached an
agreement with the United States Attorney's Office in the Southern District of
New York to resolve an investigation concerning inappropriate transfers of
unclaimed funds and related record-keeping problems that occurred between 1994
and early 1996. Pursuant to its agreement with the U.S. Attorney's Office,
Bankers Trust pleaded guilty to misstating entries in the bank's books and
records and agreed to pay a $60 million fine to federal authorities. Separately,
Bankers Trust agreed to pay a $3.5 million fine to the State of New York. The
events leading up to the guilty pleas did not arise out of the investment
advisory or mutual fund management activities of Bankers Trust or its
affiliates.
As a result of the plea, absent an order from Commission, Bankers Trust
would not be able to continue to provide investment advisory services to the
Fund. The Commission has granted Bankers Trust a temporary order under Section
9(c) of the Act to permit Bankers Trust and its affiliates to continue to
provide investment advisory services to registered investment companies, and
Bankers Trust, pursuant to Section 9(c) of the Act, has filed an application for
a permanent order. On May 7, 1999, the Commission extended the temporary order
under Section 9(c) of the Act until the Commission takes final action on the
application for a permanent order or, if earlier, November 8, 1999. However,
there is no assurance that the Commission will grant a permanent order. If the
Commission refuses to grant a permanent order, shareholders will receive
supplemental proxy materials requesting approval to release any amounts held in
escrow up to the time of the refusal and such other action as deemed appropriate
by the Board.
RECOMMENDATION OF THE BOARD
At a meeting of the Board held on February 25, 1999 called for the purpose
of, among other things, voting on approval of the New BT Management Agreement,
the Board, including the Independent Trustees, unanimously approved the New BT
Management Agreement. In reaching this conclusion, the Board obtained from BT
Corporation, Deutsche Bank and Bankers Trust such information as it deemed
reasonably necessary to approve Bankers Trust as investment adviser to the Funds
and considered a number of factors, including, among other things, the
continuity of the management of the Funds after the Merger; the nature, scope
and quality of services that Bankers Trust would likely provide to the Funds;
the quality of the personnel of Bankers Trust; Bankers Trust's commitment to
continue to provide these services in the future; the maintenance of the
identical advisory fee rates; and the fact that the New BT Management Agreement
contains substantially the same terms and conditions as the Prior Management
Agreement. Based on the factors discussed above and others, the Board determined
that the New BT Management Agreement is fair and reasonable and in the best
interest of the Fund and its shareholders.
At a meeting of the Board held on July 27, 1999 called for the purpose of,
among other things, voting on approval of the New MGI Management Agreement and
the New Sub-management Agreement, the Board, including the Independent Trustees,
unanimously approved the New MGI Management Agreement and the New Sub-management
Agreement. In reaching this
-12-
conclusion, the Board obtained from Deutsche Bank and MGI such information as
they deemed reasonably necessary to approve MGI as an investment adviser to the
Trust. Representatives of [Deutsche Bank and] MGI made detailed presentations
with respect to, among other factors, the organizational structure, assets under
management, asset management services, financial condition and business plan of
MGI. The Board considered the same factors described above for the New BT
Management Agreement with regard to the New MGI Management Agreement and the New
Sub-management Agreement. The Board also considered a number of other factors,
including the capacity of MGI to perform its duties under the New MGI Management
Agreement; the high degree of continuity of investment management personnel
expected to be available to the Trust because most of the personnel of Bankers
Trust who provided services under the Prior Management Agreement will be
employed by MGI; the financial standings of Deutsche Bank and MGI; the benefits
to the Fund from technological advances being instituted by Deutsche Bank on a
world-wide basis; the experience and expertise of MGI as an investment adviser,
as reflected in its amount of assets under management, and the new
organizational structure proposed to be created as a component of the Merger and
the benefits that may accrue to the shareholders as a result thereof. With
respect to the last factor, the Board considered that the proposed
organizational structure may simplify the organizational structure of Deutsche
Bank's U.S. mutual fund operations, enhance the efficiency of their
administration and promote consistency of internal controls, compliance and
regulatory oversight. Additionally, the eventual implementation of the New MGI
Management Agreement will provide the Fund with an investment adviser registered
under the Advisers Act.
The Board was apprised that the deferral in implementing the New MGI
Management Agreement is needed to permit Deutsche Bank a sufficient amount of
time to plan, prepare and institute the necessary arrangements for MGI to
consolidate Deutsche Bank's U.S. mutual fund operations. The Advisers also
emphasized to the Board that the New MGI Management Agreement and the New
Sub-management Agreement would be implemented only upon the approval of the
Independent Trustees based on information they then deemed necessary to consider
adequately these arrangements.
Based on the factors discussed above and others, the Board determined that
the New MGI Management Agreement and New Sub-management Agreement are fair and
reasonable and in the best interest of the Fund and its shareholders.
In addition, at meetings held on March 24 and June 3, 1999, the Board,
including the Independent Trustees, also was apprised of the guilty pleas
discussed above and the exemptive relief sought by Bankers Trust.
THEREFORE, AFTER CAREFUL CONSIDERATION, THE BOARD, INCLUDING THE
INDEPENDENT TRUSTEES, RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE "FOR"
THE APPROVAL OF THE NEW MANAGEMENT AGREEMENTS AS SET FORTH IN THESE PROPOSALS.
IF THE NEW BT MANAGEMENT AGREEMENT IS APPROVED BY THE SHAREHOLDERS, THE
AGREEMENT WILL CONTINUE IN EFFECT AS DESCRIBED ABOVE. IF THE NEW BT MANAGEMENT
AGREEMENT IS NOT APPROVED BY THE SHAREHOLDERS, THE ADVISORY FEES HELD IN ESCROW
WITH RESPECT TO THE NEW BT MANAGEMENT AGREEMENT WILL BE PAID OVER TO THE FUND.
IN SUCH EVENT, THE BOARD WILL CONSIDER WHAT OTHER ACTION IS APPROPRIATE BASED
UPON THE INTERESTS OF THE SHAREHOLDERS. IF THE NEW MGI MANAGEMENT AGREEMENT
AND/OR NEW SUB-MANAGEMENT AGREEMENT ARE NOT APPROVED BY THE SHAREHOLDERS, THE
NEW BT MANAGEMENT AGREEMENT, IF IT HAS BEEN APPROVED BY THE SHAREHOLDERS, WILL
CONTINUE IN EFFECT IN ACCORDANCE WITH ITS TERM WHILE THE BOARD CONSIDERS WHETHER
AND THE EXTENT TO WHICH OTHER ACTION IS APPROPRIATE BASED UPON THE INTERESTS OF
THE SHAREHOLDERS.
-13-
PROPOSAL II
ELECTION OF BOARD OF TRUSTEES OF THE TRUST
Six Trustees, constituting the entire Board of Trustees of the Trust, are
to be elected at the Special Meeting to serve until their successors have been
duly elected and qualified or until their earlier resignation or removal. The
Trustee Nominees were recently selected by the Independent Trustees of the Board
and nominated by the full Board at a meeting held on July 27, 1999. 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. Of the
six Trustee Nominees, Robert R. Coby, Desmond G. FitzGerald, James S. Pasman,
Jr. and William E. Small are currently Trustees of the Trust. No Trustee or
Trustee Nominee of the Trust serves or will serve as an officer of the Trust.
Each of the Trustee Nominees has agreed to serve if elected at the Special
Meeting. It is the intention of the persons designated as proxies in the Proxy,
unless otherwise directed therein, to vote at the Special Meeting for the
election of the Trustee Nominees named below as the entire Board of Trustees of
the Trust. If any Trustee Nominee is unable or unavailable to serve, the persons
named in the Proxies will vote the Proxies for such other person as the Board
may recommend.
The following table sets forth the names, ages, position with the Trust,
principal occupation and memberships on the board of other registered investment
companies and other publicly held companies of each Trustee Nominee:
TRUSTEE NOMINEES
Memberships on the
Board of Other
Registered Investment
Companies and Other
Position with Principal Occupations Publicly Held
Name and Age Trust During Last Five Years Companies
- ------------- -------------- ----------------------- ----------------------
Robert R. Coby+ Trustee President of Lynch & Mayer, [TO COME]
Age: 47 Inc. since December 1986;
formerly President of
Leadership Capital Inc.
(1995-96); Chief Operating
Officer of CS First Boston
Investment Management, Inc.
(1994-95); President of
Blackhawk L.P. (1993-94).
Desmond G. FitzGerald+ Trustee Chairman of North American [TO COME]
Age: 55 Properties Group since January 1987.
James S. Pasman, Jr.+ Trustee Retired. [TO COME]
Age: 68
Edward C. Schmults N/A Director, Green Point
Age: 68 Financial Corp; Chairman of
the Board of Trustees, The
Edna McConnell Clark
Foundation; Director, The
Germany Fund, Inc.;
Director, The Equity Fund,
Inc.; Director, Deutsche
Funds, Inc.; Director, Deutsche
Portfolios. [TO COME]
William E. Small+* Trustee Independent Consultant (1996-Present);
Age: 57 formerly Executive Vice President of First
Data Investor Services Group, Inc.
("Investor Services Group")
(1993-96).** [TO COME]
-14-
Werner Walbroel N/A President and Chief Executive Officer, [TO COME]
Age: 61 German American Chamber of Commerce, Inc.;
President, European American Chamber of
Commerce; Member, United States German
Youth Exchange Council; Director, TUB
Rheinland of North Amemrica, Inc.;
President and Director, German American
Partnership Program; Director, The Germany
Fund, Inc.; Director, New World Fund,
Limited and LDC; Director,
The Central European Equity
Fund, Inc.; Director, Deutsche Funds,
Inc.; Director, Deutsche Portfolios.
+ Member of the Audit Committee.
* While currently deemed non-interested, Mr. Small was deemed an "interested
person" within the meaning of Section 2(a)(19) of the Act until December 31,
1998 as a result of his employment until December 1996 by Investor Services
Group.
** Administrator of the Fund.
The Board has established an Audit Committee that meets with the Trust's
independent accountants to review the financial statements of the Trust, the
adequacy of internal controls and the accounting procedures and policies of the
Trust, and reports on these matters to the Board. The Independent Trustees of
the Board, who constitute 100% of the membership of the current Board, select
and nominate the new Trustee nominees who are not "interested persons," as
defined under the Act, of the Trust. The Board does not have a compensation
committee. During 1998, the Board held four meetings and the Audit Committee
held three meetings. No Trustee attended less than 75% of the applicable
meetings.
The following table sets forth the compensation received by the Trustee
Nominees for their services to the Trust and the Fund Complex (as defined below)
during the most recent fiscal year. In addition to the fees listed below, the
Trustees are also reimbursed for all reasonable expenses incurred during the
execution of their duties for the Trust.
--------------------------------------------------------------------
Pension or
Retirement
Benefits Estimated Total
Aggregate Accrued as Annual Compensation
Compensation Part of Benefits from the
Name of from the Trust upon Complex Paid
Trustee Trust Expenses Retirement to Trustee*
--------------------------------------------------------------------
Robert R. Coby $15,000 N/A N/A $15,000
--------------------------------------------------------------------
Desmond G.
FitzGerald $15,000 N/A N/A $15,000
--------------------------------------------------------------------
James S.
Pasman, Jr. $15,000 N/A N/A $15,000
--------------------------------------------------------------------
Edward C.
Schmultz N/A N/A N/A $45,750
--------------------------------------------------------------------
William E.
Small ---0--- N/A N/A ---0---
--------------------------------------------------------------------
Werner
Walbroel N/A N/A N/A $47,250
--------------------------------------------------------------------
* The "Fund Complex" consists of the Trust, Deutsche Funds, Inc., and
Deutsche Portfolios.
-15-
The following table sets forth the names, ages, position with the Trust
and length of service in such position, and principal occupations during the
past five years, of the officers of the Trust.
NAME AND AGE POSITION WITH TRUST AND PRINCIPAL OCCUPATIONS
Elizabeth A. Russell* Vice President and Secretary; Counsel
Age: 36 of Investor Services Group since 1994;
Assistant Vice President and Counsel,
the Boston Company Advisors, Inc. (1993-94).
Gerald J. Holland* President; Vice President of Investor
Age: 48 Services Group since 1994.
Brian J. O'Neill* Treasurer; Manager of Investor
Age: 30 Services Group's Financial Reporting
Department since 1994.
- ------------------
* Mr. Holland, Ms. Russell and Mr. O'Neill also hold similar positions
for other investment companies for which First Data Distributors, Inc., the
principal underwriter of the Fund and a subsidiary of Investor Services
Group, the administrator of the Fund, or an affiliate thereof serves as the
principal underwriter.
RECOMMENDATION OF THE BOARD
At a meeting of the Board held on July 27, 1999, the Board, based on a
recommendation of the incumbent Independent Trustees, unanimously approved the
nomination of the Trustee Nominees. In reaching this conclusion, the Board
obtained from the Trustee Nominees such information as it deemed reasonably
necessary to approve the Trustee Nominees and considered a number of factors,
including, among other things, the nature, scope and quality of services that
the Trustee Nominees would likely provide to the Trust and the desirability of
maintaining adherence to Section 15(f) of the Act. Based on the factors
discussed above and others, the Board determined that the election of the
Trustee Nominees is in the best interest of the Trust and its shareholders.
THEREFORE, AFTER CAREFUL CONSIDERATION, THE BOARD, INCLUDING THE
INDEPENDENT TRUSTEES, RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE "FOR"
THE ELECTION OF THE TRUSTEE NOMINEES AS SET FORTH IN THIS PROPOSAL.
IF THE TRUSTEE NOMINEES ARE ELECTED BY THE SHAREHOLDERS OF THE FUND AND
THE OTHER FUNDS, EACH TRUSTEE NOMINEE WILL SERVE UNTIL HIS SUCCESSOR IS DULY
ELECTED AND QUALIFIED OR UNTIL HIS EARLIER RESIGNATION OR REMOVAL. IF THE
TRUSTEE NOMINEES ARE NOT ELECTED, THE BOARD WILL CONSIDER WHAT ACTION IS
APPROPRIATE BASED UPON THE INTERESTS OF THE TRUST'S SHAREHOLDERS.
-16-
PROPOSAL III
RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT ACCOUNTANTS
FOR THE FUND
The Board, including a majority of the Independent Trustees, has approved
the selection of Ernst & Young LLP to serve as independent accountants for the
Fund for the current fiscal year. Ernst & Young LLP has served as independent
accountants of the Fund since 1997 and has advised the Trust that they have no
direct or indirect financial interest in the Fund. Representatives of Ernst &
Young LLP are not expected to be present at the Special Meeting and, therefore,
are not expected to make a statement; however, one or more representatives will
be available by telephone to respond to appropriate questions posed by
shareholders or management.
Therefore, after careful consideration, the Board, including the
Independent Trustees, recommends that the shareholders of the Fund vote "FOR"
the ratification of the independent accountants as set forth in this Proposal.
-17-
VOTE REQUIRED
Approval of each of Proposals IA, IB and IC with respect to the Fund's New
Management Agreements requires the affirmative vote of a "majority" of the
outstanding shares of the Fund. "Majority" (as defined in the Act) means (as of
the Record Date) the lesser of (a) 67% or more of the shares of the Fund present
at the special meeting, if the holders of more than 50% of the outstanding
shares of the Fund are present in person or by proxy, or (b) more than 50% of
the outstanding shares of the Fund. Because abstentions and broker non-votes are
treated as shares present but not voting, any abstentions and broker non-votes
will have the effect of votes against Proposals IA, IB and IC, which require the
approval of a specified percentage of the outstanding shares of the Fund.
Approval of Proposal II with respect to the Trustee Nominees of the Trust
requires the affirmative vote of a plurality of the votes cast in person or by
proxy at the Special Meeting for the Fund and the Other Funds voting
collectively. Because abstentions and broker non-votes are not treated as shares
voted, abstentions and broker non-votes will have no impact on Proposal II.
Approval of Proposal III with respect to the selection of the independent
accountants of the Trust requires the affirmative vote of a majority of the
votes cast in person or by proxy at the Special Meeting for the Fund and the
other Funds, taken together. Because abstentions and broker non-votes are not
treated as shares voted, abstentions and broker non-votes will have no impact on
Proposal III.
- --------------------------------------------------------------------------------
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, RECOMMENDS THAT THE
SHAREHOLDERS VOTE "FOR" APPROVAL OF PROPOSALS IA, IB, IC, II AND III.
ANY UNMARKED PROXIES WILL BE SO VOTED.
- --------------------------------------------------------------------------------
The Board is not aware of any other matters that will come before the
Special Meeting. Should any other matter properly come before the Special
Meeting, it is the intention of the persons named in the accompanying Proxy to
vote the Proxy in accordance with their judgment on such matters.
SUBMISSION OF SHAREHOLDER PROPOSALS
The Fund does not hold regular shareholders' meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a subsequent
shareholders' meeting should send their written proposals to the Secretary of
the Trust at the address set forth on the cover of this Proxy Statement.
Proposals must be received at a reasonable time prior to the date of a
meeting of shareholders to be considered for inclusion in the materials for the
Fund's meeting. Timely submission of a proposal does not, however, necessarily
mean that such proposal will be included.
SHAREHOLDERS' REQUEST FOR SPECIAL MEETING
Shareholders holding at least 10% of the Fund's outstanding voting
securities (as defined in the Act) may require the calling of a meeting of
shareholders for the purpose of voting on the removal of any Trustee of the
Fund. Meetings of shareholders for any other purpose also shall be called by the
Board when requested in writing by shareholders holding at least 10% of the
shares then outstanding.
-18-
IF YOU HAVE ANY QUESTIONS CONCERNING THIS PROXY STATEMENT OR THE
PROCEDURES TO BE FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT
SHAREHOLDER COMMUNICATIONS CORPORATION AT 1-800-645-1685.
- --------------------------------------------------------------------------------
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE special MEETING AND WHO
WISH TO HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, UNLESS
THE SHAREHOLDER IS VOTING BY TELEPHONE OR THROUGH THE INTERNET.
- --------------------------------------------------------------------------------
By Order of the Board of Trustees,
Elizabeth A. Russell, Secretary
[August 23], 1999
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES OF THE TRUST HOPES THAT SHAREHOLDERS WILL ATTEND
THE SPECIAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED
TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE, UNLESS YOU ARE VOTING BY TELEPHONE
OR THROUGH THE INTERNET.
- --------------------------------------------------------------------------------
-19-
ANNEX I
SMALL CAP INDEX FUND:
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES BENEFICIALLY PERCENT OWNERSHIP
OWNED OF OUTSTANDING SHARES
(i) 5% SHAREHOLDERS
Connecticut General Life Insurance Company 1,349,170 39.20
Separate Account FE
900 Cottage Grove Road
Hartford, CT 06152
Travelers Insurance Company 663,206 19.27
One Tower Square
Hartford, CT 06183
Integrity Life Insurance Company
515 West Market Street 430,997 12.52
8th Floor
Louisville, KY 40202
USAA Life Insurance Company 390,028 11.33
9800 Fredericksburg
San Antonio, TX 78288
National Integrity Life Insurance Company 374,248 10.88
515 West Market Street
8th Floor
Louisville, KY 40202
(ii) TRUSTEES AND TRUSTEE NOMINEES *
Robert R. Coby *
Desmond G. Fitzgerald *
James S. Pasman, Jr. *
Edward C. Schmults *
William E. Small *
Werner Walbroel *
(iii) EXECUTIVE OFFICERS *
Elizabeth A. Russell *
Gerald J. Holland *
Brian J. O'Neill *
(iv) TRUSTEES AND EXECUTIVE OFFICERS
AS A GROUP *
EAFE(R) EQUITY INDEX FUND
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES BENEFICIALLY PERCENT OWNERSHIP
OWNED OF OUTSTANDING SHARES
(i) 5% SHAREHOLDER
Connecticut General Life Insurance 1,988,363 61.17
Company
Separate Account FE
900 Cottage Grove Road
Hartford, CT 06152
Connecticut General Life Insurance Company 640,141 19.69
Separate Account PG
280 Trumbull Street
Hartford, CT 06104
Integrity Life Insurance Company 228,151 7.02
515 West Market Street
8th Floor
Louisville, KY 40202
(ii) TRUSTEES AND TRUSTEE NOMINEES *
Robert R. Coby *
Desmond G. Fitzgerald *
James S. Pasman, Jr. *
Edward C. Schmults *
William E. Small *
Werner Walbroel *
(iii) EXECUTIVE OFFICERS *
Elizabeth A. Russell *
Gerald J. Holland *
Brian J. O'Neill *
(iv) TRUSTEES AND EXECUTIVE OFFICERS
AS A GROUP *
EQUITY 500 INDEX FUND:
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES BENEFICIALLY PERCENT OWNERSHIP
OWNED OF OUTSTANDING SHARES
(i) 5% SHAREHOLDERS
Integrity Life Insurance Company 2,485,300 24.87
515 West Market Street
8th Floor
Louisville, KY 40202
-2-
USAA Life Insurance Company 1,784,090 17.85
9800 Fredericksburg
San Antonio, TX 78288
Lincoln National Life Insurance Company 1,658,967 16.60
Lincoln Life Variable Annuity Account
1300 South Clinton Street
Fort Wayne, IN 46801
Lincoln National Life Insurance Company 1,448,640 14.49
Lincoln Life Separate Account
1300 South Clinton Street
Fort Wayne, IN 46801
National Integrity Life Insurance Company 997,632 9.98
515 West Market Street
8th Floor
Louisville, KY 40202
Lincoln National Life Insurance Company 569,212 5.70
Lincoln Life Flexible Premium
Variable Life Account
1300 South Clinton Street
Fort Wayne, IN 46801
(ii) TRUSTEES AND TRUSTEE NOMINEES *
Robert R. Coby *
Desmond G. Fitzgerald *
James S. Pasman, Jr. *
Edward C. Schmults *
William E. Small *
Werner Walbroel *
(iii) EXECUTIVE OFFICERS *
Elizabeth A. Russell *
Gerald J. Holland *
Brian J. O'Neill *
(iv) TRUSTEES AND EXECUTIVE OFFICERS
AS A GROUP *
* The Trustees, the Trustee Nominees, the executive officers of the Trust, and
the Trustees and executive officers as a group own less than 1% of the Fund's
outstanding shares.
Annex II
Bankers Trust Company Proprietary Funds
- -----------------------------------------------------------------------------------------
Advisory Fees
Net Assets Under
Fund Management 5-31-99 Payable to BT
- -----------------------------------------------------------------------------------------
S&P Index Funds
Equity Index Portfolio (a) (b) $6,607,007,085.88 0.075%
Includes the following feeder funds:
BT Inst'l: Equity 500 Index Fund (c)
$2,391,761,781.53
BT Pyramid Investment Equity 500 Index (d) $929,474,411.08
USAA S&P 500 Index (e) $2,713,859,248.97
Amer AADV: S&P 500 - AMR Class (f) $322,610,586.01
Amer AADV: S&P 500 - Mileage Fund (f) $3,632,960.16
Scudder S&P 500 Index (g) $244,805,518.35
BT Insur: Equity 500 Index (Variable Annuity)(a)(h) $111,273,342.87 0.20%
- -----------------------------------------------------------------------------------------
Bankers Trust Company Third Party Sub-Advised Funds
- --------------------------------------------------------------------------------------------------------
Assets Under
Fund Management 5-31-99 Fee Schedule
- --------------------------------------------------------------------------------------------------------
VALIC - American General Series A monthly fee computed at the annual rate
Portfolio: of 0.02% on the first $2 billion and 0.01%
Stock Index Fund (a) $4,624,973,419.19 on assets over $2 billion. The Investment
Sub-Advisory Agreements require that
each Sub-Adviser promptly reduce its
monthly fee by the amount of any
commission, tender and exchange offer
solicitation fees, other fees or similar
payments received by the Sub-Adviser, or
any affiliated person of the Sub-Adviser, in
connection with Sub-Advised Fund portfolio
transactions.
- ----------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Assets Under
Fund Management 5-31-99 Fee Schedule
- -------------------------------------------------------------------------------------------------------
VALIC - American General Series Portfolio VALIC shall pay to Bankers Trust, a
Company 2 (Class A Shares, Class B Shares): monthly fee computed at the annual rate of
0.02% of the first $2 billion and 0.01% of
Stock Index Fund (a) average daily net asset values on the
$12,489,608.16 excess over $2 billion.
EQ Advisors Trust:
BT Equity 500 Index Fund (a) $392,561,486.32 0.05% of the Portfolio's average daily net
assets
- -----------------------------------------------------------------------------------------------------------------------
Pacific Mutual: A fee is paid at the beginning of each
calendar quarter, based on an annual
Equity Index Portfolio (a) $1,808,280,989.82 percentage of the combined daily net
assets of the Equity Index Portfolio,
according to the following schedule, subject
to a minimum annual fee of $100,000:
0.08% on first 100 million; 0.04% on next
$100 million; 0.02% on excess.
- ------------------------------------------------------------------------------------------------------------------------
Scudder Kemper Investments Inc.: The fee paid to the Sub-Adviser is
calculated on a quarterly basis and
AARP U.S. Stock Index Fund (a) $464,922,428.55 depends on the level of total assets in the
AARP U.S. Stock Index Fund. The fee rate
decreases as the level of total assets for
the Fund increases. The fee rate for each
level of assets is: 0.07% of the first $100
million of average daily net assets, 0.03%
of such assets in excess of $100 million,
and 0.01% of such assets in excess of $200
million with a minimum annual fee of $75,000.
- -------------------------------------------------------------------------------------------------------------------------
[More To Come]
-2-
SunAmerica Asset Management Corporation:
Large-Cap Growth Portfolio (a) (b) $5,142,375.93 0.10% - first $500 million
0.03% - over $500 million
- -----------------------------------------------------------------------------------------
(a) Information pertaining to advisory fees is shown before expense waivers
and/or reimbursements, if any, are applied.
(b) Master portfolio not available for direct retail purchase.
(c) Feeder fund available to institutional investors through BT.
(d) Feeder fund available to retail investors through BT.
(e) Feeder fund available to customers of United States Automobile Association
and retail public.
(f) Feeder fund available to customers of American Airlines.
(g) Feeder fund available to customers of Scudder, Stevens & Clark:
commenced operations on August 29, 1997.
(h) Available only through variable annuity products: the EAFE Equity Index
Fund and Small Cap Index Fund of the BT Insurance Funds Trust commenced
operations on August 22, 1997.
[More To Come]
-3-
II. MORGAN GRENFELL INC.
[TO COME]
INVESTMENT MANAGEMENT AND SUB-MANAGEMENT AGREEMENT
__________, 1999
[________________]
[Address]
Dear Sirs:
BT Insurance Funds Trust, a business trust organized under the laws of the
Commonwealth of Massachusetts (the "Trust"), hereby confirms its agreement with
______________ (the "Manager") [and (the "Sub-manager")] regarding investment
management services to be provided by the [Manager/Submanager] to the Small Cap
Index Fund, EAFE(R) Equity Index Fund and Equity 500 Index Fund (each, a "Fund"
and collectively, the "Funds").
Investment Description; Appointment
The Trust anticipates that each Fund will employ its capital by
investing and reinvesting in investments of the kind and in accordance with the
investment objective, policies and limitations specified in its Declaration of
Trust, dated January 19, 1996, as amended from time to time (the "Declaration of
Trust"), its By-laws, as amended from time to time, in the Funds' prospectuses
(the "Prospectus") and the statement of additional information (the "Statement")
filed with the Securities and Exchange Commission under the Investment Company
Act of 1940, as amended (the "1940 Act"), and the Securities Act of 1933, as
amended, as part of the Trust's Registration Statement on Form N-1A, as amended
from time to time, and in the manner and to the extent as may from time to time
be approved in the manner set forth in the Declaration of Trust. Copies of the
Funds' Prospectuses, Statement, Declaration of Trust and By-laws have been or
will be submitted to [the Manager/Sub-manager]. [Each Fund [and the Manager]]
desires to employ and hereby appoints [the Manager/Sub-manager] to act as their
investment [adviser/subadviser], to oversee the administration of all aspects of
the Funds' business and affairs and to supervise the performance of professional
services provided by others, including the administrator, transfer agent,
custodian and distributor to the Funds.
[Subject to the provisions of this Agreement, the duties of the
Investment Submanager, the portion of portfolio assets that the Submanager shall
manage, and the fees to be paid the Investment Submanager by the Investment
Manager under and pursuant to this Agreement may be adjusted from time to time
by the Investment Manager with and upon the
approval of the Board and the members of the Trust's Board of Trustees who are
not "interested persons," as defined in the Act.](2)
Services
Subject to the overall supervision and direction of the Board of
Trustees of the Trust, [the Manager/Sub-manager] shall have general
responsibility for the investment and management of the Funds' assets, subject
to and in accordance with each Fund's investment objective, policies and
restrictions as stated in the Prospectus and Statement, as from time to time in
effect, and the Declaration of Trust and By-laws, the 1940 Act and the
Investment Advisors Act of 1940, as the same may from time to time be amended.
In discharging its responsibility, [the Manager/Sub-manager] shall seek to
replicate as closely as possible the performance of the Russell 2000 Small Stock
Index with respect to the Small Cap Index Fund, EAFE(R) Index with respect to
EAFE(R) Equity Index Fund and Standard & Poor's 500 Composite Stock Price Index
with respect to the Equity 500 Index Fund, before the deduction of Fund expenses
and shall determine and monitor the investments of the Funds' investment
portfolios accordingly.
Information Provided to the Trust
[The Manager/Sub-manager] will keep the Funds informed of
developments materially affecting the Funds' portfolios and, in addition to
providing the [Trust/Manager] with whatever statistical or other information the
[Trust/Manager] may reasonably request with respect to its investments, [the
Manager/Sub-manager] will, on its own initiative, furnish the [Trust/Manager]
from time to time with whatever information [the Manager/Sub-manager] believes
is appropriate for this purpose.
Standard of Care
[The Manager/Sub-manager] shall exercise its best judgment in
rendering the services listed in paragraph 2 above. [The Manager/Sub-manager]
shall not be liable for any error of judgment or mistake of law or for any loss
suffered by the Trust in connection with the matters to which this Agreement
relates, provided that nothing in this Agreement shall be deemed to protect or
purport to protect [the Manager/Sub-manager] against any liability to the Trust
or to holders of the Funds' shares ("Shareholders") to which [the
Manager/Sub-manager] would 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 [the Manager/Sub-manager]'s reckless disregard of its
obligations and duties under this Agreement.
Indemnification/Liability
The [Trust/Manager] shall indemnify and hold [the
Manager/Sub-manager] harmless from and against any and all claims, costs,
expenses (including reasonable attorneys' fees), losses, damages, charges,
payments and liabilities of any sort or kind which may be
(2) Provision contained in the form of Investment Sub-management Agreement only.
-2-
asserted against [the Manager/Sub-manager] or for which [the
Manager/Sub-manager] may be held to be liable in connection with this Agreement
or [the Manager/Sub-manager]'s performance hereunder (a "Claim"), unless such
Claim resulted from a grossly negligent act or omission to act or bad faith by
[the Manager/Sub-manager] in the performance of its duties hereunder.
In any case in which the [Trust/Manager] may be asked to indemnify
or hold [the Manager/Sub-manager] harmless, [the Manager/Sub-manager] will
notify the [Trust/Manager] promptly after identifying any situation which it
believes presents or appears likely to present a claim for indemnification
against the [Trust/Manager], although the failure to do so shall not prevent
recovery by [the Manager/Sub-manager], and shall keep the [Trust/Manager]
advised with respect to all developments concerning such situation. The
[Trust/Manager] shall have the option to defend [the Manager/Sub-manager]
against any Claim which may be the subject of this indemnification, and, in the
event that the [Trust/Manager] so elects, such defense shall be conducted by
counsel chosen by the [Trust/Manager] and satisfactory to [the
Manager/Sub-manager], and thereupon the [Trust/Manager] shall take over complete
defense of the Claim and [the Manager/Sub-manager] shall sustain no further
legal or other expenses in respect of such Claim. [The Manager/Sub-manager] will
not confess any Claim or make any compromise in any case in which the
[Trust/Manager] will be asked to provide indemnification, except with the
[Trust/Manager]'s prior written consent. The obligations of the parties hereto
under this Section 5 shall survive the termination of this Agreement.
A copy of the Declaration of Trust of the Funds is on file with the
Secretary of the Commonwealth of Massachusetts, and notice is hereby given that
this instrument is executed on behalf of the Trustees of the Funds as Trustees
and not individually and that the obligations of this instrument are not binding
upon any of the Trustees or Shareholders individually but are binding only upon
the assets and property of the Funds.
Compensation
In consideration of the services rendered pursuant to this
Agreement, [each Fund/the Manager] will pay [the Manager/Sub-manager] a fee at
the annual rate of ** based on the Funds' average daily net assets. These fees
shall be computed daily and shall be payable on the first business day of each
month for services performed the preceding month. Upon any termination of this
Agreement before the end of a month, the fee for such part of that month shall
be prorated according to the proportion that such period bears to the full
monthly period and shall be payable upon the date of termination of this
Agreement. For the purpose of determining fees payable to [the
Manager/Sub-manager], the value of the Funds' net assets
** Small Cap Index Fund 0.35%
EAFE(R) Equity Index Fund 0.45%
Equity 500 Index Fund 0.20%
-3-
shall be computed at the times and in the manner specified in the Funds'
Prospectuses and/or the Statement."
Expenses
[The Manager/Sub-manager] will bear all expenses in connection with
the performance of its services under this Agreement. The Trust will bear
certain other expenses to be incurred in its operation, including: (a) payment
of the fees payable to [the Manager/Sub-manager] under paragraph 6 hereof; (b)
organization expenses; (c) brokerage fees and commissions; (d) taxes; (e)
interest charges on borrowings; (f) the costs of liability insurance or fidelity
bond coverage for the Trust's officers and employees, and directors' and
officers' errors and omissions insurance coverage; (g) legal, auditing and
accounting fees and expenses; (h) charges of the Trust's Custodian and Transfer
and Dividend Disbursing Agent; (i) the Trust's pro rata portion of dues, fees
and charges of any trade association of which the Trust is a member; (j) the
expenses of printing, preparing, distributing and mailing proxies, stock
certificates and all reports required by the Securities and Exchange Commission
and State securities administrations, including the Funds' prospectuses,
Statements, and notices to shareholders; (k) filing fees for the registration or
qualification of the Funds and their shares under federal or state securities
laws; (l) the fees and expenses involved in registering and maintaining
registration of the Funds' shares with the Securities and Exchange Commission
and State securities administrations; (m) the expenses of holding shareholder
meetings; (n) the compensation, including fees, of any of the Trust's
unaffiliated directors, officers or employees; (o) all expenses of computing the
Funds' net asset value per share, including any equipment or services obtained
solely for the purpose of pricing shares or valuing the Funds' investment
portfolios; (p) expenses of personnel performing shareholder servicing
functions; and (q) litigation and other extraordinary or non-recurring expenses
and other expenses properly payable by the Trust or the Funds.
Service to Other Companies or Accounts
The [Trust/Manager] understands that [the Manager/Sub-manager] and
its affiliates may act as investment manager to fiduciary and other managed
accounts and to one or more other investment companies, and the [Trust/Manager]
has no objection to their so acting, provided that whenever the Trust and one or
more other clients advised by [the Manager/Sub-manager] and its affiliates have
available funds for investment, investments suitable and appropriate for each
will be allocated in a manner believed by [the Manager/Sub-manager] to be
equitable to each client. The [Trust/Manager] recognizes that in some cases this
procedure may adversely affect whether a particular security is available to the
Trust, the size of the position obtainable for the Trust or the price at which
that position may be obtained or disposed. In addition, the [Trust/Manager]
understands that the persons employed by [the Manager/Sub-manager] to assist in
the performance of [the Manager/Sub-manager]'s duties under this Agreement will
not devote their full time to such service and nothing contained in this
Agreement shall be deemed to limit or restrict the right of [the
Manager/Sub-manager] or any affiliate of [the Manager/Sub-manager] to engage in
and devote time and attention to other businesses or to render services of any
kind or nature.
-4-
Term of Agreement
This Agreement shall become effective on the date hereof, shall
continue in effect for two years and thereafter shall continue for successive
annual periods, provided such continuance is specifically approved at least
annually by (i) the Trust's Trustees or (ii) a vote of a "majority" (as defined
in the 1940 Act) of each Fund's outstanding voting securities (as defined in the
1940 Act), provided that in either event the continuance is also approved by a
majority of the Trustees who are not "interested persons" (as defined in the
1940 Act) of any party to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. This Agreement is terminable
with respect to each Fund, without penalty, on 60 days' written notice, by the
Trust's Trustees or by vote of holders of a majority of each Fund's outstanding
voting securities, or upon 60 days' written notice, by [the
Manager/Sub-manager]. This Agreement will also terminate automatically in the
event of its assignment (as defined in the 1940 Act).
Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York giving effect to the conflict of law rules
thereof.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Agreement by signing and returning the enclosed
copy of this Agreement.
Very truly yours,
-5-
[SIGNATORY]
AGREED TO AND ACCEPTED:
[SIGNATORIES]
By: _________________________
-6-
FORM OF PROXY CARD
FORM OF PROXY CARD
[BANKERS TRUST LOGO] BT Insurance Funds Trust
[BT ALEX.BROWN] Small Cap Index Fund
MUTUAL FUND SERVICES -- LEGAL DEPARTMENT
MS 1-18-8 101 Federal Street
Boston, Massachusetts 02110
One South Street PROXY FOR THE SPECIAL MEETING OF STOCKHOLDERS
Baltimore, Maryland 21202-3220 2:00 p.m., Eastern time, on September 30, 1999
The undersigned hereby appoints Elizabeth A.
Russell and Daniel O. Hirsch and each of them,
with 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 IA, IB, IC, II and
III. All ABSTAIN v otes will be counted in
determining the existence of a quorum at the
Special Meeting and, for Proposals IA, IB and IC,
as votes AGAINST the applicable Proposal.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES WITH RESPECT TO YOUR FUND.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR
PROPOSALS IA, IB, IC, II AND III.
UNLESS VOTING BY TELEPHONE OR INTERNET, PLEASE
SIGN AND DATE BELOW AND MAIL THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903.
3) Enter the 12-digit control number set
forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website WWW.PROXYVOTE.COM.
3) Enter the 12-digit control number set
forth on the Proxy card and follow the
simple instructions.
DO NOT RETURN YOUR PROXY CARD IF YOU VOTE BY
PHONE OR INTERNET.
TO VOTE, MARK BLOCKS IN BLUE OR BLACK INK AS
FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS.
DETACH AND RETURN THIS PORTION ONLY.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
SMALL CAP INDEX FUND
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND MAIL THIS PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(Joint owners should EACH sign. Please sign EXACTLY as your name(s) appears on
this card. When signing as attorney, trustee, executor, administrator, guardian
or corporate officer, please give your FULL title below.)
Vote on Trustees
II. Election of Messrs. (01) Coby, For All Withhold All For All Except: To withhold authority
(02) FitzGerald, (03) Pasman, (04) |_| |_| |_| to vote, mark "For All
Schmults, (05) Small and (06) Walbroel Except" and write the
as Trustees of the Board. nominee's number on the
line below.
__________________
Vote on Proposals
IA. Approval of New Investment III. Ratification of the
Management Agreement with selection of Ernst &
Bankers Trust Company FOR |_| AGAINST |_| ABSTAIN |_| Young LLP as the
independent accountants
of the Fund. FOR [] AGAINST [] ABSTAIN []
IB. Approval of New Investment
Management Agreement with The appointed proxies will vote on any
Morgan Grenfell Inc. FOR |_| AGAINST |_| ABSTAIN |_| other business as may properly come before
the Special Meeting
IC. Approval of New Receipt of the Notice and the Proxy
Investment Sub- Statement, dated [August 23], 1999 (the
management Agreement "Proxy Statement"), is hereby acknowledged.
with Bankers Trust
Company FOR |_| AGAINST |_| ABSTAIN |_|
- -------------------------------------------- ----------------------------------
- -------------------------------------------- ----------------------------------
Signature (Please sign within box) Date Signature (Joint Owners) Date
-2-
[August 23], 1999
IMPORTANT NEWS
FOR SHAREHOLDERS OF BT INSURANCE FUNDS TRUST
Here is a brief overview of some matters affecting your Fund which
require a shareholder vote. We encourage you to read the full text of the
enclosed Proxy Statement, and to vote your shares.
Q. What has happened to require a shareholder vote?
A. On June 4, 1999, Bankers Trust became a subsidiary of Deutsche Bank AG.
Deutsche Bank, a banking company organized under the laws of the Federal
Republic of Germany, provides a comprehensive range of global banking and
financial services.
Deutsche Bank now ranks as the fourth largest investment manager in the
world with $670-billion in assets in a full range of active and index
strategies. Deutsche Asset Management handles the investment management
activities of Deutsche Bank in the Americas, United Kingdom and Asia and
will manage $256 billion in assets globally.
To ensure that Bankers Trust may continue to serve as investment adviser
of the BT Mutual Funds, we are seeking shareholder approval of new
advisory agreements.
THE BOARD MEMBERS OF YOUR FUND RECOMMEND THAT YOU VOTE FOR THESE
PROPOSALS.
Q. Why am I being asked to vote on the new advisory agreements?
A. The Investment Company Act, which regulates investment companies in the
United States such as your BT Mutual Fund, requires a shareholder vote to
approve a new advisory agreement following certain types of business
combinations. Each of the new advisory agreements became effective
immediately upon consummation of the merger and will continue in effect
only upon shareholder approval.
Q. How does the merger affect my BT Mutual Fund?
A. Your BT Mutual Fund and its respective investment objectives have not
changed as a result of the merger. You still own the same shares in
the same Fund as you did prior to the merger. Each of the new advisory
agreements contains substantially the same terms and conditions as the
agreement in effect prior to the merger, except for the dates of
execution and termination. If shareholders do not approve the new
advisory agreements, the agreements will no longer continue and the
governing Boards of your Fund will take such action as they deem to be
in the best interests of the Fund, and their respective shareholders.
Q. Have the investment advisory fees remained the same?
A. Yes.
Q. What are the benefits of the merger?
A. There are several potential positive aspects of the merger you may be
interested in. Most notably, the combined institution will be one of
the largest financial institutions in the world, as well as a leader in
a number of important categories, including asset management. The
financial strength of the combined institution coupled with the
increased breadth and depth of its resources and capabilities are
advantages the acquisition brings. Further, as a truly global
institution, the combined entity will be in a unique position to
provide coverage, services and products.
Q. How do the Board of Trustees of my BT Mutual Fund recommend that I vote?
A. After careful consideration, the Boards of Trustees of your BT Mutual Fund
recommend that you vote in favor of all the proposals on the enclosed
proxy card(s).
Q. Whom do I call for more information?
A. If you need more information, please call Shareholder Communications
Corporation, your Fund's information agent, at 1-800-645-1685.
Q. How can I vote my shares?
A. You may choose from one of the following options to vote your shares:
o By mail, with the enclosed proxy card(s) and return envelope.
o By telephone, with a toll-free call to the telephone number that
appears on your proxy card.
o Through the Internet, by using the Internet address located on your
proxy card and following the instructions on the site.
o In person at the shareholder meeting (see details enclosed in proxy
statement).
Q. Will my BT Mutual Fund pay for the proxy solicitation and legal costs
associated with this transaction?
A. No, Bankers Trust will bear these costs.
Q. What happens if I own shares in more than one BT Mutual Fund?
A. If you have more than one BT Mutual Fund in your name at the same address,
you will receive separate proxy cards for each Fund but only one proxy
statement for the account.
-2-
PLEASE VOTE ALL ISSUES ON EACH PROXY CARD THAT YOU RECEIVE. THANK YOU FOR
MAILING YOUR PROXY CARD(S) PROMPTLY.
-3-
[August 23], 1999
Dear Shareholder:
On June 4, 1999, Bankers Trust merged with Deutsche Bank AG. As a result of the
merger, we are asking shareholders of BT Mutual Funds to approve new advisory
agreements. Enclosed is further information relating to these changes, including
a Questions & Answers section and proxy card(s).
Important information about the changes:
o The merger has no effect on the number of shares you own or the value
of those shares.
o The advisory fees payable under the new advisory agreements
have not increased.
o The investment objective and policies of your mutual fund
investment have not changed.
In addition to the change in advisory agreements, shareholders are also being
asked to approve other changes outlined in the enclosed Proxy Statement. The
Board of Trustees of your BT Mutual Fund believes that the proposals are
important and recommends that you read the enclosed materials carefully and then
vote for all proposals.
What you need to do:
o Read all enclosed materials including the Questions & Answers section.
o Choose one of the following options to vote:
1. By Mail: Complete the enclosed proxy card and return in postage-
paid envelope provided.
2. By Telephone: Call the Toll-Free # on your proxy card by
(DD/MM/YY).
3. By Internet: Logon to WWW.PROXYVOTE.COM by (DD/MM/YY)
4. Attend Shareholder Meeting (details enclosed)
Please note: if you own shares of more than one Fund, you will receive more than
one proxy card. Please sign and return each proxy card you receive.
Sincerely,
[INSERT MR. HIRSCH'S SIGNATURE]
Daniel O. Hirsch
Assistant Secretary
BT Insurance Funds Trust