File No. 811-4760
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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[_] Preliminary Proxy Statement
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[_] Definitive Proxy Statement
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[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BT INVESTMENT FUNDS
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4) Date Filed: ______________________________________________________
The SMALLCap Fund, Inc.
One South Street
Baltimore, Maryland 21202
Dear Fellow Stockholder: May 20, 2002
We are writing to urge you to vote the enclosed WHITE proxy card FOR the
reorganization proposal and FOR the re-election of Joseph Incandela and Robert
Greeley. Please call us toll free at (866) 219-9663 if you need more
information.
Your vote is critical no matter how many shares you own! Ralph Bradshaw's
brother-in-law, Ron Olin, controls approximately 31% of the outstanding shares
of your Fund. Messrs. Bradshaw and Olin are counting on the fact that you and
other stockholders who hold a smaller number of shares will not take the time to
vote your shares. They hope that you will not figure out why Mr. Bradshaw wants
control of your Fund. Together, you and the other small stockholders must show
Messrs. Bradshaw and Olin that you understand what they are trying to do to your
Fund and how success for them would hurt your investment.
We strongly believe that Mr. Bradshaw wants to control your Fund so that he can
appoint his advisory firm, Cornerstone Advisors, Inc., to serve as your Fund's
investment adviser. Why is it so important that you vote to stop Ralph Bradshaw?
Because we strongly believe that if Mr. Bradshaw is able to take control of your
Fund, you will be saddled with:
... Poorer performance: Based upon his track record, Mr. Bradshaw would change
the Fund from a small cap fund to a general equity fund and appoint
Cornerstone as its adviser. Since Cornerstone took over as adviser to the
four funds, the performance of those funds has trailed the performance of
your Fund by significant margins. Cornerstone has no experience managing a
small cap equity fund. See the bar chart below.
... Higher expenses ratios. The total expense ratios of each of the four
Cornerstone advised funds as of the end of the most recent calendar year
are significantly higher than your Fund's total expense ratio. See the
opposite page for more information.
... Larger discount to net asset value at which fund shares trade: The average
discount of each of the four Cornerstone advised funds year-to-date has
been two and three times larger than your Fund's average discount over the
same periods. See the opposite page.
SMALLCap Fund for the same periods has been significantly better at a lower
expense ratio and lower discount.
Performance Bar Chart
Performance of Cornerstone advised funds and your Fund for the same time
periods.
Cornerstone Cornerstone
Strategic Strategic Progressive
Return Fund Value Fund Return Fund EIS Fund
(from 3/31/01) (from 3/31/01) (from 4/30/01) (from 12/31/01)
- -7.62% 1.34% -8.49% 1.34% -13.93% -7.79% -5.14% -0.58%
... Cumulative for Cornerstone Funds (from end of the month in which
Cornerstone began managing the fund as shown in parentheses through
4/30/02)
... Cumulative for The SmallCap Fund, Inc. (from dates shown in parentheses
through 4/30/02)
Comparison of expense ratios and discounts of the Cornerstone advised funds to
your Fund.
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Name Date Cornerstone Expense ratio as of Average discount from net asset
began managing the 12/31/01 value at which Funds traded
Fund (year-to-date)
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Net Gross
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Cornerstone Strategic 3/31/01 1.77% 2.11% -15.03%
Return Fund
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Cornerstone Strategic 3/31/01 1.67% 1.97% -13.50%
Value Fund
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Progressive Return Fund 4/19/01 1.63% 1.73% -9.75%
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EIS Fund 12/27/01 3.01% 3.01% -10.46%
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As compared to The SMALLCap Fund managed by Deutsche Asset Management, Inc.
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The SMALLCap Fund n/a 1.34% 1.34% -4.93%
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In addition, the expense ratio of the M Class of shares of the Deutsche Small
Cap Fund into which the Fund would reorganize (the "Open-End Fund") has an even
lower total expense ratio than the Fund. The expense ratio for the M Class is
estimated to be 1.14%, which is lower than your Fund's expense ratio and
significantly lower than the expense ratios of the Cornerstone advised funds.
There are no waivers or expense caps which Deutsche Asset Management, Inc. would
need to impose to keep the ratio at 1.14%. Also, the reorganization would
eliminate the discount to net asset value at which Fund shares trade.
For these reasons, we urge you to vote the WHITE proxy card FOR the
reorganization and FOR the re-election of Messrs. Incandela and Greeley. Do not
return any green proxy cards you may receive from Mr. Bradshaw as that would
mean that you are voting with him which, we strongly believe, would not be in
your best interest. If you have voted on the green proxy card because you did
not have enough information at the time, you can reverse that vote by signing,
dating and returning the WHITE proxy card.
Your vote is important no matter how many shares you own!
Sincerely,
Joseph J. Incandela
Chairman
Instructions for Voting Your Proxy
The SMALLCap Fund, Inc. offers shareholders three convenient ways of voting
their proxies:
[_] By Telephone (using a touch-tone telephone)
[_] Through the Internet (using a browser) [_] By Mail (traditional method)
Your telephone, fax or Internet vote authorizes the named Proxies to vote your
shares in the same manner as if you had mailed your proxy card. We encourage you
to use these cost effective and convenient ways of voting, 24 hours a day, 7
days a week.
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TELEPHONE VOTING Available only until 5:00 p.m. Eastern Daylight Time June
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4, 2002.
... On a touch-tone telephone, call TOLL FREE 1-800-732-6167, 24 hours a day, 7
days a week
... You will be asked to enter ONLY the Control Number shown below
... Have your proxy card ready, then follow the prerecorded instructions
... Your vote will be confirmed and cast as you directed
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INTERNET VOTING Available only until 5:00 p.m. Eastern Daylight Time June
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4, 2002.
... Visit the Internet voting Website at http://proxy.georgeson.com
... Enter the COMPANY NUMBER AND CONTROL NUMBER shown below and follow the
instructions on your screen
... You will incur only your usual Internet charges
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VOTING BY MAIL
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... Simply sign and date your proxy card and return it in the postage-paid
envelope
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CONTROL NUMBER COMPANY NUMBER
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TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS WITH RESPECT TO THE
SMALLCAP FUND, INC. THE BOARD OF DIRECTORS RECOMMENDS A VOTE `FOR' PROPOSALS 1
AND 2.
Please mark boxes in blue or black ink.
(1) To approve the reorganization of The SMALLCap Fund, Inc. (the "Fund")
into the Deutsche Small Cap Fund, an open-end investment company (the
"Small Cap Fund"), pursuant to an Agreement and Plan of Reorganization
between the Fund and BT Investment Funds on behalf of Small Cap Fund
and as described in the Proxy Statement. Under this Agreement, the Fund
would transfer all of its assets to Small Cap Fund, an open-end
investment company, in exchange for M Class shares of Small Cap Fund.
These shares would be distributed proportionately to you and the other
stockholders of the Fund. Small Cap Fund would also assume the Fund's
stated liabilities, and the Fund would then be liquidated and
dissolved;
FOR [_] AGAINST [_] ABSTAIN [_]
(2) To elect as directors of the Fund: Joseph J. Incandela and Robert E.
Greeley, for a term of three years and until their successors are duly
elected and qualify;
FOR [_] WITHHOLD [_]
INSTRUCTION: To withhold authority for any individual nominee, strike a
line through the nominee's name above.
(3) To vote and otherwise represent the undersigned on any other matter
that may properly come before the meeting or any adjournment or
postponement thereof in the discretion of the Proxy holder.
PLEASE SIGN AND DATE BELOW AND MAIL THIS PROXY CARD PROMPLY USING THE ENCLOSED
ENVELOPE.
________________________________________________________
(Title or Authority)
__________________________________________
(Signature)
__________________________________________
(Signature)
Dated: _______________________, 2002
(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.)
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
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PROXY
THE SMALLCAP FUND, INC.
One South Street, Baltimore, Maryland 21202
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
1:00 P.M., Eastern Time, on Wednesday, June 5, 2002
The undersigned holder of common stock of the SMALLCap Fund, Inc., a Maryland
corporation (the "Fund"), hereby appoints Fran Pollack-Matz and Daniel O.
Hirsch, or either of them, with full power of substitution in each of them to
attend the Annual Meeting of the Stockholders of the Fund to be held at the Omni
Berkshire Place, 21 East 52/nd/ Street at Madison Avenue, New York, NY 10022, on
June 5, 2002, at 1:00 p.m., local time, and any adjournment or postponement
thereof, to cast on behalf of the undersigned all votes that the undersigned is
entitled to cast at such meeting and otherwise to represent the undersigned at
the meeting with all powers possessed by the undersigned if personally present
at the meeting. The undersigned hereby acknowledges receipt of the Notice of the
Annual Meeting of Stockholders and of the accompanying Proxy Statement and
revokes any proxy heretofore given with respect to such meeting.
The votes entitled to be cast by the undersigned will be cast as instructed
below. If this Proxy is executed but no instruction is given, the votes entitled
to be cast by the undersigned will be cast "for" each of the nominees for
director and "for" the other proposal as described in the Proxy Statement and in
the discretion of the Proxy holder on any other matter that may properly come
before the meeting or any adjournment or postponement thereof.