N&P

Your fund and certain other funds within the Scudder Investments family of funds are holding shareholder meetings at which shareholders will be asked to approve new advisory and sub-advisory agreements.

On September 27, 2002, Deutsche Bank AG (‘Deutsche Bank’) agreed to sell the portion of its investment management business that focuses on index products to Northern Trust Investments, Inc. (‘NTI’), a subsidiary of Northern Trust Corporation. As part of this sale, many of Deutsche Bank’s investment professionals with expertise in index strategies have become employees of NTI. We are therefore proposing that you approve NTI as a sub-advisor to the Equity 500 Index Portfolio (the ‘Portfolio’), the fund into which your fund invests its assets. Deutsche Asset Management, Inc. (‘DeAM’), a wholly-owned subsidiary of Deutsche Bank, would continue to serve as investment advisor and administrator to the Portfolio and would supervise the services provided by NTI. Your fund would incur no additional cost as a result of this change.

In addition, we are asking you to approve a new advisory agreement between the Portfolio and DeAM. The new advisory agreement would contain a specific provision allowing DeAM to delegate its advisory duties to an unaffiliated sub-advisor. The new advisory agreement is otherwise substantially identical to the Portfolio’s current advisory agreement.

For your convenience, we’ve provided a question and answer section that gives a brief overview of these proposals. The enclosed proxy statement provides additional detail. Please read these materials carefully.

Your fund’s Board of Trustees, including all of the Independent Trustees, unanimously recommends that you vote in favor of each proposal. In addition, please be assured that approval of the proposals would not affect:

To vote, simply complete the enclosed proxy card—be sure to sign and date it—and return it to us in the enclosed postage-paid envelope. If you prefer, you can save time by voting over the Internet or by telephone as described on your proxy card.

Your vote is very important to us. If we do not hear from you, our proxy solicitor may contact you. Thank you for your response and for your continued investment.

The attached proxy statement contains more detailed information about the proposals. Please read it carefully.

Scudder Investments is part of Deutsche Asset Management, which is the marketing name in the US for the asset management activities of Deutsche Bank AG, Deutsche Bank Trust Company Americas, Deutsche Bank Securities, Inc., Deutsche Investment Management Americas Inc., Deutsche Asset Management Investment Services Ltd., and Scudder Trust Company.

A: Your fund invests substantially all of its assets into the Equity 500 Index Portfolio (the ‘Portfolio’), another mutual fund managed by Deutsche Asset Management, Inc. (‘DeAM’).

A: On September 27, 2002, Deutsche Bank AG, the parent company of DeAM, entered into an agreement with Northern Trust Corporation (‘Northern Trust’) under which Deutsche Bank agreed to sell the portion of its business that focuses on index-related products to NTI, a subsidiary of Northern Trust. The transaction was completed on January 31, 2003.

As part of this transaction, many of DeAM’s investment professionals with expertise in the type of index strategies used by the Portfolio became employees of NTI, and DeAM has agreed that it will not provide these types of services following the closing of the transaction (DeAM temporarily will continue to provide advisory services to the Portfolio under the current advisory agreement until shareholders approve the new sub-advisory agreement). As a result, the Portfolio needs to hire another organization to provide investment advisory services.

The portfolio managers currently managing the Portfolio are among those who have become employees of NTI. DeAM and NTI have advised your fund’s Board of Trustees that if the sub-advisory agreement is approved, these same individuals would continue to be responsible for the management of the Portfolio at NTI and would continue to use substantially the same investment process. Accordingly, DeAM has recommended that NTI be hired as a sub-advisor for the Portfolio and the Boards of the Portfolio and your fund agreed.

A: The new advisory agreement will contain a specific provision allowing DeAM to delegate some or all of its duties under the advisory agreement to an unaffiliated sub-advisor such as NTI, but is otherwise substantially identical to the current advisory agreement. This change would facilitate the appointment of NTI as sub-advisor for the Portfolio if shareholders approve the new sub-advisory agreement with NTI.

A: Yes. Under the proposed new advisory agreement, DeAM will remain the advisor to the Portfolio. If the proposed advisory and sub-advisory agreements are approved, DeAM will supervise the sub-advisory services provided to the Portfolio by NTI to ensure that shareholders continue to receive the same quality of advisory services.

A: Yes. Your fund is currently managed by Deutsche Investment Management Americas Inc. (‘DeIM’), an affiliate of DeAM. No change is being proposed in that arrangement.

Q: Will my investment advisory fees remain the same? Is anything else changing?

A: The investment advisory fee rate charged by DeAM to the Portfolio will remain the same. The fees proposed to be paid to NTI for its sub-advisory services to the Portfolio will be paid by DeAM, not by the Portfolio. Also, as noted above, no change is being proposed for the advisory arrangements of your fund. In addition, approval of the proposals will not affect your fund’s or the Portfolio’s investment objective or policies, or the number of shares you own or the value of those shares.

A: The Board of Trustees of your fund and the Board of Trustees of the Portfolio, including all of the “Independent Trustees” (those who are not affiliated with DeAM) of each Board, recommend that shareholders of the fund vote ‘FOR’ the approval of the new advisory and sub-advisory agreements.

Each Board considered a number of factors in determining to recommend approval of the new advisory and sub-advisory agreements. The Boards considered that many of DeAM’s investment personnel with expertise employing the index strategies used to manage the Portfolio will become employees of NTI as part of Deutsche Bank’s agreement with Northern Trust. In this regard, each Board considered that the same portfolio managers currently managing the Portfolio are expected to continue managing

the Portfolio at NTI and to continue using substantially the same investment process. The Boards also considered that the investment advisory and other fees paid by the fund and the Portfolio will not change as a result of implementing the new agreements.

A: If the new advisory agreement and sub-advisory agreement for the Portfolio are not approved by shareholders, DeAM temporarily will continue to provide advisory services to the Portfolio under the current advisory agreement. However, Deutsche Bank’s agreement with Northern Trust effectively restricts DeAM’s ability to directly provide the investment management services required by the Portfolio on an ongoing basis. As a result, if shareholders do not approve the proposals, the Boards of Trustees of your fund and of the Portfolio will need to consider alternate arrangements for management of the Portfolio, or the investment of your fund’s assets.

Q: Will my fund pay for the proxy solicitation and legal costs associated with this solicitation?

We encourage you to vote over the Internet or by telephone, as this will speed the recording of your vote and help to reduce solicitation costs.

A: Please call Georgeson Shareholder Communications, Inc. at 1-866-767-2075 with any additional questions about the proxy statement or the procedures to be followed to execute and deliver a proxy.

The attached proxy statement contains more detailed information about the proposals. Please read it carefully.

A special meeting of shareholders of the Scudder S&P 500 Index Fund (the ‘Fund’), a series of Investment Trust (the ‘Trust’) will be held at the offices of Deutsche Asset Management, Two International Place, 13th Floor, Boston, Massachusetts 02110-4103 on March 21, 2003 at [4:00] p.m. (Eastern time) (the ‘Special Meeting’). The Trust is an open-end management investment company organized under the laws of the Commonwealth of Massachusetts. The Trust is comprised of the Fund and several other series which are not addressed in the accompanying proxy statement (‘Proxy Statement’). The Fund operates as a feeder fund in a master-feeder fund arrangement with a corresponding master fund portfolio, Equity 500 Index Portfolio (the ‘Portfolio’), which has the same investment objective and policies as the Fund. The Fund seeks to achieve its investment objectives by investing all of its investable assets in the Portfolio. The Portfolio is organized as a registered open-end management investment company established as a trust under the laws of the State of New York. Pursuant to the Investment Company Act of 1940, as amended, as applicable to master-feeder arrangements, the Fund’s voting rights with respect to the Portfolio interests that it holds are passed through to the Fund’s own shareholders.

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 (the ‘Proposals’) in the Proxy Statement, and such other matters as may properly come before the Special Meeting or any adjournments thereof:

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 close of business on January 22, 2003 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.

The Boards of Trustees of the Portfolio and of the Trust unanimously recommend that shareholders vote FOR the Proposals.

This notice and related proxy material are first being mailed to shareholders of the Fund on or about February , 2003. This proxy is being solicited on behalf of the Fund’s Board of Trustees.

IF YOU HAVE ANY QUESTIONS CONCERNING THE PROXY STATEMENT OR THE PROCEDURES TO BE FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT GEORGESON SHAREHOLDER COMMUNICATIONS, INC. AT 1-866-767-2075.

Please indicate your voting instructions on the enclosed proxy card, sign and date the card and return it in the envelope provided. If you sign, date and return the proxy card but give no voting instructions, your shares will be voted ‘FOR’ the approval of a new investment advisory agreement with Deutsche Asset Management, Inc.; ‘FOR’ the approval of an investment sub-advisory agreement between Deutsche Asset Management, Inc. and Northern Trust Investments, Inc.; and, in the discretion of the persons appointed as proxies, with respect to any other business that may properly arise at the special meeting or any adjournments thereof. In order to avoid the additional expense of further solicitation, we ask your cooperation in mailing your proxy card promptly. As an alternative to mailing the paper proxy card, you may vote shares that are registered in your name, as well as shares held in ‘street name’ through a broker, via the internet or telephone.

Registration		Valid Signature
Corporate Accounts
(1) ABC Corp.		ABC Corp. John Doe, Treasurer
(2) ABC Corp.		John Doe, Treasurer
(3) ABC Corp. c/o John Doe, Treasurer		John Doe
(4) ABC Corp. Profit Sharing Plan		John Doe, Trustee
Partnership Accounts
(1) The XYZ Partnership		Jane B. Smith, Partner
(2) Smith and Jones, Limited Partnership		Jane B. Smith, General Partner
Trust Accounts
(1) ABC Trust Account		Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d 12/28/78		Jane B. Doe
Custodial or Estate Accounts
(1) John B. Smith, Cust. f/b/o JohnB. Smith Jr. UGMA/UTMA		John B. Smith
(2) Estate of John B. Smith		John B. Smith, Jr., Executor

This proxy statement (‘Proxy Statement’) is being furnished in connection with the solicitation of proxies by the Board of Trustees of Investment Trust (the ‘Trust’) with respect to its series, Scudder S&P 500 Index Fund (the ‘Fund’), for use at the special meeting of shareholders of the Trust to be held at the offices of Deutsche Asset Management, Two International Place, 13th Floor, Boston, Massachusetts 02110-4103 on March 21, 2003 at [4:00] p.m. (Eastern time) and at any adjournments thereof (the ‘Special Meeting’). This Proxy Statement and accompanying proxy card (‘Proxy’) are expected to be mailed to shareholders on or about February , 2003.

The Fund operates as a feeder fund in a master-feeder fund arrangement with a master fund, or portfolio, Equity 500 Index Portfolio (the ‘Portfolio’). The Portfolio is organized as a registered open-end management investment company established as a trust under the laws of the State of New York. The Fund seeks to achieve its investment objectives by investing all of its investable assets in the Portfolio, which has the same investment objectives and policies as the Fund.

For simplicity, actions are described in this Proxy Statement as being taken by the Fund, which is a series of the Trust, although all actions are actually taken by the Trust on behalf of the Fund. Some actions described as taken by or with respect to the Fund are actually actions to be taken by the Portfolio, in which the Fund invests all of its assets and on which the Fund votes as a shareholder. For the Fund, your vote and the vote of other shareholders of the Fund determines how the Fund will vote with respect to the Portfolio. See ‘Background.’

The Fund is comprised of two classes of shares, each with its own expense structure. However, since the proposals presented in this Proxy Statement (the ‘Proposals’) uniformly affect both classes, shareholders of each class will vote together as a single class, and each share, regardless of its class, has equal weight.

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:

The appointed proxies will vote on any other business as may properly come before the Special Meeting or any adjournment thereof.

Notice of the Special Meeting and a Proxy accompany this Proxy Statement. In addition to solicitations made by mail, solicitations may also be made by telephone, through the internet or in person by officers or employees of the Fund and certain financial services firms and their representatives, who will receive no extra compensation for their services. All costs of solicitation will be borne by DeAM, Inc., the investment advisor for the Portfolio, including (a) printing and mailing of this Proxy Statement and accompanying material, (b) the reimbursement of brokerage firms and others for their expenses in forwarding solicitation material to the beneficial owners of the Fund’s shares, (c) payment to Georgeson Shareholder Communications, Inc. (‘Georgeson’), a proxy solicitation firm, for its services in soliciting Proxies and (d) supplementary solicitations to submit Proxies. Georgeson has been engaged to assist in the solicitation of proxies for the Fund at an estimated total cost of $[5,000]. However, the exact cost will depend on the amount and types of services rendered. 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. A shareholder may revoke a Proxy voted by telephone or through the internet at any time prior to its exercise by (a) attending the Special Meeting and voting his/her shares in person (thereby revoking any prior Proxy) or (b) executing a superseding Proxy in the same manner as his/her original Proxy.

In all cases where a telephonic proxy is solicited, the Georgeson representative is required to ask for each shareholder’s full name and address and to confirm that the shareholder has received the proxy materials in the mail. If the shareholder is a corporation or other entity, the Georgeson representative is required to ask for the person’s title and confirmation that the person is authorized to direct the voting of the shares. If the information solicited agrees with the information provided to Georgeson, then the Georgeson representative has the responsibility to explain the process, read the Proposals listed on the proxy card and ask for the shareholder’s instructions on each Proposal. Although the Georgeson representative is permitted to answer questions about the process, he or she is not permitted to recommend to the shareholder how to vote, other than to read any recommendation set forth in this Proxy Statement. Georgeson will record the shareholder’s instructions on the card. Within 72 hours, the shareholder will be sent a letter or mailgram to confirm his or her vote and asking the shareholder to call Georgeson immediately if his or her instructions are not correctly reflected in the confirmation.

The most recent Annual Reports of the Fund, containing audited financial statements for the fiscal year ended December 31, 2001, as well as the most recent Semi-Annual Reports succeeding the Annual Reports of the Fund (each, a ‘Report’), have previously been furnished to the Fund’s shareholders. An additional copy of each Report will be furnished without charge upon request by writing to the Trust [c/o Scudder Investments, 222 South Riverside Plaza, Chicago, Illinois, 60606] or by calling [1-800-253-2277] (Class AARP) or 1-800-728-3337 (Class S). Reports for Class AARP and Class S shares are also available on the Scudder Investments website at www.aarp.scudder.com (Class AARP) or www.myScudder.com (Class S), respectively, or at the Securities and Exchange Commission’s (the ‘Commission’) website at www.sec.gov.

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 the Proposal and in accordance with the judgment of the persons appointed as proxies with respect to any other matter that may properly come before the Special Meeting. Any shareholder giving a Proxy has the right to attend the Special Meeting to vote his/her shares in person (thereby revoking any prior Proxy) and also the right to revoke the Proxy at any time prior to its exercise by executing a superseding Proxy or by submitting a written notice of revocation to the Trust’s secretary (the ‘Secretary’). To be effective, such revocation must be received by the Secretary prior to the Special Meeting. Merely attending the Special Meeting without voting will not revoke a prior Proxy.

Deutsche Bank Trust Company Americas (formerly Bankers Trust Company) (‘Deutsche Bank Trust’) may vote any shares in accounts as to which Deutsche Bank Trust has voting authority which are not otherwise represented in person or by proxy at the Special Meeting. Accordingly, for each Proposal and for any other matter that may properly come before the Special Meeting, if Deutsche Bank Trust votes shares of the Fund over which it has voting discretion, it will do so in accordance with its fiduciary and other legal obligations, and in its discretion may consult with the beneficial owners or other fiduciaries.

In the event that a quorum is not present at the Special Meeting, or if a quorum is present but sufficient votes to approve a Proposal are not received, the persons named as proxies may propose one or more adjournments of the Special Meeting to permit further solicitation of Proxies with respect to the Proposal. In determining whether to adjourn the Special Meeting, the following factors may be considered: the nature of the proposals that are the subject of the Special Meeting, the percentage of votes actually cast, the percentage of negative votes actually cast, the nature of any further solicitation and the information to be provided to shareholders with respect to the reasons for the solicitation. Any adjournment will require the affirmative vote of a majority of those shares represented at the Special Meeting in person or by Proxy. A shareholder vote may be taken on one or more of the Proposals or on any other matter that may properly come before the Special Meeting, prior to any adjournment if sufficient votes have been received and it is otherwise appropriate. 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 quorum of shareholders is constituted by the presence in person or by proxy of the holders of, for the Trust, one-third of the outstanding shares of the Trust entitled to vote at the Special Meeting, i.e., for purposes of the Proposals, one-third of the outstanding shares of the Fund. 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 January 22, 2003 (the ‘Record Date’) are entitled to notice of, and to vote at, the Special Meeting. The number of

shares of each class of the Fund that were issued and outstanding as of the Record Date are set forth in Exhibit A to this Proxy Statement.

[Only one package containing a Proxy Statement will be delivered to shareholders of the Fund sharing an address, unless the Fund has received contrary instructions from one or more of such shareholders. The Fund will deliver promptly, upon written or oral request, a separate copy of the Proxy Statement, to a shareholder at a shared address to which a single copy of the Proxy Statement was delivered. A shareholder can notify the Fund that the shareholder wishes to receive a separate copy of this Proxy Statement by calling [1-800-253-2277] (Class AARP) or 1-800-728-3337 (Class S), or by writing to the Fund [c/o Scudder Investments, 222 South Riverside Plaza, Chicago, Illinois 60606]. Shareholders can notify the Fund that they wish, in the future, to receive multiple copies of a proxy statement or Report for different shareholders at the same address, or that they wish to receive a single copy of a proxy statement or Report if they are receiving multiple copies of proxy statements or Reports for different shareholders at the same address, in the same manner.]

In order that your shares may be represented, you are requested to (unless you are voting by telephone or through the internet):

Instructions for voting by telephone or through the internet are included on the Proxy enclosed with this Proxy Statement.

Exhibit B to this Proxy Statement sets forth information as of the Record Date regarding the beneficial ownership of the Fund’s shares by the only persons known by the Fund to beneficially own more than 5% of the outstanding shares of the Fund. [Collectively, the Trustees and executive officers of the Trust own less than 1% of the Fund’s outstanding shares.] The number of shares beneficially owned is determined under rules of the Commission, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares as to which the individual has the sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days of the Record Date through the exercise of any stock option or other right. Unless otherwise indicated, each person has sole investment and voting power (or shares this power with his or her spouse) with respect to the shares set forth in Exhibit B. The inclusion therein of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of the shares.

Trust, Portfolio and Fund Structure. The Trust is an open-end management investment company, organized as a business trust under the laws of the Commonwealth of Massachusetts. As indicated earlier, the Portfolio is a registered open-end management investment company established as a trust under the laws of the State of New York. DeAM, Inc., located at 280 Park Avenue, New York, New York 10017, acts as the investment advisor to the Portfolio pursuant to the terms of an

investment advisory agreement (the ‘Current Advisory Agreement’). Pursuant to the Current Advisory Agreement, DeAM, Inc. currently supervises and assists in the management of the assets of the Portfolio and furnishes the Portfolio with research, statistical, advisory and managerial services. DeAM, Inc. pays the ordinary office expenses of the Portfolio and the Fund and the compensation of all officers and executive employees of the Portfolio and the Fund and all Trustees who are affiliated with DeAM, Inc. If the New Advisory Agreement and New Sub-Advisory Agreement are approved, DeAM, Inc. will also supervise the provision of sub-advisory services to the Portfolio by NTI.

Master-Feeder Structure. As indicated earlier, the Fund operates as a feeder fund in a master-feeder fund arrangement with the Portfolio. The Fund seeks to achieve its investment objectives by investing all of its investable assets in the Portfolio, which has the same investment objectives and policies as the Fund. The Portfolio invests directly in investment securities and other investments. Pursuant to the applicable requirements of the Investment Company Act of 1940, as amended (the ‘1940 Act’), the Fund’s voting rights with respect to the Portfolio shares that it holds must be passed through to the Fund’s own shareholders. The Current Advisory Agreement is, and the New Advisory Agreement and New Sub-Advisory Agreement will be, entered into directly with the Portfolio.

Information About the Transaction. On September 27, 2002, Deutsche Bank AG (‘Deutsche Bank’) and NTI entered into an agreement whereby Deutsche Bank would sell its global passive equity, enhanced equity and passive fixed income businesses to NTI. Deutsche Bank determined to sell its passive investment business in order to focus on active investment management. The sale to NTI encompasses all of Scudder Investment’s passive investment business in the Americas, Europe and the Far East. The sale was completed on January 31, 2003 (the “Closing Date”).

This sale and certain other matters pertaining thereto was completed pursuant to the terms of the Sale and Purchase Agreement, dated as of September 27, 2002, among Deutsche Bank, The Northern Trust Company (solely for purposes of its guarantee of payment and performance of NTI’s obligations under the Sale and Purchase Agreement and certain other ancillary agreements) and NTI (the “Sale and Purchase Agreement”), a Transition Services and Set-up Agreement, dated as of the Closing Date, between Deutsche Bank and NTI (the “Transition Services Agreement”), and a Preferred Provider Agreement, dated as of the Closing Date, between Deutsche Bank, the investment management division of the Deutsche Bank Group (the “DB Group”) and NTI (the “Preferred Provider Agreement”).

The Transition Services Agreement. Pursuant to the terms of the Transition Services Agreement, Deutsche Bank and NTI have agreed, among other things, that, for that period of time beginning on the Closing Date and ending as of the execution of the New Sub-Advisory Agreement, the investment advisory personnel who currently provide services to the Portfolio under the Current Advisory Agreement, and who became employees of NTI on the Closing Date, will be made available to DeAM, Inc. in order to assist DeAM, Inc. in fulfilling its management obligations to the Portfolio pursuant to the Current Advisory Agreement. Upon the execution of the New Sub-Advisory Agreement, the terms of the Transition Services Agreement relating to these employees will terminate and these individuals will remain employees of NTI and are anticipated to continue to provide services to the Portfolio under the New Sub-Advisory Agreement.

Preferred Provider Agreement. Subject to any required approvals of a board of directors or trustees or shareholders, or other applicable legal (other than contractual) or fiduciary obligations of any member of the DB Group, and subject to certain exceptions, for a period of five years from the Closing Date NTI will be the preferred provider for Deutsche Bank and the DB Group over other third party providers for the provision of services including, but not limited to, those proposed to be provided to the Portfolio under the New Advisory Agreement and the New Sub-Advisory Agreement. The Preferred Provider Agreement provides that, to the extent consistent with its fiduciary duties and applicable law, any Deutsche Bank entity serving as advisor to a registered investment company will recommend to the board of directors or trustees of such registered investment company that NTI serve as sub-adviser with respect to any global passive equity, enhanced equity and passive fixed income investment management and investment advisory products and services, and similar services provided to such registered investment company.

Sale and Purchase Agreement—Non-compete Provision. The Sale and Purchase Agreement provides in part that, for five years after the Closing Date, Deutsche Bank will not, and will not permit any person or entity that, directly or indirectly, it controls, including DeAM, Inc., to, directly or indirectly, provide certain investment management services, including the passive index management services provided to the Portfolio under the Current Advisory Agreement and proposed to be provided by NTI under the New Sub-Advisory Agreement, absent certain exceptions, or solicit the members of the passive index management team who currently provide services to the Portfolio under the Current Advisory Agreement and who are now employees of NTI (the “Non-compete Provision”). However, the Sale and Purchase Agreement further provides, in part, that, notwithstanding the Non-compete Provision, DeAM, Inc. may continue to serve as investment advisor for certain funds (including the Fund) for which NTI serves as sub-advisor pursuant to a sub-advisory agreement (including the New Sub-Advisory Agreement). Thus, if shareholders approve Proposal II, DeAM, Inc. will continue to serve as investment advisor to the Portfolio and will supervise the provision of sub-advisory services to the Portfolio by NTI. The Non-compete Provision does not and would not prevent the Fund from terminating the New Sub-Advisory Agreement with NTI (or terminating a sub-advisory agreement with any future sub-advisor), under which circumstances DeAm, Inc. would continue as advisor to the Fund and recommend to the Fund’s Board of Trustees that the Board consider approval of a sub-advisory agreement with another prospective sub-advisor, so long as the Fund can retain another sub-advisor which, in the judgment of DeAm, Inc. and the Board of Trustees, is capable of providing to the Fund the necessary advisory services to be provided to the Fund pursuant to the New Sub-Advisory Agreement.

For information about Northern Trust Corporation (‘Northern Trust’), the parent company of NTI, and NTI, see ‘The Proposed Sub-Advisor’ under Proposal II.

Other Information. On April 5, 2002, Deutsche Bank acquired 100% of US-based asset manager Zurich Scudder Investments (‘Scudder’). Scudder became part of Deutsche Asset Management and changed its name to Deutsche Investment Management Americas Inc. (‘DeIM’). The combined organization is, as of December 31, 2001, the fourth largest asset manager in the world, with approximately $742 billion in assets under management as of September 30, 2002. Effective August 19, 2002, the Deutsche Asset Management funds were combined with the Scudder family of funds under the Scudder Investments brand. The Deutsche Asset Management family of funds and the Scudder funds have been integrated into a single fund complex, the Scudder

Investments family of funds, with the investment operations of Scudder becoming part of an integrated global investment operation serving Deutsche Asset Management’s clients worldwide.

Also on April 5, 2002, the Fund entered into an investment management agreement with DeIM. Pursuant to this investment management agreement, DeIM acts as manager to the Fund and monitors the Fund’s investments in the Portfolio, subject to the authority and supervision of the Board of Trustees of the Fund. DeIM receives no fees for providing these services.

On July 30, 2002, the Fund elected eleven members of the Board of Trustees of the Portfolio as part of an overall plan to coordinate and enhance the efficiency of the governance of certain funds managed, advised, subadvised or administered by DeAM. The shareholders of the Fund (and the Portfolio) also approved the Current Advisory Agreement with the Portfolio in order to provide DeAM, Inc. with maximum flexibility to utilize Deutsche Asset Management’s global organization by authorizing it, to the extent permissible by law and subject to further approval by the applicable Board of Trustees, to appoint certain affiliates as sub-advisors. The Current Advisory Agreement had been approved, subject to shareholder approval, by the Boards of Trustees of the Fund and the Portfolio at a meeting held on June 7, 2002.

Section 15(f) of the 1940 Act provides that an investment advisor of a registered investment company or any of its affiliated persons may receive any amount or benefit in connection with a sale of securities of, or a sale of any other interest in, such investment advisor, which results in the assignment of an investment advisory contract with the investment company, as long as two conditions are satisfied.

First, during the three (3) year period immediately following the transaction, at least 75% of the members of the Board of Directors must not be ‘interested persons’ of the current or successor advisor within the meaning of the 1940 Act. At least 75% of the current members of the Boards are not ‘interested persons’ of DeAM, Inc. or NTI.

Second, 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 1940 Act, the term ‘unfair burden’ includes any arrangement during the two (2) year period after the change in control whereby the investment advisor (or predecessor or successor advisor), or any ‘interested person’ (as defined in the 1940 Act) of such advisor, 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 of securities or other property to, from, or on behalf of the investment company (other than fees for bona fide principal underwriting services).

As described above, Deutsche Bank has sold its passive investment management businesses to NTI. While DeAM, Inc. did not assign its Current Advisory Agreement with the Portfolio to NTI in connection with this sale, it is proposing to delegate extensive responsibilities with respect thereto to NTI as provided for in the New Sub-Advisory Agreement. Accordingly, the Sale and Purchase Agreement provides that Deutsche Bank will use its reasonable best efforts to ensure the satisfaction of the conditions set forth in Section 15(f) of the 1940 Act, including the requirement that no

‘unfair burden’ (as defined in Section 15(f)(1)(B) of the 1940 Act) be imposed on the Portfolio. Further, pursuant to the Sale and Purchase Agreement, NTI has agreed (a) for a period of three years after the Closing Date, not to recommend or advise the Board of Trustees of the Portfolio to change its composition such that less than 75% of the Board of Trustees of the Portfolio are not ‘interested persons’ of DeAM, Inc. or NTI and (b) for a period of two years after the Closing Date, not to itself impose upon the Portfolio an ‘unfair burden’ as a result of the transactions contemplated by the agreement between Deutsche Bank and NTI, or any terms, conditions or understandings applicable thereto, whether express or implied. However, nothing in the Sale and Purchase Agreement requires NTI to accept or receive less than the sub-advisory fee to be paid to NTI by DeAM, Inc. pursuant to the New Sub-Advisory Agreement, or to waive or reimburse any such fees.

The New Advisory Agreement would contain a specific provision authorizing DeAM, Inc., subject to approval by shareholders of the Portfolio of a sub-advisory agreement with the proposed sub-advisor, to delegate some or all of its duties under the New Advisory Agreement to non-affiliated sub-advisors, such as NTI. The New Advisory Agreement is otherwise identical to the Current Advisory Agreement in all material respects. See ‘The New Advisory Agreement.’

The Current Advisory Agreement. DeAM, Inc. currently serves as investment advisor to the Portfolio (as discussed earlier) pursuant to the Current Advisory Agreement. The Current Advisory Agreement was initially approved by the Boards of the Portfolio and the Trust, including a majority of those members of the Boards of the Portfolio or the Trust, respectively, who are not ‘interested persons’ (as defined in the 1940 Act) of the Trust, the Portfolio or DeAM, Inc. (the ‘Independent Trustees’) and was approved by the shareholders of the Portfolio on July 30, 2002.

If the New Advisory Agreement and New Sub-Advisory Agreement are approved, DeAM, Inc. will continue to serve as investment advisor to the Portfolio pursuant to the New Advisory Agreement. However, it will delegate many of its duties under the New Advisory Agreement to NTI and will supervise the provision of sub-advisory services to the Portfolio by NTI.

Exhibit C to this Proxy Statement lists: (i) the date of the Current Advisory Agreement; and (ii) the most recent date on which the Current Advisory Agreement was approved by the Portfolio’s and Fund’s Trustees, including a majority of the Independent Trustees of the Portfolio and Fund, and the Fund’s and Portfolio’s shareholders.

The New Advisory Agreement. If approved, the New Advisory Agreement will remain in effect for an initial term ending September 30, 2003 (unless sooner terminated), and will remain in effect from year to year thereafter if approved annually by (1) the Portfolio’s Board of Trustees or by the vote of a ‘majority of the outstanding voting securities’ (as defined in the 1940 Act; see ‘Vote Required’ below) of the Portfolio and (2) a majority of the Independent Trustees of the Portfolio who are not parties to such agreement, cast in person at a meeting called for such purpose.

The form of the New Advisory Agreement is attached to this Proxy Statement as Exhibit D. The discussion of the New Advisory Agreement in this Proxy Statement is qualified in its entirety by reference to Exhibit D. The New Advisory Agreement would

contain a specific provision authorizing DeAM, Inc., subject to approval by shareholders of the Portfolio of a sub-advisory agreement with the proposed sub-advisor, to delegate some or all of its duties under the New Advisory Agreement to a non-affiliated sub-advisor. The New Advisory Agreement is otherwise identical to the Current Advisory Agreement except for the dates of execution, effectiveness and initial term. In the event of a delegation, DeAM, Inc. will continue to supervise the services provided by NTI (or any future sub-advisor(s)) and any such delegation will not relieve DeAM, Inc. of its obligations under the New Advisory Agreement, including, without limitation, its obligation to ensure that the Portfolio’s assets are managed in accordance with the Fund’s prospectus, as contemplated by the New Advisory Agreement.

The investment advisory fee rate proposed to be charged to the Portfolio under the New Advisory Agreement is the same as that charged under the Current Advisory Agreement.

The advisory fee rate paid to DeAM, Inc. under the Current Advisory Agreement and the advisory fee paid by the Portfolio for the most recent fiscal year is set forth in Exhibit E to this Proxy Statement.

The Advisor. Under the supervision of the Board, DeAM, Inc., located at 280 Park Avenue, New York, New York 10017, acts as the investment advisor to the Portfolio. As investment advisor, DeAM, Inc. currently makes the Portfolio’s investment decisions. It buys and sells securities for the Portfolio and conducts the research that leads to the purchase and sale decisions. DeAM, Inc. is also currently responsible for selecting brokers and for negotiating brokerage commissions and dealer charges. DeAM, Inc. is registered with the Commission as an investment advisor and provides a full range of investment advisory services to institutional and retail clients. If the New Advisory Agreement and the New Sub-Advisory Agreement are approved, DeAM, Inc. will supervise the provision of sub-advisory services to the Portfolio and the Fund by NTI.

In addition to providing investment advisory services to the Portfolio, DeAM, Inc. serves as investment advisor to 44 other investment companies and investment sub-advisor to 57 other investment companies. As of September 30, 2002, DeAM, Inc. had approximately $85 billion of assets under management. DeAM, Inc. is an indirect wholly-owned subsidiary of Deutsche Bank.

See Exhibit G to this Proxy Statement for a list of those investment companies that DeAM, Inc. advises or subadvises that have investment objectives similar to those of the Portfolio, together with information regarding the fees charged to those companies.

The principal occupations of each director and principal executive officer of DeAM, Inc. are set forth in Exhibit H to this Proxy Statement. Each officer and director of the Fund who is an officer, employee, director or shareholder of DeAM, Inc. is also listed in Exhibit H. The principal business address of each director and principal executive officer as it relates to his or her duties at DeAM, Inc. is 280 Park Avenue, New York, NY 10017.

Administrator, Transfer Agent, Custodian and Distributor. Pursuant to an administrative services agreement, DeIM provides or pays others to provide substantially all of the administrative services provided to the Fund (other than those provided by DeIM under its investment management agreement with the Fund). Investment

Company Capital Corporation (‘ICCC’) provides administrative services to the Portfolio. ICCC’s address is c/o Scudder Investments, 811 Main Street, Kansas City, Missouri 64105. Scudder Service Corporation (‘SSC’) is the transfer and dividend paying agent for the Fund. State Street Bank & Trust (‘State Street’) serves as custodian for the Fund and DeAM serves as custodian for the Portfolio. Scudder Distributors, Inc. (‘SDI’) serves as the distributor of the Fund’s shares pursuant to a distribution agreement. SDI’s address is 222 South Riverside Plaza, Chicago, Illinois 60606. It is expected that these services will continue to be provided by the same service providers after approval of the New Advisory Agreement and the New Sub-Advisory Agreement. Exhibit E sets forth the fees paid (a) to DeIM and ICCC for administrative services provided to the Fund and the Portfolio, respectively, during the most recent fiscal year, (b) to SSC for its services during the most recent fiscal year and (c) to SDI for its services for the most recent fiscal year.

Deutsche Bank. Deutsche Bank, Aktiengesellschaft, Taunusalage 12, D-60262, Frankfurt am Main, Federal Republic of Germany, is an international commercial and investment banking group and a leading integrated provider of financial services to institutions and individuals throughout the world. It is organized in Germany and is a publicly traded entity. Its shares trade on many exchanges including the New York Stock Exchange and Xetra (German Stock Exchange). Deutsche Bank is a major global banking institution that is engaged in a wide range of financial services, including investment management, mutual funds, retail, private and commercial banking, investment banking and insurance.

For a discussion of the deliberations of the Boards in determining to approve the New Advisory Agreement, see Proposal II.

You are being asked to approve the appointment of NTI as sub-advisor for the Portfolio pursuant to the terms of the New Sub-Advisory Agreement. The form of the New Sub-Advisory Agreement is attached to this Proxy Statement as Exhibit F. A description of the New Sub-Advisory Agreement is set forth below and is qualified in its entirety by reference to Exhibit F.

Under the terms of the proposed New Sub-Advisory Agreement, NTI agrees, subject to the supervision and control of DeAM, Inc. and the Board of Trustees of the Portfolio, to provide the Portfolio with investment advice and investment management services concerning the investments of the Portfolio. NTI will, among other things, (a) determine what securities will be purchased, held, sold or reinvested by the Portfolio and what portion of the Portfolio’s assets shall be held uninvested in cash and cash equivalents; (b) make its officers and employees available to meet with the officers of DeAM, Inc. and the Portfolio’s officers and Trustees on due notice to review the investments and investment program of the Portfolio in the light of current and prospective economic and market conditions; (c) from time to time as the Board of Trustees of the Portfolio or DeAM, Inc. may reasonably request, furnish to DeAM, Inc. and the Portfolio’s officers and Trustees reports on portfolio transactions and reports on issuers of securities held by the Portfolio; (d) provide advice and assistance to DeAM, Inc. as to the determination of the value of securities held or to be acquired by the Portfolio for valuation purposes; (e) maintain all accounts, books and records of the Portfolio required of an investment

advisor of a registered investment company pursuant to the 1940 Act and the rules and regulations thereunder, and preserve such records for the periods and in the manner prescribed under the 1940 Act and the rules and regulations thereunder; (f) maintain and enforce adequate security procedures with respect to all materials, records, documents and data relating to any of its responsibilities pursuant to the New Sub-Advisory Agreement, including all means for the effecting of securities transactions; (g) permit DeAM, Inc., the Portfolio’s officers and the Portfolio’s independent public accountants to inspect and audit such records pertaining to the Portfolio at reasonable times during normal business hours upon due notice; and (h) vote, pursuant to procedures described to the Board of Trustees of the Portfolio, all proxies solicited by or with respect to issuers of securities in which the assets of the Portfolio may be invested from time to time.

If the New Sub-Advisory Agreement is approved, NTI’s fees will be paid by DeAM, Inc. The investment advisory fee rate charged to the Portfolio under the Current Advisory Agreement and the proposed New Advisory Agreement is not proposed to be changed.

Generally. If approved, the New Sub-Advisory Agreement will remain in effect for an initial term ending September 30, 2003 (unless sooner terminated), and will remain in effect from year to year thereafter if approved annually by (1) the Portfolio’s Board of Trustees or by the vote of a ‘majority of the outstanding voting securities’ (as defined in the 1940 Act; see ‘Vote Required’ below) of the Portfolio and (2) a majority of the Independent Trustees of the Portfolio who are not parties to such agreement, cast in person at a meeting called for such purpose. The New Sub-Advisory Agreement will terminate upon assignment by any party and is terminable, without penalty, on 60 days’ written notice by DeAM, Inc. or the Portfolio’s Board of Trustees or by a vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of the Portfolio or upon 120 days’ written notice by NTI to DeAM, Inc. and the Portfolio.

NTI is obligated to pay certain expenses associated with providing the services contemplated by the New Sub-Advisory Agreement. Pursuant to the New Sub-Advisory Agreement, NTI’s fee will be payable solely by DeAM, Inc. The Portfolio will have no responsibility for the sub-advisory fees payable to NTI. The services of NTI are not deemed to be exclusive and nothing in the New Sub-Advisory Agreement prevents it or its affiliates from providing similar services to other investment companies and other clients (whether or not their investment objectives and policies are similar to those of the Portfolio) or from engaging in other activities.

Under the New Sub-Advisory Agreement, NTI will not be liable for any loss sustained by reason of the adoption of any investment policy or the purchase, sale or retention of any security on the recommendation of NTI, if such recommendation is made in good faith; provided that nothing therein shall be construed to protect NTI against any liability to DeAM, Inc., the Portfolio or to its shareholders to which NTI could otherwise be subject by reason of willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or by reason of NTI’s reckless disregard of its obligations and duties under the New Sub-Advisory Agreement. However, DeAM, Inc. will continue to supervise the services provided by NTI (or any future sub-advisor(s)) and any such delegation will not relieve DeAM, Inc. of its obligations under the New Advisory Agreement including, without limitation, its obligation to ensure that the Portfolio’s assets are managed in accordance with the Fund’s prospectus, as contemplated by the New Advisory Agreement.

Since the Fund invests all of its investable assets in the Portfolio, portfolio transactions occur at the Portfolio level only. Subject to the provisions of the New Sub-Advisory Agreement and absent instructions from DeAM, Inc. or the Portfolio, as investment sub-advisor NTI will have full discretionary authority to place orders for the purchase and sale of securities for the account of the Portfolio with such brokers and dealers as it may select. In the selection of brokers or dealers and the placing of orders, NTI will seek for the Portfolio at all times the most favorable best execution and net price available. In assessing the best execution and net price available for any transaction, NTI will consider all factors it deems relevant including, without limitation, the breadth of the market in and the price of the security, the financial condition and execution capability of the broker or dealer, the quality of research provided and the reasonableness of the commission, if any, with respect to the specific transaction and on a continuing basis.

Pursuant to the New Sub-Advisory Agreement, NTI will have access to supplemental investment and market research and security and economic analyses provided by certain brokers who may execute brokerage transactions at higher commissions to the Portfolio than another broker may have charged, and NTI will be authorized to place orders for the purchase and sale of securities for the Portfolio with such brokers upon a good faith determination that the commission paid is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, subject to applicable laws and regulations and review and direction by DeAM, Inc. and the Board of Trustees of the Portfolio from time to time with respect to the extent and continuation of this practice. NTI will provide such information as DeAM, Inc. or the Board of Trustees of the Portfolio from time to time requests concerning the commissions paid by the Portfolio and research and other services provided to NTI by brokers executing transactions on behalf of the Portfolio. Further, under the terms of the New Sub-Advisory Agreement, DeAM, Inc. will have the right by written notice to identify securities that may not be purchased on behalf of the Portfolio and/or brokers and dealers through or with which portfolio transactions on behalf of the Portfolio may not be effected, including, without limitation, brokers or dealers affiliated with DeAM, Inc. NTI will refrain from purchasing such securities for the Portfolio or directing any portfolio transaction to any such broker or dealer on behalf of the Portfolio, unless and until the written approval of DeAM, Inc. or the Board of Trustees of the Portfolio, as the case may be, is obtained. In addition, NTI will not direct portfolio transactions for the Portfolio with or through NTI or any broker or dealer that is an ‘affiliated person’ of NTI (as defined in the 1940 Act or interpreted under applicable rules and regulations of the Commission) without the prior written approval of the Board of Trustees of the Portfolio and DeAM, Inc. and then only as permitted under the 1940 Act.

There were no affiliated brokerage transactions for the Portfolio during the Portfolio’s last fiscal year.

The Proposed Sub-Advisor. NTI is a subsidiary of The Northern Trust Company (‘TNTC’). NTI is located at 50 South LaSalle Street, Chicago, IL 60675. NTI has managed accounts, including registered investment companies, designed to mirror the performance of the same indices as those the Fund seek to replicate.

NTI is an Illinois state chartered trust company and an investment advisor registered under the Investment Advisers Act of 1940, as amended. Formed in 1988, it primarily manages assets for defined contribution and benefit plans, investment companies and other institutional investors. As of September 30, 2002, NTI had approximately $126.4 billion of assets under management.

TNTC is an Illinois state chartered banking organization and a member of the Federal Reserve System. Formed in 1889, it administers and manages assets for individuals, personal trusts, defined contribution and benefit plans and other institutional and corporate clients. It is the principal subsidiary of Northern Trust, a bank holding company.

Northern Trust, through its subsidiaries, has for more than 100 years managed the assets of individuals, charitable organizations, foundations and large corporate investors, and as of September 30, 2002, administered in various capacities approximately $1.44 trillion of assets, including approximately $293.2 billion of assets under discretionary management. As of such date, Northern Trust and its subsidiaries had approximately $39.7 billion in assets and $24.4 billion in deposits.

See Exhibit I to this Proxy Statement for a list of those investment companies that NTI advises or subadvises that have investment objectives similar to those of the Portfolio, together with information regarding the fees charged to those companies.

The principal occupations of each director and principal executive officer of NTI are set forth in Exhibit J to this Proxy Statement. The principal business address of each director and principal executive officer as it relates to his or her duties at NTI is 50 South LaSalle Street, Chicago, IL 60675.

If the New Advisory Agreement is approved by the shareholders, it would take effect as described above. If the New Advisory Agreement is not approved by the shareholders, the Boards of Trustees of the Fund and the Portfolio will consider what other action, if any, is appropriate based upon the interests of the shareholders.

If the New Sub-Advisory Agreement is approved by the shareholders, it would take effect as described above. If the New Sub-Advisory Agreement is not approved by the shareholders, the Boards of Trustees of the Fund and the Portfolio will consider what other action, if any, is appropriate based upon the interests of the shareholders, including consideration of an alternative sub-advisor.

The Board of Trustees of the Portfolio. At a meeting of the Board of Trustees of the Portfolio held on , 2002 called for the purpose of, among other things, voting on approval of the New Advisory Agreement and the New Sub-Advisory Agreement, the Board, including the Independent Trustees, unanimously approved the New Advisory Agreement and the New Sub-Advisory Agreement. In reaching this conclusion, the Board obtained from DeAM, Inc., Northern Trust and NTI such information as they deemed reasonably necessary to continue DeAM, Inc. as advisor to the Portfolio and to approve NTI as investment sub-advisor to the Portfolio. Representatives of DeAM, Inc. and NTI made detailed presentations at the meeting with respect to, among other factors, the organizational structure, operations, assets under management, asset management services, financial conditions, research capabilities, portfolio management approach and investment results of DeAM, Inc. and NTI, respectively. NTI’s presentation also included materials showing and explaining the correlation of the accounts and registered investment companies NTI manages with the same indices used by the Portfolio.

In determining to approve the New Advisory Agreement and the New Sub-Advisory Agreement and submit them to shareholders for approval, the Board considered a number of factors. The Board particularly considered that approval of the New Sub- Advisory Agreement would permit the Portfolio to continue to be managed by most of

the same investment advisory personnel who currently provide services to the Portfolio under the Current Advisory Agreement, as these personnel will be employed by NTI after completion of the transaction. The Board considered that the investment objectives and policies of the Fund would not change and that the Fund would be managed using substantially the same investment process as is currently used. The Board also considered that DeAM, Inc. agreed that, effective upon the approval of the New Advisory Agreement and the New Sub-Advisory Agreement by the shareholders, it would maintain the current cap on the expenses of the [Portfolio] for a two-year period from the date of approval of the New Advisory Agreement and New Sub-Advisory Agreement.

The Board also considered a number of other factors including, among other things, the nature, scope and quality of services that DeAM, Inc. and NTI would likely provide to the Portfolio under the New Advisory Agreement and the New Sub-Advisory Agreement, respectively; that the advisory fee rates and other fees paid by the Portfolio would not change as a result of the implementation of the New Advisory Agreement and the New Sub-Advisory Agreement; the quality and depth of the personnel and organization of NTI and Northern Trust before and after the transaction; the capacities of DeAM, Inc. and NTI to perform their duties under the New Advisory Agreement and the New Sub-Advisory Agreement, respectively, and their commitment to continue to provide these services in the future; the financial standings of NTI and Northern Trust; and the experience and expertise of DeAM, Inc. and NTI as investment advisors, both in general, as reflected in their amounts of assets under management and in particular, with respect to NTI, with respect to its experience managing accounts and registered investment companies seeking to replicate the same indices as the Fund. The Board also considered that after the transaction NTI will be among the largest passive index managers in the U.S. In addition, the Board considered that continuing to maintain an advisory relationship with DeAM, Inc. as investment advisor to the Portfolio will ensure that the activities of NTI will be monitored by an organization with extensive experience in passive index investing.

With respect to the New Advisory Agreement, the Board also considered that the terms of the New Advisory Agreement would be identical to the terms of the Current Advisory Agreement (except for the dates of execution, effectiveness and initial term), except that the New Advisory Agreement would have a specific provisions authorizing DeAM, Inc. to delegate some or all of its advisory duties to an unaffiliated sub-advisor. The Board also considered that, pursuant to the New Advisory Agreement, DeAM, Inc. would supervise the sub-advisory duties of NTI and the delegation will not relieve DeAM, Inc. of its duties under the New Advisory Agreement.

The Board of Trustees of the Fund. The Board of Trustees of the Fund, including all of the Independent Trustees, unanimously approved the New Advisory Agreement and the New Sub-Advisory Agreement at a meeting held on December 10, 2002. Prior to taking such action, DeAM, Inc., Northern Trust and NTI provided the Board with such information as the Board deemed reasonably necessary to consider and approve these agreements. Representatives of DeAM, Inc. and NTI made detailed presentations at a prior meeting of the Board with respect to, among other topics, the organizational structure, operations, assets under management, asset management services, financial conditions, research capabilities, portfolio management approach and investment results of DeAM, Inc. and NTI, respectively. NTI’s presentation also included materials showing and explaining the correlation of the accounts and registered investment companies NTI manages with the same index used by the Fund. Following these presentations, the Board requested and received additional information regarding the proposed arrangements.

The Board considered a number of factors in determining to approve the New Advisory Agreement and the New Sub-Advisory Agreement and to recommend that Fund shareholders approve these agreements. With respect to the New Sub-Advisory Agreement, one factor the Board considered was that many of DeAM, Inc.’s investment personnel with expertise in employing the index strategy pursued by the Fund would become employees of NTI as part of Deutsche Bank’s sale of its passive investment businesses to Northern Trust (see “Background – Information About the Transaction”). In this connection, DeAM, Inc. advised the Board that the Portfolio’s current portfolio managers were among those expected to become employees of NTI. DeAM, Inc. and NTI advised the Board that, if the New Sub-Advisory Agreement was approved, these same individuals would continue to be responsible for management of the Portfolio at NTI, and would continue to use substantially the same investment process. DeAM, Inc. also advised the Board that as a result of Deutsche Bank’s non-competition agreement with Northern Trust, DeAM, Inc. could no longer directly provide the type of investment management services required to manage the Portfolio. As a result, the Board considered that approval of the New Sub-Advisory Agreement would allow for substantial continuity of the Portfolio’s investment process, including the Portfolio’s current portfolio managers.

The Board also considered a number of other factors including, among other things, the nature, scope and quality of services that DeAM, Inc. and NTI would likely provide to the Portfolio under the New Advisory Agreement and the New Sub-Advisory Agreement, respectively; that the advisory fee rates and other fees paid by the Fund and the Portfolio would not change as a result of the implementation of the New Advisory Agreement and the New Sub-Advisory Agreement; the quality and depth of the personnel and organization of NTI and Northern Trust before and after the transaction; the capacities of DeAM, Inc. and NTI to perform their duties under the New Advisory Agreement and the New Sub-Advisory Agreement, respectively, and their commitment to continue to provide these services in the future; the financial standings of NTI and Northern Trust; and the experience and expertise of DeAM, Inc. and NTI as investment advisors, both in general, as reflected in their amounts of assets under management and in particular, with respect to NTI, with respect to its experience managing accounts and registered investment companies seeking to replicate the same index as the Portfolio.

With respect to the New Advisory Agreement, the Board also considered that the terms of the New Advisory Agreement would be substantially identical to the terms of the Current Advisory Agreement, except that the New Advisory Agreement would contain a specific provision authorizing DeAM, Inc. to delegate some or all of its advisory duties to an unaffiliated sub-advisor. The Board also considered that, pursuant to the New Advisory Agreement, DeAM, Inc. would supervise the sub-advisory services provided by NTI and that the delegation of such services to NTI would not relieve DeAM, Inc. of its duties under the New Advisory Agreement (including, without limitation, its obligation to ensure that the Portfolio’s assets are managed in accordance with the [Portfolio’s] registration statement). The Board also considered, with respect to both the New Advisory Agreement and the New Sub-Advisory Agreement, the recommendations of the Board of Trustees of the Portfolio.

Therefore, after careful consideration, the Boards of Trustees, including the Independent Trustees of the Fund and the Portfolio, recommend that the shareholders of the Fund vote ‘FOR’ the approval of the New Advisory Agreement as set forth in Proposal I and the New Sub-Advisory Agreement as set forth in this Proposal II.

In view of the master-feeder structure discussed earlier, approval of Proposal I with respect to the Portfolio’s New Advisory Agreement and Proposal II with respect to the Portfolio’s New Sub-Advisory Agreement each requires the affirmative vote of a ‘majority’ of the outstanding shares of those feeder funds participating as shareholders of the Portfolio and entitled to vote on the matter, i.e., in this instance, the Fund. ‘Majority’ (as defined in the 1940 Act) means (as of the Record Date) the lesser of (a) 67% or more of the shares of the Portfolio present at the Special Meeting, if the holders of more than 50% of the outstanding shares of the Portfolio are present in person or by proxy, or (b) more than 50% of the outstanding shares of the Portfolio determined by reference to the shares outstanding of the various feeder funds entitled to vote on the matter. 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 I and II.

Shareholders holding at least [10]% of the Fund’s outstanding voting securities (as defined in the 1940 Act) may require the calling of a meeting of shareholders for the purpose of voting on the removal of any Trustee of the Fund. Meetings of shareholders for any other purpose also shall be called by the Board of Trustees when requested in writing by shareholders holding at least 10% of the shares then outstanding.

1. Appointment of Investment Advisor. The Trust hereby appoints the Advisor to act as the investment advisor of each series listed in Exhibit A to this Agreement (each such series, together with all other series subsequently established by the Trust and made subject to this Agreement in accordance with section 11, being herein referred to as ‘a Series’, and collectively as ‘the Series’). The Advisor shall manage a Series’ affairs and shall supervise all aspects of a Series’ operations (except as otherwise set forth herein), including the investment and reinvestment of the cash, securities or other properties comprising a Series’ assets, subject at all times to the policies and control of the Board of Trustees. The Advisor shall give a Series the benefit of its best judgment, efforts and facilities in rendering its services as Advisor.

(d) obtain and evaluate pertinent information about significant developments and economic, statistical and financial data, domestic, foreign or otherwise, whether affecting the economy generally or a Series, and whether concerning the individual issuers whose securities are included in a Series portfolio or the activities in which they engage, or with respect to securities which the Advisor considers desirable for inclusion in a Series’ portfolio;

4. Portfolio Transactions. The Advisor is authorized to select the brokers or dealers that will execute the purchases and sales of portfolio securities for a Series and is directed to use its reasonable best efforts to obtain the best net results as described from time to time in a Series’ prospectus and statement of additional information. The Advisor will promptly communicate to the Administrator and to the officers and the Trustees of the Trust such information relating to portfolio transactions as they may reasonably request.

It is understood that the Advisor will not be deemed to have acted unlawfully, or to have breached a fiduciary duty to the Trust or be in breach of any obligation owing to the Trust under this Agreement, or otherwise, solely by reason of its having directed a securities transaction on behalf of a Series to a broker-dealer in compliance with the provisions of Section 28(e) of the Securities Exchange Act of 1934 or as otherwise permitted from time to time by a Series’ prospectus and statement of additional information.

Subject to the policies established by the Board in compliance with applicable law, the Advisor may direct DB Securities, Inc. (‘DB Securities’) or any of its affiliates to execute portfolio transactions for a Series on an agency basis. The commissions paid to DB Securities or any of its affiliates must be, as required by Rule 17e-1 under the 1940 Act, ‘reasonable and fair compared to the commission, fee or other remuneration received or to be received by other brokers in connection with comparable transactions involving similar securities . . . during a comparable period of time.’ If the purchase or

sale of securities consistent with the investment policies of a Series or one or more other accounts of the Advisor is considered at or about the same time, transactions in such securities will be allocated among the accounts in a manner deemed equitable by the Advisor. DB Securities or any of its affiliates and the Advisor may combine such transactions, in accordance with applicable laws and regulations, in order to obtain the best net price and most favorable execution.

The Trust on behalf of a Series will not deal with the Advisor or DB Securities or any of its affiliates in any transaction in which the Advisor or DB Securities or any of its affiliates acts as a principal with respect to any part of a Series’ order, except in compliance with rules of the SEC. If DB Securities or any of its affiliates is participating in an underwriting or selling group, a Series may not buy portfolio securities from the group except in accordance with policies established by the Board in compliance with rules of the SEC.

(b) The Trust assumes and shall pay or cause to be paid all other expenses of the Trust on behalf of a Series, including, without limitation: payments to the Trust’s distributor under the Trust’s plan of distribution; the charges and expenses of any registrar, any custodian or depository appointed by the Trust for the safekeeping of a Series’ cash, portfolio securities and other property, and any transfer, dividend or accounting agent or agents appointed by the Trust; brokers’ commissions chargeable to the Trust on behalf of a Series in connection with portfolio securities transactions to which the Trust is a party; all taxes, including securities issuance and transfer taxes, and fees payable by the Trust to Federal, State or other governmental agencies; the costs and expenses of engraving or printing of certificates representing shares of the Trust; all costs and expenses in connection with the registration and maintenance of registration of the Trust and its shares with the SEC and various states and other jurisdictions (including filing fees, legal fees and disbursements of counsel); the costs and expenses of printing, including typesetting, and distributing prospectuses and statements of additional information

of the Trust and supplements thereto to the Trust’s shareholders; all expenses of shareholders’ and Trustees’ meetings and of preparing, printing and mailing of proxy statements and reports to shareholders; fees and travel expenses of Trustees or Trustee members of any advisory board or committee; all expenses incident to the payment of any dividend, distribution, withdrawal or redemption, whether in shares or in cash; charges and expenses of any outside service used for pricing of the Trust’s shares; charges and expenses of legal counsel, including counsel to the Trustees of the Trust who are not interested persons (as defined in the 1940 Act) of the Trust and of independent certified public accountants, in connection with any matter relating to the Trust; membership dues of industry associations; interest payable on Trust borrowings; postage; insurance premiums on property or personnel (including officers and Trustees) of the Trust which inure to its benefit; extraordinary expenses (including but not limited to, legal claims and liabilities and litigation costs and any indemnification related thereto); and all other charges and costs of the Series’ or Trust’s operation unless otherwise explicitly provided herein.

8. Delegation of Advisory Services. With respect to any or all Series listed in Schedule A to this Agreement, and subject to the prior approval of a majority of the members of the Trust’s Board of Trustees, including a majority of the Trustees who are not ‘interested persons,’ as defined in the 1940 Act, and, where required, the shareholders of the Series, the Advisor may, through a sub-advisory agreement or other arrangement, (1) delegate to a sub-adviser any or all of its duties enumerated in section 1 hereof and (2) delegate to any other company that the Advisor controls, is controlled by, or is under common control with, or to specified employees of any such companies, or to more than one such company, to the extent permitted by applicable law, any or all of the Advisor’s duties enumerated in section 1 hereof, and may adjust the duties of such entity, the portion of portfolio assets of the Series that such entity shall manage and the fees to be paid to such entity; provided, that with respect to the delegations, the Advisor shall continue to supervise the services provided by any such sub-adviser or any such company or employees and any such delegation shall not relieve the Advisor of any of its obligations hereunder (including without limitation the management of the Series’ assets in accordance with this Agreement).

Except as hereinafter set forth, compensation under this Agreement shall be calculated and accrued daily and the amounts of the daily accruals shall be paid monthly. If this Agreement becomes effective subsequent to the first day of a month, compensation for that part of the month this Agreement is in effect shall be prorated in a manner consistent with the calculation of the fees as set forth above.

10. Non-Exclusivity. The services of the Advisor to the Trust on behalf of each Series are not to be deemed to be exclusive, and the Advisor shall be free to render investment advisory or other services to others (including other investment companies) and to engage in other activities, so long as its services under this Agreement are not impaired thereby. It is understood and agreed that officers or directors of the Advisor may serve as officers or Trustees of the Trust, and that officers or Trustees of the Trust may serve as officers or directors of the Advisor to the extent permitted by law; and that the officers and directors of the Advisor are not prohibited from engaging in any other business activity or from rendering services to any other person, or from serving as partners, officers, trustees or directors of any other firm, trust or corporation, including other investment companies.

11. Additional Series and Classes. In the event that the Trust establishes one or more series of Shares or one or more classes of Shares after the effectiveness of this Agreement, such series of shares or classes of shares, as the case may be, shall become Series and Classes under this Agreement upon approval of this Agreement by the Board with respect to the series of Shares or class of Shares and the execution of an amended Appendix A reflecting the applicable names and terms.

12. Duration and Termination. This Agreement, unless sooner terminated as provided herein, shall remain in effect with respect to the Trust on behalf of a Series until two years from the date first set forth above, and thereafter, for periods of one year so long as such continuance thereafter is specifically approved at least annually (a) by the vote of a majority of those Trustees of the Trust who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval, and (b) by the Trustees of the Trust or by vote of a majority of the outstanding voting securities of a Series, subject to the right of the Trust and the Advisor to terminate this contract as provided in this Section 12; provided, however, that if the shareholders of a Series fail to approve the Agreement as provided herein, the Advisor may continue to serve hereunder in the manner and to the extent permitted by the 1940 Act as modified or interpreted by any applicable order or orders of the SEC or any rules or regulations adopted by, or interpretative releases of, the SEC thereunder. The foregoing requirement that continuance of this Agreement be ‘specifically approved at least annually’ shall be construed in a manner consistent with the 1940 Act as modified or interpreted by any applicable order or orders of the SEC or any rules or regulations adopted by, or interpretative releases of, the SEC thereunder.

This Agreement may be terminated as to a Series at any time, without the payment of any penalty by vote of a majority of the Trustees of the Trust or by vote of a majority of the outstanding voting securities of a Series on not less than 60 days’ written notice to the Advisor, or by the Advisor at any time without the payment of any penalty, on 90 days written notice to the Trust. This Agreement will automatically and immediately terminate in the event of its assignment. Any notice under this Agreement shall be given in writing, addressed and delivered, or mailed postpaid, to the other party at any office of such party.

The Advisor shall not be liable for any error of judgment or mistake of law or for any loss suffered by a Series in connection with the matters to which this Agreement relates, except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Advisor in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement.

16. Entire Agreement. This Agreement states the entire agreement of the parties hereto, and is intended to be the complete and exclusive statement of the terms hereof. It may not be added to or changed orally, and may not be modified or rescinded except by a writing signed by the parties hereto and in accordance with the 1940 Act as modified or interpreted by any applicable order or orders of the SEC or any rules or regulations adopted by, or interpretative releases of, the SEC, when applicable.

19. Questions of Interpretation. Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act shall be resolved by reference to such term or provision of the 1940 Act and to interpretations thereof, if any, by the United States Courts or in the absence of any controlling decision of any such court, by rules, regulations or orders of the SEC issued pursuant to the 1940 Act. In addition, where the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is modified or interpreted by any applicable order or orders of the SEC or any rules or regulations adopted by, or interpretative releases of, the SEC thereunder, such provision shall be deemed to incorporate the effect of such order, rule, regulation or interpretative release. Otherwise the provisions of this Agreement shall be interpreted in accordance with the laws of Maryland.

1. Investment Advisory and Management Services. Subject to and in accordance with the provisions hereof, the Investment Adviser hereby appoints the Subadviser to serve as sub-investment adviser to perform the various investment advisory and other services for the Fund set forth herein and, subject to the restrictions set forth herein, hereby delegates to the Subadviser the authority vested in the Investment Adviser pursuant to the Advisory Agreement to the extent necessary to enable the Subadviser to perform its obligations under this Agreement, and the Subadviser hereby accepts such appointment.

Subject to the supervision and control of the Investment Adviser and the Board of Trustees, the Subadviser will regularly provide the Fund with investment advice and investment management services concerning the investments of the Fund. The Subadviser will determine what securities shall be purchased, held, sold or reinvested by the Fund and what portion of the Fund’s assets shall be held uninvested in cash and cash equivalents, subject at all times to: (i) the provisions of the Trust’s Declaration of Trust and By-laws, (ii) the requirements of the 1940 Act, and the rules and regulations thereunder, (iii) the investment objectives, policies and restrictions applicable to the Fund (including, without limitation, the provisions of the Internal Revenue Code of 1986, as amended (the “Code”) applicable to regulated investment companies), as each of the same shall be from time to time in effect or set forth in the Fund’s Prospectus and Statement of Additional Information, and (iv) any other investment guidelines, policies

To carry out such determinations the Subadviser will exercise full discretion, subject to the preceding paragraph, and act for the Fund in the same manner and with the same force and effect as the Trust might or could do with respect to purchases, sales or other transactions, as well as with respect to all other things necessary or incidental to the furtherance or conduct of such purchases, sales or other transactions.

The Subadviser will also make its officers and employees available to meet with the officers of the Investment Adviser and the Trust’s officers and Trustees on due notice to review the investments and investment program of the Fund in the light of current and prospective economic and market conditions. In addition, the Subadviser shall, on the Subadviser’s own initiative, and as reasonably requested by the Investment Adviser, for itself and on behalf of the Fund, furnish to the Investment Adviser from time to time whatever information the Investment Adviser reasonably believes appropriate for this purpose. From time to time as the Board of Trustees of the Trust or the Investment Adviser may reasonably request, the Subadviser will furnish to the Investment Adviser and Trust’s officers and to each of its Trustees, at the Subadviser’s expense, reports on portfolio transactions and reports on issuers of securities held by the Fund, all in such detail as the Trust or the Investment Adviser may reasonably request. In addition, the Subadviser shall provide advice and assistance to the Investment Adviser as to the determination of the value of securities held or to be acquired by the Fund for valuation purposes in accordance with the process described in the Fund’s current Prospectus or Statement of Additional Information.

The Subadviser shall maintain all accounts, books and records as required of an investment adviser of a registered investment company pursuant to the 1940 Act and the rules and regulations thereunder relating to its responsibilities provided hereunder with respect to the Fund, and shall preserve such records for the periods and in a manner prescribed by under the 1940 Act and the rules and regulations thereunder. The Subadviser shall maintain and enforce adequate security procedures with respect to all materials, records, documents and data relating to any of its responsibilities pursuant to this Agreement including all means for the effecting of securities transactions. The Subadviser agrees that all such records are the property of the Trust, and will be surrendered to the Trust promptly upon request. The Subadviser shall permit the Investment Adviser, the Fund’s officers and its independent public accountants to inspect and audit such records pertaining to the Fund at reasonable times during normal business hours upon due notice.

In the performance of its duties hereunder, the Subadviser is and shall be an independent contractor and, except as expressly provided for herein or otherwise expressly provided or authorized in writing by the Investment Adviser, shall have no authority to act for or represent any Fund or the Trust in any way or otherwise be deemed to be an agent of any Fund, the Trust or of the Investment Adviser. If any occasion should arise in which the Subadviser gives any advice to its clients concerning the shares of the Fund, the Subadviser will act solely as investment counsel for such clients and not in any way on behalf of the Fund. The Subadviser’s services to the Fund pursuant to this Agreement are not to be deemed to be exclusive, and it is understood that the Subadviser may render investment advice, management and other services to others.

2. Expenses. The Subadviser will bear its own costs of performing its obligations under this Agreement, including, but not limited to, the following: all necessary investment and management facilities, including salaries of personnel required for it to execute its duties faithfully, and administrative facilities, including bookkeeping, clerical personnel and equipment necessary for the efficient conduct of the investment affairs of the Fund.

The Subadviser will not be responsible for expenses of the Investment Adviser or the Fund, including, but not limited to, the following: the Fund’s legal, auditing and accounting expenses; expenses of maintenance of the Fund’s books and records other than those required to be maintained by the Subadviser, including computation of the Fund’s daily net asset value per share and dividends; interest, taxes, governmental fees and membership dues incurred by the Fund; fees of the Fund’s custodians, transfer agents, registrars or other agents; expenses of preparing the Fund’s share certificates; expenses relating to the redemption or repurchase of the Fund’s shares; expenses of registering and qualifying Fund shares for sale under applicable federal and state laws; expenses of preparing, setting in print, printing and distributing prospectuses, reports, notices and dividends to Fund investors (except that the Subadviser will be responsible for costs associated with reprints of or supplements to such documents necessitated solely by actions involving the Subadviser, including, without limitation, a change of control of the Subadviser or any change in the portfolio manager or managers assigned by the Subadviser to manage the Fund); cost of Fund stationery; costs of Trustee, shareholder and other meetings of the Trust or Fund (except that the Subadviser will be responsible for costs associated with any shareholder meeting, proxy solicitation or proxy statement or information statement, in each case, to the extent necessitated by actions or events involving the Subadviser, including, without limitation, a change of control of the Subadviser); traveling expenses of officers, Trustees and employees of the Trust or Fund; fees of the Trust’s Trustees and salaries of any officers or employees of the Trust or Fund; and the Fund’s pro rata portion of premiums on any fidelity bond and other insurance covering the Trust or Fund and their officers and Trustees.

Compensation of Subadviser. As compensation for all investment advisory and management services to be rendered hereunder, the Investment Adviser will pay the Subadviser an annual fee from its fee, computed daily and paid monthly in arrears, which varies in accordance with the net asset value of the Fund. The annual subadvisory fee is expressed as a percent of the average daily net assets of the Fund as follows:

For purposes hereof, the value of net assets of the Fund shall be computed as required by the 1940 Act and in accordance with any procedures approved by the Board of Trustees for the computation of the value of the net assets of the Fund in connection with the determination of net asset value of its shares. On any day that the net asset value determination is suspended as specified in the Fund’s Prospectus, the net asset value for purposes of calculating the advisory fee shall be calculated as of the date last determined.

b. The Investment Adviser has furnished the Subadviser copies of the Fund’s Prospectus and Statement of Additional Information, provisions of the Trust’s Declaration of Trust and by-laws that are relevant to the services contemplated by this Agreement, and all investment guidelines, policies or limitations the Board of Trustees or the Investment Adviser has from time to time established that are applicable to the Fund, and agrees during the continuance of this Agreement to furnish the Subadviser copies of any revisions or supplements thereto at, or, if practicable, before the time the revisions or supplements become effective.

4. Brokerage Transactions. Subject to the provisions of this Section 4 and absent instructions from the Investment Adviser or the Trust, the Subadviser will have full discretionary authority to place orders for the purchase and sale of securities for the account of the Fund with such brokers or dealers as it may select. In the selection of such brokers or dealers and the placing of such orders, the Subadviser is directed at all times to seek for the Fund the most favorable best execution and net price available. In assessing the best execution and net price available for any transaction, the Subadviser shall consider all factors its deems relevant, including without limitation, the breadth of the market in and the price of the security, the financial condition and execution capability of the broker or dealer, the quality of research provided and the reasonableness of the commission, if any, with respect to the specific transaction and on a continuing basis.

It is also understood, however, that it is desirable for the Fund that the Subadviser have access to supplemental investment and market research and security and economic analyses provided by certain brokers who may execute brokerage transactions at higher commissions to the Fund than another broker may have charged. Therefore, the Subadviser is authorized to place orders for the purchase and sale of securities for the Fund with such brokers upon a good faith determination that the commission paid is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, subject to applicable laws and regulations and review and direction by the Investment Adviser and the Trust’s Board of Trustees from time to time with respect to the extent and continuation of this practice. The Subadviser shall provide such information as the Investment Adviser or the Trustees shall from time to time request concerning the commissions paid by the Fund and

On occasions when the Subadviser deems the purchase or sale of a security to be in the best interests of the Fund as well as other clients of the Subadviser, the Subadviser, to the extent permitted by applicable laws and regulations, may, but shall be under no obligation to, aggregate the securities to be sold or purchased in order to obtain the most favorable price or lower brokerage commissions and efficient execution. In such event, allocation of securities so sold or purchased, as well as the expenses incurred in the transaction, will be made by the Subadviser in the manner the Subadviser considers to be the most equitable and consistent with its fiduciary obligations to the Fund and to such other clients.

The Subadviser may buy securities for a Fund at the same time it is selling such securities for another client account and may sell securities for the Fund at the time it is buying such securities for another client account. In such cases, subject to applicable legal and regulatory requirements, and in compliance with such procedures of the Trust as may be in effect from time to time, the Subadviser may effectuate cross transactions between the Fund and such other account if it deems this to be advantageous to both of the accounts involved.

Notwithstanding the foregoing, the Subadviser agrees that the Investment Adviser shall have the right by written notice to identify securities that may not be purchased on behalf of the Fund and/or brokers and dealers through or with which portfolio transactions on behalf of the Fund may not be effected, including, without limitation, brokers or dealers affiliated with the Investment Adviser. The Subadviser shall refrain from purchasing such securities for the Fund or directing any portfolio transaction to any such broker or dealer on behalf of the Fund, unless and until the written approval of the Investment Adviser or the Board of Trustees, as the case may be, is so obtained. In addition, the Subadviser agrees that it shall not direct portfolio transactions for the Fund with or through the Subadviser or any broker or dealer that is an “affiliated person” of the Subadviser (as defined in the 1940 Act or interpreted under applicable rules and regulations of the Securities and Exchange Commission) without the prior written approval of the Board of Trustees and the Investment Adviser and then only as permitted under the 1940 Act.

The Subadviser will advise the Fund’s custodian on a prompt basis of each purchase and sale of a portfolio security, specifying the name of the issuer, the description and amount or number of shares of the security purchased or sold, the market price, commission and gross or net price, trade date, settlement date and identity of the effecting broker or dealer, and such other information as may be reasonably required.

and research or upon investigation and research made by any other individual, firm or corporation, if such recommendation shall have been made and such other individual, firm, or corporation shall have been selected with due care and in good faith; but nothing herein contained will be construed to protect the Subadviser against any liability to the Investment Adviser, the Fund or its shareholders by reason of: (a) the Subadviser’s causing the Fund to be in violation of any applicable federal or state law, rule or regulation or any investment policy or restriction set forth in the Fund’s Prospectus or Statement of Additional Information or any written guidelines, policies or instruction provided in writing by the Trust’s Board of Trustees or the Investment Adviser, (b) the Subadviser’s causing the Fund to fail to satisfy the diversification or source of income requirements of Subchapter M of the Code or (c) the Subadviser’s willful misfeasance, bad faith or gross negligence generally in the performance of its duties hereunder or its reckless disregard of its obligations and duties under this Agreement.

6. Term and Termination. This Agreement shall remain in force until , 200 and from year to year thereafter, but only so long as such continuance, and the continuance of the Investment Adviser as investment adviser of the Fund, is specifically approved at least annually by the vote of a majority of the Trustees who are not interested persons of the Subadviser or the Investment Adviser of the Fund, cast in person at a meeting called for the purpose of voting on such approval and by a vote of the Board of Trustees or of a majority of the outstanding voting securities of the Fund. The aforesaid requirement that continuance of this Agreement be “specifically approved at least annually” shall be construed in a manner consistent with the 1940 Act and the rules and regulations thereunder. This Agreement may, upon 60 days’ written notice to the Subadviser, be terminated at any time without the payment of any penalty, (a) by the Fund, by the Board of Trustees or by vote of a majority of the outstanding voting securities of the Fund, or (b) by the Investment Adviser. This Agreement may, upon 120 days written notice to the Trust and the Investment Adviser, be terminated at any time, without payment of any penalty, by the Subadviser. This Agreement shall automatically terminate in the event of its assignment or in the event of the termination of the Advisory Agreement. In addition, the Investment Adviser shall have the right to terminate this Agreement upon immediate notice if the Subadviser becomes statutorily disqualified from performing its duties under this Agreement or otherwise is legally prohibited from operating as an investment adviser. Upon the effective date of termination of this Agreement, the Subadviser shall deliver all books and records of the Trust and the Fund to such entity as the Trust may designate as a successor subadviser, or to the Investment Adviser. [The provisions of Sections 5, 13, 14, 15, 16, 18 and 19 shall survive termination of this Agreement.]

7. Interpretation of Terms; Captions. In interpreting the provisions of this Agreement, the definitions contained in Section 2(a) of the 1940 Act and the rules and regulations thereunder (including specifically the definitions of “interested person,” “affiliated person,” “assignment,” “control” and “vote of a majority of the outstanding voting securities”), shall be applied, subject, however, to such exemptions as may be granted by the Securities and Exchange Commission by any rule, regulation or order. Captions used herein are for reference only and shall not limit or otherwise affect the meaning of any provision of this Agreement.

to the Fund as filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, and the 1940 Act (File Nos. ; 811- ) and the current Prospectus and Statement of Additional Information relating to the Fund, and represents and warrants that with respect to disclosure about the Subadviser or information relating directly or indirectly to the Subadviser, such Registration Statement, Prospectus and Statement of Additional Information contain, on and after the effective date thereof, no untrue statement of any material fact and do not omit any statement of material fact which was required to be stated therein or necessary to make the statements contained therein not misleading.

The Subadviser shall promptly provide such information as is necessary to enable the Trust to prepare and update the Trust’s Registration Statement (and any supplement thereto) and the Fund’s financial statements, and shall notify the Trust promptly in the event any information contained therein relating to the Subadviser or the Subadviser’s management of the Fund becomes inaccurate or incomplete under applicable law. The Subadviser understands that the Trust and the Investment Adviser will rely on such information in the preparation of the Trust’s Registration Statement and the Fund’s financial statements, and hereby covenants that any such information approved by the Subadviser expressly for use in such registration and/or financial statements shall be true and complete in all material respects.

The Subadviser shall establish compliance procedures reasonably calculated to ensure compliance at all times with: all applicable provisions of the 1940 Act and the Advisers Act, and any rules and regulations adopted thereunder; Subchapter M of the Code; the provisions of the Registration Statement; the governing documents of the Fund and other written policies, guidelines and instructions; and any other applicable provisions of state, federal or foreign law. The Subadviser shall provide to the Investment Adviser and/or the Trustees such information as it or they may reasonably request in order to review the adequacy of the Subadviser’s compliance procedures.

The Subadviser shall maintain and enforce a Code of Ethics which in form and substance is consistent with industry norms existing from time to time. The Subadviser agrees to report to the Investment Adviser any material violations of the Code of Ethics affecting the Fund of which its senior management becomes aware. The Subadviser shall promptly notify the Investment Adviser and the Trustees upon the adoption of any material change to its Code of Ethics and provide copies thereof to the Investment Adviser and the Trustees so that the Trustees, including a majority of the Trustees who are not interested persons of the Fund, may consider approval of such change promptly after its adoption by the Subadviser. The Subadviser shall also provide the Fund with a copy of any amendments to its Code of Ethics that do not represent a material change to such Code of Ethics.

13. Regulation. Except to the extent prohibited by applicable law or order, the Subadviser agrees that it will immediately forward, upon receipt, to the Adviser, for itself and as agent for the Fund, any correspondence from the Securities and Exchange Commission or other regulatory authority that relates to the Fund including routine regulatory examinations or inspections. Subject to Section 18 hereof, the Subadviser shall submit to all regulatory and administrative bodies having jurisdiction over the services provided pursuant to this Agreement any information, reports or other material which any such body by reason of this Agreement may reasonably request or require pursuant to applicable laws and regulations, and shall cooperate with the Trust and the Investment Adviser in responding to requests or investigations of such regulatory or administrative bodies or any internal investigation conducted by the Trust or the Investment Adviser.

15. Entire Agreement; Amendments. This Agreement states the entire agreement of the parties hereto, and is intended to be the complete and exclusive statement of the terms hereof. It may not be added to or changed orally, and may not be modified or rescinded, except by a writing signed by the parties hereto and in accordance with the 1940 Act or pursuant to applicable orders or interpretations of the Securities and Exchange Commission.

16. Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms or provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.

18. Confidentiality. Each party agrees that it shall hold in strict confidence all data and information obtained from another party hereto (unless such information is or becomes readily ascertainable from public or published information or trade sources) and shall ensure that its officers, employees and authorized representatives do not disclose such information to others without the prior written consent of the party from whom it was obtained, unless such disclosure is required by the Securities and Exchange Commission, other regulatory body with applicable jurisdiction, or the Fund’s

PRINCIPAL OCCUPATIONS OF EACH DIRECTOR AND PRINCIPAL EXECUTIVE OFFICER OF DeAM, INC.

The names and principal occupations of the current directors and executive officers of DeAM, Inc. are set forth below. The business address of each person is 280 Park Avenue, New York, NY 10017, except for William Butterly and John Kim whose business address is 345 Park Avenue, New York, NY 10154.

Name and Position with Northern Trust Investments, Inc.		Principal Occupation
Stephen B. Timbers Chairman, President & Chief Executive Officer		President, Northern Trust Global Investments, and Executive Vice President, Northern Trust Corporation and The Northern Trust Company

Judy M. Bednar Director and Senior Vice President		Senior Vice President Northern Trust Investments, Inc.

Carl J. Domino Director & Senior Vice President		Senior Vice President Northern Trust Investments, Inc.

Orie Leslie Dudley, Jr. Director and Executive Vice President		Executive Vice President and Chief Investment Officer, Northern Trust Corporation and The Northern Trust Company

Perry R. Pero Director		Vice Chairman and Chief Financial Officer, Northern Trust Corporation and The Northern Trust Company

Stephen N. Potter Director & Senior Vice President		Senior Vice President The Northern Trust Company

Alan W. Robertson Director & Senior Vice President		Senior Vice President Northern Trust Investments, Inc.

Kevin J. Rochford Director & Senior Vice President		Senior Vice President Northern Trust Investments, Inc.

Peter L. Rossiter Director		President—Corporate and Institutional Services Northern Trust Corporation and The Northern Trust Company

Terence J. Toth Director & Senior Vice President		Executive Vice President The Northern Trust Company

Frederick H. Waddell Director		Executive Vice President The Northern Trust Company

Lloyd A. Wennlund Director and Senior Vice President		Senior Vice President Northern Trust Investments, Inc.

The undersigned hereby appoints Daniel O. Hirsch, Phillip J. Collora, John Millette and Caroline Pearson, 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 Proposal I and Proposal II. All ABSTAIN votes will be counted in determining the existence of a quorum at the Special Meeting.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES WITH RESPECT TO YOUR FUND. THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS I AND II.

UNLESS VOTING BY TELEPHONE OR INTERNET, PLEASE SIGN AND DATE BELOW AND MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.

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.)

PROPOSAL I:		To approve a new advisory agreement between the Portfolio and Deutsche Asset Management, Inc. (‘DeAM, Inc.’).

PROPOSAL II:		To approve an investment sub-advisory agreement for the Portfolio between DeAM, Inc. and Northern Trust Investments, Inc.

PROPOSAL I:		To approve a new advisory agreement (the ‘New Advisory Agreement’) between the Portfolio and Deutsche Asset Management, Inc. (‘DeAM, Inc.’)

PROPOSAL II:		To approve an investment sub-advisory agreement (the ‘New Sub-Advisory Agreement’) for the Portfolio between DeAM, Inc. and Northern Trust Investments, Inc. (‘NTI’).

	Date of Current Advisory Agreement	Date Last Approved by the Fund’s
Fund (Fiscal Year)	Date of Current Advisory Agreement	Trustees	Shareholders*
Scudder S&P 500 Index Fund (12/31)	7/30/02	6/7/02	7/30/02

[SEAL]						[TRUST NAME]

Attest:						By:

Name:						Name:

						Title:

[SEAL]						DEUTSCHE ASSET MANAGEMENT, INC.

Attest:						By:

Name:						Name:

						Title:

Average Daily Net Asset Level		Annual Fee Rate
$0 to $ million		%
above $ million to $ million		%
above $ million to $ million		%
above $ million		%

Fund		Number of Shares Outstanding
Scudder S&P 500 Index Fund

Name and Address of Beneficial Owner	Shares Beneficially Owned	Percent Ownership of Outstanding Shares
		%
		%

Fund with similar investment objectives		Total Assets as of , 2002		Contractual Advisory Fees

Name		Principal Occupation
Stephen R. Burke		Director
Lori Callahan		Director and President
Deborah Flickinger		Director
William N. Shiebler		Director
Gwyn Thomas		Director and Treasurer
David Baldt		Executive Vice President
Gary Bartlett		Executive Vice President
William G. Butterly, III		Executive Vice President, Secretary, General Counsel, and Chief Legal Officer
Amy Olmert		Chief Compliance Officer
Joseph Rice		Assistant Treasurer
John Kim		Assistant Secretary

Funds With Similar Investment Objectives	Total Assets as of September 30, 2002		Contractual Advisory Fees
Northern Small Cap Index Fund	$	232,564,558.87	0.60	%(1)
Northern Stock Index Fund	$	329,356,336.55	0.50	%(2)
Northern Institutional International Equity	$	67,469,124.99	0.35	%(3)
Index Portfolio
Northern Institutional Small Company	$	160,297,980.74	0.30	%(4)
Index Portfolio
Northern Institutional Equity Index	$	576,714,451.44	0.20	%(5)
Portfolio
Northern Institutional U.S. Treasury Index	$	55,156,275.50	0.30	%(6)
Portfolio
UMB Scout Equity Index Fund	$	36,857,938.00	0.08	%(7)
AB Funds Trust Equity Index Fund	$	286,164,921.93	0.04	%(8)




Signature (Please sign within box)	Date	Signature (Joint Owners)	Date