Annual
report
dated August 31, 1999
Deutsche Top 50 World
(Class A Shares and Class B Shares)
Deutsche Top 50 Europe
(Class A Shares, Class B Shares and Class C Shares)
Deutsche Top 50 Asia
(Class A Shares and Class B Shares)
Deutsche Top 50 US
(Class A Shares, Class B Shares and Class C Shares)
Deutsche European Mid-Cap Fund
(Class A Shares, Class B Shares and Class C Shares)
Deutsche German Equity Fund
(Class A Shares, Class B Shares and Class C Shares)
Deutsche Japanese Equity Fund
(Class A Shares and Class B Shares)
Deutsche Global Bond Fund
(Class A Shares and Class B Shares)
Deutsche European Bond Fund
(Class A Shares, Class B Shares and Class C Shares)
Deutsche US Money Market Fund
(Class A Shares and Class B Shares)
Deutsche Institutional
US Money Market Fund
(Class Y Shares)
[Logo of Deutsche Funds]
LETTER TO SHAREHOLDERS
Dear Fellow Shareholders:
We are pleased to present you with this annual report of the Deutsche Funds for
the twelve months ended August 31, 1999. It provides market and investment
reviews from each of the Deutsche Funds' portfolio managers as well as a
complete financial summary of the Funds' operations and a listing of the
portfolios' holdings.
World equity markets in general rebounded sharply from the summer of 1998's
painful sell-off, as the U.S. Federal Reserve Board (the "Fed") cut interest
rates, international monetary policy seemed better coordinated, and Japan
initiated reflation and restructuring efforts during the fourth calendar
quarter. As 1999 began, evidence of global economic healing became overwhelming,
particularly in the impressive recovery of the Latin American, Asian, and
Eastern European emerging markets battered by last year's economic and financial
turmoil. Turnaround in the Japanese economy was perhaps most dramatic. Infusion
of liquidity by its government, minor signs of a revival in private demand, and
a continued zero interest policy by the Bank of Japan sparked a rather strong
rally in Japanese equities.*
Europe's economic fortunes began to improve as well, with firming consumer
confidence and a clear upturn in the industrial sector. These positive signs
seem to have stopped the relentless decline of the Euro, the new currency
launched in January 1999. At the same time, such stronger growth pushed up
European interest rates, partly on concerns that the European Central Bank would
begin to reverse its accommodative monetary stance. In fact, the Bank of England
began the process of monetary tightening by hiking rates 0.25%. These rate
concerns, along with tensions about the Kosovo conflict, Russian political
instability, and the impact of higher oil prices, weighed somewhat on European
equities during the annual reporting period.
As the global economy started to improve, the U.S. equity market continued a
volatile, but record-breaking run. The Dow Jones Industrial Average rose to new
highs, passing the 10,000 milestone and then the 11,000 level within the first
half of 1999.** Both the NASDAQ and S&P 500 Indices also closed in record
territory.** In the quarter ended August 1999, however, the U.S. equity market
was impacted by the Fed raising interest rates a total of 0.50% in two
subsequent moves, reversing two-thirds of the rate cuts it enacted during the
third calendar quarter of 1998. This has put the long bull run in U.S. equity
markets on pause for the moment.
International bond markets were impacted by most of the same factors as the U.S.
and international equity markets. Early in the Funds' fiscal year, these markets
were shaken by Russia defaulting on its domestic debt only weeks after entering
into a new International Monetary Fund-assisted bailout. In response to signs of
a global economic slowdown, central banks around the world eased monetary policy
to stimulate credit expansion, triggering an extensive bond rally in the last
months of 1998. However, year to date in 1999, international bonds, like U.S.
bonds, were generally lower in price. This was primarily due to concerns of
continued strong global growth, global inflation as reflected by significantly
higher commodity prices, and either actual or anticipated interest rate hikes.
Given this backdrop, we are pleased to report that seven of the eleven Deutsche
Funds outperformed their respective primary benchmark for the annual reporting
period.+ Clearly, in such a complex environment, Deutsche Fund Group's worldwide
research resources, disciplined investment strategies, focus on quality, and
risk management become a great advantage.
We are also pleased to announce that early in the year 2000, Deutsche Funds will
offer our shareholders even broader investment expertise and a more in-depth
global perspective as a benefit of the merger of Deutsche Bank and Bankers Trust
finalized in June 1999. Together, our investment group is one of the world's
most prominent and respected money managers. We will update you in the months
ahead on the exciting initiatives, enhancements, and opportunities this merger
enables us to provide.
We value your support of the Deutsche Funds and look forward to serving your
investment needs in the years ahead.
Sincerely,
Ross Youngman
Managing Director
Deutsche Asset Management
October 19, 1999
* Foreign investing involves special risks including currency risk, increased
volatility of foreign securities, and differences in auditing and other
financial standards.
** The Dow Jones Industrial Average (DJIA) is an unmanaged index which
represents share prices of selected blue-chip industrial corporations as well
as public utility and transportation companies.
The NASDAQ Index is an unmanaged index that measures all NASDAQ domestic and
non-U.S.-based common stocks listed on the NASDAQ Stock Market.
The S&P (Standard & Poor's) 500 is an unmanaged index consisting of common
stocks of industrial, utility, transportation and financial companies in the
U.S. market.
Investments cannot be made directly into indices.
+ Past performance is no guarantee of future results.
INVESTMENT REVIEW
Deutsche Top 50 World
Deutsche Top 50 World had an exceptional year. From its inception on October 2,
1997 through August 31, 1999, the Fund's Class A Shares achieved an average
annual total return of 19.42% at net asset value (NAV) (without sales charges).*
For the fiscal year, the Fund's Class A Shares achieved a total return of 42.19%
at NAV.* The MSCI World Index, the Fund's benchmark, achieved a total return of
33.05% during the same period.** The cash position in the Fund generally varied
between 0 - 10%.
In the first fiscal quarter of 1999, ongoing currency turmoil in emerging
markets around the world, the Russia crisis, and the increased risk of a
broad-based economic slowdown and weakness in the U.S. dollar contributed to a
major correction of stock prices in Europe and the U.S.
Deutsche Top 50 World proved to be exceptionally well-positioned during this
time as investors' flight-to-quality shifted more funds into the large-
capitalization, highly-liquid, global stocks owned by the Fund. The strategy of
the Fund continues to be fundamentally focused on highly-capitalized, global
players and leaders in their market segment which participate in five major
global growth trends:
. Population growth in the emerging markets;
. Aging of the population in industrial nations (health care);
. Rapidly growing demand for information and
communication technology;
. Increasing consumption of brand name products;
. Rising energy consumption.
Good second fiscal quarter performance for Class A Shares of the Fund can be
attributed to a heavy weighting in financial stocks (Merrill Lynch +45%,
American Express +25%, Citigroup +45%), an overweight position in the technology
sector (America Online +102%, Microsoft +33%), and an overweight position in
Asia (Sony +50%, Fujitsu +40%, NTT +35%).+ The Fund lost on relative performance
by being underweighted in the energy sector, which has performed well with the
rise in the price of oil.
In the Fund's fiscal third quarter, investors bid up cyclical, as well as
energy, stocks. Technology and finance sectors were weaker which caused the
Fund's Class A Shares to perform slightly worse than the Fund's benchmark, based
on NAV. Good performance in the Fund came from Japan and Asia (Sony, Fujitsu,
HSBC), and energy (Elf Aquitaine, Enron, Mobil, Total). Stocks rose to new highs
as interest rates in the U.S. remained unchanged. The Dow Jones Industrial
Average surpassed 11,000, cyclicals rose on optimism about the economy, and oil
stocks rose as the price of crude reached a 17-month high. Higher bond yields
and the bias of the U.S. Federal Reserve Board in favor of an interest rate
tightening preoccupied markets for the rest of the quarter and caused profit
taking. Financials were particularly hard-hit. In Europe, continued weakness in
the Euro benefited exporters.
This summer proved to be much more benign than originally expected. The U.S.
market corrected about 7.0% in August 1999 on continued inflation concerns, then
bounced back immediately to close the month slightly up.
The following stocks were replaced in the Fund over the past fiscal year; Sold:
Reuters, Royal Dutch, Exxon, Monsanto, Texaco, Elsevier, Eni Spa, Intel, and
Singapore Airlines; Bought: NTT, Shell Transport, Mobil, Merrill Lynch, Enron,
Vodafone, UBS, and EMC.
* Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Average annual total return for Class A Shares for the one-year
and since-inception (October 2, 1997) periods ended August 31, 1999, based on
offering price (with sales charges) was 34.35% and 15.93%, respectively.
Average annual total return for Class B Shares for the one-year and since-
inception (May 4, 1998) periods ended August 31, 1999, was 41.14% and 18.36%,
respectively, based on NAV (36.14% and 15.50%, respectively, based on
redemption value (including the contingent deferred sales charge (CDSC))).
** The MSCI World Index is created by selecting companies within the market
capitalization range of US $200-800 million. The dollar-denominated range is
applied across all 23 developed markets. This index is unmanaged.
+ Asian and Pacific Rim countries may have relatively unstable governments,
economies based on only a few commodities or industries, and securities markets
trading infrequently or in low volumes.
Deutsche Top 50 Europe
During the reporting period, market volatility in the European equity markets
was rather high. However, the Fund's Class A Shares achieved a total return of
2.84% at NAV (without sales charges) for the fiscal year.*
The depressed macroeconomic environment and the currency turmoil in worldwide
emerging markets led to a correction in European stock prices in September 1998.
Economies had been slowing down, causing business confidence to fall as fears of
global overcapacity and possible recession dominated the headlines. Successive
Federal Funds Target Rate cuts in the United States, and the Brazilian
International Monetary Fund package, helped to relieve the pressures on the
markets. Encouraged by the determined steps of the U.S. Federal Reserve Board
(the "Fed"), the market sentiment and worldwide equity markets have been
rebounding from October 1998 lows. The coordinated interest rate cut of the
European Central Bank countries in early December 1998 was a move that further
fueled the hopes of investors for improvement in growth prospects. Contributing
to the positive environment for equities were lower interest rates. In the first
half of 1999, European equity markets continued to rise. The most important
factors have been the improving consumer confidence in Europe as well as more
positive signals from the Asian and Latin American economies. After a calm
launch in January 1999, the Euro depreciated by more than 10.74% against the
U.S. dollar. However, this was due more to positive growth surprises in the U.S.
and related fears of Fed interest rate hikes than a genuine Euro weakness.
At the beginning of the summer, inflationary expectations led to a decline in
bond prices with the yield on the 30-year U.S. treasury bond reaching the 6%
level at the end of the reporting period. European yields have followed this
upward move.
The Fund's level of investment varied. In October 1998, the cash level reached a
maximum of around 10%. Since November 1998, the Fund has been invested 95% to
100%.
In October and November 1998, we significantly increased our weighting in the
utility sector for a more defensive orientation of the portfolio (Suez Lyonnaise
des Eaux and Vivendi). Since the beginning of 1999, a number of companies have
been exchanged. We reduced our weighting in pharmaceutical and chemical
companies and added to our position in the telecommunication sector (Vodafone,
Equant and Telefonica) and the financial sector (UBS). ICI replaced Swiss Re,
and Buderus replaced Generali. Both trades had been made to increase the
cyclical exposure of the Fund's portfolio in anticipation of an upswing in the
European economies. In the summer months, we further increased our holdings in
the technology sector (Nokia, Cap Gemini) and added the biotech company Qiagen
to the portfolio. All the companies mentioned above are known for their strong
position in their sector, high quality management and decent earnings growth.
Economic growth, restructuring, deregulation and liquidity are the major reasons
why European markets should proceed further. Historically, export markets pick
up strongly in the second half of the year, driving the recovery in gross
domestic product growth (forecast for Euroland 1999: 2.1% and 2000: 3.1%).
Liquidity should continue to be one of the most important drivers for market
performance. Demographics, required returns and the appetite for equities should
lead to fund flows from mutual and pension funds, insurance companies and direct
household investment. The European market is still trading at a price-to-
earnings discount to the U.S. market, even after adjusting for differences in
the sector mix. Thus, relatively low cost lends support to our view that the
European market will outperform over the next year or more.
*Performance quoted represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Average annual total return for Class A Shares for the reporting period,
based on offering price (with sales charges) was -2.83%. Average annual total
return for Class B Shares for the reporting period, based on NAV and redemption
value (including the CDSC) was 2.06% and -2.94%, respectively. Average annual
total return for Class C Shares for the period from inception date (September
2, 1998) through August 31, 1999, based on NAV and redemption value was 3.60%
and 2.60%, respectively.
Deutsche Top 50 Asia
The Asian stock markets have seen a strong recovery during the reporting period
from the weakness that resulted from the financial crisis following the
devaluation of the Thai baht in July 1997. A substantial strengthening of the
Japanese yen since the beginning of October 1998 has taken devaluation pressure
away from the other Asian currencies and has led to falling interest rates
across the whole region. Successive interest rate cuts in the United States in
October 1998 and the Brazilian International Monetary Fund package in Autumn
1998 helped to further relieve the pressure on the markets. Upgrades of economic
growth figures for Singapore and South Korea, the first signs of a recovery in
the Japanese economy, as well as a reallocation of international money into
Asia, have stimulated the markets in the second half of the reporting period.
The Fund has substantially outperformed its benchmark, the MSCI Pacific ex-Japan
Index, during the reporting period (Fund Class A Shares +130.0%, based on NAV
(without sales charges), MSCI Pacific ex-Japan Index +64.19%).*+ The Fund
concept paid-off well over the last fiscal year. The Fund concentrated its
investments in companies which are market leaders in their respective sector, or
have a competitive product or service. Quality blue-chip stocks have
substantially outperformed mid- and small-capitalization stocks around the
region. The Fund remained at a very high level of investment during the whole
reporting period.
Interest sensitive stocks such as property companies in Singapore and Hong Kong,
as well as banks in Singapore, have been the strongest performers in the first
half of the reporting period.
After the yen started to strengthen against the U.S. dollar, the Fund's
management reduced the Fund's exposure in export-oriented stocks. By adding the
two domestic telecommunications companies, NTT and NTT Docomo, we heightened the
Fund's exposure to the local economy. Adding Softbank in Japan, the market
leader in the Japanese internet business, to the portfolio proved to be very
positive. The stock has gone up more than 340% since its inclusion in the Fund's
portfolio.
Stronger prices for semiconductors after worldwide capacity shutdowns, and a
stronger than expected demand, led to higher sales volumes and an increase in
margin for Samsung Electronics. The stock has more than quintupled over the past
year. Representing nearly 10% of the portfolio's net asset value, Samsung
Electronics represents the largest single stock position in the portfolio.
Taiwan Semiconductor, another heavy-weighted stock in the portfolio, has
benefited from the worldwide trend of U.S. and Japanese companies to outsource
chip production.
Dr. Reddy's Laboratories (a pharmaceutical company in India) has been one of the
best-performing stocks in the Fund since investors have realized the quality of
the company's research and the regulatory environment in India which has enabled
the company to increase prices and create new products.
* Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Average annual total return for Class A Shares for the reporting
period, based on offering price (with sales charges) was 117.25%. Average
annual total return for Class B Shares for the reporting period, based on NAV
and redemption value (including the CDSC) was 128.65% and 123.65%,
respectively.
+ The MSCI Pacific ex-Japan Index is an arithmetic, market value-weighted
average of the performance of securities listed on the stock exchanges of the
following countries: Australia, China Free, Indonesia, Korea, Malaysia, New
Zealand, Philippines, Singapore, Taiwan and Thailand. This index excludes
Japan. This index is unmanaged.
Deutsche Top 50 US
For the fiscal year ended August 31, 1999, the Deutsche Top 50 US Class A Shares
slightly outperformed its benchmark, the S&P 500, at NAV (without sales
charges). For the reporting period, the S&P 500 ended on a strong note with a
total return of 34.62%. For the Fund's fiscal year, the investment climate can
be divided into two distinct periods. The second half of 1998 was marked by a
decelerating profit cycle for U.S. companies, which occurs when earnings growth
becomes scarce and investors tend to gravitate toward those stocks that can
maintain their growth rates in a difficult operating environment. These
companies are usually large-capitalization, high-quality, growth stocks. By the
third quarter of 1998, leadership had become so narrow that only a handful of
blue-chip names, such as Microsoft, Intel, Cisco and MCI WorldCom, pushed the
indexes higher.
As we entered the new year, a more positive outlook for global economies,
combined with continued strong growth in the U.S., fueled concerns about rising
U.S. interest rates. The profit cycle began to turn, with earnings re-
accelerating from the troughs seen during the second half of 1998 when the S&P
500 earnings declined by 3.1%. A modest cyclical rise in inflation in April
1999, which we consider as temporary, sent investors rotating from highly priced
growth stocks into cheaper small-capitalization and lower-quality value
investments. It was not until the end of June 1999 that the U.S. Federal Reserve
Board (the "Fed") began to raise interest rates. Two successive Fed-tightenings
brought the Federal Funds Target Rate to 5.25%, which is still 0.25% below where
it was before the 0.75% easing in response to last year's global financial
crisis.
The Fund has significant investments in four sectors: technology, financials,
consumer cyclicals and health care. Stocks in these sectors were some of the
primary losers in the shift to value earlier this year. The Fund is not invested
in the commodity end of economically sensitive stocks - stocks such as basic
industries that have benefited from the return to value - because we do not
believe that the over-capacity issues that have dogged these industries and the
energy sector have been adequately addressed. Longer term, fundamentals do not
support sufficient growth in these industrial, low value-added, commodity-type
industries as the U.S. is transitioning into an innovation-driven, technology-
based economy. Since the Fund is managed with an eye toward long-term,
sustainable earnings growth, and since cyclical stocks generally have short-term
performance spurts, we do not believe that these latter investments are
appropriate for the Fund's style. It is our belief that investor enthusiasm for
cyclical names may be short-lived and that investors will want to hold equity
positions in the strongest and most dynamic businesses in an increasingly
competitive world.
Portfolio activity during the past three months was low. The Fund maintains its
emphasis in technology, health care, financial services and consumer cyclical
stocks and increased its exposure to the capital goods sector to a market weight
by adding small positions in both Honeywell and United Technologies. Holdings in
the consumer staples sector have decreasing weights. The top performing sector
of the S&P 500 during the Fund's fiscal year was technology (+98.0%), where the
Fund's holdings include names such as Sun Microsystems, Texas Instruments,
Tellabs, EMC, Cisco, Intel, IBM and Microsoft. The second strongest sector
performance of the S&P 500 was in capital goods (37.9%). The health care and
financial services sectors of the S&P 500 both returned 23.7%.
Going forward, we remain confident that the Fund is well-positioned to benefit
from the major growth trends in the U.S. and globally, as many U.S. companies
derive significant portions of their earnings and growth from markets overseas.
The Fund is invested in those aggressive and tenacious companies that dominate
their markets and maintain their leadership position through a combination of
market share focus, product or service differentiation, innovation, economies of
scale and financial strength.
Deutsche European Mid-Cap Fund
The benchmark of the Deutsche European Mid-Cap Fund, the MDAX (Midcap Index),
fluctuated strongly during the fiscal year, trading between 3,256 and 4,289
index points.* At the end of the fiscal year, the benchmark achieved a total
return of -1.29% while the Fund's Class A Shares achieved a total return of
8.86% at NAV (without sales charges).**
During the first two months of the reporting period, the MDAX fell approximately
25% due to currency turmoil in worldwide emerging markets. This turmoil led to a
depressed macroeconomic environment and the fear of a global recession. Through
successive Federal Funds Target Rate cuts in the U.S., the Brazilian
International Monetary Fund package and better market sentiment worldwide, the
European equity markets recovered from the October 1998 lows. The Fund stayed
fully invested through the fiscal year.
The Fund performed better than the benchmark due to the fact that it also
invested in smaller, high-growth companies of the Neuer Markt, which performed
very well.+ The Fund's other investments in Europe contributed to its high
performance as well. Because of the Fund's active portfolio management style a
lot of share positions were sold while new investments were bought. The Fund
also participated in the subscription of successful new issues, which was
another reason of the Funds' better performance. Three examples of new
investments in companies are STMicroelectronics, Baan Company NV and United Pan-
Europe Communications NV ("UPC"). STMicroelectronics is a leading European chip-
company with positive fundamentals and a good position in the growing
semi-conductor cycle. Baan Company NV was added to the Fund's portfolio because
of a possible turnaround and new management in the company. UPC, as the largest
pan- European cable operator, is successfully expanding through acquisitions.
Its extensive network has huge potential in the cable television, telephony and
internet services business.
Economic growth, restructuring, deregulation and liquidity aspects should be, in
our opinion, reasons why the European markets could reach new highs during the
next fiscal year.
*The Fund's Adviser has elected to change the benchmark index from the MSCI
Europe Index (a broad-based market index of European equity securities) to the
MDAX because the MDAX is more representative of the securities in which the
Fund invests. The MDAX is an unmanaged, capitalization-weighted index composed
of 70 German blue-chip stocks which are in the DAX 100 but not in the DAX
(German Stock Index), and are traded in the Frankfurt Stock Exchange.
**Performance quoted represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Average annual total return for Class A Shares for the reporting period,
based on offering price (with sales charges) was 2.86%. Average annual total
return for Class B Shares for the reporting period, based on NAV and redemption
value (including the CDSC) was 8.12% and 3.12%, respectively. Average annual
total return for Class C Shares for the period from inception date (September
2, 1998) though August 31, 1999, based on NAV and redemption value was 10.15%
and 9.15%, respectively.
+The regulated, unlisted market segment of the German Stock Exchange.
Deutsche German Equity Fund
The benchmark of the Deutsche German Equity Fund, the DAX (German Stock Index),
fluctuated strongly over the reporting period and traded in a range between
3,834 and 5,687 index points.* The DAX achieved a total return of 3.88% over the
reporting period, while the Fund's Class A Shares achieved a total return of
11.58% at NAV (without sales charges).**
In the first two months of the fiscal year, the DAX fell approximately 20% due
to currency turmoil in worldwide emerging markets, such as the Asian and Russian
crises. This led to a depressed macroeconomic environment and the fear of a
global recession. Through successive Federal Funds Target Rate cuts in the U.S.,
the Brazilian International Monetary Fund package and better market sentiment
worldwide, the German equity market recovered from the October 1998 lows. From
October 1998 to January 1999, the market rose approximately 40% followed by a
slight consolidation until April 1999. Since then, the market has been in a
trading range with support at 5,000 and resistance between 5,550 and 5,600 index
points. The Fund stayed fully invested through the fiscal year.
The Fund increased its position in financials, especially in the banking sector,
because of restructuring potential and possible consolidation processes, which
contributed well to the performance of the Fund. Due to legal restrictions, the
Fund is not permitted to take a stake in Deutsche Bank shares. However, it tried
to compensate this with higher weightings in other German banks like
Commerzbank, Dresdner Bank and Bayerische Vereinsbank AG. Due to the positive
growth outlook in the telecommunication area, the Fund increased its position in
Deutsche Telekom and in Mannesmann, which is now one of the European market
leaders and actively involved in the European consolidation process. The Fund
bought Deutsche Lufthansa shares. After the sharp decrease of the stock price,
Deutsche Lufthansa is, in valuation terms, one of the cheapest airlines. The
Fund sold its position in Adidas Salomon because of the difficult competitive
situation in the business.
Due to active management of the portfolio, the Funds' performance was much
better than its benchmark. Economic growth, restructuring, deregulation,
liquidity aspects and the planned tax-reform should be reasons why, in our
opinion, the German market could reach new highs during the next fiscal year.
*The Fund's Adviser has elected to change the benchmark index from the MSCI
Germany Index (a broad-based market index of equity securities listed on the
Frankfurt Stock Exchange) to the DAX because the DAX is more representative of
the securities in which the Fund invests. The DAX is composed of the 30 most
actively traded German blue-chip stocks. This index in unmanaged.
**Performance quoted represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their
original cost. Average annual total return for Class A Shares for the
reporting period, based on offering price (with sales charges) was 5.45%.
Average annual total return for Class B Shares for the reporting period, based
on NAV and redemption value (including the CDSC) was 10.99% and 5.99%,
respectively. Average annual total return for Class C Shares for the period
from inception date (September 2, 1998) though August 31, 1999, based on NAV
and redemption value was 11.43% and 10.43%, respectively.
Deutsche Japanese Equity Fund
Over the 12-month reporting period, the Japanese stock market reached a 12-year
low in October 1998 and, after bottoming out, rose to a level as high as 18,532
points on the Nikkei Stock Average and 1,535 points in the Tokyo Stock Price
Index (the "Topix") by July 1999.* During the reporting period, the Fund
significantly outperformed its benchmark, the MSCI Japan Index.**
At the beginning of the reporting period, Japanese financial markets were still
overshadowed by a depressed macroeconomic environment and fears of a systemic
financial crisis. The phase from February 1999 on was characterized by a number
of positive factors: (1) measures of the government to stabilize the financial
sector--for example, through the recapitalization of banks, (2) an easing of
monetary policy by the Bank of Japan, and (3) numerous restructuring and
cost-cutting announcements by Japanese corporations. These developments were
followed by a stabilization of the Asian economies as well as signs of a broader
economic recovery in Japan itself. Though part of the better-than-expected gross
domestic product numbers in the first and second quarter were derived from the
massive fiscal stimulus measures (24 trillion yen) that were implemented by the
Japanese government since the end of 1998, there were also improvements in
inventory levels and private demand. Altogether, the above-mentioned positive
change in surroundings triggered a strong inflow of foreign funds, a substantial
rally in the stock market and a significant appreciation of the Japanese
currency against the U.S. dollar and the Euro.
During the reporting period, the Fund maintained a high degree of investment,
ranging from 95% to 100%. Due to the still depressed environment until February
1999, the Fund's management stuck to its policy of investing in top-quality
companies with international competitiveness, emphasizing these sectors:
electric machinery, pharmaceuticals and services. During that time, the Fund was
partly currency-hedged. This depressed the performance slightly. From January
1999 on, the Fund's management increased the weighting in domestic, economy-
oriented stocks. In the communications sector, positions in NTT and NTT-Mobile
were increased. In the machinery sector, positions in SMC and Enplas were added.
The Fund management also added to the positions in the service sector,
concentrating on information technology- and software-related stocks, which
included Obic. On the contrary, positions in export-oriented titles were reduced
during the reporting period. In light of the positive macroeconomic developments
and the inflow of foreign funds, the Fund's management did not expect a drastic
weakening of the yen and closed all currency hedges in February 1999. This
greatly contributed to the good performance of the Fund.
The further development of the Japanese stock market largely depends on three
factors: (1) whether the yen will show a further "premature" strengthening, (2)
whether the companies will proceed with their restructuring measures as
announced and thus improve profitability, and (3) whether the recent signs of a
positive macroeconomic development will lead into a self-sustained economic
growth. In our view these factors represent only short- and mid-term risks for
the stock market, and our long-term view remains positive for the Japanese stock
market.
*The Nikkei Stock Average is composed of 225 actively traded issues of the
First Section of the Tokyo Stock Exchange (TSE). The Topix, published by the
TSE, is the composite index of all common stock listed on the First Section of
the TSE. These indices are unmanaged.
**The MSCI Japan Index is an unmanaged, market value-weighted average of the
performance of over 300 securities listed on the TSE.
Deutsche Global Bond Fund
The Deutsche Global Bond Fund pursues its investment objective by investing
primarily in fixed income securities (including floating rate notes, bonds,
convertible bonds, and bonds with warrants) of issuers worldwide. The Fund's
broadly diversified portfolio will invest at least 65% of its total assets in
bonds, and the portfolio will include securities of at least three different
countries.
In the first half of the reporting period, the emerging markets crisis
(September/October 1998), which generated a flight to high-quality paper, and
the introduction of the Euro currency, which had a weak start, have been the
main drivers for the financial markets. The current global economic situation
can be described as having moderate growth and low inflation expectations.
During the last months of the reporting period, the economic situation changed
to a more positive perspective for Asia (especially Japan) and emerging markets.
Some commodity prices showed a significant improvement (especially oil). This,
in combination with a tight labor market in the U.S., led the U.S. Federal
Reserve Board to increase interest rates by 0.50% to 5.25%.
Under this economic situation, the Fund was overweighted in the dollar
currencies (55% in the Dollar-Bloc), with 49% in the U.S. and an additional 3%
in both Canada and Australia, at the beginning of the reporting period. The
weighting was reduced to 37%, neutral to the J.P. Morgan benchmark (33% in the
U.S., 3% in Canada and 1% in New Zealand)* over the year due to the introduction
of the Euro, giving Europe a more competitive and highly liquid financial
market, and the more positive outlook for the Japanese currency.
In Europe, the main focus has been on investments in Euro (approximately 29% of
the Fund's portfolio at the end of August 1999), the United Kingdom (6%),
Denmark (3%) and Germany (3%). To profit from the ongoing convergence in Europe
due to the European Monetary Union, we have made additional investments in South
and Eastern Europe (Greece (2%), Poland (3%) and Hungary (2%)). The position in
the Czech koruna (2% of the Fund) was sold in July 1999. In addition, a position
in Norwegian krone (2%) was built-up to take advantage of the increasing oil
price.
We heavily underweighted Japan at the beginning of the reporting period (6%
versus 17% of the Fund's benchmark) because of weak economic growth, structural
problems and credibility uncertainties in the financial system. During the
fiscal year, we doubled the weighting to more than 12% at the end of August
1999, reflecting the better growth outlook and increasing financial flows into
the Japanese currency.
During the reporting period, the Fund had a lower duration than its benchmark,
reflecting the expectation of higher interest rates by the Funds' management.
The Class A Shares of the Fund achieved a total return of -0.33% at NAV (without
sales charges).** On August 31, 1999, the weighted average maturity of the Fund
was 7.2 years.
*The Fund's benchmark, the J.P. Morgan Global Government Bond Index, is a
broad-based market index of securities representing major government bond
markets.
**Performance quoted represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their
original cost. Average annual total return for Class A Shares for the
reporting period, based on offering price (with sales charges) was -4.79%.
Average annual total return for Class B Shares for the period from inception
date (October 9, 1998) through August 31, 1999, based on NAV and redemption
value (including the CDSC) was -7.66% and -12.05%, respectively.
Deutsche European Bond Fund
The Deutsche European Bond Fund invests primarily in the fixed income securities
of European issuers (at least 65% of Portfolio's total assets) and fixed income
securities denominated in European currencies. The objective is to seek steady,
high income.
Since the end of August 1998, the Fund decreased its allocation in the British
pound (-2.8%), Danish krone (-3.8%) and Norwegian krone (-1.3%). Instead, new
positions were established in the Swedish krona (+4.5%), Hungarian forint
(+2.5%), Polish zloty (+1.5%) and Czech koruna (+1.8%), which all benefited from
a relatively stable economical and political environment but, nevertheless,
provided an attractive yield pick-up in comparison to the Euro.
The currency markets were rather volatile during this reporting period. The
British pound traded in a large range between 1.55 and 1.71, the Swedish krona
traded between 7.6 and 8.6 and the Norwegian krone traded between 7.3 and 8.0.
Although these currencies lost significantly against the U.S. dollar, they
clearly outperformed the Euro. Throughout the fiscal year, the German mark
strengthened against the U.S. dollar in anticipation of the Euro. A
significantly stronger U.S. dollar followed the Euro's launch as the European
economies started looking increasingly fragile in comparison to the booming
growth in the U.S. The Euro depreciated from 1.17 levels against the U.S. dollar
all the way to almost 1.01 by the beginning of July 1999. After that, the
picture improved somewhat for the Euro as better economic figures started
indicating that the worst may be over for the European slow-down.
The European fixed income markets continued to stay positive until the end of
January 1999. In February 1998, the bond markets worldwide, starting from Japan
and spreading to Europe, came under a heavy selling pressure as many investors
got worried about possible liquidations of Japanese investors in U.S. and
European bonds. Later on during the year, the downtrend continued as more and
more worries about commodities prices (mostly oil) and their impact on inflation
started to emerge. It coincided with the stronger Japanese yen, which has often
been used as a funding currency for U.S. and European bond acquisitions. We
reduced our weighted average maturity from 7.6 to 6.4 years, and preferred
credit exposure in the U.K. and Sweden and government bonds in Euroland, where
the swap spreads remained relatively low.
During the reporting period, Class A Shares of the Fund achieved a total return
of -2.13% at NAV (without sales charges).*
*Performance quoted represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Average annual total return for Class A Shares for the reporting period,
based on offering price (with sales charges) was -6.53%. Average annual total
return for Class B Shares for the reporting period, based on NAV and redemption
value (including the CDSC) was -2.88% and -7.58%, respectively. Average annual
total return for Class C Shares for the period from inception date (September
2, 1998) through August 31, 1999, based on NAV and redemption value was -3.00%
and -3.94%, respectively.
Deutsche U.S. Money Market Funds
The developments in the financial markets in the fiscal year ended August 31,
1999 can be divided into three distinctively different periods.
The first part, in the fall of 1998, saw Russia default on its domestic debt.
This caused turmoil in financial markets around the world, and lead to the near-
collapse of a hedge fund in the United States. A group of large banks, summoned
by the U.S. Federal Reserve Board (the "Fed"), came to the rescue and staged a
US $3 billion bailout. The Fed itself eased monetary policy three times over a
six-week period last autumn and thus helped avoid a financial crisis.
Gradually, the markets calmed down again. In this period, which lasted from the
final month of 1998 to early summer of 1999, financial markets returned to
normalcy. The flight-to-quality, which had occurred earlier when investors were
looking only for the best and most liquid securities (i.e. U.S. treasuries), was
mostly reversed. The U.S. economy returned to its growth path of well above 3%,
showing little effects of the jitters in the financial markets.
Then, in June of 1999, the Fed responded to the booming economy by raising the
official interest rate twice. Fearing that the strong growth and low
unemployment could ultimately trigger higher inflation, the Fed raised the
Federal Funds Target Rate by 0.25% in late June and late August 1999. With this
move, the Fed reversed most of the easing that it had been forced to do in the
fall of last year. However, the Fed had prepared the financial markets for these
tightening moves well in advance and thus did not create any major disruptions.
The Federal Funds Target Rate stands at 5.25% as of this writing. It is expected
to remain there through year-end 1999.
The Funds weathered the gyrations of the financial markets very well. During the
period of financial turmoil, the weighted average maturity of the Funds'
portfolio was reduced to between 30 - 40 days. After the storm had subsided, it
was increased to around 50 days by late April 1999, and has stayed there since.
The steepness of the yield curve rewards this longer average maturity. At the
end of August 1999, the average maturity stood at 48 days.
For Class A shareholders of the Deutsche US Money Market Fund, the Fund's 7-day
yield stood at 4.68% as of August 31, 1999 (5.02% for Class Y Shares of the
Deutsche Institutional US Money Market Fund).* The Fund currently holds 80% of
its assets in corporate debt and 20% in U.S. government and agency debt. There
are no lower rated securities in the Funds' portfolio. The portfolio's main
sector holdings are insurance (12%), financial services (9%) and telephone (8%).
The Funds have maintained the AAAm rating, the highest possible rating for a
money market fund, that was originally awarded to them by Standard & Poor's in
September of last year.** Their investment policies adhere to Standard & Poor's
standards. Also, all purchases are consistent with the Fund's goal of generating
a high level of current income for risk averse investors while providing maximum
liquidity for them.
The U.S. economy continues on its path of solid growth and restrained inflation.
We think that this balanced trajectory will make further changes in official
interest rates unlikely for the time being. The pickup in growth in other
countries around the world should not jeopardize this picture. Also, the
prospect of dealing with the computer problem known as the millennium bug
(a.k.a. "Y2K") should prevent the Fed from tightening interest rates later this
year. As a matter of fact, the Fed has already gone out of its way to assure the
financial community that there will be plenty of liquidity available around the
turn of the new year. Trading in the financial markets is expected to slow down
significantly as the end of the millennium approaches. However, we do not expect
major disruptions in the financial markets. It seems that the financial industry
is well-prepared to deal with the technological challenges. Deutsche Bank, one
of the largest banks in the world, and the Deutsche U.S. Money Market Funds, are
equally well-prepared for this event. And, we believe that the Deutsche U.S.
Money Market Funds will continue to deliver competitive yields to their
investors.
*Performance quoted represents past performance and is not indicative of future
results. Yield will vary. Yields quoted for money market funds most closely
reflect the funds' current earnings. The 7-day yield, as of August 31, 1999,
for Class B Shares of the Deutsche US Money Market Fund was 3.84%.
**This rating is obtained after Standard & Poor's evaluates a number of factors,
including credit quality, market price exposure and management. Ratings are
subject to change and do not remove market risks.
An investment in the Funds is neither insured nor guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the Funds
seek to preserve the value of your investment at $1.00 per share, it is possible
to lose money by investing in the Funds.
Deutsche Top 50 World--Class A
Growth of $10,000 Invested in Deutsche Top 50 World
The graph below illustrates the hypothetical investment of $10,000* in Class A
Shares of the Deutsche Top 50 World (the "Fund") from October 2, 1997 (start of
performance) to August 31, 1999, compared to the MSCI World Index.+
[Graphic representation omitted. See Appendix A(1).]
AVERAGE ANNUAL TOTAL RETURNS** FOR THE PERIODS ENDED AUGUST 31, 1999
1 Year.........................................34.35%
Start of Performance (10/2/97).................15.93%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund after deducting the
maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge =
$9,450). The Fund's performance assumes the reinvestment of all dividends and
distributions. The MSCI World Index has been adjusted to reflect reinvestment
of dividends on securities in the index.
**Total returns quoted reflect all applicable sales charges.
+The MSCI World Index is not adjusted to reflect sales charges, expenses, or
other fees that the SEC requires to be reflected in the Fund's performance. The
index is unmanaged and investments cannot be made directly into an index.
Deutsche Top 50 World--Class B
Growth of $10,000 Invested in Deutsche Top 50 World
The graph below illustrates the hypothetical investment of $10,000* in Class B
Shares of the Deutsche Top 50 World (the "Fund") from May 4, 1998 (start of
performance) to August 31, 1999, compared to the MSCI World Index.+
[Graphic representation omitted. See Appendix A(2).]
AVERAGE ANNUAL TOTAL RETURNS** FOR THE PERIODS ENDED AUGUST 31, 1999
1 Year.........................................36.14%
Start of Performance (5/4/98)..................15.50%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge imposed on any
redemption. The Fund's performance assumes the reinvestment of all dividends
and distributions. The MSCI World Index has been adjusted to reflect
reinvestment of dividends on securities in the index.
**Total returns quoted reflect all applicable sales charges.
+The MSCI World Index is not adjusted to reflect sales charges, expenses, or
other fees that the SEC requires to be reflected in the Fund's performance. The
index is unmanaged and investments cannot be made directly into an index.
Deutsche Top 50 Europe--Class A
Growth of $10,000 Invested in Deutsche Top 50 Europe
The graph below illustrates the hypothetical investment of $10,000* in Class A
Shares of the Deutsche Top 50 Europe (the "Fund") from October 2, 1997 (start of
performance) to August 31, 1999, compared to the MSCI Europe Index.+
[Graphic representation omitted. See Appendix A(3).]
AVERAGE ANNUAL TOTAL RETURNS** FOR THE PERIODS ENDED AUGUST 31, 1999
1 Year........................................(2.83)%
Start of Performance (10/2/97).................0.67%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund after deducting the
maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge =
$9,450). The Fund's performance assumes the reinvestment of all dividends and
distributions. The MSCI Europe Index has been adjusted to reflect reinvestment
of dividends on securities in the index.
**Total returns quoted reflect all applicable sales charges.
+The MSCI Europe Index is a market value-weighted average of the performance of
over 500 securities listed on the stock exchanges of 15 countries in the
European region. This index is not adjusted to reflect sales charges, expenses,
or other fees that the SEC requires to be reflected in the Fund's performance.
The index is unmanaged and investments cannot be made directly into an index.
Deutsche Top 50 Europe--Class B
Growth of $10,000 Invested in Deutsche Top 50 Europe
The graph below illustrates the hypothetical investment of $10,000* in Class B
Shares of the Deutsche Top 50 Europe (the "Fund") from March 30, 1998 (start of
performance) to August 31, 1999, compared to the MSCI Europe Index.+
[Graphic representation omitted. See Appendix A(4).]
AVERAGE ANNUAL TOTAL RETURNS** FOR THE PERIODS ENDED AUGUST 31, 1999
1 Year........................................(2.94)%
Start of Performance (3/30/98)................(6.17)%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge imposed on any
redemption. The Fund's performance assumes the reinvestment of all dividends
and distributions. The MSCI Europe Index has been adjusted to reflect
reinvestment of dividends on securities in the index.
**Total returns quoted reflect all applicable sales charges.
+The MSCI Europe Index is not adjusted to reflect sales charges, expenses, or
other fees that the SEC requires to be reflected in the Fund's performance. The
index is unmanaged and investments cannot be made directly into an index.
Deutsche Top 50 Europe--Class C
Growth of $10,000 Invested in Deutsche Top 50 Europe
The graph below illustrates the hypothetical investment of $10,000* in Class C
Shares of the Deutsche Top 50 Europe (the "Fund") from September 2, 1998 (start
of performance) to August 31, 1999, compared to the MSCI Europe Index.+
[Graphic representation omitted. See Appendix A(5).]
TOTAL RETURN** FOR THE PERIOD ENDED AUGUST 31, 1999
Start of Performance (9/2/98)..................2.60%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge imposed on any
redemption. The Fund's performance assumes the reinvestment of all dividends
and distributions. The MSCI Europe Index has been adjusted to reflect
reinvestment of dividends on securities in the index.
**Total return quoted reflects all applicable sales charges and is not
annualized.
+The MSCI Europe Index is not adjusted to reflect sales charges, expenses, or
other fees that the SEC requires to be reflected in the Fund's performance. The
index is unmanaged and investments cannot be made directly into an index.
Deutsche Top 50 Asia--Class A
Growth of $10,000 Invested in Deutsche Top 50 Asia
The graph below illustrates the hypothetical investment of $10,000* in Class A
Shares of the Deutsche Top 50 Asia (the "Fund") from October 14, 1997 (start of
performance) to August 31, 1999, compared to the MSCI Pacific ex-Japan Index and
the MSCI Pacific Index.+
[Graphic representation omitted. See Appendix A(6).]
AVERAGE ANNUAL TOTAL RETURNS** FOR THE PERIODS ENDED AUGUST 31, 1999
1 Year........................................117.25%
Start of Performance (10/14/97)................20.57%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund after deducting the
maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge =
$9,450). The Fund's performance assumes the reinvestment of all dividends and
distributions. The MSCI Pacific ex-Japan Index and the MSCI Pacific Index have
been adjusted to reflect reinvestment of dividends on securities in the
indices.
**Total returns quoted reflect all applicable sales charges.
+The MSCI Pacific ex-Japan Index and the MSCI Pacific Index are not adjusted to
reflect sales charges, expenses, or other fees that the SEC requires to be
reflected in the Fund's performance. The indices are unmanaged and investments
cannot be made directly into indices.
Deutsche Top 50 Asia--Class B
Growth of $10,000 Invested in Deutsche Top 50 Asia
The graph below illustrates the hypothetical investment of $10,000* in Class B
Shares of the Deutsche Top 50 Asia (the "Fund") from May 5, 1998 (start of
performance) to August 31, 1999, compared to the MSCI Pacific ex-Japan Index and
the MSCI Pacific Index.+
[Graphic representation omitted. See Appendix A(7).]
AVERAGE ANNUAL TOTAL RETURNS** FOR THE PERIODS ENDED AUGUST 31, 1999
1 Year........................................123.65%
Start of Performance (5/5/98)..................46.38%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge imposed on any
redemption. The Fund's performance assumes the reinvestment of all dividends
and distributions. The MSCI Pacific ex-Japan Index and the MSCI Pacific Index
have been adjusted to reflect reinvestment of dividends on securities in the
indices.
**Total returns quoted reflect all applicable sales charges.
+The MSCI Pacific ex-Japan Index and the MSCI Pacific Index are not adjusted to
reflect sales charges, expenses, or other fees that the SEC requires to be
reflected in the Fund's performance. The indices are unmanaged and investments
cannot be made directly into indices.
Deutsche Top 50 US--Class A
Growth of $10,000 Invested in Deutsche Top 50 US
The graph below illustrates the hypothetical investment of $10,000* in Class A
Shares of the Deutsche Top 50 US (the "Fund") from October 2, 1997 (start of
performance) to August 31, 1999, compared to the S&P 500 Index.+
[Graphic representation omitted. See Appendix A(8).]
AVERAGE ANNUAL TOTAL RETURNS** FOR THE PERIODS ENDED AUGUST 31, 1999
1 Year.........................................34.01%
Start of Performance (10/2/97).................17.07%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund after deducting the
maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge =
$9,450). The Fund's performance assumes the reinvestment of all dividends and
distributions. The S&P 500 Index has been adjusted to reflect reinvestment of
dividends on securities in the index.
**Total returns quoted reflect all applicable sales charges.
+The S&P 500 Index is not adjusted to reflect sales charges, expenses, or other
fees that the SEC requires to be reflected in the Fund's performance. The index
is unmanaged and investments cannot be made directly into an index.
Deutsche Top 50 US--Class B
Growth of $10,000 Invested in Deutsche Top 50 US
The graph below illustrates the hypothetical investment of $10,000* in Class B
Shares of the Deutsche Top 50 US (the "Fund") from March 18, 1998 (start of
performance) to August 31, 1999, compared to the S&P 500 Index.+
[Graphic representation omitted. See Appendix A(9).]
AVERAGE ANNUAL TOTAL RETURNS** FOR THE PERIODS ENDED AUGUST 31, 1999
1 Year.........................................35.88%
Start of Performance (3/18/98).................13.01%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge imposed on any
redemption. The Fund's performance assumes the reinvestment of all dividends
and distributions. The S&P 500 Index has been adjusted to reflect reinvestment
of dividends on securities in the index.
**Total returns quoted reflect all applicable sales charges.
+The S&P 500 Index is not adjusted to reflect sales charges, expenses, or other
fees that the SEC requires to be reflected in the Fund's performance. The index
is unmanaged and investments cannot be made directly into an index.
Deutsche Top 50 US--Class C
Growth of $10,000 Invested in Deutsche Top 50 US
The graph below illustrates the hypothetical investment of $10,000* in Class C
Shares of the Deutsche Top 50 US (the "Fund") from September 2, 1998 (start of
performance) to August 31, 1999, compared to the S&P 500 Index.+
[Graphic representation omitted. See Appendix A(10).]
TOTAL RETURN** FOR THE PERIOD ENDED AUGUST 31, 1999
Start of Performance (9/2/98)..................33.64%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge imposed on any
redemption. The Fund's performance assumes the reinvestment of all dividends
and distributions. The S&P 500 Index has been adjusted to reflect reinvestment
of dividends on securities in the index.
**Total return quoted reflects all applicable sales charges and is not
annualized.
+The S&P 500 Index is not adjusted to reflect sales charges, expenses, or other
fees that the SEC requires to be reflected in the Fund's performance. The index
is unmanaged and investments cannot be made directly into an index.
Deutsche European Mid-Cap Fund--Class A
Growth of $10,000 Invested in Deutsche European Mid-Cap Fund
The graph below illustrates the hypothetical investment of $10,000* in Class A
Shares of the Deutsche European Mid-Cap Fund (the "Fund") from October 17, 1997
(start of performance) to August 31, 1999, compared to the MSCI Europe Index and
the MDAX (Midcap Index).+
[Graphic representation omitted. See Appendix A(11).]
AVERAGE ANNUAL TOTAL RETURNS** FOR THE PERIODS ENDED AUGUST 31, 1999
1 Year.........................................2.86%
Start of Performance (10/17/97)................8.74%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund after deducting the
maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge =
$9,450). The Fund's performance assumes the reinvestment of all dividends and
distributions. The MSCI Europe Index and the MDAX have been adjusted to reflect
reinvestment of dividends on securities in the indices.
**Total returns quoted reflect all applicable sales charges.
+The MSCI Europe Index and the MDAX are not adjusted to reflect sales charges,
expenses, or other fees that the SEC requires to be reflected in the Fund's
performance. The indices are unmanaged and investments cannot be made directly
into indices.
Deutsche European Mid-Cap Fund--Class B
Growth of $10,000 Invested in Deutsche European Mid-Cap Fund
The graph below illustrates the hypothetical investment of $10,000* in Class B
Shares of the Deutsche European Mid-Cap Fund (the "Fund") from March 30, 1998
(start of performance) to August 31, 1999, compared to the MSCI Europe Index and
the MDAX (Midcap Index).+
[Graphic representation omitted. See Appendix A(12).]
AVERAGE ANNUAL TOTAL RETURNS** FOR THE PERIODS ENDED AUGUST 31, 1999
1 Year.........................................3.12%
Start of Performance (3/30/98).................3.17%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge imposed on any
redemption. The Fund's performance assumes the reinvestment of all dividends
and distributions. The MSCI Europe Index and the MDAX have been adjusted to
reflect reinvestment of dividends on securities in the indices.
**Total returns quoted reflect all applicable sales charges.
+The MSCI Europe Index and the MDAX are not adjusted to reflect sales charges,
expenses, or other fees that the SEC requires to be reflected in the Fund's
performance. The indices are unmanaged and investments cannot be made directly
into indices.
Deutsche European Mid-Cap Fund--Class C
Growth of $10,000 Invested in Deutsche European Mid-Cap Fund
The graph below illustrates the hypothetical investment of $10,000* in Class C
Shares of the Deutsche European Mid-Cap Fund (the "Fund") from September 2, 1998
(start of performance) to August 31, 1999, compared to the MSCI Europe Index and
the MDAX (Midcap Index).+
[Graphic representation omitted. See Appendix A(13).]
TOTAL RETURN** FOR THE PERIOD ENDED AUGUST 31, 1999
Start of Performance (9/2/98)..................9.15%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge imposed on any
redemption. The Fund's performance assumes the reinvestment of all dividends
and distributions. The MSCI Europe Index and the MDAX have been adjusted to
reflect reinvestment of dividends on securities in the indices.
**Total return quoted reflects all applicable sales charges and is not
annualized.
+The MSCI Europe Index and the MDAX are not adjusted to reflect sales charges,
expenses, or other fees that the SEC requires to be reflected in the Fund's
performance. The indices are unmanaged and investments cannot be made directly
into indices.
Deutsche German Equity Fund--Class A
Growth of $10,000 Invested in Deutsche German Equity Fund
The graph below illustrates the hypothetical investment of $10,000* in Class A
Shares of the Deutsche German Equity Fund (the "Fund") from October 17, 1997
(start of performance) to August 31, 1999, compared to the MSCI Germany Index
and the DAX (German Stock Index).+
[Graphic representation omitted. See Appendix A(14).]
AVERAGE ANNUAL TOTAL RETURNS** FOR THE PERIODS ENDED AUGUST 31, 1999
1 Year.........................................5.45%
Start of Performance (10/17/97)................11.17%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund after deducting the
maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge =
$9,450). The Fund's performance assumes the reinvestment of all dividends and
distributions. The MSCI Germany Index and the DAX have been adjusted to reflect
reinvestment of dividends on securities in the indices.
**Total returns quoted reflect all applicable sales charges.
+The MSCI Germany Index and the DAX are not adjusted to reflect sales charges,
expenses, or other fees that the SEC requires to be reflected in the Fund's
performance. The indices are unmanaged and investments cannot be made directly
into indices.
Deutsche German Equity Fund--Class B
Growth of $10,000 Invested in Deutsche German Equity Fund
The graph below illustrates the hypothetical investment of $10,000* in Class B
Shares of the Deutsche German Equity Fund (the "Fund") from March 16, 1998
(start of performance) to August 31, 1999, compared to the MSCI Germany Index
and the DAX (German Stock Index).+
[Graphic representation omitted. See Appendix A(15).]
AVERAGE ANNUAL TOTAL RETURNS** FOR THE PERIODS ENDED AUGUST 31, 1999
1 Year.........................................5.99%
Start of Performance (3/16/98).................5.50%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge imposed on any
redemption. The Fund's performance assumes the reinvestment of all dividends
and distributions. The MSCI Germany Index and the DAX have been adjusted to
reflect reinvestment of dividends on securities in the indices.
**Total returns quoted reflect all applicable sales charges.
+The MSCI Germany Index and the DAX are not adjusted to reflect sales charges,
expenses, or other fees that the SEC requires to be reflected in the Fund's
performance. The indices are unmanaged and investments cannot be made directly
into indices.
Deutsche German Equity Fund--Class C
Growth of $10,000 Invested in Deutsche German Equity Fund
The graph below illustrates the hypothetical investment of $10,000* in Class C
Shares of the Deutsche German Equity Fund (the "Fund") from September 2, 1998
(start of performance) to August 31, 1999, compared to the MSCI Germany Index
and the DAX (German Stock Index).+
[Graphic representation omitted. See Appendix A(16).]
TOTAL RETURN** FOR THE PERIOD ENDED AUGUST 31, 1999
Start of Performance (9/2/98)..................10.43%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge imposed on any
redemption. The Fund's performance assumes the reinvestment of all dividends
and distributions. The MSCI Germany Index and the DAX have been adjusted to
reflect reinvestment of dividends on securities in the indices.
**Total return quoted reflects all applicable sales charges and is not
annualized.
+The MSCI Germany Index and the DAX are not adjusted to reflect sales charges,
expenses, or other fees that the SEC requires to be reflected in the Fund's
performance. The indices are unmanaged and investments cannot be made directly
into indices.
Deutsche Japanese Equity Fund--Class A
Growth of $10,000 Invested in Deutsche Japanese Equity Fund
The graph below illustrates the hypothetical investment of $10,000* in Class A
Shares of the Deutsche Japanese Equity Fund (the "Fund") from October 20, 1997
(start of performance) to August 31, 1999, compared to the MSCI Japan Index.+
[Graphic representation omitted. See Appendix A(17).]
AVERAGE ANNUAL TOTAL RETURNS** FOR THE PERIODS ENDED AUGUST 31, 1999
1 Year.........................................93.09%
Start of Performance (10/20/97)................25.19%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund after deducting the
maximum sales charge of 5.50% ($10,000 investment minus $550 sales charge =
$9,450). The Fund's performance assumes the reinvestment of all dividends and
distributions. The MSCI Japan Index has been adjusted to reflect reinvestment
of dividends on securities in the index.
**Total returns quoted reflect all applicable sales charges.
+The MSCI Japan Index is not adjusted to reflect sales charges, expenses, or
other fees that the SEC requires to be reflected in the Fund's performance. The
index is unmanaged and investments cannot be made directly into an index.
Deutsche Japanese Equity Fund--Class B
Growth of $10,000 Invested in Deutsche Japanese Equity Fund
The graph below illustrates the hypothetical investment of $10,000* in Class B
Shares of the Deutsche Japanese Equity Fund (the "Fund") from August 10, 1998
(start of performance) to August 31, 1999, compared to the MSCI Japan Index.+
[Graphic representation omitted. See Appendix A(18).]
AVERAGE ANNUAL TOTAL RETURNS** FOR THE PERIODS ENDED AUGUST 31, 1999
1 Year.........................................97.97%
Start of Performance (8/10/98).................85.59%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge imposed on any
redemption. The Fund's performance assumes the reinvestment of all dividends
and distributions. The MSCI Japan Index has been adjusted to reflect
reinvestment of dividends on securities in the index.
**Total returns quoted reflect all applicable sales charges.
+The MSCI Japan Index is not adjusted to reflect sales charges, expenses, or
other fees that the SEC requires to be reflected in the Fund's performance. The
index is unmanaged and investments cannot be made directly into an index.
Deutsche Global Bond Fund--Class A
Growth of $10,000 Invested in Deutsche Global Bond Fund
The graph below illustrates the hypothetical investment of $10,000* in Class A
Shares of the Deutsche Global Bond Fund (the "Fund") from October 15, 1997
(start of performance) to August 31, 1999, compared to the J.P. Morgan Global
Government Bond Index.+
[Graphic representation omitted. See Appendix A(19).]
AVERAGE ANNUAL TOTAL RETURNS** FOR THE PERIODS ENDED AUGUST 31, 1999
1 Year........................................(4.79)%
Start of Performance (10/15/97)...............(0.61)%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund after deducting the
maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge =
$9,550). The Fund's performance assumes the reinvestment of all dividends and
distributions. The J.P. Morgan Global Government Bond Index has been adjusted
to reflect reinvestment of dividends on securities in the indices.
**Total returns quoted reflect all applicable sales charges.
+The J.P. Morgan Global Government Bond Index is not adjusted to reflect sales
charges, expenses, or other fees that the SEC requires to be reflected in the
Fund's performance. The index is unmanaged and investments cannot be made
directly into an index.
Deutsche Global Bond Fund--Class B
Growth of $10,000 Invested in the Deutsche Global Bond Fund
The graph below illustrates the hypothetical investment of $10,000* in Class B
Shares of the Deutsche Global Bond Fund (the "Fund") from October 9, 1998 (start
of performance) to August 31, 1999, compared to the J.P. Morgan Global
Government Bond Index.+
[Graphic representation omitted. See Appendix A(20).]
TOTAL RETURN** FOR THE PERIOD ENDED AUGUST 31, 1999
Start of Performance (10/9/98)................(12.05)%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge imposed on any
redemption. The Fund's performance assumes the reinvestment of all dividends
and distributions. The J.P. Morgan Global Government Bond Index has been
adjusted to reflect reinvestment of dividends on securities in the index.
**Total return quoted reflects all applicable sales charges and is not
annualized.
+The J.P. Morgan Global Government Bond Index is not adjusted to reflect sales
charges, expenses, or other fees that the SEC requires to be reflected in the
Fund's performance. The index is unmanaged and investments cannot be made
directly into an index.
Deutsche European Bond Fund--Class A
Growth of $10,000 Invested in Deutsche European Bond Fund
The graph below illustrates the hypothetical investment of $10,000* in Class A
Shares of the Deutsche European Bond Fund (the "Fund") from October 17, 1997
(start of performance) to August 31, 1999, compared to the J.P. Morgan European
Government Bond Index.+
[Graphic representation omitted. See Appendix A(21).]
AVERAGE ANNUAL TOTAL RETURNS** FOR THE PERIODS ENDED AUGUST 31, 1999
1 Year........................................(6.53)%
Start of Performance (10/17/97)...............(0.41)%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund after deducting the
maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge =
$9,550). The Fund's performance assumes the reinvestment of all dividends and
distributions. The J.P. Morgan European Government Bond Index has been adjusted
to reflect reinvestment of dividends on securities in the index.
**Total returns quoted reflect all applicable sales charges.
+The J.P. Morgan European Government Bond Index is a standard foreign securities
index representing European government bond markets. This index is not adjusted
to reflect sales charges, expenses, or other fees that the SEC requires to be
reflected in the Fund's performance. The index is unmanaged and investments
cannot be made directly into an index.
Deutsche European Bond Fund--Class B
Growth of $10,000 Invested in Deutsche European Bond Fund
The graph below illustrates the hypothetical investment of $10,000* in Class B
Shares of the Deutsche European Bond Fund (the "Fund") from June 25, 1998 (start
of performance) to August 31, 1999, compared to the J.P. Morgan European
Government Bond Index.+
[Graphic representation omitted. See Appendix A(22).]
AVERAGE ANNUAL TOTAL RETURNS** FOR THE PERIODS ENDED AUGUST 31, 1999
1 Year........................................(7.58)%
Start of Performance (6/25/98)................(2.88)%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge imposed on any
redemption. The Fund's performance assumes the reinvestment of all dividends
and distributions. The J.P. Morgan European Government Bond Index has been
adjusted to reflect reinvestment of dividends on securities in the index.
**Total returns quoted reflect all applicable sales charges.
+The J.P. Morgan European Government Bond Index is not adjusted to reflect sales
charges, expenses, or other fees that the SEC requires to be reflected in the
Fund's performance. The index is unmanaged and investments cannot be made
directly into an index.
Deutsche European Bond Fund--Class C
Growth of $10,000 Invested in Deutsche European Bond Fund
The graph below illustrates the hypothetical investment of $10,000* in Class C
Shares of the Deutsche European Bond Fund (the "Fund") from September 2, 1998
(start of performance) to August 31, 1999, compared to the J.P. Morgan European
Government Bond Index.+
[Graphic representation omitted. See Appendix A(23).]
TOTAL RETURN** FOR THE PERIOD ENDED AUGUST 31, 1999
Start of Performance (9/2/98).................(3.94)%
Past performance is not indicative of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*Represents a hypothetical investment of $10,000 in the Fund. The ending value
of the Fund reflects a contingent deferred sales charge imposed on any
redemption. The Fund's performance assumes the reinvestment of all dividends
and distributions. The J.P. Morgan European Government Bond Index has been
adjusted to reflect reinvestment of dividends on securities in the index.
**Total return quoted reflects all applicable sales charges and is not
annualized.
+J.P. Morgan European Government Bond Index is not adjusted to reflect sales
charges, expenses, or other fees that the SEC requires to be reflected in the
Fund's performance. The index is unmanaged and investments cannot be made
directly into an index.
STATEMENTS OF ASSETS AND LIABILITIES
Deutsche Funds, Inc.
August 31, 1999
<TABLE>
<CAPTION>
Deutsche
Deutsche Deutsche
Top 50 Top
50 Top 50
World
Europe Asia
----------
- ----------- ----------
<S> <C>
<C> <C>
Assets:
Investment in corresponding Deutsche Portfolio, at value.................................. $4,908,026
$11,121,795 $27,587,503
Receivable from Manager for expense reimbursement, net.................................... 22,055
35,450 17,923
Receivable for capital shares sold........................................................ 2,505
12,167 101,615
Receivable from corresponding Deutsche Portfolio for withdrawals.......................... --
- -- --
Foreign tax reclaim receivable............................................................ 2,495
26,857 --
Deferred organization costs............................................................... 7,765
7,765 7,848
----------
- ----------- -----------
Total assets............................................................................. 4,942,846
11,204,034 27,714,889
----------
- ----------- -----------
Liabilities:
Payable for capital shares redeemed....................................................... --
3,786 2,706
Payable to corresponding Deutsche Portfolio for contributions............................. --
- -- 48,763
Dividends payable......................................................................... --
- -- --
Transfer Agent fees payable............................................................... 4,348
6,250 4,266
Distribution and service fees payable..................................................... 2,334
6,744 6,954
Portfolio accounting fees payable......................................................... 1,700
1,900 1,700
Administrative fees payable............................................................... 266
686 1,425
Other accrued expenses.................................................................... 27,387
26,064 27,752
----------
- ----------- -----------
Total liabilities........................................................................ 36,035
45,430 93,566
----------
- ----------- -----------
Net assets............................................................................... $4,906,811
$11,158,604 $27,621,323
==========
=========== ===========
Net Assets Consist of:
Capital stock, $0.001 par value (a)....................................................... $ 298 $
896 $ 1,447
Paid-in capital........................................................................... 4,594,630
11,228,561 19,500,444
Accumulated net investment income (loss).................................................. (2,101)
(13,228) (42,068)
Undistributed (accumulated) net realized gain (loss) on investments, futures contracts
and foreign currency transactions......................................................... 41,239
(436,940) 413,973
Net unrealized appreciation/(depreciation) of investments, futures contracts and foreign
currency translations..................................................................... 272,745
379,315 7,747,527
----------
- ----------- -----------
Net assets............................................................................... $4,906,811
$11,158,604 $27,621,323
==========
=========== ===========
Computation of Net Asset Value, Redemption Price and Maximum Offering Price Per Share:
Net assets--Class A....................................................................... $2,775,698 $
3,796,364 $23,954,112
==========
=========== ===========
Shares outstanding--Class A............................................................... 160,026
283,382 1,274,559
==========
=========== ===========
Net asset value and redemption price per share--Class A................................... $17.35 $
13.40 $18.79
==========
=========== ===========
Maximum offering price per share--Class A................................................. $18.36 $
14.18 $19.88
==========
=========== ===========
Net assets--Class B....................................................................... $2,131,113 $
6,395,042 $ 3,667,211
==========
=========== ===========
Shares outstanding--Class B............................................................... 138,146
537,858 172,879
==========
=========== ===========
Net asset value and offering price per share--Class B..................................... $15.43 $
11.89 $21.21
==========
=========== ===========
Minimum redemption price per share--Class B............................................... $14.66 $
11.30 $20.15
==========
=========== ===========
Net assets--Class C....................................................................... -- $
967,198 --
==========
=========== ===========
Shares outstanding--Class C............................................................... --
74,665 --
==========
=========== ===========
Net asset value and offering price per share--Class C..................................... -- $
12.95 --
==========
=========== ===========
Minimum redemption price per share--Class C............................................... -- $
12.82 --
==========
=========== ===========
</TABLE>
(a) 250,000,000 shares authorized for each Fund except Deutsche US Money Market
Fund for which 5,000,000,000 shares are authorized, and Deutsche
Institutional US Money Market Fund for which 10,000,000,000 shares are
authorized.
(b) Represents Class Y information.
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
Deutsche Deutsche Deutsche Deutsche Deutsche Deutsche Deutsche
Deutsche European German Japanese Global European US Money Institutional US
Top 50 Mid-Cap Equity Equity Bond Bond Market Money Market
US Fund Fund Fund Fund Fund Fund Fund
--------- ----------- ---------- ---------- -------- -------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
$6,264,411 $22,517,337 $2,141,730 $15,579,929 $324,535 $882,625 $15,247,456 $18,820,258
23,516 36,376 32,110 33,450 14,031 27,439 -- 10,205
10,103 47,565 5,247 119,498 -- 2,187 -- --
52,171 27,799 -- -- -- -- -- --
-- 33,914 2,900 -- -- -- -- --
7,76 7,868 7,868 7,875 7,855 7,868 4,488 5,383
---------- ----------- ---------- ----------- -------- -------- ----------- -----------
6,357,966 22,670,859 2,189,855 15,740,752 346,421 920,119 15,251,944 18,835,846
---------- ----------- ---------- ----------- -------- -------- ----------- -----------
52,171 30,817 3,996 -- -- -- -- --
-- 41,798 -- 84,735 -- -- -- --
-- -- -- -- 459 474 -- --
4,693 6,611 6,227 4,410 4,386 5,775 7,715 1,851
3,252 9,636 1,051 5,236 198 285 3,258 --
1,900 1,900 1,900 1,700 1,700 1,900 764 1,039
373 1,318 140 796 16 39 639 181
26,928 33,758 26,663 29,322 26,402 28,593 35,826 31,635
---------- ----------- ---------- ----------- -------- -------- ----------- -----------
89,317 125,838 39,977 126,199 33,161 37,066 48,202 34,706
---------- ----------- ---------- ----------- -------- -------- ----------- -----------
$6,268,649 $22,545,021 $2,149,878 $15,614,553 $313,260 $883,053 $15,203,742 $18,801,140
========== =========== ========== =========== ======== ======== =========== ===========
$ 376 $ 1,554 $ 141 $ 735 $ 27 $ 72 $ 15,204 $ 18,802
5,170,500 22,194,627 2,048,369 11,503,310 327,923 973,712 15,187,724 18,783,000
-- (86,639) 2,651 (1,757) (750) (2,687) 919 --
(188,523) (89,317) 62,511 348,961 (680) (8) (105) (662)
1,286,296 524,796 36,206 3,763,304 (13,260) (88,036) -- --
---------- ----------- ---------- ----------- -------- -------- ----------- -----------
$6,268,649 $22,545,021 $2,149,878 $15,614,553 $313,260 $883,053 $15,203,742 $18,801,140
========== =========== ========== =========== ======== ======== =========== ===========
$3,369,622 $13,907,145 $1,453,972 $11,010,113 $178,029 $736,931 $15,083,196 $18,801,140(b)
========== =========== ========== =========== ======== ======== =========== ===========
188,359 910,023 90,961 547,339 14,688 59,458 15,083,301 18,801,802(b)
========== =========== ========== =========== ======== ======== =========== ===========
$ 17.89 $ 15.28 $ 15.98 $20.12 $ 12.12 $ 12.39 $1.00 $1.00(b)
========== =========== ========== =========== ======== ======== =========== ===========
$ 18.93 $ 16.17 $ 16.91 $21.29 $ 12.69 $ 12.97 -- --
========== =========== ========== =========== ======== ======== =========== ===========
$2,763,512 $ 6,940,248 $ 648,130 $ 4,604,440 $135,231 $142,931 $ 120,546 --
========== =========== ========== =========== ======== ======== =========== ===========
179,021 518,932 46,684 187,352 12,316 11,851 120,546 --
========== =========== ========== =========== ======== ======== =========== ===========
$ 15.44 $ 13.37 $ 13.88 $24.58 $ 10.98 $ 12.06 $1.00 --
========== =========== ========== =========== ======== ======== =========== ===========
$ 14.67 $ 12.70 $ 13.19 $23.35 $ 10.43 $ 11.46 $1.00 --
========== =========== ========== =========== ======== ======== =========== ===========
$ 135,515 $ 1,697,628 $ 47,776 -- -- $ 3,191 -- --
========== =========== ========== =========== ======== ======== =========== ===========
8,050 125,072 3,465 -- -- 271 -- --
========== =========== ========== =========== ======== ======== =========== ===========
$ 16.83 $ 13.57 $ 13.79 -- -- $ 11.76 -- --
========== =========== ========== =========== ======== ======== =========== ===========
$ 16.66 $ 13.43 $ 13.65 -- -- $ 11.64 -- --
========== =========== ========== =========== ======== ======== =========== ===========
</TABLE>
STATEMENTS OF OPERATIONS Deutsche Funds, Inc.
For the year/period ended August 31, 1999
<TABLE>
<CAPTION>
Deutsche Deutsche
Deutsche
Top 50 Top 50
Top 50
World Europe
Asia
--------- ---------
- ---------
<S> <C> <C> <C>
Investment Income:
Investment Income and Expenses allocated from corresponding Deutsche Portfolio:
Dividend income.................................................................... $ 29,781 $ 150,369 $
145,170
Less: Foreign withholding taxes.................................................... (1,457) (7,437)
(17,770)
--------- ---------
- ----------
Net dividend income............................................................... 28,324 142,932
127,400
Interest income.................................................................... 6,279 31,412
10,443
--------- ---------
- ----------
Expenses........................................................................... (57,270) (185,918)
(190,586)
--------- ---------
- ----------
Net investment income (loss) allocated from the corresponding Deutsche Portfolio.. (22,667) (11,574)
(52,743)
--------- ---------
- ----------
Expenses:
Transfer Agent fees................................................................ 53,362 72,499
52,000
Professional fees.................................................................. 29,669 29,669
29,716
Registration fees.................................................................. 27,448 41,037
30,592
Portfolio accounting fees.......................................................... 20,400 22,800
20,400
Reports to Shareholders............................................................ 12,947 27,203
11,132
Directors' fees and expenses....................................................... 5,293 5,293
5,293
Amortization of organization costs................................................. 2,518 2,518
2,518
Administration fees............................................................... 1,305 5,807
7,197
Insurance expenses................................................................. 819
819 937
Distribution fees--Class B......................................................... 6,809 39,389
6,194
Distribution fees--Class C (b)..................................................... --
4,776 --
Service fees--Class A.............................................................. 2,750 7,613
25,618
Service fees--Class B.............................................................. 2,270 13,130
2,065
Service fees--Class C (b).......................................................... --
1,592 --
Other expenses..................................................................... 4,925 4,922
4,923
--------- ---------
- ----------
Total expenses.................................................................... 170,515 279,067
198,585
Less: Expense reimbursement of Fund and Portfolio allocated expenses............... (188,771) (277,601)
(205,297)
--------- ---------
- ----------
Net expenses (net reimbursement in excess of total Fund expenses)................. (18,256) 1,466
(6,712)
--------- ---------
- ----------
Net investment income (loss).................................................... (4,411) (13,040)
(46,031)
--------- ---------
- ----------
Net Realized and Unrealized Gain (Loss) on Investments, Futures Contracts and
Foreign Currency allocated from corresponding Deutsche Portfolio:
Net realized gain (loss) on:
Investments....................................................................... 75,845 (540,681)
403,099
Futures contracts................................................................. --
(12,078) --
Foreign currency contracts and foreign currency transactions...................... (3,023) (17,069)
(46,061)
Net change in unrealized appreciation/(depreciation) on:
Investments....................................................................... 311,752 947,868
7,720,431
Futures contracts................................................................. --
(1,135) --
Foreign currency contracts and foreign currency translations...................... 576 (341)
42,099
--------- ---------
- ----------
Net Realized and Unrealized Gain (Loss) on Investments, Futures Contracts
and Foreign Currency allocated from corresponding Deutsche Portfolio............... 385,150 376,564
8,119,568
--------- ---------
- ----------
Net Increase (Decrease) in Net Assets Resulting From Operations.................... $ 380,739 $ 363,524
$8,073,537
========= =========
==========
(a) Commencement of operations: 12/10/98
(b) Inception date: --
9/2/98 --
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
Deutsche Deutsche Deutsche Deutsche Deutsche Deutsche Deutsche
Deutsche European German Japanese Global European US Money Institutional US
Top 50 Mid-Cap Equity Equity Bond Bond Market Money Market
US Fund Fund Fund Fund Fund Fund Fund (a)
-------- -------- -------- -------- -------- ------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 34,807 $ 257,036 $ 31,055 $ 8,485 $ -- $ -- $ -- $ --
-- (24,986) (4,579) (1,273) -- -- -- --
---------- ----------- --------- ---------- --------- --------- --------- ---------
34,807 232,050 26,476 7,212 -- -- -- --
11,673 5,150 5,611 9,628 11,966 29,779 578,477 835,960
(95,160) (383,200) (106,302) (183,321) (14,698) (34,319) (27,671) (40,665)
---------- ---------- --------- ---------- --------- --------- --------- ---------
(48,680) (146,000) (74,215) (166,481) (2,732) (4,540) 550,806 795,295
---------- ---------- --------- ---------- --------- --------- --------- ---------
54,987 77,047 69,942 51,487 50,699 61,005 31,000 18,489
29,676 29,751 29,723 29,732 29,713 29,722 44,248 20,298
37,246 42,051 36,715 28,374 25,655 35,971 30,573 24,887
22,800 22,799 22,800 20,400 19,599 22,799 10,960 7,389
12,947 29,528 25,953 11,608 11,252 29,580 27,934 12,974
5,293 5,292 5,293 5,293 5,292 5,292 5,497 2,763
2,518 2,519 2,519 2,519 2,518 2,519 1,258 911
3,116 10,716 1,113 2,699 135 397 7,443 2,884
819 966 966 975 946 966 515 199
14,492 44,243 3,726 9,653 425 868 43 --
425 7,486 324 -- -- 87 -- --
7,012 23,973 2,930 7,163 379 1,209 28,380 --
4,831 14,748 1,242 3,218 142 289 14 --
141 2,495 108 -- -- 29 -- --
4,925 4,924 4,924 4,923 4,925 4,914 5,812 8,828
---------- ---------- --------- ---------- --------- --------- --------- ---------
201,228 318,538 208,278 178,044 151,680 195,647 193,677 99,622
(209,427) (385,549) (283,084) (285,236) (163,244) (221,058) (159,078) (106,985)
---------- ---------- --------- ---------- --------- --------- --------- ---------
(8,199) (67,011) (74,806) (107,192) (11,564) (25,411) 34,599 (7,363)
---------- ---------- --------- ---------- --------- --------- --------- ---------
(40,481) (78,989) 591 (59,289) 8,832 20,871 516,207 802,658
---------- ---------- --------- ---------- --------- --------- --------- ---------
(145,703) (59,466) (42,395) 468,229 1,672 12,044 (105) (662)
-- -- 92,942 -- (1,209) -- -- --
-- (56,681) 2,973 (25,818) (643) (2,083) -- --
1,454,911 1,372,873 137,764 3,773,231 (13,281) (88,383) -- --
-- -- 5,440 -- (241) -- -- --
-- 4,937 5,046 (2,078) (204) (1,659) -- --
---------- ---------- --------- ---------- --------- --------- --------- ---------
1,309,208 1,261,663 201,770 4,213,564 (13,906) (80,081) (105) (662)
---------- ---------- --------- ---------- --------- --------- --------- ---------
$1,268,727 $1,182,674 $ 202,361 $4,154,275 $ (5,074) $ (59,210) $ 516,102 $ 801,996
========== ========== ========= ========== ========= ========= ========= =========
9/2/98 9/2/98 9/2/98 -- -- 9/2/98 -- --
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
Deutsche Funds, Inc.
<TABLE>
<CAPTION>
Deutsche Top 50 World Deutsche
Top 50 Europe
---------------------------------
- ----------------------------------
For the For the Period For
the For the Period
Year Ended Ended (a) Year
Ended Ended (a)
August 31, 1999 August 31, 1998 August 31,
1999 August 31, 1998
--------------- ---------------
- --------------- ---------------
<S> <C> <C>
<C> <C>
Increase (Decrease) in Net
Assets:
Operations:
Net investment loss........... $ (4,411) $ (9) $
(13,040) $ (1,014)
Net realized gain (loss) on
investments, futures
contracts and foreign
currency
transactions allocated from corresponding Deutsche
Portfolio.................... 72,822 8,390
(569,828) 15,157
Net change in unrealized
appreciation/(depreciation)
on investments, futures
contracts and foreign
currency translations
allocated from corresponding
Deutsche Portfolio............ 312,328 (39,583)
946,392 (567,077)
----------- --------
- ------------ ----------
Net increase (decrease) in net assets resulting from
operations................... 380,739 (31,202)
363,524 (552,934)
----------- --------
- ------------ ----------
Distributions to Shareholders:
Dividends from net investment
income:
Class A....................... (29) --
- -- --
Class B....................... (5) --
- -- --
Class C....................... -- --
- -- --
Distributions from realized
gains:
Class A....................... (3,696) --
- -- --
Class B....................... (2,250) --
- -- --
Class C....................... -- --
- -- --
----------- --------
- ------------ ----------
Total distributions.......... (5,980) --
- -- --
----------- --------
- ------------ ----------
Capital Share Transactions:
Net proceeds from shares sold. 5,644,684 298,985
20,516,777 5,153,438
Net proceeds from dividends and distributions reinvested 5,761 --
- -- --
Net cost of shares redeemed... (1,388,830) (8,458)
(14,050,235) (283,077)
----------- --------
- ------------ ----------
Net increase in net assets resulting from capital share
transactions................. 4,261,615 290,527
6,466,542 4,870,361
----------- --------
- ------------ ----------
Total increase in net assets. 4,636,374 259,325
6,830,066 4,317,427
Net Assets:
Beginning of period........... 270,437 11,112
4,328,538 11,111
----------- --------
- ------------ ----------
End of period (b)............. $ 4,906,811 $270,437 $
11,158,604 $4,328,538
=========== ========
============ ==========
(a) Commencement of operations:
10/2/97 10/2/97
(b) Includes undistributed
(accumulated) net
investment income (loss)
of:........................ $ (2,101) $ (212) $
(13,228) $ (2,530)
----------- --------
- ------------ ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
Deutsche Top 50 Asia Deutsche Top 50 US Deutsche European
Mid-Cap Fund
-------------------------------------- ------------------------------------
- --------------------------------------
For the For the Period For the For the Period For the For
the Period
Year Ended Ended (a) Year Ended Ended (a) Year Ended
Ended (a)
August 31, 1999 August 31, 1998 August 31, 1999 August 31, 1998 August 31, 1999
August 31, 1998
--------------- --------------- --------------- --------------- ----------------
- ---------------
<S> <C> <C> <C> <C> <C>
$ (46,031) $ (102) $ (40,481) $ (7,648) $ (78,989)
$ (4,424)
357,038 (18,360) (145,703) (27,910)
(116,147) 158,552
7,762,530 (15,003) 1,454,911 (168,615) 1,377,810
(853,014)
- ----------------- ------------ ------------ ------------ ------------
- ------------
8,073,537 (33,465) 1,268,727 (204,173) 1,182,674
(698,886)
- ----------------- ------------ ------------ ------------ ------------
- ------------
(217) -- -- --
- -- --
(102) -- -- --
- -- --
- ----------------- ------------ ------------ ------------ ------------
- ------------
-- -- -- --
(51,423) --
-- -- -- --
(76,047) --
-- -- -- --
(9,584) --
- ----------------- ------------ ------------ ------------ ------------
- ------------
(319) -- -- --
(137,054) --
- ----------------- ------------ ------------ ------------ ------------
- ------------
21,563,670 204,104 6,730,640 2,997,963 23,243,388
7,812,630
319 -- -- --
122,669 --
(2,106,011) (91,623) (4,223,573) (312,046) (8,555,403)
(436,108)
- ----------------- ------------ ------------ ------------ ------------
- ------------
19,457,978 112,481 2,507,067 2,685,917 14,810,654
7,376,522
27,531,196 79,016 3,775,794 2,481,744 15,856,274
6,677,636
90,127 11,111 2,492,855 11,111
6,688,747 11,111
- ----------------- ------------ ------------ ------------ ------------
- ------------
$ 27,621,323 $ 90,127 $ 6,268,649 $ 2,492,855 $ 22,545,021 $
6,688,747
- ----------------- ------------ ------------ ------------ ------------
- ------------
10/14/97 10/2/97
10/17/97
$ (42,068) $ 757 $ -- $ -- $ (86,639)
$ (5,105)
- ----------------- ------------ ------------ ------------ ------------
- ------------
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (continued)
Deutsche Funds, Inc.
<TABLE>
<CAPTION>
Deutsche German Equity Fund Deutsche
Japanese Equity Fund
---------------------------------
- ----------------------------------
For the For the Period For
the For the Period
Year Ended Ended (a) Year
Ended Ended (a)
August 31, 1999 August 31, 1998 August 31,
1999 August 31, 1998
--------------- ---------------
- --------------- ---------------
<S> <C> <C>
<C> <C>
Increase (Decrease) in Net
Assets:
Operations:
Net investment income (loss)............................. $ 591 $ 676 $
(59,289) $ (280)
Net realized gain (loss) on
investments, futures
contracts and foreign
currency
transactions allocated from corresponding Deutsche
Portfolio............................................... 53,520 10,544
442,411 (3,536)
Net change in unrealized
appreciation/(depreciation)
on investments, futures
contracts and foreign
currency translations
allocated from corresponding
Deutsche Portfolio....................................... 148,250 (112,044)
3,771,153 (7,849)
------------ ---------
- ----------- --------
Net increase (decrease) in net assets resulting from
operations.............................................. 202,361 (100,824)
4,154,275 (11,665)
------------ ---------
- ----------- --------
Distributions to Shareholders:
Dividends from net investment
income:
Class A.................................................. (994) --
- -- --
Class B.................................................. -- --
- -- --
Class C.................................................. -- --
- -- --
Distributions from realized
gains:
Class A.................................................. (9,095) --
- -- --
Class B.................................................. (3,764) --
- -- --
Class C.................................................. (407) --
- -- --
------------ ---------
- ----------- --------
Total distributions..................................... (14,260) --
- -- --
------------ ---------
- ----------- --------
Capital Share Transactions:
Net proceeds from shares sold............................ 11,277,293 958,275
16,293,920 298,712
Net proceeds from dividends and distributions reinvested 13,149 --
- -- --
Net cost of shares redeemed.............................. (10,068,715) (128,512)
(5,130,586) (1,214)
------------ ---------
- ----------- --------
Net increase in net assets resulting from capital share
transactions............................................ 1,221,727 829,763
11,163,334 297,498
------------ ---------
- ----------- --------
Total increase in net assets............................ 1,409,828 728,939
15,317,609 285,833
Net Assets:
Beginning of period...................................... 740,050 11,111
296,944 11,111
------------ ---------
- ----------- --------
End of period (b)........................................ $ 2,149,878 $ 740,050
$15,614,553 $296,944
============ =========
=========== ========
(a) Commencement of operations:
10/17/97 10/20/97
(b) Includes undistributed
(accumulated) net
investment income (loss)
of:.................................................. $ 2,651 $ 40 $
(1,757) $ (27)
------------ ---------
- ----------- --------
(c) Represents Class Y information.
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
Deutsche
Institutional
US Money
Deutsche Global Bond Fund Deutsche European Bond Fund Deutsche US Money Market Fund
Market Fund
- ---------------------------------- --------------------------------- ----------------------------------
- ---------------
For the For the Period For the For the Period For the For the Period For
the Period
Year Ended Ended (a) Year Ended Ended (a) Year Ended Ended (a)
Ended (a)
August 31, 1999 August 31, 1998 August 31, 1999 August 31, 1998 August 31, 1999 August 31, 1998
August 31, 1999
- --------------- --------------- --------------- --------------- --------------- ---------------
- ---------------
<S> <C> <C> <C> <C> <C> <C>
$ 8,832 $ 1,646 $ 20,871 $ 610 $ 516,207 $ 13,478
$ 802,658
(180) (499) 9,961 636 (105)
- -- (662)
(13,726) 466 (90,042) 2,006 --
- -- --
- ------------ ------------ ------------ ------------ ------------ ------------
- ------------
(5,074) 1,613 (59,210) 3,252 516,102
13,478 801,996
- ------------ ------------ ------------ ------------ ------------ ------------
- ------------
(6,982) (1,204) (18,918) (203) (515,990) (13,478)
(802,658)(c)
(2,396) -- (3,559) (400) (217)
- -- --
-- -- (248) -- --
- -- --
(293) -- (1,162) -- --
- -- --
(22) -- (215) -- --
- -- --
- ------------ ------------ ------------ ------------ ------------ ------------
- ------------
(9,693) (1,204) (24,102) (603) (516,207) (13,478)
(802,658)
- ------------ ------------ ------------ ------------ ------------ ------------
- ------------
462,112 172,958 2,499,353 108,802 63,902,385 2,773,253
50,529,534
8,126 1,203 22,592 603 506,980
10,409 801,602
(226,442) (101,450) (1,669,449) (9,296) (49,932,814) (2,056,466)
(32,535,934)
- ------------ ------------ ------------ ------------ ------------ ------------
- ------------
243,796 72,711 852,496 100,109 14,476,551 727,196
18,795,202
- ------------ ------------ ------------ ------------ ------------ ------------
- ------------
229,029 73,120 769,184 102,758 14,476,446 727,196
18,794,540
84,231 11,111 113,869 11,111 727,296
100 6,600
- ------------ ------------ ------------ ------------ ------------ ------------
- ------------
$ 313,260 $ 84,231 $ 883,053 $ 113,869 $ 15,203,742 $ 727,296 $
18,801,140
============ ============ ============ ============ ============ ============
============
10/15/97 10/17/97 3/25/98
12/10/98
$ (750) $ (36) $ (2,687) $ 175 $ 919 $ --
$ --
- ------------ ------------ ------------ ------------ ------------ ------------
- ------------
</TABLE>
FINANCIAL HIGHLIGHTS
Deutsche Funds, Inc.
Selected data for a Class A share of common stock outstanding throughout each
period.
<TABLE>
<CAPTION>
Deutsche Top 50 World Deutsche
Top 50 Europe
----------------------------------------
- ---------------------------------
For the Year For the Period For the
Year For the Period
Ended Ended (a)
Ended Ended (a)
August 31, 1999 August 31, 1998 August 31,
1999 August 31, 1998
--------------- ---------------
- --------------- ---------------
<S> <C> <C>
<C> <C>
Net asset value at beginning of period....... $12.35 $ 12.50
$13.03 $ 12.50
------ ---------
- ------ --------
Investment operations:
Net investment income (loss)................ 0.01 0.01
0.04 0.02
Net realized and unrealized gain (loss) on
investments,
futures contracts and foreign currency
allocated from
corresponding Deutsche Portfolio............ 5.18 (0.16)
0.33 0.51
------ ---------
- ------ --------
Increase (decrease) from investment
operations................................. 5.19 (0.15)
0.37 0.53
------ ---------
- ------ --------
Distributions to Shareholders:
Dividends from net investment income........ (0.00)(d) --
- -- --
Distributions from net realized gains....... (0.19) --
- -- --
------ ---------
- ------ --------
Total distributions......................... (0.19) --
- -- --
------ ---------
- ------ --------
Net asset value at end of period............. $17.35 $ 12.35
$13.40 $ 13.03
====== =========
====== ========
Total Return (based on net asset value) (b).. 42.19% (1.20)%*
2.84% 4.24%*
Ratios and Supplemental Data:
Net assets, end of period (000's)........... $2,776 $ 181
$3,796 $ 1,208
Ratios to average net assets:
Expenses (c)................................ 1.60% 1.60%**
1.60% 1.60%**
Net investment income (loss) (c)............ 0.13% 0.13%**
0.44% 0.50%**
Portfolio turnover of corresponding
Deutsche Portfolio......................... 79% 125%*
61% 27%*
(a) Commencement of operations: 10/2/97
10/2/97
</TABLE>
(b) Total Return based on net asset value, excluding transaction charges,
assumes a purchase of common stock at net asset value at the beginning of
each period, reinvestment of distributions at net asset value and a
redemption on the last day of the period, also at net asset value. During
the period, total return would have been lower had certain expenses not been
reimbursed by the Manager.
(c) Includes the Fund's allocated portion of the corresponding Deutsche
Portfolio's expenses net of expense reimbursements. Had the Manager not
undertaken to reimburse such expenses, the ratios of expenses and net
investment income (loss) to average net assets would have been as follows:
<TABLE>
<S> <C> <C>
<C> <C>
Expenses to average net assets 10.56% 127.49%**
4.73% 16.53%**
Net investment loss to average net assets (8.83)% (125.76)%**
(2.69)% (14.43)%**
</TABLE>
(d) Amount rounds to less than $0.01. * Not annualized
** Annualized
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
Deutsche Top 50 Asia Deutsche Top 50 US Deutsche European Mid-Cap Fund
- -------------------------------- ---------------------------------- ---------------------------------
For the Year For the Period For the Year For the Period For the Year For the Period
Ended Ended (a) Ended Ended (a) Ended Ended (a)
August 31, 1999 August 31, 1998 August 31, 1999 August 31, 1998 August 31, 1999 August 31, 1998
- --------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
$ 8.18 $ 12.50 $ 12.62 $ 12.50 $ 14.22 $ 12.50
- ------------ ---------- ------------ ------------ ------------- ------------
(0.10) 0.01 (0.08) (0.03) (0.01) 0.01
10.72 (4.33) 5.35 0.15 1.26 1.71
- ------------ ---------- ------------ ------------ ------------- ------------
10.62 (4.32) 5.27 0.12 1.25 1.72
- ------------ ---------- ------------ ------------ ------------- ------------
(0.01) -- -- -- -- --
-- -- -- -- (0.19) --
- ------------ ---------- ------------ ------------ ------------- ------------
(0.01) -- -- -- (0.19) --
- ------------ ---------- ------------ ------------ ------------- ------------
$ 18.79 $ 8.18 $ 17.89 $ 12.62 $ 15.28 $ 14.22
============ ========== ============ ============ ============= ============
130.00% (34.56)%* 41.76% 0.96%* 8.86% 13.76%*
$ 23,954 $ 41 $ 3,370 $ 2,056 $ 13,907 $ 2,402
1.60% 1.60%** 1.50% 1.50%** 1.60% 1.60%**
(0.34)% 0.15%** (0.52)% (0.44)%** (0.10)% 0.23%**
51% 54%* 58% 24%* 89% 82%*
10/14/97 10/2/97 10/17/97
3.50% 247.05%** 5.71% 11.58%** 4.12% 18.86%**
(2.24)% (245.30)%** (4.73)% (10.52)%** (2.62)% (17.03)%**
</TABLE>
FINANCIAL HIGHLIGHTS (continued) Deutsche Funds, Inc.
Selected data for a Class A share (d) of common stock outstanding throughout
each period.
<TABLE>
<CAPTION>
Deutsche German Equity Fund Deutsche
Japanese Equity Fund
----------------------------------------
- ------------------------------------
For the Year For the Period For the
Year For the Period
Ended Ended (a)
Ended Ended (a)
August 31, 1999 August 31, 1998 August 31,
1999 August 31, 1998
---------------- ---------------- -----------------
- ----------------
<S> <C> <C> <C>
<C>
Net asset value at beginning of period....... $14.46 $ 12.50 $
9.85 $ 12.50
------ ---------
- --------- ----------
Investment operations:
Net investment income (loss)................ 0.03 0.02
0.00(e) (0.07)
Net realized and unrealized gain (loss) on
investments,
futures contracts and foreign currency
allocated from
corresponding Deutsche Portfolio............ 1.65 1.94
10.27 (2.58)
------ ---------
- --------- ----------
Increase (decrease) from investment
operations................................. 1.68 1.96
10.27 (2.65)
------ ---------
- --------- ----------
Distributions to Shareholders:
Dividends from net investment income........ (0.02) --
- -- --
Distributions from net realized gains....... (0.14) --
- -- --
------ ---------
- --------- ----------
Total distributions......................... (0.16) --
- -- --
------ ---------
- --------- ----------
Net asset value at end of period............. $15.98 $ 14.46 $
20.12 $ 9.85
====== =========
========= ==========
Total Return (based on net asset value) (b).. 11.58% 15.68%*
104.26% (21.20)%*
Ratios and Supplemental Data:
Net assets, end of period (000's)........... $1,454 $ 462 $
11,010 $ 14
Ratios to average net assets:
Expenses (c)................................ 1.60% 1.60%**
1.60% 1.60%**
Net investment income (loss) (c)............ 0.24% 0.75%**
(1.29)% (1.00)%**
Portfolio turnover of corresponding
Deutsche Portfolio......................... 77% 93%*
133% 95%*
(a) Commencement of operations:
10/17/97 10/20/97
</TABLE>
(b) Total Return based on net asset value, excluding transaction charges,
assumes a purchase of common stock at net asset value at the beginning of
each period, reinvestment of distributions at net asset value and a
redemption on the last day of the period, also at net asset value. During
the period, total return would have been lower had certain expenses not been
reimbursed by the Manager.
(c) Includes the Fund's allocated portion of the corresponding Deutsche
Portfolio's expenses net of expense reimbursements. Had the Manager not
undertaken to reimburse such expenses, the ratios of expenses and net
investment income (loss) to average net assets would have been as follows:
<TABLE>
<S> <C> <C>
<C> <C>
Expenses to average net assets 17.78% 73.61%**
5.88% 454.24%**
Net investment income (loss) to average net assets (15.94)% (71.26)%**
(5.57)% (453.64)%**
</TABLE>
(d) Represents Class Y information for Deutsche Institutional US Money Market
Fund.
(e) Amount rounds to less than $0.01. * Not annualized
** Annualized
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
Institutional
US Money
Deutsche Global Bond Fund Deutsche European Bond Fund Deutsche US Money Market Fund
Market Fund
- -------------------------------- --------------------------------- ----------------------------------
- ----------------
For the Year For the Period For the Year For the Period For the Year For the Period
For the Period
Ended Ended (a) Ended Ended (a) Ended Ended
(a) Ended (a)
August 31, 1999 August 31, 1998 August 31, 1999 August 31, 1998 August 31, 1999 August 31, 1998
August 31, 1999
- --------------- --------------- --------------- --------------- --------------- ----------------
- ---------------
<S> <C> <C> <C> <C> <C>
<C>
$12.79 $12.50 $13.15 $12.50 $ 1.00 $
1.00 $ 1.00
------ ------ ------ ------ -------
- ------- -------
0.61 0.26 0.35 0.19 0.05
0.02 0.04
(0.63) 0.22 (0.60) 0.58 _
- - -
------ ------ ------ ------ -------
- ------- -------
(0.02) 0.48 (0.25) 0.77 0.05
0.02 0.04
------ ------ ------ ------ -------
- ------- -------
(0.62) (0.19) (0.48) (0.12) (0.05)
(0.02) (0.04)
(0.03) _ (0.03) _ _
- - -
------ ------ ------ ------ -------
- ------- -------
(0.65) (0.19) (0.51) (0.12) (0.05)
(0.02) (0.04)
------ ------ ------ ------ -------
- ------- -------
$12.12 $12.79 $12.39 $13.15 $ 1.00 $
1.00 $ 1.00
====== ====== ====== ====== =======
======= =======
(0.33)% 3.85%* (2.13)% 6.17%* 4.67%
2.46%* 3.55%*
$ 178 $ 84 $ 737 $ 28 $15,083 $
727 $18,801
1.30% 1.30%** 1.30% 1.30%** 0.55%
0.55%** 0.20%**
4.46% 3.62%** 3.58% 2.67%** 4.55%
5.04%** 4.82%**
31% 43%* 53% 177%* _
- - -
10/15/97 10/17/97
3/25/98 12/10/98
81.86% 243.87%** 38.14% 454.22%** 1.95%
43.80%** 0.84%**
(76.10)% (238.95)%** (33.26)% (450.25)%** 3.15%
(38.21)%** 4.18%**
</TABLE>
FINANCIAL HIGHLIGHTS (continued)
Deutsche Funds, Inc.
Selected data for a Class B share of common stock outstanding throughout each
period.
<TABLE>
<CAPTION>
Deutsche Top 50 World Deutsche
Top 50 Europe
---------------------------------------
- -------------------------------
For the Year For the Period For the
Year For the Period
Ended Ended (a)
Ended Ended (a)
August 31, 1999 August 31, 1998 August 31,
1999 August 31, 1998
--------------- ---------------
- --------------- ---------------
<S> <C> <C> <C>
<C>
Net asset value at beginning of period...... $ 11.08 $ 12.50 $
11.65 $ 12.50
------- ----------
- -------- ----------
Investment operations:
Net investment loss........................ (0.02) (0.01)
(0.04) (0.01)
Net realized and unrealized gain (loss) on
investments,
futures contracts and foreign currency
allocated from
corresponding Deutsche Portfolio........... 4.56 (1.41)
0.28 (0.84)
------- ----------
- -------- ----------
Increase (decrease) from investment
operations................................ 4.54 (1.42)
0.24 (0.85)
------- ----------
- -------- ----------
Distributions to Shareholders:
Dividends from net investment income....... (0.00)(d) --
- -- --
Distributions from net realized gains...... (0.19) --
- -- --
------- ----------
- -------- ----------
Total distributions........................ (0.19) --
- -- --
------- ----------
- -------- ----------
Net asset value at end of period............ $ 15.43 $ 11.08 $
11.89 $ 11.65
======= ==========
======== ==========
Total Return (based on net asset value) (b). 41.14% (11.36)%*
2.06% (6.80)%*
Ratios and Supplemental Data:
Net assets, end of period (000's).......... $ 2,131 $ 90 $
6,395 $ 3,120
Ratios to average net assets:
Expenses (c)............................... 2.35% 2.35%**
2.35% 2.35%**
Net investment loss (c).................... (0.64)% (0.84)%**
(0.46)% (0.46)%**
Portfolio turnover of corresponding
Deutsche Portfolio........................ 79% 125%*
61% 27%*
(a) Commencement of operations:
5/4/98 3/30/98
</TABLE>
(b) Total Return based on net asset value, excluding transaction charges,
assumes a purchase of common stock at net asset value at the beginning of
each period, reinvestment of distributions at net asset value and a
redemption on the last day of the period, also at net asset value. During
the period, total return would have been lower had certain expenses not been
reimbursed by the Manager.
(c) Includes the Fund's allocated portion of the corresponding Deutsche
Portfolio's expenses net of expense reimbursements. Had the Manager not
undertaken to reimburse such expenses, the ratios of expenses and net
investment income (loss) to average net assets would have been as follows:
<TABLE>
<S> <C> <C> <C>
<C>
Expenses to average net assets 12.29% 128.24%**
5.39% 17.28%**
Net investment loss to average net assets (10.58)% (126.73)%**
(3.50)% (15.39)%**
</TABLE>
(d) Amount rounds to less than $0.01. * Not annualized
** Annualized
The accompanying notes are an integral part of the financial statements
<TABLE>
<CAPTION>
Deutsche Top 50 Asia Deutsche Top 50 US Deutsche European Mid-Cap Fund Deutsche
German Equity Fund
- ------------------------------- -------------------------------- --------------------------------
- -------------------------------
For the Year For the Period For the Year For the Period For the Year For the Period For the
Year For the Period
Ended Ended (a) Ended Ended (a) Ended Ended (a)
Ended Ended (a)
August 31, 1999 August 31, 1998 August 31, 1999 August 31, 1998 August 31, 1999 August 31, 1998 August 31,
1999 August 31, 1998
- --------------- --------------- --------------- --------------- --------------- ---------------
- --------------- ---------------
<S> <C> <C> <C> <C> <C>
<C> <C>
$ 9.28 $ 12.50 $ 10.96 $ 12.50 $ 12.55 $ 12.50 $
12.63 $ 12.50
------ ------- -------- ------- ------- -------
- ------- -------
(0.12) (0.02) (0.12) (0.06) (0.11) (0.02)
(0.04) (0.01)
12.06 (3.20) 4.60 (1.48) 1.12 0.07
1.43 0.14
------ ------- -------- ------- ------- -------
- ------- -------
11.94 (3.22) 4.48 (1.54) 1.01 0.05
1.39 0.13
------ ------- -------- ------- ------- -------
- ------- -------
(0.01) -- -- -- -- --
- -- --
-- -- -- -- (0.19) --
(0.14) --
------ ------- -------- ------- ------- -------
- ------- -------
(0.01) -- -- -- (0.19) --
(0.14) --
------ ------- -------- ------- ------- -------
- ------- -------
$21.21 $ 9.28 $ 15.44 $ 10.96 $ 13.37 $ 12.55 $
13.88 $ 12.63
====== ======= ======== ======= ======= =======
======= =======
128.65% (25.76)%* 40.88% (12.32)%* 8.12% 0.40%*
10.99% 1.04%*
$ 3,667 $ 50 $ 2,764 $ 436 $ 6,940 $ 4,287 $
648 $ 278
2.35% 2.35%** 2.25% 2.25%** 2.35% 2.35%**
2.35% 2.35%**
(1.32)% (0.51)%** (1.30)% (1.35)%** (1.06)% (0.70)%**
(0.43)% (0.19)%**
51% 54%* 58% 24%* 89% 82%*
77% 93%*
5/5/98 3/18/98
3/30/98 3/16/98
3.75% 247.80%** 6.83% 12.33%** 4.37% 19.61%**
19.66% 74.36%**
(2.72)% (245.96)%** (5.88)% (11.43)%** (3.08)% (17.96)%**
(17.74)% (72.20)%**
</TABLE>
FINANCIAL HIGHLIGHTS (continued) Deutsche Funds, Inc.
Selected data for a Class B share of common stock outstanding throughout each
period.
<TABLE>
<CAPTION>
Deutsche
Global
Bond
Deutsche Japanese Equity Fund Fund
------------------------------------
- --------------
For the Year For the Period For the
Period
Ended Ended (a) Ended
(a)
August 31, 1999 August 31, 1998 August
31, 1999
--------------- ---------------
- ---------------
<S> <C> <C> <C>
Net asset value at beginning of period.................... $ 12.11 $ 12.50 $
12.50
------- -------
- -------
Investment operations:
Net investment income (loss)............................. (0.12) (0.01)
0.53
Net realized and unrealized gain (loss) on investments, futures contracts and
foreign currency allocated from
corresponding Deutsche Portfolio........................ 12.59 (0.38)
(1.46)
------- -------
- -------
Increase (decrease) from investment operations........... 12.47 (0.39)
(0.93)
------- -------
- -------
Distributions to Shareholders:
Dividends from net investment income..................... -- --
(0.56)
Distributions from net realized gains.................... -- --
(0.03)
------- -------
- -------
Total distributions...................................... -- --
(0.59)
------- -------
- -------
Net asset value at end of period.......................... $ 24.58 $ 12.11 $
10.98
======= =======
=======
Total Return (based on net asset value) (b)............... 102.97% (3.12)%*
(7.66)%*
Ratios and Supplemental Data:
Net assets, end of period (000's)........................ $ 4,604 $ 283 $
135
Ratios to average net assets:
Expenses (c)............................................. 2.35% 2.35%**
2.05%**
Net investment income (loss) (c)......................... (1.74)% (1.25)%**
3.65%**
Portfolio turnover of corresponding Deutsche Portfolio... 133% 95%*
31%*
(a) Commencement of operations: 8/10/98
10/9/98
</TABLE>
(b) Total Return based on net asset value, excluding transaction charges,
assumes a purchase of common stock at net asset value at the beginning of
each period, reinvestment of distributions at net asset value and a
redemption on the last day of the period, also at net asset value. During
the period, total return would have been lower had certain expenses not been
reimbursed by the Manager.
(c) Includes the Fund's allocated portion of the corresponding Deutsche
Portfolio's expenses net of expense reimbursements. Had the Manager not
undertaken to reimburse such expenses, the ratios of expenses and net
investment income (loss) to average net assets would have been as follows:
<TABLE>
<S> <C> <C> <C>
Expenses to average net assets 14.99% 454.99%**
74.69%**
Net investment income (loss) to average net assets (14.38)% (453.89)%**
(68.99)%**
(d) Amount rounds to less than $0.01. * Not annualized
** Annualized
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
Deutsche US
Money Market
Deutsche European Bond Fund Fund
- ----------------------------------- -----------------
For the Year For the Period For the Period
Ended Ended (a) Ended (a)
August 31, 1999 August 31, 1998 August 31, 1999
- ---------------- --------------- ---------------
<S> <C> <C>
$12.82 $ 12.50 $ 1.00
------ -------- --------
0.36 0.08 0.00(d)
(0.70) 0.35 --
------ -------- --------
(0.34) 0.43 0.00
------ -------- --------
(0.39) (0.11) 0.00(d)
(0.03) -- --
------ -------- --------
(0.42) (0.11) 0.00
------ -------- --------
$12.06 $ 12.82 $ 1.00
====== ======== ========
(2.88)% 3.44%* 0.42%*
$ 143 $ 85 $ 121
2.05% 2.05%** 1.30%**
2.82% 2.38%** 3.83%**
53% 177%* --
6/25/98 7/20/99
34.83% 454.97%** 2.18%**
(29.96)% (450.54)%** 2.95%**
</TABLE>
FINANCIAL HIGHLIGHTS (continued)
Deutsche Funds, Inc.
For the period September 2, 1998 (a) through August 31, 1999
Selected data for a Class C share of common stock outstanding throughout the
period.
<TABLE>
<CAPTION>
Deutsche
Deutsche Deutsche
Deutsche Deutsche European
German European
Top 50 Top 50 Mid-Cap
Equity Bond
Europe US Fund
Fund Fund
-------- -------- --------
- ------- -------
<S> <C> <C> <C>
<C> <C>
Net asset value at beginning of period...................................... $ 12.50 $ 12.50 $ 12.50 $
12.50 $ 12.50
------- ------- -------
- ------- -------
Investment operations:
Net investment income (loss)............................................... (0.03) (0.09) (0.06)
(0.03) 0.57
Net realized and unrealized gain (loss) on investments, futures contracts and
foreign currency allocated from
corresponding Deutsche Portfolio........................................... 0.48 4.42
1.32 1.46 (0.92)
------- ------- -------
- ------- -------
Increase (decrease) from investment operations............................. 0.45 4.33
1.26 1.43 (0.35)
------- ------- -------
- ------- -------
Distributions to Shareholders:
Dividends from net investment income....................................... -- --
- -- -- (0.36)
Distributions from net realized gains...................................... -- -- (0.19)
(0.14) (0.03)
------- ------- -------
- ------- -------
Total distributions........................................................ -- -- (0.19)
(0.14) (0.39)
------- ------- -------
- ------- -------
Net asset value at end of period............................................ $ 12.95 $ 16.83 $ 13.57 $
13.79 $ 11.76
======= ======= =======
======= =======
Total Return (based on net asset value) (b)*................................ 3.60% 34.64% 10.15%
11.43% (3.00)%
Ratios and Supplemental Data:
Net assets, end of period (000's).......................................... $ 967 $ 136 $ 1,698
$ 48 $ 3
Ratios to average net assets:
Expenses (c)**............................................................. 2.35% 2.25%
2.35% 2.35% 2.05%
Net investment income (loss) (c)**......................................... (0.31)% (1.31)% (0.73)%
(0.21)% 2.63%
Portfolio turnover of corresponding Deutsche Portfolio*.................... 61% 58%
89% 77% 53%
</TABLE>
(a) Commencement of operations
(b) Total Return based on net asset value, excluding transaction charges,
assumes a purchase of common stock at net asset value at the beginning of
each period, reinvestment of distributions at net asset value and a
redemption on the last day of the period, also at net asset value. During
the period, total return would have been lower had certain expenses not been
reimbursed by the Manager.
(c) Includes the Fund's allocated portion of the corresponding Deutsche
Portfolio's expenses net of expense reimbursements. Had the Manager not
undertaken to reimburse such expenses, the ratios of expenses and net
investment income (loss) to average net assets would have been as follows:
<TABLE>
<S> <C> <C> <C>
<C> <C>
Expenses to average net assets** 5.97% 7.15% 4.89%
19.60% 44.99%
Net investment loss to average net assets** (3.93)% (6.21)% (3.27)%
(17.46)% (40.31)%
* Not annualized
** Annualized
</TABLE>
The accompanying notes are an integral part of the financial statements.
NOTES TO FINANCIAL STATEMENTS
Deutsche Funds, Inc.
August 31, 1999
Note 1 -- Organization
Deutsche Funds, Inc. (the "Company") was incorporated in Maryland on May 22,
1997. The Company is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company,
consisting of eleven separate investment series (each a "Fund" and collectively,
the "Funds"): Deutsche Top 50 World ("Top 50 World"), Deutsche Top 50 Europe
("Top 50 Europe"), Deutsche Top 50 Asia ("Top 50 Asia"), Deutsche Top 50 US
("Top 50 US"), Deutsche European Mid-Cap Fund ("European Mid-Cap Fund"),
Deutsche German Equity Fund ("German Equity Fund"), and Deutsche Japanese Equity
Fund ("Japanese Equity Fund") (collectively, the "Equity Funds"); Deutsche
Global Bond Fund ("Global Bond Fund") and Deutsche European Bond Fund ("European
Bond Fund") (collectively, the "Bond Funds"); and Deutsche US Money Market Fund
(the "Money Market Fund") and Deutsche Institutional US Money Market Fund (the
"Institutional Money Market Fund") (collectively, the "Money Market Funds").
Each of the Funds seeks to achieve its respective investment objective by
investing substantially all of its assets in the corresponding portfolio of
Deutsche Portfolios (the "Portfolio Trust"), a New York business trust,
registered under the 1940 Act, having substantially the same investment
objective of each of the respective Funds. The Portfolio Trust is an open-end
management investment company and comprises ten portfolios (each a "Portfolio").
The financial statements of the corresponding Portfolios, including their
portfolios of investments, are included elsewhere within this report and should
be read in conjunction with each Fund's financial statements.
The Company has not retained the services of an investment adviser since the
Funds seek to achieve their investment objective by investing all of their
investable assets in their corresponding Portfolios of the Portfolio Trust. Each
Portfolio is managed by Deutsche Fund Management, Inc. ("DFM" or the "Manager"),
an indirect subsidiary of Deutsche Bank AG. Federated Services Company
("Federated") serves as Administrator to the Funds and Federated Shareholder
Services Company serves as transfer agent and dividend disbursing agent to the
Funds. Edgewood Services, Inc. ("Edgewood"), an affiliate of Federated, serves
as distributor to the Funds (the "Distributor").
Top 50 World, Top 50 Asia, the Japanese Equity Fund, the Global Bond Fund and
the Money Market Fund offer two classes of shares to investors, Class A and
Class B. Top 50 Europe, Top 50 US, the European Mid-Cap Fund, the German Equity
Fund, and the European Bond Fund offer three classes of shares to investors,
Class A, Class B and Class C Shares. All three Classes of shares are subject to
a Service Plan, and Class B Shares and Class C Shares are also subject to a
Distribution Plan. Each Class will bear its respective portion of the expenses
under the Service and Distribution Plans. The Funds, with the exception of the
Institutional Money Market Fund, commenced operations during October 1997. The
Institutional Money Market Fund offers one class of shares to investors, Class
Y, and commenced operations on December 10, 1998.
Note 2 -- Significant Accounting Policies
The Company prepares its financial statements in accordance with generally
accepted accounting principles. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make certain estimates and assumptions that affect the reported amounts and
disclosures. Actual results could differ from those estimates. The following is
a summary of significant accounting policies followed by the Funds:
Valuation
The value of a Fund's investment in the Portfolio included in the accompanying
Statements of Assets and Liabilities reflects the Fund's proportionate
beneficial interest in the net assets of the Portfolio (percentages as of August
31, 1999 are listed below). Valuation of securities by the Portfolio is
discussed in Note 2 of the Portfolio Trust's Notes to Financial Statements which
are included elsewhere in this report.
<TABLE>
<CAPTION>
Fund Percentage Portfolio
- ------------------------------- ----------- --------------------------------------
<S> <C> <C>
Top 50 World 21.0% Top 50 World Portfolio (US Dollar)
Top 50 Europe 34.2% Top 50 Europe Portfolio (US Dollar)
Top 50 Asia 39.3% Top 50 Asia Portfolio (US Dollar)
Top 50 US 25.9% Top 50 US Portfolio (US Dollar)
European Mid-Cap Fund 78.1% Provesta Portfolio (US Dollar)
German Equity Fund 30.7% Investa Portfolio (US Dollar)
Japanese Equity Fund 74.5% Japanese Equity Portfolio (US Dollar)
Global Bond Fund 5.4% Global Bond Portfolio (US Dollar)
European Bond Fund 11.6% European Bond Portfolio (US Dollar)
Money Market Fund 7.1% US Money Market Portfolio (US Dollar)
Institutional Money Market Fund 8.7% US Money Market Portfolio (US Dollar)
</TABLE>
At August 31, 1999, the remaining interest in each of the respective portfolios
of the Portfolio Trust was held by similar Funds of DB Funds Ltd., an offshore
company and an affiliate of the Company.
Investment Income, Expenses and Realized and Unrealized Gains and Losses
The Funds record their proportionate share of the investment income, including
accretion of discount and amortization of premium, expenses and realized and
unrealized gains and losses recorded by the Portfolios on a daily basis based
upon the amount of their investment in the Portfolio. The Company accounts
separately for the assets, liabilities and operations of each Fund. Expenses
attributable to each Fund are charged directly to the respective Fund, while
general Company expenses attributable to more than one Fund of the Company are
allocated among the respective Funds. The investment income and expenses of each
Fund (other than Class specific expenses), and realized and unrealized gains and
losses allocated from the Portfolio are further allocated to each Class of
shares based on their relative net asset value.
Federal Income Taxes
Each Fund is treated as a separate entity for federal income tax purposes. It is
the policy of each Fund to continue to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code, as amended.
Accordingly, each Fund would not be subject to U.S. federal income taxes to the
extent it distributes substantially all of its taxable income including any net
capital gains for each fiscal year. In addition, by distributing, during each
calendar year, substantially all of its net investment income and capital gains,
each Fund would not be subject to U.S. federal excise tax. Accordingly, no
provision for U.S. federal income and excise tax is required.
At August 31, 1999, Top 50 Europe had a capital loss carryforward of $85,655,
which will expire in 2007 if not utilized. Top 50 US had a capital loss
carryforward of $72,786, of which $193 will expire in 2006 and $72,593 will
expire in 2007 if not utilized. To the extent that these loss carryforwards are
used to offset future capital gains, such capital gains so offset will not be
distributed to shareholders.
Realized capital losses incurred after October 31 are deemed to arise on the
first business day of the following fiscal year for tax purposes. The following
Funds have incurred and elected to defer their realized capital losses incurred
after October 31, 1998:
<TABLE>
<CAPTION>
Realized Realized
Foreign Foreign
Currency Realized Currency Realized
Fund Loss Capital Loss Fund Loss Capital Loss
- ------------------------------ -------- ------------ ------------------------------- -------- -------------
<S> <C> <C> <C> <C> <C>
Top 50 World $ 2,956 $ -- Global Bond Fund $ 366 $1,011
Top 50 Europe 10,823 302,225 European Bond Fund 2,761 --
Top 50 US -- 107,273 Money Market Fund -- 105
European Mid-Cap Fund 50,188 79,560 Institutional Money Market Fund -- 662
</TABLE>
Distributions to Shareholders
Dividends from net investment income of the Equity Funds are declared and paid
at least annually and, in the case of the Bond Funds, monthly. All of the Money
Market Funds' net income and short-term capital gains and losses, if any, are
declared as dividends daily and paid monthly. Capital gains of each Equity and
Bond Fund, if any, are distributed at least annually. However, to the extent
that the net realized gains of a Fund can be reduced by any capital loss
carryforwards of that Fund, such gains will not be distributed. Dividends and
capital gains distributions are distributed in U.S. dollars. The Funds record
all dividends and distributions to shareholders on ex-dividend date.
Income and capital gain distributions are determined in accordance with federal
income tax regulations which may differ from generally accepted accounting
principles. These differences, which could be temporary or permanent in nature,
may result in reclassification of distributions; however, net investment income,
net realized gains and net assets are not affected. Distributions which exceed
net investment income and net realized capital gains for financial reporting
purposes but not for tax purposes are reported as distributions in excess of net
investment income or realized gains. To the extent they exceed net investment
income and net realized capital gains for tax purposes, they are reported as
distributions from capital. As of August 31, 1999, the following Funds
reclassified permanent book and tax differences to increase (decrease) the
following accounts:
<TABLE>
<CAPTION>
Undistributed Undistributed Net Realized
Net Investment Gains on Investments
Fund Income and Foreign Currency Transactions Paid-in Capital
- ----------------------------- -------------- --------------------------------- ---------------
<S> <C> <C> <C>
Top 50 World $ 2,556 $(30,886) $ 28,330
Top 50 Europe 2,342 133,682 (136,024)
Top 50 Asia 3,525 66,300 (69,825)
Top 50 US 40,481 (17,655) (22,826)
European Mid-Cap Fund (2,545) 36,766 (34,221)
German Equity Fund 3,014 12,353 (15,367)
Japanese Equity Fund 57,559 (90,552) 32,993
Global Bond Fund (168) (243) 411
European Bond Fund (1,008) (8,640) 9,648
Money Market Fund 919 -- (919)
</TABLE>
Deferred Organization Costs
Organization costs incurred in connection with the organization and initial
registration of the Company were paid initially by DFM and are being reimbursed
by the Funds. Such organization costs have been deferred and are being amortized
ratably over a period of sixty months from the commencement of operations of the
Funds. The amount paid by each Fund on any redemption by Edgewood (or any
subsequent holder) of such Fund's initial shares will be reduced by the pro-rata
portion of any unamortized organization costs of the Fund.
Note 3 -- Significant Agreements and Transactions with Affiliates
The Company has retained the services of Federated as administrator. Under the
Administration Agreement, Federated will assist in the operations of the Funds
subject to the direction and control of the Board of Directors of the Company.
For its services, Federated receives a fee from each Fund, which is computed
daily and paid monthly, at an annual rate of 0.065% of the average daily net
assets of each of the Funds up to $200 million and 0.0525% of such assets in
excess of $200 million for the Fund's then current fiscal year. Federated, in
its capacity as operations agent for the Portfolio Trust and Administrator of
the Funds, receives a minimum aggregate fee from each Fund, its corresponding
Portfolio and any other funds investing in the Portfolio Trust, taken together,
of $75,000 for the first year and $125,000 for the second year.
The Company has entered into a distribution agreement with Edgewood. Edgewood
serves as principal distributor for shares of each Fund. Pursuant to the Service
and Distribution Plans, Class B Shares and Class C Shares of the Funds are
subject to the Distribution Plan and Class A Shares, Class B Shares and Class C
Shares of the Funds are subject to the Service Plan. Under the Distribution
Plan, Class B Shares and Class C Shares of each Fund pay a fee to the
Distributor in an amount computed at an annual rate of 0.75% of the average
daily net assets of the Fund represented by Class B Shares and Class C Shares,
respectively, to finance any activity that is principally intended to result in
the sale of Class B Shares and Class C Shares of the Fund. Under the Service
Plan, each Fund will pay to DFM, for the provision of certain services to the
holders of Class A Shares, Class B Shares and Class C Shares, a fee computed at
an annual rate of 0.25% of the average daily net assets of each such Class of
shares.
Federated Shareholder Services Company serves as the transfer agent and dividend
disbursing agent for each Fund. Federated and Federated Shareholder Services
Company are both affiliated with Edgewood. IBT Fund Services (Canada) Inc.
provides fund accounting services to the Funds. Investors Bank & Trust Company
(Boston) acts as the sub-administrator for each Fund and as the custodian of
each Fund's assets.
Expense Reimbursements
DFM has voluntarily agreed that it will reimburse each Fund through at least
August 31, 1999, to the extent necessary, to maintain each Fund's total
operating expenses (which includes expenses of the Fund and its pro-rata portion
of expenses of the corresponding Portfolio), at not more than 1.60%, 2.35%, and
2.35% of the average daily net assets of Class A Shares, Class B Shares and
Class C Shares of all the Equity Funds except Top 50 US, at not more than 1.30%,
2.05% and 2.05% of the average daily net assets of Class A Shares, Class B
Shares and Class C Shares of the Bond Funds, at not more than 0.55% and 1.30% of
the average daily net assets of Class A Shares and Class B Shares of the Money
Market Fund, and at not more than 0.20% of the average daily net assets of the
Institutional Money Market Fund, respectively. The total operating expenses of
Top 50 US will not exceed 1.50%, 2.25% and 2.25% for Class A Shares, Class B
Shares and Class C Shares, respectively. As approved by the Board of Directors
on October 14, 1999, DFM has agreed to contractually reimburse the Funds through
at least August 31, 2000 to the extent necessary, to maintain each Fund's total
operating expenses (which includes expenses of the Fund and its pro-rata portion
of expenses of the corresponding Portfolio) at the aforementioned rates.
For the year ended August 31, 1999, DFM voluntarily reimbursed the following
expenses pursuant to this undertaking:
<TABLE>
<CAPTION>
Portfolio Fund Total Portfolio Fund
Total
--------- -------- -------- --------- --------
- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Top 50 World $18,256 $170,515 $188,771 Japanese Equity Fund $107,192 $178,044
$285,236
Top 50 Europe -- 277,601 277,601 Global Bond Fund 11,564 151,680
163,244
Top 50 Asia 6,712 198,585 205,297 European Bond Fund 25,411 195,647
221,058
Top 50 US 8,199 201,228 209,427 Money Market Fund -- 159,078
159,078
European Mid-Cap Fund 67,011 318,538 385,549 Institutional Money Market Fund 7,363 99,622
106,985
German Equity Fund 74,806 208,278 283,084
</TABLE>
Certain directors and officers of the Funds are affiliated with Deutsche Bank
AG. These persons are not paid by the Funds for serving in these capacities.
Note 4 -- Concentration of Ownership
From time to time the Funds may have a concentration of several shareholders
holding a significant percentage of shares outstanding. Investment activities of
these shareholders could have a material impact on the Fund and the Portfolio.
Note 5 -- Capital Share Transactions
Transactions in capital stock were as follows for the following periods and
classes of each Fund:
<TABLE>
<CAPTION>
Deutsche Top 50 World Deutsche
Top 50 Europe
---------------------------------------------
- -----------------------------------------------
Year Ended Period Ended (a) Year Ended
Period Ended (a)
August 31, 1999 August 31, 1998 August 31, 1999
August 31, 1998
---------------------- ------------------ ----------------------
- --------------------
Capital Shares -- Class A: Shares Amount Shares Amount Shares Amount
Shares Amount
------ ------ ------ ------ ------ ------
- ------ -------
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Shares sold....................... 225,999 $ 3,695,241 14,360 $197,213 1,093,777 $ 14,427,570
102,366 $1,500,448
Reinvestment of dividends and
distributions.................... 224 3,508 -- -- --
- -- -- --
Shares redeemed................... (80,839) (1,325,130) (607) (8,458) (903,100) (12,054,080)
(10,550) (148,736)
------- ----------- ------ -------- --------- ------------
- ------- ----------
Net increase...................... 145,384 $ 2,373,619 13,753 $188,755 190,677 $ 2,373,490
91,816 $1,351,712
------- ----------- ------ -------- --------- ------------
- ------- ----------
(a) Commencement of operations:
10/2/97 10/2/97
Capital Shares -- Class B:
Shares sold....................... 134,071 $ 1,949,443 8,089 $101,772 379,025 $ 4,442,161
278,086 $3,652,990
Reinvestment of dividends and
distributions.................... 161 2,253 -- -- --
- -- -- --
Shares redeemed................... (4,175) (63,700) -- -- (109,012) (1,292,761)
(10,241) (134,341)
------- ----------- ------ -------- --------- ------------
- ------- ----------
Net increase...................... 130,057 $ 1,887,996 8,089 $101,772 270,013 $ 3,149,400
267,845 $3,518,649
======= =========== ====== ======== ========= ============
======= ==========
(a) Inception date:
5/4/98 3/30/98
</TABLE>
<TABLE>
<CAPTION>
Period Ended (a)
August 31, 1999
---------------------
Capital Shares -- Class C: Shares Amount
------ -------
<S> <C> <C>
<C> <C>
Shares sold....................... 128,947 $
1,647,046 -- $ --
Shares redeemed................... (54,282)
(703,394) -- --
------- -----------
- ---- ----------
Net increase...................... 74,665 $
943,652 -- $ --
======= ============
==== ==========
(a) Inception date: 9/2/98
</TABLE>
<TABLE>
<CAPTION>
Deutsche Top 50 Asia Deutsche Top 50
US
-------------------------------------------
- ---------------------------------------------
Year Ended Period Ended (a) Year Ended
Period Ended (a)
August 31, 1999 August 31, 1998 August 31, 1999
August 31, 1998
-------------------- ----------------- --------------------
- ------------------
Capital Shares -- Class A: Shares Amount Shares Amount Shares Amount
Shares Amount
------ ------ ------ ------ ------ ------
- ------ -------
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Shares sold....................... 1,376,077 $18,173,485 4,424 $ 43,445 245,592 $ 4,215,805
177,430 $2,396,342
Reinvestment of dividends and
distributions.................... 19 216 -- -- --
- -- -- --
Shares redeemed................... (106,497) (1,681,431) (353) (3,711) (220,175) (3,728,094)
(15,377) (218,521)
--------- ----------- ------ -------- --------- ------------
- ------- ----------
Net increase...................... 1,269,599 $16,492,270 4,071 $ 39,734 25,417 $ 487,711
162,053 $2,177,821
========= =========== ====== ======== ========= ============
======= ==========
(a) Commencement of operations:
10/14/97 10/2/97
Capital Shares -- Class B:
Shares sold....................... 191,167 $ 3,390,185 14,351 $160,659 157,403 $ 2,177,200
47,729 $ 601,621
Reinvestment of dividends and
distributions.................... 8 103 -- -- --
- -- -- --
Shares redeemed................... (23,633) (424,580) (9,014) (87,912) (18,199) (288,524)
(7,912) (93,525)
--------- ----------- ------ -------- --------- ------------
- ------- ----------
Net increase...................... 167,542 $ 2,965,708 5,337 $ 72,747 139,204 $ 1,888,676
39,817 $ 508,096
========= =========== ====== ======== ========= ============
======= ==========
(a) Inception date:
5/5/98 3/18/98
</TABLE>
<TABLE>
<CAPTION>
Period Ended (a)
August 31, 1999
---------------------
Capital Shares -- Class C:
<S> <C> <C>
<C> <C>
Shares sold....................... 19,925 $
337,635 -- $ --
Reinvestment of dividends and
distributions.................... --
- -- -- --
Shares redeemed................... (11,875)
(206,955) -- --
------- -----------
- ---- ----------
Net increase...................... 8,050 $
130,680 -- $ --
======= ===========
==== ==========
(a) Inception date: 9/2/98
</TABLE>
<TABLE>
<CAPTION>
Deutsche European Mid-Cap Fund Deutsche German
Equity Fund
------------------------------------------
- --------------------------------------------------
Year Ended Period Ended (a) Year Ended
Period Ended (a)
August 31, 1999 August 31, 1998 August 31, 1999
August 31, 1998
------------------- ----------------- -------------------
- ---------------------
Capital Shares -- Class A: Shares Amount Shares Amount Shares Amount
Shares Amount
------ ------ ------ ------ ------ -------
- ------ ------
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Shares sold.................. 1,197,311 $17,754,423 185,654 $2,861,890 642,165 $ 9,941,423
39,304 $ 638,075
Reinvestment of dividends
and distributions........... 3,201 46,741 -- -- 590
9,508 -- --
Shares redeemed.............. (459,377) (6,838,703) (17,655) (281,685) (583,731) (9,107,864)
(8,256) (128,511)
--------- ----------- ------- ---------- -------- -----------
- ------ ---------
Net increase................. 741,135 $10,962,461 167,999 $2,580,205 59,024 $ 843,067
31,048 $ 509,564
========= =========== ======= ========== ======== ===========
====== =========
(a) Commencement of
operations:
10/17/97 10/17/97
Capital Shares -- Class B:
Shares sold.................. 269,748 $ 3,415,267 353,382 $4,950,740 44,266 $ 602,809
22,029 $ 320,200
Reinvestment of dividends
and distributions........... 5,232 67,185 -- -- 244
3,431 -- --
Shares redeemed.............. (97,624) (1,239,901) (11,806) (154,723) (19,855)
(271,459) -- (1)
--------- ----------- ------- ---------- -------- -----------
- ------ ---------
Net increase................. 177,356 $ 2,242,551 341,576 $4,796,017 24,655 $ 334,781
22,029 $ 320,199
========= =========== ======= ========== ======== ===========
====== =========
(a) Inception date:
3/30/98 3/16/98
</TABLE>
<TABLE>
<CAPTION>
Period Ended (a) Period Ended (a)
Capital Shares -- Class C: August 31, 1999 August 31, 1999
-------------------
- -------------------
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Shares sold.................. 161,281 $ 2,073,698 -- $ -- 55,341 $
733,061 -- $ --
Reinvestment of dividends
and distributions........... 671 8,743 -- -- 15
210 -- --
Shares redeemed.............. (36,880) (476,799) -- -- (51,891)
(689,392) -- --
--------- ----------- ------- ---------- -------- -----------
- ------ ---------
Net increase................. 125,072 $ 1,605,642 -- $ -- 3,465 $
43,879 -- $ --
========= =========== ======= ========== ======== ===========
====== =========
(a) Inception date: 9/2/98 9/2/98
</TABLE>
<TABLE>
<CAPTION>
Deutsche Japanese Equity Fund Deutsche Global Bond
Fund
------------------------------------------
- --------------------------------------------------
Year Ended Period Ended (a) Year Ended
Period Ended (a)
August 31, 1999 August 31, 1998 August 31, 1999
August 31, 1998
------------------- ----------------- -------------------
- ---------------------
Capital Shares -- Class A: Shares Amount Shares Amount Shares Amount
Shares Amount
------ ------ ------ ------ ------ -------
- ------ ------
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Shares sold.................. 775,493 $12,552,723 667 $ 7,050 16,827 $ 213,359
13,535 $ 172,958
Reinvestment of dividends
and distributions........... -- -- -- -- 516
6,622 95 1,203
Shares redeemed.............. (229,605) (4,506,823) (105) (1,079) (9,242) (116,606)
(7,932) (101,450)
--------- ----------- ------- ---------- -------- -----------
- ------ ---------
Net increase................. 545,888 $ 8,045,900 562 $ 5,971 8,101 $ 103,375
5,698 $ 72,711
========= =========== ======= ========== ======== ===========
====== =========
(a) Commencement of
operations:
10/20/97 10/15/97
</TABLE>
<TABLE>
<CAPTION>
Period Ended (a)
Capital Shares -- Class B: August 31, 1999
----------------------
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Shares sold.................. 191,425 $ 3,741,197 23,343 $ 291,662 22,085 $
248,753 -- $ --
Reinvestment of
dividends
and distributions........... -- -- -- -- 133
1,504 -- --
Shares redeemed.............. (27,405) (623,763) (11) (135) (9,902)
(109,836) -- --
--------- ----------- ------- ---------- -------- -----------
- ------ ---------
Net increase................. 164,020 $ 3,117,434 23,332 $ 291,527 12,316 $
140,421 -- $ --
========= =========== ======= ========== ======== ===========
====== =========
(a) Inception date: 8/10/98 10/9/98
</TABLE>
<TABLE>
<CAPTION>
Deutsche
Institutional
US Money
Deutsche European Bond Fund Deutsche US Money Market
Fund Market Fund (c)
----------------------------
- ----------------------------- ----------------
Year Ended Period Ended (a) Year Ended Period Ended
(a) Period Ended (a)
August 31, 1999 August 31, 1998 August 31, 1999 August 31,
1998 August 31, 1999
--------------- --------------- ---------------
- ---------------- -----------------
Capital Shares -- Class A: Shares Amount Shares Amount Shares (b) Shares
(b) Shares (b)
------ ------ ------ ------ ----------
- ---------- -----------
<S> <C> <C> <C> <C> <C>
<C> <C>
Shares sold................ 92,153 $1,243,683 1,985 $25,533 63,341,207
2,773,253 50,529,534
Reinvestment of dividends
and distributions......... 1,423 18,865 16 202 506,899
10,409 801,602
Shares redeemed............ (36,279) (483,139) (729) (9,296) (49,492,101)
(2,056,466) (32,535,934)
------- ---------- ----- ------- -----------
- ---------- -----------
Net increase............... 57,297 $ 779,409 1,272 $16,439 14,356,005
727,196 18,795,202
======= ========== ===== ======= ===========
========== ===========
(a) Commencement of
operations:............... 10/17/97
3/25/98 12/10/98
</TABLE>
<TABLE>
<CAPTION>
Period Ended (a)
Capital Shares -- Class B: August 31, 1999
----------------
<S> <C> <C> <C> <C> <C>
Shares sold................ 29,479 $ 364,450 6,631 $83,269 561,178
Reinvestment of dividends
and distributions......... 270 3,493 32 401 81
Shares redeemed............ (24,561) (301,464) -- -- (440,713)
------- ---------- ----- ------- -----------
Net increase............... 5,188 $ 66,479 6,663 $83,670 120,546
======= ========== ===== ======= ===========
(a) Inception date: 6/25/98 7/20/99
</TABLE>
<TABLE>
<CAPTION>
Period Ended (a)
Capital Shares -- Class C: August 31, 1999
----------------
<S> <C> <C> <C> <C>
Shares sold................ 72,906 $ 891,220 -- $ --
Reinvestment of dividends
and distributions......... 19 234 -- --
Shares redeemed............ (72,654) (884,846) -- --
------- ---------- ----- -------
Net increase............... 271 $ 6,608 -- $ --
======= ========== ===== =======
(a) Inception date: 9/2/98
(b) At $1.00 per share
(c) Represents Class Y information.
</TABLE>
Note 6 -- Off-Balance Sheet Risk and Concentration of Credit Risk See Notes to
the Financial Statements of the Portfolios included elsewhere in this report for
discussion of off-balance sheet risk and concentration of credit risk.
Note 7 -- Subsequent Event
At its meeting held on October 14, 1999, the Board of Directors of the Company
adopted the following resolutions:
(a) Change the name of the Company to Flag Investors Funds, Inc., effective
January 1, 2000. The Board of Directors also approved on this date, a plan to
rename all of the issued and unissued shares of the Deutsche Top 50 World,
Deutsche Top 50 Europe, Deutsche Top 50 Asia, Deutsche Top 50 US, Deutsche
European Mid-Cap Fund, Deutsche German Equity Fund, Deutsche Japanese Equity
Fund, Deutsche Global Bond Fund, Deutsche European Bond Fund, Deutsche US Money
Market Fund and Deutsche Institutional US Money Market Fund, respectively, as
shares of Flag Investors Top 50 World, Flag Investors Top 50 Europe, Flag
Investors Top 50 Asia, Flag Investors Top 50 US, Flag Investors European Mid-Cap
Fund, Flag Investors German Equity Fund, Flag Investors Japanese Equity Fund,
Flag Investors Global Bond Fund, Flag Investors European Bond Fund, Flag
Investors US Money Market Fund and Flag Investors Institutional US Money Market
Fund.
(b) Approve a distribution agreement between ICC Distributor's Inc. ("ICC") and
the Company, replacing Edgewood.
(c) Approve a plan of liquidation on approximately November 30, 1999 for the
Deutsche German Equity Fund, the Deutsche Global Bond Fund and the Deutsche
European Bond Fund, and their related investment portfolios, Investa Portfolio
(US Dollar), Global Bond Portfolio (US Dollar), European Bond Portfolio (US
Dollar), respectively.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Deutsche Funds, Inc.:
In our opinion, the accompanying statements of assets and liabilities, and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the Deutsche Top 50 World, Deutsche Top 50 Europe, Deutsche Top 50 Asia,
Deutsche Top 50 US, Deutsche European Mid-Cap Fund, Deutsche German Equity Fund,
Deutsche Japanese Equity Fund, Deutsche Global Bond Fund, Deutsche European Bond
Fund, Deutsche US Money Market Fund and Deutsche Institutional US Money Market
Fund (each of the funds constituting a series of Deutsche Funds, Inc., hereafter
referred to as the "Funds") at August 31, 1999 and the results of each of their
operations, the changes in each of their net assets and the financial highlights
for each of the periods presented, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Funds' management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP 1177 Avenue of the Americas New York, New York 10036
October 19, 1999
1999 FEDERAL TAX NOTICE (UNAUDITED)
For the year ended August 31, 1999, certain funds elected, pursuant to Section
853 of the Internal Revenue Code, to pass through foreign taxes to their
shareholders. Gross foreign source income and foreign taxes passed through with
respect to this election are as follows:
<TABLE>
<CAPTION>
Foreign Tax Gross Foreign
Fund Pass Through Source Income
- ----------------------- ------------ -------------
<S> <C> <C>
Top 50 Asia $16,602 $145,170
European Mid-Cap Fund 24,986 257,036
German Equity Fund 4,579 30,940
Japanese Equity Fund 1,273 8,485
</TABLE>
PORTFOLIO OF INVESTMENTS
Top 50 World Portfolio (US Dollar)
August 31, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- ----------------- --------------------------------------------------- -----------
<C> <S> <C>
Common Stocks -- 88.9%
France -- 7.4%
4,200 AXA............................................... $ 522,417
1,900 Elf-Aquitaine..................................... 333,031
770 L'Oreal SA........................................ 497,176
3,000 Total SA - Series B............................... 386,459
-----------
1,739,083
-----------
Germany -- 3.1%
6,000 Daimler-Chrysler AG............................... 452,348
2,400 Schering AG....................................... 266,594
-----------
718,942
-----------
Hong Kong -- 1.8%
33,600 HSBC Holdings Plc................................. 416,490
-----------
Japan -- 7.0%
22,000 Fujitsu Ltd....................................... 644,725
41 Nippon Telegraph & Telephone Corp................. 460,401
4,200 Sony Corp......................................... 543,717
-----------
1,648,843
-----------
Netherlands -- 1.8%
6,000 Unilever NV....................................... 417,186
-----------
Singapore -- 1.0%
24,000 Singapore Airlines Ltd............................ 225,138
-----------
Sweden -- 2.0%
14,600 Telefonaktiebolaget LM Ericsson................... 471,082
-----------
Switzerland -- 6.6%
250 Nestle SA......................................... 492,976
160 Novartis AG....................................... 230,034
38 Roche Holding AG.................................. 439,069
1,400 UBS AG............................................ 394,711
-----------
1,556,790
-----------
United Kingdom -- 8.0%
19,000 British Petroleum Co. Plc......................... 352,678
18,000 Glaxo Wellcome Plc................................ 473,259
33,000 Shell Transport & Trading Co...................... 263,050
31,500 SmithKline Beecham Plc............................ 410,305
18,000 Vodafone Group Plc................................ 362,755
-----------
1,862,047
-----------
United States -- 50.2%
14,000 Abbott Laboratories............................... 607,250
5,200 America Online, Inc.*............................. 474,825
2,900 American Express Co............................... 398,750
5,400 Bristol-Myers Squibb Co........................... 380,025
2,900 Chevron Corp...................................... 267,525
6,800 Cisco Systems, Inc.*.............................. 461,125
9,300 Citigroup, Inc.................................... 413,269
6,600 Coca-Cola Co. (The)............................... 394,763
5,100 Colgate-Palmolive Co.............................. 272,850
7,000 EMC Corp.*........................................ 420,000
11,000 Enron Corp........................................ 460,625
9,800 Gillette Co....................................... 456,925
7,500 Halliburton Co.................................... 347,813
3,300 International Business Machines Corp.............. 411,056
7,000 Lucent Technologies, Inc.......................... 448,438
11,000 McDonald's Corp................................... 455,125
6,200 MCI Worldcom, Inc.*............................... 469,650
9,200 Medtronic, Inc.................................... 719,896
7,200 Merck & Co., Inc.................................. 483,750
5,200 Merrill Lynch & Co., Inc.......................... 388,050
5,600 Microsoft Corp.*.................................. 518,350
2,900 Mobil Corp........................................ 296,888
13,400 Pfizer, Inc....................................... 505,850
14,200 Philip Morris Co., Inc............................ 531,613
4,500 Procter & Gamble Co. (The)........................ 446,625
5,400 Schlumberger Ltd.................................. 360,450
13,100 Walt Disney Co. (The)............................. 363,525
-----------
11,755,011
-----------
Total Common Stocks (Cost -- $17,473,169)......... 20,810,612
-----------
Preferred Stock -- 2.3%
Germany -- 2.3%
1,340 SAP AG............................................ 537,664
-----------
Total Preferred Stock (Cost -- $563,610).......... 537,664
-----------
Total Investments -- 91.2% (Cost -- $18,036,779).. 21,348,276
Other Assets in excess of liabilities -- 8.8%..... 2,052,463
-----------
Total Net Assets -- 100.0%........................ $23,400,739
-----------
</TABLE>
Notes to the Portfolio of Investments:
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
PORTFOLIO OF INVESTMENTS
Top 50 Europe Portfolio (US Dollar)
August 31, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- ----------------- --------------------------------------------- -----------
<C> <S> <C>
Common Stocks -- 94.1%
Austria -- 2.6%
15,800 Bank Austria AG............................... $ 838,332
-----------
Denmark -- 0.6%
1,870 Coloplast A/S - B............................. 187,234
-----------
Finland -- 1.3%
5,000 Nokia Oyj..................................... 417,081
-----------
France -- 18.4%
22,000 Alstom........................................ 740,566
5,250 AXA........................................... 653,021
6,960 Banque Nationale de Paris..................... 532,072
2,700 Cap Gemini SA................................. 463,276
4,000 Elf-Aquitaine................................. 701,118
2,350 Groupe Danone................................. 581,136
5,500 Suez Lyonnaise des Eaux....................... 916,996
5,230 Total Fina SA - B............................. 673,728
9,600 Vivendi....................................... 740,988
-----------
6,002,901
-----------
Germany -- 34.1%
9,002 Altana AG..................................... 594,076
12,582 BASF AG....................................... 569,941
18,200 Buderus AG.................................... 307,478
5,300 Daimler-Chrysler AG........................... 399,574
6,613 Deutsche Pfandbrief-und Hypothekenbank AG..... 540,458
2,036 Duerr AG...................................... 50,413
12,372 Fresenius Medical Care AG..................... 900,082
14,265 Gehe AG....................................... 685,340
38,602 Hoechst AG.................................... 1,630,394
13,540 Mannesmann AG................................. 2,075,906
559 Rhoen-Klinikum AG............................. 65,518
2,274 SAP AG........................................ 797,171
7,067 Schering AG................................... 785,007
11,208 SGL Carbon AG*................................ 816,582
13,962 Veba AG....................................... 888,971
-----------
11,106,911
-----------
Italy -- 1.3%
180,000 Istituto Nazionale delle Assicurazioni S.p.A.. 436,762
-----------
Netherlands -- 9.7%
6,000 Aegon NV...................................... 524,571
41,420 Elsevier...................................... 476,716
7,000 Equant NV*.................................... 619,021
9,283 ING Groep NV.................................. 508,720
14,386 Koninklijke Ahold NV.......................... 514,947
7,300 Qiagen NV*.................................... 301,771
3,309 Unilever NV - CVA............................. 230,078
-----------
3,175,824
-----------
Norway -- 0.9%
8,400 Tomra Systems ASA............................. 295,122
-----------
Spain -- 3.1%
62,900 Telefonica SA*................................ 1,002,883
-----------
Sweden -- 5.9%
43,640 Securitas AB - B Shares....................... 624,639
40,200 Telefonaktiebolaget LM Ericsson............... 1,297,089
-----------
1,921,728
-----------
Switzerland -- 6.7%
3,280 Credit Suisse Group........................... 618,664
300 Novartis AG................................... 431,313
48 Roche Holding AG.............................. 554,613
2,000 UBS AG........................................ 563,873
-----------
2,168,463
-----------
United Kingdom -- 9.5%
30,000 Imperial Chemical Industries Plc.............. 340,866
27,000 Lloyds TSB Group Plc.......................... 373,386
98,900 Rentokil Initial Plc.......................... 396,958
27,600 Reuters Group Plc............................. 404,305
150,400 Invensys Plc.................................. 767,422
40,000 Vodafone Group Plc............................ 806,121
-----------
3,089,058
-----------
Total Common Stocks (Cost -- $28,866,207).... 30,642,299
-----------
Preferred Stocks -- 4.8%
Germany -- 4.8%
4,125 Fresenius AG.................................. 688,183
1,196 Rhoen-Klinikum AG............................. 147,754
1,786 SAP AG........................................ 716,618
-----------
Total Preferred Stocks (Cost $1,512,594)...... 1,552,555
-----------
Warrants -- 0.1%
France -- 0.1%
3,120 Banque Nationale de Paris (Exp. Date: 7/15/02;
Strike Price EUR 100.00)*..................... 27,377
-----------
Total Warrants (Cost -- $16,496).............. 27,377
-----------
Total Investments -- 99.0% (Cost --
$30,395,297).................................. 32,222,231
Other assets in excess of liabilities -- 1.0%.. 328,364
-----------
Total Net Assets -- 100.0%..................... $32,550,595
-----------
</TABLE>
Notes to the Portfolio of Investments:
*Non-income producing security.
EUR -- European Monetary Unit (Euro)
The accompanying notes are an integral part of the financial statements.
PORTFOLIO OF INVESTMENTS
Top 50 Asia Portfolio (US Dollar)
August 31, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- ----------------- ------------------------------------------------------ -----------
<C> <S> <C>
Common Stocks -- 99.4%
Australia -- 2.6%
30,000 AMP Ltd............................................... $ 298,709
71,662 Australia & New Zealand Banking Group Ltd............. 465,817
53,337 Broken Hill Proprietary Co. Ltd....................... 573,299
8,171 National Australia Bank Ltd........................... 123,479
2,560 National Income Securities............................ 168,610
30,000 Woodside Petroleum Ltd................................ 209,646
-----------
1,839,560
-----------
Hong Kong -- 13.2%
700,000 Cathay Pacific Airways................................ 1,189,970
100,000 Cheung Kong Holdings Ltd.............................. 869,296
600,000 Cheung Kong Infrastructure Holdings................... 1,209,288
800,000 China Telecom (Hong Kong) Limited*.................... 2,488,120
152,400 HSBC Holdings Plc..................................... 1,889,078
186,000 Jardine Matheson Holdings Ltd......................... 889,080
80,000 Sun Hung Kai Properties Ltd........................... 685,134
-----------
9,219,966
-----------
India -- 2.9%
40,000 Dr. Reddy's Laboratories Ltd. - GDR................... 1,080,000
32,000 ITC Ltd. - GDR........................................ 980,800
-----------
2,060,800
-----------
Indonesia -- 0.1%
108,000 PT Telekomunikasi..................................... 41,538
-----------
Japan -- 28.3%
50,000 Bridgestone Corp...................................... 1,415,073
10,000 Canon, Inc............................................ 292,144
85,000 Fujitsu Ltd........................................... 2,490,985
40,000 Minebea Co., Ltd...................................... 482,038
210 Nippon Telegraph & Telephone Corp..................... 2,358,150
155,000 Nomura Securities Co., Ltd............................ 2,271,192
55 NTT Mobile Communications Network, Inc................ 913,863
60 NTT Mobile Communications Network, Inc. - New*........ 991,464
60,000 Shiseido Co. Ltd...................................... 838,088
10,000 Softbank Corp......................................... 3,432,693
22,000 Sony Corp............................................. 2,848,039
16,000 Takeda Chemical Industries............................ 803,396
25,000 Toyota Motor Co....................................... 737,207
-----------
19,874,332
-----------
Korea -- 19.0%
45,000 Korea Electric Power Corp............................. 1,677,255
38,408 LG Electronics........................................ 1,626,768
55,000 Pohang Iron & Steel Co., Ltd. - ADR................... 2,021,250
9,000 Pohang Iron & Steel Co., Ltd.......................... 1,204,574
10,643 Samsung Display Devices Co............................ 615,770
32,455 Samsung Electronics................................... 6,158,340
-----------
13,303,957
-----------
Malaysia -- 1.7%
149,000 Malaysian Oxygen Bhd.................................. 311,724
620,000 Nylex (Malaysia) Bhd.................................. 419,316
188,200 O.Y.L. Industries Bhd................................. 453,166
-----------
1,184,206
-----------
Philippines -- 2.1%
2,128,000 Ayala Corp............................................ 576,585
158,000 Benpres Holdings Corp. - GDR*......................... 632,000
176,000 San Miguel Corp. - Class B............................ 286,125
-----------
1,494,710
-----------
Singapore -- 13.9%
180,000 City Developments..................................... 1,090,067
282,600 DBS Bank Ltd.......................................... 3,238,247
800,000 DBS Land Ltd.......................................... 1,823,903
370,000 GP Batteries International Ltd........................ 643,650
425,000 Overseas Union Bank Ltd. - Foreign Shares............. 2,220,507
80,000 Singapore Airlines Ltd................................ 750,460
-----------
9,766,834
-----------
Taiwan -- 14.5%
46,000 Acer, Inc. - GDR*..................................... 489,900
48,000 Advanced Semiconducter Engineering Inc. - GDR*........ 867,600
240,186 Asustek Computer, Inc. - GDR - Reg. S................. 3,482,697
109 Asustek Computer, Inc. - GDR.......................... 1,581
183,270 Taiwan Semiconductor Manufacturing Co. Ltd. - ADR*.... 5,303,376
3,600 Uni-President Enterprises Co. - GDR - 144A............ 25,099
-----------
10,170,253
-----------
United Kingdom -- 1.1%
51,059 Standard Chartered Plc................................ 749,180
-----------
Total Common Stocks (Cost -- $44,523,905)............. 69,705,336
-----------
Convertible Preferred Stock -- 0.2%
Australia -- 0.2%
5,000 National Australia Bank Ltd., 7.875%.................. 140,938
-----------
Total Convertible Preferred Stock (Cost -- $138,425).. 140,938
-----------
Rights -- 0.0%
Taiwan -- 0.0%
12 Asustek Computer Inc.*................................ $ 93
-----------
Total Rights (Cost -- $0)............................. 93
-----------
Total Investments -- 99.6% (Cost -- $44,662,330)...... 69,846,367
Other assets in excess of liabilities -- 0.4%......... 285,656
-----------
Total Net Assets -- 100.0%............................ $70,132,023
===========
</TABLE>
Notes to the Portfolio of Investments: ADR -- American Depository Receipt GDR --
Global Depository Receipt * Non-income producing security.
144A -- Securities restricted from resale to Qualified Institutional Buyers.
The accompanying notes are an integral part of the financial statements.
PORTFOLIO OF INVESTMENTS
Top 50 US Portfolio (US Dollar)
August 31, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- --------------- --------------------------------------- ----------
<C> <S> <C>
Common Stocks -- 99.3%
Aerospace & Defense -- 1.1%
4,100 United Technologies Corp............... $ 271,113
----------
Banking -- 5.2%
3,600 American Express Co.................... 495,000
11,400 Bank of New York Co., Inc. (The)....... 407,550
9,710 Household International, Inc........... 366,553
----------
1,269,103
----------
Beverages, Food & Tobacco -- 1.7%
2,780 Coca-Cola (The) Co..................... 166,279
6,830 Philip Morris Co., Inc................. 255,698
----------
421,977
----------
Building Materials -- 5.2%
14,080 Home Depot, Inc........................ 860,640
3,400 Honeywell, Inc......................... 385,900
----------
1,246,540
----------
Communications -- 4.5%
10,080 Lucent Technologies, Inc............... 645,750
7,600 Tellabs, Inc.*......................... 452,675
----------
1,098,425
----------
Computer Software & Processing -- 9.6%
16,700 IMS Health, Inc........................ 461,338
12,600 Microsoft Corp.*....................... 1,166,279
8,600 Sun Microsystems, Inc.*................ 683,700
----------
2,311,317
----------
Computers & Information -- 11.5%
11,250 Cisco Systems, Inc.*................... 762,891
14,160 EMC Corp.*............................. 849,600
10,500 Gartner Group, Inc. - Class A.......... 219,844
4,300 International Business Machines Corp... 535,619
11,720 Symbol Technologies, Inc............... 408,003
----------
2,775,957
----------
Cosmetics & Personal Care -- 6.2%
7,100 Avon Products, Inc..................... 311,513
4,600 Colgate-Palmolive Co................... 246,100
10,460 Estee Lauder Co. - Class A............. 480,506
4,700 Procter & Gamble Co. (The)............. 466,475
----------
1,504,594
----------
Electric Utilities -- 1.9%
7,550 AES Corp.*............................. 458,191
----------
Electrical Equipment -- 3.3%
7,020 General Electric Co.................... 788,434
----------
Electronics -- 7.9%
6,000 General Motors Corp. - Class H
(Hughes Electronics)................... $ 309,000
5,860 Intel Corp............................. 481,619
13,800 Texas Instruments Inc.................. 1,132,463
----------
1,923,082
----------
Financial Services -- 4.3%
112 Berkshire Hathaway, Inc. - Class B*.... 224,336
11,000 Citigroup, Inc......................... 488,813
5,340 Federal National Mortgage Association.. 331,748
----------
1,044,897
----------
Heavy Machinery -- 0.9%
5,000 W.W. Grainger, Inc..................... 217,813
----------
Industrial -- Diversified -- 3.9%
9,300 Tyco International Ltd................. 942,206
----------
Insurance -- 5.5%
7,193 American International Group, Inc...... 666,701
4,650 Chubb Corp............................. 265,922
5,400 Marsh & McLennan Co., Inc.............. 393,188
----------
1,325,811
----------
Medical Supplies -- 6.3%
7,500 Boston Scientific Corp.*............... 254,531
7,200 Guidant Corp........................... 422,550
3,370 Johnson & Johnson...................... 344,583
6,310 Medtronic, Inc......................... 493,758
----------
1,515,422
----------
Office Equipment -- 2.4%
12,220 Xerox Corp............................. 583,505
----------
Oil & Gas -- 1.4%
8,000 Enron Corp............................. 335,000
----------
Pharmaceuticals -- 6.8%
6,360 Abbott Laboratories.................... 275,865
7,080 Merck & Co., Inc....................... 475,688
14,100 Pfizer, Inc............................ 532,275
5,400 Warner-Lambert Co...................... 357,750
----------
1,641,578
----------
Restaurants -- 1.1%
6,700 McDonald's Corp........................ 277,213
----------
Retailers -- 4.8%
18,270 Staples, Inc.*......................... 397,373
17,040 Wal-Mart Stores, Inc................... 755,085
----------
1,152,458
----------
Telephone Systems -- 3.8%
2,450 AT&T Corp............................. 110,250
10,600 MCI Worldcom, Inc.*................... 802,950
----------
913,200
----------
Total Investments -- 99.3%
(Cost -- $17,009,278)............... 24,017,836
Other assets in excess of
liabilities -- 0.7%.................. 168,841
-----------
Total Net Assets -- 100.0%............ $24,186,677
===========
</TABLE>
Notes to the Portfolio of Investments:
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
PORTFOLIO OF INVESTMENTS
Provesta Portfolio (US Dollar)
August 31, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- ---------------- -------------------------------------------- -----------
<C> <S> <C>
Common Stocks -- 83.0%
Austria -- 0.2%
1,500 Beko Holding AG*............................ $ 65,888
-----------
France -- 7.2%
16,600 Business Objects SA - ADR*.................. 740,775
5,150 Cap Gemini SA............................... 883,656
6,500 Dassault Systemes SA........................ 247,081
1,000 Publicis SA................................. 206,956
-----------
2,078,468
-----------
Germany -- 53.3%
2,010 1&1 Aktiengesellschaft & Co. KGaA*.......... 176,368
2,000 ACG AG*..................................... 308,323
1,000 AGIV AG..................................... 21,646
11,250 Aixtron AG.................................. 1,113,050
9,000 Altana AG................................... 593,944
1,000 AVA Allgemeine Handels der Verbraucher...... 372,733
3,000 Barmag AG................................... 51,950
4,500 BDAG Balcke-Duerr AG........................ 54,405
3,200 Beiersdorf AG............................... 215,235
11,500 BERLINER ELEKTRO Holding AG................. 127,500
5,000 BERU AG..................................... 106,910
14,250 Continental AG.............................. 328,015
6,800 Deutsche Babcock AG*........................ 272,845
6,000 Deutsche Pfandbrief-und Hypothekenbank AG... 490,360
8,500 Deutz AG*................................... 60,223
5,750 Duerr AG.................................... 142,375
500 D. Logistics AG*............................ 38,963
1,100 Escada AG................................... 142,863
37,500 FAG Kugelfischer Georg Schaefer AG.......... 393,983
500 Foris AG*................................... 33,525
875 Fresenius AG................................ 130,734
5,500 Fresenius Medical Care AG................... 400,133
1,365 Fuchs Petrolub AG Oel & Chemie.............. 100,891
7,650 Gehe AG..................................... 367,532
1,100 GFT Technologies AG*........................ 55,171
5,650 Heidelberger Druckmaschinen AG.............. 357,950
3,600 Hoeft & Wessel AG*.......................... 94,651
12,000 Hucke AG.................................... 81,980
550 Infor Business Solutions AG*................ 13,880
900 Intershop Communications AG*................ 80,586
17,000 IWKA AG..................................... 314,130
2,050 Ixos Software AG*........................... 303,043
6,000 Kiekert AG.................................. 202,733
10,000 Kinowelt Medien AG*......................... 834,161
5,800 Kloeckner-Werke AG*......................... 431,758
150 KSB AG...................................... 22,016
1,600 Leonische Drahtwerke AG..................... 580,323
15,000 Maxdata AG*................................. 315,186
650 Medion AG*.................................. 171,584
21,500 Metallgesellschaft AG....................... 485,820
5,550 MobilCom AG................................. 396,153
160 Nuernberger Beteiligungs AG................. 135,324
11,000 Phoenix AG.................................. 167,255
9,000 Praktiker Bau-und Heimwerkermaerkte AG*..... 66,522
1,350 Rhoen-Klinikum AG........................... 158,227
3,000 Rinol AG.................................... 42,764
2,500 SAP AG...................................... 876,397
7,300 SGL Carbon AG*.............................. 531,857
3,000 Sixt AG..................................... 148,882
17,000 SKW Trostberg AG............................ 387,726
740 Springer (Axel) Verlag AG................... 898,571
9,000 Steag Hamatech AG*.......................... 191,012
11,000 Suess MicroTec AG*.......................... 107,554
25,620 Wella AG.................................... 608,674
4,500 WMF-Wuerttembergische Metallwarenfabrik AG.. 75,074
30,000 Wuensche AG*................................ 200,199
-----------
15,381,669
-----------
Ireland -- 0.4%
5,000 CBT Group Plc - ADR*........................ 105,000
-----------
Italy -- 2.4%
2,800 Banca Popolare di Brescia................... 122,607
29,000 Banca Popolare di Milano.................... 211,286
20,000 Banca Popolare di Novara.................... 188,668
115,000 Seat Pagine Gialle SpA...................... 159,193
-----------
681,754
-----------
Netherlands -- 14.9%
13,000 ASM Lithography Holding NV*................. 822,229
25,000 Baan Company NV*............................ 320,730
4,600 Equant NV*.................................. 406,785
17,086 Getronics NV................................ 836,205
9,091 Nutreco Holding NV.......................... 323,973
17,500 Qiagen NV*.................................. 723,423
7,000 STMicroelectronics NV....................... 464,543
6,500 United Pan-Europe Communications NV*........ 393,956
-----------
4,291,844
-----------
Portugal -- 0.8%
25,741 Banco Mello SA.............................. 240,542
-----------
Spain -- 1.1%
2,700 Banco Popular Espanol SA..................... 197,712
3,500 Baron de Ley, SA*............................ 133,043
-----------
330,755
-----------
Switzerland -- 0.3%
3 Lindt & Spruengli AG......................... 75,183
-----------
United Kingdom -- 1.3%
15,750 Cable & Wireless Communications Plc*......... 164,400
9,500 COLT Telecom Group Plc*...................... 206,874
-----------
371,274
-----------
United States -- 1.1%
2,000 FortuneCity.com, Inc.*....................... 25,130
6,340 Global TeleSystems Group, Inc.*.............. 204,861
2,750 MIH Ltd.*.................................... 74,250
-----------
304,241
-----------
Total Common Stocks (Cost -- $22,663,847).... 23,926,618
===========
Preferred Stocks -- 16.4%
Germany -- 16.4%
1,200 BERLINER ELEKTRO Holding AG.................. 11,594
4,500 Draegerwerk AG............................... 47,135
9,250 Dyckerhoff AG................................ 312,546
5,350 Fresenius AG................................. 892,552
1,200 Fuchs Petrolub AG Oel & Chemie............... 82,107
5,500 Gerry Weber International AG................. 87,112
875 Jagenberg AG................................. 37,141
23,000 Jungheinrich AG.............................. 340,000
3,400 Marschollek, Lautenschlaeger und Partner AG.. 583,385
155 Porsche AG................................... 390,340
4,600 ProSieben Media AG........................... 205,457
2,500 Rhoen-Klinikum AG............................ 308,851
1,100 SAP AG....................................... 441,366
12,000 Sixt AG...................................... 399,130
4,900 Sto AG....................................... 110,153
12,500 Wella AG..................................... 356,366
9,300 WMF-Wuerttembergische Metallwarenfabrik AG... 134,532
-----------
Total Preferred Stocks (Cost -- $5,006,679).. 4,739,767
===========
Warrants -- 0.1%
Germany -- 0.1%
200 Continental AG (Exp. Date: 7/6/00;
Strike Price EUR 10.17)*.................... 24,497
-----------
Total Warrants (Cost -- $35,707)............. 24,497
-----------
Total Investments -- 99.5%
(Cost -- $27,706,233)....................... 28,690,882
Other assets in excess of liabilities -- 0.5%. 139,718
-----------
Total Net Assets -- 100.0%................... $28,830,600
-----------
</TABLE>
Notes to the Portfolio of Investments:
* Non-income producing security.
ADR -- American Depository Receipt
EUR -- European Monetary Unit (Euro)
The accompanying notes are an integral part of the financial statements.
PORTFOLIO OF INVESTMENTS
Investa Portfolio (US Dollar)
August 31, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- ---------------- ----------------------------- ----------
<C> <S> <C>
Common Stocks -- 88.5%
Germany -- 88.5%
Airlines -- 0.8%
2,950 Deutsche Lufthansa AG........ $ 57,003
----------
Automotive -- 11.3%
3,270 Bayerische Motoren Werke AG.. 103,756
2,627 Continental AG............... 60,470
5,433 Daimler-Chrysler AG.......... 409,477
3,550 Volkswagen AG................ 214,036
----------
787,739
----------
Banking -- 13.8%
5,500 Bayerische Vereinsbank AG.... 325,798
8,750 Commerzbank AG............... 313,206
7,050 Dresdner Bank AG............. 324,563
----------
963,567
----------
Chemicals -- 12.8%
4,850 BASF AG...................... 219,696
6,200 Bayer AG..................... 269,392
9,500 Hoechst AG................... 401,242
----------
890,330
----------
Communications -- 8.9%
14,014 Deutsche Telekom AG.......... 620,010
----------
Computer Software & Processing -- 3.8%
750 SAP AG....................... 262,919
----------
Electric Utilities -- 5.7%
4,800 RWE AG....................... 207,041
3,000 Veba AG...................... 191,012
----------
398,053
----------
Electrical Equipment -- 1.8%
1,500 Siemens AG................... 126,074
----------
Heavy Construction -- 0.5%
825 Hochtief AG.................. 35,803
----------
Heavy Machinery -- 0.2%
500 MAN AG....................... 16,894
----------
Household Products -- 1.6%
1,750 Henkel KGaA.................. 108,837
----------
Industrial -- Diversified -- 16.1%
1,450 Degussa-Huels AG............. 56,037
1,300 Linde AG..................... 79,340
3,700 Mannesmann AG................ 567,272
6,600 Thyssen Krupp AG*............ 154,014
12,730 Viag AG...................... 270,848
----------
1,127,511
----------
Insurance -- 6.2%
600 Allianz AG................... $ 157,942
1,450 Muenchener Rueckversicherungs-
Gesellschaft AG............. 275,284
----------
433,226
----------
Pharmaceuticals -- 2.1%
1,350 Schering AG.................. 149,959
----------
Retailers -- 2.9%
3,500 Metro AG..................... 200,674
----------
Total Common Stocks
(Cost -- $5,658,030)........ 6,178,599
==========
Preferred Stocks -- 7.7%
Germany -- 7.7%
Automotive -- 0.4%
1,752 Bayerische Motoren
Werke AG.................... 28,304
----------
Building Materials -- 0.6%
1,250 Dyckerhoff AG................ 42,236
----------
Computer Software & Processing -- 3.2%
550 SAP AG....................... 220,683
----------
Household Products -- 1.0%
1,000 Henkel KGaA.................. 72,329
----------
Heavy Machinery -- 1.3%
4,300 MAN AG....................... 92,851
----------
Retailers -- 1.2%
2,500 Metro AG..................... 79,852
----------
Total Preferred Stocks
(Cost -- $523,722).......... 536,255
==========
Warrants -- 2.1%
Germany -- 2.1%
Automotive -- 0.4%
92 Continental AG (Exp. Date:
7/6/00; Strike Price
EUR 10.17)*................ 11,269
15,000 Daimler-Chrysler AG
(Exp. Date: 1/28/00;
Strike Price EUR 74.89)*... 16,630
----------
27,899
----------
Banking -- 0.2%
800 Commerzbank AG (Exp. Date:
6/15/00; Strike Price
EUR 19.02)*................ 12,966
----------
Chemicals -- 0.3%
85 BASF Finance Europe
(Exp. Date: 4/9/01;
Strike Price EUR 15.75)*... 24,502
----------
Insurance -- 1.2%
43,500 Allianz AG (Exp. Date:
7/21/00; Strike Price
EUR 180.00)*............... 38,583
420 Allianz AG (Exp. Date:
7/20/00; Strike Price
EUR 180.00)*............... 33,917
318 Muenchener Rueckversicherungs-
Gesellschaft AG (Exp. Date:
6/3/02; Strike Price
EUR 163.61)*............... 10,577
----------
83,077
----------
Total Warrants
(Cost -- $197,440)......... 148,444
----------
Total Investments -- 98.3%
(Cost -- $6,379,192)....... 6,863,298
Other assets in excess of
liabilities -- 1.7%........ 116,156
----------
Total Net Assets -- 100.0%.. $6,979,454
==========
</TABLE>
Notes to the Portfolio of Investments:
* Non-income producing security.
EUR -- European Monetary Unit (Euro)
The accompanying notes are an integral part of the financial statements.
PORTFOLIO OF INVESTMENTS
Japanese Equity Portfolio (US Dollar)
August 31, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- ----------------- ------------------------------------------------ ----------
<C> <S> <C>
Common Stocks -- 97.5%
Automotive -- 5.1%
13,000 Bridgestone Corp................................ $ 367,919
7,000 Honda Motor Co., Ltd............................ 281,189
70,000 Nissan Motor Co., Ltd.*......................... 407,724
----------
1,056,832
----------
Banking -- 5.6%
66,000 Asahi Bank, Ltd................................. 403,707
7,000 Dai-Ichi Kangyo Bank, Ltd....................... 73,556
20,000 Fuji Bank, Ltd.................................. 206,327
36,000 Sanwa Bank, Ltd. (The).......................... 492,993
----------
1,176,583
----------
Beverages, Food & Tobacco -- 2.4%
44,000 Ajinomoto Co., Inc.............................. 502,524
----------
Chemicals -- 2.0%
10,000 Shin-Etsu Chemical Co., Ltd..................... 407,176
----------
Commercial Services -- 5.8%
800 Bellsystem 24, Inc.............................. 401,698
4,000 Benesse Corp.................................... 693,842
3,000 Pasona Softbank, Inc.*.......................... 109,006
----------
1,204,546
----------
Communications -- 6.9%
1,000 Hikari Tsushin, Inc............................. 527,685
3,000 Matsushita Communication Industrial Co., Ltd.... 254,987
8 NTT Mobile Communications Network, Inc.......... 132,926
32 NTT Mobile Communications Network, Inc. - New*.. 528,781
----------
1,444,379
----------
Computer Software & Processing -- 7.3%
20,000 Fujitsu Ltd..................................... 586,114
9 NTT Data Corp................................... 87,095
1,000 Obic Co., Ltd................................... 424,522
10,000 Toyo Information Systems Co., Ltd.*............. 433,651
----------
1,531,382
----------
Computers & Information -- 7.6%
13,000 Diamond Computer Service Co..................... 277,126
2,000 Fujitsu Support and Service, Inc................ 516,730
1,000 InterQ, Inc.*................................... 178,025
1,800 Softbank Corp................................... 617,885
----------
1,589,766
----------
Cosmetics & Personal Care -- 2.4%
18,000 Kao Corp........................................ 511,070
----------
Electric Utilities -- 1.6%
14,000 Tokyo Electric Power Co......................... 325,923
----------
Electrical Equipment -- 5.9%
6,000 Fanuc Ltd....................................... $ 361,528
35,000 Minebea Co., Ltd................................ 421,783
3,000 SMC Corp........................................ 457,388
----------
1,240,699
----------
Electronics -- 19.0%
3,000 Advantest Corp.................................. 406,719
10,000 Enplas Corp..................................... 409,002
10,000 Mitsumi Electric Co., Ltd....................... 300,361
30,000 Olympus Optical Co., Ltd........................ 446,707
4,500 Sony Corp....................................... 582,554
90,000 Star Micronics Co., Ltd......................... 821,653
8,000 Tokyo Electron Ltd.............................. 562,377
50,000 Toshiba Corp.................................... 444,150
----------
3,973,523
----------
Entertainment & Leisure -- 1.0%
4,000 People Co., Ltd................................. 218,378
----------
Financial Services -- 3.9%
3,000 Aiful Corp.*.................................... 520,655
20,000 Nomura Securities Co., Ltd...................... 293,057
----------
813,712
----------
Health Care Providers -- 2.2%
3,000 Nichii Gakkan Co................................ 463,414
----------
Medical Supplies -- 2.4%
10,000 Takeda Chemical Industries...................... 502,123
----------
Office Equipment -- 2.0%
24,000 Ricoh Co., Ltd.................................. 427,699
----------
Pharmaceuticals -- 2.5%
6,000 Sankyo Co., Ltd................................. 167,070
8,000 Yamanouchi Pharmaceutical Co., Ltd.............. 356,416
----------
523,486
----------
Real Estate -- 1.5%
30,000 Mitsubishi Estate Co., Ltd...................... 310,038
----------
Restaurants -- 0.7%
2,600 Saizeriya Co., Ltd.............................. 149,541
----------
Retailers -- 5.1%
8,000 Paris Miki, Inc................................. 657,324
2,000 Ryohin Keikaku Co., Ltd......................... 401,698
----------
1,059,022
----------
Telephone Systems -- 2.3%
42 Nippon Telegraph & Telephone Corp............... 471,630
----------
Transportation -- 2.3%
20,000 Yamato Transport Co., Ltd....................... 483,864
----------
Total Investments -- 97.5% (Cost -- $15,050,785) 20,387,310
Other assets in excess of liabilities -- 2.5%... 512,716
-----------
Total Net Assets -- 100.0%...................... $20,900,026
===========
</TABLE>
Notes to the Portfolio of Investments:
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
PORTFOLIO OF INVESTMENTS
Global Bond Portfolio (US Dollar)
August 31, 1999
<TABLE>
<CAPTION>
Par
Maturity Market
Currency Value Description Rate
Date Value
- -------- ----- ----------- ----
- -------- --------
<S> <C> <C> <C>
<C> <C>
Corporate Debt -- 24.0%
Japan -- 4.7%
JPY 30,000,000 Nippon Telegraph & Telephone Corp.................... 2.500%
7/25/07 $ 285,936
- ----------
Multinational -- 7.1%
EUR 76,200 European Investment Bank - Series EUR................ 5.250%
4/15/04 82,793
PLN 200,000 World Bank........................................... 11.375%
3/01/00 49,711
JPY 8,000,000 World Bank........................................... 5.250%
3/20/02 81,837
PLN 400,000 World Bank........................................... 18.000%
2/27/03 116,226
NZD 200,000 World Bank........................................... 5.375%
11/06/03 96,303
- ----------
426,870
- ----------
Netherlands -- 2.4%
USD 50,000 Baden Wurt L - Finance (Eurodollar).................. 6.000%
12/19/02 48,950
USD 100,000 Telefonica Europe BV - (Eurodollar).................. 6.375%
1/08/03 98,500
- ----------
147,450
- ----------
United Kingdom -- 4.9%
USD 100,000 British Telecom Plc. - (Eurodollar).................. 7.000%
5/23/07 99,850
USD 100,000 Glaxo Wellcome Plc - (Eurodollar).................... 6.125%
1/25/06 95,800
GBP 60,000 Vodafone Group Plc................................... 7.875%
11/06/01 98,451
- ----------
294,101
- ----------
United States -- 4.9%
USD 100,000 BMW U.S. Capital Corp................................ 6.625%
3/15/04 98,250
USD 200,000 Philip Morris Co., Inc. - Global Bond................ 7.000%
7/15/05 196,500
- ----------
294,750
- ----------
Total Corporate Debt (Cost --
$1,469,894)............ 1,449,107
==========
Mortgage Backed Securities -- 4.5%
Denmark -- 3.2%
DKK 1,487,000 Nykredit AS.......................................... 6.000%
10/01/29 192,559
- ----------
Germany -- 1.3%
EUR 76,693 Hypothekenbank in Essen AG - Series 509.............. 4.000%
5/15/00 81,385
- ----------
Total Mortgage Backed Securities (Cost --
$311,121).. 273,944
==========
Sovereign Debt Obligations -- 52.0%
Belgium -- 2.2%
EUR 136,341 Kingdom of Belgium - Series 31....................... 5.500%
3/28/28 135,469
- ----------
Canada -- 4.4%
CAD 250,000 Canadian Government.................................. 5.500%
2/01/00 167,559
USD 100,000 Province of Ontario - (Yankee)....................... 6.000%
2/21/06 96,100
- ----------
263,659
- ----------
Denmark -- 0.9%
DEM 100,000 Kingdom of Denmark International Bond................ 4.750%
1/07/02 54,878
- ----------
France -- 7.1%
EUR 76,224 France O.A.T......................................... 6.750%
10/25/03 88,292
EUR 200,000 France O.A.T......................................... 7.500%
4/25/05 243,279
EUR 100,000 France O.A.T......................................... 4.000%
4/25/09 97,248
- ----------
428,819
- ----------
Germany -- 7.1%
EUR 102,258 Deutschland Republic................................. 8.500%
8/21/00 $ 113,319
EUR 200,000 Deutschland Republic................................. 7.250%
10/21/02 230,608
EUR 76,693 Treuhandanstalt...................................... 6.500%
4/23/03 87,216
- ----------
431,143
- ----------
Greece -- 2.2%
GRD 20,000,000 Hellenic Republic Bond............................... 9.700%
5/27/01 66,546
GRD 20,000,000 Hellenic Republic Bond............................... 9.200%
3/21/02 67,355
- ----------
133,901
- ----------
Hungary -- 2.1%
HUF 30,000,000 Hungary Government Bond - Series 00/G................ 16.000%
11/24/00 127,464
- ----------
Italy -- 4.8%
EUR 150,000 Republic of Italy.................................... 11.500%
3/01/03 194,908
USD 100,000 Republic of Italy International Bond - (Eurodollar).. 6.000%
5/29/08 93,750
- ----------
288,658
- ----------
Japan -- 6.2%
JPY 40,000,000 Japan - 199 (10 Year Issue).......................... 2.200%
12/20/07 378,177
- ----------
Netherlands -- 3.6%
EUR 200,000 Netherlands Government............................... 5.250%
7/15/08 215,192
- ----------
Norway -- 1.7%
NOK 800,000 Norwegian Government................................. 5.750%
11/30/04 101,970
- ----------
Spain -- 5.1%
DEM 250,000 Government of Spain.................................. 5.750%
1/03/07 139,625
EUR 90,151 Government of Spain.................................. 6.000%
1/31/08 100,854
EUR 66,111 Government of Spain.................................. 6.000%
1/31/29 70,924
- ----------
311,403
- ----------
United Kingdom -- 4.6%
GBP 30,000 United Kingdom Gilts................................. 9.000%
10/13/08 60,556
GBP 30,000 United Kingdom Treasury.............................. 8.500%
12/07/05 55,252
GBP 90,000 United Kingdom Treasury.............................. 7.250%
12/07/07 161,200
- ----------
277,008
- ----------
Total Sovereign Debt Obligations (Cost --
$3,363,665) 3,147,741
==========
U.S. Government and Agency
Obligations -- 17.7%
USD 102,000 Federal National Mortgage Association................ 6.375%
6/15/09 $ 98,382
USD 200,000 US Treasury Note..................................... 6.000%
8/15/00 200,844
USD 100,000 US Treasury Note..................................... 5.625%
11/30/00 99,969
USD 100,000 US Treasury Note..................................... 5.875%
11/30/01 100,172
USD 100,000 US Treasury Note (a)................................. 6.000%
7/31/02 100,422
USD 200,000 US Treasury Note..................................... 5.625%
12/31/02 198,374
USD 300,000 US Treasury Note..................................... 4.750%
11/15/08 271,548
- ----------
Total U.S. Government and Agency Obligations (Cost --
$1,083,913).......................................... 1,069,711
- ----------
Total Investments -- 98.2% (Cost --
$6,228,593)................ 5,940,503
Other assets in excess of liabilities --
1.8%.................. 110,242
- ----------
Total Net Assets --
100.0%..................................... $6,050,745
==========
</TABLE>
Notes to the Portfolio of Investments:
(a) This security is segregated with the Portfolio's Custodian as collateral for
open futures contracts.
Eurodollar -- Bonds issued offshore that pay interest and principal in U.S.
Dollars.
Yankee -- U.S. Dollar denominated bonds issued by non-U.S. entities in the U.S.
Currency abbreviations defined: CAD -- Canadian Dollar DEM -- German
Deutschemark DKK -- Danish Krone EUR -- European Monetary Unit (Euro) GBP --
Great Britain Pound GRD -- Greek Drachma HUF -- Hungarian Forint JPY -- Japanese
Yen NOK -- Norwegian Krone NZD -- New Zealand Dollar PLN -- Polish Zloty USD --
United States Dollar
The accompanying notes are an integral part of the financial statements.
PORTFOLIO OF INVESTMENTS
European Bond Portfolio (US Dollar)
August 31, 1999
<TABLE>
<CAPTION>
Par
Maturity Market
Currency Value Description Rate
Date Value
-------- ----- ----------- ----
- -------- ------
<S> <C> <C> <C>
<C> <C>
Corporate Debt -- 28.8%
Austria -- 2.6%
DEM 350,000 Oesterreichische Postsparkasse AG.................. 5.250%
11/11/02 $ 194,246
- ----------
Denmark --
2.7%
DKK 1,692,000 Realkredit Danmark AS.............................. 5.000%
10/01/29 204,615
- ----------
Finland --
3.2%
EUR 250,000 Sonera Group Plc (MTN)............................. 4.625%
4/16/09 243,517
- ----------
Multinational --
2.6%
DEM 350,000 World Bank......................................... 5.875%
11/10/03 198,498
- ----------
Netherlands --
2.4%
ITL 120,000,000 Commerzbank Overseas Finance....................... 10.800%
4/14/00 68,090
DEM 200,000 LB Schleswig-Holsteinische Finance................. 5.625%
7/30/07 109,432
- ----------
177,522
- ----------
Sweden --
2.6%
SEK 1,000,000 Stadshypotek AB - Series 1553...................... 10.000%
12/20/00 129,537
ITL 120,000,000 Swedish Export Credit.............................. 10.750%
6/09/00 69,038
- ----------
198,575
- ----------
United Kingdom --
11.6%
EUR 250,000 BAT International Finance Plc (MTN)................ 4.875%
2/25/09 241,141
GBP 140,000 Kingfisher Plc..................................... 8.125%
2/14/07 242,656
GBP 120,000 National Grid Co. Plc.............................. 8.000%
3/29/06 207,123
EUR 178,952 LB Baden-Wuertt Capital Markets (MTN).............. 4.625%
2/17/03 190,656
- ----------
881,576
- ----------
United States --
1.1%
GBP 50,000 KFW International Finance.......................... 7.250%
7/23/07 85,458
- ----------
Total Corporate Debt (Cost --
$2,315,961).......... 2,184,007
==========
Mortgage Backed Securities --
3.3%
Denmark --
2.2%
DKK 39,001 Nykredit AS........................................ 6.000%
10/01/26 5,171
DKK 1,283,000 Nykredit AS........................................ 6.000%
10/01/29 166,142
- ----------
171,313
- ----------
Germany --
1.1%
EUR 76,693 Hypothekenbank in Essen AG......................... 5.250%
1/22/08 80,737
- ----------
Total Mortgage Backed Securities (Cost --
$286,667) 252,050
==========
Sovereign Debt Obligations --
56.9%
Austria --
2.5%
EUR 178,951 Republic of Austria - Series 98-2.................. 4.300%
7/15/03 189,427
- ----------
Belgium --
2.3%
DEM 300,000 Kingdom of Belgium International Bond.............. 6.250%
10/06/03 172,570
- ----------
Czech Republic --
1.8%
CZK 4,500,000 Czech Republic..................................... 14.750%
5/15/00 136,920
- ----------
Denmark -- 4.9%
DKK 1,000,000 Kingdom of Denmark................................... 7.000%
12/15/04 $ 156,081
DKK 1,350,000 Kingdom of Denmark................................... 7.000%
11/15/07 213,624
- ----------
369,705
- ----------
Finland --
2.1%
FRF 900,000 Finland International Bond........................... 7.000%
6/15/04 159,144
- ----------
France --
1.4%
EUR 100,000 French Treasury Bill................................. 4.500%
7/12/02 107,227
- ----------
Germany --
15.0%
EUR 400,000 Bundesobligation - Series 123........................ 4.500%
5/17/02 429,750
EUR 300,000 Bundesobligation - Series 96......................... 6.250%
4/26/06 344,171
EUR 217,299 Deutschland Republic - Series 93..................... 6.000%
9/15/03 244,131
EUR 102,258 Deutschland Republic - Series 97..................... 6.500%
7/04/27 118,610
- ----------
1,136,662
- ----------
Greece --
3.1%
GRD 40,000,000 Hellenic Republic Bond............................... 9.800%
3/21/00 129,274
EUR 100,000 Hellenic Republic Bond - Series 36 (MTN)............. 5.750%
3/31/08 106,171
- ----------
235,445
- ----------
Hungary --
2.5%
HUF 45,000,000 Hungary Government Bond - Series 00/G................ 16.000%
11/24/00 191,196
- ----------
Ireland --
1.4%
EUR 95,230 Irish Gilt........................................... 6.250%
10/18/04 109,121
- ----------
Netherlands --
2.9%
EUR 200,000 Netherlands Government............................... 5.750%
1/15/04 222,689
- ----------
Norway --
2.5%
NOK 1,500,000 Norwegian Government................................. 5.750%
11/30/04 191,194
- ----------
Poland --
1.5%
PLN 450,000 Poland Government Bond - Series 0601................. 12.000%
6/12/01 111,962
- ----------
Spain --
5.9%
EUR 372,627 Spanish Government................................... 5.150%
7/30/09 392,867
DEM 100,000 Spanish Government International Bond................ 5.750%
1/03/07 55,850
- ----------
448,717
- ----------
Sweden --
3.7%
SEK 700,000 Kingdom of Sweden - Series 1036...................... 10.250%
5/05/00 88,689
SEK 1,000,000 Kingdom of Sweden - Series 1042...................... 5.000%
1/15/04 120,621
ITL 120,000,000 Kingdom of Sweden International Bond................. 10.000%
2/08/01 71,100
- ----------
280,410
- ----------
United Kingdom -- 3.4%
GBP 145,000 United Kingdom Gilts................................. 7.750%
9/08/06 261,226
- ----------
Total Sovereign Debt Obligations (Cost --
$4,542,205) 4,323,615
==========
U.S. Government Agency
Obligation -- 2.5%
DEM 350,000 Federal National Mortgage Association-Global. ...... 5.000%
2/16/01 $ 192,451
- ----------
Total U.S. Government Agency Obligation
(Cost --
$195,879) 192,451
- ----------
Total Investments -- 91.5% (Cost --
$7,340,712)........... 6,952,123
Other assets in excess of liabilities --
8.5%............. 646,385
- ----------
Total Net Assets --
100.0%................................ $7,598,508
==========
</TABLE>
Notes to the Portfolio of Investments:
MTN -- Medium Term Note
Currency abbreviations defined: CZK -- Czech Koruna DEM -- German Deutschemark
DKK -- Denmark Krone EUR -- European Monetary Unit (Euro) FRF -- Franch Franc
GBP -- Great Britain Pound GRD -- Greek Drachma HUF -- Hungarian Forint ITL --
Italian Lira NOK -- Norwegian Krone SEK -- Swedish Krona
The accompanying notes are an integral part of the financial statements.
PORTFOLIO OF INVESTMENTS
U.S. Money Market Portfolio (US Dollar)
August 31, 1999
<TABLE>
<CAPTION>
Par Yield/ Maturity Market
Value Description Rate Date Value
----- ----------- ------ -------- -------
<C> <S> <C> <C> <C>
Certificates of Deposit -- 4.6%
$4,000,000 Barclays Bank Plc (New York) - Yankee CD....................... 5.200% 9/17/99 $
4,000,000
6,000,000 Dresdner Bank AG (New York).................................... 4.980% 9/03/99
6,000,000
- ------------
Total Certificates of Deposit (Amortized Cost -- $10,000,000)..
10,000,000
============
Commercial Paper -- 58.4%
6,000,000 AlliedSignal, Inc. - 144A...................................... 5.080% 9/07/99
5,994,920
6,000,000 Associates Corp. of North America.............................. 5.180% 9/02/99
5,999,137
5,125,000 Bell Atlantic Network Funding.................................. 5.150% 9/03/99
5,123,534
6,000,000 BellSouth Capital Funding - 144A............................... 5.180% 9/22/99
5,981,870
6,000,000 Coca-Cola Co. (The)............................................ 5.140% 9/21/99
5,982,867
6,000,000 Colgate-Palmolive Co. - 144A................................... 5.070% 9/02/99
5,999,155
6,000,000 E. I. du Pont de Nemours & Co.................................. 5.140% 9/07/99
5,994,860
6,000,000 Ford Credit Co................................................. 5.250% 10/05/99
5,970,250
8,000,000 General Electric Capital Corp.................................. 5.140% 10/08/99
7,957,738
6,000,000 General Re Corp................................................ 5.200% 9/24/99
5,980,067
6,000,000 Household Finance Corp......................................... 5.120% 9/14/99
5,988,907
6,000,000 IBM Credit Corp................................................ 5.160% 9/10/99
5,992,260
4,000,000 KFW International Finance...................................... 4.770% 9/15/99
3,992,580
6,000,000 Lucent Technologies, Inc....................................... 5.180% 9/09/99
5,993,093
6,000,000 Marsh & McLennan Co., Inc. - 144A.............................. 5.180% 9/13/99
5,989,640
6,000,000 Metlife Funding Inc............................................ 5.240% 9/24/99
5,979,913
6,000,000 Motorola, Inc.................................................. 5.200% 9/01/99
6,000,000
6,000,000 Nestle Capital Corp............................................ 5.160% 9/23/99
5,981,080
6,000,000 Pfizer, Inc. - 144A............................................ 5.140% 9/10/99
5,992,290
8,000,000 Prudential Funding Corp........................................ 5.010% 10/07/99
7,959,920
5,000,000 Warner-Lambert Co.............................................. 5.140% 9/08/99
4,995,003
- ------------
Total Commercial Paper (Amortized Cost -- $125,849,084)........
125,849,084
============
Corporate Debt -- 19.8%
5,330,000 AT&T Corp...................................................... 8.250% 1/11/00
5,386,089
5,000,000 Bayerische Landesbank (New York) - Series DPNT................. 5.800% 4/15/00
5,017,459
5,000,000 Chrysler Financial Co. LLC - Series MTNR....................... 5.950% 4/06/00
5,010,380
2,030,000 Florida Power Corp. - Series MTN............................... 6.330% 7/01/00
2,038,794
1,000,000 General Motors Acceptance Corp................................. 7.000% 3/01/00
1,006,335
5,000,000 General Motors Acceptance Corp. - Series MTN................... 6.625% 4/17/00
5,028,151
5,000,000 International Lease Finance Corp............................... 6.375% 1/18/00
5,020,773
5,000,000 Salomon, Inc................................................... 6.500% 3/01/00
5,030,948
3,000,000 Walt Disney Co. (The) - Series MTN............................. 5.600% 1/13/00
3,002,319
6,000,000 World Bank..................................................... 5.680% 9/27/99
6,002,402
- ------------
Total Corporate Debt (Amortized Cost -- $42,543,650)...........
42,543,650
============
U.S. Government Agency Obligations -- 16.7%
$11,200,000 Federal Home Loan Bank.......................................... 5.050% 9/08/99 $
11,189,002
15,300,000 Federal Home Loan Mortgage Corp................................. 5.210% 10/28/99
15,173,788
7,538,000 Federal National Mortgage Association........................... 5.150% 9/17/99
7,520,746
2,000,000 Federal Home Loan Mortgage Corp. Discount Note.................. 5.150% 9/02/99
1,999,714
- ------------
Total U.S. Government Agency Obligations (Amortized Cost -- $35,883,250)
35,883,250
- ------------
Total Investments -- 99.5% (Amortized Cost -- $214,275,984).....
214,275,984
Other assets in excess of liabilities -- 0.5%...................
1,048,581
- ------------
Total Net Assets -- 100.0%......................................
$215,324,565
============
</TABLE>
Notes to the Portfolio of Investments:
Yankee CD -- U.S. Dollar-denominated certificates of deposit issued by a U.S.
branch of a foreign bank and held in the U.S.
144A -- Securities restricted for resale to Qualified Institutional Buyers.
The accompanying notes are an integral part of the financial statements.
The following are the industry sector diversifications of the Top 50 World
Portfolio (US Dollar), Top 50 Europe Portfolio (US Dollar), and Top 50 Asia
Portfolio (US Dollar) as a percentage of net assets as of August 31, 1999:
<TABLE>
<CAPTION>
Top 50 World Portfolio (US Dollar)
Percentage of
Industry Sector Net Assets
- --------------------------------------- --------------
<S> <C>
Pharmaceuticals 16.2%
Oil & Gas 11.6
Computer Software & Processing 9.3
Beverages, Food & Tobacco 7.8
Cosmetics & Personal Care 7.2
Financial Services 5.7
Telephone Systems 5.5
Computers & Information 5.5
Banking 5.2
Communications 3.9
Medical Supplies 3.1
Electronics 2.3
Restaurants 1.9
Automotive 1.9
Entertainment & Leisure 1.6
Commercial Services 1.5
Airlines 1.0
Other assets in excess of liabilities 8.8
------
Total 100.0%
======
</TABLE>
<TABLE>
<CAPTION>
Top 50 Europe Portfolio (US Dollar)
Percentage of
Industry Sector Net Assets
- --------------------------------------- --------------
<S> <C>
Banking 10.7%
Chemicals 10.3
Industrial -- Diversified 10.1
Computer Software & Processing 8.0
Pharmaceuticals 7.3
Telephone Systems 5.6
Health Care Providers 5.5
Commercial Services 5.4
Communications 5.3
Financial Services 4.8
Oil & Gas 4.2
Insurance 3.0
Electric Utilities 2.7
Beverages, Food & Tobacco 2.5
Heavy Machinery 2.4
Electrical Equipment 2.4
Wholesalers 2.1
Food Retailers 1.6
Media -- Broadcasting & Publishing 1.5
Automotive 1.2
Building Materials 0.9
Medical & Bio-Technology 0.9
Medical Supplies 0.6
Other assets in excess of liabilities 1.0
------
Total 100.0%
======
</TABLE>
<TABLE>
<CAPTION>
Top 50 Asia Portfolio (US Dollar)
Percentage of
Industry Sector Net Assets
- --------------------------------------- --------------
<S> <C>
Electronics 24.8%
Banking 12.8
Computers & Information 9.9
Telephone Systems 7.0
Real Estate 6.4
Metals 4.6
Industrial -- Diversified 4.6
Financial Services 4.5
Computer Software & Processing 4.3
Communications 3.6
Automotive 3.1
Airlines 2.8
Electric Utilities 2.4
Heavy Construction 1.7
Pharmaceuticals 1.5
Cosmetics & Personal Care 1.2
Medical Supplies 1.1
Electrical Equipment 0.7
Building Materials 0.7
Chemicals 0.4
Beverages, Food & Tobacco 0.4
Insurance 0.4
Office Equipment 0.4
Oil & Gas 0.3
Other assets in excess of liabilities 0.4
------
Total 100.0%
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
The following are the industry sector diversifications of the Provesta Portfolio
(US Dollar) and the U.S. Money Market Portfolio (US Dollar) as a percentage of
net assets as of August 31, 1999:
<TABLE>
<CAPTION>
Provesta Portfolio (US Dollar)
Percentage of
Industry Sector Net Assets
- --------------------------------------- --------------
<S> <C>
Computer Software & Processing 15.7%
Heavy Machinery 10.0
Health Care Providers 6.6
Automotive 6.2
Media -- Broadcasting & Publishing 5.4
Computers & Information 5.2
Banking 5.0
Industrial -- Diversified 4.6
Electronics 4.5
Cosmetics & Personal Care 4.1
Chemicals 3.2
Entertainment & Leisure 2.9
Telephone Systems 2.8
Medical & Bio-Technology 2.5
Financial Services 2.1
Electrical Equipment 2.1
Pharmaceuticals 2.1
Communications 1.9
Transportation 1.9
Beverages, Food & Tobacco 1.8
Building Materials 1.6
Retailers 1.5
Textiles, Clothing & Fabrics 1.5
Wholesalers 1.3
Household Products 0.7
Oil & Gas 0.6
Advertising 0.6
Insurance 0.5
Apparel Retailers 0.3
Medical Supplies 0.2
Commercial Services 0.1
Other assets in excess of liabilities 0.5
------
Total 100.0%
======
</TABLE>
<TABLE>
<CAPTION>
U.S. Money Market Portfolio (US Dollar)
Percentage of
Industry Sector Net Assets
- --------------------------------------- --------------
<S> <C>
U.S. Government 16.7%
Insurance 12.0
Financial Services 9.3
Telephone Systems 7.7
Automotive 5.6
Communications 5.6
Beverages, Food & Tobacco 5.5
Banking 5.1
Pharmaceuticals 5.1
Bank Obligations on CD, TD and B 4.6
Electrical Equipment 3.7
Multinational 2.8
Cosmetics & Personal Care 2.8
Aerospace & Defense 2.8
Chemicals 2.8
Computers & Information 2.8
Commercial Services 2.3
Entertainment & Leisure 1.4
Electric Utilities 0.9
Other assets in excess of liabilities 0.5
------
Total 100.0%
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
STATEMENTS OF ASSETS AND LIABILITIES
Deutsche Portfolios
August 31, 1999
<TABLE>
<CAPTION>
Top 50 Top 50 Top 50
Top 50
World Europe Asia
US
Portfolio Portfolio Portfolio
Portfolio
(US Dollar) (US Dollar) (USDollar)
(USDollar)
----------- ----------- ----------
- ----------
<S> <C> <C> <C> <C>
Assets:
Investments, at value............................................ $21,348,276 $32,222,231 $69,846,367
$24,017,836
Cash............................................................. 1,722,636 677,743 1,741,404
920,854
Foreign currency................................................. -- 97,454
13,765 --
Dividends receivable............................................. 23,973 34,136 45,921
10,473
Interest receivable.............................................. 6,493 1,302
3,649 1,618
Receivable for investments sold.................................. 493,591 --
- -- --
Receivable for Investors' Beneficial Interest for contributions.. -- 45,183
160,381 --
Unrealized appreciation on forward foreign currency contracts.... -- 3,143
- -- --
Receivable from Advisor.......................................... -- --
- -- --
Deferred organization costs...................................... 40,664 40,664 41,098
40,664
----------- ----------- -----------
- -----------
Total assets.................................................... 23,635,633 33,121,856 71,852,585
24,991,445
----------- ----------- -----------
- -----------
Liabilities:
Payable for investments purchased................................ 119,058 450,582
1,593,653 --
Loan payable..................................................... -- --
- -- --
Due to Custodian................................................. -- --
- -- --
Unrealized depreciation on forward foreign currency contracts.... 4,076 --
3 --
Variation margin payable on futures contracts.................... -- --
- -- --
Payable to Investors' Beneficial Interest for withdrawals........ -- -- --
694,517
Investment management fees payable............................... 34,048 45,714 50,582
35,303
Custody and portfolio accounting fees payable.................... 5,898 3,345
6,150 3,351
Administrative fees payable...................................... 9,985 9,484
8,007 9,761
Organization costs payable....................................... 41,820 41,820 42,253
41,820
Other accrued expenses........................................... 20,009 20,316 19,914
20,016
----------- ----------- -----------
- -----------
Total liabilities............................................... 234,894 571,261 1,720,562
804,768
----------- ----------- -----------
- -----------
Net assets...................................................... $23,400,739 $32,550,595 $70,132,023
$24,186,677
=========== =========== ===========
===========
Net Assets:
Applicable to Investors' Beneficial Interests.................... $23,400,739 $32,550,595 $70,132,023
$24,186,677
=========== =========== ===========
===========
Cost of investments.............................................. $18,036,779 $30,395,297 $44,662,330
$17,009,278
=========== =========== ===========
===========
Cost of foreign currency......................................... $ -- $ 96,458 $ 13,668
$ --
=========== =========== ===========
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
Japanese Global European US Money
Provesta Investa Equity Bond Bond Market
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
(USDollar) (US Dollar) (US Dollar) (USDollar) (USDollar) (USDollar)
---------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$28,690,882 $6,863,298 $20,387,310 $5,940,503 $6,952,123 $214,275,984
-- -- 213,518 35,759 535,697 36,755
-- -- -- -- -- --
4,262 -- 4,392 -- -- --
2,668 3,613 6,925 132,112 203,253 1,075,508
1,258,375 2,349,061 678,265 -- -- --
41,798 -- 217,197 27,174 -- --
-- -- 2,220 -- -- --
69,472 -- -- -- -- --
41,206 41,206 41,242 41,134 41,206 50,734
----------- ---------- ----------- ---------- ---------- ------------
30,108,663 9,257,178 21,551,069 6,176,682 7,732,279 215,438,981
----------- ---------- ----------- ---------- ---------- ------------
-- 471,026 530,611 -- -- --
372,145 1,555,734 -- -- -- --
791,898 138,775 -- -- -- --
-- 421 -- -- -- --
-- -- -- 764 -- --
27,799 1,334 -- 4,477 5,599 --
-- 23,560 39,051 35,988 43,675 27,638
5,808 6,320 2,054 4,756 4,531 9,235
9,182 10,378 9,725 10,478 10,433 5,421
42,362 42,362 42,398 42,290 42,362 51,546
28,869 27,814 27,204 27,184 27,171 20,576
----------- ---------- ----------- ---------- ---------- ------------
1,278,063 2,277,724 651,043 125,937 133,771 114,416
----------- ---------- ----------- ---------- ---------- ------------
$28,830,600 $6,979,454 $20,900,026 $6,050,745 $7,598,508 $215,324,565
=========== ========== =========== ========== ========== ============
$28,830,600 $6,979,454 $20,900,026 $6,050,745 $7,598,508 $215,324,565
=========== ========== =========== ========== ========== ============
$27,706,233 $6,379,192 $15,050,785 $6,228,593 $7,340,712 $214,275,984
=========== ========== =========== ========== ========== ============
$-- $ -- $ -- $ -- $ -- $ --
=========== ========== =========== ========== ========== ============
</TABLE>
STATEMENTS OF OPERATIONS
Deutsche Portfolios
For the year ended August 31, 1999
<TABLE>
<CAPTION>
Top 50 Top
50 Top 50
World
Europe Asia
Portfolio
Portfolio Portfolio
(US Dollar) (US
Dollar) (US Dollar)
-----------
- ----------- -----------
<S> <C>
<C> <C>
Investment Income:
Dividend income............................................................................ $ 210,311 $
429,002 $ 521,855
Less: foreign withholding taxes............................................................ (25,741)
(99,540) (67,092)
-----------
- ----------- -----------
Net dividend income....................................................................... 184,570
329,462 454,763
Interest income............................................................................ 44,436
101,548 54,101
Less: interest expense..................................................................... (155)
(1,202) (2,597)
-----------
- ----------- -----------
Total investment income................................................................... 228,851
429,808 506,267
-----------
- ----------- -----------
Expenses:
Investment management fees................................................................. 153,724
272,729 389,911
Operations agent fees...................................................................... 120,354
114,606 110,830
Custody and portfolio accounting fees...................................................... 73,507
73,408 89,128
Administrative agent fees.................................................................. 44,697
44,583 44,582
Professional fees.......................................................................... 33,452
33,487 33,511
Amortization of organization costs......................................................... 13,184
13,184 13,183
Trustees' fees and expenses................................................................ 5,375
5,375 5,375
Insurance fees............................................................................. 609
609 609
Other expenses............................................................................. 12,681
12,776 13,061
-----------
- ----------- -----------
Total expenses............................................................................ 457,583
570,757 700,190
-----------
- ----------- -----------
Net investment income (loss)............................................................ (228,732)
(140,949) (193,923)
-----------
- ----------- -----------
Realized and Unrealized Gain (Loss) on Investments, Futures Contracts and Foreign Currency:
Net realized gain (loss) on:
Investments............................................................................... 462,956
(1,781,573) 498,995
Futures contracts......................................................................... --
(48,589) --
Foreign currency transactions............................................................. (22,355)
(57,237) (367,415)
Net change in unrealized appreciation/(depreciation) on:
Investments............................................................................... 4,023,276
2,829,292 30,597,114
Futures contracts.........................................................................
- -- -- --
Foreign currency translations............................................................. (459)
(693) 68,020
-----------
- ----------- -----------
Net Realized and Unrealized Gain (Loss) on Investments, Futures Contracts and Foreign
Currency.................................................................................. 4,463,418
941,200 30,796,714
-----------
- ----------- -----------
Net Increase (Decrease) in Net Assets Resulting from Operations............................ $4,234,686 $
800,251 $30,602,791
===========
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
Top 50 Japanese Global European US Money
US Provesta Investa Equity Bond Bond Market
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
(US Dollar) (US Dollar) (US Dollar) (US Dollar) (US Dollar) (US Dollar) (US Dollar)
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$179,448 $ 331,951 $ 105,305 $ 18,479 $ -- $ -- $ --
-- (81,233) (27,440) (2,772) -- -- --
---------- ---------- --------- ---------- --------- --------- -----------
179,448 250,718 77,865 15,707 -- -- --
63,534 15,301 18,341 18,858 289,765 326,797 12,809,201
(570) (7,610) (630) (2,230) -- (571) (5,934)
---------- ---------- --------- ---------- --------- --------- -----------
242,412 258,409 95,576 32,335 289,765 326,226 12,803,267
---------- ---------- --------- ---------- --------- --------- -----------
210,939 188,736 50,210 54,632 39,918 49,921 374,550
116,881 112,867 122,834 121,732 123,586 123,090 62,622
52,446 94,122 74,354 66,981 67,060 65,604 59,998
44,583 44,583 44,583 44,583 44,583 44,583 27,855
33,487 47,967 47,967 47,967 47,967 47,967 34,587
13,184 13,184 13,184 13,184 13,183 13,184 9,934
5,375 5,375 5,375 5,375 5,375 5,375 5,595
609 609 609 609 609 609 2,015
12,681 12,738 12,684 12,636 12,682 12,681 12,745
---------- ---------- --------- ---------- --------- --------- -----------
490,185 520,181 371,800 367,699 354,963 363,014 589,901
---------- ---------- --------- ---------- --------- --------- -----------
(247,773) (261,772) (276,224) (335,364) (65,198) (36,788) 12,213,366
---------- ---------- --------- ---------- --------- --------- -----------
(872,169) (82,192) (151,993) 631,963 52,965 227,884 (216)
-- -- 328,051 -- (30,884) -- --
-- (74,045) 4,251 (132,882) (15,645) (19,072) --
7,983,805 1,964,047 475,849 5,562,007 (331,251) (624,102) --
-- -- -- -- (6,155) -- --
-- 5,310 17,061 21,023 (5,145) (13,051) --
---------- ---------- --------- ---------- --------- --------- -----------
7,111,636 1,813,120 673,219 6,082,111 (336,115) (428,341) (216)
---------- ---------- --------- ---------- --------- --------- -----------
$6,863,863 $1,551,348 $ 396,995 $5,746,747 $(401,313) $(465,129) $12,213,150
========== ========== ========= ========== ========= ========= ===========
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
Deutsche Portfolios
<TABLE>
<CAPTION>
Top 50 World Portfolio (US Dollar) Top 50 Europe
Portfolio (US Dollar)
----------------------------------
- -----------------------------------
For the For the Period For
the For the Period
Year Ended Ended (a) Year
Ended Ended (a)
August 31, 1999 August 31, 1998 August 31,
1999 August 31, 1998
--------------- ----------------
- --------------- ---------------
<S> <C> <C> <C>
<C>
Increase (Decrease) in Net Assets:
Operations--
Net investment loss......................... $ (228,732) $ (135,494) $
(140,949) $ (130,925)
Net realized gain (loss) on investments,
futures contracts and
foreign currency transactions............... 440,601 471,456
(1,887,399) 160,234
Net change in unrealized appreciation
(depreciation) on investments,
futures contracts and foreign currency
translations............................... 4,022,817 (711,580)
2,828,599 (1,001,967)
----------- -----------
- ------------ -----------
Net increase (decrease) in net assets
resulting from operations.................. 4,234,686 (375,618)
800,251 (972,658)
----------- -----------
- ------------ -----------
Capital Transactions--
Proceeds from contributions................. 13,610,609 12,443,494
31,411,385 25,907,115
Withdrawals................................. (4,245,807) (2,277,739)
(18,442,917) (6,163,693)
----------- -----------
- ------------ -----------
Net increase in net assets from capital
transactions............................... 9,364,802 10,165,755
12,968,468 19,743,422
----------- -----------
- ------------ -----------
Total increase in net assets............... 13,599,488 9,790,137
13,768,719 18,770,764
Net Assets--
Beginning of period......................... 9,801,251 11,114
18,781,876 11,112
----------- -----------
- ------------ -----------
End of period............................... $23,400,739 $ 9,801,251 $
32,550,595 $18,781,876
=========== ===========
============ ===========
(a) Commencement of operations:
10/2/97 10/2/97
</TABLE>
<TABLE>
<CAPTION>
Japanese Equity Portfolio (US Dollar) Global Bond
Portfolio (US Dollar)
--------------------------------------
- ---------------------------------
For the For the Period For
the For the Period
Year Ended Ended (a) Year
Ended Ended (a)
August 31, 1999 August 31, 1998 August 31, 1999
August 31, 1998
--------------- ---------------- ---------------
- ---------------
<S> <C> <C> <C>
<C>
Increase (Decrease) in Net Assets:
Operations--
Net investment income (loss)................ $ (335,364) $ (202,441) $
(65,198) $ (72,497)
Net realized gain (loss) on investments,
futures contracts and
foreign currency transactions............... 499,081 (291,835)
6,436 (16,020)
Net change in unrealized appreciation
(depreciation) on investments,
futures contracts and foreign currency
translations............................... 5,583,030 (247,060)
(342,551) 42,134
----------- -----------
- ------------ -----------
Net increase (decrease) in net assets
resulting from operations.................. 5,746,747 (741,336)
(401,313) (46,383)
----------- -----------
- ------------ -----------
Capital Transactions--
Proceeds from contributions................. 22,319,656 2,526,572
3,556,849 4,807,453
Withdrawals................................. (8,815,452) (147,273)
(936,907) (940,066)
----------- -----------
- ------------ -----------
Net increase in net assets from capital
transactions............................... 13,504,204 2,379,299
2,619,942 3,867,387
----------- -----------
- ------------ -----------
Total increase (decrease) in net assets.... 19,250,951 1,637,963
2,218,629 3,821,004
Net Assets--
Beginning of period......................... 1,649,075 11,112
3,832,116 11,112
----------- -----------
- ------------ -----------
End of period............................... $20,900,026 $ 1,649,075 $
6,050,745 $ 3,832,116
=========== ===========
============ ===========
(a) Commencement of operations:
10/20/97 10/15/97
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
Top 50 Asia Portfolio Top 50 US Portfolio Provesta Portfolio
Investa Portfolio
(US Dollar) (US Dollar) (US Dollar)
(US Dollar)
---------------------- ------------------- -------------------
- ------------------
For the For the For
the For the
Period Period For the Period For
the Period
For the Ended (a) For the Ended (a) Year Ended Ended (a) Year
Ended Ended (a)
Year Ended August 31, Year Ended August 31, August 31, August 31, August
31, August 31,
August 31, 1999 1998 August 31, 1999 1998 1999 1998
1999 1998
--------------- ---------- ---------------- ---------- ---------- ----------
- ---------- ----------
<S> <C> <C> <C> <C> <C>
<C> <C>
$(193,923) $ (28,925) $ (247,773) $ (181,990) $ (261,772) $ (306,706) $
(276,224) $ (194,992)
131,580 (4,161,991) (872,169) (166,914) (156,237) 411,987
180,309 212,346
30,665,134 (5,480,524) 7,983,805 (975,247) 1,969,357 (979,439)
492,910 8,257
----------- ------------ --------------- ------------ ----------- -----------
- ------------ -----------
30,602,791 (9,671,440) 6,863,863 (1,324,151) 1,551,348 (874,158)
396,995 25,611
----------- ------------ --------------- ------------ ----------- -----------
- ------------ -----------
33,066,820 40,430,598 22,490,394 23,011,759 25,013,744 16,189,162
13,664,729 5,858,332
(11,485,568) (12,822,290) (19,487,950) (7,378,350) (9,340,555) (3,720,053)
(11,110,845) (1,866,480)
----------- ------------ --------------- ------------ ----------- -----------
- ------------ -----------
21,581,252 27,608,308 3,002,444 15,633,409 15,673,189 12,469,109
2,553,884 3,991,852
----------- ------------ --------------- ------------ ----------- -----------
- ------------ -----------
52,184,043 17,936,868 9,866,307 14,309,258 17,224,537 11,594,951
2,950,879 4,017,463
17,947,980 11,112 14,320,370 11,112 11,606,063 11,112
4,028,575 11,112
----------- ------------ --------------- ------------ ----------- -----------
- ------------ -----------
$70,132,023 $ 17,947,980 $ 24,186,677 $ 14,320,370 $28,830,600 $11,606,063 $
6,979,454 $ 4,028,575
=========== ============ =============== ============ =========== ===========
============ ===========
10/14/97 10/2/97
10/17/97 10/17/97
European Bond Portfolio US Money Portfolio
(US Dollar) (US Dollar)
------------------------ -------------------
For the For the
Period Period
For the Ended (a) For the Ended (a)
Year Ended August 31, Year Ended August 31,
August 31, 1999 1998 August 31, 1999 1998
--------------- ---------- ---------------- ----------
<S> <C> <C> <C>
$ (36,788) $ (69,536) $ 12,213,366 $ 7,678,158
208,812 77,531 (216) --
(637,153) 241,738 -- --
----------- ------------ --------------- -------------
(465,129) 249,733 12,213,150 7,678,158
----------- ------------ --------------- -------------
7,442,553 10,703,739 2,944,206,376 1,153,007,875
(5,978,762) (4,364,738) (3,036,637,815) (865,143,389)
----------- ------------ --------------- -------------
1,463,791 6,339,001 (92,431,439) 287,864,486
----------- ------------ --------------- -------------
998,662 6,558,734 (80,218,289) 295,542,644
6,599,846 11,112 295,542,854 210
----------- ------------ --------------- --------------
$ 7,598,508 $ 6,599,846 $ 215,324,565 $ 295,542,854
=========== ============ =============== ==============
10/17/97 3/25/98
</TABLE>
FINANCIAL HIGHLIGHTS
Deutsche Portfolios
<TABLE>
<CAPTION>
Top 50 World Portfolio (US Dollar) Top 50 Europe Portfolio
(US Dollar)
----------------------------------
- ------------------------------------
For the For the Period For the
For the Period
Year Ended Ended (a) Year Ended
Ended (a)
August 31, 1999 August 31, 1998 August 31, 1999
August 31, 1998
--------------- --------------- ---------------
- -----------------
<S> <C> <C> <C> <C>
Ratios/Supplemental Data:
Net assets, end of period (000's)... $ 23,401 $ 9,801
$32,551 $18,782
Ratio of expenses to average net
assets before interest expense..... 2.98% 3.75%(b)
2.09% 3.49%(b)
Ratio of interest expense to
average net assets................. 0.00%(c) --(b)
0.00%(c) --(b)
Ratio of expenses to average net
assets after interest expense...... 2.98% 3.75%(b)
2.09% 3.49%(b)
Ratio of net investment loss to
average net assets................. (1.49)% (1.75)%(b)
(0.52)% (1.49)%(b)
Portfolio turnover.................. 79% 125%(d)
61% 27%(d)
(a) Commencement of operations:
10/2/97 10/2/97
</TABLE>
<TABLE>
<CAPTION>
Japanese Equity Portfolio (US Dollar) Global Bond Portfolio (US
Dollar)
--------------------------------------
- ------------------------------------
For the For the Period For the For
the Period
Year Ended Ended (a) Year Ended
Ended (a)
August 31, 1999 August 31, 1998 August 31, 1999
August 31, 1998
--------------- --------------- ---------------
- -----------------
<S> <C> <C> <C> <C>
Ratios/Supplemental Data:
Net assets, end of period (000's)... $ 20,900 $ 1,649 $
6,051 $ 3,832
Ratio of expenses to average net
assets before interest expense..... 5.72% 15.44%(b)
6.66% 8.18%(b)
Ratio of interest expense to
average net assets................. 0.03% --
- -- --
Ratio of expenses to average net
assets after interest expense...... 5.75% 15.44%(b)
6.66% 8.18%(b)
Ratio of net investment income
(loss) to average net assets....... (5.22)% (14.46)%(b)
(1.22)% (2.63)%(b)
Portfolio turnover.................. 133% 95%(d)
31% 43%(d)
(a) Commencement of operations:
10/20/97 10/15/97
(b) Annualized
(c) Amount rounds to less than 0.01%.
(d) Not Annualized
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
Top 50 Asia Portfolio Top 50 US Portfolio Provesta Portfolio Investa
Portfolio
(US Dollar) (US Dollar) (US Dollar) (US
Dollar)
--------------------------------- ------------------- ------------------
- -------------------
For the For the For
the For the
For the Period For the Period For the
Period Period
Year Ended Ended (a) Year Ended Ended (a) Year Ended Ended (a)
Year Ended (a)
August 31, August 31, August 31, August 31, August 31, August 31, August
31, August 31,
1999 1998 1999 1998 1999 1998
1999 1998
---- ---- ---- ---- ---- ----
- ---- ----
<S> <C> <C> <C> <C> <C>
<C> <C>
$70,132 $ 17,948 $ 24,187 $ 14,320 $ 28,831 $11,606 $
6,979 $4,029
1.80% 2.19%(b) 1.98% 3.24%(b) 2.34% 9.77%(b)
6.29% 9.87%(b)
0.01% -- 0.00%(c) -- 0.03% --
0.01% --
1.81% 2.19%(b) 1.98% 3.24%(b) 2.37% 9.77%(b)
6.30% 9.87%(b)
(0.50)% (0.15)%(b) (1.00)% (2.18)%(b) (1.18)% (8.36)%(b)
(4.68)% (7.68)%(b)
51% 54%(d) 58% 24%(d) 89% 82%(d)
77% 93%(d)
10/14/97 10/2/97 1 0/17/97
10/17/97
</TABLE>
<TABLE>
<CAPTION>
European Bond Portfolio US Money Market Portfolio
(US Dollar) (US Dollar)
------------------------ --------------------------
For the For the
For the Period For the Period
Year Ended Ended (a) Year Ended Ended (a)
August 31, August 31, August 31, August 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C>
$7,599 $ 6,600 $ 215,325 $ 295,543
5.45% 7.79%(b) 0.24% 0.25%(b)
0.01% -- 0.00%(c) --
5.46% 7.79%(b) 0.24% 0.25%(b)
(0.55)% (2.38)%(b) 4.89% 5.34%(b)
53% 177%(d) -- --
10/17/97 3/25/98
</TABLE>
NOTES TO FINANCIAL STATEMENTS
Deutsche Portfolios
August 31, 1999
Note 1--Organization
Deutsche Portfolios ("Portfolio Trust") was organized on June 20, 1997, as a
business trust under the laws of the State of New York. The Portfolio Trust is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end management investment company, consisting of ten separate
investment series (each a "Portfolio" and collectively the "Portfolios"), each
of which is, in effect, a separate mutual fund: Top 50 World Portfolio (US
Dollar) ("Top 50 World Portfolio"), Top 50 Europe Portfolio (US Dollar) ("Top 50
Europe Portfolio"), Top 50 Asia Portfolio (US Dollar) ("Top 50 Asia Portfolio"),
Top 50 US Portfolio (US Dollar) ("Top 50 US Portfolio"), Provesta Portfolio (US
Dollar) ("Provesta Portfolio"), Investa Portfolio (US Dollar) ("Investa
Portfolio"), Japanese Equity Portfolio (US Dollar) ("Japanese Equity
Portfolio"), (collectively, the "Equity Portfolios"); Global Bond Portfolio (US
Dollar) ("Global Bond Portfolio") and European Bond Portfolio (US Dollar)
("European Bond Portfolio") (collectively, the "Bond Portfolios"); and US Money
Market Portfolio (US Dollar) ("Money Market Portfolio").
The investment manager of the Portfolios is Deutsche Fund Management, Inc.
("DFM" or the "Manager"), an indirect subsidiary of Deutsche Bank AG. The
investment objective of the Equity Portfolios is primarily to achieve high
capital appreciation, and as a secondary objective, reasonable dividend income.
The investment objective of the Bond Portfolios is to achieve steady, high
income. The investment objective of the Money Market Portfolio is primarily to
achieve as high a level of current income as is consistent with the preservation
of capital and the maintenance of liquidity. Refer to each Portfolio's
Prospectus for a more complete description of each Portfolio's investment
objectives, policies and strategies. The Portfolios commenced operations during
October 1997.
The Portfolio Trust operates under a "Hub and Spoke(R)" structure where the
beneficial interest holders of each respective Portfolio invest substantially
all of their investable assets in the respective Portfolio ("Hub and Spoke(R)"
is a registered service mark of Signature Financial Group, Inc.). From time to
time, a beneficial interest holder of each respective Portfolio may own a
significant percentage of the Portfolio. Investment activities of the beneficial
interest holders could have a material impact on the Portfolio.
The beneficial interest holders of the Portfolios at August 31, 1999 were as
follows:
<TABLE>
<S> <C> <C> <C>
Top 50 World Portfolio: Investa Portfolio:
Deutsche Top 50 World Fund 21.0% Deutsche German Equity Fund 30.7%
DB Top 50 World Fund 79.0% DB German Equity Fund 69.3%
------ ------
100.0% 100.0%
====== ======
Top 50 Europe Portfolio: Japanese Equity Portfolio:
Deutsche Top 50 Europe Fund 34.2% Deutsche Japanese Equity Fund 74.5%
DB Top 50 Europe Fund 65.8% DB Japanese Equity Fund 25.5%
------ ------
100.0% 100.0%
====== ======
Top 50 Asia Portfolio: Global Bond Portfolio:
Deutsche Top 50 Asia Fund 39.3% Deutsche Global Bond Fund 5.4%
DB Top 50 Asia Fund 60.7% DB Global Bond Fund 94.6%
------ ------
100.0% 100.0%
====== ======
Top 50 US Portfolio: European Bond Portfolio:
Deutsche Top 50 US Fund 25.9% Deutsche European Bond Fund 11.6%
DB Top 50 US Fund 74.1% DB European Bond Fund 88.4%
------ ------
100.0% 100.0%
====== ======
Provesta Portfolio: Money Market Portfolio:
Deutsche European Mid-Cap Fund 78.1% Deutsche US Money Market Fund 7.1%
DB European Mid-Cap Fund 21.9% Deutsche Institutional US
------ Money Market Fund 8.7%
100.0% DB US Money Market Fund 84.2%
====== ------
100.0%
======
</TABLE>
Note 2--Significant Accounting Policies
The financial statements of the Portfolio Trust are prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates. The following is a
summary of significant accounting policies followed by the Portfolios:
Investment Valuation
Securities listed on a U.S. securities exchange are valued at the last quoted
sales price on the securities exchange or national securities market on which
such securities are primarily traded. Securities listed on a foreign exchange
considered by the Manager to be the primary market for the securities are valued
at the last quoted sale price available before the time when net assets are
valued. Unlisted securities, and securities for which the Manager determines the
listing exchange is not the primary market, are valued at the average of the
quoted bid-and-ask prices in the over-the-counter market. Debt securities with a
remaining maturity of less than 60 days and money market instruments are valued
at amortized cost, which approximates market value. The amortized cost method
involves valuing a security at its cost on the date of purchase and thereafter
assuming a constant amortization to maturity of the difference between the
amount due at maturity and cost. The Money Market Portfolio's use of amortized
cost is subject to the Portfolio's amortized cost procedures and certain
conditions as specified under Rule 2a-7 of the 1940 Act.
Debt securities with a maturity of 60 days or more are valued based on the last
sales price on a national securities exchange or in the absence of recorded
sales, at the average of readily available closing bid-and-asked prices on such
exchanges or at the average of the readily available closing bid and asked
prices in the over-the-counter market, if such exchange or market constitutes
the broadest and most representative market for the security. Securities of the
Bond Portfolios may be valued by independent pricing services, approved by the
Portfolio's Board of Trustees, which use prices provided by market-makers or
estimates of market value obtained from yield data relating to instruments or
securities with similar characteristics. Securities for which market quotations
are not readily available, are valued in good faith in accordance with fair
valuation procedures adopted by the Trustees of the Portfolio Trust.
Investment Transactions
Investment transactions are recorded on trade date. Cost of securities sold is
calculated using the identified cost method. Dividend income is recorded on ex-
dividend date, or when the ex-dividend date becomes known, and interest income,
including the accretion of discounts and amortization of premiums is recorded
daily on an accrual basis. Such dividend and interest income is recorded net of
the unrecoverable portion of any applicable foreign withholding tax.
Forward Foreign Currency Contracts
The Portfolio Trust may enter into forward foreign currency contracts with
various counterparties for purposes of hedging its existing portfolio of
investments and settling foreign investment transactions. Forward foreign
currency contracts are over-the-counter contracts for delayed delivery of
securities or currency in which the buyer agrees to buy and the seller agrees to
deliver a specified currency at a specified price on a specified date. Because
the terms of forward contracts are not standardized, they are not traded on
organized exchanges and generally can be terminated or closed-out only by
agreement of both parties to the contract. All contracts are marked to market
daily at the applicable foreign exchange rate. During the period the forward
contract is open, changes in the value of the contract are recognized as
unrealized gains or losses. When the forward contract is closed, the Portfolio
Trust records a realized gain or loss equal to the difference between the
proceeds from (or payments to) the close-out of the contract and the original
contract price.
Futures Contracts
The Portfolios may enter into futures contracts to hedge against market
fluctuations or to speculate on future market conditions. A futures contract is
an agreement between a buyer and a seller and an established futures exchange or
its clearinghouse in which the buyer or seller agrees to take or make a delivery
of a specific amount of an item at a specified price on a specific date
(settlement date) or to make or receive a cash payment based on the value of a
securities index. Upon entering into a futures contract, the Portfolio is
required to deposit with a financial intermediary an amount equal to a certain
percentage of the face value indicated in the futures contract("initial
margin"). Subsequent payments ("variation margin") are made or received by the
Portfolio each day, dependent on the daily fluctuations in the value of the
underlying security or index. When entering into a closing transaction, the
Portfolio will realize a gain or loss equal to the difference between the value
of the futures contract to sell and the contract to buy.
Futures contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are traded.
Foreign Currency Translation
The books and records of the Portfolios are maintained in U.S. Dollars. Assets
and liabilities denominated in foreign currency amounts are translated at the
spot foreign currency exchange rate in effect at the time net assets are valued.
Purchases and sales of investment securities, income and expenses are reported
at the prevailing exchange rate on the respective days of such transactions. The
resultant realized and unrealized gains and losses arising from exchange rate
fluctuations are identified separately in the Statements of Operations, except
for such amounts attributable to investments which are included in net realized
and unrealized gains and losses on investments.
Foreign investments may involve certain considerations and risks not typically
associated with those of domestic origin. These include, among others, the
possibility of political and economic developments and the level of governmental
supervision and regulation of foreign securities markets.
Federal Income Taxes
Each Portfolio is treated as a partnership under the U.S. Internal Revenue Code
(the "Code"). Accordingly, it is expected that each Portfolio will not be
subject to any U.S. federal income tax on its income and net realized gains (if
any). However, each investor in the Portfolio may be taxed on its allocable
share of the partnership's income and capital gains for purposes of determining
its federal tax liability. It is intended that each Portfolio's assets, income
and expense allocation will be managed in such a way that a regulated investment
company investing in the Portfolio will satisfy the requirements of Subchapter M
of the Code, assuming that such investment company invests substantially all of
its assets in the corresponding Portfolio.
Expenses
Expenses are recorded on an accrual basis. Expenses of the Portfolio Trust which
are directly identifiable to a specific Portfolio are charged to that Portfolio.
Expenses not directly attributable to a specific Portfolio are allocated among
the Portfolios based on relative net asset value.
Deferred Organization Costs
Organization costs incurred in connection with the organization and initial
registration of the Portfolio Trust were paid initially by DFM and are being
reimbursed by the Portfolios. Such organization costs have been deferred and are
being amortized ratably over a period of sixty months from the commencement of
operations of the Portfolios.
Note 3--Significant Agreements and Transactions with Affiliates
The Portfolio Trust has entered into an Investment Management Agreement (the
"Management Agreement") with DFM. DFM retains overall responsibility for
supervision of the investment management program for each Portfolio but has
delegated the day-to-day management of the investment operations of each
Portfolio to DWS International Portfolio Management GmbH ("DWS")as investment
adviser to the Portfolios, except for the Top 50 US Portfolio and Money Market
Portfolio. Deutsche Bank Investment Management, Inc. ("DBIM") is the investment
adviser of the Top 50 US Portfolio and Money Market Portfolio. As compensation
for the services rendered by DFM under the Management Agreement with the
Portfolio Trust with respect to each Portfolio, DFM receives a fee from each
Portfolio, which is computed daily and paid monthly, equal to the following
percentages of each Portfolio's average daily net assets on an annualized basis
for the Portfolio's then-current fiscal year:
<TABLE>
<S> <C> <C> <C>
Top 50 World Portfolio 1.00% Investa Portfolio 0.85%
Top 50 Europe Portfolio 1.00% Japanese Equity Portfolio 0.85%
Top 50 Asia Portfolio 1.00% Global Bond Portfolio 0.75%
Top 50 US Portfolio 0.85% European Bond Portfolio 0.75%
Provesta Portfolio 0.85% Money Market Portfolio 0.15%
</TABLE>
The advisers are indirect subsidiaries of Deutsche Bank AG. As compensation for
their services, DWS and DBIM receive a fee, paid by DFM which is based on the
average daily net assets of the applicable Portfolio.
The Portfolio Trust has retained Federated Services Company as operations agent
to the Portfolios. As operations agent of the Portfolios, Federated Services
Company ("Federated") receives a fee from each Portfolio, which is computed
daily and paid monthly, at the annual rate of 0.035% of the average daily net
assets of each Portfolio for the Portfolio's then-current fiscal year, subject
to a minimum fee of $60,000 per Portfolio annually. Federated receives, in its
capacity as administrator of the Deutsche Funds, Inc. and as operations agent of
the Portfolios, a minimum aggregate fee from each Portfolio, its corresponding
Fund and any other fund investing in each Portfolio, taken together, of $75,000
for the first year of each Portfolio's operations and $125,000 for the second
year.
The Portfolio Trust has entered into an agreement with IBT Trust Company
(Cayman) Ltd. ("IBT (Cayman)"). Pursuant to that agreement, IBT (Cayman)
provides sub-administrative services to the Portfolios, for which it receives a
fee from each Equity and Bond Portfolio, which is computed daily and paid
monthly, at an annual rate of 0.025% on the first $200 million, 0.02% on the
next $800 million and 0.01% on assets in excess of $1 billion, subject to a
minimum of $40,000 during the first year of the Portfolio's operations, $45,000
in the second year of operations and $50,000 in the third year. As
Administrative Agent of the Money Market Portfolio, IBT (Cayman) receives a fee
from the Portfolio, which is computed daily and paid monthly, at an annual rate
of 0.025% on the first $200 million, 0.02% on the next $800 million and 0.01% on
the excess of $1 billion of the average daily net assets of the Money Market
Portfolio beginning with the second year of operations of the Portfolio provided
that the net assets of the Portfolio were less than $325 million after the first
year of operations. For the first year of operations of the Money Market
Portfolio, IBT (Cayman) received fees directly from the Deutsche US Money Market
Fund, Deutsche Institutional US Money Market Fund and DB US Money Market Fund.
Investors Bank & Trust Company (Boston) acts as the custodian of each
Portfolio's assets.
For the year ended August 31, 1999, affiliates of Deutsche Bank AG received the
following amounts in brokerage commissions from each Portfolio, as a result of
executing agency transactions in portfolio securities:
<TABLE>
<S> <C> <C> <C>
Top 50 World Portfolio $ 469 Investa Portfolio $15,006
Top 50 Europe Portfolio 6,226 Japanese Equity Portfolio --
Top 50 Asia Portfolio -- Global Bond Portfolio 107
Top 50 US Portfolio 6,781 European Bond Portfolio --
Provesta Portfolio 61,403 Money Market Portfolio --
</TABLE>
Certain Trustees and officers of the Portfolios are affiliated with Deutsche
Bank AG. These persons are not paid by the Portfolios for serving in these
capacities.
During the year ended August 31, 1999, certain portfolios of the Portfolio Trust
purchased/sold securities to/from other portfolios within the Portfolio Trust
and other entities of the Manager at prevailing market values and in accordance
with procedures approved by the Board of Trustees of the Portfolio Trust.
Note 4--Investment Portfolio Transactions
Cost of purchases and proceeds from sales of investments, excluding short-term
securities, for each Portfolio for the year ended August 31, 1999 were as
follows:
<TABLE>
<CAPTION>
Top 50 Top 50 Top 50 Top
50
World Europe Asia US
Portfolio Portfolio Portfolio
Portfolio
--------- --------- ---------
- ----------
<S> <C> <C> <C>
<C>
Purchases
U.S. Government.............................................. $ -- $ -- $ --
$ --
Non-U.S. Government.......................................... 18,264,504 29,474,803 41,703,803
16,458,341
----------- ----------- -----------
- -----------
Total........................................................ $18,264,504 $29,474,803 $41,703,803
$16,458,341
=========== =========== ===========
===========
Sales
U.S. Government.............................................. $ -- $ -- $ --
$ --
Non-U.S. Government.......................................... 11,308,849 15,161,735 19,479,912
13,125,606
----------- ----------- -----------
- -----------
Total........................................................ $11,308,849 $15,161,735 $19,479,912
$13,125,606
=========== =========== ===========
===========
</TABLE>
<TABLE>
<CAPTION>
Japanese
Global European
Provesta Investa Equity
Bond Bond
Portfolio Portfolio Portfolio
Portfolio Portfolio
--------- --------- ---------
- --------- ----------
<S> <C> <C> <C>
<C> <C>
Purchases
U.S. Government.............................................. $ -- $ -- $ -- $
482,250 $ --
Non-U.S. Government.......................................... 35,355,369 6,642,469 21,094,830
3,802,118 4,464,905
----------- ----------- -----------
- ----------- ----------
Total........................................................ $35,355,369 $ 6,642,469 $21,094,830 $
4,284,368 $4,464,905
=========== =========== ============
=========== ==========
Sales
U.S. Government.............................................. $ -- $ -- $ --
$ -- $ --
Non-U.S. Government.......................................... 19,299,946 4,210,846 8,313,256
1,560,472 3,382,246
----------- ----------- -----------
- ----------- ----------
Total........................................................ $19,299,946 $ 4,210,846 $ 8,313,256 $
1,560,472 $3,382,246
=========== =========== ============
=========== ==========
</TABLE>
At August 31, 1999, the cost of investments and the unrealized appreciation
(depreciation) of investments for U.S. federal income tax purposes for each
Portfolio were as follows:
<TABLE>
<CAPTION>
Top 50 Top 50 Top 50 Top
50
World Europe Asia US
Portfolio Portfolio Portfolio
Portfolio
--------- --------- ---------
- ----------
<S> <C> <C> <C>
<C>
Cost of Investments........................................... $18,224,919 $30,617,184 $46,431,834
$17,055,895
----------- ----------- -----------
- -----------
Gross Unrealized Appreciation................................. 3,297,503 2,744,663 24,308,189
7,266,091
Gross Unrealized Depreciation................................. (174,146) (1,139,616) (893,656)
(304,150)
----------- ----------- -----------
- -----------
Net Unrealized Appreciation................................... 3,123,357 1,605,047 23,414,533
6,961,941
=========== =========== ===========
===========
</TABLE>
<TABLE>
<CAPTION>
Japanese
Global European
Provesta Investa Equity
Bond Bond
Portfolio Portfolio Portfolio
Portfolio Portfolio
--------- --------- ---------
- --------- ----------
<S> <C> <C> <C>
<C> <C>
Cost of Investments........................................... $28,124,506 $ 6,576,866 $15,057,321 $
6,228,593 $7,352,841
----------- ----------- -----------
- ----------- ----------
Gross Unrealized Appreciation................................. 2,817,947 468,815 5,454,354
46,458 5,130
Gross Unrealized Depreciation................................. (2,251,571) (182,383) (124,365)
(334,548) (405,848)
----------- ----------- -----------
- ----------- ----------
Net Unrealized Appreciation (Depreciation).................... 566,376 286,432 5,329,989
(288,090) (400,718)
=========== =========== ============
=========== ==========
</TABLE>
Note 5--Forward Foreign Currency Contracts
Certain Portfolios had forward foreign currency contracts which contractually
obligate the Portfolio to deliver or receive currencies at specified future
dates.
The following contracts were open at August 31, 1999:
<TABLE>
<CAPTION>
Settlement/ Local/ Foreign
Maturity Notional Contract
Current Unrealized
Date Amount U.S. $Value U.S.
Value Gain (Loss)
----------- -------- -----------
- ---------- -----------
<S> <C> <C> <C> <C>
<C> <C>
Top 50 World Portfolio:
Sale Great Britian Pound... 9/07/99 202,519 $ 321,418 $
325,494 $(4,076)
Top 50 Europe Portfolio:
Buy European Monetary Unit 9/30/99 79,799 $ 83,589 $
84,466 $ 877
Buy Great Britain Pound... 9/01/99 18,529 $ 29,372 $
29,778 406
Buy Great Britain Pound... 9/07/99 92,389 $ 146,631 $
148,491 1,860
- -------
$3,143
=======
Top 50 Asia Portfolio:
Sale Malaysian Ringitt..... 9/01/99 8,690 $ 2,284 $
2,287 $ (3)
Investa Portfolio:
Sale European Monetary Unit 9/01/99 1,469,660 $1,551,520
$1,551,941 $ (421)
Japanese Equity Portfolio:
Buy Japanese Yen.......... 9/01/99 14,161,800 $ 123,028 $
129,310 $ 6,282
Buy Japanese Yen.......... 9/02/99 43,958,623 $ 395,560 $
401,446 5,886
Sale Japanese Yen.......... 9/02/99 74,293,800 $ 668,530 $
678,478 (9,948)
- -------
$2,220
=======
</TABLE>
Note 6--Futures Contracts
At August 31, 1999, the Global Bond Portfolio had entered into the following
futures contracts:
<TABLE>
<CAPTION>
Number Face Underlying Expiration Notional
Notional Unrealized
of Contracts Value Index Date Cost
Value Depreciation
- ------------- ----- ---------- ---------- --------
- -------- -------------
Long Position
- -------------
<S> <C> <C> <C> <C>
<C> <C>
3 100,000 U.S. Treasury Bond 12/20/99 $ 348,061 $
341,906 $(6,155)
</TABLE>
Note 7--Off-Balance Sheet Risk and Concentration of Credit Risk
The Statements of Assets and Liabilities include the market or fair value of
contractual commitments involving forward settlement and futures contracts.
These instruments involve elements of market risk in excess of amounts reflected
on the Statements of Assets and Liabilities.
Notional amounts are indicative only of the volume of activity; they are not a
measure of market risk. Notional amounts of forward foreign currency and futures
contracts include both purchase and sale commitments. Market risk is influenced
by the nature of the items that comprise a particular category of financial
instruments and by the relationship among various off-balance sheet categories
as well as the relationship between off-balance sheet items and items recorded
on the Portfolios' Statements of Assets and Liabilities. Credit risk is measured
by the loss the Portfolio would record if its counterparties failed to perform
pursuant to terms of their obligations to the Portfolio. Because the Portfolios
enter into forward foreign currency contracts, credit risk exists with
counterparties. It is the policy of the Portfolios to transact the majority of
its securities activity with broker-dealers, banks and regulated exchanges that
the Manager considers to be well established.
Note 8--Line of Credit Agreement ("Loan Payable")
The Portfolio Trust has established a revolving line of credit with Investors
Bank and Trust Company ("IBT"). Borrowing under the line of Credit may not
exceed the lesser of $15,000,000 or 33% of the total assets of the Portfolio
Trust. Interest is payable on outstanding borrowings at the Federal Funds Rate
plus 1.00%. Additionally, the line of credit includes an annual commitment fee
equal to 0.07% per annum on the difference between $15,000,000 and the average
daily amount of outstanding borrowings. During the year ended August 31, 1999,
the Portfolios periodically utilized the line of credit and incurred interest
expense as disclosed in the Statements of Operations. At August 31, 1999, the
Provesta Portfolio and the Investa Portfolio had $372,145 and $1,555,734
outstanding, respectively, under the line of credit agreement. During the year
ended August 31, 1999, the average borrowing outstanding by the Portfolio Trust
was $788,300. The highest amount borrowed during the year was $4,640,289. The
weighted average interest rate during the year was 5.59%. Commitment fees paid
by the Portfolio Trust during the year were $9,948.
Note 9 -- Subsequent Event
At its meeting held on October 14, 1999, the Board of Trustees of the Portfolio
Trust adopted the following resolutions:
(a) Change the name of the Portfolio Trust to Flag Investors Portfolios Trust,
effective January 1, 2000. The Board of Trustees also approved on this date, a
plan to rename the Top 50 World Portfolio, Top 50 Europe Portfolio, Top 50 Asia
Portfolio, Top 50 US Portfolio, Provesta Portfolio, Investa Portfolio, Japanese
Equity Portfolio, Global Bond Portfolio, European Bond Portfolio and US Money
Market Portfolio to Flag Investors Top 50 World Portfolio, Flag Investors Top 50
Europe Portfolio, Flag Investors Top 50 Asia Portfolio, Flag Investors Top 50 US
Portfolio, Flag Investors Provesta Portfolio, Flag Investors Investa Portfolio,
Flag Investors Japanese Equity Portfolio, Flag Investors Global Bond Portfolio,
Flag Investors European Bond Portfolio and Flag Investors US Money Market
Portfolio, respectively.
(b) Approve a plan of liquidation on approximately November 30, 1999 for the
Investa Portfolio, Global Bond Portfolio, European Bond Portfolio.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Beneficial Interest Holders of Deutsche Portfolios:
In our opinion, the accompanying statements of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Top 50 World Portfolio (US
Dollar), Top 50 Europe Portfolio (US Dollar), Top 50 Asia Portfolio (US Dollar),
Top 50 US Portfolio (US Dollar), Provesta Portfolio (US Dollar), Investa
Portfolio (US Dollar), Japanese Equity Portfolio (US Dollar), Global Bond
Portfolio (US Dollar), European Bond Portfolio (US Dollar), and US Money Market
Portfolio (US Dollar) (each of the portfolios constituting Deutsche Portfolios,
hereafter referred to as the "Portfolio Trust") at August 31, 1999, and the
results of each of their operations, the changes in each of their net assets and
the financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Portfolio Trust's management; our responsiblilty is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and siginificant estimates made by management,
and evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP 1177 Avenue of the Americas New York, New York 10036
October 19, 1999
Directors of the Corporation and
Trustees of the Portfolio Trust
The Honorable Richard R. Burt*
Edward C. Schmults*
Robert H. Wadsworth*
Werner Walbroel*
Christian Strenger
Officers of the Corporation and
the Portfolio Trust
Brian A. Lee, President
Joseph Parascondola, Treasurer
Robert R. Gambee, Secretary
Daniel Hirsch, Assistant Secretary
* Member of Audit Committee
Not FDIC Insured. No Bank Guarantee.
May Lose Value.
This report must be preceded or accompanied by the Funds' prospectus.
Edgewood Services, Inc., Distributor
G02332-08 (10/99)
APPENDIX
A(1). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class A Shares of Deutsche Top 50 World (the "Fund"), based on
a 5.50% sales charge, are represented by a solid line. The MSCI World Index (the
Fund's benchmark) is represented by a broken line. The line graph is a visual
representation of a comparison of change in value of a $10,000 hypothetical
investment in the Class A Shares of the Fund and the MSCI World Index. The
x-axis reflects computation periods from 10/2/1997 (start of performance) to
8/31/1999. The y-axis reflects the cost of the investment. The right margin
reflects the ending value of the hypothetical investment in the Fund's Class A
Shares, based on a 5.50% sales charge, as compared to the MSCI World Index. The
ending values were $13,275 and $12,873, respectively.
A(2). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class B Shares of Deutsche Top 50 World (the "Fund"),
reflecting a contingent deferred sales charge imposed on any redemption, are
represented by a solid line.
The MSCI World Index (the Fund's benchmark) is represented by a broken line.
The line graph is a visual representation of a comparison of change in value of
a $10,000 hypothetical investment in the Class B Shares of the Fund and the MSCI
World Index. The x-axis reflects computation periods from 5/4/1998 (start of
performance) to 8/31/1999. The y-axis reflects the cost of the investment. The
right margin reflects the ending value of the hypothetical investment in the
Fund's Class B Shares, reflecting a contingent deferred sales charge imposed on
any redemption, as compared to the MSCI World Index. The ending values were
$12,111 and $11,582, respectively.
A(3). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class A Shares of Deutsche Top 50 Europe (the "Fund"), based
on a 5.50% sales charge, are represented by a solid line. The MSCI Europe Index
(the Fund's benchmark) is represented by a broken line. The line graph is a
visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class A Shares of the Fund and the MSCI Europe
Index. The x-axis reflects computation periods from 10/2/1997 (start of
performance) to 8/31/1999. The y-axis reflects the cost of the investment. The
right margin reflects the ending value of the hypothetical investment in the
Fund's Class A Shares, based on a 5.50% sales charge, as compared to the MSCI
Europe Index. The ending values were $10,131 and $12,831, respectively.
A(4). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class B Shares of Deutsche Top 50 Europe (the "Fund"),
reflecting a contingent deferred sales charge imposed on any redemption, are
represented by a solid line. The MSCI Europe Index (the Fund's benchmark) is
represented by a broken line. The line graph is a visual representation of a
comparison of change in value of a $10,000 hypothetical investment in the Class
B Shares of the Fund and the MSCI Europe Index. The x-axis reflects computation
periods from 3/30/1998 (start of performance) to 8/31/1999. The y-axis reflects
the cost of the investment. The right margin reflects the ending value of the
hypothetical investment in the Fund's Class B Shares, reflecting a contingent
deferred sales charge imposed on any redemption, as compared to the MSCI Europe
Index. The ending values were $9,132 and $10,643, respectively.
A(5). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class C Shares of Deutsche Top 50 Europe (the "Fund"),
reflecting a contingent deferred sales charge imposed on any redemption, are
represented by a solid line. The MSCI Europe Index (the Fund's benchmark) is
represented by a broken line. The line graph is a visual representation of a
comparison of change in value of a $10,000 hypothetical investment in the Class
C Shares of the Fund and the MSCI Europe Index. The x-axis reflects computation
periods from 9/2/1998 (start of performance) to 8/31/1999. The y-axis reflects
the cost of the investment. The right margin reflects the ending value of the
hypothetical investment in the Fund's Class C Shares, reflecting a contingent
deferred sales charge imposed on any redemption, as compared to the MSCI Europe
Index. The ending values were $10,260 and $11,340, respectively.
A(6). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class A Shares of Deutsche Top 50 Asia (the "Fund"), based on
a 5.50% sales charge, are represented by a solid line. The MSCI Pacific ex-Japan
Index (the Fund's benchmark) is represented by a dotted line and the MSCI
Pacific Index is represented by a dashed line. The line graph is a visual
representation of a comparison of change in value of a $10,000 hypothetical
investment in the Class A Shares of the Fund, the MSCI Pacific ex-Japan Index
and the MSCI Pacific Index. The x-axis reflects computation periods from
10/14/1997 (start of performance) to 8/31/1999. The y-axis reflects the cost of
the investment. The right margin reflects the ending value of the hypothetical
investment in the Fund's Class A Shares, based on a 5.50% sales charge, as
compared to the MSCI Pacific ex-Japan Index and the MSCI Pacific Index.
The ending values were $14,223, $8,741 and $10,572, respectively.
A(7). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class B Shares of Deutsche Top 50 Asia (the "Fund"),
reflecting a contingent deferred sales charge imposed on any redemption, are
represented by a solid line.
The MSCI Pacific ex-Japan Index (the Fund's benchmark) is represented by a
dotted line and the MSCI Pacific Index is represented by a dashed line. The line
graph is a visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class B Shares of the Fund, the MSCI Pacific
ex-Japan Index and the MSCI Pacific Index. The x-axis reflects computation
periods from 5/5/1998 (start of performance) to 8/31/1999. The y-axis reflects
the cost of the investment. The right margin reflects the ending value of the
hypothetical investment in the Fund's Class B Shares, reflecting a contingent
deferred sales charge imposed on any redemption, as compared to the MSCI Pacific
ex-Japan Index and the MSCI Pacific Index. The ending values were $16,574,
$11,459 and $13,154, respectively.
A(8). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class A Shares of Deutsche Top 50 US (the "Fund"), based on a
5.50% sales charge, are represented by a solid line. The S&P 500 Index (the
Fund's benchmark) is represented by a broken line. The line graph is a visual
representation of a comparison of change in value of a $10,000 hypothetical
investment in the Class A Shares of the Fund and the S&P 500 Index. The x-axis
reflects computation periods from 10/2/1997 (start of performance) to 8/31/1999.
The y-axis reflects the cost of the investment. The right margin reflects the
ending value of the hypothetical investment in the Fund's Class A Shares, based
on a 5.50% sales charge, as compared to the S&P 500 Index. The ending values
were $13,525 and $14,129, respectively.
A(9). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class B Shares of Deutsche Top 50 US (the "Fund"), reflecting
a contingent deferred sales charge imposed on any redemption, are represented by
a solid line.
The S&P 500 Index (the Fund's benchmark) is represented by a broken line. The
line graph is a visual representation of a comparison of change in value of a
$10,000 hypothetical investment in the Class B Shares of the Fund and the S&P
500 Index. The x-axis reflects computation periods from 3/18/1998 (start of
performance) to 8/31/1999. The y-axis reflects the cost of the investment. The
right margin reflects the ending value of the hypothetical investment in the
Fund's Class B Shares, reflecting a contingent deferred sales charge imposed on
any redemption, as compared to the S&P 500 Index. The ending values were $11,952
and $12,148, respectively.
A(10). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class C Shares of Deutsche Top 50 US (the "Fund"), reflecting
a contingent deferred sales charge imposed on any redemption, are represented by
a solid line.
The S&P 500 Index (the Fund's benchmark) is represented by a broken line. The
line graph is a visual representation of a comparison of change in value of a
$10,000 hypothetical investment in the Class C Shares of the Fund and the S&P
500 Index. The x-axis reflects computation periods from 9/2/1998 (start of
performance) to 8/31/1999. The y-axis reflects the cost of the investment. The
right margin reflects the ending value of the hypothetical investment in the
Fund's Class C Shares, reflecting a contingent deferred sales charge imposed on
any redemption, as compared to the S&P 500 Index. The ending values were $13,364
and $13,981, respectively.
A(11). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class A Shares of the Deutsche European Mid-Cap Fund (the
"Fund"), based on a 5.50% sales charge, are represented by a solid line. The
MSCI Europe Index (the Fund's old benchmark) is represented by a dotted line and
the Midcap Index (the "MDAX", the Fund's new benchmark) is represented by a
dashed line. The line graph is a visual representation of a comparison of change
in value of a $10,000 hypothetical investment in the Class A Shares of the Fund,
the MSCI Europe Index and the MDAX. The x-axis reflects computation periods from
10/17/1997 (start of performance) to 8/31/1999. The y-axis reflects the cost of
the investment. The right margin reflects the ending value of the hypothetical
investment in the Fund's Class A Shares, based on a 5.50% sales charge, as
compared to the MSCI Europe Index and the MDAX.
The ending values were $11,703, $13,491 and $10,471, respectively.
A(12). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class B Shares of the Deutsche European Mid-Cap Fund (the
"Fund"), reflecting a contingent deferred sales charge imposed on any
redemption, are represented by a solid line. The MSCI Europe Index (the Fund's
old benchmark) is represented by a dotted line and the Midcap Index (the "MDAX",
the Fund's new benchmark) is represented by a dashed line. The line graph is a
visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class B Shares of the Fund, the MSCI Europe Index
and the MDAX. The x-axis reflects computation periods from 3/30/1998 (start of
performance) to 8/31/1999. The y-axis reflects the cost of the investment. The
right margin reflects the ending value of the hypothetical investment in the
Fund's Class B Shares, reflecting a contingent deferred sales charge imposed on
any redemption, as compared to the MSCI Europe Index and the MDAX. The ending
values were $10,455, $10,643 and $9,345, respectively.
A(13). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class C Shares of the Deutsche European Mid-Cap Fund (the
"Fund"), reflecting a contingent deferred sales charge imposed on any
redemption, are represented by a solid line. The MSCI Europe Index (the Fund's
old benchmark) is represented by a dotted line and the Midcap Index (the "MDAX",
the Fund's new benchmark) is represented by a dashed line. The line graph is a
visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class C Shares of the Fund, the MSCI Europe Index
and the MDAX. The x-axis reflects computation periods from 9/2/1998 (start of
performance) to 8/31/1999. The y-axis reflects the cost of the investment. The
right margin reflects the ending value of the hypothetical investment in the
Fund's Class C Shares, reflecting a contingent deferred sales charge imposed on
any redemption, as compared to the MSCI Europe Index and the MDAX. The ending
values were $10,915, $11,340 and $9,868, respectively.
A(14). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class A Shares of the Deutsche German Equity Fund (the
"Fund"), based on a 5.50% sales charge, are represented by a solid line. The
MSCI Germany Index (the Fund's old benchmark) is represented by a dotted line
and the German Stock Index (the "DAX", the Fund's new benchmark) is represented
by a dashed line. The line graph is a visual representation of a comparison of
change in value of a $10,000 hypothetical investment in the Class A Shares of
the Fund, the MSCI Germany Index and the DAX. The x-axis reflects computation
periods from 10/17/1997 (start of performance) to 8/31/1999. The y-axis reflects
the cost of the investment. The right margin reflects the ending value of the
hypothetical investment in the Fund's Class A Shares, based on a 5.50% sales
charge, as compared to the MSCI Germany Index and the DAX.
The ending values were $12,198, $13,409 and $13,200, respectively.
A(15). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class B Shares of the Deutsche German Equity Fund (the
"Fund"), reflecting a contingent deferred sales charge imposed on any
redemption, are represented by a solid line. The MSCI Germany Index (the Fund's
old benchmark) is represented by a dotted line and the German Stock Index (the
"DAX", the Fund's new benchmark) is represented by a dashed line. The line graph
is a visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class B Shares of the Fund, the MSCI Germany
Index and the DAX. The x-axis reflects computation periods from 3/16/1998 (start
of performance) to 8/31/1999. The y-axis reflects the cost of the investment.
The right margin reflects the ending value of the hypothetical investment in the
Fund's Class B Shares, reflecting a contingent deferred sales charge imposed on
any redemption, as compared to the MSCI Germany Index and the DAX. The ending
values were $10,814, $10,628 and $11,005, respectively.
A(16). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class C Shares of the Deutsche German Equity Fund (the
"Fund"), reflecting a contingent deferred sales charge imposed on any
redemption, are represented by a solid line. The MSCI Germany Index (the Fund's
old benchmark) is represented by a dotted line and the German Stock Index (the
"DAX", the Fund's new benchmark) is represented by a dashed line. The line graph
is a visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class C Shares of the Fund, the MSCI Germany
Index and the DAX. The x-axis reflects computation periods from 9/2/1998 (start
of performance) to 8/31/1999. The y-axis reflects the cost of the investment.
The right margin reflects the ending value of the hypothetical investment in the
Fund's Class C Shares, reflecting a contingent deferred sales charge imposed on
any redemption, as compared to the MSCI Germany Index and the DAX. The ending
values were $11,043, $10,627 and $10,387, respectively.
A(17). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class A Shares of the Deutsche Japanese Equity Fund (the
"Fund"), based on a 5.50% sales charge, are represented by a solid line. The
MSCI Japan Index (the Fund's benchmark) is represented by a broken line. The
line graph is a visual representation of a comparison of change in value of a
$10,000 hypothetical investment in the Class A Shares of the Fund and the MSCI
Japan Index. The x-axis reflects computation periods from 10/20/1997 (start of
performance) to 8/31/1999. The y-axis reflects the cost of the investment. The
right margin reflects the ending value of the hypothetical investment in the
Fund's Class A Shares, based on a 5.50% sales charge, as compared to the MSCI
Japan Index. The ending values were $15,211 and $12,182, respectively.
A(18). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class B Shares of the Deutsche Japanese Equity Fund (the
"Fund"), reflecting a contingent deferred sales charge imposed on any
redemption, are represented by a solid line. The MSCI Japan Index (the Fund's
benchmark) is represented by a broken line. The line graph is a visual
representation of a comparison of change in value of a $10,000 hypothetical
investment in the Class B Shares of the Fund and the MSCI Japan Index. The
x-axis reflects computation periods from 8/10/1998 (start of performance) to
8/31/1999. The y-axis reflects the cost of the investment. The right margin
reflects the ending value of the hypothetical investment in the Fund's Class B
Shares, reflecting a contingent deferred sales charge imposed on any redemption,
as compared to the MSCI Japan Index. The ending values were $19,264 and $14,412,
respectively.
A(19). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class A Shares of the Deutsche Global Bond Fund (the "Fund"),
based on a 4.50% sales charge, are represented by a solid line. The J.P. Morgan
Global Government Bond Index (the Fund's benchmark) is represented by a broken
line. The line graph is a visual representation of a comparison of change in
value of a $10,000 hypothetical investment in the Class A Shares of the Fund and
the J.P. Morgan Global Government Bond Index. The x-axis reflects computation
periods from 10/15/1997 (start of performance) to 8/31/1999. The y-axis reflects
the cost of the investment. The right margin reflects the ending value of the
hypothetical investment in the Fund's Class A Shares, based on a 4.50% sales
charge, as compared to the J.P. Morgan Global Government Bond Index. The ending
values were $9,885 and $11,041, respectively.
A(20). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class B Shares of the Deutsche Global Bond Fund (the "Fund"),
reflecting a contingent deferred sales charge imposed on any redemption, are
represented by a solid line. The J.P. Morgan Global Government Bond Index (the
Fund's benchmark) is represented by a broken line. The line graph is a visual
representation of a comparison of change in value of a $10,000 hypothetical
investment in the Class B Shares of the Fund and the J.P. Morgan Global
Government Bond Index. The x-axis reflects computation periods from 10/9/1998
(start of performance) to 8/31/1999. The y-axis reflects the cost of the
investment. The right margin reflects the ending value of the hypothetical
investment in the Fund's Class B Shares, reflecting a contingent deferred sales
charge imposed on any redemption, as compared to the J.P. Morgan Global
Government Bond Index. The ending values were $8,795 and $10,304, respectively.
A(21). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class A Shares of the Deutsche European Bond Fund (the
"Fund"), based on a 4.50% sales charge, are represented by a solid line. The
J.P. Morgan European Government Bond Index (the Fund's benchmark) is represented
by a broken line. The line graph is a visual representation of a comparison of
change in value of a $10,000 hypothetical investment in the Class A Shares of
the Fund and the J.P. Morgan European Government Bond Index. The x-axis reflects
computation periods from 10/17/1997 (start of performance) to 8/31/1999. The
y-axis reflects the cost of the investment. The right margin reflects the ending
value of the hypothetical investment in the Fund's Class A Shares, based on a
4.50% sales charge, as compared to the J.P. Morgan European Government Bond
Index. The ending values were $9,922 and $10,893, respectively.
A(22). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class B Shares of the Deutsche European Bond Fund (the
"Fund"), reflecting a contingent deferred sales charge imposed on any
redemption, are represented by a solid line. The J.P. Morgan European Government
Bond Index (the Fund's benchmark) is represented by a broken line. The line
graph is a visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class B Shares of the Fund and the J.P. Morgan
European Government Bond Index. The x-axis reflects computation periods from
6/25/1998 (start of performance) to 8/31/1999. The y-axis reflects the cost of
the investment. The right margin reflects the ending value of the hypothetical
investment in the Fund's Class B Shares, reflecting a contingent deferred sales
charge imposed on any redemption, as compared to the J.P. Morgan European
Government Bond Index. The ending values were $9,659 and $10,056, respectively.
A(23). The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graph. The Class C Shares of the Deutsche European Bond Fund (the
"Fund"), reflecting a contingent deferred sales charge imposed on any
redemption, are represented by a solid line. The J.P. Morgan European Government
Bond Index (the Fund's benchmark) is represented by a broken line. The line
graph is a visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Class C Shares of the Fund and the J.P. Morgan
European Government Bond Index. The x-axis reflects computation periods from
9/2/1998 (start of performance) to 8/31/1999. The y-axis reflects the cost of
the investment. The right margin reflects the ending value of the hypothetical
investment in the Fund's Class C Shares, reflecting a contingent deferred sales
charge imposed on any redemption, as compared to the J.P. Morgan European
Government Bond Index. The ending values were $9,606 and $9,767, respectively.
