<PAGE> 1
BT INVESTMENT FUNDS
CAPITAL
APPRECIATION
FUND
ANNUAL REPORT
SEPTEMBER 30, 1995
<PAGE> 2
CAPITAL APPRECIATION FUND 1
--------------------------------------------------------
TABLE OF CONTENTS
================================================================================
<TABLE>
<S> <C>
INTRODUCTION FROM PRESIDENT . . . . . . . . . . . . . . . . . . 2
LETTER TO SHAREHOLDERS FROM INVESTMENT ADVISER . . . . . . . . 3
CAPITAL APPRECIATION FUND
Statement of Assets and Liabilities . . . . . . . . . 6
Statement of Operations . . . . . . . . . . . . . . . 7
Statement of Changes in Net Assets . . . . . . . . . . 8
Financial Highlights . . . . . . . . . . . . . . . . . 9
CAPITAL APPRECIATION PORTFOLIO
Statement of Assets and Liabilities . . . . . . . . . 10
Statement of Operations . . . . . . . . . . . . . . . 11
Statement of Changes in Net Assets . . . . . . . . . . 12
Financial Highlights . . . . . . . . . . . . . . . . . 13
Schedule of Portfolio Investments . . . . . . . . . . 14
CAPITAL APPRECIATION FUND
Notes to Financial Statements . . . . . . . . . . . . 17
Report of Independent Accountants . . . . . . . . . . 19
CAPITAL APPRECIATION PORTFOLIO
Notes to Financial Statements . . . . . . . . . . . . 20
Report of Independent Accountants . . . . . . . . . . 22
</TABLE>
For shareholder account information and current price and yield quotations,
shareholders may call their relationship manager or servicing agent.
Prospectuses containing more extensive information regarding the Capital
Appreciation Fund may be obtained by calling or writing to Investors Fiduciary
Trust Company or Signature Broker-Dealer Services, Inc., the primary Servicing
Agent and Distributor, respectively, of BT Investment Funds:
BT INVESTMENT FUNDS
INVESTORS FIDUCIARY TRUST COMPANY
127 WEST 10TH STREET
KANSAS CITY, MO 64105
(800) 422-6577
BT INVESTMENT FUNDS
SIGNATURE BROKER-DEALER SERVICES, INC.
6 ST. JAMES AVENUE
BOSTON, MA 02116
(800) 545-1074
You may write to the Capital Appreciation Fund at the following address:
BT INVESTMENT FUNDS
6 ST. JAMES AVENUE
BOSTON, MA 02116
<PAGE> 3
CAPITAL APPRECIATION FUND 2
--------------------------------------------------------
INTRODUCTION FROM PRESIDENT
================================================================================
November, 1995
Dear Shareholders:
We are pleased to present your Annual Report for the BT Investment Funds
Capital Appreciation Fund. This Report provides you with an investment
overview as well as a financial summary of the Fund's operations for the
period January 1, 1995 to September 30, 1995. We have also included a
Letter from the Investment Adviser, detailing the factors that affected
the Fund's performance and a performance chart which illustrates your
Fund's return versus a relevant financial index. Also presented in your
Report is a pie chart displaying diversification of Portfolio investments,
financial statements, financial highlights and a listing of the
Portfolio's holdings.
Looking ahead, we will continue to closely observe the economic conditions
and how they affect the financial markets.
We appreciate your ongoing support of the Capital Appreciation Fund and
look forward to continuing to serve your investment needs.
Philip W. Coolidge
President
<PAGE> 4
CAPITAL APPRECIATION FUND 3
--------------------------------------------------------
LETTER TO SHAREHOLDERS FROM INVESTMENT ADVISER
================================================================================
For the year ended September 30, 1995, the Capital Appreciation Fund once
again outperformed its benchmark and its competitors impressively. The
Fund's outstanding return of 43.36% compares to 25.77% for the S&P Midcap
400 Index and 25.87% for the Lipper Growth Average. Since its inception on
March 9, 1993, the Fund has returned 68.30%.
We are also pleased to report that we have recently achieved new
administrative economies of scale by aligning the Fund's fiscal year-end,
from December to September, with several of the other BT Investment Funds.
The Fund's Semi-Annual Report will be sent to you in May.
The primary factor contributing to the Fund's strong performance continues
to be its overweighted position in the technology sector, which was the
leading sector from January through June, and the second-best performing
sector in the third calendar quarter. While the Fund continues to be
overweighted there, we did decrease our technology holdings just somewhat
in September, diversifying into sectors that were previously
under-represented in the Fund, such as consumer non-durables and retail.
The Fund also benefitted from an underweighting in weaker, lagging
sectors, including the capital spending, conglomerates and consumer
cyclical sectors.
As anticipated in our last report to you, midcap stocks did outperform the
large company indices in the third quarter of 1995. However, in
September, this pattern reversed, with the S&P 500 outperforming the
midcap index, which in turn, outperformed the smaller company index. Thus,
to remain a leader in the midcap growth sector and to meet the Fund's
objective of capital growth over the long term, we will continue our
thematic approach to investing.
We will also continue, as always, to carry out intensive analysis in each
sector, focusing on individual companies that appear to offer compelling
valuations relative to their growth rates. Given the uncertainty about the
economy now, we remain especially interested in companies with strong,
consistent earnings and revenue growth potential.
<PAGE> 5
CAPITAL APPRECIATION FUND 4
--------------------------------------------------------
LETTER TO SHAREHOLDERS FROM INVESTMENT ADVISER
================================================================================
The following graph illustrates the Fund's return versus the S&P MidCap 400
Index since March 31, 1993, assuming a $10,000 initial investment:
================================================================================
COMPARISON OF CHANGE
IN VALUE OF A $10,000
INVESTMENT IN THE [FIGURE 1]
CAPITAL APPRECIATION
FUND AND THE S&P MIDCAP
400 INDEX
<TABLE>
<CAPTION>
Cap Grwth S&P
<S> <C> <C>
3/31/93 10000 10000
6/30/93 10519 10233
9/30/93 11838 10747
12/31/93 11708 11034
3/31/94 11409 10614
6/30/94 10699 10227
9/30/94 11728 10920
12/31/94 12088 10638
3/31/95 12857 11498
6/30/95 14266 12513
9/30/95 16813 13734
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN
ENDED SEPTEMBER 30, 1995
One Year Since 3/9/93*
<S> <C>
43.36% 68.30%
</TABLE>
* The Fund's inception date
Investment return and principal
value may fluctuate so that
shares, when redeemed, may be
worth more or less than their
original cost.
================================================================================
ABOUT THE MARY LISANTI
PORTFOLIO MANAGER Managing Director
- Manager of the Capital Appreciation
Portfolio, Small Cap Portfolio, and separate
aggressive growth accounts
- 16 years of investment experience as a
portfolio manager and analyst in
Small/Mid cap equities
- Joined Bankers Trust from Lieber &
Company/The Evergreen Funds, where for three
years she was Vice President of Investments
and a portfolio manager working on their
$800 million small and mid-sized company
fund
- Senior Vice President at Shearson Lehman
Brothers, headed the firm's emerging growth
stock investment strategy and research
effort; member of the Investment Policy
Committee
- Earned the #1 ranking in Institutional
Investor's All Star Research Team in 1989
(ranked #2 and #3 in 1987 and 1986,
respectively) for her work as a small
company stock analyst
- B.A.--Princeton University
- Member, New York Society of Security
Analysts and Financial Analyst Federation
<PAGE> 6
CAPITAL APPRECIATION FUND 5
--------------------------------------------------------
================================================================================
OBJECTIVE Seeks capital growth over the long-term through
investment in medium sized companies that show
growth potential. Current income is a secondary
goal.
- --------------------------------------------------------------------------------
INVESTMENT INSTRUMENTS Primarily common stocks of growth-oriented
domestic corporations and, to a lesser extent,
foreign corporations, but may invest in any market
sectors and companies of any size; also, may take
advantage of any investment opportunity with
attractive long-term prospects.
- --------------------------------------------------------------------------------
TEN LARGEST STOCK HOLDINGS LSI Logic Maxim Integrated Products
Staples Parametric Technology
Xilinx Altera
Glenayre Technologies Paychex
Boston Scientific Teradyne
- --------------------------------------------------------------------------------
DIVERSIFICATION OF PORTFOLIO
INVESTMENTS BY THEME
as of September 30, 1995
(percentages are based on market value)
<TABLE>
<S> <C>
The Uibiquitous Semiconductor 13.66%
New Health Care Paradigm 10.89%
Managing the Information Age 10.31%
U.S. Treasury Bills 10.24%
Stores of Value 10.01%
Other* 9.43%
Productivity Enhancement 9.17%
America's Changing Leisure Time 5.75%
America's Industrial Renaissance 5.49%
Telecommunications 5.24%
Move to Outsourcing 5.02%
The Greying of America 4.79%
</TABLE>
* No one theme represents more than 4% of portfolio holdings.
<PAGE> 7
CAPITAL APPRECIATION FUND 6
--------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
====================================================================================================================================
September 30, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
Investment in Capital Appreciation Portfolio, at Value $57,651,998
- ------------------------------------------------------------------------------------------------------------------------------------
Deferred Organizational Expenses 660
- ------------------------------------------------------------------------------------------------------------------------------------
Prepaid Expenses 3,731
- ------------------------------------------------------------------------------------------------------------------------------------
Total Assets 57,656,389
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- ------------------------------------------------------------------------------------------------------------------------------------
Due to Bankers Trust 15,046
- ------------------------------------------------------------------------------------------------------------------------------------
Payable for Shares of Beneficial Interest Redeemed 234,271
- ------------------------------------------------------------------------------------------------------------------------------------
Accrued Expenses and Accounts Payable 27,472
- ------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 276,789
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (Applicable to 3,408,487 Outstanding Shares of $0.001 Par Value
Per Share, Unlimited Number of Shares of Beneficial Interest Authorized) $57,379,600
====================================================================================================================================
NET ASSET VALUE, Subscription and Redemption Price Per Share
($57,379,600/3,408,487 Shares) $ 16.83
====================================================================================================================================
COMPOSITION OF NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
Shares of Beneficial Interest, at Par $ 3,408
- ------------------------------------------------------------------------------------------------------------------------------------
Paid-in Capital 38,327,538
- ------------------------------------------------------------------------------------------------------------------------------------
Undistributed Net Realized Gain from Securities Transactions 2,859,582
- ------------------------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Securities 16,189,072
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, SEPTEMBER 30, 1995 $57,379,600
====================================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 17 and 18
<PAGE> 8
CAPITAL APPRECIATION FUND 7
--------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
====================================================================================================================================
For the period January 1, 1995 to September 30, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------------------------------------------
Income Allocated from Capital Appreciation Portfolio, net $ 1,440
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
Administration and Services Fee $229,796
- -----------------------------------------------------------------------------------------------------------------------------------
Shareholders Reports 23,137
- -----------------------------------------------------------------------------------------------------------------------------------
Registration Fees 15,052
- -----------------------------------------------------------------------------------------------------------------------------------
Professional Fees 5,800
- -----------------------------------------------------------------------------------------------------------------------------------
Amortization of Organizational Expenses 1,772
- -----------------------------------------------------------------------------------------------------------------------------------
Trustees Fees 1,173
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance 658
- -----------------------------------------------------------------------------------------------------------------------------------
Miscellaneous 1,285
- -----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 278,673
- -----------------------------------------------------------------------------------------------------------------------------------
Less: Expenses Absorbed by Bankers Trust (48,877) 229,796
- -----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT (LOSS) (228,356)
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES
- -----------------------------------------------------------------------------------------------------------------------------------
Net Realized Gain from Securities Transactions 5,405,206
- -----------------------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Securities 10,914,097
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON SECURITIES 16,319,303
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $16,090,947
===================================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 17 and 18
<PAGE> 9
CAPITAL APPRECIATION FUND 8
--------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
===================================================================================================================================
For the
For the period year ended
January 1, 1995 to December
September 30, 1995 31, 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Net Investment (Loss) $ (228,356) $ (145,000)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) from Securities Transactions 5,405,206 (1,488,811)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Securities 10,914,097 3,083,897
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Operations 16,090,947 1,450,086
- -----------------------------------------------------------------------------------------------------------------------------------
FROM TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets from Transactions
in Shares of Beneficial Interest (1,448,121) 23,713,884
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 14,642,826 25,163,970
===================================================================================================================================
NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
Beginning of Period 42,736,774 17,572,804
- -----------------------------------------------------------------------------------------------------------------------------------
End of Period $57,379,600 $42,736,774
===================================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 17 and 18
<PAGE> 10
CAPITAL APPRECIATION FUND 9
--------------------------------------------------------
FINANCIAL HIGHLIGHTS
================================================================================
Contained below are selected data for a share outstanding, total investment
return, ratios to average net assets and other supplemental data for each of
the periods indicated for the Capital Appreciation Fund.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
For the period
For the March 9, 1993
For the period year ended (Commencement
January 1, 1995 to December of Operations) to
September 30, 1995 31, 1994 December 31, 1993
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of Period $ 12.10 $ 11.72 $ 10.00
------- ------- -------
Income from Investment Operations
Net Investment (Loss) (0.07) (0.04) (0.01)
Net Realized and Unrealized Gain on Securities 4.80 0.42 1.73
------- ------- -------
Total from Investment Operations 4.73 0.38 1.72
------- ------- -------
Net Asset Value, End of Period $ 16.83 $ 12.10 $ 11.72
======= ======= ========
TOTAL INVESTMENT RETURN 39.09% 3.24% 21.54%*
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment (Loss) to Average Net Assets (0.65)%* (0.57)% (0.23)%*
Ratio of Expenses to Average Net Assets, Including
Expenses of the Capital Appreciation Portfolio 1.25%* 1.25% 1.25%*
Decrease Reflected in Above Expense Ratio Due to Absorption
of Expenses by Bankers Trust 0.32%* 0.54% 0.74%*
Net Assets, End of Period (000's omitted) $57,380 $42,737 $17,573
</TABLE>
* Annualized
See Notes to Financial Statements on Pages 17 and 18
<PAGE> 11
CAPITAL APPRECIATION PORTFOLIO 10
--------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
=======================================================================================================================
September 30, 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
- -----------------------------------------------------------------------------------------------------------------------
Investments, at Value (Cost $112,010,157) $144,756,143
- -----------------------------------------------------------------------------------------------------------------------
Cash 1,547,832
- -----------------------------------------------------------------------------------------------------------------------
Receivable for Securities Sold 5,548,565
- -----------------------------------------------------------------------------------------------------------------------
Dividends Receivable 14,960
- -----------------------------------------------------------------------------------------------------------------------
Prepaid Expenses 175
- -----------------------------------------------------------------------------------------------------------------------
Total Assets 151,867,675
- -----------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------------------
Due to Bankers Trust 57,336
- -----------------------------------------------------------------------------------------------------------------------
Payable for Securities Purchased 1,901,125
- -----------------------------------------------------------------------------------------------------------------------
Accrued Expenses and Accounts Payable 21,325
- -----------------------------------------------------------------------------------------------------------------------
Total Liabilities 1,979,786
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS $149,887,889
=======================================================================================================================
COMPOSITION OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------
Paid-in Capital $117,141,903
- -----------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Securities 32,745,986
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS, SEPTEMBER 30, 1995 $149,887,889
=======================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 20 and 21
<PAGE> 12
CAPITAL APPRECIATION PORTFOLIO 11
--------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
===============================================================================================================================
For the period January 1, 1995 to September 30, 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
- -------------------------------------------------------------------------------------------------------------------------------
Dividends $ 108,821
- -------------------------------------------------------------------------------------------------------------------------------
Interest 347,025
- -------------------------------------------------------------------------------------------------------------------------------
Total Investment Income $ 455,846
- -------------------------------------------------------------------------------------------------------------------------------
EXPENSES
- -------------------------------------------------------------------------------------------------------------------------------
Advisory Fee 482,453
- -------------------------------------------------------------------------------------------------------------------------------
Administration and Services Fee 74,224
- -------------------------------------------------------------------------------------------------------------------------------
Professional Fees 16,299
- -------------------------------------------------------------------------------------------------------------------------------
Insurance 2,000
- -------------------------------------------------------------------------------------------------------------------------------
Trustees Fees 1,107
- -------------------------------------------------------------------------------------------------------------------------------
Miscellaneous 965
- -------------------------------------------------------------------------------------------------------------------------------
Total Expenses 577,048
- -------------------------------------------------------------------------------------------------------------------------------
Less: Expenses Absorbed by Bankers Trust (131,702) 445,346
- -------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 10,500
- -------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES
- -------------------------------------------------------------------------------------------------------------------------------
Net Realized Gain from Securities Transactions 11,774,764
- -------------------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Securities 23,909,639
- -------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON SECURITIES 35,684,403
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $35,694,903
===============================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 20 and 21
<PAGE> 13
CAPITAL APPRECIATION PORTFOLIO 12
--------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
===============================================================================================================================
For the
For the period year ended
January 1, 1995 to December
September 30, 1995 31, 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
- -------------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net Investment Income $ 10,500 $ 39,472
- -------------------------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) from Securities Transactions 11,774,764 (3,134,504)
- -------------------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Securities 23,909,639 5,994,992
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Operations 35,694,903 2,899,960
- -------------------------------------------------------------------------------------------------------------------------------
FROM CAPITAL TRANSACTIONS
- -------------------------------------------------------------------------------------------------------------------------------
Proceeds from Capital Invested 63,887,608 48,149,120
- -------------------------------------------------------------------------------------------------------------------------------
Value of Capital Withdrawn (23,328,952) (14,490,487)
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Capital Transactions 40,558,656 33,658,633
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 76,253,559 36,558,593
===============================================================================================================================
NET ASSETS
- -------------------------------------------------------------------------------------------------------------------------------
Beginning of Period 73,634,330 37,075,737
- -------------------------------------------------------------------------------------------------------------------------------
End of Period $149,887,889 $ 73,634,330
===============================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 20 and 21
<PAGE> 14
CAPITAL APPRECIATION PORTFOLIO 13
--------------------------------------------------------
FINANCIAL HIGHLIGHTS
================================================================================
Contained below are selected ratios and supplemental data for each of the
periods indicated for the Capital Appreciation Portfolio.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
For the period
For the March 9, 1993
For the period year ended (Commencement
January 1, 1995 to December of Operations) to
September 30, 1995 31, 1994 December 31, 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment Income to Average Net Assets 0.01%* 0.08% 0.38%*
Ratio of Expenses to Average Net Assets 0.60%* 0.60% 0.60%*
Decrease Reflected in Above Ratio of Expenses to Average
Net Assets Due to Absorption of Expenses by Bankers Trust 0.18%* 0.23% 0.41%*
Portfolio Turnover Rate 125% 157% 137%
Net Assets, End of Period (000's omitted) $149,888 $73,634 $37,076
</TABLE>
* Annualized
See Notes to Financial Statements on Pages 20 and 21
<PAGE> 15
CAPITAL APPRECIATION PORTFOLIO 14
--------------------------------------------------------
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS
==================================================================================================================================
September 30, 1995
SHARES DESCRIPTION VALUE
==================================================================================================================================
<S> <C> <C>
COMMON STOCKS - 86.69%
- ----------------------------------------------------------------------------------------------------------------------------------
AMERICA'S CHANGING LEISURETIME - 5.55%
- ----------------------------------------------------------------------------------------------------------------------------------
16,800 Broderbund Software (a) $ 1,278,900
- ----------------------------------------------------------------------------------------------------------------------------------
132,500 Darden Restaurants (a) 1,523,750
- ----------------------------------------------------------------------------------------------------------------------------------
24,400 Davidson and Associates (a) 847,900
- ----------------------------------------------------------------------------------------------------------------------------------
27,500 La Quinta Inns 770,000
- ----------------------------------------------------------------------------------------------------------------------------------
33,700 Lone Star Steakhouse& Saloon (a) 1,381,700
- ----------------------------------------------------------------------------------------------------------------------------------
15,000 New World Communications Group (a) 309,375
- ----------------------------------------------------------------------------------------------------------------------------------
64,600 Renaissance Hotel Group N.V. (a) 1,146,650
- ----------------------------------------------------------------------------------------------------------------------------------
37,100 Sinclair Broadcast Group (a) 1,066,625
- ----------------------------------------------------------------------------------------------------------------------------------
8,324,900
==================================================================================================================================
AMERICA'S INDUSTRIAL RENAISSANCE - 5.30%
- ----------------------------------------------------------------------------------------------------------------------------------
49,200 American Standard (a) 1,451,400
- ----------------------------------------------------------------------------------------------------------------------------------
35,700 Atlantic Southeast Airlines 834,487
- ----------------------------------------------------------------------------------------------------------------------------------
51,450 Comair Holdings 1,363,425
- ----------------------------------------------------------------------------------------------------------------------------------
49,700 Pall 1,155,525
- ----------------------------------------------------------------------------------------------------------------------------------
9,900 Sealed Air (a) 545,737
- ----------------------------------------------------------------------------------------------------------------------------------
25,700 Ultratech Stepper (a) 1,085,825
- ----------------------------------------------------------------------------------------------------------------------------------
23,800 Vicor (a) 575,663
- ----------------------------------------------------------------------------------------------------------------------------------
65,300 Westinghouse Air Brake (a) 938,688
- ----------------------------------------------------------------------------------------------------------------------------------
7,950,750
==================================================================================================================================
LIFE SCIENCES REVOLUTION - 3.04%
- ----------------------------------------------------------------------------------------------------------------------------------
45,700 BioChem Pharma (a) 1,456,687
- ----------------------------------------------------------------------------------------------------------------------------------
41,700 Idexx Laboratories (a) 1,553,325
- ----------------------------------------------------------------------------------------------------------------------------------
28,400 Millipore 1,065,000
- ----------------------------------------------------------------------------------------------------------------------------------
9,900 Sigma-Aldrich 480,150
- ----------------------------------------------------------------------------------------------------------------------------------
4,555,162
==================================================================================================================================
MANAGING THE INFORMATION AGE - 9.96%
- ----------------------------------------------------------------------------------------------------------------------------------
24,600 3Com (a) 1,119,300
- ----------------------------------------------------------------------------------------------------------------------------------
32,900 Adobe Systems 1,702,575
- ----------------------------------------------------------------------------------------------------------------------------------
10,800 Ascend Communications (a) 864,000
- ----------------------------------------------------------------------------------------------------------------------------------
23,700 Bay Networks (a) 1,264,987
- ----------------------------------------------------------------------------------------------------------------------------------
24,200 Cascade Communications (a) 1,191,850
- ----------------------------------------------------------------------------------------------------------------------------------
31,800 Ceridian (a) 1,411,125
- ----------------------------------------------------------------------------------------------------------------------------------
55,600 Cheyenne Software (a) 1,112,000
- ----------------------------------------------------------------------------------------------------------------------------------
16,200 FORE Systems (a) 599,400
- ----------------------------------------------------------------------------------------------------------------------------------
33,400 Glenayre Technologies (a) 2,404,800
- ----------------------------------------------------------------------------------------------------------------------------------
27,100 Madge Networks N.V. (a) 867,200
- ----------------------------------------------------------------------------------------------------------------------------------
13,600 Policy Management Systems (a) 697,000
- ----------------------------------------------------------------------------------------------------------------------------------
25,800 Symantec (a) 774,000
- ----------------------------------------------------------------------------------------------------------------------------------
21,900 Tellabs (a) 922,538
- ----------------------------------------------------------------------------------------------------------------------------------
14,930,775
==================================================================================================================================
MOVE TO OUTSOURCING - 4.85%
- ----------------------------------------------------------------------------------------------------------------------------------
27,600 Avnet 1,424,850
- ----------------------------------------------------------------------------------------------------------------------------------
50,700 Lear Seating (a) 1,489,313
- ----------------------------------------------------------------------------------------------------------------------------------
42,000 Paychex 1,942,500
- ----------------------------------------------------------------------------------------------------------------------------------
28,100 Solectron (a) 1,109,950
- ----------------------------------------------------------------------------------------------------------------------------------
66,500 USA Waste Services (a) 1,296,750
- ----------------------------------------------------------------------------------------------------------------------------------
7,263,363
==================================================================================================================================
NEW HEALTH CARE PARADIGM - 10.52%
- ----------------------------------------------------------------------------------------------------------------------------------
38,700 American Oncology Resources (a) 1,664,100
- ----------------------------------------------------------------------------------------------------------------------------------
25,000 Biogen (a) 1,500,000
- ----------------------------------------------------------------------------------------------------------------------------------
14,000 CareLine (a) 131,250
- ----------------------------------------------------------------------------------------------------------------------------------
21,000 Caremark International 451,500
- ----------------------------------------------------------------------------------------------------------------------------------
35,200 Cerner (a) 1,205,600
- ----------------------------------------------------------------------------------------------------------------------------------
22,900 HBO & Co 1,431,250
- ----------------------------------------------------------------------------------------------------------------------------------
32,000 Healthsource (a) 1,540,000
- ----------------------------------------------------------------------------------------------------------------------------------
23,800 Medtronic 1,279,250
- ----------------------------------------------------------------------------------------------------------------------------------
26,100 Nellcor Puritan Bennett (a) 1,298,475
- ----------------------------------------------------------------------------------------------------------------------------------
23,100 Oxford Health Plans (a) 1,680,525
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements on Pages 20 and 21
<PAGE> 16
CAPITAL APPRECIATION PORTFOLIO 15
--------------------------------------------------------
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS
==================================================================================================================================
September 30, 1995
SHARES DESCRIPTION VALUE
==================================================================================================================================
<S> <C> <C>
39,900 PhyCor (a) $ 1,366,575
- ----------------------------------------------------------------------------------------------------------------------------------
34,800 Sola International (a) 769,950
- ----------------------------------------------------------------------------------------------------------------------------------
35,200 Watson Pharmaceuticals (a) 1,443,200
- ----------------------------------------------------------------------------------------------------------------------------------
15,761,675
==================================================================================================================================
PRODUCTIVITY ENHANCEMENT - 8.86%
- ----------------------------------------------------------------------------------------------------------------------------------
28,250 Credence Systems (a) 1,024,062
- ----------------------------------------------------------------------------------------------------------------------------------
36,000 Danka Business Systems - ADR 1,296,000
- ----------------------------------------------------------------------------------------------------------------------------------
23,900 Diamond Multimedia Systems (a) 770,775
- ----------------------------------------------------------------------------------------------------------------------------------
17,100 KLA Instruments (a) 1,372,275
- ----------------------------------------------------------------------------------------------------------------------------------
18,400 Lam Research (a) 1,099,400
- ----------------------------------------------------------------------------------------------------------------------------------
77,300 Mentor Graphics (a) 1,613,638
- ----------------------------------------------------------------------------------------------------------------------------------
14,000 Novellus Systems (a) 980,000
- ----------------------------------------------------------------------------------------------------------------------------------
36,000 Parametric Technology (a) 2,214,000
- ----------------------------------------------------------------------------------------------------------------------------------
24,200 Tencor Instruments (a) 1,070,850
- ----------------------------------------------------------------------------------------------------------------------------------
51,000 Teradyne (a) 1,836,000
- ----------------------------------------------------------------------------------------------------------------------------------
13,277,000
==================================================================================================================================
REDISTRIBUTION OF DEBT - 3.21%
- ----------------------------------------------------------------------------------------------------------------------------------
23,900 Countrywide Credit Industries 561,650
- ----------------------------------------------------------------------------------------------------------------------------------
24,400 Green Tree Financial 1,488,400
- ----------------------------------------------------------------------------------------------------------------------------------
35,700 The Money Store 1,691,288
- ----------------------------------------------------------------------------------------------------------------------------------
22,600 The PMI Group 1,070,675
- ----------------------------------------------------------------------------------------------------------------------------------
4,812,013
==================================================================================================================================
SPECIAL SITUATIONS - 2.85%
- ----------------------------------------------------------------------------------------------------------------------------------
42,600 AVX (a) 1,427,100
- ----------------------------------------------------------------------------------------------------------------------------------
30,500 Katz Media Group (a) 621,437
- ----------------------------------------------------------------------------------------------------------------------------------
34,700 Softkey International (a) 1,535,475
- ----------------------------------------------------------------------------------------------------------------------------------
21,400 Sybase (a) 687,475
- ----------------------------------------------------------------------------------------------------------------------------------
4,271,487
==================================================================================================================================
STORES OF VALUE - 9.67%
- ----------------------------------------------------------------------------------------------------------------------------------
31,400 Barnes &Noble (a) 1,201,050
- ----------------------------------------------------------------------------------------------------------------------------------
63,900 Borders Group (a) 1,094,287
- ----------------------------------------------------------------------------------------------------------------------------------
40,500 Corporate Express (a) 987,187
- ----------------------------------------------------------------------------------------------------------------------------------
29,000 General Nutrition (a) 1,319,500
- ----------------------------------------------------------------------------------------------------------------------------------
37,200 Heilig-Myers 864,900
- ----------------------------------------------------------------------------------------------------------------------------------
30,900 Nine West Group (a) 1,405,950
- ----------------------------------------------------------------------------------------------------------------------------------
24,400 Oakley (a) 722,850
- ----------------------------------------------------------------------------------------------------------------------------------
90,975 Staples (a) 2,570,044
- ----------------------------------------------------------------------------------------------------------------------------------
30,100 Sunglass Hut International (a) 1,505,000
- ----------------------------------------------------------------------------------------------------------------------------------
40,200 The Men's Wearhouse (a) 1,447,200
- ----------------------------------------------------------------------------------------------------------------------------------
32,900 Tiffany & Co 1,377,688
- ----------------------------------------------------------------------------------------------------------------------------------
14,495,656
==================================================================================================================================
TELECOMMUNICATIONS - 5.06%
- ----------------------------------------------------------------------------------------------------------------------------------
38,000 ADC Telecommunications (a) 1,729,000
- ----------------------------------------------------------------------------------------------------------------------------------
30,000 Adtran (a) 1,042,500
- ----------------------------------------------------------------------------------------------------------------------------------
19,100 Andrew (a) 1,167,487
- ----------------------------------------------------------------------------------------------------------------------------------
25,400 DSC Communications (a) 1,504,950
- ----------------------------------------------------------------------------------------------------------------------------------
16,900 LCI International (a) 663,325
- ----------------------------------------------------------------------------------------------------------------------------------
34,000 National Data 913,750
- ----------------------------------------------------------------------------------------------------------------------------------
16,300 Nera AS - ADS (a) 560,313
- ----------------------------------------------------------------------------------------------------------------------------------
7,581,325
==================================================================================================================================
THE GREYING OF AMERICA - 4.63%
- ----------------------------------------------------------------------------------------------------------------------------------
54,200 Boston Scientific (a) 2,310,275
- ----------------------------------------------------------------------------------------------------------------------------------
12,200 Cordis (a) 1,033,950
- ----------------------------------------------------------------------------------------------------------------------------------
48,100 Guidant 1,406,925
- ----------------------------------------------------------------------------------------------------------------------------------
15,400 Loewen Group 635,250
- ----------------------------------------------------------------------------------------------------------------------------------
24,500 St. Jude Medical (a) 1,549,625
- ----------------------------------------------------------------------------------------------------------------------------------
6,936,025
==================================================================================================================================
THE UBIQUITOUS SEMICONDUCTOR - 13.19%
- ----------------------------------------------------------------------------------------------------------------------------------
37,050 Alliance Semiconductor (a) 1,472,737
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements on Pages 20 and 21
<PAGE> 17
CAPITAL APPRECIATION PORTFOLIO 16
--------------------------------------------------------
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS
==================================================================================================================================
September 30, 1995
SHARES DESCRIPTION VALUE
==================================================================================================================================
<S> <C> <C>
34,300 Altera (a) $ 2,139,462
- ----------------------------------------------------------------------------------------------------------------------------------
32,200 Analog Devices (a) 1,114,925
- ----------------------------------------------------------------------------------------------------------------------------------
20,200 Atmel (a) 681,750
- ----------------------------------------------------------------------------------------------------------------------------------
27,600 Cirrus Logic (a) 1,580,100
- ----------------------------------------------------------------------------------------------------------------------------------
15,500 Cypress Semiconductor (a) 598,688
- ----------------------------------------------------------------------------------------------------------------------------------
35,200 Linear Technology 1,460,800
- ----------------------------------------------------------------------------------------------------------------------------------
52,200 LSI Logic (a) 3,014,550
- ----------------------------------------------------------------------------------------------------------------------------------
30,600 Maxim Integrated Products (a) 2,264,400
- ----------------------------------------------------------------------------------------------------------------------------------
35,600 Microchip Technology (a) 1,348,350
- ----------------------------------------------------------------------------------------------------------------------------------
14,100 National Semiconductor (a) 389,513
- ----------------------------------------------------------------------------------------------------------------------------------
29,400 Oak Technology (a) 1,234,800
- ----------------------------------------------------------------------------------------------------------------------------------
51,300 Xilinx (a) 2,468,813
- ----------------------------------------------------------------------------------------------------------------------------------
19,768,888
==================================================================================================================================
TOTAL COMMON STOCKS
(Cost $97,184,102) $129,929,019
==================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
==================================================================================================================================
<S> <C> <C>
U.S. Treasury Bills - 9.89%
- ----------------------------------------------------------------------------------------------------------------------------------
$ 224,000 5.65%, 11/09/95 $ 222,719
- ----------------------------------------------------------------------------------------------------------------------------------
205,000 5.69%, 11/16/95 203,609
- ----------------------------------------------------------------------------------------------------------------------------------
1,154,000 5.35%, 12/07/95 1,142,872
- ----------------------------------------------------------------------------------------------------------------------------------
8,768,000 5.28%, 12/14/95 8,673,235
- ----------------------------------------------------------------------------------------------------------------------------------
2,404,000 5.33%, 1/18/96 2,367,075
- ----------------------------------------------------------------------------------------------------------------------------------
2,255,000 5.46%, 1/25/96 2,217,614
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. TREASURY BILLS
(Cost $14,826,055) $ 14,827,124
==================================================================================================================================
TOTAL INVESTMENTS
(Cost $112,010,157) 96.58% $144,756,143
- ----------------------------------------------------------------------------------------------------------------------------------
Other Assets in Excess of Liabilities 3.42% 5,131,746
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET 100.00% $149,887,889
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Non-Income Producing Security
See Notes to Financial Statements on Pages 20 and 21
<PAGE> 18
CAPITAL APPRECIATION FUND 17
--------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
A. Organization
BT Investment Funds (the "Trust") is registered under the Investment Company
Act of 1940 (the "Act"), as amended, as an open-end management investment
company. The Trust was organized on July 21, 1986, as a business trust under
the laws of the Commonwealth of Massachusetts. The Capital Appreciation Fund
(the "Fund") is one of the funds offered to investors by the Trust. The Fund
commenced operations and began offering shares of beneficial interest on March
9, 1993. The Fund invests substantially all of its assets in the Capital
Appreciation Portfolio (the "Portfolio"). The Portfolio is an open-end
management investment company registered under the Act. The Fund seeks to
achieve its investment objective by investing all of its investable assets in
the Portfolio. The value of such investment in the Portfolio reflects the
Fund's proportionate interest in the net assets of the Portfolio. At September
30, 1995, the Fund's investment was approximately 38% of the Portfolio.
The financial statements of the Portfolio, including the Schedule of Portfolio
Investments, are contained elsewhere in this report.
In fiscal year 1995, the Fund changed it's year end to September 30th.
B. Investment Income
The Fund earns income, net of expenses, daily on its investment in the
Portfolio. All of the net investment income and realized and unrealized gains
and losses from the security transactions of the Portfolio are allocated pro
rata among the investors in the Portfolio at the time of such determination.
C. Organizational Expenses
Costs incurred by the Fund in connection with its organization and initial
registration are being amortized over a five year period on a straight-line
basis.
D. Dividends
It is the Fund's policy to declare and distribute dividends quarterly to
shareholders from net investment income, if any. Dividends and distributions
payable to shareholders are recorded by the Fund on the ex-dividend date.
Distributions of net realized short-term and long-term capital gains, if any,
earned by the Fund will be made annually to the extent they are not offset by
any capital loss carryforwards.
The Fund may periodically make reclassifications among certain of its capital
accounts as a result of the timing and characterization of certain income and
capital gains distributions determined annually in accordance with federal tax
regulations which may differ from generally accepted accounting principles. For
the period January 1, 1995 to September 30, 1995, $228,356 of net investment
loss was reclassified to undistributed net realized gain from securities
transactions.
E. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders. Therefore, no federal income tax provision is
required.
F. Other
The Trust accounts separately for the assets, liabilities, and operations of
the Fund. Expenses directly attributable to the Fund are charged to that Fund,
while expenses which are attributable to all of the Trust's funds are allocated
among them.
<PAGE> 19
CAPITAL APPRECIATION FUND 18
--------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE 2 - FEES AND TRANSACTIONS WITH AFFILIATES
The Fund has entered into an Administration and Services Agreement with Bankers
Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Fund in return for a fee computed daily and paid
monthly at an annual rate of 0.65 of 1% of the Fund's average daily net assets.
For the period January 1, 1995 to September 30, 1995, this fee aggregated
$229,796.
The Trust has entered into a Distribution Agreement with Signature
Broker-Dealer Services, Inc. ("Signature"). Under the Distribution Agreement
with the Trust, pursuant to Rule 12b-1 of the 1940 Act, Signature may seek
reimbursement, at an annual rate not exceeding 0.20 of 1% of the Fund's average
daily net assets, for expenses incurred in connection with any activities
primarily intended to result in the sale of the Fund's shares. For the period
January 1, 1995 to September 30, 1995, there were no reimbursable expenses
incurred under this agreement.
Bankers Trust has voluntarily undertaken to waive and reimburse expenses of the
Fund, to the extent necessary, to limit all expenses to 0.65 of 1% of the
average daily net assets of the Fund, excluding expenses of the Portfolio and
1.25 of 1% of the average daily net assets of the Fund, including expenses of
the Portfolio. For the period January 1, 1995 to September 30, 1995, expenses
of the Fund have been reduced $48,877.
The Fund is subject to such limitations as may from time to time be imposed by
the Blue Sky laws of states in which the Fund sells its shares. Currently, the
most restrictive jurisdiction imposes expense limitations of 2.5% of the first
$30,000,000 of the average daily net assets, 2.0% of the next $70,000,000, and
1.5% of any excess over $100,000,000.
Certain trustees and officers of the Fund are also directors, officers and/or
employees of Signature. None of the trustees so affiliated received
compensation for services as trustee of the Fund. Similarly, none of the Fund's
officers received compensation from the Fund.
NOTE 3 - SHARES OF BENEFICIAL INTEREST
At September 30, 1995, there were an unlimited number of shares of beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
For the period For the
January 1, 1995 to year ended
September 30, 1995 December 31, 1994
------------------ -----------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Sold 892,749 $12,646,445 2,523,927 * $29,502,478 *
Redeemed (1,017,100) (14,094,566) (490,867) (5,788,594)
--------- ---------- -------- ----------
Net Increase
(Decrease) (124,351) $(1,448,121) 2,033,060 $23,713,884
======= ========= ========= ==========
</TABLE>
* Includes 1,026,855 shares and $12,306,701 from BT Investment Funds Capital
Growth Fund merger.
<PAGE> 20
CAPITAL APPRECIATION FUND 19
--------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
To the Trustees and Shareholders of
BT Investment Funds:
We have audited the accompanying statement of assets and liabilities of the
Capital Appreciation Fund (one of the funds comprising BT Investment Funds) as
of September 30, 1995, and the related statement of operations for the nine
months then ended, the statements of changes in net assets for the nine months
ended September 30, 1995 and the year ended December 31, 1994, and the
financial highlights for the nine months ended September 30, 1995, for the year
end December 31, 1994 and for the period March 9, 1993 (commencement of
operations) to December 31, 1993. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Capital Appreciation Fund of BT Investment Funds as of September 30, 1995, the
result of its operations, the changes in its net assets, and the financial
highlights for the periods referred to above, in conformity with generally
accepted accounting principles.
/s/ COOPERS & LYBRAND L.L.P.
- ----------------------------
Kansas City, Missouri
November 14, 1995
<PAGE> 21
CAPITAL APPRECIATION PORTFOLIO 20
--------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
A. Organization
The Capital Appreciation Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940 (the "Act"), as amended, as an open-end
management investment company. The Portfolio was organized on October 28, 1992
as an unincorporated trust under the laws of New York and commenced operations
on March 9, 1993. The Declaration of Trust permits the Board of Trustees (the
"Trustees") to issue beneficial interests in the Portfolio.
In fiscal year 1995, the Portfolio changed it's year end to September 30th.
B. Security Valuation
The Portfolio's investments are valued each business day by an independent
pricing service (the "Service") approved by the Board of Trustees. Securities
traded on national exchanges or traded in the NASDAQ National Market System are
valued at the last sales prices reported at the close of business.
Over-the-counter securities not included in the NASDAQ National Market System
and listed securities for which no sale was reported are valued at the mean of
the bid and asked prices. Short-term obligations with remaining maturities of
60 days or less are valued at amortized cost which with accrued interest
approximates value. Securities for which quotations are not available are
stated at fair value as determined by the Board of Trustees.
C. Security Transactions and Investment Income
Security transactions are accounted for on a trade date basis (date the order
to buy or sell is executed). Dividend income is recorded on the ex-dividend
date. Interest income is recorded on the accrual basis and includes
amortization of premium and discount on investments. Realized gains and losses
from securities transactions are recorded on the identified cost basis.
All of the net investment income and realized and unrealized gains and
losses from the security transactions of the Portfolio are allocated pro rata
among the investors in the Portfolio at the time of such determination.
D. Federal Income Taxes
It is the Portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to it. Therefore, no federal income tax provision is
required.
<PAGE> 22
CAPITAL APPRECIATION PORTFOLIO 21
--------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE 2 - FEES AND TRANSACTIONS WITH AFFILIATES
The Portfolio has entered into an Administration and Services Agreement with
Bankers Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Portfolio in return for a fee computed daily and
paid monthly at an annual rate of 0.10 of 1% of the Portfolio's average daily
net assets. For the period January 1, 1995 to September 30, 1995, this fee
aggregated $74,224.
The Portfolio has entered into an Advisory Agreement with Bankers Trust. Under
this Advisory Agreement, the Portfolio pays Bankers Trust an advisory fee
computed daily and paid monthly at an annual rate of 0.65 of 1% of the
Portfolio's average daily net assets. For the period January 1, 1995 to
September 30, 1995, this fee aggregated $482,453.
Bankers Trust has voluntarily undertaken to waive and reimburse expenses of the
Portfolio, to the extent necessary, to limit all expenses to 0.60 of 1% of the
average daily net assets of the Portfolio. For the period January 1, 1995 to
September 30, 1995, expenses of the Portfolio have been reduced $131,702.
Certain trustees and officers of the Portfolio are also directors, officers
and/or employees of Signature. None of the trustees so affiliated received
compensation for services as trustee of the Portfolio. Similarly, none of the
Portfolio's officers received compensation from the Portfolio.
NOTE 3 - PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments, other
than short-term obligations, for the period January 1, 1995 to September 30,
1995, were $136,801,394 and $114,800,140, respectively. For federal income tax
purposes, the tax basis of investments held at September 30, 1995 was
$112,043,941. The aggregate gross unrealized appreciation for all investments
was $33,445,086 and the aggregate gross unrealized depreciation for all
investments was $732,884.
<PAGE> 23
CAPITAL APPRECIATION PORTFOLIO 22
--------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
To the Trustees and Holders of Beneficial Interest of the Capital Appreciation
Portfolio:
We have audited the accompanying statement of assets and liabilities of the
Capital Appreciation Portfolio, including the schedule of portfolio
investments, as of September 30, 1995, and the related statement of operations
for the nine months then ended, the statements of changes in net assets for the
nine months ended September 30, 1995 and the year ended December 31, 1994, and
the financial highlights for the nine months ended September 30, 1995, for the
year ended December 31, 1994 and for the period March 9, 1993 (commencement of
operations) to December 31, 1993. These financial statements and financial
highlights are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995 by correspondence withthe custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the Capital Appreciation Portfolio as of September 30, 1995, the
result of its operations, the changes in its net assets and the financial
highlights for the periods referred to above, in conformity with generally
accepted accounting principles.
/s/ COOPERS & LYBRAND L.L.P.
- ----------------------------
Kansas City, Missouri
November 14, 1995
<PAGE> 24
================================================================================
BT INVESTMENT FUNDS
================================================================================
International
Equity
Fund
Annual Report
September 30, 1995
<PAGE> 25
INTERNATIONAL EQUITY FUND 1
--------------------------------------------------------
Table of Contents
================================================================================
Introduction from President.............................................. 2
Letter to Shareholders from Investment Adviser........................... 3
International Equity Fund
Statement of Assets and Liabilities................................. 6
Statement of Operations............................................. 7
Statement of Changes in Net Assets.................................. 8
Financial Highlights................................................ 9
International Equity Portfolio
Statement of Assets and Liabilities................................. 10
Statement of Operations............................................. 11
Statement of Changes in Net Assets.................................. 12
Financial Highlights................................................ 13
Schedule of Portfolio Investments................................... 14
International Equity Fund
Notes to Financial Statements....................................... 16
Report of Independent Accountants................................... 18
International Equity Portfolio
Notes to Financial Statements....................................... 19
Report of Independent Accountants................................... 21
For shareholder account information and current price and yield quotations,
shareholders may call their relationship manager or servicing agent.
Prospectuses containing more extensive information regarding the International
Equity Fund may be obtained by calling or writing to Investors Fiduciary Trust
Company or Signature Broker-Dealer Services, Inc., the primary Servicing Agent
and Distributor, respectively, of BT Investment Funds:
BT Investment Funds
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, MO 64105
(800) 422-6577
BT Investment Funds
Signature Broker-Dealer Services, Inc.
6 St. James Avenue
Boston, MA 02116
(800) 545-1074
You may write to the International Equity Fund at the
following address:
BT Investment Funds
6 St. James Avenue
Boston, MA 02116
<PAGE> 26
INTERNATIONAL EQUITY FUND 2
-----------------------------------------------------
Introduction from President
================================================================================
November, 1995
Dear Shareholders:
We are pleased to present your 1995 Annual Report for the BT Investment
Funds International Equity Fund. This Report provides you with an investment
overview as well as a financial summary of the Fund's operations for the period
January 1, 1995 to September 30, 1995. We have also included a Letter from the
Investment Adviser detailing the factors that affected the Fund's performance
and a performance chart which illustrates your Fund's return versus a relevant
financial index. Also presented in your Report is a pie chart displaying
diversification of Portfolio investments, financial statements, financial
highlights and a listing of the Portfolio's holdings.
As always, we will continue to closely observe the economic conditions and
how they affect the financial markets.
We appreciate your ongoing support of the International Equity Fund and look
forward to continuing to serve your investment needs.
Philip W. Coolidge
President
<PAGE> 27
INTERNATIONAL EQUITY FUND 3
-----------------------------------------------------
Letter to Shareholders from Investment Adviser
================================================================================
For the twelve months ended September 30, 1995, the International Equity
Fund once again outperformed its benchmark and its competitors impressively.
The Fund's return of 13.84% compares to 5.79% for the Morgan Stanley Capital
International ("MSCI") EAFE Index and just 3.12% for the Lipper International
Equity Funds Average. Since its inception on August 4, 1992, the Fund has
returned 61.50%.
We are also pleased to report that we have recently achieved new
administrative economies of scale by aligning the Fund's fiscal year-end, from
December to September, with several of the other BT Investment Funds. The
Fund's Semi-Annual Report will be sent to you in May.
Through much of the Fund's fiscal year, the major influence on international
equity investments has been the shifts of strength among various currencies and
the volatility among markets. Specifically, the renewed decline in the dollar
helped holders of foreign assets during the early months of 1995. In contrast,
the most dramatic performance in market terms during the third calendar quarter
was the Japanese market, which benefitted from increasing confidence in
prospects for the nation's economic recovery. However, dollar-based investors
gave up much of this performance due to the weakening of the yen during these
months. Further, in the first half of the Fund's fiscal year, many countries
experienced a serious bear market, while the second half was basically positive
for the international equity markets.
The Fund's outperformance was based primarily on active portfolio
management, benefitting from successful stock selection as well as timely asset
allocation and currency strategies. For example, the Fund's performance was
enhanced late in its fiscal year by its overweighted positions in Sweden,
Finland, and Australia, the three markets that produced the highest return in
dollar terms. These countries' economies and currencies are highly correlated
to the dollar bloc. Also, a currency overlay, which increased the Fund's dollar
exposure, added approximately 1% to its total return during the period of the
dollar strength. Earlier in the year the Fund identified a number of long-term
high-growth companies in a number of Asian emerging markets, and benefitted by
establishing positions after the sell-off in the region.
Looking ahead, we believe European equity markets overall are attractively
valued. Unfortunately, political concerns across the region will keep
volatility high. Also, after its runup, Japan's equity market is likely to be
tentative, pending policies to address losses in the banking sector and more
definitive evidence that the economic recovery is progressing. While Hong Kong
may continue its recent recovery, we believe more favorable earnings prospects
will be required to support stretched valuation levels which are already
discounting further decreases in U.S. interest rates. In short, we believe that
increasing world liquidity and the prospect of moderate non-inflationary growth
with supportive monetary policy should be a good environment for equity markets
in the near term. At the same time, we are mindful that any sign of real
inflation is likely to trigger a bond market sell-off, and so, as always, we
continue to carefully monitor economic and market conditions.
<PAGE> 28
INTERNATIONAL EQUITY FUND 4
-----------------------------------------------------
Letter to Shareholders from Investment Adviser
================================================================================
The following graph illustrates the Fund's return versus the Morgan Stanley
Capital International EAFE Index since August 31, 1992, assuming a $10,000
initial investment:
- --------------------------------------------------------------------------------
Total Return
ended September 30, 1995
One Year Since 8/4/92*
13.84% 61.50%
* The Fund's inception date
Investment return and principal
value may fluctuate so that shares,
when redeemed, may be worth more
or less than their original cost.
Comparison of Change in
Value of a $10,000
Investment in the
International Equity Fund
and the Morgan Stanley
Capital International
EAFE Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Label A B
- --------------------------------------------------------------------------------------------------------------
Label International Equity Fund Morgan Stanley Capital International EAFE Index
- --------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
8/31/92 10,000 10,000
- --------------------------------------------------------------------------------------------------------------
9/30/92 9,665 9,803
- --------------------------------------------------------------------------------------------------------------
12/31/92 9,606 9,424
- --------------------------------------------------------------------------------------------------------------
3/31/93 10,424 10,554
- --------------------------------------------------------------------------------------------------------------
6/30/93 11,084 11,615
- --------------------------------------------------------------------------------------------------------------
9/30/93 11,944 12,386
- --------------------------------------------------------------------------------------------------------------
12/31/93 13,196 12,493
- --------------------------------------------------------------------------------------------------------------
3/31/94 13,717 12,930
- --------------------------------------------------------------------------------------------------------------
6/30/94 13,266 13,590
- --------------------------------------------------------------------------------------------------------------
9/30/94 13,977 13,603
- --------------------------------------------------------------------------------------------------------------
12/31/94 13,738 13,465
- --------------------------------------------------------------------------------------------------------------
3/31/95 14,046 13,715
- --------------------------------------------------------------------------------------------------------------
6/30/95 14,961 13,815
- --------------------------------------------------------------------------------------------------------------
9/30/95 15,911 14,391
- --------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Past performance is not indicative of future performance.
About the
Portfolio Manager Michael Levy
Managing Director, Global Investment Management
- Head of International Active Equity Portfolio Management
Team, International Equity Fund
- Equity Strategist/International Investment Advisory
- Responsible for design and management of U.S. and
International quantitative proprietary stock selection
processes. Chairman, stock selection group
- Prior experience in equity analysis with Oppenheimer & Co.,
investment banking and manufacturing; 24 years business
experience, 14 years investment industry experience
- Joined Bankers Trust in 1993
- B.A. (Mathematics) - University of Michigan
M.S. (Geophysics) - University of Michigan
<PAGE> 29
INTERNATIONAL EQUITY FUND 5
-----------------------------------------------------
================================================================================
Objective
Seeks long term capital appreciation from investments in foreign equity
securities or other securities with equity characteristics.
- --------------------------------------------------------------------------------
Investment Instruments
Equity securities of foreign issuers, consisting of common stock and other
securities with equity characteristics; the investments are diversified among
several regions.
- --------------------------------------------------------------------------------
Ten Largest Holdings
Philips Electronics Kyocera
Kymmene Hutchison Whampoa
Internationale Nederlanden Group Storehouse
National Australia Bank KLM Royal Dutch Airlines
BBC Brown Boveri & Cie, Cl.A Hitachi
================================================================================
Diversification of Portfolio
Equity Investments by Country
as of September 30, 1995
(percentages are based on market value)
[PIE GRAPH APPEARS HERE]
Finland 3.36% Austria 2.28%
France 9.47% Malaysia 0.93%
Spain 5.99% United Kingdom 9.36%
Canada 2.60% Singapore 1.12%
Italy 3.66% Ireland 3.44%
Australia 6.20% Netherlands 13.07%
Sweden 3.53% Switzerland 4.75%
Venezuela 1.27% Indonesia 1.55%
Denmark 1.83% Germany 6.36%
Japan 10.89% Taiwan 0.46%
Norway 2.13%
Latin America 0.53%
Hong Kong 4.50%
Thailand 0.72%
<PAGE> 30
INTERNATIONAL EQUITY FUND 6
-----------------------------------------------------
Statement of Assets and Liabilities
================================================================================
September 30, 1995
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Assets
- --------------------------------------------------------------------------------
Investment in International Equity Portfolio, at Value $83,313,265
- --------------------------------------------------------------------------------
Receivable for Shares of Beneficial Interest Sold 51,878
- --------------------------------------------------------------------------------
Prepaid Expenses 6,211
================================================================================
Total Assets 83,371,354
================================================================================
Liabilities
- --------------------------------------------------------------------------------
Due to Bankers Trust 26,859
- --------------------------------------------------------------------------------
Payable for Shares of Beneficial Interest Redeemed 500,485
- --------------------------------------------------------------------------------
Accrued Expenses and Accounts Payable 36,799
================================================================================
Total Liabilities 564,143
================================================================================
Net Assets (Applicable to 5,351,217 Outstanding Shares
of $0.001 Par Value Per Share, Unlimited Number of Shares of
Beneficial Interest Authorized) $82,807,211
================================================================================
Net Asset Value, Subscription and Redemption Price Per Share
($82,807,211/5,351,217 Shares) $ 15.47
================================================================================
Composition of Net Assets
- --------------------------------------------------------------------------------
Shares of Beneficial Interest, at Par $ 5,351
- --------------------------------------------------------------------------------
Paid-in Capital 68,310,012
- --------------------------------------------------------------------------------
Undistributed Net Investment Income 799,626
- --------------------------------------------------------------------------------
Accumulated Net Realized Gain from Securities and Foreign
Currency Transactions 1,924,914
- --------------------------------------------------------------------------------
Net Unrealized Appreciation on Securities 11,864,864
- --------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Forward Foreign
Currency Contracts (93,928)
- --------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Foreign Currency
Translation (3,628)
================================================================================
Net Assets, September 30, 1995 $82,807,211
================================================================================
</TABLE>
See Notes to Financial Statements on Pages 16 and 17
<PAGE> 31
INTERNATIONAL EQUITY FUND 7
-----------------------------------------------------
Statement of Operations
================================================================================
For the period January 1, 1995 to September 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------
Investment Income
- ------------------------------------------------------------------------------------------------
Income Allocated from International Equity Portfolio, net $1,188,599
- ------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------
Administration and Services Fee $421,538
- ------------------------------------------------------------------------------------------------
Professional Fees 9,781
- ------------------------------------------------------------------------------------------------
Shareholders Reports 27,162
- ------------------------------------------------------------------------------------------------
Registration Fees 11,886
- ------------------------------------------------------------------------------------------------
Trustees Fees 1,138
- ------------------------------------------------------------------------------------------------
Insurance 661
- ------------------------------------------------------------------------------------------------
Amortization of Organizational Expenses 1,711
- ------------------------------------------------------------------------------------------------
Miscellaneous 617
================================================================================================
Total Expenses 474,494
- ------------------------------------------------------------------------------------------------
Less: Expenses Absorbed by Bankers Trust (52,956) 421,538
================================================================================================
Net Investment Income 767,061
================================================================================================
Net Realized and Unrealized Gain (Loss) on Securities and Foreign Currency
- ------------------------------------------------------------------------------------------------
Net Realized Gain from Securities Transactions 1,181,079
- ------------------------------------------------------------------------------------------------
Net Realized Gain from Foreign Currency Transactions 775,406
- ------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Securities 6,964,999
- ------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Forward Foreign Currency Contracts 3,996
- ------------------------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Foreign Currency Translation (13,905)
- ------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Securities and Foreign Currency 8,911,575
================================================================================================
Net Increase in Net Assets from Operations $9,678,636
================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 16 and 17
<PAGE> 32
INTERNATIONAL EQUITY FUND 8
-----------------------------------------------------
Statement of Changes in Net Assets
================================================================================
<TABLE>
<CAPTION>
For the
For the period year ended
January 1, 1995 to December
September 30, 1995 31, 1994
=======================================================================================
<S> <C> <C>
Increase (Decrease) in Net Assets
- ---------------------------------------------------------------------------------------
From Operations
- ---------------------------------------------------------------------------------------
Net Investment Income $ 767,061 $ 418,381
- ---------------------------------------------------------------------------------------
Net Realized Gain from Securities and Foreign
Currency Transactions 1,956,485 1,178,391
- ---------------------------------------------------------------------------------------
Net Unrealized Appreciation (Depreciation) on
Securities and Foreign Currency 6,955,090 (402,631)
- ---------------------------------------------------------------------------------------
Net Increase in Net Assets from Operations 9,678,636 1,194,141
=======================================================================================
From Dividends and Distributions
- ---------------------------------------------------------------------------------------
Net Investment Income (16,362) (369,454)
- ---------------------------------------------------------------------------------------
Net Realized Gain from Securities Transactions (62,809) (1,074,988)
- ---------------------------------------------------------------------------------------
Net (Decrease) in Net Assets from Dividends and
Distributions (79,171) (1,444,442)
- ---------------------------------------------------------------------------------------
From Transactions in Shares of Beneficial Interest
- ---------------------------------------------------------------------------------------
Net Increase in Net Assets from Transactions in Shares
of Beneficial Interest 17,187,367 22,401,859
- ---------------------------------------------------------------------------------------
Total Increase in Net Assets 26,786,832 22,151,558
=======================================================================================
Net Assets
- ---------------------------------------------------------------------------------------
Beginning of Period 56,020,379 33,868,821
- ---------------------------------------------------------------------------------------
End of Period [including Undistributed Net Investment
Income of $799,626 and $48,927 for 1995 and 1994,
respectively] $82,807,211 $56,020,379
=======================================================================================
</TABLE>
See Notes to Financial Statements on Pages 16 and 17
<PAGE> 33
INTERNATIONAL EQUITY FUND 9
-----------------------------------------------------
Financial Highlights
================================================================================
Contained below are selected data for a share outstanding, total investment
return, ratios to average net assets and other supplemental data for each of
the periods indicated for the International Equity Fund.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
For the year ended August 4, 1992
For the period December 31, (Commencement
January 1, 1995 to ------------------ of Operations) to
September 30, 1995 1994 1993 December 31, 1992
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Selected Per Share Data
Net Asset Value, Beginning of Period $13.37 $13.18 $ 9.75 $10.00
------ ------ ------- ------
Income from Investment Operations
Net Investment Income 0.14 0.10 0.05 0.03
Net Realized and Unrealized Gain (Loss) on Securities
and Foreign Currency 1.97 0.44 3.60 (0.28)
------ ------ ------- ------
Total from Investment Operations 2.11 0.54 3.65 (0.25)
------ ------ ------- ------
Less Dividends and Distributions
Dividends from Net Investment Income (0.00)+ (0.09) (0.15) --
Distributions from Net Realized Gain from Securities
Transactions (0.01) (0.26) (0.07) --
------ ------ ------- ------
Total Dividends and Distributions (0.01) (0.35) (0.22) --
------ ------ ------- ------
Net Asset Value, End of Period $15.47 $13.37 $13.18 $ 9.75
====== ====== ======= ======
Total Investment Return 15.82% 4.12% 37.38% (6.01%)*
Ratios and Supplemental Data
Ratio of Net Investment Income to Average Net Assets 1.55%* 0.84% 0.79% 0.97%*
Ratio of Expenses to Average Net Assets, Including
Expenses of the International Equity Portfolio 1.50%* 1.50% 1.50% 1.50%*
Decrease Reflected in Above Expense Ratio
Due to Absorption of Expenses by Bankers Trust 0.33%* 0.37% 0.62% 1.36%*
Net Assets, End of Period (000's omitted) $82,807 $56,020 $33,869 $8,218
</TABLE>
* Annualized
+ Less Than $0.01 Per Share
See Notes to Financial Statements on Pages 16 and 17
<PAGE> 34
INTERNATIONAL EQUITY PORTFOLIO 10
-----------------------------------------------------
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
===================================================================================
September 30, 1995
- -----------------------------------------------------------------------------------
<S> <C>
Assets
- -----------------------------------------------------------------------------------
Investments, at Value (Cost $71,735,744) $83,600,608
- -----------------------------------------------------------------------------------
Foreign Cash (Cost $2,034,278) 2,038,951
- -----------------------------------------------------------------------------------
Cash 11,260
- -----------------------------------------------------------------------------------
Receivable for Securities Sold 249,375
- -----------------------------------------------------------------------------------
Dividends and Interest Receivable 160,726
- -----------------------------------------------------------------------------------
Receivable for Foreign Taxes Withheld 122,825
- -----------------------------------------------------------------------------------
Prepaid Expenses 189
- -----------------------------------------------------------------------------------
Total Assets 86,183,934
- -----------------------------------------------------------------------------------
Liabilities
- -----------------------------------------------------------------------------------
Due to Bankers Trust 26,019
- -----------------------------------------------------------------------------------
Payable for Securities Purchased 2,722,547
- -----------------------------------------------------------------------------------
Accrued Expenses and Accounts Payable 28,009
- -----------------------------------------------------------------------------------
Net Unrealized Depreciation on Forward Foreign Currency Contracts 93,928
- -----------------------------------------------------------------------------------
Total Liabilities 2,870,503
- -----------------------------------------------------------------------------------
Net Assets $83,313,431
===================================================================================
Composition of Net Assets
- -----------------------------------------------------------------------------------
Paid-in Capital $71,546,123
- -----------------------------------------------------------------------------------
Net Unrealized Appreciation on Securities 11,864,864
- -----------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Forward Foreign Currency
Contracts (93,928)
- -----------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Foreign Currency Translation (3,628)
- -----------------------------------------------------------------------------------
Net Assets, September 30, 1995 $83,313,431
===================================================================================
</TABLE>
See Notes to Financial Statements on Pages 19 and 20
<PAGE> 35
INTERNATIONAL EQUITY PORTFOLIO 11
-----------------------------------------------------
<TABLE>
<CAPTION>
Statement of Operations
==========================================================================================
For the period January 1, 1995 to September 30, 1995
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income
- ------------------------------------------------------------------------------------------
Dividends (net of foreign withholding tax of $176,431) $ 1,362,870
- ------------------------------------------------------------------------------------------
Interest 148,428
- ------------------------------------------------------------------------------------------
Total Investment Income $ 1,511,298
- ------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------
Advisory Fee 322,696
- ------------------------------------------------------------------------------------------
Administration and Services Fee 74,468
- ------------------------------------------------------------------------------------------
Professional Fees 27,151
- ------------------------------------------------------------------------------------------
Transfer Tax 3,077
- ------------------------------------------------------------------------------------------
Trustees Fees 1,079
- ------------------------------------------------------------------------------------------
Insurance 1,987
- ------------------------------------------------------------------------------------------
Miscellaneous 981
- ------------------------------------------------------------------------------------------
Total Expenses 431,439
- ------------------------------------------------------------------------------------------
Less: Expenses Absorbed by Bankers Trust (108,743) 322,696
- ------------------------------------------------------------------------------------------
Net Investment Income 1,188,602
- ------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss) on Securities and Foreign
Currency
- ------------------------------------------------------------------------------------------
Net Realized Gain from Securities Transactions 1,181,082
- ------------------------------------------------------------------------------------------
Net Realized Gain from Foreign Currency Transactions 775,042
- ------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Securities 6,964,969
- ------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Forward Foreign Currency
Contracts 3,996
- ------------------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Foreign Currency Translation (13,494)
- ------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Securities and Foreign Currency 8,911,595
- ------------------------------------------------------------------------------------------
Net Increase in Net Assets from Operations $10,100,197
==========================================================================================
</TABLE>
See Notes to Financial Statements on Pages 19 and 20
<PAGE> 36
INTERNATIONAL EQUITY PORTFOLIO 12
-----------------------------------------------------
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
=====================================================================================
For the
For the period year ended
January 1, 1995 to December
September 30, 1995 31, 1994
=======================================================================================
<S> <C> <C>
Increase (Decrease) in Net Assets
- ---------------------------------------------------------------------------------------
From Operations
- ---------------------------------------------------------------------------------------
Net Investment Income $ 1,188,602 $ 839,522
- ---------------------------------------------------------------------------------------
Net Realized Gain from Securities and
Foreign Currency Transactions 1,956,124 1,178,394
- ---------------------------------------------------------------------------------------
Net Unrealized Appreciation (Depreciation) on
Securities and Foreign Currency 6,955,471 (402,629)
=======================================================================================
Net Increase in Net Assets from Operations 10,100,197 1,615,287
=======================================================================================
From Capital Transactions
- ---------------------------------------------------------------------------------------
Proceeds from Capital Invested 35,819,720 26,018,869
- ---------------------------------------------------------------------------------------
Value of Capital Withdrawn (18,648,629) (5,499,175)
=======================================================================================
Net Increase in Net Assets from Capital Transactions 17,171,091 20,519,694
=======================================================================================
Total Increase in Net Assets 27,271,288 22,134,981
=======================================================================================
Net Assets
- ---------------------------------------------------------------------------------------
Beginning of Period 56,042,143 33,907,162
- ---------------------------------------------------------------------------------------
End of Period $ 83,313,431 $56,042,143
=======================================================================================
</TABLE>
See Notes to Financial Statements on Pages 19 and 20
<PAGE> 37
INTERNATIONAL EQUITY PORTFOLIO 13
-----------------------------------------------------
Financial Highlights
================================================================================
Contained below are selected ratios and supplemental data for each of the
periods indicated for the International Equity Portfolio.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
For the year ended August 4, 1992
For the period December 31, (Commencement
January 1, 1995 to ------------------- of Operations) to
September 30, 1995 1994 1993 December 31, 1992
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ratios and Supplemental Data
Ratio of Net Investment Income to Average Net Assets 2.39%* 1.69% 1.64% 1.87%*
Ratio of Expenses to Average Net Assets 0.65%* 0.65% 0.65% 0.60%*
Decrease Reflected in Above Ratio of Expenses to Average
Net Assets Due to Absorption of Expenses by Bankers Trust 0.22%* 0.24% 0.39% 0.93%*
Portfolio Turnover Rate 21% 15% 17% 7%
Net Assets, End of Period (000's omitted) $83,313 $56,042 $33,907 $8,225
</TABLE>
* Annualized
See Notes to Financial Statements on Pages 19 and 20
<PAGE> 38
INTERNATIONAL EQUITY PORTFOLIO 14
-----------------------------------------------------
Schedule of Portfolio Investments
================================================================================
September 30, 1995
<TABLE>
<CAPTION>
Shares Description Value
================================================================================
<C> <S> <C>
COMMON STOCKS - 95.36%
- --------------------------------------------------------------------------------
Australia - 5.45%
- --------------------------------------------------------------------------------
601,400 Burns Philip & Company
(Consumer Goods) $ 1,273,380
- --------------------------------------------------------------------------------
239,400 National Australia Bank (Finance) 2,118,101
- --------------------------------------------------------------------------------
206,500 News Corp. (Consumer Services) 1,149,303
- --------------------------------------------------------------------------------
4,540,784
================================================================================
Austria - 2.18%
- --------------------------------------------------------------------------------
28,600 Mayr-Melnhof Karton (Materials) 1,818,900
================================================================================
Canada - 2.49%
- --------------------------------------------------------------------------------
86,100 TELUS (Utilities) 1,050,783
- --------------------------------------------------------------------------------
38,800 Westcoast Energy (Utilities) 574,734
- --------------------------------------------------------------------------------
30,300 Westcoast Energy, ADR (Utilities) 450,713
- --------------------------------------------------------------------------------
2,076,230
================================================================================
Denmark - 1.75%
- --------------------------------------------------------------------------------
28,200 Tele Danmark, Cl.B (Utilities) 1,457,568
================================================================================
Finland - 3.22%
- --------------------------------------------------------------------------------
87,000 Kymmene (Materials) 2,686,284
================================================================================
France - 9.08%
- --------------------------------------------------------------------------------
7,000 Chargeurs (Consumer Services) 1,449,084
- --------------------------------------------------------------------------------
15,300 Club Mediterranee
(Consumer Services)(a) 1,481,171
- --------------------------------------------------------------------------------
15,400 Lyonnaise des Eaux-Dumez
(Diversified) 1,409,589
- --------------------------------------------------------------------------------
3,680 Taittinger (Consumer Goods) 1,605,764
- --------------------------------------------------------------------------------
26,800 Total Petroleum, Cl.B (Energy) 1,620,864
- --------------------------------------------------------------------------------
7,566,472
================================================================================
Germany - 6.10%
- --------------------------------------------------------------------------------
6,600 Bayer (Materials) 1,685,332
- --------------------------------------------------------------------------------
6,500 Berliner Kraft & Licht (Utilities) 1,546,536
- --------------------------------------------------------------------------------
5,700 Volkswagen (Consumer Goods) 1,846,816
- --------------------------------------------------------------------------------
5,078,684
================================================================================
Hong Kong - 4.31%
- --------------------------------------------------------------------------------
500,000 First Pacific (Emerging Markets)(b) 533,497
- --------------------------------------------------------------------------------
208,000 Guoco Group (Emerging Markets) 1,041,076
- --------------------------------------------------------------------------------
372,000 Hutchison Whampoa (Diversified) 2,015,882
- --------------------------------------------------------------------------------
3,590,455
================================================================================
Indonesia - 1.48%
- --------------------------------------------------------------------------------
67,500 Hanjaya Mandala Sampoerna
(Emerging Markets) 628,669
- --------------------------------------------------------------------------------
112,000 Indofood Sukses Makmur
(Emerging Markets) 540,102
- --------------------------------------------------------------------------------
100,000 SMART (Emerging Markets) $ 65,107
- --------------------------------------------------------------------------------
1,233,878
================================================================================
Ireland - 3.29%
- --------------------------------------------------------------------------------
150,000 CRH (Consumer Goods) 1,028,412
- --------------------------------------------------------------------------------
480,000 Irish Life (Consumer Services) 1,715,314
- --------------------------------------------------------------------------------
2,743,726
================================================================================
Italy - 3.51%
- --------------------------------------------------------------------------------
1,220,000 Credito Italiano (Finance) 1,445,115
- --------------------------------------------------------------------------------
486,700 Societa Finanziaria Telefonica
(Utilities) 1,476,675
- --------------------------------------------------------------------------------
2,921,790
================================================================================
Japan - 10.44%
- --------------------------------------------------------------------------------
184,000 Hitachi (Capital Equipment) 1,997,186
- --------------------------------------------------------------------------------
58,000 Jusco (Consumer Services) 1,381,508
- --------------------------------------------------------------------------------
25,000 Kyocera (Capital Equipment) 2,045,226
- --------------------------------------------------------------------------------
63,000 Sankyo (Consumer Goods) 1,430,955
- --------------------------------------------------------------------------------
253,000 Toshiba (Capital Equipment) 1,843,467
- --------------------------------------------------------------------------------
8,698,342
================================================================================
Latin America - 0.51%
- --------------------------------------------------------------------------------
31,500 Latin American Equity Fund
(Emerging Markets) 425,250
- --------------------------------------------------------------------------------
Malaysia - 0.89%
- --------------------------------------------------------------------------------
69,000 Oyl Industries Berhad (Emerging
Markets) 570,883
- --------------------------------------------------------------------------------
50,000 Petronas Gas Berhad (Emerging
Markets)(a)(b) 174,026
- --------------------------------------------------------------------------------
744,909
================================================================================
Netherlands - 12.53%
- --------------------------------------------------------------------------------
13,700 Akzo Nobel (Materials) 1,645,062
- --------------------------------------------------------------------------------
38,900 Internationale Nederlanden
Group (Finance) 2,258,913
- --------------------------------------------------------------------------------
57,200 KLM Royal Dutch Airlines
(Transportation) 2,005,826
- --------------------------------------------------------------------------------
60,300 Philips Electronics (Consumer
Goods) 2,939,992
- --------------------------------------------------------------------------------
12,900 Royal Dutch Petroleum (Energy) 1,585,286
- --------------------------------------------------------------------------------
10,435,079
================================================================================
Norway - 2.04%
- --------------------------------------------------------------------------------
39,600 Norsk Hydro (Energy) 1,699,260
- --------------------------------------------------------------------------------
Singapore - 1.08%
- --------------------------------------------------------------------------------
133,000 Jardine Matheson Holdings
(Diversified) 897,750
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements on Pages 19 and 20
<PAGE> 39
INTERNATIONAL EQUITY PORTFOLIO 15
-----------------------------------------------------
Schedule of Portfolio Investments
================================================================================
September 30, 1995
<TABLE>
<CAPTION>
Shares Description Value
================================================================================
<C> <S> <C>
Spain - 5.75%
88,990 Autopistas Concesionaria
Espanola S.A.
(Consumer Services) $ 872,274
- --------------------------------------------------------------------------------
9,635 Banco Popular Espanol (Finance) 1,500,140
- --------------------------------------------------------------------------------
14,324 Fomento de Construcciones
y Contratas (Diversified) 1,205,609
- --------------------------------------------------------------------------------
160,100 Iberdrola S.A. (Utilities) 1,211,336
- --------------------------------------------------------------------------------
4,789,359
================================================================================
Sweden - 3.38%
- --------------------------------------------------------------------------------
54,100 Astra, Series A (Consumer Goods) 1,935,230
- --------------------------------------------------------------------------------
29,400 Svelada Industri
(Capital Equipment) 884,510
- --------------------------------------------------------------------------------
2,819,740
================================================================================
Switzerland - 4.55%
- --------------------------------------------------------------------------------
780 Baloise Holdings Ltd. (Finance) 1,714,582
- --------------------------------------------------------------------------------
1,791 BBC Brown Boveri & Cie, Cl.A
(Capital Equipment) 2,075,421
- --------------------------------------------------------------------------------
3,790,003
================================================================================
Taiwan - 0.45%
- --------------------------------------------------------------------------------
29,120 Yageo, GDR
(Emerging Markets)(a) 371,280
- --------------------------------------------------------------------------------
Thailand - 0.69%
- --------------------------------------------------------------------------------
59,000 PTT Exploration & Production
(Emerging Markets)(a) 573,660
================================================================================
United Kingdom - 8.97%
- --------------------------------------------------------------------------------
441,000 Iceland Group (Consumer Services) 1,227,497
- --------------------------------------------------------------------------------
560,700 Lonrho (Diversified) 1,476,434
- --------------------------------------------------------------------------------
110,100 Manweb (Utilities) 1,737,749
- --------------------------------------------------------------------------------
141,000 National Power (Partially Paid)
(Utilities) 503,961
- --------------------------------------------------------------------------------
131,500 Powergen (Installment Shares)
(Utilities) 517,838
- --------------------------------------------------------------------------------
427,100 Storehouse (Consumer Services) 2,012,867
- --------------------------------------------------------------------------------
7,476,346
================================================================================
Venezuela - 1.22%
- --------------------------------------------------------------------------------
730,198 Electricidad de Caracas
(Emerging Markets) 649,409
- --------------------------------------------------------------------------------
103,935 Mavesa, ADR (Emerging
Markets)(b) 367,285
- --------------------------------------------------------------------------------
1,016,694
================================================================================
Total Common Stocks
(Cost $67,648,342) $ 79,452,443
================================================================================
PREFERRED STOCK - 0.49%
- --------------------------------------------------------------------------------
Australia - 0.49%
- --------------------------------------------------------------------------------
82,050 News Corp. (Consumer Services)
(Cost $331,591) $ 407,022
================================================================================
Principal
Amount
================================================================================
CORPORATE DEBT
NON-CONVERTIBLE - 1.32%
- --------------------------------------------------------------------------------
South Africa - 1.32%
$1,000,000 Liberty Life International,
6.50%, 9/30/04
(Emerging Markets)
(Cost $1,114,559) $ 1,100,000
================================================================================
U.S. TREASURY BILL - 3.17%
$2,670,000 5.28%, 12/14/95
(Cost $2,641,252) $ 2,641,143
================================================================================
Total Investments
(Cost $71,735,744) 100.34% $83,600,608
- --------------------------------------------------------------------------------
Liabilities in Excess
of Other Assets (0.34) (287,177)
================================================================================
Net Assets 100.00% $83,313,431
================================================================================
</TABLE>
(a) Non-Income Producing Security
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At the period end, the value of
this security amounted to $1,074,808 or 1.29% of net assets.
Industry Diversification (as a percentage of Total Investments):
<TABLE>
<CAPTION>
<S> <C>
Capital Equipment................................................. 10.58%
Consumer Goods.................................................... 14.42
Consumer Services................................................. 13.99
Diversified....................................................... 8.38
Emerging Markets.................................................. 8.42
Energy............................................................ 5.87
Finance........................................................... 10.81
Materials......................................................... 9.37
Transportation.................................................... 2.40
Utilities......................................................... 12.59
U.S. Government Treasury Bill..................................... 3.17
------
100.00%
======
</TABLE>
See Notes to Financial Statements on Pages 19 and 20
<PAGE> 40
INTERNATIONAL EQUITY FUND 16
-----------------------------------------------------
Notes To Financial Statements
================================================================================
Note 1 -- Organization and Significant Accounting Policies
A. Organization
BT Investment Funds (the "Trust") is registered under the Investment Company
Act of 1940 (the "Act"), as amended, as an open-end management investment
company. The Trust was organized on July 21, 1986, as a business trust under
the laws of the Commonwealth of Massachusetts. The International Equity Fund
(the "Fund") is one of the funds offered to investors by the Trust. The Fund
commenced operations and began offering shares of beneficial interest on August
4, 1992. The Fund invests substantially all of its assets in the International
Equity Portfolio (the "Portfolio"). The Portfolio is an open-end management
investment company registered under the Act. The Fund seeks to achieve its
investment objective by investing all of its investable assets in the
Portfolio. The value of such investment in the Portfolio reflects the Fund's
proportionate interest in the net assets of the Portfolio. At September 30,
1995, the Fund's investment was approximately 100% of the Portfolio.
The financial statements of the Portfolio, including the Schedule of
Portfolio Investments, are contained elsewhere in this report.
B. Investment Income
The Fund earns income, net of expenses, daily on its investment in the
Portfolio. All of the net investment income and realized and unrealized gains
and losses from the security and foreign currency transactions of the Portfolio
are allocated pro rata among the investors in the Portfolio at the time of such
determination.
C. Dividends
It is the Fund's policy to declare and distribute dividends annually to
shareholders from net investment income. Dividends payable to shareholders are
recorded by the Fund on the ex-dividend date. Distributions of net realized
short-term and long-term capital gains, if any, earned by the Fund will be made
annually to the extent they are not offset by any capital loss carryforwards.
The Fund may periodically make reclassifications among certain of its
capital accounts as a result of the timing and characterization of certain
income and capital gains distributions determined annually in accordance with
federal tax regulations which may differ from generally accepted accounting
principles.
D. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income to shareholders. Therefore, no federal income tax
provision is required.
E. Other
The Trust accounts separately for the assets, liabilities, and operations of
the Fund. Expenses directly attributable to the Fund are charged to that Fund,
while expenses which are attributable to all of the Trust's funds are allocated
among them.
In fiscal 1995, the Fund changed its year end to September 30th.
<PAGE> 41
INTERNATIONAL EQUITY FUND 17
-----------------------------------------------------
Notes To Financial Statements
================================================================================
Note 2 -- Fees and Transactions with Affiliates
The Fund has entered into an Administration and Services Agreement with
Bankers Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Fund in return for a fee computed daily and paid
monthly at an annual rate of 0.85 of 1% of the Fund's average daily net assets.
For the period January 1, 1995 to September 30, 1995, this fee aggregated
$421,538.
The Trust has entered into a Distribution Agreement with Signature
Broker-Dealer Services, Inc. ("Signature"). Under the Distribution Agreement
with the Trust, pursuant to Rule 12b-1 of the 1940 Act, Signature may seek
reimbursement, at an annual rate not exceeding 0.20 of 1% of the Fund's average
daily net assets, for expenses incurred in connection with any activities
primarily intended to result in the sale of the Fund's shares. For the period
January 1, 1995 to September 30, 1995, there were no reimbursable expenses
incurred under this agreement.
Bankers Trust has voluntarily undertaken to waive and reimburse expenses of
the Fund, to the extent necessary, to limit all expenses to 0.85 of 1% of the
average daily net assets of the Fund, excluding expenses of the Portfolio and
1.50 of 1% of the average daily net assets of the Fund, including expenses of
the Portfolio. For the period January 1, 1995 to September 30, 1995, expenses
of the Fund have been reduced $52,956.
The Fund is subject to such limitations as may from time to time be imposed
by the Blue Sky laws of states in which the Fund sells its shares. Currently,
the most restrictive jurisdiction imposes expense limitations of 2.5% of the
first $30,000,000 of the average daily net assets, 2.0% of the next
$70,000,000, and 1.5% of any excess over $100,000,000.
Certain trustees and officers of the Fund are also directors, officers
and/or employees of Signature. None of the trustees so affiliated received
compensation for services as trustee of the Fund. Similarly, none of the Fund's
officers received compensation from the Fund.
Note 3 -- Shares of Beneficial Interest
At September 30, 1995, there were an unlimited number of shares of
beneficial interest authorized. Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
For the period
January 1, 1995 to For the year ended
September 30, 1995 December 31, 1994
----------------------- -------------------------
Shares Amount Shares Amount
--------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Sold 2,458,261 $ 35,856,451 1,879,250 $26,034,015
Reinvested 2,716 42,076 46,910 627,191
Redeemed (1,298,482) (18,711,160) (307,219) (4,259,347)
--------- ---------- --------- ----------
Net Increase 1,162,495 $ 17,187,367 1,618,941 $22,401,859
========= =========== ========= ==========
</TABLE>
<PAGE> 42
INTERNATIONAL EQUITY FUND 18
-----------------------------------------------------
Report of Independent Accountants
================================================================================
To the Trustees and Shareholders
of BT Investment Funds:
We have audited the accompanying statement of assets and liabilities of the
International Equity Fund (one of the funds comprising BT Investment Funds) as
of September 30, 1995, and the related statement of operations for the nine
months then ended, the statements of changes in net assets for the nine months
ended September 30, 1995, and the year ended December 31, 1994, and the
financial highlights for the nine months ended September 30, 1995, for each of
the two years in the period ended December 31, 1994 and for the period August
4, 1992 (commencement of operations) to December 31, 1992. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995 by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
the International Equity Fund of BT Investment Funds as of September 30, 1995,
the results of its operations, the changes in its net assets, and the financial
highlights for the periods referred to above, in conformity with generally
accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Kansas City, Missouri
November 14, 1995
<PAGE> 43
INTERNATIONAL EQUITY PORTFOLIO 19
-----------------------------------------------------
Notes To Financial Statements
================================================================================
Note 1 -- Organization and Significant Accounting Policies
A. Organization
The International Equity Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940 (the "Act"), as amended, as an open-end
management investment company. The Portfolio was organized on December 11, 1991
as an unincorporated trust under the laws of New York and commenced operations
on August 4, 1992. The Declaration of Trust permits the Board of Trustees (the
"Trustees") to issue beneficial interests in the Portfolio.
In fiscal 1995, the Portfolio changed its year end to September 30th.
B. Security Valuation
The Portfolio's investments are valued each business day by an independent
pricing service (the "Service") approved by the Trustees. Securities traded
primarily on a principal securities exchange (domestic or foreign) are valued
at their last reported sale price on that exchange. If no sale is reported, or
if local custom or regulation so provides, the mean of the latest bid and asked
price is used. Securities traded over-the-counter are valued using either the
mean between the bid and asked price or, where local custom or regulations so
provide, the last sales price. Short-term obligations with remaining maturities
of 60 days or less are valued at amortized cost which with accrued interest
approximates value. Securities for which quotations are not available are
stated at fair value as determined by the Trustees.
C. Foreign Currency Transactions
The books and records of the Portfolio are maintained in U.S. dollars. All
assets and liabilities initially expressed in foreign currencies are converted
into U.S. dollars at prevailing exchange rates. Purchases and sales of
investment securities, dividend and interest income, and certain expenses are
translated at the rates of exchange prevailing on the respective dates of such
transactions. The Portfolio does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from securities.
D. Forward Foreign Currency Contracts
The Portfolio may enter into forward foreign currency contracts for the
purpose of settling specific purchases or sales of securities denominated in a
foreign currency or with respect to the Portfolio's investments generally. The
net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using prevailing exchange rates. With respect to
forward foreign currency contracts, losses in excess of amounts recognized in
the Statement of Assets and Liabilities may arise due to changes in the value
of the foreign currency or if the counterparty does not perform under the
contract.
E. Security Transactions and Investment Income
Security transactions are accounted for on a trade date basis (date the
order to buy or sell is executed). Dividend income, less foreign taxes withheld
(if any), is recorded on the ex-dividend date or upon receipt of ex-dividend
notification in the case of certain foreign securities. Interest income is
recorded on the accrual basis and includes amortization of premium and discount
on investments. Realized gains and losses from security transactions are
recorded on the identified cost basis.
All of the net investment income and realized and unrealized gains and
losses from security and foreign currency transactions of the Portfolio are
allocated pro rata among the investors of the Portfolio at the time of such
determination.
<PAGE> 44
INTERNATIONAL EQUITY PORTFOLIO 20
-----------------------------------------------------
Notes To Financial Statements
================================================================================
F. Federal Income Taxes
It is the Portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to it. Therefore, no federal income tax provision is
required.
Note 2 -- Fees and Transactions with Affiliates
The Portfolio has entered into an Administration and Services Agreement with
Bankers Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Portfolio in return for a fee computed daily and
paid monthly at an annual rate of 0.15 of 1% of the Portfolio's average daily
net assets. For the period January 1, 1995 to September 30, 1995, this fee
aggregated $74,468.
The Portfolio has entered into an Advisory Agreement with Bankers Trust.
Under this Advisory Agreement, the Portfolio pays Bankers Trust an advisory fee
computed daily and paid monthly at an annual rate of 0.65 of 1% of the
Portfolio's average daily net assets. For the period January 1, 1995 to
September 30, 1995, this fee aggregated $322,696.
Bankers Trust has voluntarily undertaken to waive and reimburse expenses of
the Portfolio, to the extent necessary, to limit all expenses to 0.65 of 1% of
the average daily net assets of the Portfolio. For the period January 1, 1995
to September 30, 1995, expenses of the Portfolio have been reduced $108,743.
Certain trustees and officers of the Portfolio are also directors, officers
and/or employees of Signature. None of the trustees so affiliated received
compensation for services as trustee of the Portfolio. Similarly, none of the
Portfolio's officers received compensation from the Portfolio.
Note 3 -- Purchases and Sales of Investment Securities
The aggregate cost of purchases and proceeds from sales of investments,
other than short-term obligations, for the period January 1, 1995 to September
30, 1995, were $31,676,113 and $13,580,726, respectively. For federal income
tax purposes, the tax basis of investments held at September 30, 1995 was
$71,735,953. The aggregate gross unrealized appreciation for all investments
was $13,556,024 and the aggregate gross unrealized depreciation for all
investments was $1,691,369.
Note 4 -- Open Forward Foreign Currency Contracts
As of September 30, 1995, the Portfolio had entered into the following open
forward foreign currency contract:
<TABLE>
<CAPTION>
Contracts In Settle- Net Unrealized
to Exchange ment Value (Depreciation)
Deliver For Date (US $) (US $)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales
- --------------------------------------------------------------------------------------------
JPY 336,000,000 USD 3,289,280 10/18/95 3,383,208 (93,928)
============================================================================================
</TABLE>
<PAGE> 45
INTERNATIONAL EQUITY PORTFOLIO 21
-----------------------------------------------------
Report of Independent Accountants
================================================================================
To the Trustees and Holders of Beneficial Interest
of the International Equity Portfolio:
We have audited the accompanying statement of assets and liabilities of the
International Equity Portfolio, including the Schedule of Portfolio of
Investments, as of September 30, 1995, and the related statement of operations
for the nine months then ended, the statements of changes in net assets for the
nine months ended September 30, 1995, and the year ended December 31, 1994, and
the financial highlights for the nine months ended September 30, 1995, for each
of the two years in the period ended December 31, 1994 and for the period
August 4, 1992 (commencement of operations) to December 31, 1992. These
financial statements and financial highlights are the responsibility of the
Portfolio's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995 by correspondence with the custodian and brokers. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly in all material respects, the financial position of the
International Equity Portfolio as of September 30, 1995, the results of its
operations, the changes in its net assets, and the financial highlights for the
periods referred to above, in conformity with generally accepted accounting
principles.
/s/ Coopers & Lybrand L.L.P.
Kansas City, Missouri
November 14, 1995
<PAGE> 46
BT INVESTMENT FUNDS
Small
Cap
Fund
Annual Report
September 30, 1995
<PAGE> 47
SMALL CAP FUND 1
----------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Introduction from President................................................. 2
Letter to Shareholders from Investment Adviser.............................. 3
Small Cap Fund
Statement of Assets and Liabilities.................................... 6
Statement of Operations................................................ 7
Statement of Changes in Net Assets..................................... 8
Financial Highlights................................................... 9
Small Cap Portfolio
Statement of Assets and Liabilities.................................... 10
Statement of Operations................................................ 11
Statement of Changes in Net Assets..................................... 12
Financial Highlights................................................... 13
Schedule of Portfolio Investments...................................... 14
Small Cap Fund
Notes to Financial Statements.......................................... 17
Report of Independent Accountants...................................... 19
Small Cap Portfolio
Notes to Financial Statements.......................................... 20
Report of Independent Accountants...................................... 22
For shareholder account information and current price and yield quotations,
shareholders may call their relationship manager or servicing agent.
Prospectuses containing more extensive information regarding the Small Cap Fund
may be obtained by calling or writing to Investors Fiduciary Trust Company or
Signature Broker-Dealer Services, Inc., the primary Servicing Agent and
Distributor, respectively, of BT Investment Funds:
BT Investment Funds
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, MO 64105
(800) 422-6577
BT Investment Funds
Signature Broker-Dealer Services, Inc.
6 St. James Avenue
Boston, MA 02116
(800) 545-1074
You may write to the Small Cap Fund at the following address:
BT Investment Funds
6 St. James Avenue
Boston, MA 02116
<PAGE> 48
SMALL CAP FUND 2
----------------------------------------------------------------------
Introduction from President
- --------------------------------------------------------------------------------
November, 1995
Dear Shareholders:
We are pleased to present your Annual Report for the BT Investment Funds
Small Cap Fund. This Report provides you with an investment overview as well
as a financial summary of the Fund's operations for the year ended September
30, 1995. We have also included a Letter from the Investment Adviser,
detailing the factors that affected the Fund's performance and a performance
chart which illustrates your Fund's return versus a relevant financial
index. Also presented in your Report is a pie chart displaying
diversification of Portfolio investments, financial statements, financial
highlights and a listing of the Portfolio's holdings.
Looking ahead, we will continue to closely observe the economic conditions
and how they affect the financial markets.
We appreciate your ongoing support of the Small Cap Fund and look forward to
continuing to serve your investment needs.
Philip W. Coolidge
President
<PAGE> 49
SMALL CAP FUND 3
----------------------------------------------------------------------
Letter to Shareholders from Investment Adviser
- --------------------------------------------------------------------------------
For the year ended September 30, 1995, the BT Investment Funds Small Cap Fund
once again outperformed its benchmark and its competitors impressively. The
Fund's outstanding return of 59.48% compares to 23.47% for the Russell 2000
Index and 28.93% for the Lipper Small Cap Growth Average. Since its inception
on October 21, 1993, the Fund has returned 85.00%.
The Fund's outperformance is even more notable in light of the generally weak
performance of small cap stocks throughout most of the first three quarters
of the Fund's fiscal year. Plus, in the last quarter, when the small cap
universe did post the best performance over the MidCap Index and the S&P 500,
the Fund still outperformed its benchmark and its category average.
Throughout the twelve months, the Fund's strong results were primarily due to
its overweighting in the technology and healthcare sectors and its
underweighting in the energy, financial, utilities, materials and processing,
and REIT (Real Estate Investment Trust) sectors. Although the technology
sector was volatile toward the end of the Fund's fiscal year, it was also
either the first or second best performing sector in each quarter. We
increased our holdings in technology companies in March, and continue to be
overweighted there. However, we did decrease our technology holdings just
somewhat in September, diversifying into sectors that were previously under-
represented in the Fund, such as consumer non-durables and retail. The
healthcare sector was the number one sector in the most recent quarter. In
the second half of the Fund's fiscal year, we participated in a number of
initial public offerings and also started eliminating our positions in
selected securities due to company specific concerns.
As always, in each sector, we continue to carry out intensive analysis,
focusing on companies whose improving fundamentals have not yet been
recognized by the market and on companies which appear to offer compelling
valuations relative to their growth rates. Given the uncertainty about the
economy now, we remain especially interested in companies with strong,
consistent earnings and revenue growth potential.
Due to their relative undervaluation and stronger projected earnings growth,
we believe that, looking ahead, smaller capitalization stocks may well
outpace the larger company issues through the end of 1995, particularly if
the economy slows.
<PAGE> 50
SMALL CAP FUND 4
----------------------------------------------------------------------
Letter to Shareholders from Investment Adviser
- --------------------------------------------------------------------------------
The following graph illustrates the Fund's return versus the Russell 2000
Index since October 31, 1993, assuming a $10,000 initial investment:
Comparison of
Change in Value
of a $10,000
Investment in the
Small Cap Fund
and the
Russell 2000 Index
Total Return
ended September 30, 1995
One Year Since 10/21/93*
59.48% 85.00%
* The Fund's inception date
Investment return and principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Small Cap Fund Russell 2000 Index
-------------- ------------------
<S> <C> <C>
10/31/93 $10,000 $10,000
12/31/93 10,326 10,002
3/31/94 10,375 9,735
6/30/94 9,951 9,354
9/30/94 11,451 10,004
12/31/94 12,320 9,819
3/31/95 14,107 10,273
6/30/95 15,903 11,236
9/30/95 18,263 12,345
</TABLE>
Past performance is not indicative of future performance.
- --------------------------------------------------------------------------------
About the
Portfolio Manager
Mary Lisanti
Managing Director & Portfolio Manager
- Manager of the Small Cap Fund, Capital Appreciation
Fund and separate
aggressive growth accounts
- 16 years of investment experience as a portfolio
manager and analyst in Small/Mid cap equities
- Joined Bankers Trust from Lieber & Company/The Evergreen
Funds, where for three years she was Vice President of
Investments and a portfolio manager working on their $800
million small and mid-sized company fund
- Senior Vice President at Shearson Lehman Brothers, headed
the firm's emerging growth stock investment strategy and
research effort; member of the Investment Policy
Committee
- Earned the #1 ranking Institutional Investor's All Star
Research Team in 1989 (ranked #2 and #3 in 1987 and 1986,
respectively) for her work as a small company stock
analyst
- B.A. -- Princeton University
- Member , New York Society of Security Analysts and
Financial Analyst Federation
<PAGE> 51
SMALL CAP FUND 5
----------------------------------------------------------------------
- --------------------------------------------------------------------------------
Objective Seeks to provide long-term capital growth by investing
primarily in equity securities of smaller companies.
The production of any current income is secondary to
this objective.
- --------------------------------------------------------------------------------
Investment Instruments Primarily common stocks of smaller U.S. corporations
and, to a lesser extent, in foreign corporations.
- --------------------------------------------------------------------------------
Ten Largest Common Dollar Tree Stores CompDent
Stock Holdings DSP Communications CRA Managed Care
IDEXX Laboratories Teltrend
Olympic Financial Gulf South Medical Supply
Daisytek International Renaissance Solutions
- --------------------------------------------------------------------------------
Diversification of Portfolio Investments by Theme
as of September 30, 1995
(percentages are based on market value)
[PIE GRAPH APPEARS HERE]
<TABLE>
<S> <C>
Flourishing in the Managed Care Environment 7.26%
Client Server Computing 5.45%
New Consumer 15.46%
Move to Outsourcing 9.40%
Managing the Information Age 12.82%
New Health Care Paradigm 9.52%
Productivity Enhancement 6.67%
Other* 10.22%
Life on the Net 10.42%
The Ubiquitous Semiconductor 7.35%
U.S. Treasury Bills 5.43%
</TABLE>
*No one Investment Theme represents more than 4% of Portfolio Holdings
<PAGE> 52
SMALL CAP FUND 6
----------------------------------------------------------------------
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
September 30, 1995
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------------------------
Assets
- --------------------------------------------------------------------------------------------------------------------
Investment in Small Cap Portfolio, at Value $123,827,936
- --------------------------------------------------------------------------------------------------------------------
Receivable for Shares of Beneficial Interest Sold 167,053
- --------------------------------------------------------------------------------------------------------------------
Prepaid Expenses 2,560
- --------------------------------------------------------------------------------------------------------------------
Total Assets 123,997,549
- --------------------------------------------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------------------------------------------
Due to Bankers Trust 75,890
- --------------------------------------------------------------------------------------------------------------------
Payable for Shares of Beneficial Interest Redeemed 943,441
- --------------------------------------------------------------------------------------------------------------------
Accrued Expenses and Accounts Payable 43,437
- --------------------------------------------------------------------------------------------------------------------
Total Liabilities 1,062,768
- --------------------------------------------------------------------------------------------------------------------
Net Assets (Applicable to 6,645,609 Outstanding Shares of $0.001 Par Value Per Share,
Unlimited Number of Shares of Beneficial Interest Authorized) $122,934,781
====================================================================================================================
Net Asset Value, Subscription and Redemption Price Per Share
($122,934,781/6,645,609 Shares) $ 18.50
====================================================================================================================
Composition of Net Assets
- --------------------------------------------------------------------------------------------------------------------
Shares of Beneficial Interest, at Par $ 6,646
- --------------------------------------------------------------------------------------------------------------------
Paid-in Capital 90,866,481
- --------------------------------------------------------------------------------------------------------------------
Undistributed Net Realized Gain from Securities Transactions 9,758,712
- --------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Securities 22,302,942
- --------------------------------------------------------------------------------------------------------------------
Net Assets, September 30, 1995 $122,934,781
====================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 17 and 18.
<PAGE> 53
SMALL CAP FUND 7
----------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
For the year ended September 30, 1995
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
Investment Income
- -------------------------------------------------------------------------------------------------------------------
Income Allocated from Small Cap Portfolio, net $ 114,355
- -------------------------------------------------------------------------------------------------------------------
Expenses
- -------------------------------------------------------------------------------------------------------------------
Administration and Services Fee $388,661
- -------------------------------------------------------------------------------------------------------------------
Registration Fees 50,551
- -------------------------------------------------------------------------------------------------------------------
Shareholders Reports 27,741
- -------------------------------------------------------------------------------------------------------------------
Professional Fees 10,473
- -------------------------------------------------------------------------------------------------------------------
Trustees Fees 1,564
- -------------------------------------------------------------------------------------------------------------------
Insurance 894
- -------------------------------------------------------------------------------------------------------------------
Miscellaneous 1,098
- -------------------------------------------------------------------------------------------------------------------
Total Expenses 480,982
- -------------------------------------------------------------------------------------------------------------------
Less: Expenses Absorbed by Bankers Trust (92,321) 388,661
- -------------------------------------------------------------------------------------------------------------------
Net Investment (Loss) (274,306)
- -------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss) on Securities
- -------------------------------------------------------------------------------------------------------------------
Net Realized Gain from Securities Transactions 11,205,495
- -------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Securities 19,127,778
- -------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Securities 30,333,273
- -------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Operations $30,058,967
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements on Pages 17 and 18.
<PAGE> 54
SMALL CAP FUND 8
----------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
October 21, 1993
For the (Commencement
year ended of Operations) to
September 30, 1995 September 30, 1994
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets
- --------------------------------------------------------------------------------------------------------------------
From Operations
- --------------------------------------------------------------------------------------------------------------------
Net Investment (Loss) $ (274,306) $ (62,208)
- --------------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) from Securities Transactions 11,205,495 (1,172,477)
- --------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Securities 19,127,778 3,175,164
- --------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Operations 30,058,967 1,940,479
- --------------------------------------------------------------------------------------------------------------------
From Transactions in Shares of Beneficial Interest
- --------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Transactions in
Shares of Beneficial Interest 71,544,157 19,391,178
- --------------------------------------------------------------------------------------------------------------------
Total Increase in Net Assets 101,603,124 21,331,657
====================================================================================================================
Net Assets
- --------------------------------------------------------------------------------------------------------------------
Beginning of Period 21,331,657 --
- --------------------------------------------------------------------------------------------------------------------
End of Period $122,934,781 $21,331,657
====================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 17 and 18.
<PAGE> 55
SMALL CAP FUND 9
----------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Contained below are selected data for a share outstanding, total investment
return, ratios to average net assets and other supplemental data for each of
the periods indicated for the Small Cap Fund.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
For the period
October 21, 1993
For the (Commencement
year ended of Operations) to
September 30, 1995 September 30, 1994
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Selected Per Share Data
Net Asset Value, Beginning of Period $ 11.60 $ 10.00
-------- --------
Income from Investment Operations
Net Investment (Loss) (0.04) (0.03)
Net Realized and Unrealized Gain on Securities 6.94 1.63
-------- --------
Total from Investment Operations 6.90 1.60
-------- --------
Net Asset Value, End of Period $ 18.50 $ 11.60
======== ========
Total Investment Return 59.48% 17.06%*
Ratios and Supplemental Data
Ratio of Net Investment (Loss) to Average Net Assets (0.46%) (0.58%)*
Ratio of Expenses to Average Net Assets, Including
Expenses of the Small Cap Portfolio 1.25% 1.25%*
Decrease Reflected in Above Expense Ratio Due to Absorption
of Expenses by Bankers Trust 0.34% 0.86%*
Net Assets, End of Period (000's omitted) $122,935 $ 21,332
</TABLE>
* Annualized
See Notes to Financial Statements on Pages 17 and 18.
<PAGE> 56
SMALL CAP PORTFOLIO 10
----------------------------------------------------------------------
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
September 30, 1995
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Assets
- --------------------------------------------------------------------------------
Investments, at Value (Cost $96,338,528) $118,641,475
- --------------------------------------------------------------------------------
Cash 353,495
- --------------------------------------------------------------------------------
Receivable for Securities Sold 9,167,872
- --------------------------------------------------------------------------------
Prepaid Expenses 189
- --------------------------------------------------------------------------------
Total Assets 128,163,031
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Due to Bankers Trust 70,264
- --------------------------------------------------------------------------------
Payable for Securities Purchased 4,243,404
- --------------------------------------------------------------------------------
Accrued Expenses and Accounts Payable 21,411
- --------------------------------------------------------------------------------
Total Liabilities 4,335,079
- --------------------------------------------------------------------------------
Net Assets $123,827,952
================================================================================
Composition of Net Assets
- --------------------------------------------------------------------------------
Paid-in Capital $101,525,005
- --------------------------------------------------------------------------------
Net Unrealized Appreciation on Securities 22,302,947
- --------------------------------------------------------------------------------
Net Assets, September 30, 1995 $123,827,952
================================================================================
</TABLE>
See Notes to Financial Statements on Pages 20 and 21.
<PAGE> 57
SMALL CAP PORTFOLIO 11
----------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
For the year ended September 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------
Investment Income
- --------------------------------------------------------------------------------
Dividends $ 11,228
- --------------------------------------------------------------------------------
Interest 462,219
- --------------------------------------------------------------------------------
Total Investment Income $ 473,447
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Advisory Fee 389,015
- --------------------------------------------------------------------------------
Administration and Services Fee 59,848
- --------------------------------------------------------------------------------
Professional Fees 17,320
- --------------------------------------------------------------------------------
Insurance 2,695
- --------------------------------------------------------------------------------
Trustees Fees 1,563
- --------------------------------------------------------------------------------
Miscellaneous 513
- --------------------------------------------------------------------------------
Total Expenses 470,954
- --------------------------------------------------------------------------------
Less: Expenses Absorbed by Bankers Trust (111,862) 359,092
- --------------------------------------------------------------------------------
Net Investment Income 114,355
- --------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss) on Securities
- --------------------------------------------------------------------------------
Net Realized Gain from Securities Transactions 11,205,496
- --------------------------------------------------------------------------------
Net Unrealized Appreciation on Securities 19,127,783
- --------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Securities 30,333,279
- --------------------------------------------------------------------------------
Net Increase in Net Assets from Operations $30,447,634
================================================================================
</TABLE>
See Notes to Financial Statements on Pages 20 and 21.
<PAGE> 58
SMALL CAP PORTFOLIO 12
----------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
October 21, 1993
For the (Commencement
year ended of Operations) to
September 30, 1995 September 30, 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets
- ---------------------------------------------------------------------------------------------------------------
From Operations
- ---------------------------------------------------------------------------------------------------------------
Net Investment Income $ 114,355 $ 7,187
- ---------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) from Securities Transactions 11,205,496 (1,172,477)
- ---------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Securities 19,127,783 3,175,164
- ---------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Operations 30,447,634 2,009,874
- ---------------------------------------------------------------------------------------------------------------
From Capital Transactions
- ---------------------------------------------------------------------------------------------------------------
Proceeds from Capital Invested 89,963,488 21,058,530
- ---------------------------------------------------------------------------------------------------------------
Value of Capital Withdrawn (17,910,681) (1,740,893)
- ---------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Capital Transactions 72,052,807 19,317,637
- ---------------------------------------------------------------------------------------------------------------
Total Increase in Net Assets 102,500,441 21,327,511
===============================================================================================================
Net Assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of Period 21,327,511 --
- ---------------------------------------------------------------------------------------------------------------
End of Period $123,827,952 $21,327,511
===============================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 20 and 21.
<PAGE> 59
SMALL CAP PORTFOLIO 13
----------------------------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Contained below are selected ratios and supplemental data for each of the
periods indicated for the Small Cap Portfolio.
For the period
October 21, 1993
For the (Commencement
year ended of Operations) to
September 30, 1995 September 30, 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Ratios and Supplemental Data
Ratio of Net Investment Income to Average Net Assets 0.19% 0.07%*
Ratio of Expenses to Average Net Assets 0.60% 0.60%*
Decrease Reflected in Above Ratio of Expenses to Average
Net Assets Due to Absorption of Expenses by Bankers Trust 0.19% 0.38%*
Portfolio Turnover Rate 161% 154%
Net Assets, End of Period (000's omitted) $123,828 $21,328
*Annualized
</TABLE>
See Notes to Financial Statements on Pages 20 and 21.
<PAGE> 60
SMALL CAP PORTFOLIO 14
----------------------------------------------------------------------
<TABLE>
<CAPTION>
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
September 30, 1995
Shares Description Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS-90.61%
Client Server Computing-5.22%
- --------------------------------------------------------------------------------
3,600 Business Objects, ADS (a) $ 153,450
- --------------------------------------------------------------------------------
19,800 CBT Group, ADS (a) 945,450
- --------------------------------------------------------------------------------
61,800 Computron Software (a) 1,066,050
- --------------------------------------------------------------------------------
20,900 Discreet Logic (a) 1,149,500
- --------------------------------------------------------------------------------
26,600 Mercury Interactive (a) 738,150
- --------------------------------------------------------------------------------
27,500 Novadigm (a) 464,062
- --------------------------------------------------------------------------------
29,500 Open Environment (a) 516,250
- --------------------------------------------------------------------------------
23,500 Seer Technologies (a) 355,438
- --------------------------------------------------------------------------------
50,000 Unison Software (a) 750,000
- --------------------------------------------------------------------------------
12,400 Veritas Software (a) 322,400
- --------------------------------------------------------------------------------
6,460,750
================================================================================
Flourishing in the Managed
Care Environment-6.96%
- --------------------------------------------------------------------------------
26,700 AHI Healthcare Systems (a) 413,850
- --------------------------------------------------------------------------------
57,100 CompDent (a) 1,670,175
- --------------------------------------------------------------------------------
73,800 CRA Managed Care (a) 1,595,925
- --------------------------------------------------------------------------------
65,200 OccuSystems (a) 1,352,900
- --------------------------------------------------------------------------------
62,700 Pediatrix Medical Group (a) 1,285,350
- --------------------------------------------------------------------------------
18,300 Renal Treatment Centers (a) 677,100
- --------------------------------------------------------------------------------
18,500 Target Therapeutics (a) 1,295,000
- --------------------------------------------------------------------------------
10,800 United Dental Care (a) 324,000
- --------------------------------------------------------------------------------
8,614,300
================================================================================
Life on the Net-9.99%
- --------------------------------------------------------------------------------
31,500 Firefox Communications (a) 779,625
- --------------------------------------------------------------------------------
21,700 FTP Software (a) 602,175
- --------------------------------------------------------------------------------
40,200 Harbinger (a) 552,750
- --------------------------------------------------------------------------------
43,800 Legato Systems (a) 1,160,700
- --------------------------------------------------------------------------------
16,700 Macromedia (a) 953,988
- --------------------------------------------------------------------------------
29,300 Maxis (a) 1,289,200
- --------------------------------------------------------------------------------
19,400 McAfee Associates (a) 999,100
- --------------------------------------------------------------------------------
14,200 NetManage (a) 337,250
- --------------------------------------------------------------------------------
12,400 Network General (a) 511,500
- --------------------------------------------------------------------------------
25,400 Number Nine Visual Technology (a) $ 419,100
- --------------------------------------------------------------------------------
32,300 On Technology (a) 557,175
- --------------------------------------------------------------------------------
29,200 Pinnacle Systems (a) 897,900
- --------------------------------------------------------------------------------
63,900 Quarterdeck (a) 1,238,062
- --------------------------------------------------------------------------------
8,800 Security Dynamics Technologies (a) 420,200
- --------------------------------------------------------------------------------
41,000 Transactions Systems Architects (a) 1,096,750
- --------------------------------------------------------------------------------
19,700 Verifone (a) 549,137
- --------------------------------------------------------------------------------
12,364,612
================================================================================
Life Sciences Revolution-2.91%
- --------------------------------------------------------------------------------
42,400 Cephalon (a) 1,166,000
- --------------------------------------------------------------------------------
53,600 Magainin Pharmaceuticals (a) 582,900
- --------------------------------------------------------------------------------
30,200 Neurogen (a) 671,950
- --------------------------------------------------------------------------------
40,400 NeXstar Pharmaceuticals (a) 595,900
- --------------------------------------------------------------------------------
38,000 Regeneron Pharmaceuticals (a) 593,750
- --------------------------------------------------------------------------------
3,610,500
================================================================================
Managing the Information
Age-12.28%
- --------------------------------------------------------------------------------
22,400 ADFlex Solutions (a) 501,200
- --------------------------------------------------------------------------------
20,100 Applix (a) 442,200
- --------------------------------------------------------------------------------
56,500 Astea International (a) 1,130,000
- --------------------------------------------------------------------------------
42,200 Atria Software (a) 1,234,350
- --------------------------------------------------------------------------------
64,600 Datastream Systems (a) 1,469,650
- --------------------------------------------------------------------------------
71,600 Dendrite International (a) 1,091,900
- --------------------------------------------------------------------------------
20,800 Desktop Data (a) 722,800
- --------------------------------------------------------------------------------
53,700 DSP Communications (a) 1,772,100
- --------------------------------------------------------------------------------
48,300 Eagle Point Software (a) 905,625
- --------------------------------------------------------------------------------
36,300 HNC Software (a) 952,875
- --------------------------------------------------------------------------------
42,000 IMNET Systems (a) 1,081,500
- --------------------------------------------------------------------------------
46,800 Inference (a) 690,000
- --------------------------------------------------------------------------------
43,700 National Data 1,174,437
- --------------------------------------------------------------------------------
51,200 SITEL (a) 1,254,400
- --------------------------------------------------------------------------------
11,000 Software Artistry (a) 209,000
- --------------------------------------------------------------------------------
36,000 Vantive (a) 576,000
- --------------------------------------------------------------------------------
15,208,037
================================================================================
</TABLE>
See Notes to Financial Statements on Pages 20 and 21.
<PAGE> 61
SMALL CAP PORTFOLIO 15
----------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
September 30, 1995
<TABLE>
<CAPTION>
Shares Description Value
- --------------------------------------------------------------------------------
<C> <S> <C>
Move to Outsourcing--9.00%
- --------------------------------------------------------------------------------
20,500 AccuStaff (a) $ 753,375
- --------------------------------------------------------------------------------
35,600 Affiliated Computer Services (a) 1,041,300
- --------------------------------------------------------------------------------
36,100 Alternative Resources (a) 1,155,200
- --------------------------------------------------------------------------------
25,500 Atlas Air (a) 567,375
- --------------------------------------------------------------------------------
47,000 Comair 1,245,500
- --------------------------------------------------------------------------------
51,400 Daisytek International (a) 1,689,775
- --------------------------------------------------------------------------------
61,200 HealthPlan Services (a) 1,246,950
- --------------------------------------------------------------------------------
20,000 HPR (a) 465,000
- --------------------------------------------------------------------------------
2,800 Interim Services (a) 75,600
- --------------------------------------------------------------------------------
21,100 Kent Electronics (a) 925,762
- --------------------------------------------------------------------------------
35,100 Personnel Group of America (a) 491,400
- --------------------------------------------------------------------------------
20,500 Quintiles Transnational (a) 1,209,500
- --------------------------------------------------------------------------------
23,200 Zycon (a) 284,200
- --------------------------------------------------------------------------------
11,150,937
================================================================================
New Consumer--14.82%
- --------------------------------------------------------------------------------
49,700 Apple South 1,130,675
- --------------------------------------------------------------------------------
7,150 Blyth Industries (a) 334,263
- --------------------------------------------------------------------------------
59,200 Claire's Stores 1,213,600
- --------------------------------------------------------------------------------
17,900 Discount Auto Parts (a) 541,475
- --------------------------------------------------------------------------------
74,400 Dollar Tree Stores (a) 2,529,600
- --------------------------------------------------------------------------------
21,000 DonnKenny (a) 590,625
- --------------------------------------------------------------------------------
12,500 Duracraft (a) 564,063
- --------------------------------------------------------------------------------
28,900 Moovies (a) 567,163
- --------------------------------------------------------------------------------
33,000 Nautica Enterprises (a) 1,130,250
- --------------------------------------------------------------------------------
34,500 Neostar Retail Group (a) 590,812
- --------------------------------------------------------------------------------
19,600 Norton McNaughton (a) 436,100
- --------------------------------------------------------------------------------
26,600 Papa John's International (a) 1,197,000
- --------------------------------------------------------------------------------
40,200 Phamis (a) 1,100,475
- --------------------------------------------------------------------------------
15,700 Regal Cinemas (a) 645,662
- --------------------------------------------------------------------------------
54,500 Renaissance Hotel Group (a) 967,375
- --------------------------------------------------------------------------------
61,300 Renaissance Solutions (a) 1,494,187
- --------------------------------------------------------------------------------
32,000 Softkey International (a) 1,416,000
- --------------------------------------------------------------------------------
27,500 Sonic (a) 625,625
- --------------------------------------------------------------------------------
55,300 Studio Plus Hotels (a) $ 1,271,900
- --------------------------------------------------------------------------------
18,346,850
================================================================================
New Health Care Paradigm--9.12%
- --------------------------------------------------------------------------------
28,000 American Oncology Resources (a) 1,204,000
- --------------------------------------------------------------------------------
9,500 Authentic Fitness (a) 213,750
- --------------------------------------------------------------------------------
2,400 CareLine (a) 22,500
- --------------------------------------------------------------------------------
22,600 Eastbay (a) 446,350
- --------------------------------------------------------------------------------
19,000 Garden Ridge (a) 555,750
- --------------------------------------------------------------------------------
62,200 Gulf South Medical Supply (a) 1,531,675
- --------------------------------------------------------------------------------
20,000 HCIA (a) 515,000
- --------------------------------------------------------------------------------
47,400 IDEXX Laboratories (a) 1,765,650
- --------------------------------------------------------------------------------
83,200 Martek Biosciences (a) 1,352,000
- --------------------------------------------------------------------------------
48,200 MiniMed (a) 530,200
- --------------------------------------------------------------------------------
20,400 Physician Sales & Services (a) 979,200
- --------------------------------------------------------------------------------
74,400 Rexall Sundown (a) 1,255,500
- --------------------------------------------------------------------------------
25,000 Summit Medical Systems (a) 375,000
- --------------------------------------------------------------------------------
25,500 Ventritex (a) 548,250
- --------------------------------------------------------------------------------
11,294,825
================================================================================
Productivity Enhancement--6.39%
- --------------------------------------------------------------------------------
30,000 ArcSys (a) 1,237,500
- --------------------------------------------------------------------------------
31,200 Aspen Technology (a) 936,000
- --------------------------------------------------------------------------------
32,400 Credence Systems (a) 1,174,500
- --------------------------------------------------------------------------------
13,000 Electroglas (a) 885,625
- --------------------------------------------------------------------------------
23,100 Epic Design Technology (a) 1,120,350
- --------------------------------------------------------------------------------
38,400 Integrated Measurement Systems (a) 508,800
- --------------------------------------------------------------------------------
39,000 Periphonics (a) 1,121,250
- --------------------------------------------------------------------------------
3,400 PRI Automation (a) 139,400
- --------------------------------------------------------------------------------
30,200 QuickResponse Services (a) 785,200
- --------------------------------------------------------------------------------
7,908,625
================================================================================
Redistribution of Debt--1.46%
- --------------------------------------------------------------------------------
2,700 General Acceptance (a) 89,775
- --------------------------------------------------------------------------------
62,900 Olympic Financial (a) 1,721,888
- --------------------------------------------------------------------------------
1,811,663
================================================================================
</TABLE>
See Notes to Financial Statements on Pages 20 and 21.
<PAGE> 62
SMALL CAP PORTFOLIO 16
----------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
September 30, 1995
<TABLE>
<CAPTION>
Shares Description Value
================================================================================
<C> <S> <C>
Special Situations -- 1.96%
- --------------------------------------------------------------------------------
54,000 Intermet (a) $ 607,500
- --------------------------------------------------------------------------------
94,800 LTX (a) 1,196,850
- --------------------------------------------------------------------------------
26,750 Tetra Technologies (a) 621,938
- --------------------------------------------------------------------------------
2,426,288
================================================================================
Telecommunications -- 3.46%
- --------------------------------------------------------------------------------
29,000 American Radio Systems (a) 717,750
- --------------------------------------------------------------------------------
18,200 Hummingbird Communications (a) 677,950
- --------------------------------------------------------------------------------
34,300 Nera AS-ADS (a) 1,179,063
- --------------------------------------------------------------------------------
10,000 Tel-Save Holdings (a) 153,750
- --------------------------------------------------------------------------------
47,300 Teltrend (a) 1,560,900
- --------------------------------------------------------------------------------
4,289,413
================================================================================
The Ubiquitous
Semiconductor -- 7.04%
- --------------------------------------------------------------------------------
58,000 Actel (a) 1,022,250
- --------------------------------------------------------------------------------
46,600 ANADIGICS (a) 1,293,150
- --------------------------------------------------------------------------------
33,700 FSI International (a) 1,120,525
- --------------------------------------------------------------------------------
48,900 Information Storage Devices (a) 1,106,363
- --------------------------------------------------------------------------------
48,100 Micrel (a) 1,346,800
- --------------------------------------------------------------------------------
28,000 Microchip Technology (a) 1,060,500
- --------------------------------------------------------------------------------
13,200 Oak Technology (a) 554,400
- --------------------------------------------------------------------------------
11,000 Opal (a) 200,750
- --------------------------------------------------------------------------------
88,000 TelCom Semiconductor (a) 1,012,000
- --------------------------------------------------------------------------------
8,716,738
================================================================================
Total Common Stocks
(Cost $89,901,381) $ 112,203,538
================================================================================
<CAPTION>
Principal
Amount Description Value
================================================================================
<C> <S> <C>
U.S. Treasury Bills -- 5.20%
- --------------------------------------------------------------------------------
$ 433,000 5.60%, 10/19/95 $ 431,839
- --------------------------------------------------------------------------------
308,000 5.37%, 10/26/95 306,879
- --------------------------------------------------------------------------------
237,000 5.25%, 11/24/95 235,088
- --------------------------------------------------------------------------------
787,000 5.35%, 12/07/95 779,411
- --------------------------------------------------------------------------------
114,000 5.28%, 12/14/95 112,768
- --------------------------------------------------------------------------------
1,005,000 5.42%, 12/21/95 993,230
- --------------------------------------------------------------------------------
3,271,000 5.33%, 1/18/96 3,220,757
- --------------------------------------------------------------------------------
364,000 5.46%, 1/25/96 357,965
- --------------------------------------------------------------------------------
Total U.S. Treasury Bills
(Cost $6,437,147) $ 6,437,937
================================================================================
Total Investments
(Cost $96,338,528) 95.81% $ 118,641,475
- --------------------------------------------------------------------------------
Other Assets in Excess of Liabilities 4.19% 5,186,477
- --------------------------------------------------------------------------------
Net Assets 100.00% $ 123,827,952
================================================================================
</TABLE>
(a) Non-Income Producing Security
See Notes to Financial Statements on Pages 20 and 21.
<PAGE> 63
SMALL CAP FUND 17
----------------------------------------------------------------------
Notes To Financial Statements
- --------------------------------------------------------------------------------
Note 1 - Organization and Significant Accounting Policies
A. Organization
BT Investment Funds (the "Trust") is registered under the Investment Company
Act of 1940 (the "Act"), as amended, as an open-end management investment
company. The Trust was organized on July 21, 1986, as a business trust under
the laws of the Commonwealth of Massachusetts. The Small Cap Fund (the "Fund")
is one of the funds offered to investors by the Trust. The Fund commenced
operations and began offering shares of beneficial interest on October 21,
1993. The Fund invests substantially all of its assets in the Small Cap
Portfolio (the "Portfolio"). The Portfolio is an open-end management investment
company registered under the Act. The Fund seeks to achieve its investment
objective by investing all of its investable assets in the Portfolio. The value
of such investment in the Portfolio reflects the Fund's proportionate interest
in the net assets of the Portfolio. At September 30, 1995, the Fund's
investment was approximately 100% of the Portfolio.
The financial statements of the Portfolio, including the Schedule of
Portfolio Investments, are contained elsewhere in this report.
B. Investment Income
The Fund earns income, net of expenses, daily on its investment in the
Portfolio. All of the net investment income and realized and unrealized gains
and losses from the security transactions of the Portfolio are allocated pro
rata among the investors in the Portfolio at the time of such determination.
C. Dividends
It is the Fund's policy to declare and distribute dividends quarterly to
shareholders from net investment income. Dividends payable to shareholders are
recorded by the Fund on the ex-dividend date. Distributions of net realized
short-term and long-term capital gains, if any, earned by the Fund will be made
annually to the extent they are not offset by any capital loss carryforwards.
The Fund may periodically make reclassifications among certain of its
capital accounts as a result of the timing and characterization of certain
income and capital gains distributions determined annually in accordance with
federal tax regulations which may differ from generally accepted accounting
principles. For the year ended September 30, 1995, $274,306 of net investment
loss was reclassified to undistributed net realized gain from securities
transactions.
D. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income to shareholders. Therefore, no federal income tax
provision is required.
E. Other
The Trust accounts separately for the assets, liabilities, and operations of
the Fund. Expenses directly attributable to the Fund are charged to that Fund,
while expenses which are attributable to all of the Trust's funds are allocated
among them.
<PAGE> 64
SMALL CAP FUND 18
----------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 2 - Fees and Transactions
with Affiliates
The Fund has entered into an Administration and Services Agreement with
Bankers Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Fund in return for a fee computed daily and paid
monthly at an annual rate of 0.65 of 1% of the Fund's average daily net assets.
For the year ended September 30, 1995, this fee aggregated $388,661.
The Trust has entered into a Distribution Agreement with Signature
Broker-Dealer Services, Inc. ("Signature"). Under the Distribution Agreement
with the Trust, pursuant to Rule 12b-1 under the 1940 Act, Signature may seek
reimbursement, at an annual rate not exceeding 0.20 of 1% of the Fund's average
daily net assets, for expenses incurred in connection with any activities
primarily intended to result in the sale of the Fund's shares. For the year
ended September 30, 1995, there were no reimbursable expenses incurred under
this agreement.
Bankers Trust has voluntarily undertaken to waive and reimburse expenses of
the Fund, to the extent necessary, to limit all expenses to 0.65 of 1% of the
average daily net assets of the Fund, excluding expenses of the Portfolio and
1.25 of 1% of the average daily net assets of the Fund, including expenses of
the Portfolio. For the year ended September 30, 1995, expenses of the Fund have
been reduced $92,321.
The Fund is subject to such limitations as may from time to time be imposed
by the Blue Sky laws of states in which the Fund sells its shares. Currently,
the most restrictive jurisdiction imposes expense limitations of 2.5% of the
first $30,000,000 of the average daily net assets, 2.0% of the next
$70,000,000, and 1.5% of any excess over $100,000,000.
Certain trustees and officers of the Fund are also directors, officers
and/or employees of Signature. None of the trustees so affiliated received
compensation for services as trustee of the Fund. Similarly, none of the Fund's
officers received compensation from the Fund.
Note 3 - Shares of Beneficial Interest
At September 30, 1995, there were an unlimited number of shares of
beneficial interest authorized. Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
For the period
For the October 21, 1993
year ended (Commencement of Operations)
September 30, 1995 to September 30, 1994
-------------------------- ----------------------------
Shares Amount Shares Amount
--------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Sold 6,022,926 $90,112,541 1,997,724 $21,076,520
Redeemed (1,216,232) (18,568,384) (158,809) (1,685,342)
----------- ------------ --------- -----------
Net Increase 4,806,694 $71,544,157 1,838,915 $19,391,178
========== =========== ========= ===========
</TABLE>
<PAGE> 65
SMALL CAP FUND 19
----------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Trustees and Shareholders
of BT Investment Funds:
We have audited the accompanying statement of assets and liabilities of the
Small Cap Fund (one of the funds comprising BT Investment Funds) as of
September 30, 1995 and the related statement of operations for the year then
ended, the statements of changes in net assets and the financial highlights for
the year then ended and for the period October 21, 1993 (commencement of
operations) to September 30, 1994. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
the Small Cap Fund of BT Investment Funds as of September 30, 1995, the results
of its operations, the changes in its net assets, and the financial highlights
for the periods referred to above, in conformity with generally accepted
accounting principles.
/s/ Coopers & Lybrand L.L.P.
Kansas City, Missouri
November 10, 1995
<PAGE> 66
SMALL CAP PORTFOLIO 20
----------------------------------------------------------------------
Notes To Financial Statements
- --------------------------------------------------------------------------------
Note 1 - Organization and Significant
Accounting Policies
A. Organization
The Small Cap Portfolio (the "Portfolio") is registered under the Investment
Company Act of 1940 (the "Act"), as amended, as an open-end management
investment company. The Portfolio was organized on August 6, 1993 as an
unincorporated trust under the laws of New York and commenced operations on
October 21, 1993. The Declaration of Trust permits the Board of Trustees (the
"Trustees") to issue beneficial interests in the Portfolio.
B. Security Valuation
The Portfolio's investments are valued each business day by an independent
pricing service (the "Service") approved by the Trustees. Securities traded on
national exchanges or traded in the NASDAQ National Market System are valued at
the last sales prices reported at the close of business on each day.
Over-the-counter securities not included in the NASDAQ National Market System
and listed securities for which no sale was reported are valued at the mean of
the bid and asked prices. Short-term obligations with remaining maturities of
60 days or less, are valued at amortized cost which with accrued interest
approximates value. Securities for which quotations are not available are
stated at fair value as determined by the Trustees.
C. Security Transactions and Investment Income
Security transactions are accounted for on a trade date basis (date the
order to buy or sell is executed). Dividend income is recorded on the
ex-dividend date. Interest income is recorded on the accrual basis and includes
amortization of premium and discount on investments. Realized gains and losses
from securities transactions are recorded on the identified cost basis. The
Portfolio may enter into repurchase agreements with financial institutions
deemed to be creditworthy by the Portfolio's Investment Adviser, subject to the
seller's agreement to repurchase such securities at a mutually agreed upon
price. Securities purchased subject to repurchase agreements are deposited with
the Portfolio's custodian, and pursuant to the terms of the repurchase
agreement must have an aggregate market value greater than or equal to the
repurchase price plus accrued interest at all times. If the value of the
underlying securities falls below the value of the repurchase price plus
accrued interest, the Portfolio will require the seller to deposit additional
collateral by the next business day. If the request for additional collateral
is not met, or the seller defaults on its repurchase obligation, the Portfolio
maintains the right to sell the underlying securities at market value and may
claim any resulting loss against the seller.
All of the net investment income and realized and unrealized gains and
losses from the securities transactions of the Portfolio are allocated pro rata
among the investors in the Portfolio at the time of such determination.
D. Federal Income Taxes
It is the Portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to it. Therefore, no federal income tax provision is
required.
<PAGE> 67
SMALL CAP PORTFOLIO 21
----------------------------------------------------------------------
Notes To Financial Statements
- --------------------------------------------------------------------------------
Note 2 - Fees and Transactions
with Affiliates
The Portfolio has entered into an Administration and Services Agreement with
Bankers Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Portfolio in return for a fee computed daily and
paid monthly at an annual rate of 0.10 of 1% of the Portfolio's average daily
net assets. For the year ended September 30, 1995, this fee aggregated $59,848.
The Portfolio has entered into an Advisory Agreement with Bankers Trust.
Under this Advisory Agreement, Bankers Trust manages the Portfolio in
accordance with the Portfolio's investment objective and stated investment
policies in return for a fee computed daily and paid monthly at an annual rate
of 0.65 of 1% of the Portfolio's average daily net assets. For the year ended
September 30, 1995, this fee aggregated $389,015.
Bankers Trust has voluntarily undertaken to waive and reimburse expenses of
the Portfolio, to the extent necessary, to limit all expenses to 0.60 of 1% of
the average daily net assets of the Portfolio. For the year ended September 30,
1995, expenses of the Portfolio have been reduced $111,862.
Certain trustees and officers of the Portfolio are also directors, officers
and/or employees of Signature. None of the trustees so affiliated received
compensation for services as trustee of the Portfolio. Similarly, none of the
Portfolio's officers received compensation from the Portfolio.
Note 3 - Purchases and Sales of
Investment Securities
The aggregate cost of purchases and proceeds from sales of investments,
other than short-term obligations, for the year ended September 30, 1995, were
$150,170,416 and $87,357,700, respectively. For federal income tax purposes,
the tax basis of investments held at September 30, 1995 was $96,445,067. The
aggregate gross unrealized appreciation for all investments was $24,413,447 and
the aggregate gross unrealized depreciation for all investments was $2,217,039.
<PAGE> 68
SMALL CAP PORTFOLIO 22
----------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Trustees and Holders of Beneficial
Interest of the Small Cap Portfolio:
We have audited the accompanying statement of assets and liabilities of the
Small Cap Portfolio (a series of BT Investment Portfolios), including the
schedule of portfolio investments, as of September 30, 1995, and the related
statement of operations for the year then ended, the statements of changes in
net assets and the financial highlights for the year then ended and for the
period October 21, 1993 (commencement of operations) to September 30, 1994.
These financial statements and financial highlights are the responsibility of
the Portfolio's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
the Small Cap Portfolio of BT Investment Portfolios as of September 30, 1995,
the results of its operations, the changes in its net assets and the financial
highlights for the periods referred to above, in conformity with generally
accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Kansas City, Missouri
November 10, 1995
<PAGE> 69
BT INVESTMENT FUNDS
Global
High Yield
Securities
Fund
Annual Report
September 30, 1995
<PAGE> 70
GLOBAL HIGH YIELD SECURITIES FUND 1
-------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Introduction from President.................................................. 2
Letter to Shareholders from Investment Adviser............................... 3
Global High Yield Securities Fund
Statement of Assets and Liabilities....................................... 6
Statement of Operations................................................... 7
Statement of Changes in Net Assets........................................ 8
Financial Highlights...................................................... 9
Global High Yield Securities Portfolio
Statement of Assets and Liabilities....................................... 10
Statement of Operations................................................... 11
Statement of Changes in Net Assets........................................ 12
Financial Highlights...................................................... 13
Schedule of Portfolio Investments......................................... 14
Global High Yield Securities Fund
Notes to Financial Statements............................................. 16
Report of Independent Accountants......................................... 18
Global High Yield Securities Portfolio
Notes to Financial Statements............................................. 19
Report of Independent Accountants......................................... 21
For shareholder account information and current price and yield quotations,
shareholders may call their relationship manager or servicing agent.
Prospectuses containing more extensive information regarding the Global High
Yield Securities Fund may be obtained by calling or writing to Investors
Fiduciary Trust Company or Signature Broker-Dealer Services, Inc., the primary
Servicing Agent and Distributor, respectively, of BT Investment Funds:
BT Investment Funds
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, MO 64105
(800) 422-6577
BT Investment Funds
Signature Broker-Dealer Services, Inc.
6 St. James Avenue
Boston, MA 02116
(800) 545-1074
You may write to the Global High Yield Securities Fund at the following address:
BT Investment Funds
6 St. James Avenue
Boston, MA 02116
<PAGE> 71
GLOBAL HIGH YIELD SECURITIES FUND 2
-------------------------------------------------------------
Introduction from President
- --------------------------------------------------------------------------------
November, 1995
Dear Shareholders:
We are pleased to present your 1995 Annual Report for BT Investment Funds
Global High Yield Securities Fund. This Report provides you with an investment
overview as well as a financial summary of the Fund's operations for the year
ended September 30, 1995. We have also included a Letter from the Investment
Adviser detailing the factors that affected the Fund's performance and a
performance chart which illustrates your Fund's return versus a relevant
financial index. Also presented in your Report is a pie chart displaying
diversification of Portfolio investments, financial statements, financial
highlights and a listing of the Portfolio's holdings.
Looking ahead, we will continue to closely observe the economic conditions
and how they affect the financial markets.
We appreciate your ongoing support of the Global High Yield Securities Fund
and look forward to continuing to serve your investment needs.
Philip W. Coolidge
President
<PAGE> 72
GLOBAL HIGH YIELD SECURITIES FUND 3
-------------------------------------------------------------
Letter to Shareholders from Investment Adviser
- --------------------------------------------------------------------------------
The Global High Yield Securities Fund had a total return of 4.28% for the
twelve months ended September 30, 1995, versus 8.17% for the Fund's benchmark
over the same period. The benchmark is calculated using the performances of
two appropriate global and emerging market indices in the following
proportions: J.P. Morgan Emerging Bond Market Index ("EMBI"), 75%, and Merrill
Lynch High Yield Master Index, 25%. Since its inception on December 14, 1993,
the Fund has returned 7.31%.
The Fund's performance for the year was negatively affected by difficult
conditions throughout much of the first two quarters in many of the world's
emerging markets where the Fund has a significant percentage of its assets. By
late March, however, conditions began to improve, and the global high yield
market rallied strongly in the Fund's third quarter. The crisis in Mexico
subsided, concern over the banking system in Argentina subsided, and the
Brazilian congress passed key legislation relating to the economic reform
process. Poland's June 1st announcement of its investment grade credit rating
from Moody's sparked a rally in Polish Brady bonds, which continued into the
fourth quarter. The Fund also benefited in the last quarter from positive
returns on Asian positions, where credit spreads continued to tighten. The
Fund took profits in Indonesian corporate bond positions, but remains invested
in convertible bonds of Hong Kong-based companies.
Throughout the year, the Fund benefited from its holdings in United States
high yield debt. These bonds performed well due to continued growth in cash
flows of high yield companies, large net inflows into U.S. high yield bond
mutual funds, a strong U.S. Treasury market, and spread tightening in U.S.
corporate debt securities held in the Fund. Although, as anticipated, new
issue supply was heavy in the second half of the year, market returns exceeded
expectations as many new deals were well oversubscribed. In the U.S. market,
the Fund has investments in selected stable cash flow industries, such as
media and communications.
The Fund was significantly underweighted versus the EMBI for all of the year
in Mexico and Venezuela because of our credit concerns in these countries.
During this period, this had a positive impact on the Fund's performance
relative to its benchmark. During the second half of the fiscal year
securities of these two countries rallied strongly, which negatively affected
the Fund's performance versus its benchmark. We do not expect to change
significantly the Fund's positions in these two countries until our credit
concerns are mitigated.
Looking ahead, we believe that the current low interest rate environment will
lead to significant long-term values in the emerging debt markets. We are
particularly favorable toward Brazilian sovereign debt, maintain a moderate
position in Argentina and a small position in Mexico. In Asia, we like
selected markets where we see strong economic growth prospects combined with
attractive pricing of convertible and corporate debt, and in Eastern Europe,
we maintain our exposure to Poland. Finally, our outlook for the U.S. high
yield debt market remains positive, given the moderate growth in the economy,
the strength in stocks, and the Federal Reserve Board in a flat to easing
mode.
<PAGE> 73
GLOBAL HIGH YIELD SECURITIES FUND 4
-------------------------------------------------------------
Letter to Shareholders from Investment Adviser
- --------------------------------------------------------------------------------
The following graph illustrates the Fund's return versus a blended J.P. Morgan
Emerging Bond Market Index and the Merrill Lynch High Yield Master Index since
December 31, 1993, assuming a $10,000 initial investment:
- -------------------------------------------------------------------------------
Comparison of Change in Value of a $10,000 Investment in the Global High
Yield Securities Fund and the blended J.P. Morgan and Merrill Lynch Indices
Total Return
ended September 30, 1995
One Year Since 12/14/93*
4.28% 7.31%
*The Fund's inception date.
Investment return and principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Global High Yield JP Morgan (75%) & Merrill
Securities Fund Lynch (25%)
----------------- -------------------------
<S> <C> <C>
12/31/93 $10,000 $10,000
3/31/94 $9,870 $8,584
6/30/94 $9,711 $8,474
9/30/94 $10,259 $9,161
12/31/94 $9,694 $8,570
3/31/95 $9,128 $8,043
6/30/95 $10,207 $9,448
9/30/95 $10,699 $9,927
</TABLE>
Past performance is not indicative of future performance.
- --------------------------------------------------------------------------------
About the
Portfolio Managers
Stephen C. Freidheim
Managing Director & Portfolio Manager
- Responsible for portfolio management and trading of
high yield investment products
- Formerly Senior Vice President and Director of Research
and Trading. Board of Directors: Nomura Corporate
Research and Asset Management; Director of Research:
Kidder Peabody High Yield Asset Management
- Nine years investment experience, including two years
as a sell-side industry analyst for Kidder Peabody
- Joined Bankers Trust G lobal High Yield group in 1993
- B.A. (Economics) -- Yale University
- --------------------------------------------------------------------------------
David A. Reiss
Vice President & Emerging Markets Portfolio Manager
- Responsible for portfolio management, trading and
credit analysis of emerging markets
- Managed $700MM of high yield assets for Kidder Peabody
Asset Management
- Served as Associate in Mortgage Research at Goldman
Sachs
- Joined Bankers Trust in 1994
- M.B.A. (Finance) Wharton School of Business
B.A. (Mathematics) University of Pennsylvania
<PAGE> 74
GLOBAL HIGH YIELD SECURITIES FUND 5
-------------------------------------------------------------
- --------------------------------------------------------------------------------
Objective
Seeks a high level of current income, with a secondary objective of capital
appreciation, through investments in the global high yield debt markets.
- --------------------------------------------------------------------------------
Investment Instruments
Primarily high yield, non-investment grade debt securities issued in many of
the world's securities markets.
- --------------------------------------------------------------------------------
Diversification of Portfolio
Investments by Asset Type
as of September 30, 1995
(percentages are based on market value)
[PIE GRAPH APPEARS HERE]
<TABLE>
<S> <C>
Foreign Preferred Stocks 3.37%
Foreign Government Bonds 32.77%
U.S. Corporate Debentures 30.93%
Foreign Corporate Debentures 32.93%
</TABLE>
<PAGE> 75
GLOBAL HIGH YIELD SECURITIES FUND 6
-------------------------------------------------------------
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
September 30, 1995
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Assets
- -------------------------------------------------------------------------------------------------------------------------------
Investment in Global High Yield Securities Portfolio, at Value $23,003,455
- -------------------------------------------------------------------------------------------------------------------------------
Receivable for Shares of Beneficial Interest Sold 30,000
- -------------------------------------------------------------------------------------------------------------------------------
Deferred Organizational Expenses 5,328
- -------------------------------------------------------------------------------------------------------------------------------
Prepaid Expenses 4,051
- -------------------------------------------------------------------------------------------------------------------------------
Total Assets 23,042,834
- -------------------------------------------------------------------------------------------------------------------------------
Liabilities
- -------------------------------------------------------------------------------------------------------------------------------
Due to Bankers Trust 9,277
- -------------------------------------------------------------------------------------------------------------------------------
Payable for Shares of Beneficial Interest Redeemed 96,010
- -------------------------------------------------------------------------------------------------------------------------------
Accrued Expenses and Accounts Payable 24,382
- -------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 129,669
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets (Applicable to 2,342,469 Outstanding Shares of $0.001 Par Value
Per Share, Unlimited Number of Shares of Beneficial Interest Authorized) $22,913,165
===============================================================================================================================
Net Asset Value, Subscription and Redemption Price Per Share
($22,913,165/2,342,469 Shares) $ 9.78
===============================================================================================================================
Composition of Net Assets
- -------------------------------------------------------------------------------------------------------------------------------
Shares of Beneficial Interest, at Par $ 2,342
- -------------------------------------------------------------------------------------------------------------------------------
Paid-in Capital 23,069,073
- -------------------------------------------------------------------------------------------------------------------------------
Undistributed Net Investment Income 511,309
- -------------------------------------------------------------------------------------------------------------------------------
Accumulated Net Realized (Loss) from Securities and Foreign Currency Transactions (699,445)
- -------------------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Securities 29,877
- -------------------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Foreign Currency Translation 9
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets, September 30, 1995 $22,913,165
===============================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 16 and 17
<PAGE> 76
GLOBAL HIGH YIELD SECURITIES FUND 7
-------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
For the year ended September 30, 1995
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Investment Income
- -------------------------------------------------------------------------------------------------------------------------------
Income Allocated from Global High Yield Securities Portfolio, net $1,705,971
- -------------------------------------------------------------------------------------------------------------------------------
Expenses
- -------------------------------------------------------------------------------------------------------------------------------
Administration and Services Fee $167,703
- -------------------------------------------------------------------------------------------------------------------------------
Professional Fees 11,146
- -------------------------------------------------------------------------------------------------------------------------------
Registration Fees 34,232
- -------------------------------------------------------------------------------------------------------------------------------
Trustees Fees 1,564
- -------------------------------------------------------------------------------------------------------------------------------
Amortization of Organizational Expenses 3,071
- -------------------------------------------------------------------------------------------------------------------------------
Shareholders Reports 28,569
- -------------------------------------------------------------------------------------------------------------------------------
Insurance 894
- -------------------------------------------------------------------------------------------------------------------------------
Miscellaneous 848
- -------------------------------------------------------------------------------------------------------------------------------
Total Expenses 248,027
- -------------------------------------------------------------------------------------------------------------------------------
Less: Expenses Absorbed by Bankers Trust (74,013) 174,014
- -------------------------------------------------------------------------------------------------------------------------------
Net Investment Income 1,531,957
- -------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss) on Securities and Foreign Currency
- -------------------------------------------------------------------------------------------------------------------------------
Net Realized (Loss) from Securities Transactions (511,935)
- -------------------------------------------------------------------------------------------------------------------------------
Net Realized (Loss) from Foreign Currency Transactions (4,480)
- -------------------------------------------------------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Securities (7,120)
- -------------------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Foreign Currency Translation 3,602
- -------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized (Loss) on Securities and Foreign Currency (519,933)
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Operations $1,012,024
===============================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 16 and 17
<PAGE> 77
GLOBAL HIGH YIELD SECURITIES FUND 8
-------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
December 14, 1993
For the (Commencement
year ended of Operations) to
September 30, 1995 September 30, 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets
- ---------------------------------------------------------------------------------------------------------------------
From Operations
- ---------------------------------------------------------------------------------------------------------------------
Net Investment Income $ 1,531,957 $ 449,268
- ---------------------------------------------------------------------------------------------------------------------
Net Realized (Loss) from Securities and
Foreign Currency Transactions (516,415) (183,030)
- ---------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation (Depreciation) on
Securities and Foreign Currency Translation (3,518) 33,404
- ---------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Operations 1,012,024 299,642
- ---------------------------------------------------------------------------------------------------------------------
From Dividends
- ---------------------------------------------------------------------------------------------------------------------
Net Investment Income (1,469,916) --
- ---------------------------------------------------------------------------------------------------------------------
Net (Decrease) in Net Assets from Dividends (1,469,916) --
- ---------------------------------------------------------------------------------------------------------------------
From Transactions in Shares of Beneficial Interest
- ---------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Transactions in
Shares of Beneficial Interest 8,632,701 14,438,714
- ---------------------------------------------------------------------------------------------------------------------
Total Increase in Net Assets 8,174,809 14,738,356
=====================================================================================================================
Net Assets
- ---------------------------------------------------------------------------------------------------------------------
Beginning of Period 14,738,356 --
- ---------------------------------------------------------------------------------------------------------------------
End of Period (including Undistributed Net Investment Income
of $511,309 and $449,268 for 1995 and 1994, respectively) $22,913,165 $14,738,356
=====================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 16 and 17
<PAGE> 78
GLOBAL HIGH YIELD SECURITIES FUND 9
-------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Contained below are selected data for a share outstanding, total investment
return, ratios to average net assets and other supplemental data for each of
the periods indicated for the Global High Yield Securities Fund.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
For the period
December 14, 1993
For the (Commencement
year ended of Operations) to
September 30, 1995 September 30, 1994
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Selected Per Share Data
Net Asset Value, Beginning of Period $ 10.29 $ 10.00
-------- --------
Income from Investment Operations
Net Investment Income 0.77 0.31
Net Realized and Unrealized (Loss) on Securities
and Foreign Currency (0.41) (0.02)
-------- --------
Total from Investment Operations 0.36 0.29
-------- --------
Less Dividends
Dividends from Net Investment Income (0.87) --
-------- --------
Net Asset Value, End of Period $ 9.78 $ 10.29
======== ========
Total Investment Return 4.28% 3.66%*
Ratios and Supplemental Data
Ratio of Net Investment Income to Average Net Assets 8.68% 5.44%*
Ratio of Expenses to Average Net Assets, Including
Expenses of the Global High Yield Securities Portfolio 1.74% 1.75%*
Decrease Reflected in Above Expense Ratio Due to Absorption of
Expenses by Bankers Trust 0.87% 1.08%*
Net Assets, End of Period (000's omitted) $22,913 $14,738
</TABLE>
*Annualized
See Notes to Financial Statements on Pages 16 and 17
<PAGE> 79
GLOBAL HIGH YIELD SECURITIES PORTFOLIO 10
-------------------------------------------------------------
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
September 30, 1995
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Assets
- --------------------------------------------------------------------------------
Investments, at Value (Cost $21,438,021) $21,468,005
- --------------------------------------------------------------------------------
Cash 1,404,716
- --------------------------------------------------------------------------------
Interest Receivable 664,616
- --------------------------------------------------------------------------------
Prepaid Expenses and Other Assets 279
- --------------------------------------------------------------------------------
Total Assets 23,537,616
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Due to Bankers Trust 8,871
- --------------------------------------------------------------------------------
Payable for Securities Purchased 497,815
- --------------------------------------------------------------------------------
Accrued Expenses and Accounts Payable 27,465
- --------------------------------------------------------------------------------
Total Liabilities 534,151
- --------------------------------------------------------------------------------
Net Assets $23,003,465
================================================================================
Composition of Net Assets
- --------------------------------------------------------------------------------
Paid-in Capital $22,973,472
- --------------------------------------------------------------------------------
Net Unrealized Appreciation on Securities 29,984
- --------------------------------------------------------------------------------
Net Unrealized Appreciation on Foreign Currency Translation 9
- --------------------------------------------------------------------------------
Net Assets, September 30, 1995 $23,003,465
================================================================================
</TABLE>
See Notes to Financial Statements on Pages 19 and 20
<PAGE> 80
GLOBAL HIGH YIELD SECURITIES PORTFOLIO 11
-------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
For the year ended September 30, 1995
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Investment Income
- --------------------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding tax of $847) $ 15,761
- --------------------------------------------------------------------------------------------------------------
Interest 1,823,124
- --------------------------------------------------------------------------------------------------------------
Total Investment Income $1,838,885
- --------------------------------------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------------------------------------
Advisory Fee 141,692
- --------------------------------------------------------------------------------------------------------------
Administration and Services Fee 35,423
- --------------------------------------------------------------------------------------------------------------
Professional Fees 26,982
- --------------------------------------------------------------------------------------------------------------
Insurance 2,695
- --------------------------------------------------------------------------------------------------------------
Interest 1,298
- --------------------------------------------------------------------------------------------------------------
Trustees Fees 1,563
- --------------------------------------------------------------------------------------------------------------
Amortization of Organizational Expenses 1,432
- --------------------------------------------------------------------------------------------------------------
Miscellaneous 592
- --------------------------------------------------------------------------------------------------------------
Total Expenses 211,677
- --------------------------------------------------------------------------------------------------------------
Less: Expenses Absorbed by Bankers Trust (78,840) 132,837
- --------------------------------------------------------------------------------------------------------------
Net Investment Income 1,706,048
- --------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss) on Securities and Foreign Currency
- --------------------------------------------------------------------------------------------------------------
Net Realized (Loss) from Securities Transactions (511,939)
- --------------------------------------------------------------------------------------------------------------
Net Realized (Loss) from Foreign Currency Transactions (4,480)
- --------------------------------------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Securities (7,013)
- --------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Foreign Currency Translation 3,602
- --------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized (Loss) on Securities and Foreign Currency (519,830)
- --------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Operations $1,186,218
- --------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements on Pages 19 and 20
<PAGE> 81
GLOBAL HIGH YIELD SECURITIES PORTFOLIO 12
-------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
December 14, 1993
For the (Commencement
year ended of Operations) to
September 30, 1995 September 30, 1994
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets
- ------------------------------------------------------------------------------------------------------------------
From Operations
- ------------------------------------------------------------------------------------------------------------------
Net Investment Income $ 1,706,048 $ 531,903
- ------------------------------------------------------------------------------------------------------------------
Net Realized (Loss) from Securities and Foreign
Currency Transactions (516,419) (183,030)
- ------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation (Depreciation) on Securities
and Foreign Currency Translation (3,411) 33,404
- ------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Operations 1,186,218 382,277
- ------------------------------------------------------------------------------------------------------------------
From Capital Transactions
- ------------------------------------------------------------------------------------------------------------------
Proceeds from Capital Invested 18,275,555 21,182,075
- ------------------------------------------------------------------------------------------------------------------
Value of Capital Withdrawn (11,187,306) (6,835,354)
- ------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Capital Transactions 7,088,249 14,346,721
- ------------------------------------------------------------------------------------------------------------------
Total Increase in Net Assets 8,274,467 14,728,998
==================================================================================================================
Net Assets
- ------------------------------------------------------------------------------------------------------------------
Beginning of Period 14,728,998 --
- ------------------------------------------------------------------------------------------------------------------
End of Period $ 23,003,465 $14,728,998
==================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 19 and 20
<PAGE> 82
GLOBAL HIGH YIELD SECURITIES PORTFOLIO 13
-------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Contained below are selected ratios and supplemental data for each of the
periods indicated for the Global High Yield Securities Portfolio.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
For the period
December 14, 1993
For the (Commencement
year ended of Operations) to
September 30, 1995 September 30, 1994
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Ratios and Supplemental Data
Ratio of Net Investment Income to Average Net Assets 9.63% 6.44%*
Ratio of Expenses to Average Net Assets 0.75% 0.75%*
Decrease Reflected in Above Ratio of Expenses to Average
Net Assets Due to Absorption of Expenses by Bankers Trust 0.45% 0.59%*
Portfolio Turnover Rate 169% 347%
Net Assets, End of Period (000's omitted) $23,003 $14,729
</TABLE>
* Annualized
See Notes to Financial Statements on Pages 19 and 20
<PAGE> 83
GLOBAL HIGH YIELD SECURITIES PORTFOLIO 14
-------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
September 30, 1995
<TABLE>
<CAPTION>
Principal
Amount Description Value
================================================================================
<C> <S> <C>
GOVERNMENT BONDS - 30.59%
- --------------------------------------------------------------------------------
Argentina - 7.38%
- --------------------------------------------------------------------------------
$1,750,000 Argentina Par Series L-GL
6.875%, 3/31/23 (a) $1,017,188
- --------------------------------------------------------------------------------
1,400,000 Argentina Par Series L-GP
5.00%, 3/31/23 (a) 680,750
- --------------------------------------------------------------------------------
1,697,938
================================================================================
Brazil - 14.17%
- --------------------------------------------------------------------------------
1,404,540 Brazil C 8.00%,
4/15/14 747,918
- --------------------------------------------------------------------------------
1,248,480 Brazil C Series L 8.00%,
4/15/14 664,815
- --------------------------------------------------------------------------------
1,000,000 Brazil DCB Series L 7.312%,
4/15/12 (a) 576,875
- --------------------------------------------------------------------------------
1,000,000 Brazil New Money Bond
7.312%, 4/15/09 (a) 607,500
- --------------------------------------------------------------------------------
1,000,000 Brazil Series EI-L 7.25%,
4/15/06 (a) 663,125
- --------------------------------------------------------------------------------
3,260,233
================================================================================
Mexico - 1.32%
- --------------------------------------------------------------------------------
500,000 Mexico Par Series B 6.25%,
12/31/19 304,063
================================================================================
Morocco - 2.18%
- --------------------------------------------------------------------------------
800,000 Morocco Reconstruction &
Consolidation Agreement Series A
6.687%, 1/1/09 (a) 501,000
================================================================================
Panama - 1.83%
- --------------------------------------------------------------------------------
700,000 Panama Refinance Loan
8.01%, 4/24/96 (a) 420,000
================================================================================
Poland - 2.36%
- --------------------------------------------------------------------------------
275,000 Poland Discount 7.125%,
10/27/24 (a) 212,781
- --------------------------------------------------------------------------------
145,000 Poland Series PDI 3.25%,
10/27/14 (a) 91,713
- --------------------------------------------------------------------------------
521,000 Poland Series RSTA 2.75%,
10/27/24 (a) 237,706
- --------------------------------------------------------------------------------
542,200
================================================================================
Uruguay - 1.35%
- --------------------------------------------------------------------------------
500,000 Uruguay Discount Note Series B
6.75%, 2/18/07 (a) 310,000
================================================================================
Total Government Bonds (Cost $7,138,945) $7,035,434
================================================================================
CORPORATE DEBENTURES - 59.59%
- --------------------------------------------------------------------------------
Argentina - 0.69%
- --------------------------------------------------------------------------------
200,000 Baesa Embotelladora 8.50%,
12/29/00 (c) $ 159,500
================================================================================
Canada - 13.74%
- --------------------------------------------------------------------------------
500,000 Acetex 9.75%,
10/1/03 (c) 497,815
- --------------------------------------------------------------------------------
1,000,000 Call - Net Enterprises 0.00%,
12/1/04 (d) 648,750
- --------------------------------------------------------------------------------
250,000 Cott 9.375%,
7/1/05 254,375
- --------------------------------------------------------------------------------
500,000 Domtar 12.00%,
4/15/01 577,500
- --------------------------------------------------------------------------------
500,000 Rogers Cablesystems 10.00%,
3/15/05 525,000
- --------------------------------------------------------------------------------
250,000 Rogers Cablesystems 9.65%,
1/15/14 160,237
- --------------------------------------------------------------------------------
500,000 Tembec 9.875%,
9/30/05 497,500
- --------------------------------------------------------------------------------
3,161,177
================================================================================
Colombia - 1.89%
- --------------------------------------------------------------------------------
500,000 Celcaribe 0.00%,
3/15/04 (b) (c) 435,000
================================================================================
Costa Rica - 1.69%
- --------------------------------------------------------------------------------
700,000 Banco Central de Costa Rica
Series A 6.25%, 5/21/10 388,500
================================================================================
Hong Kong - 3.93%
- --------------------------------------------------------------------------------
500,000 Goldlion Capital 4.875%,
2/1/99 481,250
- --------------------------------------------------------------------------------
500,000 Hon Kwok Land Treasury
4.875%, 12/15/00 422,500
- --------------------------------------------------------------------------------
903,750
================================================================================
</TABLE>
See Notes to Financial Statements on Pages 19 and 20
<PAGE> 84
GLOBAL HIGH YIELD SECURITIES PORTFOLIO 15
-------------------------------------------------------------
Schedule of Portfolio Investments
================================================================================
September 30, 1995
<TABLE>
<CAPTION>
Principal
Amount Description Value
================================================================================
<C> <S> <C> <C>
South Africa - 7.35%
- --------------------------------------------------------------------------------
$825,000 Liberty Life Association 6.50%,
9/30/04 $ 907,500
- --------------------------------------------------------------------------------
330,000 Samancor O/S Financing 7.00%,
6/30/04 313,913
- --------------------------------------------------------------------------------
300,000 Sappi BIV Financing 7.50%,
8/1/02 (c) 312,189
- --------------------------------------------------------------------------------
150,000 Sappi BIV Financing 7.50%,
8/1/02 155,906
- --------------------------------------------------------------------------------
1,689,508
================================================================================
United Kingdom - 1.44%
- --------------------------------------------------------------------------------
500,000 Videotron Holdings 0.00%,
7/1/04 (d) 331,250
================================================================================
United States - 28.86%
- --------------------------------------------------------------------------------
95,000 Barlow International Investments
7.00%, 9/20/04 122,075
- --------------------------------------------------------------------------------
250,000 Borden Chemical & Plastics 9.50%,
5/1/05 256,250
- --------------------------------------------------------------------------------
500,000 Crown Packaging 10.75%,
11/1/00 485,000
- --------------------------------------------------------------------------------
500,000 Giant Industries 9.75%,
11/15/03 495,000
- --------------------------------------------------------------------------------
500,000 Host Mar Travel Plaza 9.50%,
5/15/05 (c) 486,250
- --------------------------------------------------------------------------------
500,000 Icon Health and Fitness 13.00%,
7/15/02 527,500
- --------------------------------------------------------------------------------
500,000 In Flight Phone 0.00%,
5/15/02 (b)(e) 202,500
- --------------------------------------------------------------------------------
500,000 Owens Illinois 9.75%,
8/15/04 515,000
- --------------------------------------------------------------------------------
500,000 Penn Traffic 8.625%,
12/15/03 433,750
- --------------------------------------------------------------------------------
500,000 Pioneer Americas ACQ 13.375%,
4/1/05 (c) 515,000
- --------------------------------------------------------------------------------
1,000,000 Pricellular 0.00%,
10/1/03 (d) 715,000
- --------------------------------------------------------------------------------
500,000 SCI Television 11.00%,
6/30/05 532,500
- --------------------------------------------------------------------------------
500,000 S.D. Warren 12.00%,
12/15/04 555,000
- --------------------------------------------------------------------------------
500,000 Schuller International Group
10.875%, 12/15/04 553,750
- --------------------------------------------------------------------------------
250,000 Universal Health Services
8.75%, 8/15/05 245,000
- --------------------------------------------------------------------------------
6,639,575
================================================================================
Total Corporate Debentures (Cost $13,667,627) $13,708,260
================================================================================
OTHER SECURITIES - 0.00%
- --------------------------------------------------------------------------------
Mexico - 0.00%
- --------------------------------------------------------------------------------
500,000 Mexico Recovery Rights
Expire 6/30/03 $ 0
================================================================================
United States - 0.00%
- --------------------------------------------------------------------------------
500 IHF Holdings-Warrants Series I
Expire 11/14/99 0
================================================================================
PREFERRED STOCKS - 3.15%
- --------------------------------------------------------------------------------
South Africa - 3.15%
- --------------------------------------------------------------------------------
50,500 Sasol 8.5% Convertible $ 414,870
- --------------------------------------------------------------------------------
10,000 South African Breweries,
Cl. B 309,441
- --------------------------------------------------------------------------------
Total Preferred Stocks (Cost $631,449) $ 724,311
================================================================================
Total Investments
(Cost $21,438,021) 93.33% $21,468,005
- --------------------------------------------------------------------------------
Other Assets in Excess of Liabilities 6.67% 1,535,460
- --------------------------------------------------------------------------------
Net Assets 100.00% $23,003,465
================================================================================
</TABLE>
(a) Floating Rate Security
(b) Purchased at Deep Discount
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $2,405,754 or 10.46% of net
assets.
(d) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(e) Non-Income Producing Security
See Notes to Financial Statements on Pages 19 and 20
<PAGE> 85
GLOBAL HIGH YIELD SECURITIES FUND 16
------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 1 -- Organization and Significant
Accounting Policies
A. Organization
BT Investment Funds (the "Trust") is registered under the Investment Company
Act of 1940 (the "Act"), as amended, as an open-end management investment
company. The Trust was organized on July 21, 1986, as a business trust under
the laws of the Commonwealth of Massachusetts. The Global High Yield Securities
Fund (the "Fund") is one of the funds offered to investors by the Trust. The
Fund commenced operations and began offering shares of beneficial interest on
December 14, 1993. The Fund invests substantially all of its assets in the
Global High Yield Securities Portfolio (the "Portfolio"). The Portfolio is an
open-end management investment company registered under the Act. The Fund seeks
to achieve its investment objective by investing all of its investable assets
in the Portfolio. The value of such investment in the Portfolio reflects the
Fund's proportionate interest in the net assets of the Portfolio. At September
30, 1995, the Fund's investment was approximately 100% of the Portfolio.
The financial statements of the Portfolio, including the Schedule of
Portfolio Investments, are contained elsewhere in this report.
B. Investment Income
The Fund earns income, net of expenses, daily on its investment in the
Portfolio. All of the net investment income and realized and unrealized gains
and losses from the security and foreign currency transactions of the Portfolio
are allocated pro rata among the investors in the Portfolio at the time of such
determination.
C. Organizational Expenses
Costs incurred by the Fund in connection with its organization and initial
registration are being amortized over a five year period on a straight-line
basis.
D. Dividends
It is the Fund's policy to declare and distribute dividends quarterly to
shareholders from net investment income. Dividends payable to shareholders are
recorded by the Fund on the ex-dividend date. Distributions of net realized
short-term and long-term capital gains, if any, earned by the Fund will be made
annually to the extent they are not offset by any capital loss carryforwards.
The Fund may periodically make reclassifications among certain of its
capital accounts as a result of the timing and characterization of certain
income and capital gains distributions determined annually in accordance with
federal tax regulations which may differ from generally accepted accounting
principles.
E. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income to shareholders. Therefore, no federal income tax
provision is required.
F. Other
The Trust accounts separately for the assets, liabilities, and operations of
the Fund. Expenses directly attributable to the Fund are charged to that Fund,
while expenses which are attributable to all of the Trust's funds are allocated
among them.
<PAGE> 86
GLOBAL HIGH YIELD SECURITIES FUND 17
------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 2 -- Fees and Transactions with Affiliates
The Fund has entered into an Administration and Services Agreement with
Bankers Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Fund in return for a fee computed daily and paid
monthly at an annual rate of 0.95 of 1% of the Fund's average daily net assets.
For the year ended September 30, 1995, this fee aggregated $167,703.
The Trust has entered into a Distribution Agreement with Signature
Broker-Dealer Services, Inc. ("Signature"). Under the Distribution Agreement
with the Trust, pursuant to Rule 12b-1 of the 1940 Act, Signature may seek
reimbursement, at an annual rate not exceeding 0.20 of 1% of the Fund's average
daily net assets, for expenses incurred in connection with any activities
primarily intended to result in the sale of the Fund's shares. For the year
ended September 30, 1995, there were no reimbursable expenses incurred under
this agreement.
Bankers Trust has voluntarily undertaken to waive and reimburse expenses of
the Fund, to the extent necessary, to limit all expenses to 1.00 of 1% of the
average daily net assets of the Fund, excluding expenses of the Portfolio and
1.75 of 1% of the average daily net assets of the Fund, including expenses of
the Portfolio. On September 15, 1995, the Board of Trustees approved a change
to reduce the Fund's reimbursement policy to waive and reimburse expenses of
the Fund, to the extent necessary, to limit all expenses to 0.75 of 1% of the
average daily net assets of the Fund, excluding expenses of the Portfolio and
1.50 of 1% of the average daily net assets of the Fund, including expenses of
the Portfolio. For the year ended September 30, 1995, expenses of the Fund have
been reduced $74,013.
The Fund is subject to such limitations as may from time to time be imposed
by the Blue Sky laws of states in which the Fund sells its shares. Currently,
the most restrictive jurisdiction imposes expense limitations of 2.5% of the
first $30,000,000 of the average daily net assets, 2.0% of the next
$70,000,000, and 1.5% of any excess over $100,000,000.
Certain trustees and officers of the Fund are also directors, officers
and/or employees of Signature. None of the trustees so affiliated received
compensation for services as trustee of the Fund. Similarly, none of the Fund's
officers received compensation from the Fund.
Note 3 -- Shares of Beneficial Interest
At September 30, 1995, there were an unlimited number of shares of
beneficial interest authorized. Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
For the period
December 14, 1993
For the (Commencement
year ended of Operations)
September 30, 1995 to September 30, 1994
------------------------ --------------------------
Shares Amount Shares Amount
------------------------ --------------------------
<S> <C> <C> <C> <C>
Sold 1,942,399 $ 18,303,164 2,104,030 $21,182,065
Reinvested 49,577 458,206 -- --
Redeemed (1,081,376) (10,128,669) (672,161) (6,743,351)
---------- ------------ --------- -----------
Net Increase 910,600 $ 8,632,701 1,431,869 $14,438,714
========== ============ ========= ===========
</TABLE>
Note 4 -- Capital Loss Carryforward
At September 30, 1995, accumulated net realized capital loss carryforwards
available as a reduction against future net realized capital gains aggregated
$609,870 of which $155,004 and $454,866 expires in 2002 and 2003, respectively.
<PAGE> 87
GLOBAL HIGH YIELD SECURITIES FUND 18
----------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Trustees and Shareholders of BT Investment Funds:
We have audited the accompanying statement of assets and liabilities of the
Global High Yield Securities Fund (one of the funds comprising BT Investment
Funds) as of September 30, 1995 and the related statement of operations for the
year ended, the statements of changes in net assets and the financial highlights
for the year then ended and for the period December 14, 1993 (commencement of
operations) to September 30, 1994. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
the Global High Yield Securities Fund of BT Investment Funds as of September
30, 1995, the results of its operations, the changes in its net assets, and the
financial highlights for the periods referred to above, in conformity with
generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Kansas City, Missouri
November 14, 1995
<PAGE> 88
GLOBAL HIGH YIELD SECURITIES PORTFOLIO 19
-------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 1 -- Organization and Significant Accounting Policies
A. Organization
The Global High Yield Securities Portfolio (the "Portfolio") is registered
under the Investment Company Act of 1940 (the "Act"), as amended, as an
open-end management investment company. The Portfolio was organized on August
6, 1993 as an unincorporated trust under the laws of New York and commenced
operations on December 14, 1993. The Declaration of Trust permits the Board of
Trustees (the "Trustees") to issue beneficial interests in the Portfolio.
B. Security Valuation
The Portfolio's investments are valued each business day by an independent
pricing service (the "Service") approved by the Trustees. Investments for which
quoted bid prices in the judgment of the Service are readily available and are
representative of the bid side of the market are valued at the mean between the
quoted bid prices (as obtained by the Service from dealers in such securities)
and asked prices (as calculated by the Service based upon its evaluation of the
market for such securities). Other investments (which constitute a majority of
the portfolio securities) are carried at fair value as determined by the
Service, based on methods which include consideration of: yields or prices of
securities of comparable quality, coupon, maturity and type; indications as to
values from dealers; and general market conditions. Securities traded primarily
on a principal securities exchange (domestic or foreign) are valued at their
last reported sale price on that exchange. If no sale is reported, or if local
custom or regulation so provides, the mean of the latest bid and asked price is
used. Securities traded over-the-counter are valued using either the mean
between the bid and asked price or, where local custom or regulations so
provide, the last sales price. Short-term obligations with remaining maturities
of 60 days or less are valued at amortized cost which with accrued interest
approximates value. Securities for which quotations are not available are stated
at fair value as determined by the Trustees.
C. Foreign Currency Transactions
The books and records of the Portfolio are maintained in U.S. dollars. All
assets and liabilities initially expressed in foreign currencies are converted
into U.S. dollars at prevailing exchange rates. Purchases and sales of
investment securities and interest income, and certain expenses are translated
at the rates of exchange prevailing on the respective dates of such
transactions.
The portfolio does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from securities.
D. Forward Foreign Currency Contracts
The Portfolio may enter into forward foreign currency contracts for the
purpose of settling specific purchases or sales of securities denominated in a
foreign currency or with respect to the Portfolio's investments generally. The
net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Portfolio and the resulting unrealized appreciation or
depreciation are determined using prevailing exchange rates. With respect to
forward foreign currency contracts, losses in excess of amounts recognized in
the Statement of Assets and Liabilities may arise due to changes in the value
of the foreign currency or if the counterparty does not perform under the
contract.
E. Security Transactions and Investment Income
Security transactions are accounted for on a trade date basis (date the
order to buy or sell is executed). Interest income is recorded on the accrual
basis and includes amortization of premium and discount on investments.
Realized gains and losses from securities transactions are recorded on the
identified cost basis.
All of the net investment income and realized and unrealized gains and
losses from securities and foreign currency transactions of the Portfolio are
allocated pro rata among investors of the Portfolio at the time of such
determination.
<PAGE> 89
GLOBAL HIGH YIELD SECURITIES PORTFOLIO 20
-------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
F. Federal Income Taxes
It is the Portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to it. Therefore, no federal income tax provision is
required.
Note 2 -- Fees and Transactions with Affiliates
The Portfolio has entered into an Administration and Services Agreement with
Bankers Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Portfolio in return for a fee computed daily and
paid monthly at an annual rate of 0.20 of 1% of the Portfolio's average daily
net assets. For the year ended September 30, 1995, this fee aggregated $35,423.
The Portfolio has entered into an Advisory Agreement with Bankers Trust.
Under this Advisory Agreement, Bankers Trust manages the Portfolio in
accordance with the Portfolio's investment objective and stated investment
policies in return for a fee computed daily and paid monthly at an annual rate
of 0.80 of 1% of the Portfolio's average daily net assets. For the year ended
September 30, 1995, this fee aggregated $141,692.
Bankers Trust has voluntarily undertaken to waive and reimburse expenses of
the Portfolio, to the extent necessary, to limit all expenses to 0.75 of 1% of
the average daily net assets of the Portfolio. For the year ended September 30,
1995, expenses of the Portfolio have been reduced $78,840.
Certain trustees and officers of the Portfolio are also directors, officers
and/or employees of Signature. None of the trustees so affiliated received
compensation for services as trustee of the Portfolio. Similarly, none of the
Portfolio's officers received compensation from the Portfolio.
Note 3 -- Purchases and Sales of Investment Securities
The aggregate cost of purchases and proceeds from sales of investments,
other than short-term obligations, for the year ended September 30, 1995, were
$35,330,574 and $27,950,936, respectively. For Federal Income tax purposes, the
tax basis of investments held at September 30, 1995 was $21,501,091. The
aggregate gross unrealized appreciation for all investments was $914,999 and
the aggregate gross unrealized depreciation for all investments was $948,085.
Note 4 -- Credit Risks
Although the Portfolio's investments are diversified, the Portfolio invests
in primarily high yield, non-investment grade debt securities issued in many of
the world's securities markets. Investments in higher yielding securities are
accompanied by a greater degree of credit risk and the risk tends to be more
sensitive to economic conditions than higher rated securities. The risk of loss
due to default by the issuer may be significantly greater for the holders of
high yielding securities because such securities are generally unsecured and
are often subordinated to other creditors of the issuer.
<PAGE> 90
GLOBAL HIGH YIELD SECURITIES PORTFOLIO 21
------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Trustees and Holders of Beneficial Interest of the
Global High Yield Securities Portfolio:
We have audited the accompanying statement of assets and liabilities of the
Global High Yield Securities Portfolio (a series of BT Investment Portfolios),
including the schedule of portfolio investments, as of September 30, 1995, and
the related statement of operations for the year then ended, the statements of
changes in net assets and the financial highlights for the year then ended and
for the period December 14, 1993 (commencement of operations) to September 30,
1994. These financial statements and financial highlights are the
responsibility of the Portfolio's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
the Global High Yield Securities Portfolio of BT Investment Portfolios as of
September 30, 1995, the results of its operations, the changes in its net
assets, and the financial highlights for the periods referred to above, in
conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Kansas City, Missouri
November 14, 1995
<PAGE> 91
BT INVESTMENT FUNDS
LATIN AMERICAN EQUITY FUND
ANNUAL REPORT
SEPTEMBER 30, 1995
<PAGE> 92
LATIN AMERICAN EQUITY FUND 1
----------------------------------------------
TABLE OF CONTENTS
================================================================================
<TABLE>
<S> <C>
INTRODUCTION FROM PRESIDENT . . . . . . . . . . . . . . . . . . 2
LETTER TO SHAREHOLDERS FROM INVESTMENT ADVISER . . . . . . . . 3
LATIN AMERICAN EQUITY FUND
Statement of Assets and Liabilities . . . . . . . . 6
Statement of Operations . . . . . . . . . . . . . . 7
Statement of Changes in Net Assets . . . . . . . . . 8
Financial Highlights . . . . . . . . . . . . . . . . 9
LATIN AMERICAN EQUITY PORTFOLIO
Statement of Assets and Liabilities . . . . . . . . 10
Statement of Operations . . . . . . . . . . . . . . 11
Statement of Changes in Net Assets . . . . . . . . . 12
Financial Highlights . . . . . . . . . . . . . . . . 13
Schedule of Portfolio Investments . . . . . . . . . 14
LATIN AMERICAN EQUITY FUND
Notes to Financial Statements . . . . . . . . . . . 16
Report of Independent Accountants . . . . . . . . . 18
LATIN AMERICAN EQUITY PORTFOLIO
Notes to Financial Statements . . . . . . . . . . . 19
Report of Independent Accountants . . . . . . . . . 21
</TABLE>
For shareholder account information and current price and yield quotations,
shareholders may call their relationship manager or servicing agent.
Prospectuses containing more extensive information regarding the Latin American
Equity Fund may be obtained by calling or writing to Investors Fiduciary Trust
Company or Signature Broker-Dealer Services, Inc., the primary Servicing Agent
and Distributor, respectively, of BT Investment Funds:
BT INVESTMENT FUNDS
INVESTORS FIDUCIARY TRUST COMPANY
127 WEST 10TH STREET
KANSAS CITY, MO 64105
(800) 422-6577
BT INVESTMENT FUNDS
SIGNATURE BROKER-DEALER SERVICES, INC.
6 ST. JAMES AVENUE
BOSTON, MA 02116
(800) 545-1074
You may write to the Latin American Equity Fund
at the following address:
BT INVESTMENT FUNDS
6 ST. JAMES AVENUE
BOSTON, MA 02116
<PAGE> 93
LATIN AMERICAN EQUITY FUND 2
----------------------------------------------
INTRODUCTION FROM PRESIDENT
================================================================================
November, 1995
Dear Shareholders:
We are pleased to present your Annual Report for the BT Investment Funds
Latin American Equity Fund. This Report provides you with an investment
overview as well as a financial summary of the Fund's operations for the
year ended September 30, 1995. We have also included a Letter from the
Investment Adviser detailing the factors that affected the Fund's
performance and a performance chart which illustrates your Fund's return
versus a relevant financial index. Also presented in your Report is a pie
chart displaying diversification of Portfolio investments, financial
statements, financial highlights and a listing of the Portfolio's holdings.
Looking ahead, we will continue to closely observe the economic conditions
and how they affect the financial markets.
We appreciate your ongoing support of the Latin American Equity Fund and
look forward to continuing to serve your investment needs.
Philip W. Coolidge
President
<PAGE> 94
LATIN AMERICAN EQUITY FUND 3
----------------------------------------------
LETTER TO SHAREHOLDERS FROM INVESTMENT ADVISER
================================================================================
The Fund's total return was down 40.68% for the year ended September 30,
1995, as compared to the IFCI Latin American Index, whose return was down
34.85%, and to the Lipper Latin American Average return, which was down
36.16%. Since its inception on October 25, 1993, the Fund's total return
was down 13.57%.
The Latin American markets actually staged a strong rally in the second
calendar quarter, with the major markets advancing between 18%-30%, as the
Mexican liquidity crisis came to an end and investors took advantage of
extremely depressed prices. However, this rally was neither enough to
retrace the losses of the preceding six months nor to prevent the strongly
diverging performance of the following quarter. Overall, the year in the
Latin American markets was dominated by political uncertainty, scandal and
economic crises.
For example, Colombia, which performed comparatively well during the six
months ended March 31, 1995, was later affected by the likelihood that its
President would have to resign in response to allegations that he financed
his presidential campaign with monies tied to drug trafficking. On the
other hand, Brazil, which began 1995 on a downward trend and struggled for
months with a sharply deteriorating economy, ended the Fund's fiscal year
appreciating strongly. Brazil's stock market rallied in response to easing
monetary policy and the increasing likelihood of a "soft landing" for its
economy. Mexico and Argentina, both of which performed well from March
through most of the next quarter, suffered economic weaknesses after that,
which, in turn, destabilized both markets. Argentina was also affected by
speculation about the resignation of its finance minister.
The Fund's underperformance over the past twelve months was primarily due
to the large scale redemptions of the first half of the fiscal year and to
its small cash position throughout. We also lost some ground during the
second calendar quarter rally, as the Fund was underweighted in Mexico, one
of the best performing markets that quarter.
Our investment strategy going forward is to continue emphasizing high
growth markets at the expense of contracting or decelerating markets.
Thus, we continue to overweight Brazil and the Andean Pact and to
underweight Argentina and Mexico. Within Brazil, we continue to structure
Fund holdings around the themes of efficiency improvement stories, export
plays, and future privatization plays. Within Mexico, we have restructured
Fund holdings to emphasize U.S. dollar earners with low credit risk. We
also intend to maintain a fully invested portfolio, since we believe the
region as a whole will benefit from the improvement in global liquidity
resulting from current interest rate scenarios in the U.S. and Japan.
<PAGE> 95
LATIN AMERICAN EQUITY FUND 4
----------------------------------------------
LETTER TO SHAREHOLDERS FROM INVESTMENT ADVISER
================================================================================
The following graph illustrates the Fund's return versus the IFCI Latin
American Index since October 31, 1993, assuming a $10,000 initial
investment:
================================================================================
COMPARISON OF CHANGE
IN VALUE OF A $10,000
INVESTMENT IN THE
LATIN AMERICAN EQUITY [FIGURE 1]
FUND AND IFCI LATIN
AMERICAN INDEX
<TABLE>
<Caption
INDEX FUND
----- ----
<S> <C> <C>
10/31/93 10000 10000
12/31/93 12327 12432.7
3/31/94 12448 12821.5
6/30/94 11206 10917.2
9/30/94 14938 14546
12/31/94 11159 11091
3/31/95 7791 7350
6/30/95 9254 8475
9/30/95 9760 8617
</TABLE>
<TABLE>
<CAPTION>
Total Return
ended September 30, 1995
<S> <C>
One Year Since 10/25/93*
(40.68)% (13.57)%
</TABLE>
* The Fund's inception date
Investment return and principal value may fluctuate so that
shares, when redeemed, may be worth more or less than their
original cost.
================================================================================
ABOUT THE
PORTFOLIO MANAGER MARIA-ELENA CARRION
CFA, VICE PRESIDENT
Joined Bankers Trust's Investment Management Group in
the Spring of 1993. Maria-Elena has eight years of
investment experience having previously worked at Latin
American Securities (London) and US Trust (NYC). At
Latin American Securities, she was head of the
Argentine/Colombian investment team and managed
regional portfolios that invested in the whole Latin
American region. At US Trust, she concentrated on
stock-picking around the world to complement US
portfolios and also managed US based portfolios.
Maria-Elena earned her undergraduate degree at the
Wharton School, University of Pennsylvania, and her MBA
at Columbia University.
<PAGE> 96
LATIN AMERICAN EQUITY FUND 5
----------------------------------------------
================================================================================
OBJECTIVE Seeks long-term capital appreciation through investment
primarily in the equity securities (or other securities
with equity characteristics) of companies domiciled in,
or doing business in, Latin America.
- --------------------------------------------------------------------------------
INVESTMENT INSTRUMENTS Primarily common and preferred stocks, rights,
warrants, American Depositary Receipts ("ADRs") and
convertible securities.
- --------------------------------------------------------------------------------
TEN LARGEST Panamerican Beverages, Compania Siderurgica
Cl 'A' Nacional, ADR
STOCK HOLDINGS Grupo Carso S.A. de CV,
Cl 'A1' Brasmotor PN
Usiminas PN Refrigeracao Parana S.A.
Electrobras Gruma S.A., Cl 'B'
Banco Bradesco PN Compania Cervejaria Brahma
================================================================================
DIVERSIFICATION OF EQUITY
INVESTMENTS BY COUNTRY
as of September 30, 1995 (percentages are based on market value)
<TABLE>
<S> <C>
Brazil 48.23%
Mexico 18.21%
Peru 8.96%
Columbia 8.81%
Chile 8.50%
Venezuela 7.29%
</TABLE>
[FIGURE 2]
<PAGE> 97
LATIN AMERICAN EQUITY FUND 6
----------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
===================================================================================================================================
September 30, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
Investment in Latin American Equity Portfolio, at Value $13,657,909
- -----------------------------------------------------------------------------------------------------------------------------------
Receivable for Shares of Beneficial Interest Sold 3,919
- -----------------------------------------------------------------------------------------------------------------------------------
Deferred Organizational Expenses 4,726
- -----------------------------------------------------------------------------------------------------------------------------------
Prepaid Expenses 4,108
- -----------------------------------------------------------------------------------------------------------------------------------
Due from Bankers Trust 29,452
- -----------------------------------------------------------------------------------------------------------------------------------
Total Assets 13,700,114
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------------------------------
Payable for Shares of Beneficial Interest Redeemed 53,490
- -----------------------------------------------------------------------------------------------------------------------------------
Accrued Expenses and Accounts Payable 22,420
- -----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 75,910
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (Applicable to 1,602,060 Outstanding Shares of
$0.001 Par Value Per Share, Unlimited Number of Shares of Beneficial
Interest Authorized) $13,624,204
===================================================================================================================================
NET ASSET VALUE, Subscription and Redemption Price Per Share
($13,624,204/1,602,060 Shares) $ 8.50
===================================================================================================================================
COMPOSITION OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
Shares of Beneficial Interest, at Par $ 1,602
- -----------------------------------------------------------------------------------------------------------------------------------
Paid-in Capital 23,536,959
- -----------------------------------------------------------------------------------------------------------------------------------
Accumulated Net Realized (Loss) from Securities and Foreign Currency
Transactions (9,518,213)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Securities (395,476)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Foreign Currency Translation (668)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, SEPTEMBER 30, 1995 $13,624,204
===================================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 16 and 17
<PAGE> 98
LATIN AMERICAN EQUITY FUND 7
----------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
===================================================================================================================================
For the year ended September 30, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------------------------------------------
Income Allocated from Latin American Equity Portfolio, net $ 220,235
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
Administration and Services Fee $ 162,746
- -----------------------------------------------------------------------------------------------------------------------------------
Shareholders Reports 28,354
- -----------------------------------------------------------------------------------------------------------------------------------
Registration Fees 23,358
- -----------------------------------------------------------------------------------------------------------------------------------
Professional Fees 13,965
- -----------------------------------------------------------------------------------------------------------------------------------
Amortization of Organizational Expenses 3,044
- -----------------------------------------------------------------------------------------------------------------------------------
Trustees Fees 1,544
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance 894
- -----------------------------------------------------------------------------------------------------------------------------------
Miscellaneous 1,172
- -----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 235,077
- -----------------------------------------------------------------------------------------------------------------------------------
Less: Expenses Absorbed by Bankers Trust (63,765) 171,312
- -----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 48,923
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES AND FOREIGN CURRENCY
- -----------------------------------------------------------------------------------------------------------------------------------
Net Realized (Loss) from Securities Transactions (9,239,800)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Realized (Loss) from Foreign Currency Transactions (245,679)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Securities (3,177,929)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Foreign Currency Translation 1,716
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED (LOSS) ON SECURITIES AND FOREIGN CURRENCY (12,661,692)
- -----------------------------------------------------------------------------------------------------------------------------------
NET (DECREASE) IN NET ASSETS FROM OPERATIONS $(12,612,769)
===================================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 16 and 17
<PAGE> 99
LATIN AMERICAN EQUITY FUND 8
----------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
===================================================================================================================================
For the period
October 25, 1993
For the (Commencement
year ended of Operations) to
September 30, 1995 September 30, 1994
===================================================================================================================================
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Net Investment Income $ 48,923 $ 3,399
- -----------------------------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) from Securities and Foreign Currency
Transactions (9,485,479) 201,391
- -----------------------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation (Depreciation) on Securities
and Foreign Currency Translation (3,176,213) 2,780,069
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets from Operations (12,612,769) 2,984,859
- -----------------------------------------------------------------------------------------------------------------------------------
FROM DISTRIBUTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Net Realized Gain from Securities Transactions (479,804) -
- -----------------------------------------------------------------------------------------------------------------------------------
Net (Decrease) in Net Assets from Distributions (479,804) -
- -----------------------------------------------------------------------------------------------------------------------------------
FROM TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets from Transactions in
Shares of Beneficial Interest (772,294) 24,504,212
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (13,864,867) 27,489,071
===================================================================================================================================
NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
Beginning of Period 27,489,071 -
- -----------------------------------------------------------------------------------------------------------------------------------
End of Period [including Undistributed Net Investment Income
of $0 and $3,399 for 1995 and 1994, respectively] $ 13,624,204 $27,489,071
===================================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 16 and 17
<PAGE> 100
LATIN AMERICAN EQUITY FUND 9
----------------------------------------------
FINANCIAL HIGHLIGHTS
================================================================================
Contained below are selected data for a share outstanding, total investment
return, ratios to average net assets and other supplemental data for each of
the periods indicated for the Latin American Equity Fund.
<TABLE>
<CAPTION>
===================================================================================================================================
FOR THE PERIOD
OCTOBER 25, 1993
FOR THE (COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
===================================================================================================================================
<S> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of Period $14.59 $10.00
------- -----
Income from Investment Operations
Net Investment Income 0.03 0.00#
Net Realized and Unrealized Gain (Loss) on Securities
and Foreign Currency (5.92) 4.59
------- -----
Total from Investment Operations (5.89) 4.59
------- -----
Less Distributions
Distributions from Net Realized Gain from Securities Transactions (0.20) --
------- -----
Net Asset Value, End of Period $ 8.50 $14.59
======= ======
TOTAL INVESTMENT RETURN (40.68%) 50.01%*
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment Income to Average Net Assets 0.29% 0.03%*
Ratio of Expenses to Average Net Assets, Including
Expenses of the Latin American Equity Portfolio 2.00% 2.00%*
Decrease Reflected in Above Expense Ratio Due to Absorption
of Expenses by Bankers Trust 1.17% 1.27%*
Net Assets, End of Period (000's omitted) $13,624 $27,489
</TABLE>
* Annualized
# Less than $0.01 per share
See Notes to Financial Statements on Pages 16 and 17
<PAGE> 101
LATIN AMERICAN EQUITY PORTFOLIO 10
----------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
===================================================================================================================================
September 30, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
Investments, at Value (Cost $13,678,031) $13,282,555
- -----------------------------------------------------------------------------------------------------------------------------------
Foreign Cash (Cost $34,983) 34,679
- -----------------------------------------------------------------------------------------------------------------------------------
Cash 4,469
- -----------------------------------------------------------------------------------------------------------------------------------
Receivable for Securities Sold 363,889
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and Interest Receivable 19,485
- -----------------------------------------------------------------------------------------------------------------------------------
Prepaid Expense 189
- -----------------------------------------------------------------------------------------------------------------------------------
Total Assets 13,705,266
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------------------------------
Due to Bankers Trust 19,709
- -----------------------------------------------------------------------------------------------------------------------------------
Accrued Expenses and Accounts Payable 27,642
- -----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 47,351
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $13,657,915
===================================================================================================================================
COMPOSITION OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
Paid-in Capital $14,054,059
- -----------------------------------------------------------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Securities (395,476)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Foreign Currency Translation (668)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, SEPTEMBER 30, 1995 $13,657,915
===================================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 19 and 20
<PAGE> 102
LATIN AMERICAN EQUITY PORTFOLIO 11
----------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
===================================================================================================================================
For the year ended September 30, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding tax of $16,723) $ 247,512
- -----------------------------------------------------------------------------------------------------------------------------------
Interest 145,868
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Income $ 393,380
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
Advisory Fee 173,145
- -----------------------------------------------------------------------------------------------------------------------------------
Administration and Services Fee 34,629
- -----------------------------------------------------------------------------------------------------------------------------------
Transfer Tax 68,515
- -----------------------------------------------------------------------------------------------------------------------------------
Professional Fees 29,090
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance 2,695
- -----------------------------------------------------------------------------------------------------------------------------------
Trustees Fees 1,535
- -----------------------------------------------------------------------------------------------------------------------------------
Miscellaneous 1,887
- -----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 311,496
- -----------------------------------------------------------------------------------------------------------------------------------
Less: Expenses Absorbed by Bankers Trust (138,351) 173,145
- -----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 220,235
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES AND FOREIGN CURRENCY
- -----------------------------------------------------------------------------------------------------------------------------------
Net Realized (Loss) from Securities Transactions (9,239,804)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Realized (Loss) from Foreign Currency Transactions (245,679)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Securities (3,177,929)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Foreign Currency Translation 1,716
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED (LOSS) ON SECURITIES AND FOREIGN CURRENCY (12,661,696)
- -----------------------------------------------------------------------------------------------------------------------------------
NET (DECREASE) IN NET ASSETS FROM OPERATIONS $(12,441,461)
===================================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 19 and 20
<PAGE> 103
LATIN AMERICAN EQUITY PORTFOLIO 12
----------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
===================================================================================================================================
For the period
October 25, 1993
For the (Commencement
year ended of Operations) to
September 30, 1995 September 30, 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Net Investment Income $ 220,235 $ 106,308
- -----------------------------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) from Securities and Foreign Currency Transactions (9,485,483) 201,391
- -----------------------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation (Depreciation) on Securities
and Foreign Currency Translation (3,176,213) 2,780,069
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets from Operations (12,441,461) 3,087,768
- -----------------------------------------------------------------------------------------------------------------------------------
FROM CAPITAL TRANSACTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Proceeds from Capital Invested 18,611,709 27,627,247
- -----------------------------------------------------------------------------------------------------------------------------------
Value of Capital Withdrawn (19,878,349) (3,348,999)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets from Capital Transactions (1,266,640) 24,278,248
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (13,708,101) 27,366,016
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
Beginning of Period 27,366,016 -
- -----------------------------------------------------------------------------------------------------------------------------------
End of Period $ 13,657,915 $27,366,016
===================================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 19 and 20
<PAGE> 104
LATIN AMERICAN EQUITY PORTFOLIO 13
----------------------------------------------
FINANCIAL HIGHLIGHTS
================================================================================
Contained below are selected ratios and supplemental data for each of the
periods indicated for the Latin American Equity Portfolio.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
For the period
October 25, 1993
For the (Commencement
year ended of Operations) to
September 30, 1995 September 30, 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment Income to Average Net Assets 1.27% 1.03%*
Ratio of Expenses to Average Net Assets 1.00% 1.00%*
Decrease Reflected in Above Ratio of Expenses to Average
Net Assets Due to Absorption of Expenses by Bankers Trust 0.80% 0.79%*
Portfolio Turnover Rate 161% 124%
Net Assets, End of Period (000's omitted) $13,658 $27,366
</TABLE>
* Annualized
See Notes to Financial Statements on Pages 19 and 20
<PAGE> 105
LATIN AMERICAN EQUITY PORTFOLIO 14
----------------------------------------------
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS
==========================================================================================================
September 30, 1995
SHARES DESCRIPTION VALUE
==========================================================================================================
<S> <C> <C>
COMMON STOCKS - 51.32%
==========================================================================================================
BRAZIL - 11.55%
- ----------------------------------------------------------------------------------------------------------
13,797 Aracruz Celulose S.A., ADR
(Paper) $ 137,970
- ----------------------------------------------------------------------------------------------------------
750,000 Compania Siderurgica Nacional
(Steel) 19,993
- ----------------------------------------------------------------------------------------------------------
13,527 Compania Siderurgica Nacional,
ADR (Steel) 358,465
- ----------------------------------------------------------------------------------------------------------
1,440,259 Electrobras (Utility) 439,855
- ----------------------------------------------------------------------------------------------------------
10,033,165 Lojas Americanas (Retail) 219,016
- ----------------------------------------------------------------------------------------------------------
5,868,000 Telec Brasileiras-Telebras "ON"
(Telecommunications) 234,018
- ----------------------------------------------------------------------------------------------------------
15,500 Usiminas, ADR (Steel) (b) 167,555
- ----------------------------------------------------------------------------------------------------------
1,576,872
==========================================================================================================
CHILE - 6.53%
- ----------------------------------------------------------------------------------------------------------
7,910 Banco Osorno y la Union S.A.,
Series 'A', ADR (Banks) 122,605
- ----------------------------------------------------------------------------------------------------------
13,969 Chile Fund (Diversified) 316,049
- ----------------------------------------------------------------------------------------------------------
14,565 Chilgener S.A., ADR (Utility) 307,685
- ----------------------------------------------------------------------------------------------------------
2,100 Compania Telefonica de Chile S.A.,
ADR (Telecommunications) 145,163
- ----------------------------------------------------------------------------------------------------------
891,502
==========================================================================================================
COLOMBIA - 6.77%
- ----------------------------------------------------------------------------------------------------------
11,000 Banco Industrial Colombiano,
ADR (Banks) 149,875
- ----------------------------------------------------------------------------------------------------------
14,794 CADENALCO, Gran Cadena de
Almacenes Colombianos, ADR
(Retail) 208,965
- ----------------------------------------------------------------------------------------------------------
12,000 Carulla CIA, S.A.,
ADR, Cl 'B' (Retail) (b) 115,440
- ----------------------------------------------------------------------------------------------------------
14,900 Cementos Diamante S.A., ADR,
Cl 'B' (Building & Construction) (b) 275,650
- ----------------------------------------------------------------------------------------------------------
14,000 Cementos Paz del Rio, ADR
(Building & Construction) (a)(b) 175,000
- ----------------------------------------------------------------------------------------------------------
924,930
==========================================================================================================
MEXICO - 13.99%
- ----------------------------------------------------------------------------------------------------------
24 Controladora de Famacia (Retail) 10
- ----------------------------------------------------------------------------------------------------------
88,119 Gruma S.A., Cl 'B' (Diversified) (a) 318,827
- ----------------------------------------------------------------------------------------------------------
85,618 Grupo Carso S.A. de CV, Cl 'A1'
(Diversified) (a) 506,909
- ----------------------------------------------------------------------------------------------------------
61,023 Grupo Modelo, S.A. (Beverages) 248,508
- ----------------------------------------------------------------------------------------------------------
20,691 Panamerican Beverages,
Cl 'A' (Beverages) 556,070
- ----------------------------------------------------------------------------------------------------------
175,000 Telefonos de Mexico S.A., ADR,
Cl 'L' (Telecommunications) 280,132
- ----------------------------------------------------------------------------------------------------------
1,910,456
==========================================================================================================
PERU - 6.88%
- ----------------------------------------------------------------------------------------------------------
98,883 Backus Y Johnson Brewery, Cl 'T'
(Beverages) 190,703
- ----------------------------------------------------------------------------------------------------------
148,825 Banco de Credito del Peru (Banks) 279,047
- ----------------------------------------------------------------------------------------------------------
44,882 Cementos Norte Pacasmayo S.A.,
Cl 'T' (Building & Construction) (a) 105,193
- ----------------------------------------------------------------------------------------------------------
92,000 La Fabril Pacifico S.A. (Diversified) (a) 110,893
- ----------------------------------------------------------------------------------------------------------
132,441 Telefonica del Peru, Cl 'B'
(Telecommunications) 254,239
- ----------------------------------------------------------------------------------------------------------
940,075
==========================================================================================================
VENEZUELA - 5.60%
- ----------------------------------------------------------------------------------------------------------
14,700 Banco Mercantil, Series 'A-B' (Banks) 29,437
- ----------------------------------------------------------------------------------------------------------
2,352 Banco Mercantil, Series 'B' (Banks) 3,325
- ----------------------------------------------------------------------------------------------------------
9,065 Banco Provincial (Banks) 12,547
- ----------------------------------------------------------------------------------------------------------
2,016 Banco Venezolana de Credito,
Series 'A-B' (Banks) 70,056
- ----------------------------------------------------------------------------------------------------------
40,800 Ceramica Carabobo, ADR, Cl 'B'
(Building & Construction) 44,880
- ----------------------------------------------------------------------------------------------------------
10,960 Corimon Saca, ADR
(Building & Construction) (a) 60,280
- ----------------------------------------------------------------------------------------------------------
116,203 Electricidad de Caracas (Utility) 103,345
- ----------------------------------------------------------------------------------------------------------
30,700 Mavesa S.A., ADR
(Consumer Goods) (b) 108,488
- ----------------------------------------------------------------------------------------------------------
28,567 Mavesa S.A., ADR
(Consumer Goods) 100,950
- ----------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements on Pages 19 and 20
<PAGE> 106
LATIN AMERICAN EQUITY PORTFLIO 15
----------------------------------------------
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS
==========================================================================================================
September 30, 1995
SHARES DESCRIPTION VALUE
==========================================================================================================
<S> <C> <C> <C>
57,000 Siderurgica Venezolana Sivensa
(Steel) $ 94,050
- ----------------------------------------------------------------------------------------------------------
722,587 Sudamtex (Textiles) 81,288
- ----------------------------------------------------------------------------------------------------------
304,500 Venaseta Cl 'A' (Finance) 24,212
- ----------------------------------------------------------------------------------------------------------
60,900 Venaseta Cl 'B' (Finance) 4,573
- ----------------------------------------------------------------------------------------------------------
10,000 Venezolana de Cementos
(Building & Construction) 15,313
- ----------------------------------------------------------------------------------------------------------
20,000 Venezolana Pulpa Y Papel (Paper) 12,604
- ----------------------------------------------------------------------------------------------------------
765,348
==========================================================================================================
TOTAL COMMON STOCKS
(Cost $7,432,407) $ 7,009,183
==========================================================================================================
PREFERRED STOCKS - 25.51%
==========================================================================================================
BRAZIL - 25.51%
==========================================================================================================
39,666,839 Banco Bradesco PN (Banks) $ 380,912
- ----------------------------------------------------------------------------------------------------------
861,116 Banco Itau S.A. (Banks) 269,320
- ----------------------------------------------------------------------------------------------------------
1,354,711 Brasmotor PN (Auto Related) 344,063
- ----------------------------------------------------------------------------------------------------------
778,179 Compania Cervejaria Brahma
(Beverages) 316,057
- ----------------------------------------------------------------------------------------------------------
134,373 Compania Siderurgica Paulista,
Series 'B' (Steel) 239,738
- ----------------------------------------------------------------------------------------------------------
366,000 Compania Tecidos Norte de Minas
(Textile) 119,843
- ----------------------------------------------------------------------------------------------------------
1,422,237 Compania Vale do Rio Doce PN
(Steel) 238,072
- ----------------------------------------------------------------------------------------------------------
921,079 Iochpe Maxion PN
(Consumer Goods) 303,530
- ----------------------------------------------------------------------------------------------------------
4,433,777 Lojas Americanas (Retail) 104,696
- ----------------------------------------------------------------------------------------------------------
6,683,800 Lojas Renner S.A. (Retail) 150,813
- ----------------------------------------------------------------------------------------------------------
610,800 Mesbla (Retail) (a) 10,185
- ----------------------------------------------------------------------------------------------------------
124,280,971 Refrigeracao Parana S.A.
(Consumer Goods) 326,077
- ----------------------------------------------------------------------------------------------------------
4,731,000 Telebras PN (Telecommunications) 222,437
- ----------------------------------------------------------------------------------------------------------
415,692,734 Usiminas PN (Steel) 458,075
==========================================================================================================
TOTAL PREFERRED STOCKS
(Cost $3,456,544) $ 3,483,818
- ----------------------------------------------------------------------------------------------------------
CALL OPTION - 0.00%
==========================================================================================================
BRAZIL - 0.00%
==========================================================================================================
3,100 Compania Paulista de Forca
Luz, Call Option, Strike price 70,
Expire 10/16/95 (Cost $37) (a) $ 33
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SHORT-TERM
AMOUNT INVESTMENTS - 20.42%
==========================================================================================================
<S> <C> <C> <C>
$ 2,820,000 U.S. TREASURY BILLS, 5.28%,
12/14/95 (Cost $2,789,043) $ 2,789,521
==========================================================================================================
TOTAL INVESTMENTS
(Cost $13,678,031) 97.25% $ 13,282,555
==========================================================================================================
OTHER ASSETS IN EXCESS OF LIABILITIES 2.75 375,360
==========================================================================================================
NET ASSETS 100.00% $ 13,657,915
==========================================================================================================
</TABLE>
(a) Non-Income Producing Security
(b) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At
September 30, 1995, the value of these securities amounted to $842,133
or 6.17% of net assets.
Industry Diversification (as a percentage of Total Investments):
<TABLE>
<S> <C>
Auto Related . . . . . . . . . 2.59%
Banks . . . . . . . . . . . . . 9.92
Beverages & Foods . . . . . . . 9.87
Building & Construction . . . . 5.09
Consumer Goods . . . . . . . . 6.32
Diversified . . . . . . . . . . 9.43
Other* . . . . . . . . . . . . 2.87
Retail . . . . . . . . . . . . 6.09
Steel . . . . . . . . . . . . . 11.86
Telecommunications . . . . . . 8.55
U.S. Government . . . . . . . . 21.00
Utilities . . . . . . . . . . . 6.41
------
100.00%
======
</TABLE>
*No one industry represents more than 2% of Portfolio holdings.
See Notes to Financial Statements on Pages 19 and 20
<PAGE> 107
LATIN AMERICAN EQUITY FUND 16
----------------------------------------------
NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
A. Organization
BT Investment Funds (the "Trust") is registered under the Investment Company
Act of 1940 (the "Act"), as amended, as an open-end management investment
company. The Trust was organized on July 21, 1986, as a business trust under
the laws of the Commonwealth of Massachusetts. The Latin American Equity Fund
(the "Fund") is one of the funds offered to investors by the Trust. The Fund
commenced operations and began offering shares of beneficial interest on
October 25, 1993. The Fund invests substantially all of its assets in the Latin
American Equity Portfolio (the "Portfolio"). The Portfolio is an open-end
management investment company registered under the Act. The Fund seeks to
achieve its investment objective by investing all of its investable assets in
the Portfolio. The value of such investment in the Portfolio reflects the
Fund's proportionate interest in the net assets of the Portfolio. At September
30, 1995, the Fund's investment was approximately 100% of the Portfolio.
The financial statements of the Portfolio, including the Schedule of Portfolio
Investments, are contained else- where in this report.
B. Investment Income
The Fund earns income, net of expenses, daily on its investment in the
Portfolio. All of the net investment income and realized and unrealized gains
and losses from the security and foreign currency transactions of the Portfolio
are allocated pro rata among the investors in the Portfolio at the time of such
determination.
C. Organizational Expenses
Costs incurred by the Fund in connection with its organization and initial
registration are being amortized over a five year period on a straight-line
basis.
D. Dividends
It is the Fund's policy to declare and distribute dividends annually to
shareholders from net investment income. Dividends payable to shareholders are
recorded by the Fund on the ex-dividend date. Distributions of net realized
short-term and long-term capital gains, if any, earned by the Fund will be made
annually to the extent they are not offset by any capital loss carryforwards.
The Fund may periodically make reclassifications among certain of its capital
accounts as a result of the timing and characterization of certain income and
capital gains distributions determined annually in accordance with federal tax
regulations which may differ from generally accepted accounting principles. For
the year ended September 30, 1995, $245,679 of net realized (loss) from foreign
currency transactions was reclassified against $52,322 of undistributed net
investment income, with the remaining $193,357 reclassified against paid in
capital.
E. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders. Therefore, no federal income tax provision is
required.
F. Other
The Trust accounts separately for the assets, liabilities, and operations of
the Fund. Expenses directly attributable to the Fund are charged to that Fund,
while expenses which are attributable to all of the Trust's funds are allocated
among them.
<PAGE> 108
LATIN AMERICAN EQUITY FUND 17
----------------------------------------------
NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE 2 - FEES AND TRANSACTIONS WITH AFFILIATES
The Fund has entered into an Administration and Services Agreement with Bankers
Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Fund in return for a fee computed daily and paid
monthly at an annual rate of 0.95 of 1% of the Fund's average daily net assets.
For the year ended September 30, 1995, this fee aggregated $162,746.
The Trust has entered into a Distribution Agreement with Signature
Broker-Dealer Services, Inc. ("Signature"). Under the Distribution Agreement
with the Trust, pursuant to Rule 12b-1 of the 1940 Act, Signature may seek
reimbursement, at an annual rate not exceeding 0.20 of 1% of the Fund's average
daily net assets, for expenses incurred in connection with any activities
primarily intended to result in the sale of the Fund's shares. For the year
ended September 30, 1995, there were no reimbursable expenses incurred under
this agreement.
Bankers Trust has voluntarily undertaken to waive and reimburse expenses of the
Fund, to the extent necessary, to limit all expenses to 1.00 of 1% of the
average daily net assets of the Fund, excluding expenses of the Portfolio and
2.00 of 1% of the average daily net assets of the Fund, including expenses of
the Portfolio. For the year ended September 30, 1995, expenses of the Fund have
been reduced $63,765.
The Fund is subject to such limitations as may from time to time be imposed by
the Blue Sky laws of states in which the Fund sells its shares. Currently, the
most restrictive jurisdiction imposes expense limitations of 2.5% of the first
$30,000,000 of the average daily net assets, 2.0% of the next $70,000,000, and
1.5% of any excess over $100,000,000.
Certain trustees and officers of the Fund are also directors, officers and/or
employees of Signature. None of the trustees so affiliated received
compensation for services as trustee of the Fund. Similarly, none of the Fund's
officers received compensation from the Fund.
NOTE 3 - SHARES OF BENEFICIAL INTEREST
At September 30, 1995, there were an unlimited number of shares of beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
For the period
October 25, 1993
For the (Commencement
year ended of Operations) to
September 30, 1995 September 30, 1994
---------------------------- ---------------------------
Shares Amount Shares Amount
----------- ------------- --------- ------------
<S> <C> <C> <C> <C>
Sold 1,726,404 $18,486,926 2,139,065 $27,763,764
Reinvested 27,924 327,552 - -
Redeemed (2,036,411) (19,586,772) (254,922) (3,259,552)
---------- ----------- -------- ----------
Net Increase
(Decrease) (282,083) $ (772,294) 1,884,143 $24,504,212
========== ============ ========= ===========
</TABLE>
NOTE 4 - CAPITAL LOSS CARRYFORWARD
At September 30, 1995, accumulated net realized capital loss carryforward
available as a reduction against future net realized capital gains aggregated
$9,111,852, which will expire in 2003.
<PAGE> 109
LATIN AMERICAN EQUITY FUND 18
----------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
To the Trustees and Shareholders of
BT Investment Funds:
We have audited the accompanying statement of assets and liabilities of the
Latin American Equity Fund (one of the funds comprising BT Investment Funds) as
of September 30, 1995, and the related statement of operations for the year
then ended, the statements of changes in net assets and the financial
highlights for the year then ended and for the period October 25, 1993
(commencement of operations) to September 30, 1994. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Latin American Equity Fund of BT Investment Funds as of September 30, 1995, the
results of its operations, the changes in its net assets, and the financial
highlights for the periods referred to above, in conformity with generally
accepted accounting principles.
/S/ COOPERS & LYBRAND L.L.P
- ---------------------------
Kansas City, Missouri
November 10, 1995
<PAGE> 110
LATIN AMERICAN EQUITY PORTFOLIO 19
----------------------------------------------
NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE 1 - ORGANIZATION AND SIGNIFICANT
ACCOUNTING POLICIES
A. Organization
The Latin American Equity Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940 (the "Act"), as amended, as an open-end
management investment company. The Portfolio was organized on August 6, 1993 as
an unincorporated trust under the laws of New York and commenced operations on
October 25, 1993. The Declaration of Trust permits the Board of Trustees (the
"Trustees") to issue beneficial interests in the Portfolio.
B. Security Valuation
The Portfolio's investments are valued each business day by an independent
pricing service (the "Service") approved by the Trustees. Securities traded
primarily on a principal securities exchange (domestic or foreign) are valued
at their last reported sale price on that exchange. If no sale is reported, or
if local custom or regulation so provides, the mean of the latest bid and asked
price is used. Securities traded over-the-counter are valued using either the
mean between the bid and asked price or, where local custom or regulations so
provide, the last sales price. Short-term obligations with remaining maturities
of 60 days or less are valued at amortized cost which with accrued interest
approximates value. Securities for which quotations are not available are
stated at fair value as determined by the Trustees.
C. Foreign Currency Transactions
The books and records of the Portfolio are maintained in U.S. dollars. All
assets and liabilities initially expressed in foreign currencies are converted
into U.S. dollars at prevailing exchange rates. Purchases and sales of
investment securities, dividend and interest income, and certain expenses are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The portfolio does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from securities.
D. Forward Foreign Currency Contracts
The Portfolio may enter into forward foreign currency contracts for the purpose
of settling specific purchases or sales of securities denominated in a foreign
currency or with respect to the Portfolio's investments generally. The net U.S.
dollar value of foreign currency underlying all contractual commitments held by
the Portfolio and the resulting unrealized appreciation or depreciation are
determined using prevailing exchange rates. With respect to forward foreign
currency contracts, losses in excess of amounts recognized in the Statement of
Assets and Liabilities may arise due to changes in the value of the foreign
currency or if the counterparty does not perform under the contract.
E. Option Contracts
Upon the purchase of a put option or a call option by the Portfolio, the
premium paid is recorded as an investment, the value of which is
marked-to-market daily to reflect the current market value. When a purchased
option expires, the Portfolio will realize a loss in the amount of the cost of
the option. When the Portfolio enters into a closing sale transaction, the
Portfolio will realize a gain or loss depending on whether the sale proceeds
from the closing sale transaction are greater or less than the cost of the
option. When the Portfolio exercises a put option, it realizes a gain or loss
from the sale of the underlying security and the proceeds from such sale will
be decreased by the premium originally paid. When the Portfolio exercises a
call option, the cost of the security which the Portfolio purchases upon
exercise will be increased by the premium originally paid.
<PAGE> 111
LATIN AMERICAN EQUITY PORTFOLIO 20
----------------------------------------------
NOTES TO FINANCIAL STATEMENTS
================================================================================
F. Security Transactions and Investment Income
Security transactions are accounted for on a trade date basis (date the order
to buy or sell is executed). Dividend income, less foreign taxes withheld (if
any), is recorded on the ex-dividend date or upon receipt of ex-dividend
notification in the case of certain foreign securities. Interest income is
recorded on the accrual basis and includes amortization of premium and discount
on investments. Realized gains and losses from securities transactions are
recorded on the identified cost basis.
All of the net investment income and realized and unrealized gains and losses
from security and foreign currency transactions of the Portfolio are allocated
pro rata among the investors of the Portfolio at the time of such
determination.
G. Federal Income Taxes
It is the Portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to it. Therefore, no federal income tax provision is
required.
NOTE 2 - FEES AND TRANSACTIONS WITH AFFILIATES
The Portfolio has entered into an Administration and Services Agreement with
Bankers Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder servicesto the Portfolio in return for a fee computed daily and
paid monthly at an annual rate of 0.20 of 1% of the Portfolio's average daily
net assets. For the year ended September 30, 1995, this fee aggregated $34,629.
The Portfolio has entered into an Advisory Agreement with Bankers Trust. Under
this Advisory Agreement, Bankers Trust manages the Portfolio in accordance with
the Portfolio's investment objective and stated investment policies in return
for a fee computed daily and paid monthly at an annual rate of 1.00 of 1% of
the Portfolio's average daily net assets. For the year ended September 30,
1995, this fee aggregated $173,145.
Bankers Trust has voluntarily undertaken to waive and reimburse expenses of the
Portfolio, to the extent necessary, to limit all expenses to 1.00 of 1% of the
average daily net assets of the Portfolio. For the year ended September 30,
1995, expenses of the Portfolio have been reduced $138,351.
Certain trustees and officers of the Portfolio are also directors, officers
and/or employees of Signature. None of the trustees so affiliated received
compensation for services as trustee of the Portfolio. Similarly, none of the
Portfolio's officers received compensation from the Portfolio.
NOTE 3 - PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments, other
than short-term obligations and options purchased, for the year ended September
30, 1995, were $25,437,401 and $30,324,345, respectively. For federal income
tax purposes, the tax basis for investments held as of September 30, 1995 was
$13,988,644. The aggregate gross unrealized appreciation for all investments
was $426,638 and the aggregate gross unrealized depreciation for all
investments was $1,132,727.
<PAGE> 112
LATIN AMERICAN EQUITY PORTFOLIO 21
----------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
To the Trustees and Holders of Beneficial Interest of
the Latin American Equity Portfolio:
We have audited the accompanying statement of assets and liabilities of the
Latin American Equity Portfolio (a series of BT Investment Portfolios),
including the schedule of portfolio investments, as of September 30, 1995, and
the related statement of operations for the year then ended, the statements of
changes in net assets and the financial highlights for the year then ended and
for the period October 25, 1993 (commencement of operations) to September 30,
1994. These financial statements and financial highlights are the
responsibility of the Portfolio's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995 bycorrespondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Latin American Equity Portfolio of BT Investment Portfolios as of September 30,
1995, the results of its operations, the changes in its net assets, and the
financial highlights for the periods referred to above, in conformity with
generally accepted accounting principles.
/S/ COOPERS & LYBRAND L.L.P
- ----------------------------
Kansas City, Missouri
November 10, 1995
<PAGE> 113
BT INVESTMENT FUNDS
PACIFIC
BASIN
EQUITY FUND
ANNUAL REPORT
SEPTEMBER 30, 1995
<PAGE> 114
PACIFIC BASIN EQUITY FUND 1
----------------------------------------------
TABLE OF CONTENTS
================================================================================
<TABLE>
<S> <C>
INTRODUCTION FROM PRESIDENT . . . . . . . . . . . . . . . . . . . 2
LETTER TO SHAREHOLDERS FROM INVESTMENT ADVISER . . . . . . . . . 3
PACIFIC BASIN EQUITY FUND
Statement of Assets and Liabilities . . . . . . . . . . 6
Statement of Operations . . . . . . . . . . . . . . . . 7
Statement of Changes in Net Assets . . . . . . . . . . . 8
Financial Highlights . . . . . . . . . . . . . . . . . . 9
PACIFIC BASIN EQUITY PORTFOLIO
Statement of Assets and Liabilities . . . . . . . . . . 10
Statement of Operations . . . . . . . . . . . . . . . . 11
Statement of Changes in Net Assets . . . . . . . . . . . 12
Financial Highlights . . . . . . . . . . . . . . . . . . 13
Schedule of Portfolio Investments . . . . . . . . . . . 14
PACIFIC BASIN EQUITY FUND
Notes to Financial Statements . . . . . . . . . . . . . 17
Report of Independent Accountants . . . . . . . . . . . 19
PACIFIC BASIN EQUITY PORTFOLIO
Notes to Financial Statements . . . . . . . . . . . . . 20
Report of Independent Accountants . . . . . . . . . . . 22
</TABLE>
For shareholder account information and current price and yield quotations,
shareholders may call their relationship manager or servicing agent.
Prospectuses containing more extensive information regarding the Pacific Basin
Equity Fund may be obtained by calling or writing to Investors Fiduciary Trust
Company or Signature Broker-Dealer Services, Inc., the primary Servicing Agent
and Distributor, respectively, of BT Investment Funds:
BT INVESTMENT FUNDS
INVESTORS FIDUCIARY TRUST COMPANY
127 WEST 10TH STREET
KANSAS CITY, MO 64105
(800) 422-6577
BT INVESTMENT FUNDS
SIGNATURE BROKER-DEALER SERVICES, INC.
6 ST. JAMES AVENUE
BOSTON, MA 02116
(800) 545-1074
You may write to the Pacific Basin Equity Fund at
the following address:
BT INVESTMENT FUNDS
6 ST. JAMES AVENUE
BOSTON, MA 02116
<PAGE> 115
PACIFIC BASIN EQUITY FUND 2
----------------------------------------------
INTRODUCTION FROM PRESIDENT
===============================================================================
November, 1995
Dear Shareholders:
We are pleased to present your Annual Report for the BT Investment Funds
Pacific Basin Equity Fund. This Report provides you with an investment
overview as well as a financial summary of the Fund's operations for the
year ended September 30, 1995. We have also included a Letter from the
Investment Adviser, detailing the factors that affected the Fund's
performance and a performance chart which illustrates your Fund's return
versus a relevant financial index. Also presented in your Report is a pie
chart displaying diversification of Portfolio investments, financial
statements, financial highlights and a listing of the Portfolio's holdings.
Looking ahead, we will continue to closely observe the economic conditions
and how they affect the financial markets.
We appreciate your ongoing support of the Pacific Basin Equity Fund and
look forward to continuing to serve your investment needs.
Philip W. Coolidge
President
<PAGE> 116
PACIFIC BASIN EQUITY FUND 3
----------------------------------------------
LETTER TO SHAREHOLDERS FROM INVESTMENT ADVISER
===============================================================================
The Fund's total return was down 3.87% for the year ended September 30, 1995,
as compared to the MSCI Combined Far East Free ex Japan Index, whose return was
down 6.08%, and to the Lipper Pacific Basin Average return, which was down
7.29%. Since its inception on November 1, 1993, the Pacific Basin Equity Fund
has returned a positive 13.63%.
Overall, Asian equity markets (ex Japan) were weak during the past year. Those
markets most sensitive to U.S. monetary policy, including Hong Kong, Thailand,
and Malaysia, performed poorly in the last months of 1994 and into 1995 as the
Federal Reserve Board continued to raise U.S. interest rates. The July cut in
the U.S. rate was expected to be a powerful stimulus to Asian equity market
performance, however, the improved interest rate outlook coincided with slowing
U.S. demand for Asian exports. Thus the positive effects of such a stimulus
have not yet been seen to any significant degree. Ongoing problems in much of
Latin America continued to put pressure on the Asian emerging markets as well.
Even with all that, the Fund outperformed both its benchmark and the majority
of its competitors due primarily to strong stock selection. The Fund's asset
allocation and currency selection had a virtually neutral effect. Specifically,
we reduced the Fund's exposure to major exporters on the expectation of slowed
U.S. demand, and in line with our positive interest rate outlook, increased
weightings in selected financial and banking securities, particularly in Korea
and the Phillipines. We also, as per our ongoing overall investment themes,
remain overweighted in domestic consumption stocks and infrastructure
investment beneficiaries, including building materials and construction
companies in Thailand and Malaysia.
Looking forward, we expect domestic economic concerns to grow, as we believe
that some countries in the region, including Malaysia, Thailand, and Indonesia,
are now approaching serious capacity constraints and will begin to suffer from
the adverse effects of inflation and deteriorating trade accounts. At the same
time though, other countries, such as China, Hong Kong, and Korea, are likely
to benefit from improving domestic liquidity as growth slows to more
sustainable levels. In general, we believe that the Asian equity markets will
continue to be sensitive to U.S. monetary policy and that the prospect of low
inerest rates in particular will ultimately serve as a positive stimulus to
these markets' performance.
<PAGE> 117
Pacific Basin Equity fund 4
---------------------------------------------
LETTER TO SHAREHOLDERS FROM INVESTMENT ADVISER
===============================================================================
The following graph illustrates the Fund's return versus the MSCI Combined Far
East Free ex Japan Index since November 30, 1993, assuming a $10,000 initial
investment:
===============================================================================
COMPARISON OF CHANGE
IN VALUE OF A $10,000
INVESTMENT IN THE
PACIFIC BASIN EQUITY
FUND AND MSCI
COMBINED FAR EAST
FREE EX JAPAN INDEX
<TABLE>
<CAPTION>
Total Return
ended September 30, 1995
<S> <C>
One Year Since 11/1/93*
(3.87%) 13.63%
</TABLE>
* The Fund's inception date
Investment return and principal
value may fluctuate so that
shares, when redeemed, may be
worth more or less than their
original cost.
<TABLE>
<CAPTION>
MSCI Pacific
<S> <C> <C>
11/30/93 10000 10000
12/31/93 12419 13127
3/31/94 9673 10392
6/30/94 10039 11115
9/30/94 11227 12198
12/31/94 10058 10913
3/31/95 9880 10614
6/30/95 10762 11641
9/30/95 10544 11727
</TABLE>
[FIGURE 1]
ABOUT THE PAUL DURHAM
PORTFOLIO MANAGER VICE PRESIDENT
- Portfolio Manager: - BT Investment Funds Pacific
Basin Equity Fund
- BT South East Asia Fund
(Offshore Fund)
- BTA South East Asia Fund
(Offshore Fund)
- Attended University of Sydney
- Graduated 1987 with an Economics Degree
- Joined Bankers Trust in Sydney in 1988
<PAGE> 118
PACIFIC BASIN EQUITY FUND 5
----------------------------------------------
================================================================================
OBJECTIVE Seeks to provide long term capital growth
through investments in Pacific Basin
stock markets.
- --------------------------------------------------------------------------------
INVESTMENT INSTRUMENTS Primarily common stocks and corporate issued
intermediate to long-term bonds.
- --------------------------------------------------------------------------------
TEN LARGEST United Engineers Berhad Overseas Chinese
HOLDINGS Banking
TPI Polyne, LTD Technology
Resources
Singapore Land Hang Seng Bank
Commerce Asset Hutchison Whampoa
New World Development HSBC Holdings
- --------------------------------------------------------------------------------
DIVERSIFICATION OF PORTFOLIO
INVESTMENTS BY COUNTRY
as of September 30, 1995
(percentages are based on market value)
<TABLE>
<S> <C>
Hong Kong 24.63%
Malaysia 17.32%
Thailand 13.84%
South Korea 10.31%
Singapore 9.64%
Indonesia 9.13%
Philippines 8.50%
India 4.53%
Other* 2.10%
</TABLE>
[FIGURE 2]
* No one country represents more than 2% of Portfolio holdings.
<PAGE> 119
PACIFIC BASIN EQUITY FUND 6
----------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
=======================================================================================================================
September 30, 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
- -----------------------------------------------------------------------------------------------------------------------
Investment in Pacific Basin Equity Portfolio, at Value $24,656,289
- -----------------------------------------------------------------------------------------------------------------------
Deferred Organizational Expenses 6,317
- -----------------------------------------------------------------------------------------------------------------------
Prepaid Expenses 2,592
- -----------------------------------------------------------------------------------------------------------------------
Due from Bankers Trust 6,210
- -----------------------------------------------------------------------------------------------------------------------
Total Assets 24,671,408
- -----------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------------------
Payable for Shares of Beneficial Interest Redeemed 144,574
- -----------------------------------------------------------------------------------------------------------------------
Accrued Expenses and Accounts Payable 22,560
- -----------------------------------------------------------------------------------------------------------------------
Total Liabilities 167,134
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS (Applicable to 2,236,081 Outstanding Shares of
$0.001 Par Value Per Share, Unlimited Number of Shares of Beneficial
Interest Authorized) $24,504,274
=======================================================================================================================
NET ASSET VALUE, Subscription and Redemption Price Per Share
($24,504,274/2,236,081 Shares) $ 10.96
=======================================================================================================================
COMPOSITION OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------
Shares of Beneficial Interest, at Par $ 2,236
- -----------------------------------------------------------------------------------------------------------------------
Paid-in Capital 24,729,698
- -----------------------------------------------------------------------------------------------------------------------
Accumulated Net Realized (Loss) from Securities and Foreign
- -----------------------------------------------------------------------------------------------------------------------
Currency Transactions (632,370)
- -----------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Securities 521,421
- -----------------------------------------------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Foreign Currency Translation (2,137)
- -----------------------------------------------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Forward Foreign Currency Contracts (114,574)
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS, SEPTEMBER 30, 1995 $24,504,274
=======================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 17 and 18
<PAGE> 120
PACIFIC BASIN EQUITY FUND 7
----------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
=======================================================================================================================
For the year ended September 30, 1995
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------------------------------
Income Allocated from Pacific Basin Equity Portfolio, net $ 201,609
- -----------------------------------------------------------------------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------------------------------------------------------
Administration and Services Fee $173,407
- -----------------------------------------------------------------------------------------------------------------------
Professional Fees 11,146
- -----------------------------------------------------------------------------------------------------------------------
Registration Fees 26,206
- -----------------------------------------------------------------------------------------------------------------------
Trustees Fees 1,544
- -----------------------------------------------------------------------------------------------------------------------
Amortization of Organizational Expenses 3,173
- -----------------------------------------------------------------------------------------------------------------------
Shareholders Reports 28,114
- -----------------------------------------------------------------------------------------------------------------------
Insurance 894
- -----------------------------------------------------------------------------------------------------------------------
Miscellaneous 1,186
- -----------------------------------------------------------------------------------------------------------------------
Total Expenses 245,670
- -----------------------------------------------------------------------------------------------------------------------
Less: Expenses Absorbed by Bankers Trust (72,263) 173,407
- -----------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 28,202
- -----------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES AND FOREIGN CURRENCY
- -----------------------------------------------------------------------------------------------------------------------
Net Realized (Loss) from Securities Transactions (448,644)
- -----------------------------------------------------------------------------------------------------------------------
Net Realized (Loss) from Foreign Currency Transactions (32,877)
- -----------------------------------------------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Securities (716,292)
- -----------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Foreign Currency Translation 5,383
- -----------------------------------------------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Forward Foreign Currency Contracts (110,421)
- -----------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED (LOSS) ON SECURITIES AND FOREIGN CURRENCY (1,302,851)
- -----------------------------------------------------------------------------------------------------------------------
NET (DECREASE) IN NET ASSETS FROM OPERATIONS $(1,274,649)
=======================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 17 and 18
<PAGE> 121
PACIFIC BASIN EQUITY FUND 8
----------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
=======================================================================================================================
For the period
November 1, 1993
For the (Commencement
year ended of Operations) to
September 30, 1995 September 30, 1994
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) $ 28,202 $ (91,888)
- -----------------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) from Securities and Foreign
Currency Transactions (481,521) 744,135
- -----------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation (Depreciation)
on Securities and Foreign Currency Translation (821,330) 1,226,040
- -----------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets from Operations (1,274,649) 1,878,287
- -----------------------------------------------------------------------------------------------------------------------
FROM DISTRIBUTIONS
Net Realized Gain from Securities Transactions (831,820) -
- -----------------------------------------------------------------------------------------------------------------------
Net (Decrease) in Net Assets from Distributions (831,820) -
- -----------------------------------------------------------------------------------------------------------------------
FROM TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
- -----------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Transactions in
Shares of Beneficial Interest 1,248,861 23,483,595
- -----------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (857,608) 25,361,882
=======================================================================================================================
NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------
Beginning of Period 25,361,882 -
- -----------------------------------------------------------------------------------------------------------------------
End of Period $24,504,274 $25,361,882
=======================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 17 and 18
<PAGE> 122
PACIFIC BASIN EQUITY FUND 9
----------------------------------------------
FINANCIAL HIGHLIGHTS
================================================================================
Contained below are selected data for a share outstanding, total investment
return, ratios to average net assets and other supplemental data for each of
the periods indicated for the Pacific Basin Equity Fund.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
For the period
November 1, 1993
For the (Commencement
year ended of Operations) to
September 30, 1995 September 30, 1994
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of Period $ 11.82 $ 10.00
------- -------
Income from Investment Operations
Net Investment Income (Loss) 0.01 (0.04)
Net Realized and Unrealized Gain (Loss) on Securities
and Foreign Currency (0.49) 1.86
------- -------
Total from Investment Operations (0.48) 1.82
------- -------
Less Distributions
Distributions from Net Realized Gain from Securities
Transactions (0.38) -
------- -------
Net Asset Value, End of Period $ 10.96 $ 11.82
======= =======
TOTAL INVESTMENT RETURN (3.87%) 20.11%*
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment Income (Loss) to Average Net Assets 0.12% (0.59%)*
Ratio of Expenses to Average Net Assets, Including
Expenses of the Pacific Basin Equity Portfolio 1.75% 1.75%*
Decrease Reflected in Above Expense Ratio Due to Absorption
of Expenses by Bankers Trust 0.52% 0.60%*
Net Assets, End of Period (000's omitted) $24,504 $25,362
</TABLE>
* Annualized
See Notes to Financial Statements on Pages 17 and 18
<PAGE> 123
PACIFIC BASIN EQUITY PORTFOLIO 10
----------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
=======================================================================================================================
September 30, 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
- -----------------------------------------------------------------------------------------------------------------------
Investments, at Value (Cost $21,794,123) $22,315,544
- -----------------------------------------------------------------------------------------------------------------------
Foreign Cash (Cost $523,620) 521,288
- -----------------------------------------------------------------------------------------------------------------------
Cash 392,856
- -----------------------------------------------------------------------------------------------------------------------
Receivable for Securities Sold 1,539,827
- -----------------------------------------------------------------------------------------------------------------------
Dividends and Interest Receivable 46,101
- -----------------------------------------------------------------------------------------------------------------------
Prepaid Expenses 189
- -----------------------------------------------------------------------------------------------------------------------
Total Assets 24,815,805
- -----------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------------------
Due to Bankers Trust 17,611
- -----------------------------------------------------------------------------------------------------------------------
Accrued Expenses and Accounts Payable 27,322
- -----------------------------------------------------------------------------------------------------------------------
Net Unrealized Depreciation on Forward Foreign Currency Contacts 114,574
- -----------------------------------------------------------------------------------------------------------------------
Total Liabilities 159,507
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS $24,656,298
=======================================================================================================================
COMPOSITION OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------
Paid-in Capital $24,251,588
- -----------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Securities 521,421
- -----------------------------------------------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Foreign Currency Translation (2,137)
- -----------------------------------------------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Forward Foreign Currency Contracts (114,574)
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS, SEPTEMBER 30, 1995 $24,656,298
=======================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 20 and 21
<PAGE> 124
PACIFIC BASIN EQUITY PORTFOLIO 11
----------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
=======================================================================================================================
For the year ended September 30, 1995
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign withholding tax of $23,935) $ 433,065
- -----------------------------------------------------------------------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------------------------------------------------------
Advisory Fee $173,591
- -----------------------------------------------------------------------------------------------------------------------
Administration and Services Fee 57,864
- -----------------------------------------------------------------------------------------------------------------------
Professional Fees 26,882
- -----------------------------------------------------------------------------------------------------------------------
Transfer Tax 11,216
- -----------------------------------------------------------------------------------------------------------------------
Insurance 2,695
- -----------------------------------------------------------------------------------------------------------------------
Interest 4,423
- -----------------------------------------------------------------------------------------------------------------------
Trustees Fees 1,535
- -----------------------------------------------------------------------------------------------------------------------
Amortization of Organizational Expenses 11
- -----------------------------------------------------------------------------------------------------------------------
Miscellaneous 577
- -----------------------------------------------------------------------------------------------------------------------
Total Expenses 278,794
- -----------------------------------------------------------------------------------------------------------------------
Less: Expenses Absorbed by Bankers Trust (47,338) 231,456
- -----------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 201,609
- -----------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES AND FOREIGN CURRENCY
- -----------------------------------------------------------------------------------------------------------------------
Net Realized (Loss) from Securities Transactions (448,645)
- -----------------------------------------------------------------------------------------------------------------------
Net Realized (Loss) from Foreign Currency Transactions (32,882)
- -----------------------------------------------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Securities (716,292)
- -----------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation on Foreign Currency Translation 5,383
- -----------------------------------------------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Forward Foreign Currency Contracts (110,421)
- -----------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED (LOSS) ON SECURITIES AND FOREIGN CURRENCY (1,302,857)
- -----------------------------------------------------------------------------------------------------------------------
NET (DECREASE) IN NET ASSETS FROM OPERATIONS $(1,101,248)
=======================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 20 and 21
<PAGE> 125
PACIFIC BASIN EQUITY PORTFOLIO 12
----------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
=======================================================================================================================
For the period
November 1, 1993
For the (Commencement
year ended of Operations) to
September 30, 1995 September 30, 1994
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------
Net Investment Income $ 201,609 $ 24,084
- -----------------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) from Securities and Foreign Currency Transactions (481,527) 744,140
- -----------------------------------------------------------------------------------------------------------------------
Net Unrealized Appreciation (Depreciation) on
Securities and Foreign Currency Translation (821,330) 1,226,040
- -----------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets from Operations (1,101,248) 1,994,264
- -----------------------------------------------------------------------------------------------------------------------
FROM CAPITAL TRANSACTIONS
- -----------------------------------------------------------------------------------------------------------------------
Proceeds from Capital Invested 12,695,645 27,367,327
- -----------------------------------------------------------------------------------------------------------------------
Value of Capital Withdrawn (12,304,373) (3,995,317)
- -----------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Capital Transactions 391,272 23,372,010
- -----------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (709,976) 25,366,274
=======================================================================================================================
NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------
Beginning of Period 25,366,274 -
- -----------------------------------------------------------------------------------------------------------------------
End of Period $24,656,298 $25,366,274
=======================================================================================================================
</TABLE>
See Notes to Financial Statements on Pages 20 and 21
<PAGE> 126
PACIFIC BASIN EQUITY PORTFOLIO 13
----------------------------------------------
FINANCIAL HIGHLIGHTS
================================================================================
Contained below are selected ratios and supplemental data for each of the
periods indicated for the Pacific Basin Equity Portfolio.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
For the period
November 1, 1993
For the (Commencement
year ended of Operations) to
September 30, 1995 September 30, 1994
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment Income to Average Net Assets 0.87% 0.16%**
Ratio of Expenses to Average Net Assets 1.00% 1.00%*
Decrease Reflected in Above Ratio of Expenses to Average
Net Assets Due to Absorption of Expenses by Bankers Trust 0.20% 0.26%*
Portfolio Turnover Rate 104% 40%
Net Assets, End of Period (000's omitted) $24,656 $25,366
</TABLE>
* Annualized
See Notes to Financial Statements on Pages 20 and 21
<PAGE> 127
PACIFIC BASIN EQUITY PORTFOLIO 14
----------------------------------------------
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS
================================================================================
September 30, 1995
SHARES DESCRIPTION VALUE
==========================================================================
<S> <C> <C>
COMMON STOCKS - 88.41%
==========================================================================
HONG KONG - 22.29%
- --------------------------------------------------------------------------
62,000 Cheung Kong, LTD (Real Estate) $ 337,584
- --------------------------------------------------------------------------
590,000 China Resources Enterprises, LTD
(Real Estate) 253,718
- --------------------------------------------------------------------------
700,000 CP Pokphand (Agriculture) 285,178
- --------------------------------------------------------------------------
210,000 Goldlion Holdings, LTD
(Apparel) 115,429
- --------------------------------------------------------------------------
500,000 Guandong Investments, LTD
(Diversified) 299,082
- --------------------------------------------------------------------------
65,100 Hang Seng Bank (Banking) 536,747
- --------------------------------------------------------------------------
464,000 HKR International, LTD
(Real Estate) 393,068
- --------------------------------------------------------------------------
5,000 Hong Kong Electric Holdings
(Utility-Electric) 16,716
- --------------------------------------------------------------------------
418,000 Hopewell Holdings, LTD
(Property Infrastructure) 283,820
- --------------------------------------------------------------------------
35,600 HSBC Holdings (Banking) 494,956
- --------------------------------------------------------------------------
99,000 Hutchison Whampoa (Diversified) 536,485
- --------------------------------------------------------------------------
159,000 Liu Chong Hing Bank, LTD (Banking) 197,413
- --------------------------------------------------------------------------
6,000 National Mutual Asia, LTD
(Financial Services) 4,617
- --------------------------------------------------------------------------
151,000 New World Development
(Real Estate) 595,642
- --------------------------------------------------------------------------
400,000 Orient Overseas International, LTD
(Transportation-Shipping) 234,092
- --------------------------------------------------------------------------
580,000 Qingling Motors
(Auto & Trucks) 133,523
- --------------------------------------------------------------------------
40,000 Sinocan Holdings, LTD
(Packaging & Container) 14,744
- --------------------------------------------------------------------------
58,000 Swire Pacific, LTD, Cl. A
(Diversified) 459,454
- --------------------------------------------------------------------------
484,000 Tomei International Holdings
(Electronics) 25,978
- --------------------------------------------------------------------------
89,000 Wharf Holdings (Diversified) 277,406
- --------------------------------------------------------------------------
5,495,652
==========================================================================
INDIA - 3.98%
- --------------------------------------------------------------------------
7,900 Bajaj Auto, LTD, GDR
(Automotive) 241,938
- --------------------------------------------------------------------------
3,000 Calcutta Electric, GDR
(Utility-Electric) (a) 11,100
- --------------------------------------------------------------------------
21,400 Core Healthcare, LTD, GDR
(Health Care) (a) 96,300
- --------------------------------------------------------------------------
9,000 Indian Petrochemicals, GDR
(Chemicals) (a) 121,545
- --------------------------------------------------------------------------
13,800 Mahindra & Mahindra Limited, GDR
(Automotive) (b) 182,988
- --------------------------------------------------------------------------
9,000 Tri Polyta Indonesia, PT, ADR
(Chemicals) 193,500
- --------------------------------------------------------------------------
7,400 Reliance Industries (Chemicals) (a) 134,162
- --------------------------------------------------------------------------
981,533
==========================================================================
INDONESIA - 7.61%
- --------------------------------------------------------------------------
11,300 Asia Pacific Resources International,
Cl. A (Forest Products &Paper) (a) 89,694
- --------------------------------------------------------------------------
35,250 Bank Dagang Nas Indonesia PT
(Banking) 32,286
- --------------------------------------------------------------------------
48,200 Bank International Indonesia PT
(Banking) (a) 165,950
- --------------------------------------------------------------------------
110,000 Bimantara Citra PT (Diversified) (a) 88,612
- --------------------------------------------------------------------------
6,833 Duta Anggada Realty PT
(Real Estate) 4,449
- --------------------------------------------------------------------------
24,000 Gadjah Tuniggal (Tire & Rubber) 15,890
- --------------------------------------------------------------------------
113,664 Indah Kiat Pulp & Paper PT
(Forest Products & Paper) 136,718
- --------------------------------------------------------------------------
2,200 Indonesian Satellite PT, ADR
(Telecommunications) 77,275
- --------------------------------------------------------------------------
24,000 Inti Indorayon Utama PT
(Forest Products & Paper) 36,018
- --------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements on Pages 20 and 21
<PAGE> 128
PACIFIC BASIN EQUITY PORTFOLIO 15
----------------------------------------------
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS
================================================================================
September 30, 1995
SHARES DESCRIPTION VALUE
==========================================================================
<S> <C> <C>
32,500 Jaya Real Property PT (Real Estate) $ 97,550
- --------------------------------------------------------------------------
60,000 Modern Photo Film PT
(Photo & Optical) 344,295
- --------------------------------------------------------------------------
172,700 Mulia Industrindo PT
(Glass Manufacturing) 428,796
- --------------------------------------------------------------------------
26,500 Semen Gresik PT (Building Materials) 74,862
- --------------------------------------------------------------------------
54,000 Tempo Scan Pacific PT
(Pharmaceuticals) 284,242
- --------------------------------------------------------------------------
1,876,637
==========================================================================
MALAYSIA - 15.67%
- --------------------------------------------------------------------------
76,000 Berjaya Sports Toto Berhad
(Diversified) 160,223
- --------------------------------------------------------------------------
123,000 Commerce Asset (Banking) 645,823
- --------------------------------------------------------------------------
50,000 Gadek Berhad
(Diversified) 296,340
- --------------------------------------------------------------------------
16,000 Industrial Oxygen Berhad (Diversified) 18,457
- --------------------------------------------------------------------------
122,000 Pilecon Engineering Berhad
(Engineering & Construction) 128,115
- --------------------------------------------------------------------------
110,000 Rashid Hussain Berhad
(Financial Services) 315,036
- --------------------------------------------------------------------------
176,000 Tanjong PLC (Gaming) 486,555
- --------------------------------------------------------------------------
207,000 Technology Resources
(Telecommunications) (a) 539,320
- --------------------------------------------------------------------------
199,000 United Engineers Berhad
(Engineering & Construction) 1,274,423
- --------------------------------------------------------------------------
3,864,292
==========================================================================
PAKISTAN - 0.58%
- --------------------------------------------------------------------------
22,100 Engro Chemical Pakistan, LTD
(Chemicals) (a) 106,579
- --------------------------------------------------------------------------
35,000 Karachi Electric (Utility-Electric) (a) 34,979
- --------------------------------------------------------------------------
141,558
==========================================================================
PHILIPPINES - 7.69%
- --------------------------------------------------------------------------
2,436 Benpress Holdings, GDR
(Diversified) (a) 15,225
- --------------------------------------------------------------------------
495,500 C & P Homes (Construction) (a) 309,034
- --------------------------------------------------------------------------
1,733,100 Engineering & Equipment
(Engineering & Construction) 126,382
- --------------------------------------------------------------------------
199,600 Megaworld Properties & Holdings
(Real Estate) (a) 103,420
- --------------------------------------------------------------------------
12,231 Metropolitan Bank & Trust
(Banking) 227,674
- --------------------------------------------------------------------------
12,120 Philippine Commercial International
Bank (Banking) (a) 109,315
- --------------------------------------------------------------------------
123,608 Philippine Savings Bank (Banking) 291,763
- --------------------------------------------------------------------------
392,700 SM Prime Holdings, Cl. B
(Diversified) (a) 117,561
- --------------------------------------------------------------------------
3,357,000 Southeast Asia Cement Holdings
(Cement) (a) 425, 181
- --------------------------------------------------------------------------
464,600 Vitarich (Agriculture) 171,183
- --------------------------------------------------------------------------
1,896,738
==========================================================================
SINGAPORE - 8.72%
- --------------------------------------------------------------------------
68,000 City Developments (Real Estate) 420,372
- --------------------------------------------------------------------------
52,000 Overseas Chinese Banking
(Banking) 588,128
- --------------------------------------------------------------------------
58,000 Overseas Union Bank (Banking) 370,776
- --------------------------------------------------------------------------
133,000 Singapore Land
(Property Development) 770,812
- --------------------------------------------------------------------------
2,150,088
==========================================================================
SOUTH KOREA - 9.34%
- --------------------------------------------------------------------------
5,440 Central Investment & Finance
(Financial Services) 121,093
- --------------------------------------------------------------------------
28,000 Cho Hung Bank, LTD (Banking) 433,049
- --------------------------------------------------------------------------
25,000 Commercial Bank of Korea
(Banking) 304,120
- --------------------------------------------------------------------------
15,400 Daewoo (Wholesale) (a) 224,525
- --------------------------------------------------------------------------
6,480 Dong-Ah Construction Industrial
(Engineering & Construction) 282,481
- --------------------------------------------------------------------------
20,000 Korea First Bank (Banking) 221,557
- --------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements on Pages 20 and 21
<PAGE> 129
PACIFIC BASIN EQUITY PORTFOLIO 16
----------------------------------------------
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS
================================================================================
September 30, 1995
SHARES DESCRIPTION VALUE
==========================================================================
<S> <C> <C>
2,500 Korean Air (Transportation) (a) $ 94,282
- --------------------------------------------------------------------------
3,680 Samsung Electronics New (Nonvoting),
GDS (Electronics) (a) (b) 249,872
- --------------------------------------------------------------------------
152 Samsung Electronics New (Voting),
GDS (Electronics) (a) (b) 17,693
- --------------------------------------------------------------------------
771 Samsung Electronics (Voting), GDS
(Electronics) (a) (b) 92,520
- --------------------------------------------------------------------------
24,500 Seoul Bank (Banking) 260,564
- --------------------------------------------------------------------------
2,301,756
==========================================================================
THAILAND - 12.53%
- --------------------------------------------------------------------------
27,600 Finance One Public
(Financial Services) 168,273
- --------------------------------------------------------------------------
57,800 Hana Microelectronics (Electronics) 232,628
- --------------------------------------------------------------------------
39,820 Krung Thai Bank Public (Banking) 158,677
- --------------------------------------------------------------------------
60,000 Krungthai Thanakit, PLC
(Financial Services) (a) 155,409
- --------------------------------------------------------------------------
24,000 Nawarat Patanakarn Public
(Engineering & Construction) (a) 116,199
- --------------------------------------------------------------------------
51,000 Phatra Thanakit (Financial Services) 369,874
- --------------------------------------------------------------------------
223,400 Sahaviriya Steel Industries
(Metals) (a) 391,696
- --------------------------------------------------------------------------
220,000 Siam City Bank, LTD (Banking) 298,067
- --------------------------------------------------------------------------
127,000 TPI Polyne, LTD (Cement) 961,546
- --------------------------------------------------------------------------
39,300 Unithai Line Public
(Transportation-Shipping) 236,473
- --------------------------------------------------------------------------
3,088,842
==========================================================================
TOTAL COMMON STOCKS
(Cost $21,272,470) $21,797,096
==========================================================================
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
==========================================================================
CORPORATE DEBENTURES - 2.10%
==========================================================================
<S> <C> <C>
INDIA - 0.12%
- --------------------------------------------------------------------------
$ 30,000 Essar Gujarat, LTD (Conv.)
(Iron & Steel), 5.50%, 8/5/98 $ 30,075
==========================================================================
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
==========================================================================
<S> <C>
INDONESIA - 0.65%
- --------------------------------------------------------------------------
$150,000 Eka Gunatam PT (Conv.) (Industrial)
4.00%, 10/4/97 (b) $ 160,500
==========================================================================
TAIWAN - 1.33%
- --------------------------------------------------------------------------
285,000 Walsin Lihwa (Conv.) (Electronics)
3.25%, 6/16/04 327,750
==========================================================================
TOTAL CORPORATE DEBENTURES
(Cost $521,653) $ 518,325
==========================================================================
OTHER SECURITIES - 0.00%
==========================================================================
PHILIPPINES - 0.00%
==========================================================================
16 Metropolitan Bank & Trust Rights
(Banking) (a) (Cost $0) 123
==========================================================================
TOTAL INVESTMENTS
(Cost $21,794,123) 90.51% $22,315,544
- --------------------------------------------------------------------------
Other Assets in Excess of
Liabilities 9.49% 2,340,754
==========================================================================
NET ASSETS 100.00% $24,656,298
==========================================================================
</TABLE>
(a) Non-Income Producing Security
(b) Security exempt from registation under Rule 144A of the Securities Act
of 1933. These Securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the
period end, the value of the securities amounted to $703,573 or 2.85%
of net assets.
<TABLE>
<CAPTION>
Industry Diversification (as a percentage of Total Investments):
<S> <C>
Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.92%
Cement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.21
Diversified . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.17
Electronics . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.24
Engineering & Construction . . . . . . . . . . . . . . . . . . . . 8.64
Financial Services . . . . . . . . . . . . . . . . . . . . . . . . 5.08
Other* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.41
Property Development . . . . . . . . . . . . . . . . . . . . . . . 3.45
Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.88
--------
100.00%
========
</TABLE>
*No one industry represents more than 3% of Portfolio holdings.
See Notes to Financial Statements on Pages 20 and 21
<PAGE> 130
PACIFIC BASIN EQUITY FUND 17
----------------------------------------------
NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE 1 - ORGANIZATION AND SIGNIFICANT
ACCOUNTING POLICIES
A. Organization
BT Investment Funds (the "Trust") is registered under the Investment Company
Act of 1940 (the "Act"), as amended, as an open-end management investment
company. The Trust was organized on July 21, 1986, as a business trust under
the laws of the Commonwealth of Massachusetts. The Pacific Basin Equity fund
(the "Fund") is one of the funds offered to investors by the Trust. The Fund
commenced operations and began offering shares of beneficial interest on
November 1, 1993. The Fund invests substantially all of its assets in the
Pacific Basin Equity Portfolio (the "Portfolio"). The Portfolio is an open-end
management investment company registered under the Act. The Fund seeks to
achieve its investment objective by investing all of its investable assets in
the Portfolio. The value of such investment in the Portfolio reflects the
Fund's proportionate interest in the net assets of the Portfolio. At September
30, 1995, the Fund's investment was approximately 100% of the Portfolio.
The financial statements of the Portfolio, including the Schedule of Portfolio
Investments, are contained elsewhere in this report.
B. Investment Income
The Fund earns income, net of expenses, daily on its investment in the
Portfolio. All of the net investment income and realized and unrealized gains
and losses from the security and foreign currency transactions of the Portfolio
are allocated pro rata among the investors in the Portfolio at the time of such
determination.
C. Organizational Expenses
Costs incurred by the Fund in connection with its organization and initial
registration are being amortized over a five year period on a straight-line
basis.
D. Dividends
It is the Fund's policy to declare and distribute dividends annually to
shareholders from net investment income. Dividends payable to shareholders are
recorded by the Fund on the ex-dividend date. Distributions of net realized
short-term and long-term capital gains, if any, earned by the Fund will be made
annually to the extent they are not offset by any capital loss carryforwards.
The Fund may periodically make reclassifications among certain of its capital
accounts as a result of the timing and characterization of certain income and
capital gains distributions determined annually in accordance with federal tax
regulations which may differ from generally accepted accounting principles. For
the year ended September 30, 1995, $28,724 of net realized (loss) from foreign
currency transactions was reclassified against $28,202 of undistributed net
investment income with the remaining $522 reclassified against paid in capital.
E. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders. Therefore, no federal income tax provision is
required.
F. Other
The Trust accounts separately for the assets, liabilities, and operations of
the Fund. Expenses directly attributable to the Fund are charged to that Fund,
while expenses which are attributable to all of the Trust's funds are allocated
among them.
<PAGE> 131
PACIFIC BASIN EQUITY FUND 18
----------------------------------------------
NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE 2 - FEES AND TRANSACTIONS WITH AFFILIATES
The Fund has entered into an Administration and Services Agreement with Bankers
Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Fund in return for a fee computed daily and paid
monthly at an annual rate of 0.75 of 1% of the Fund's average daily net assets.
For the year ended September 30, 1995, this fee aggregated $173,407.
The Trust has entered into a Distribution Agreement with Signature
Broker-Dealer Services, Inc. ("Signature"). Under the Distribution Agreement
with the Trust, pursuant to Rule 12b-1 under the 1940 Act, Signature may seek
reimbursement, at an annual rate not exceeding 0.20 of 1% of the Fund's average
daily net assets, for expenses incurred in connection with any activities
primarily intended to result in the sale of the Fund's shares. For the year
ended September 30, 1995, there were no reimbursable expenses incurred under
this agreement.
Bankers Trust has voluntarily undertaken to waive and reimburse expenses of the
Fund, to the extent necessary, to limit all expenses to 0.75 of 1% of the
average daily net assets of the Fund, excluding expenses of the Portfolio and
1.75 of 1% of the average daily net assets of the Fund, including expenses of
the Portfolio. For the year ended September 30, 1995, expenses of the Fund have
been reduced $72,263.
The Fund is subject to such limitations as may from time to time be imposed by
the Blue Sky laws of states in which the Fund sells its shares. Currently, the
most restrictive jurisdiction imposes expense limitations of 2.5% of the first
$30,000,000 of the average daily net assets, 2.0% of the next $70,000,000, and
1.5% of any excess over $100,000,000.
Certain trustees and officers of the Fund are also directors, officers and/or
employees of Signature. None of the trustees so affiliated received
compensation for services as trustee of the Fund. Similarly, none of the Fund's
officers received compensation from the Fund.
NOTE 3 - SHARES OF BENEFICIAL INTEREST
At September 30, 1995, there were an unlimited number of shares of beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
For the period
November 1, 1993
For the (Commencement
year ended of Operations) to
September 30, 1995 September 30, 1994
--------------------------- ------------------------
Shares Amount Shares Amount
---------- ----------- --------- ------------
<S> <C> <C> <C> <C>
Sold 1,187,576 $ 12,685,645 2,481,528 $ 27,377,317
Reinvested 36,517 375,029 - -
Redeemed (1,133,993) (11,811,813) (335,547) (3,893,722)
---------- ------------ --------- ------------
Net Increase 90,100 $ 1,248,861 2,145,981 $ 23,483,595
========== ============ ========= ============
</TABLE>
NOTE 4 - CAPITAL LOSS CARRYFORWARD
At September 30, 1995, accumulated net realized capital loss carryforwards
available as a reduction against future net realized capital gains aggregated
$415,644 which expires 2003.
<PAGE> 132
PACIFIC BASIN EQUITY FUND 19
----------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
To the Trustees and Shareholders of
BT Investment Funds:
We have audited the accompanying statement of assets and liabilities of the
Pacific Basin Equity Fund (one of the funds comprising BT Investment Funds) as
of September 30, 1995, and the related statement of operations for the year
then ended, the statements of changes in net assets and the financial
highlights for the year then ended and for the period November 1, 1993
(commencement of operation) to September 30, 1994. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995 by corres-pondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all mate-rial respects, the financial position of the
Pacific Basin Equity Fund of BT Investment Funds as of September 30, 1995, the
results of its operations, the changes in its net assets, and the financial
highlights for the periods referred to above, in conformity with generally
accepted accounting principles.
/S/ COOPERS & LYBRAND L.L.P.
- ----------------------------
Kansas City, Missouri
November 10, 1995
<PAGE> 133
PACIFIC BASIN EQUITY PORTFOLIO 20
----------------------------------------------
NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
A. Organization
The Pacific Basin Equity Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940 (the "Act"), as amended, as an open-end
management investment company. The Portfolio was organized on August 6, 1993 as
an unincorporated trust under the laws of New York and commenced operations on
November 1, 1993. The Declaration of Trust permits the Board of Trustees (the
"Trustees") to issue beneficial interests in the Portfolio.
B. Security Valuation
The Portfolio's investments are valued each business day by an independent
pricing service (the "Service") approved by the Trustees. Securities traded
primarily on a principal securities exchange (domestic or foreign) are valued
at their last reported sale price on that exchange. If no sale is reported, or
if local custom or regulation so provides, the mean of the latest bid and asked
price is used. Securities traded over-the-counter are valued using either the
mean between the bid and asked price or, where local custom or regulations so
provide, the last sales price. Short-term obligations with remaining maturities
of 60 days or less are valued at amortized cost which with accrued interest
approximates value. Securities for which quotations are not available are
stated at fair value as determined by the Trustees.
C. Foreign Currency Transactions
The books and records of the Portfolio are maintained in U.S. dollars. All
assets and liabilities initially expressed in foreign currencies are converted
into U.S. dollars at prevailing exchange rates. Purchases and sales of
investment securities, dividend and interest income, and certain expenses are
translated at the rates of exchange prevailing on the respective dates of such
transactions. The portfolio does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in the market prices of securities held.
Such fluctuations are included with the net realized and unrealized gain or
loss from securities.
D. Forward Foreign Currency Contracts
The Portfolio may enter into forward foreign currency contracts for the purpose
of settling specific purchases or sales of securities denominated in a foreign
currency or with respect to the Portfolio's investments generally. The net U.S.
dollar value of foreign currency underlying all contractual commitments held by
the Portfolio and the resulting unrealized appreciation or depreciation are
determined using prevailing exchange rates. With respect to forward foreign
currency contracts, losses in excess of amounts recognized in the Statement of
Assets and Liabilities may arise due to changes in the value of the foreign
currency or if the counterparty does not perform under the contract.
E. Security Transactions and Investment Income
Security transactions are accounted for on a trade date basis (date the order
to buy or sell is executed). Dividend income, less foreign taxes withheld (if
any), is recorded on the ex-dividend date or upon receipt of ex-dividend
notification in the case of certain foreign securities. Interest income is
recorded on the accrual basis and includes amortization of premium and discount
on investments. Realized gains and losses from security transactions are
recorded on the identified cost basis.
All of the net investment income and realized and unrealized gains and losses
from securities and foreign currency transactions of the Portfolio are
allocated pro rata among the investors of the Portfolio at the time of such
determination.
<PAGE> 134
PACIFIC BASIN EQUITY PORTFOLIO 21
----------------------------------------------
NOTES TO FINANCIAL STATEMENTS
===============================================================================
F. Federal Income Taxes
It is the Portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to it. Therefore, no federal income tax provision is
required.
NOTE 2 - FEES AND TRANSACTIONS WITH AFFILIATES
The Portfolio has entered into an Administration and Services Agreement with
Bankers Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Portfolio in return for a fee computed daily and
paid monthly at an annual rate of 0.25 of 1% of the Portfolio's average daily
net assets. For the year ended September 30, 1995, this fee aggregated $57,864.
The Portfolio has entered into an Advisory Agreement with Bankers Trust. Under
this Advisory Agreement, Bankers Trust manages the Portfolio in accordance with
the Portfolio's investment objective and stated investment policies in return
for a fee computed daily and paid monthly at an annual rate of 0.75 of 1% of
the Portfolio's average daily net assets. For the year ended September 30,
1995, this fee aggregated $173,591.
Bankers Trust has entered into a Sub-Advisory Agreement with BT Fund Managers
International Limited ("BT Fund Managers International"), a wholly owned
subsidiary of Bankers Trust Australia Limited. Under this Sub-Advisory
Agreement, BT Fund Managers International receives a fee from Bankers Trust for
providing investment advice and research services, computed daily and paid
monthly at an annual rate of 0.60 of 1% of the Portfolio's average daily net
assets.
Bankers Trust has voluntarily undertaken to waive and reimburse expenses of the
Portfolio, to the extent necessary, to limit all expenses to 1.00 of 1% of the
average daily net assets of the Portfolio. For the year ended September 30,
1995, expenses of the Portfolio have been reduced $47,338.
Certain trustees and officers of the Portfolio are also directors, officers
and/or employees of Signature. None of the trustees so affiliated received
compensation for services as trustee of the Portfolio. Similarly, none of the
Portfolio's officers received compensation from the Portfolio.
NOTE 3 - PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments, other
than short-term obligations, for the year ended September 30, 1995, were
$23,147,139 and $21,335,740, respectively. For federal income tax purposes, the
tax basis of investments held at September 30, 1995 was $21,841,557. The
aggregate gross unrealized appreciation for all investments was $2,262,513 and
the aggregate gross unrealized depreciation for all investments was $1,788,526.
NOTE 4 - OPEN FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
As of September 30, 1995, the Portfolio has entered into the following open
forward foreign currency exchange contracts:
<TABLE>
<CAPTION>
Net
Contracts In Unrealized
to Exchange Settlement Value (Depreciation)
Deliver For Date (US $) (US $)
- ----------------------------------------------------------------------------------------------
Sales
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SGD 3,727,511 USD 2,642,500 2/8/96 2,645,138 $ (2,638)
- ----------------------------------------------------------------------------------------------
Purchases
- ----------------------------------------------------------------------------------------------
USD 2,642,500 SGD 3,566,054 2/8/96 2,530,564 (111,936)
- ----------------------------------------------------------------------------------------------
$ (114,574)
------------
</TABLE>
<PAGE> 135
PACIFIC BASIN EQUITY PORTFOLIO 22
----------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
To the Trustees and Holders of Beneficial Interest of the Pacific Basin Equity
Portfolio:
We have audited the accompanying statement of assets and liabilities of the
Pacific Basin Equity Portfolio (a series of BT Investment Portfolios),
including the schedule of portfolio investments, as of September 30, 1995, and
the related statement of operations for the year then ended, the statements of
changes in net assets and the financial highlights for the year then ended and
for the period November 1, 1993 (commencement of operation) to September 30,
1994. These financial statements and financial highlights are the
responsibility of the Portfolio's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the finan-cial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Pacific Basin Equity Portfolio of BT Investment Portfolios as of September 30,
1995, the results of its operations, the changes in its net assets, and the
financial highlights for the periods referred to above, in conformity with
generally accepted accounting principles.
/S/ COOPERS & LYBRAND L.L.P.
- -----------------------------
Kansas City, Missouri
November 10, 1995
