BT INVESTMENT FUNDS, 485BPOS, 1996-01-30

BT INVESTMENT FUNDS
485BPOS, 1996-01-30

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 30, 1996

File Nos. 33-7404 and 811-4760

================================================================================

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-1A
REGISTRATION STATEMENT UNDER

THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 36

AND
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940

AMENDMENT NO. 37

BT INVESTMENT FUNDS
(Exact Name of Registrant as Specified in Charter)

6 ST. JAMES AVENUE, BOSTON, MASSACHUSETTS 02116
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: 617-423-0800

Philip W. Coolidge Copies to: Burton M. Leibert, Esq.
Signature Broker-Dealer Services, Inc. Willkie Farr & Gallagher
6 St. James Avenue One Citicorp Center
Boston, Massachusetts 02116 153 East 53rd Street
(Name and Address of Agent for Service) New York, New York 10022

It is proposed that this filing will become effective (check appropriate box)
- --- ---
X
- --- immediately upon filing pursuant to --- on (date) pursuant to
paragraph (b) paragraph (b)
- --- ---
- --- 60 days after filing pursuant to --- on (date) pursuant to
paragraph (a)(i) paragraph (a)(i)
- --- ---
- --- 75 days after filing pursuant to --- on (date) pursuant to
paragraph (a)(ii) paragraph (a)(ii) of rule 485.

If appropriate, check the following box:
- ---
- --- this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

BT INVESTMENT PORTFOLIOS, CAPITAL APPRECIATION
PORTFOLIO AND INTERNATIONAL EQUITY PORTFOLIO HAVE ALSO EXECUTED THIS

REGISTRATION STATEMENT.

REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES OF BENEFICIAL
INTEREST PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT OF 1940.
REGISTRANT FILED THE NOTICE REQUIRED BY RULE 24F-2 ON OR ABOUT NOVEMBER 30, 1995
FOR REGISTRANT'S FISCAL YEAR ENDED SEPTEMBER 30, 1995. REGISTRANT FILED THE
NOTICE REQUIRED BY RULE 24F-2 ON FEBRUARY 28, 1995 FOR REGISTRANT'S FISCAL YEAR
ENDED DECEMBER 31, 1994. REGISTRANT FILED THE

<PAGE>

NOTICE REQUIRED BY RULE 24F-2 ON MAY 26, 1995 FOR REGISTRANT'S FISCAL YEAR ENDED
MARCH 31, 1995.

<PAGE>

EXPLANATORY NOTE

This Post-Effective Amendment No. 36 (the "Amendment") to the
Registrant's Registration Statement on Form N-1A is being filed with respect to
the Global High Yield Securities Fund , Small Cap Fund, International Equity
Fund, Capital Appreciation Fund, Pacific Basin Equity Fund, Latin American
Equity Fund, European Equity Fund and International Bond Fund (the "Funds"),
each a series of shares of the Registrant. The Amendment is being filed solely
in order to bring the Funds' audited financial statements up to date and to make
other non-material changes.

The series of shares of the Registrant are listed below and are offered
by Prospectuses in the respective Part A of the Post-Effective Amendments to the
Registrant's Registration Statement as identified. Each of the following is a
separate series of shares of the Registrant. This Amendment does not relate to,
amend or otherwise affect the Prospectuses contained in prior Post-Effective
Amendments, and, therefore, pursuant to Rule 485(d) under the Securities Act of
1933, as amended (the "1933 Act"), does not affect the effectiveness of such
Post-Effective Amendments.

Post-Effective
AMENDMENT NO.

BT Investment Lifecycle Short Range Fund 34
BT Investment Lifecycle Mid Range Fund 34
BT Investment Lifecycle Long Range Fund 34

Short/Intermediate U.S. Government Securities Fund 33

Cash Management Fund 33

Treasury Money Fund 33
100% Treasury Fund 33

Intermediate Tax Free Fund 33
Utility Fund 33

Tax Free Money Fund 33
NY Tax Free Money Fund 33

<PAGE>

BT0329H

BT INVESTMENT FUNDS

GLOBAL HIGH YIELD SECURITIES FUND, SMALL CAP FUND, INTERNATIONAL EQUITY FUND,
CAPITAL APPRECIATION FUND, PACIFIC BASIN EQUITY FUND, LATIN AMERICAN EQUITY
FUND, EUROPEAN EQUITY FUND AND INTERNATIONAL BOND FUND

FORM N-1A
CROSS REFERENCE SHEET

Part A
ITEM NO. HEADINGS IN PROSPECTUS

1. Cover Page . . . . . . . . Cover Page

2. Synopsis . . . . . . . . . Summary of Fund Expenses

3. Condensed Financial
Information . . . . . . . Fund's Financial Highlights

4. General Description of
Registrant . . . . . . . . Cover Page; Investment Objective, Policies
and Risks; Management of the Trust and
Portfolios

5. Management of the Fund . . Management of the Trust and Portfolios

6. Capital Stock and Other
Securities . . . . . . . . Cover Page; Purchase and Redemption of
Shares; Dividends, Distributions and Taxes;
Management of the Trust and Portfolios;
Performance Information and Reports

7. Purchase of Securities
Being Offered . . . . . . Purchase and Redemption of Shares; Net Asset
Value

8. Redemption or Repurchase . Purchase and Redemption of Shares

9. Pending Legal Proceedings Not applicable

<PAGE>
Part B Headings in Statement of
ITEM NO. ADDITIONAL INFORMATION

10. Cover Page . . . . . . . . Cover Page

11. Table of Contents . . . . Contents

12. General Information and
History . . . . . . . . . Not applicable

13. Investment Objectives and
Policies . . . . . . . . . Investment Objective, Policies and Risks

14. Management of the Fund . . Management of the Trust and Portfolios

15. Control Persons and Principal
Holders of Securities . . .See Prospectus -- "Organization of the Trust"

16. Investment Advisory and
Other Services . . . . . . Management of the Trust and Portfolios

17. Brokerage Allocation and
Other Practices . . . . . Investment Objective, Policies and Risks

18. Capital Stock and Other
Securities . . . . . . . . Organization of the Trust; see Prospectus --
"Dividends, Distributions and Taxes" and
"Organization of the Trust"

19. Purchase, Redemption and
Pricing of Securities
Being Offered . . . . . . Purchase and Redemption Information; Net
Asset Value

20. Tax Status . . . . . . . . Taxes; see Prospectus -- "Dividends,
Distributions and Taxes"

21. Underwriters . . . . . . . See Prospectus -- "Management of the Trust
and Portfolios"

22. Calculations of Yield
Quotations of Money Market
Funds . . . . . . . . . . Performance Information

23. Financial Statements . . . Financial Statements

PART C

Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE>

BT INVESTMENT FUNDS

Global
High Yield
Securities Fund
PROSPECTUS: JANUARY 29, 1996 Please
read this Prospectus carefully
before investing and retain it for
future reference. It contains
important information about the o Seeks high current income,
Fund that you should know and can through investment in a non-
refer to in deciding whether the diversified portfolio of high
Fund's goals match your own. A yield, non-investment grade
Statement of Additional Information debt securities issued
(SAI) with the same date has been in many of the world's securities
filed with the Securities and markets.
Exchange Commission, and is
incorporated herein by reference.
You may request a free copy of the
Statement by calling the Fund's
Service Agent at 1-800-730-1313.

UNLIKE OTHER MUTUAL FUNDS, THE FUND
SEEKS TO ACHIEVE ITS INVESTMENT
OBJECTIVE BY INVESTING ALL OF ITS
INVESTABLE ASSETS IN THE PORTFOLIO
WHICH IS A SEPARATE FUND WITH AN
IDENTICAL INVESTMENT OBJECTIVE. SEE
"SPECIAL INFORMATION CONCERNING
MASTER-FEEDER FUND STRUCTURE" ON
PAGE 18. THE PORTFOLIO MAY BORROW
MONEY FOR INVESTMENT IN SECURITIES.
SUCH LEVERAGE WILL EXAGGERATE ANY
INCREASE OR DECREASE IN THE VALUE
OF SHARES IN THE FUND. BORROWING
ALSO INVOLVES COSTS TO THE
PORTFOLIO. SEE "LEVERAGE" ON PAGE
11 HEREIN. THIS PORTFOLIO INVESTS
PRIMARILY IN LOWER RATED BONDS,
COMMONLY KNOWN AS "JUNK BONDS."
INVESTMENTS OF THIS TYPE ARE
SUBJECT TO A GREATER RISK OF LOSS
OF PRINCIPAL AND INTEREST.
PURCHASERS OF SHARES OF THE FUND
SHOULD CAREFULLY ASSESS THE RISK
ASSOCIATED WITH AN INVESTMENT IN
THE FUND. THE FUND MAY BE
CONSIDERED A SPECULATIVE INVESTMENT
AND IS DESIGNED FOR AGGRESIVE
INVESTORS. SHARES OF THE FUND ARE
NEITHER INSURED NOR GUARANTEED BY
THE U.S. GOVERNMENT. SHARES OF THE
FUND ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, BANKERS TRUST COMPANY
AND THE SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.

LIKE SHARES OF ALL MUTUAL FUNDS,
THESE SECURITIES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE BANKERS TRUST COMPANY
SECURITIES AND EXCHANGE COMMISSION Investment Adviser of the
OR ANY STATE SECURITIES COMMISSION Portfolio and Administrator
NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES SIGNATURE BROKER-
COMMISSION PASSED UPON THE ACCURACY DEALER SERVICES, INC.
OR ADEQUACY OF THIS PROSPECTUS. ANY Distributor
REPRESENTATION TO THE CONTRARY IS A 6 St. James Avenue
CRIMINAL OFFENSE. Boston, Massachusetts 02116

<PAGE>

TABLE OF CONTENTS
- ------------------------------------------------------------------------------
PAGE
..............................................................................
Summary of Fund Expenses 3
Fund Financial Highlights 4
Investment Objective, Policies and Risks 5
Risk Factors; Matching the Fund to Your Investment Needs 13
Net Asset Value 19
Purchase and Redemption of Shares 20
Dividends, Distributions and Taxes 23
Performance Information and Reports 24
Management of the Trust and BT Investment Portfolios 25
Additional Information 30
Appendix 35
- -----------------------------------------------------------------------------

<PAGE>
SUMMARY OF FUND EXPENSES
The following table provides (i) a summary of expenses relating to purchases
and sales of the shares of the Global High Yield Securities Fund (the "Fund")
and the annual operating expenses of the Fund and the expenses of the Global
High Yield Securities Portfolio (the "Portfolio"), as a percentage of average
net assets of the Fund and (ii) an example illustrating the dollar cost of
such expenses on a $1,000 investment in the Fund. THE TRUSTEES OF THE BT
INVESTMENT FUNDS (THE "TRUST") BELIEVE THAT THE AGGREGATE PER SHARE EXPENSES
OF THE FUND AND THE PORTFOLIO WILL BE LESS THAN OR APPROXIMATELY EQUAL TO THE
EXPENSES WHICH THE FUND WOULD INCUR IF THE TRUST RETAINED THE SERVICES OF AN
INVESTMENT ADVISER AND THE INVESTABLE ASSETS ("ASSETS") OF THE FUND WERE
INVESTED DIRECTLY IN THE TYPE OF SECURITIES BEING HELD BY THE PORTFOLIO.
- ------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSES
(as a percentage of the average daily net assets of the Fund)
..............................................................................
Investment advisory fee (after reimbursement or waiver) 0.41%
12b-1 fees 0.00
Other expenses (after reimbursements or waivers) 1.09
..............................................................................
Total operating expenses (after reimbursements or waivers) 1.50%
..............................................................................
EXAMPLE 1 year 3 years 5 years 10 years
..............................................................................
You would pay the following expenses
on a $1,000 investment, assuming (1)
5% annual return and (2) redemption
at the end of each time period $15 $47 $82 $179
- ------------------------------------------------------------------------------

The expense table and the example above show the costs and expenses that an
investor will bear directly or indirectly as a shareholder of the Fund. While
reimbursement of distribution expenses in amounts up to 0.20% of average net
assets are authorized to be made pursuant to the Plan of Distribution under
Rule 12b-1 of the Investment Company Act of 1940, as amended (the "1940 Act")
it is not expected that any payments will actually be made under that plan in
the foreseeable future. Bankers Trust Company ("Bankers Trust") has
voluntarily agreed to waive a portion of its investment advisory fee. Without
such waiver, the Portfolio's investment advisory fee would be equal to 0.80%.
The expense table and the example reflect a voluntary undertaking by Bankers
Trust or Signature Broker-Dealer Services, Inc. ("Signature") to waive or
reimburse expenses such that the total operating expenses will not exceed
1.50% of the Fund's average net assets annually. Prior to September 15, 1995,
Bankers Trust and Signature voluntarily undertook to waive and reimburse
expenses such that total operating expense would not exceed 1.75%. The expense
information in the above table has been restated to reflect the new expense
waiver. In the absence of this undertaking, for the fiscal year ended
September 30, 1995, the total operating expenses would be equal to
approximately 2.61% of the Fund's average net assets annually. THE EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Moreover, while each
example assumes a 5% annual return, actual performance will vary and may
result in a return greater or less than 5%.

The Fund is sold by Signature as the Trust's distributor (the "Distributor")
to customers of Bankers Trust or to customers of another bank or a dealer or
other institution that has a sub-shareholder servicing agreement with Bankers
Trust (along with Bankers Trust, a "Service Agent"). Some Service Agents may
impose certain conditions on their customers in addition to or different from
those imposed by the Fund and may charge their customers a direct fee for
their services. Each Service Agent has agreed to transmit to shareholders who
are its customers appropriate disclosures of any fees that it may charge them
directly.

For more information with respect to the expenses of the Fund and the
Portfolio see "Management of the Trust and BT Investment Portfolios" herein.

FUND FINANCIAL HIGHLIGHTS
The following table shows selected data for a share outstanding, total
investment return, ratios to average net assets and other supplemental data
for the Fund for each period indicated and has been audited by Coopers &
Lybrand L.L.P., the Fund's independent accountants, whose report thereon
appears in the Fund's Annual Report which is incorporated by reference in the
Fund's Statement of Additional Information.
- ------------------------------------------------------------------------------
FOR THE PERIOD
DECEMBER 14, 1993
(COMMENCEMENT
FOR THE OF OPERATIONS)
YEAR ENDED TO
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
..............................................................................
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
Distributions 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
- ------------------------------------------------------------------------------
*Annualized

INVESTMENT OBJECTIVE, POLICIES AND RISKS
The Fund's investment objective is high current income from investment in a
non-diversified portfolio of high yield, non-investment grade debt securities
issued in many of the world's securities markets. Capital appreciation will be
considered when consistent with the primary investment objective of high
current income. The Portfolio intends to invest in Brady Bonds and other
sovereign debt and in high risk, lower quality debt securities commonly
referred to as "junk bonds" and regarded as predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation as well as in the debt securities
of issuers located in emerging markets, Brady bonds and other sovereign debt.
The Portfolio may borrow money for investment purposes and invest up to 10% of
its assets in restricted securities (including 144A securities) which may
involve greater risk and increased Fund expenses.

There can be no assurances that the investment objective of either the Fund or
the Portfolio will be achieved. The investment objective of each of the Fund
and the Portfolio is not a fundamental policy and may be changed upon notice
to but without the approval of the Fund's shareholders or the Portfolio's
investors, respectively. See "Special Information Concerning Master-Feeder
Fund Structure" on page 18 herein.

The Portfolio is classified as a "non-diversified" investment company under
the 1940 Act and may invest a greater portion of its assets in a single issuer
than a diversified fund. As a result, the Portfolio may be more susceptible to
any single economic, political or regulatory occurrence than a diversified
fund.

GLOBAL HIGH YIELD SECURITIES PORTFOLIO
Under normal circumstances, at least 65% of the Portfolio's assets will be
invested in high yield, non-investment grade debt securities of both
governmental and corporate issuers in both the major industrialized markets
and the so-called "emerging markets." The world's industrialized markets
generally include but are not limited to the following: Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy,
Japan, Luxemborg, the Netherlands, New Zealand, Norway, Singapore, Spain,
Sweden, Switzerland, the United Kingdom, and the United States; the world's
emerging markets generally include but are not limited to the following:
Argentina, Bolivia, Brazil, Chile, China, Colombia, Costa Rica, the Czech
Republic, Ecuador, Egypt, Greece, Hungary, India, Indonesia, Israel, the Ivory
Coast, Jordan, Malaysia, Mexico, Morocco, Nicaragua, Nigeria, Pakistan, Peru,
the Philippines, Poland, Portugal, Romania, Russia, Slovakia, Slovenia, South
Africa, South Korea, Sri Lanka, Taiwan, Thailand, Turkey, Uruguay, Venezuela,
Vietnam and Zimbabwe. The Portfolio may also invest in securities of issuers
located in Eastern Europe which may at any time revert back to Communist
governments and nationalized industries. Higher risk is associated with
investing in developing countries such as expropriation and withholding
dividends at the source.

Although Bankers Trust considers each of the above countries, both
industrialized and emerging, eligible for investment pursuant to the
Portfolio's objective, the Portfolio will not be invested in all such markets
at all times. Furthermore, investing in some of these markets may be neither
feasible nor desirable from time to time, due to the lack of adequate
custodial arrangements for the Portfolio's assets, exchange controls and
overly burdensome repatriation, the lack of organized and liquid securities
markets, and unacceptable political risks. Under normal circumstances, the
Portfolio will invest in at least three of the emerging markets listed above.

The Portfolio generally invests in securities which are rated BBB or lower by
Standard & Poor's Corporation ("S&P") or Baa or lower by Moody's Investors
Service, Inc. ("Moody's") or, if unrated, of comparable quality in the opinion
of Bankers Trust. Securities which are rated BBB by S&P or Baa by Moody's
possess some speculative characteristics. A description of the rating
categories is contained in the Appendix herein. THERE IS NO LOWER LIMIT WITH
RESPECT TO THE RATING CATEGORIES FOR SECURITIES IN WHICH THE PORTFOLIO MAY
INVEST. See "Risk Factors: Matching the Fund to Your Investment Needs -- Risks
of Investing in High Yield Securities ("Junk Bonds")."

Lower-rated securities will usually offer higher yields than higher-rated
securities. However, there is more risk associated with these investments.
This is because of the reduced creditworthiness and increased risk of default
that these securities carry. Lower-rated securities generally tend to reflect
short-term corporate and market developments to a greater extent than higher-
rated securities which react primarily to fluctuations in the general level of
interest rates. Short-term corporate and market developments affecting the
prices and liquidity of lower-rated securities could include adverse news
impacting major issues, and underwriters or dealers in lower-rated or unrated
securities. In addition, since there are fewer investors in lower-rated
securities, it may be harder to sell securities at an optimum time.

An economic downturn may adversely affect the value of some lower-rated bonds.
Such a downturn may especially affect highly leveraged companies or companies
in cyclically sensitive industries, where deterioration in a company's cash
flow may impair its ability to meet its obligation to pay principal and
interest to bondholders in a timely fashion. From time to time, as a result of
changing conditions, issuers of lower-rated bonds may seek or may be required
to restructure the terms and conditions of the securities they have issued. As
a result of these restructurings, holders of lower-rated securities may
receive less principal and interest than originally expected at the time such
bonds were purchased. In the event of a restructuring, the Portfolio may bear
additional legal or administrative expenses in order to maximize recovery from
an issuer. The secondary trading market for lower-rated bonds is generally
less liquid than the secondary trading market for higher-rated bonds.

Asset Allocation. The Portfolio invests in debt obligations allocated among
diverse markets and denominated in various currencies, including multi-
currency units such as European Currency Units ("ECUs"). The Portfolio may
purchase securities that are issued by the government or a company or
financial institution of one country but denominated in the currency (or
multi-currency unit) of another country. Bankers Trust will allocate the
assets of the Portfolio in securities of issuers in countries and currency
denominations where the combination of fixed income market returns, the price
appreciation potential of fixed income securities and currency exchange rate
movements will present opportunities primarily for high current income and
secondarily for capital appreciation. In so doing, Bankers Trust intends to
take full advantage of the different yield, risk and return characteristics
that investment in the fixed income markets of different countries can
provide. Fundamental economic strength, credit quality, currency and interest
rate trends and diversification to manage risk will be the principal
determinants of the emphasis given to various country, geographic and industry
sectors within the Portfolio. Securities held by the Portfolio may be invested
without limitation as to maturity and are summarized according to the
following general classifications; emerging market debt securities, Brady
bonds, loan participations and assignments, convertible securities, preferred
stock, industrialized market debt securities, leverage, reverse repurchase
agreements, short-term instruments, repurchase agreements, zero coupon
securities and floating rate bonds.

Emerging Markets Debt Securities. In addition to the risks inherent in
investment in debt securities of U.S. issuers, investments in debt securities
denominated in foreign currencies involve certain other risks. Less public
information may be available concerning non-U.S. issuers as compared to U.S.
issuers. Non-U.S. issuers are generally not subject to accounting, auditing
and financial practices comparable to those applicable to U.S. issuers.

In investing in bonds denominated in non-U.S. currencies, the Portfolio will
be subject to the risk of currency fluctuations. Non-U.S. currencies may be
affected by devaluation, adverse political and economic developments, and
governmental restrictions. The values of foreign investments and the
investment income derived from them may also be affected adversely by changes
in currency exchange control regulations. Although the Portfolio will invest
primarily in securities denominated in U.S. dollars or in currencies that are
fully convertible into U.S. dollars, it is a possibility that individual
securities might suffer loss of value or liquidity due to foreign government
imposition of currency exchange controls.

Securities denominated in foreign currencies of U.S. or non-U.S. issuers may
be less liquid and their prices more volatile than securities issued by U.S.
issuers and denominated in U.S. dollars. In addition, investing in non-U.S.
securities and securities denominated in non-U.S. currencies often entails
costs not associated with investments in U.S. dollar-denominated securities of
U.S. issuers such as the cost of converting U.S. dollars to foreign currency,
higher brokerage commissions, custodial expenses and other fees. Non-U.S.
dollar denominated securities may be subject to withholding or other taxes in
the relevant jurisdiction, which may reduce the yield on the securities to the
Portfolio and which may not be recoverable by the Fund or its investors.

Sovereign and Supranational Debt Obligations. Debt instruments issued or
guaranteed by foreign governments, agencies, and supranational organizations
("sovereign debt obligations"), especially sovereign debt obligations of
developing countries, may involve a high degree of risk, and may be in default
or present the risk of default. The issuer of the obligation or the
governmental authorities that control the repayment of the debt may be unable
or unwilling to repay principal and interest when due, and may require
renegotiation or rescheduling of debt payments. In addition, prospects for
repayment of principal and interest may depend on political as well as
economic factors.

Brady Bonds. The Portfolio will also invest in "Brady bonds," which have
recently been issued by the governments of Argentina, Costa Rica, Mexico,
Nigeria, Uruguay, Venezuela, Brazil and the Philippines, as well as other
emerging market countries. Most Brady bonds are currently rated below BBB by
S&P or Baa by Moody's. While Bankers Trust is not aware of the occurrence of
any payment defaults on Brady bonds, investors should recognize that these
debt securities have been issued only recently and, accordingly, do not have a
long payment history. Brady bonds may be collateralized or uncollateralized,
are issued in various currencies (primarily the U.S. dollar) and are actively
traded in the secondary market for Latin American debt.

Loan Participations and Assignments. The Portfolio may invest in fixed and
floating rate loans ("loans") arranged through private negotiations between a
borrower and one or more institutions ("lenders"). The majority of the
Portfolio's investments in loans in emerging markets is expected to be in the
form of participations in loans ("participations") and assignments of portions
of loans from third parties ("assignments"). The Portfolio may also invest in
loans, participations or assignments of loans to borrowers located in the
industrialized world. Participations typically will result in the Portfolio
having a contractual relationship only with the lender, not the borrower. The
Portfolio will have the right to receive payments of principal, interest and
any fees to which it is entitled only from the lender selling the
participation and only upon receipt by the lender of the payments from the
borrower. In connection with purchasing participations, the Portfolio
generally will have no right to enforce compliance by the borrower with the
terms of the loan agreement relating to the loan ("loan agreement"), nor any
rights of set-off against the borrower, and the Portfolio may not directly
benefit from any collateral supporting the loan in which it has purchased the
participation. As a result, the Portfolio will assume the credit risk of both
the borrower and the lender that is selling the participation. In the event of
the insolvency of the lender selling the participation, the Portfolio may be
treated as a general creditor of the lender and may not benefit from any set-
off between the lender and the borrower. The Portfolio will acquire
participations only if the lender interpositioned between the Portfolio and
the borrower is determined by Bankers Trust to be creditworthy. When the
Portfolio purchases assignments from lenders, the Portfolio will acquire
direct rights against the borrower on the loan; however, since assignments are
arranged through private negotiations between the potential assignees and
assignors, the rights and obligations acquired by the Portfolio as the
purchaser of an assignment may differ from, and be more limited than, those
held by the assigning lender.

The Portfolio may have difficulty disposing of assignments and participations.
The liquidity of such securities is limited and the Portfolio anticipates that
such securities could only be sold to a limited number of institutional
investors. The lack of a liquid secondary market could have an adverse impact
on the value of such securities and on the Portfolio's ability to dispose of
particular assignments or participations when necessary to meet the
Portfolio's liquidity needs or in response to a specific economic event, such
as a deterioration in the creditworthiness of the borrower. The lack of a
liquid secondary market for assignments and participations also may make it
more difficult in valuing the Portfolio and, therefore, calculating the net
asset value per share of the Fund. All assignments and participations shall be
considered to be illiquid securities by the Portfolio. The investment by the
Portfolio in illiquid securities, including assignments and participations, is
limited to a total of 15% of total assets.

Convertible Securities. A convertible security is a fixed income security,
such as a bond or preferred stock, which may be converted at a stated price
within a specific period of time into a specified number of shares of common
stock of the same or different issuer. Convertible securities are senior to
common stock in a corporation's capital structure, but usually are
subordinated to non-convertible debt securities. While providing a fixed
income stream -- generally higher in yield than in the income derivable from a
common stock but lower than that afforded by a non-convertible debt security
- -- a convertible security also affords an investor the opportunity, through
its conversion feature, to participate in the capital appreciation of common
stock into which it is convertible.

In general, the market value of a convertible security is the higher of its
investment value (its value as a fixed income security) or its conversion
value (the value of the underlying shares of common stock if the security is
converted). As a fixed income security, the market value of a convertible
security generally increases when interest rates decline and generally
decreases when interest rates rise; however, the price of a convertible
security generally increases as the market value of the underlying stock
increases, and generally decreases as the market value of the underlying stock
declines. Investments in convertible securities generally entail less risk
than investments in the common stock of the same issuer.

Preferred Stock. The Portfolio may also invest in preferred stock of U.S. and
non-U.S. issuers. Preferred stock has a preference in liquidation (and,
generally dividends) over common stock but is subordinated in liquidation to
debt. As a general rule the market value of preferred stocks with fixed
dividend rates and no conversion rights varies inversely with interest rates
and perceived credit risk, with the price determined by the dividend rate.
Some preferred stocks are convertible into other securities, for example
common stock, at a fixed price and ratio or upon the occurrence of certain
events. The market price of convertible preferred stocks generally reflects an
element of conversion value. Because many preferred stocks lack a fixed
maturity date, these securities generally fluctuate substantially in value
when interest rates change; such fluctuations often exceed those of long-term
bonds of the same issuer. Some preferred stocks pay an adjustable dividend
that may be based on an index, formula, auction procedure or other dividend
rate reset mechanism. In the absence of credit deterioration, adjustable rate
preferred stocks tend to have more stable market values than fixed rate
preferred stocks.

All preferred stocks are also subject to the same types of credit risks of the
issuer as those described above for corporate bonds. In addition, because
preferred stock is junior to debt securities and other obligations of an
issuer, deterioration in the credit rating of the issuer will cause greater
changes in the value of a preferred stock than in more senior debt security
with similar yield characteristics. Preferred stocks may be rated by S&P and
Moody's although there is no minimum rating which a preferred stock must have
(and a preferred stock may not be rated) to be an eligible investment for the
Portfolio. Bankers Trust expects, however, that generally the preferred stocks
in which the Portfolio invests will be rated at least CCC by S&P or Caa by
Moody's or, if unrated, of comparable quality in the opinion of Bankers Trust
Preferred stocks rated CCC by S&P are regarded as predominantly speculative
with respect to the issuer's capacity to pay preferred stock obligations and
represent the highest degree of speculation among securities rated between BB
and CCC; preferred stocks rated Caa by Moody's are likely to be in arrears on
dividend payments. Moody's rating with respect to preferred stocks does not
purport to indicate the future status of payments of dividends.

Industrialized Market Debt Securities. Under normal market conditions, the
Portfolio will invest in certain securities that are issued by corporate or
guaranteed borrowers located in the world's industrialized markets. These debt
securities may pay interest in cash or in additional securities, at fixed or
adjustable rates or may be zero coupon securities and may be convertible into
common stock or other securities. Bankers Trust selects securities for the
Portfolio by considering, among other factors, price and yield, interest
coverage and financial resources, the liquidity of the secondary trading
market in the security, factors relating to the issuer's industry in general
and its sensitivity to economic conditions, its operating history and quality
of management, and regulatory matters.

The Portfolio will invest in higher-yielding, lower-rated U.S. dollar-
denominated debt securities, which may involve high risk and are predominantly
speculative in character. These securities are commonly known as "junk bonds."
Investments in lower-rated long-term debt obligations, including securities
rated from BB to D by S&P or Ba to C by Moody's or, if unrated, of comparable
quality in the opinion of Bankers Trust involve special risks as compared with
investments in higher-rated debt obligations, including greater sensitivity to
general economic downturns and significant increases in interest rates,
greater market price volatility, and less liquid secondary trading markets.
See "Risk Factors; Matching the Fund to Your Investment Needs." The net asset
value per share of the Fund can be expected to increase or decrease depending
on real or perceived changes in the credit risks associated with the
Portfolio's investments, changes in interest rates and other factors generally
affecting the credit markets.

Most of the debt securities in which the Portfolio invests are rated, at the
time of investment, at least CCC by S&P or Caa by Moody's or, if unrated, of
comparable quality in the opinion of Bankers Trust. Such securities are
regarded by S&P as predominantly speculative with respect to the capacity to
pay interest and repay principal in accordance with the terms of the contract.
Debt rated Caa by Moody's is regarded as being of poor standing and may be in
default or there may be present elements of danger with respect to the payment
of principal or interest.

Certain of the debt securities in which the Portfolio invests are rated, at
the time of investment, or may be downgraded while held by the Portfolio, to
ratings below CCC by S&P or Caa by Moody's or, if unrated, their credit
quality may be or may decline to levels less than equivalent to such ratings
in the opinion of Bankers Trust. Such debt securities are highly speculative
and may be in default or payment of interest or principal may be in arrears.
The issuers of such securities may be involved in bankruptcy or reorganization
proceedings or may be restructuring outstanding debt. Defaulted debt
securities may never resume interest payments or repay principal. Investing in
bankrupt and troubled companies involves special risk. The Portfolio will not
invest more than 10% of its assets in debt securities rated below CCC by S&P
or Caa by Moody's or, if unrated, of comparable quality in the opinion of
Bankers Trust.

The Portfolio is not required to dispose of debt securities whose credit
quality declines at some point after the security is purchased; however, no
more than 25% of the Portfolio's assets will be invested at any time in
securities rated less than CCC by S&P or Caa by Moody's or, if unrated, of
comparable quality in the opinion of Bankers Trust. S&P's lowest rating for
bonds is CI, which is reserved for income bonds on which no interest is being
paid and D, which is reserved for debt in default and in respect of which
payment of interest or repayment of principal is in arrears. Moody's lowest
rating is C, which is applied to bonds which have extremely poor prospects for
ever attaining any real investment standing. Other than as set forth above,
there is no restriction on the percentage of the Portfolio's assets which may
be invested in bonds of a particular rating.

Repurchase Agreements. The Portfolio may engage in repurchase agreement
transactions with banks and governmental securities dealers approved by the
Trustees of the Portfolio. Under the terms of a typical repurchase agreement,
the Portfolio would acquire an underlying debt obligation of a kind in which
the Portfolio could invest for a relatively short period (usually not more
than one week) subject to an obligation of the seller to repurchase, and the
Portfolio to resell, the obligation at an agreed price and time, thereby
determining the yield during the Portfolio's holding period. This arrangement
results in a fixed rate of return that is not subject to market fluctuations
during the Portfolio's holding period. The value of the underlying securities
will be at least equal at all time to the total amount of the repurchase
obligations, including interest. The Portfolio bears a risk of loss in the
event that the other party to a repurchase agreement defaults on its
obligations and the Portfolio is delayed in or prevented from exercising its
rights to dispose of the collateral securities, including the risk of a
possible decline in the value of the underlying securities during the period
in which the Portfolio seeks to assert these rights. Bankers Trust, acting
under the supervision of the Board of Trustees of BT Investment Portfolios,
reviews the creditworthiness of those banks and dealers with which the
Portfolio enters in repurchase agreements and monitors on an ongoing basis the
value of the securities subject to repurchase agreements to ensure that it is
maintained at the required level. Repurchase agreements are considered
collateralized loans under the 1940 Act.

Leveraging by means of borrowing may exaggerate the effect of any increase or
decrease in the value of the Portfolio securities and the Fund's net asset
value and money borrowed by the Portfolio will be subject to interest and
other costs (which may include commitment fees and/or the cost of maintaining
minimum average balances) which may or may not exceed the income received from
the securities purchased with borrowed funds.

Reverse Repurchase Agreements. In a reverse repurchase agreement the Portfolio
agrees to sell portfolio securities to financial institutions such as banks
and broker-dealers and to repurchase them at a mutually agreed date and price.
At the time the Portfolio enters into a reverse repurchase agreement, it will
place in a segregated custodial account the following: cash; U.S. Government
securities; or high grade liquid debt obligations having a value equal to the
repurchase price, including accrued interest. Reverse repurchase agreements
involve the risk that the market value of the securities sold by the Portfolio
may decline below the repurchase price of those securities. Reverse repurchase
agreements are considered to be borrowings by the Portfolio for purposes of
the limitations described in "Leverage" above.

NON-DIVERSIFIED INVESTMENT COMPANY
The Portfolio and the Fund are each classified as a "non-diversified"
investment company so that with respect to 50% of the Portfolio's assets it
will be able to invest more than 5% of its assets in obligations of one or
more issuers, while being limited with respect to the other half of its assets
to investments not exceeding 5% of the Portfolio's total assets. (A
"diversified" investment company would be required under the 1940 Act to
maintain at least 75% of its assets in cash (including foreign currency), cash
items, U.S. Government securities, and other securities limited per issuer to
not more than 5% of the investment company's total assets.) In order to enable
the Fund to qualify as a regulated investment company under the Internal
Revenue Code of 1986, as amended (the "Code"), the Portfolio, among other
things, may not invest more than 25% of its assets in obligations of any one
issuer (other than U.S. Government securities). As a "non-diversified"
investment company, the Portfolio may invest a greater proportion of its
assets in the securities of a smaller number of issuers and therefore may be
subject to greater market and credit risk than a more broadly diversified
fund.

The Portfolio will not have more than 25% of the current value of its total
assets invested in any single industry, provided that this restriction shall
not apply to debt securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities.

OTHER INVESTMENTS AND INVESTMENT TECHNIQUES
The Portfolio may also utilize the following investments and investment
techniques and practices: when-issued or delayed delivery securities, Rule
144A securities, securities lending, foreign currency exchange transactions,
options on foreign currencies, options on foreign bond indices, futures
contracts on foreign bond indices and options on futures contracts. See
"Additional Information" for further information.

ADDITIONAL INVESTMENT LIMITATIONS
No more than 15% of the Portfolio's net assets may be invested in illiquid or
not readily marketable securities (including assignments, participations,
repurchase agreements and time deposits with remaining maturities of more than
seven calendar days). Additional investment policies of the Portfolio are
contained in the Statement of Additional Information.

RISK FACTORS; MATCHING THE FUND TO YOUR INVESTMENT NEEDS
Shareholders should understand that all investments involve risk and there can
be no guarantee against loss resulting from an investment in the Fund, nor can
there be any assurance that the Fund's investment objective will be attained.
As with any investment in securities, the value of, and income from, an
investment in the Fund can decrease as well as increase, depending on a
variety of factors which may affect the values and income generated by the
Portfolio's securities, including general economic conditions, market factors
and currency exchange rates. Additionally, investment decisions made by
Bankers Trust will not always be profitable or prove to have been correct.

By itself, the Fund does not constitute a balanced investment plan; the Fund
and the Portfolio seek high current income from investments described above.
Changes in domestic and foreign interest rates may affect the value of the
Portfolio's investments, and rising interest rates can be expected to reduce
the Fund's share value. A description of a number of investments and
investment techniques available to the Portfolio, including foreign
investments and the use of options and futures, and certain risks associated
with these investments and techniques is included under "Additional
Information." The Fund's share price, yield and total return fluctuate and
your investment may be worth more or less than your original cost when you
redeem your shares.

RISKS OF INVESTING IN FOREIGN SECURITIES
Investors should realize that investing in securities of foreign issuers
involves considerations not typically associated with investing in securities
of companies organized and operated in the United States. Investors should
realize that the value of the Portfolio's investments may be adversely
affected by changes in political or social conditions, diplomatic relations,
confiscatory taxation, expropriation, nationalization, limitation on the
removal of funds or assets, or imposition of (or change in) exchange control
or tax regulations in foreign countries. In addition, changes in government
administrations or economic or monetary policies in the United States or
abroad could result in appreciation or depreciation of portfolio securities
and could favorably or unfavorably affect the Portfolio's operations.
Furthermore, the economies of individual foreign nations may differ from the
U.S. economy, whether favorably or unfavorably, in areas such as growth of
gross national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position; it may also be more
difficult to obtain and enforce a judgment against a foreign issuer. In
general, less information is publicly available with respect to foreign
issuers than is available with respect to U.S. companies. Most foreign
companies are also not subject to the uniform accounting and financial
reporting requirements applicable to issuers in the United States. Any foreign
investments made by the Portfolio must be made in compliance with U.S. and
foreign currency restrictions and tax laws restricting the amounts and types
of foreign investments.

RISKS OF INVESTING IN EMERGING MARKETS
The Portfolio will invest in the securities of issuers based in some of the
world's underdeveloped emerging markets, including those in Eastern Europe.
Investment in securities of issuers based in underdeveloped countries entails
all of the risks of investing in securities of foreign issuers outlined in
this section to a heightened degree. These heightened risks include: (i)
greater risks of expropriation, confiscatory taxation, nationalization, and
less social, political and economic stability; (ii) the smaller size of the
market for such securities and a low or nonexistent volume of trading,
resulting in lack of liquidity and in price volatility; (iii) certain national
policies which may restrict the Portfolio's investment opportunities including
restrictions on investing in issuers or industries deemed sensitive to
relevant national interests; and (iv) in the case of Eastern Europe, the
absence of developed capital market and legal structures governing private or
foreign investment and private property and the possibility that recent
favorable economic and political developments could be slowed or reversed by
unanticipated events.

So long as the Communist Party continues to exercise a significant or, in some
countries, dominant role in Eastern European countries, investments in such
countries will involve risks of nationalization, expropriation and
confiscatory taxation. The Communist governments of a number of Eastern
European countries expropriated large amounts of private property in the past,
in many cases without adequate compensation, and there may be no assurance
that such expropriation will not occur in the future. In the event of such
expropriation, the Portfolio could lose a substantial portion of any
investments it has made in the affected countries. Further, no accounting
standards exist in Eastern European countries. Finally, even though certain
Eastern European currencies may be convertible into U.S. dollars, the
conversion rates may be artificial to the actual market values and may be
adverse to Fund shareholders.

In addition to brokerage commissions, custodial services and other costs
relating to investment in emerging markets are generally more expensive than
in the United States. Such markets have been unable to keep pace with the
volume of securities transactions, making it difficult to conduct such
transactions. The inability of the Portfolio to make intended security
purchases due to settlement problems could cause the Portfolio to miss
attractive investment opportunities. Inability to dispose of a security due to
settlement problems could result either in losses to the Portfolio due to
subsequent declines in the value of the security or, if the Portfolio has
entered into a contract to sell the security, could result in possible
liability to the purchaser.

RISKS OF INVESTING IN HIGH YIELD SECURITIES ("JUNK BONDS")
Under normal circumstances, a majority of the Portfolio's assets will be
invested in fixed income securities offering high current income. Such high
yield, fixed income securities are ordinarily in the lower rating categories
of recognized rating agencies or will be non-rated and of equivalent quality
in the opinion of Bankers Trust. They are commonly known as "junk bonds." The
market value for such securities tends to be less sensitive to changes in
prevailing interest rates than higher-rated securities but more sensitive to
individual corporate developments than higher-rated securities. Such lower-
rated securities also tend to be more sensitive to economic conditions than
are higher-rated securities. Accordingly, these securities are considered
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation
and will generally involve more credit risk than securities in the higher-
rated categories. Even securities rated BBB or Baa by S&P and Moody's,
respectively, possess some speculative characteristics. There are risks
involved in applying credit ratings as a method for evaluating high yield
obligations in that credit ratings evaluate the safety of principal and
interest payments, not market value risk. In addition, credit rating agencies
may not change credit ratings on a timely basis to reflect changes in economic
or company conditions that affect a security's market value. The Portfolio
will rely on Bankers Trust's judgment, analysis and experience in evaluating
the creditworthiness of an issuer. In this evaluation, Bankers Trust will take
into consideration, among other things, the issuer's ability to cover interest
and fixed charges, factors relating to the issuer's industry and its
sensitivity to economic conditions and trends, its operating history, the
quality of the issuer's management and regulatory matters.

The Portfolio is authorized to invest in high risk, lower quality debt
securities without limit. Investments in lower-rated long-term obligations,
including securities rated from BB to D by S&P or Ba to C by Moody's or, if
unrated, of comparable quality in the opinion of Bankers Trust, involve
special risks as compared with investments in higher-rated debt obligations,
including greater sensitivity to general economic downturns and significant
increases in interest rates, greater market price volatility, and less liquid
secondary trading markets. Regardless of rating levels, all debt securities
considered for purchase (whether rated or unrated) will be carefully analyzed
by Bankers Trust to insure, to the extent possible, that the planned
investment is sound. The Portfolio may, from time to time, purchase defaulted
debt securities if, in the opinion of Bankers Trust, the issuer may resume
interest payments in the near future. The Fund will not invest more than 10%
of its total assets (at the time of purchase) in defaulted debt securities,
which may be illiquid.

The risk of loss due to default by the issuer is significantly greater for the
holders of high yield securities because such securities are generally
unsecured and are often subordinated to other obligations of the issuer.
During an economic downturn or a sustained period of rising interest rates,
highly leveraged issuers of high yield securities may experience financial
stress and may not have sufficient revenues to meet their interest payment
obligations. An issuer's ability to service its debt obligations may also be
adversely affected by specific corporate developments, its inability to meet
specific projected business forecasts, or the unavailability of additional
financing.

Factors adversely affecting the market value of high yield and other
securities will adversely affect the Fund's net asset value per share. In
addition, the Portfolio may incur additional expenses to the extent it is
required to seek recovery upon a default in the payment of principal of or
interest on its portfolio holdings.

Futures contracts and related option transactions are discussed under
"Additional Information." Successful use of futures contracts and related
options is subject to special risk considerations. A liquid secondary market
for any futures or options contract may not be available when a futures or
options position is sought to be closed. In addition, there may be an
imperfect correlation between movements in the securities or foreign currency
on which the futures or options contract is based and movements in the
securities or currency of the Portfolio. Successful use of futures or options
contracts is further dependent on Bankers Trust's ability to correctly predict
movements in the securities or foreign currency markets and no assurance can
be given that its judgment will be correct. Successful use of options on
securities or stock indices is subject to similar risk considerations. In
addition, by writing covered call options, the Portfolio gives up the
opportunity, which the option is in effect, to profit from any price increase
in the underlying securities above the option exercise price.

There are further risk factors, including possible losses through the holding
of securities in domestic and foreign custodian banks and depositories,
described elsewhere in the Prospectus and in the Statement of Additional
Information.

PORTFOLIO TURNOVER
The frequency of portfolio transactions -- the Portfolio's turnover rate --
will vary from year to year depending on market conditions. The Portfolio's
turnover rate for the year ended September 30, 1995 and for the period from
December 14, 1993 (commencement of operations) through September 30, 1994, was
169% and 347%, respectively. Because a higher turnover rate increases
transaction costs and may increase taxable capital gains, Bankers Trust
carefully weighs the anticipated benefits of short-term investment against
these consequences.

DERIVATIVES
The Portfolio may invest in various instruments that are commonly known as
derivatives. Generally, a derivative is a financial arrangement, the value of
which is based on, or "derived" from, a traditional security, asset, or market
index. Some "derivatives" such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may
be more volatile or less liquid than more traditional debt securities. There
are, in fact, many different types of derivatives and many different ways to
use them. There are a range of risks associated with those uses. Futures and
options are commonly used for traditional hedging purposes to attempt to
protect a fund from exposure to changing interest rates, securities prices, or
currency exchange rates and for cash management purposes as a low cost method
of gaining exposure to a particular securities market without investing
directly in those securities. However, some derivatives are used for leverage,
which tends to magnify the effects of an instrument's price changes as market
conditions change. Leverage involves the use of a small amount of money to
control a large amount of financial assets, and can in some circumstances,
lead to significant losses. The Adviser will use derivatives only in
circumstances where the Adviser believes they offer the most economic means of
improving the risk/reward profile of the Portfolio. Derivatives will not be
used to increase portfolio risk above the level that could be achieved using
only traditional investment securities or to acquire exposure to changes in
the value of assets or indexes that by themselves would not be purchased for
the Portfolio. The use of derivatives for non-hedging purposes may be
considered speculative. A description of the derivatives that the Portfolio
may use and some of their associated risks is found under "Additional
Information."

SPECIAL INFORMATION CONCERNING MASTER-FEEDER FUND STRUCTURE
Unlike other open-end management investment companies (mutual funds) which
directly acquire and manage their own portfolio securities, the Fund seeks to
achieve its investment objective by investing all of its Assets in the
Portfolio, a separate registered investment company with the same investment
objective as the Fund. Therefore, an investor's interest in the Portfolio's
securities is indirect. In addition to selling a beneficial interest to the
Fund, the Portfolio may sell beneficial interests to other mutual funds or
institutional investors. Such investors will invest in the Portfolio on the
same terms and conditions and will pay a proportionate share of the
Portfolio's expenses. However, the other investors investing in the Portfolio
are not required to sell their shares at the same public offering price as the
Fund due to variations in sales commissions and other operating expenses.
Therefore, investors in the Fund should be aware that these differences may
result in differences in returns experienced by investors in the different
funds that invest in the Portfolio. Such differences in returns are also
present in other mutual fund structures. Information concerning other
holders of interests in the Portfolio is available from Bankers Trust at
(800) 730-1313.

The master-feeder structure has been developed relatively recently, so
shareholders should carefully consider this investment approach.

Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large
fund withdraws from the Portfolio, the remaining funds may experience higher
pro rata operating expenses, thereby producing lower returns (however, this
possibility exists as well for traditionally structured funds which have large
institutional investors). Additionally, the Portfolio may become less diverse,
resulting in increased portfolio risk. Also, funds with a greater pro rata
ownership in the Portfolio could have effective voting control of the
operations of the Portfolio. Except as permitted by the SEC, whenever the
Trust is requested to vote on matters pertaining to the Portfolio, the Trust
will hold a meeting of shareholders of the Fund and will cast all of its votes
in the same proportion as the votes of the Fund's shareholders. Fund
shareholders who do not vote will not affect the Trust's votes at the
Portfolio meeting. The percentage of the Trust's votes representing Fund
shareholders not voting will be voted by the Trustees or officers of the Trust
in the same proportion as the Fund shareholders who do, in fact, vote.

The Fund may withdraw its investment from the Portfolio at any time, if the
Board of Trustees of the Trust determines that it is in the best interests of
the shareholders of the Fund to do so. Upon any such withdrawal, the Board of
Trustees of the Trust would consider what action might be taken, including the
investment of all the Assets of the Fund in another pooled investment entity
having the same investment objectives as the Fund or the retaining of an
investment adviser to manage the Fund's Assets in accordance with the
investment policies described below with respect to the Portfolio.

The Fund's investment objective is not a fundamental policy and may be changed
upon notice to but without the approval of the Fund's shareholders. If there
is a change in the Fund's investment objective, the Fund's shareholders should
consider whether the Fund remains an appropriate investment in light of their
then-current needs. The investment objective of the Portfolio is also not a
fundamental policy. Shareholders of the Fund will receive 30 days prior
written notice with respect to any change in the investment objective of the
Fund or the Portfolio. See "Investment Objective, Policies and Risks" for a
description of the fundamental policies of the Portfolio that cannot be
changed without approval by the holders of "a majority of the outstanding
voting securities" (as defined in the 1940 Act) of the Portfolio.

For descriptions of the investment objective, policies and restrictions of the
Portfolio, see "Investment Objective, Policies and Risks." For descriptions of
the management of the Portfolio, see "Management of the Trust and BT
Investment Portfolios" herein and "Management of the Trust and Portfolios" in
the Statement of Additional Information. For descriptions of the expenses of
the Portfolio, see "Management of the Trust and BT Investment Portfolios"
herein.

NET ASSET VALUE
The net asset value per share of the Fund is calculated on each day on which
the New York Stock Exchange Inc. (the "NYSE") is open (each such day being a
"Valuation Day"). The NYSE is currently open on each day, Monday through
Friday, except: (a) January 1st, Presidents' Day (the third Monday in
February), Good Friday, Memorial Day (the last Monday in May), July 4th, Labor
Day (the first Monday in September), Thanksgiving Day (the last Thursday in
November) and December 25th; and (b) the preceding Friday or the subsequent
Monday when one of the calendar-determined holidays falls on a Saturday or
Sunday, respectively.

The net asset value per share of the Fund is calculated once on each Valuation
Day as of the close of regular trading on the NYSE (the "Valuation Time"),
which is currently 4:00 p.m., New York time or in the event that the NYSE
closes early, at the time of such early closing. The net asset value per share
of the Fund is computed by dividing the value of the Fund's Assets (i.e., the
value of its investment in the Portfolio and other assets), less all
liabilities, by the total number of its shares outstanding. The Portfolio's
securities and other assets are valued primarily on the basis of market
quotations or, if quotations are not readily available by Bankers Trust,
pursuant to procedures adopted by the Portfolio's Board of Trustees. These
procedures require Bankers Trust to value such a security at the same value as
an equivalent security which is readily marketable and, in making such
comparisons, to consider all relevant factors under applicable guidelines of
the Securities and Exchange Commission (the "SEC"). See "Valuation of
Securities" in the Statement of Additional Information for more information.

PURCHASE AND REDEMPTION OF SHARES
PURCHASE OF SHARES
The Trust accepts purchase orders for shares of the Fund at the net asset
value per share of the Fund next determined on each Valuation Day. See "Net
Asset Value" above. There is no sales charge on the purchase of shares, but
costs of distributing shares of the Fund may be reimbursed from its assets, as
described herein. Service Agents may impose initial and subsequent investment
minimums that differ from the amounts presented in the "Minimum Investments"
table below. Shares of the Fund may be purchased in only those states where
they may be lawfully sold.

Purchase orders for shares of the Fund that are received by a Service Agent
and transmitted to Bankers Trust, as the Trust's transfer agent (the "Transfer
Agent"), prior to the Valuation Time (currently 4:00 p.m., New York time or
earlier, should the NYSE close earlier) on any Valuation Day will be effective
at that day's Valuation Time. The Trust and Signature reserve the right to
reject any purchase order.

Shares must be purchased in accordance with procedures established by the
Transfer Agent and Service Agents, including Bankers Trust, in connection with
customers' accounts. It is the responsibility of each Service Agent to
transmit to the Transfer Agent purchase and redemption orders and to transmit
to Bankers Trust as the Trust's custodian (the "Custodian") purchase payments
on behalf of its customers in a timely manner, and a shareholder must settle
with the Service Agent his or her entitlement to an effective purchase or
redemption order as of a particular time. Because Bankers Trust is the
Custodian and Transfer Agent of the Trust, funds may be transferred directly
from or to a customer's account with Bankers Trust to or from the Fund without
incurring the additional costs or delays associated with the wiring of Federal
funds.

Certificates for shares will not be issued. Each shareholder's account will be
maintained by a Service Agent or the Transfer Agent.

Automatic Investment Plan. The Fund may offer shareholders an automatic
investment plan under which shareholders may authorize some Service Agents to
place a purchase order each month or quarter for Fund shares. For further
information regarding the automatic investment plan, shareholders should
contact their Service Agent.

- ------------------------------------------------------------------------------

MINIMUM INVESTMENTS

TO OPEN AN ACCOUNT $2,500
For retirement accounts $ 500
Through automatic investment plans $1,000

TO ADD TO AN ACCOUNT $ 250
For retirement accounts $ 100
Through automatic investment plans $ 100

MINIMUM BALANCE $1,000
For retirement accounts None

REDEMPTION OF SHARES
Shareholders may redeem shares at the net asset value per share next
determined on each Valuation Day. Redemption requests should be transmitted by
customers in accordance with procedures established by the Transfer Agent and
the shareholder's Service Agent. Redemption requests for shares of the Fund
received by the Service Agent and transmitted to the Transfer Agent prior to
the Valuation Time (currently
4:00 p.m., New York time or earlier should the NYSE close earlier) on each
Valuation Day will be effective at that day's Valuation Time and the
redemption proceeds normally will be delivered to the shareholder's account
with the Service Agent on the next day, but in any event within seven calendar
days following receipt of the request.

Service Agents may allow redemptions or exchanges by telephone and may
disclaim liability for following instructions communicated by telephone that
the Service Agent reasonably believes to be genuine. The Service Agent must
provide the investor with an opportunity to choose whether or not to utilize
the telephone redemption or exchange privilege. The Service Agent must employ
reasonable procedures to confirm that instructions communicated by telephone
are genuine. If the Service Agent does not do so, it may be liable for any
losses due to unauthorized or fraudulent instructions. Such procedures may
include, among others, requiring some form of personal identification prior to
acting upon instructions received by telephone, providing written confirmation
of such transactions and/or tape recording of telephone instructions.

Redemption orders are processed without charge by the Trust. A Service Agent
may on at least 30 days' notice involuntarily redeem a shareholder's account
with the Fund having a minimum market value, but not if an account is below
the minimum due to a change in market value. See "Investment Minimums" above
for minimum balance amounts.

Automatic Cash Withdrawal Plan. The Fund may offer shareholders an automatic
cash withdrawal plan, under which shareholders who own shares of the Fund may
elect to receive periodic cash payments. Retirement plan accounts are eligible
for automatic cash withdrawal plans only where the shareholder is eligible to
receive qualified distributions. For further information regarding the
automatic cash withdrawal plan, shareholders should contact their Service
Agent.

EXCHANGE PRIVILEGE
Shareholders may exchange their shares for shares of certain other funds in
the BT Family of Funds registered in their state. The Fund reserves the right
to terminate or modify the exchange privilege in the future. To make an
exchange, follow the procedures indicated in "Purchase of Shares" and
"Redemption of Shares" in that fund's prospectus. Before making an exchange,
please note the following:

* Call your Service Agent for information and a prospectus. Read the
prospectus for relevant information.

* Complete and sign an application, taking care to register your new account
in the same name, address and taxpayer identification number as your
existing account(s).

* Each exchange represents the sale of shares of one fund and the purchase of
shares of another, which may produce a gain or loss for tax purposes. Your
Service Agent will send a written confirmation of each exchange transaction.

TAX-SAVING RETIREMENT PLANS
Retirement plans offer significant tax savings and are available to
individuals, partnerships, small businesses, corporations, nonprofit
organizations and other institutions. Contact your Service Agent or Bankers
Trust for further information. Bankers Trust can set up your new account in
the Fund under a number of several tax-sheltered plans. These plans contain
special tax advantages and let you invest for retirement while sheltering your
investment income from current taxes. Minimums may differ from those listed
elsewhere in the Prospectus.

* Individual Retirement Accounts (IRAs): personal savings plans that offer
tax advantages for individuals to set aside money for retirement and allow
new contributions of $2,000 per tax year.

* Rollover IRAs: tax-deferred retirement accounts that retain the special tax
advantages of lump sum distributions from qualified retirement plans and
transferred IRA accounts.

* Simplified Employee Pension Plans (SEP): a relatively easy and inexpensive
alternative to retirement planning for sole proprietors, partnerships and
corporations. Under a SEP, employers make tax-deductible contributions to
their own and to eligible employees' IRA accounts. Employee contributions
are available through a "Salary Deferral" SEP for businesses with fewer than
25 eligible employees.

* Keogh Plans: defined contribution plans available to individuals with self-
employed income and nonincorporated businesses such as sole proprietors,
professionals and partnerships. Contributions are tax-deductible to the
employer and earnings are tax-sheltered until distribution.

* Corporate Profit-Sharing and Money-Purchase Plans: defined contribution
plans available to corporations to benefit their employees by making
contributions on their behalf and in some cases permitting their employees
to make contributions.

* 401(k) Programs: defined contribution plans available to corporations
allowing tax-deductible employer contributions and permitting employees to
contribute a percentage of their wages on a tax-deferred basis.

* 403(b) Custodian Accounts: defined contribution plans open to employees of
most nonprofit organizations and educational institutions.

* Deferred Benefit Plans: plan sponsors may invest all or part of their
pension assets in the Fund.

DIVIDENDS, DISTRIBUTIONS AND TAXES
Distributions. The Fund distributes substantially all of its net investment
income and capital gains to shareholders each year. Income dividends are
distributed on the first business day in April, July and October. In December,
another income dividend will be distributed plus any net capital gains. Unless
a shareholder instructs the Trust to pay such dividends and distributions in
cash, they will be automatically reinvested in additional shares of the Fund.

Federal Taxes. Distributions from the Fund's income and short-term capital
gains are taxed as dividends, and long-term capital gain distributions are
taxed as long-term capital gains. The Fund's distributions are taxable when
they are paid, whether you take them in cash or reinvest them in additional
shares. Distributions declared to shareholders of record in November and
December and paid in January are taxable as if paid on December 31. The Fund
will send each shareholder a tax statement by January 31 showing the tax
status of the distributions received in the past year.

Capital Gains. You may realize a capital gain or loss when you redeem (sell)
or exchange shares. Because the tax treatment also depends on your purchase
price and your personal tax position, you should keep your regular account
statements to use in determining your tax.

"Buying a Dividend." On the ex-date for a distribution from income and/or
capital gains, the Fund's share value is reduced by the amount of the
distribution. If you buy shares just before the ex-date ("buying a dividend"),
you will pay the full price for the shares and then receive a portion of the
price back as a taxable distribution.

Other Tax Information. In addition to Federal taxes, you may be subject to
state or local taxes on your investment, depending on the laws in your area.

Income received by the Portfolio from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. It is impossible to determine the effective rate of
foreign tax in advance since the amount of the Portfolio's assets to be
invested in various countries will vary.

If the Portfolio is liable for foreign taxes, and if more than 50% of the
value of the Portfolio's total assets at the close of its taxable year
consists of securities of foreign corporations, it may make an election
pursuant to which certain foreign taxes paid by it would be treated as having
been paid directly by shareholders of the entities, such as the Fund, which
have invested in the Portfolio. Pursuant to such election, the amount of
foreign taxes paid will be included in the income of Fund shareholders, and
Fund shareholders (except tax-exempt shareholders) may, subject to certain
limitations, claim either a credit or deduction for the taxes. Each Fund
shareholder will be notified after the close of the Portfolio's taxable year
whether the foreign taxes paid will "pass through" for that year and, if so,
such notification will designate (a) the shareholder's portion of the foreign
taxes paid to each such country and (b) the portion which represents income
derived from sources within each such country.

The amount of foreign taxes for which a shareholder may claim a credit in any
year will generally be subject to a separate limitation for "passive income,"
which includes, among other items of income, dividends, interest and certain
foreign currency gains. Because capital gains realized by the Portfolio on the
sale of foreign securities will be treated as U.S. source income, the
available credit of foreign taxes paid with respect to such gains may be
restricted by this limitation.

PERFORMANCE INFORMATION AND REPORTS
The Fund's performance may be used from time to time in advertisements,
shareholder reports or other communications to shareholders or prospective
shareholders. Performance information may include the Fund's investment
results and/or comparisons of its investment results to various unmanaged
indices such as the JP Morgan Emerging Markets Bonds Indices and the Merrill
Lynch High Yield Master Index or results of other mutual funds or investment
or savings vehicles. The Fund will compare its performance to the results of a
blending of these Indexes. The Fund's investment results as used in such
communications will be calculated on a yield or total rate of return basis in
the manner set forth below. From time to time, fund rankings may be quoted
from various sources, such as Lipper Analytical Services, Inc., Value Line and
Morningstar, Inc.

The Trust may provide period and average annualized "total return" quotations
for the Fund. The Fund's "total return" refers to the change in the value of
an investment in the Fund over a stated period based on any change in net
asset value per share and including the value of any shares purchasable with
any dividends or capital gains distributed during such period. Period total
return quotations may be annualized. An annualized total return is a
compounded total return which assumes that the period total return is
generated over a one-year period, and that all dividends and capital gain
distributions are reinvested. An annualized total return will be higher than a
period total return if the period is shorter than one year because of the
compounding effect.

The Trust may provide annualized "yield" quotations for the Fund. The "yield"
of the Fund refers to the income generated by an investment in the Fund over a
30-day or one-month period (which period shall be stated in any such
advertisement or communications). This income is then annualized; that is, the
amount generated by the investment over the period is assumed to be generated
over a one-year period and is shown as a percentage of investment.

Unlike some bank deposits or other investments which pay a fixed yield for a
stated period of time, the total return of the Fund will vary depending upon
interest rates, the current market value of the securities held by the
Portfolio and changes in the Fund's expenses. In addition, during certain
periods for which total return or yields may be provided, Bankers Trust, as
Adviser, Service Agent or Administrator, or Signature, as Distributor, may
have voluntarily agreed to waive portions of their fees on a month-to-month
basis. Such waivers will have the effect of increasing the Fund's net income
(and therefore its total rate of return or yield) during the period such
waivers are in effect.

Shareholders will receive financial reports semi-annually that include the
Portfolio's financial statements, including listings of investment securities
held by the Portfolio at those dates. Annual reports are audited by
independent accountants.

MANAGEMENT OF THE TRUST AND BT INVESTMENT PORTFOLIOS
BOARD OF TRUSTEES
The affairs of the Trust and BT Investment Portfolios are managed under the
supervision of their respective Boards of Trustees. By virtue of the
responsibilities assumed by Bankers Trust, as the Administrator of the Trust
and BT Investment Portfolios, neither the Trust nor BT Investment Portfolios
requires employees other than its officers. None of the Trust's or BT
Investment Portfolios' officers devotes full time to the affairs of the Trust
or BT Investment Portfolios.

The Trustees of the Trust who are not "interested persons" (as defined in the
1940 Act) of the Trust or of the BT Investment Portfolios, as the case may be,
(the "Independent Trustees") have adopted written procedures reasonably
appropriate to deal with potential conflicts of interest, up to and including
creating separate boards of trustees, arising from the fact that several of
the same individuals are trustees of the Trust and BT Investment Portfolios.
For more information with respect to the Trustees of both the Trust and BT
Investment Portfolios, see "Management of the Trust and the Portfolios" in the
Statement of Additional Information.

INVESTMENT ADVISER
The Trust has not retained the services of an investment adviser since the
Trust seeks to achieve the investment objective of the Fund by investing all
the Assets of the Fund in the Portfolio. BT Investment Portfolios has retained
the services of Bankers Trust, as investment adviser. David A Reiss, Vice
President of Bankers Trust and Stephen C. Freidheim, Managing Director of
Bankers Trust are responsible for the day-to-day management of the Portfolio.
Mr. Reiss has been employed by Bankers Trust since March, 1994 and has managed
the Portfolio's assets since March, 1994. From September, 1989 to March, 1994,
Mr. Reiss was a Portfolio Manager at Kidder Peabody Asset Management. Prior to
September, 1989, he was an associate in Mortgage Research at Goldman, Sachs &
Co. Mr. Freidheim has been employed by Bankers Trust since August, 1993 and
has managed the Portfolio's assets since December, 1993. From July, 1990 to
July, 1993 he was a Senior Vice President and Director of Research and Trading
at Nomura Securities International. Mr. Freidheim was also on the Board of
Directors of Nomura Corporate Research and Asset Management. Prior to July,
1990, he was Director of Research at Kidder, Peabody High Yield Asset
Management.

Bankers Trust, a New York banking corporation with principal offices at 280
Park Avenue, New York, New York 10017, is a wholly owned subsidiary of Bankers
Trust New York Corporation. Bankers Trust conducts a variety of general banking
and trust activities and is a major wholesale supplier of financial services to
the international and domestic institutional markets. As of September 30, 1995,
Bankers Trust New York Corporation was the ninth largest bank holding company in
the United States with total assets of approximately $104 billion. Bankers Trust
is a worldwide merchant bank dedicated to servicing the needs of corporations,
governments, financial institutions and private clients through a global network
of over 120 offices in more than 40 countries. Investment management is a core
business of Bankers Trust, built on a tradition of excellence from its roots as
a trust bank founded in 1903. The scope of Bankers Trust's investment management
capability is unique due to its leadership positions in both active and passive
quantitative management and its presence in major equity and fixed income
markets around the world. Bankers Trust is one of the nation's largest and most
experienced investment managers with approximately $200 billion in assets under
management globally.

Bankers Trust, subject to the supervision and direction of the Board of
Trustees of BT Investment Portfolios, manages the Portfolio in accordance with
the Portfolio's investment objective and stated investment policies, makes
investment decisions for the Portfolio, places orders to purchase and sell
securities and other financial instruments on behalf of the Portfolio and
employs professional investment managers and securities analysts who provide
research services to the Portfolio. Bankers Trust may utilize the expertise of
any of its worldwide subsidiaries and affiliates to assist it in its role as
investment adviser.

All orders for investment transactions on behalf of the Portfolio are placed
by Bankers Trust with broker-dealers and other financial intermediaries that
it selects, including those affiliated with Bankers Trust. A Bankers Trust
affiliate will be used in connection with a purchase or sale of an investment
for the Portfolio only if Bankers Trust believes that the affiliate's charge
for the transaction does not exceed usual and customary levels. The Portfolio
will not invest in obligations for which Bankers Trust or any of its
affiliates is the ultimate obligor or accepting bank. The Portfolio may,
however, invest in the obligations of correspondents or customers of Bankers
Trust.

Under its Investment Advisory Agreement, Bankers Trust receives a fee from the
Portfolio computed daily and paid monthly at the annual rate of 0.80% of the
average daily net assets of the Portfolio.

Bankers Trust has been advised by its counsel that, in counsel's opinion,
Bankers Trust currently may perform the services for the Trust and the
Portfolio described in this Prospectus and the Statement of Additional
Information without violation of the Glass-Steagall Act or other applicable
banking laws or regulations. State laws on this issue may differ from the
interpretations of relevant Federal law and banks and financial institutions
may be required to register as dealers pursuant to state securities law.

ADMINISTRATOR
Under its Administration and Services Agreement with the Trust, Bankers Trust
calculates the net asset value of the Fund and generally assists the Board of
Trustees of the Trust in all aspects of the administration and operation of
the Trust. The Administration and Services Agreement provides for the Trust to
pay Bankers Trust a fee computed daily and paid monthly at the rate of 0.95%
of the average daily net assets of the Fund.

Under an Administration and Services Agreement with BT Investment Portfolios,
Bankers Trust calculates the value of the assets of the Portfolio and
generally assists the Board of Trustees of BT Investment Portfolios in all
aspects of the administration and operation of BT Investment Portfolios. The
Administration and Services Agreement provides for the Portfolio to pay
Bankers Trust a fee computed daily and paid monthly at the rate of 0.20% of
the average daily net assets of the Portfolio. Under the Administration and
Services Agreement, Bankers Trust may delegate one or more of its
responsibilities to others, including Signature, at Bankers Trust's expense.
For more information, see the Statement of Additional Information.

DISTRIBUTOR
Under its Distribution Agreement with the Trust, Signature, as Distributor,
serves as the Trust's principal underwriter on a best efforts basis. In
addition, Signature provides the Trust with office facilities. Signature is a
wholly owned subsidiary of Signature Financial Group, Inc. ("SFG"). SFG and
its affiliates currently provide administration and distribution services for
other registered investment companies. The principal business address of SFG
and Signature is 6 St. James Avenue, Boston, Massachusetts 02116.

Pursuant to the terms of the Trust's Plan of Distribution pursuant to Rule
12b-1 under the 1940 Act (the "Plan"), Signature may seek reimbursement in an
amount not exceeding 0.20% of the Fund's average daily net assets annually for
expenses incurred in connection with any activities primarily intended to
result in the sale of the Fund's shares, including, but not limited to:
compensation to and expenses (including overhead and telephone expenses) of
account executives or other employees of Signature who, as their primary
activity, engage in or support the distribution of shares; printing of
prospectuses, statements of additional information and reports for other than
existing Fund shareholders in amounts in excess of that typically used in
connection with the distribution of shares of the Fund; costs of placing
advertising in various media; services of parties other than Signature or its
affiliates in formulating sales literature; and typesetting, printing and
distribution of sales literature. All costs and expenses in connection with
implementing and operating the Plan will be paid by the Fund, subject to the
0.20% of net assets limitation. All costs and expenses associated with
preparing the Fund's prospectus and statement of additional information and in
connection with printing them for and distributing them to existing
shareholders and regulatory authorities, which costs and expenses would not be
considered distribution expenses for purposes of the Plan, will also be paid
by the Fund. To the extent expenses of Signature under the Plan in any fiscal
year of the Trust exceed amounts payable under the Plan during that year,
those expenses will not be reimbursed in any succeeding fiscal year. Expenses
incurred in connection with distribution activities will be identified to the
Fund or the other series of the Trust involved, although it is anticipated
that some activities may be conducted on a Trust-wide basis, with the result
that those activities will not be identifiable to any particular series. In
the latter case, expenses will be allocated among the series of the Trust on
the basis of their relative net assets. It is not expected that any payment
will be made under the Plan in the foreseeable future.

SERVICE AGENT
All shareholders must be represented by a Service Agent. Bankers Trust acts as
a Service Agent pursuant to its Administration and Services Agreement with the
Trust and receives no additional compensation from the Fund for such
shareholder services. The service fees of any other Service Agents, including
broker-dealers, will be paid by Bankers Trust from its fees. The services
provided by a Service Agent may include establishing and maintaining
shareholder accounts, processing purchase and redemption transactions,
arranging for bank wires, performing shareholder sub-accounting, answering
client inquiries regarding the Trust, assisting clients in changing dividend
options, account designations and addresses, providing periodic statements
showing the client's account balance, transmitting proxy statements, periodic
reports, updated prospectuses and other communications to shareholders and,
with respect to meetings of shareholders, collecting, tabulating and
forwarding to the Trust executed proxies and obtaining such other information
and performing such other services as the Administrator or the Service Agent's
clients may reasonably request and agree upon with the Service Agent. Service
Agents may separately charge their clients additional fees only to cover
provision of additional or more comprehensive services not already provided
under the Administration and Services Agreement with Bankers Trust, or of the
type or scope not generally offered by a mutual fund, such as cash management
services or enhanced retirement or trust reporting. Each Service Agent has
agreed to transmit to shareholders, who are its customers, appropriate
disclosures of any fees that it may charge them directly.

CUSTODIAN AND TRANSFER AGENT
Bankers Trust acts as Custodian of the assets of the Trust and BT Investment
Portfolios and serves as the Transfer Agent for the Trust and BT Investment
Portfolios under the Administration and Services Agreement with the Trust and
BT Investment Portfolios.

ORGANIZATION OF THE TRUST
The Trust was organized on July 21, 1986 under the laws of the Commonwealth of
Massachusetts. The Fund is a separate series of the Trust and was established
and designated as a separate series of the Trust on August 6, 1993. The Trust
offers shares of beneficial interest of separate series, par value $0.001 per
share. The shares of the other series of the Trust are offered through
separate prospectuses. No series of shares has any preference over any other
series.

The Trust is an entity commonly known as a "Massachusetts business trust."
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.

When matters are submitted for shareholder vote, shareholders of the Fund will
have one vote for each full share held and proportionate, fractional votes for
fractional shares held. A separate vote of the Fund is required on any matter
affecting the Fund on which shareholders are entitled to vote. Shareholders of
the Fund are not entitled to vote on Trust matters that do not affect the
Fund. There normally will be no meetings of shareholders for the purpose of
electing Trustees unless and until such time as less than a majority of
Trustees holding office have been elected by shareholders, at which time the
Trustees then in office will call a shareholders' meeting for the election of
Trustees. Any Trustee may be removed from office upon the vote of shareholders
holding at least two-thirds of the Trust's outstanding shares at a meeting
called for that purpose. The Trustees are required to call such a meeting upon
the written request of shareholders holding at least 10% of the Trust's
outstanding shares.

The Portfolio is a series of BT Investment Portfolios, an open-end management
investment company. BT Investment Portfolios was organized as a trust under
the laws of the State of New York. BT Investment Portfolios' Declaration of
Trust provides that the Fund and other entities investing in the Portfolio
(e.g., other investment companies, insurance company separate accounts and
common and commingled trust funds) will each be liable for all obligations of
the Portfolio. However, the risk of the Fund incurring financial loss on
account of such liability is limited to circumstances in which both inadequate
insurance existed and the Portfolio itself was unable to meet its obligations.
Accordingly, the Trustees of the Trust believe that neither the Fund nor its
shareholders will be adversely affected by reason of the Fund's investing in
the Portfolio. The interests in BT Investment Portfolios are divided into
separate series, such as the Portfolio. No series of BT Investment Portfolios
has any preference over any other series.

Each series of the Trust will not be involved in any vote involving a
Portfolio in which it does not invest its Assets. Shareholders of all of the
series of the Trust will, however, vote together to elect Trustees of the
Trust and for certain other matters. Under certain circumstances, the
shareholders of one or more series could control the outcome of these votes.
The series of BT Investment Portfolios will vote together or separately on
matters in the same manner, and in the same circumstances, as do the series of
the Trust. As with the Trust, the investors in one or more series of BT
Investment Portfolios could control the outcome of these votes.

EXPENSES OF THE TRUST
The Fund bears its own expenses. Operating expenses for the Fund generally
consist of all costs not specifically borne by Bankers Trust or Signature,
including administration and service fees, fees for necessary professional
services, amortization of organizational expenses, and costs associated with
regulatory compliance and maintaining legal existence and shareholder
relations. Bankers Trust and Signature have agreed to reimburse the Fund to
the extent required by applicable state law for certain expenses that are
described in the Statement of Additional Information. The Portfolio bears its
own expenses. Operating expenses for the Portfolio generally consist of all
costs not specifically borne by Bankers Trust or Signature, including
investment advisory and administration and services fees, fees for necessary
professional services, amortization of organizational expenses, the costs
associated with regulatory compliance and maintaining legal existence and
investor relations.

ADDITIONAL INFORMATION
When-Issued and Delayed Delivery Securities. The Portfolio may purchase
securities on a when-issued or delayed delivery basis. Delivery of and payment
for these securities may take place as long as a month or more after the date
of the purchase commitment. The value of these securities is subject to market
fluctuation during this period and no income accrues to the Portfolio until
settlement takes place. The Portfolio maintains with the Custodian a
segregated account containing high grade liquid securities in an amount at
least equal to these commitments. When entering into a when-issued or delayed
delivery transaction, the Portfolio will rely on the other party to consummate
the transaction; if the other party fails to do so, the Portfolio may be
disadvantaged.

Rule 144A Securities. The Portfolio may purchase securities in the United
States that are not registered for sale under Federal securities laws but
which can be resold to institutions under the SEC's Rule 144A. Provided that a
dealer or institutional trading market in such securities exists, these
restricted securities are treated as exempt from the Portfolio's 15% limit on
illiquid securities. Under the supervision of the Board of Trustees of the
Portfolio, Bankers Trust determined the liquidity of restricted securities
and, through reports from Bankers Trust, the Board will monitor trading
activity in restricted securities. Because Rule 144A is relatively new, it is
not possible to predict how these markets will develop. If institutional
trading in restricted securities were to decline, the liquidity of the
Portfolio could be adversely affected. No more than 10% of the Portfolio's
assets may be invested in securities restricted as to transfer or re-sale,
including Rule 144A securities.

Securities Lending. The Portfolio is permitted to lend up to 30% of the total
value of its securities. These loans must be secured continuously by cash or
equivalent collateral or by a letter of credit at least equal to the market
value of the securities loaned plus accrued income. By lending its securities,
the Portfolio can increase its income by continuing to receive income on the
loaned securities as well as by the opportunity to receive interest on the
collateral. Any gain or loss in the market price of the borrowed securities
which occurs during the term of the loan inures to the Portfolio and its
investors. In lending securities to brokers, dealers and other organizations,
the Portfolio is subject to risk which, like those associated with other
extensions of credit, include delays in recovery and possible loss of rights
in the collateral should the borrower fail financially.

Zero Coupon Securities. The Portfolio may purchase zero coupon securities
which are the separate income or principal components of a debt instrument.
These involve risks that are similar to those of other debt securities,
although they may be more volatile, and certain zero coupon securities move in
the same direction as interest rates.

Floating Rate Bonds. The Portfolio may purchase floating rate bonds which may
have interest rates that move in tandem with a benchmark, helping to stabilize
their prices.

Foreign Currency Exchange Transactions. Because the Portfolio buys and sells
securities denominated in currencies other than the U.S. dollar and receives
interest, dividends and sale proceeds in currencies other than the U.S.
dollar, the Portfolio from time to time may enter into foreign currency
exchange transactions to convert to and from different foreign currencies and
to convert foreign currencies to and from the U.S. dollar. The Portfolio
either enters into these transactions on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market or uses forward
contracts to purchase or sell foreign currencies.

A forward foreign currency exchange contract is an obligation by the Portfolio
to purchase or sell a specific currency at a future date, which may be any
fixed number of days from the date of the contract. Forward foreign currency
exchange contracts establish an exchange rate at a future date. These
contracts are transferable in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A
forward foreign currency exchange contract generally has no deposit
requirement and is traded at a net price without commission. The Portfolio
maintains with its custodian a segregated account of high grade liquid assets
in an amount at least equal to its obligations under each forward foreign
currency exchange contract. Neither spot transactions nor forward foreign
currency exchange contracts eliminate fluctuations in the prices of the
Portfolio's securities or in foreign exchange rates, or prevent loss if the
prices of these securities should decline.

The Portfolio may enter into foreign currency hedging transactions in an
attempt to protect against changes in foreign currency exchange rates between
the trade and settlement dates of specific securities transactions or changes
in foreign currency exchange rates that would adversely affect a portfolio
position or an anticipated investment position. Since consideration of the
prospect for currency parities will be incorporated into Bankers Trust's long-
term investment decisions, the Portfolio will not routinely enter into foreign
currency hedging transactions with respect to security transactions; however,
Bankers Trust believes that it is important to have the flexibility to enter
into foreign currency hedging transactions when it determines that the
transactions would be in the Portfolio's best interest. Although these
transactions tend to minimize the risk of loss due to a decline in the value
of the hedged currency, at the same time they tend to limit any potential gain
that might be realized should the value of the hedged currency increase. The
precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of such securities between the date the forward
contract is entered into and the date it matures. The projection of currency
market movements is extremely difficult, and the successful execution of a
hedging strategy is highly uncertain.

Options on Foreign Currencies. The Portfolio may write covered put and call
options and purchase put and call options on foreign currencies for the
purpose of protecting against declines in the dollar value of portfolio
securities and against increases in the dollar cost of securities to be
acquired. The Portfolio may use options on currency to cross-hedge, which
involves writing or purchasing options on one currency to hedge against
changes in exchange rates for a different, but related currency. As with other
types of options, however, the writing of an option on foreign currency will
constitute only a partial hedge up to the amount of the premium received, and
the Portfolio could be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on foreign currency may be used to hedge against fluctuations in
exchange rates although, in the event of exchange rate movements adverse to
the Portfolio's position, it may forfeit the entire amount of the premium plus
related transaction costs. In addition, the Portfolio may purchase call
options on currency when the investment adviser anticipates that the currency
will appreciate in value.

There is no assurance that a liquid secondary market on an options exchange
will exist for any particular option, or at any particular time. If the
Portfolio is unable to effect a closing purchase transaction with respect to
covered options it has written, the Portfolio will not be able to sell the
underlying currency or dispose of assets held in a segregated account until
the options expire or are exercised. Similarly, if the Portfolio is unable to
effect a closing sale transaction with respect to options it has purchased, it
would have to exercise the options in order to realize any profit and will
incur transaction costs upon the purchase or sale of underlying currency. The
Portfolio pays brokerage commissions or spreads in connection with its options
transactions.

As in the case of forward contracts, certain options on foreign currencies are
traded over-the-counter and involve liquidity and credit risks which may not
be present in the case of exchange-traded currency options. The Portfolio's
ability to terminate over-the-counter options ("OTC Options") will be more
limited than with exchange-traded options. It is also possible that broker-
dealers participating in OTC Options transactions will not fulfill their
obligations. Until such time as the staff of the SEC changes its position, the
Portfolio will treat purchased OTC Options and assets used to cover written
OTC Options as illiquid securities. With respect to options written with
primary dealers in U.S. Government securities pursuant to an agreement
requiring a closing purchase transaction at a formula price, the amount of
illiquid securities may be calculated with reference to the repurchase
formula.

Options on Foreign Bond Indices. The Portfolio may purchase and write put and
call options on foreign indices listed on domestic and foreign exchanges. A
bond index fluctuates with changes in the market values of the bonds included
in the index.

Options on bond indices are generally similar to options on securities except
that the delivery requirements are different. Instead of giving the right to
take or make delivery of securities at a specified price, an option on a bond
index gives the holder the right to receive a cash "exercise settlement
amount" equal to (a) the amount, if any, by which the fixed exercise price of
the option exceeds (in the case of a put) or is less than (in the case of a
call) the closing value of the underlying index on the date of exercise,
multiplied by (b) a fixed "index multiplier." Receipt of this cash amount will
depend upon the closing level of a bond index upon which the option is based
being greater than, in the case of a call, or less than, in the case of a put,
the exercise price of the option. The amount of cash received will be equal to
such difference between the closing price of the index and the exercise price
of the option expressed in dollars or a foreign currency, as the case may be,
times a specified multiple. The writer of the option is obligated, in return
for the premium received, to make delivery of this amount. The writer may
offset its position in index options prior to expiration by entering into a
closing transaction on an exchange or the option may expire unexercised.

To the extent permitted by U.S. Federal or state securities laws, the
Portfolio may invest in options on foreign bond indices in lieu of direct
investment in foreign bonds. The Portfolio may also use foreign bond index
options for hedging purposes.

Because the value of a bond option depends upon movements in the level of the
index rather than the price of a particular bond, whether the Portfolio will
realize a gain or loss from the purchase or writing of options on an index
depends upon movements in the level of bond prices in the securities market
generally, rather than movements in the price of a particular security.
Accordingly, successful use by the Portfolio of options on bond indices will
be subject to Bankers Trust's ability to predict correctly movements in the
direction of the corresponding bond market generally. This requires different
skills and techniques than predicting changes in the price of individual
bonds.

Futures Contracts on Foreign Bond Indices. The Portfolio may enter into
contracts providing for the making and acceptance of a cash settlement based
upon changes in the value of an index of foreign bonds ("Futures Contracts").
This investment technique is designed only to hedge against anticipated future
change in general market prices which otherwise might either adversely affect
the value of securities held by the Portfolio or adversely affect the prices
of securities which are intended to be purchased at a later date for the
Portfolio. A Futures Contract may also be entered into to close out or offset
an existing futures position.

In general, each transaction in Futures Contracts involves the establishment
of a position which will move in a direction opposite to that of the
investment being hedged. If these hedging transactions are successful, the
futures positions taken for the Portfolio will rise in value by an amount
which approximately offsets the decline in value of the portion of the
Portfolio's investments that are being hedged. Should general market prices
move in an unexpected manner, the full anticipated benefits of Futures
Contracts may not be achieved or a loss may be realized.

Although Futures Contracts would be entered into for hedging purposes only,
such transactions do involve certain risks. These risks could include a lack
of correlation between the Futures Contract and the foreign bond market being
hedged, a potential lack of liquidity in the secondary market and incorrect
assessments of market trends which may result in poorer overall performance
than if a Futures Contract had not been entered into.

Brokerage costs will be incurred and "margin" will be required to be posted
and maintained as a good-faith deposit against performance of obligations
under Futures Contracts written for the Portfolio. The Portfolio may not
purchase or sell a Futures Contract if immediately thereafter its margin
deposits on its outstanding Futures Contracts would exceed 5% of the market
value of the Portfolio's total assets.

Options on Futures Contracts. The Portfolio may invest in options on such
futures contracts for similar purposes.

The Portfolio will write and purchase put and call options only to the extent
permitted by the policies of state securities authorities in states where
shares of the Fund are qualified for offer and sale.

There can be no assurance that the use of these portfolio strategies will be
successful.

Asset Coverage. To assure that the Portfolio's use of futures and related
options, as well as when-issued and delayed-delivery securities and foreign
currency exchange transactions, are not used to achieve investment leverage,
the Portfolio will cover such transactions, as required under applicable
interpretations of the SEC, either by owning the underlying securities or by
establishing a segregated account with the Portfolio's custodian containing
high grade liquid debt securities in an amount at all times equal to or
exceeding the Portfolio's commitment with respect to these instruments or
contracts.

<PAGE>

APPENDIX
DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS:

Aaa - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.

Aa - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.

A - Bonds rated A possess many favorable investment attributes and are to be
considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Baa - Bonds rated Baa are considered as medium-grade obligations, i.e. they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such, bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both (good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B - Bonds rated B generally lack characteristics of a desirable investment.
Assurance of interest and principal payments or of maintenance of other terms
of the contract over any long period of time may be small.

Caa - Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.

Ca - Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked short-comings.

C - Bonds rated C are the lowest-rated class of bonds and issued so rated can
be regarded as having extremely poor prospects of ever attaining any real
investment standing.

Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond system. The modifier 1
indicates that the security ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating
category.

DESCRIPTION OF S&PS CORPORATE BOND RATINGS:

AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's to a
debt obligation. Capacity to pay interest and repay principal is extremely
strong.

AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.

A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.

BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.

BB - Debt rate BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.

B - Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness
to pay interest and repay principal. The B rating category is also used for
debt subordinated to senior debt that is assigned an actual or implied BB-
rating.

CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic conditions
to meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to have
the capacity to pay interest and repay principal.

CC - Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.

C -The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed but debt service
payments are continued.

CI - The rating CI is reserved for income bonds on which no interest is being
paid.

D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The D rating will also be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>

INVESTMENT ADVISER OF THE PORTFOLIO AND ADMINISTRATOR
BANKERS TRUST COMPANY

DISTRIBUTOR
SIGNATURE BROKER-DEALER SERVICES, INC.

CUSTODIAN AND TRANSFER AGENT
BANKERS TRUST COMPANY

INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.

COUNSEL
WILLKIE FARR & GALLAGHER

..............................................................................
No person has been authorized to give any information or to make any
representations other than those contained in the Trust's Prospectuses, its
Statements of Additional Information or the Trust's official sales literature
in connection with the offering of the Trust's shares and, if given or made,
such other information or representations must not be relied on as having been
authorized by the Trust. This Prospectus does not constitute an offer in any
state in which, or to any person to whom, such offer may not lawfully be made.
..............................................................................

<PAGE>
BT INVESTMENT FUNDS

Small Cap Fund

PROSPECTUS: JANUARY 29, 1996

Please read this Prospectus
carefully before investing and
retain it for future reference. It
contains important information o Seeks long-term capital growth
about the Fund that you should know through investment in smaller sized
and can refer to in deciding growth companies.
whether the Fund's goals match your
own.

A Statement of Additional
Information (SAI) with the same
date has been filed with the
Securities and Exchange Commission,
and is incorporated herein by
reference. You may request a free
copy of the Statement by calling
the Fund's Service Agent at
1-800-730-1313.

LIKE SHARES OF ALL MUTUAL FUNDS, BANKERS TRUST COMPANY
THESE SECURITIES HAVE NOT BEEN Investment Adviser of the
APPROVED OR DISAPPROVED BY THE Portfolio and Administrator
SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION SIGNATURE BROKER-
NOR HAS THE SECURITIES AND EXCHANGE DEALER SERVICES, INC.
COMMISSION OR ANY STATE SECURITIES Distributor
COMMISSION PASSED UPON THE ACCURACY 6 St. James Avenue
OR ADEQUACY OF THIS PROSPECTUS. ANY Boston, Massachusetts 02116
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
................................................................................
Summary of Fund Expenses 3
Fund Financial Highlights 4
Investment Objective, Policies and Risks 4
Risk Factors; Matching the Fund to Your Investment Needs 7
Net Asset Value 10
Purchase and Redemption of Shares 11
Dividends, Distributions and Taxes 14
Performance Information and Reports 14
Management of the Trust and BT Investment Portfolios 15
Additional Information 20
- --------------------------------------------------------------------------------

<PAGE>

SUMMARY OF FUND EXPENSES
The following table provides (i) a summary of estimated expenses relating to
purchases and sales of the shares of the Small Cap Fund (the "Fund") and the
annual operating expenses of the Fund and the expenses of the Small Cap
Portfolio (the "Portfolio"), as a percentage of average net assets of the Fund
and (ii) an example illustrating the dollar cost of such expenses on a $1,000
investment in the Fund. THE TRUSTEES OF THE BT INVESTMENT FUNDS (THE "TRUST")
BELIEVE THAT THE AGGREGATE PER SHARE EXPENSES OF THE FUND AND THE PORTFOLIO
WILL BE LESS THAN OR APPROXIMATELY EQUAL TO THE EXPENSES WHICH THE FUND WOULD
INCUR IF THE TRUST RETAINED THE SERVICES OF AN INVESTMENT ADVISER AND THE
INVESTABLE ASSETS ("ASSETS") OF THE FUND WERE INVESTED DIRECTLY IN THE TYPE OF
SECURITIES BEING HELD BY THE PORTFOLIO.
- --------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSES
(as a percentage of the average daily net assets of the Fund)
................................................................................
Investment advisory fee (after reimbursement or waiver) 0.37%
12b-1 fees 0.00
Other expenses (after reimbursements or waivers) 0.88
................................................................................
Total operating expenses (after reimbursements or waivers) 1.25%
................................................................................
EXAMPLE 1 year 3 years 5 years 10 years
................................................................................
You would pay the following expenses
on a $1,000 investment, assuming (1)
5% annual return and (2) redemption
at the end of each time period $13 $40 $69 $151
- --------------------------------------------------------------------------------

The expense table and the example above show the costs and expenses that an
investor will bear directly or indirectly as a shareholder of the Fund. While
reimbursement of distribution expenses in amounts up to 0.20% of average net
assets are authorized to be made pursuant to the Plan of Distribution under Rule
12b-1 of the Investment Company Act of 1940, as amended (the "1940 Act"), it is
not expected that any payments will actually be made under that plan in the
foreseeable future. Bankers Trust Company ("Bankers Trust") has voluntarily
agreed to waive a portion of its investment advisory fee. Without such waiver,
the Portfolio's investment advisory fee would be equal to 0.65%. The expense
table and the example reflect a voluntary undertaking by Bankers Trust or
Signature Broker-Dealer Services, Inc. ("Signature") to waive or reimburse
expenses such that the total operating expenses will not exceed 1.25% of the
Fund's average net assets annually. In the absence of this undertaking, for the
fiscal year ended September 30, 1995, the total operating expenses would be
equal to approximately 1.59% of the Fund's average net assets annually. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Moreover, while each
example assumes a 5% annual return, actual performance will vary and may result
in a return greater or less than 5%.

The Fund is sold by Signature as the Trust's distributor (the "Distributor") to
customers of Bankers Trust or to customers of another bank or a dealer or other
institution that has a sub-shareholder servicing agreement with Bankers Trust
(along with Bankers Trust, a "Service Agent"). Some Service Agents may impose
certain conditions on their customers in addition to or different from those
imposed by the Fund and may charge their customers a direct fee for their
services. Each Service Agent has agreed to transmit to shareholders who are its
customers appropriate disclosures of any fees that it may charge them directly.

For more information with respect to the expenses of the Fund and the Portfolio
see "Management of the Trust and BT Investment Portfolios" herein.

FUND FINANCIAL HIGHLIGHTS
The following table shows selected data for a share outstanding, total
investment return, ratios to average net assets and other supplemental data
for the Fund for each period indicated and has been audited by Coopers &
Lybrand L.L.P., the Fund's independent accountants, whose report thereon
appears in the Fund's Annual Report which is incorporated by reference in the
Fund's Statement of Additional Information.
- --------------------------------------------------------------------------------
FOR THE PERIOD
OCTOBER 21, 1993
FOR THE (COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
SEPTEMBER 30, 1995 SEPEMBER 30, 1994
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
*Annualized

INVESTMENT OBJECTIVE, POLICIES AND RISKS
The Fund's investment objective is long-term capital growth; the production of
any current income is secondary to this objective.

There can be no assurances that the investment objective of either the Fund or
the Portfolio will be achieved. The investment objective of each of the Fund and
the Portfolio is not a fundamental policy and may be changed upon notice to, but
without the approval of the Fund's shareholders or the Portfolio's investors,
respectively. See "Special Information Concerning Master-Feeder Fund Structure"
on page 9 herein.

SMALL CAP PORTFOLIO

The Portfolio seeks to provide long term capital growth by investing primarily
in equity securities of smaller companies. The Portfolio's policy is to invest
in equity securities of smaller companies that Bankers Trust, as the Portfolio's
investment adviser (the "Adviser"), believes are in an early stage or
transitional point in their development and have demonstrated or have the
potential for above average capital growth. The Adviser will select companies
which have the potential to gain market share in their industry, achieve and
maintain high and consistent profitability or produce increases in earnings. The
Adviser also seeks companies with strong company management and superior
fundamental strength.

The Adviser employs a flexible investment program in pursuit of the Portfolio's
investment objective. The Adviser takes advantage of its market access and the
research available to it to select investments in promising growth companies
that are involved in new technologies, new products, foreign markets and special
developments, such as research discoveries, acquisitions, recapitalizations,
liquidations or management changes, and companies whose stock may be undervalued
by the market. These situations are only illustrative of the types of investment
the Portfolio may make. The Portfolio is free to invest in any common stock
which in the Adviser's judgment provides above average potential for long-term
growth of capital and income.

Under normal market conditions, the Portfolio will invest at least 65% of its
assets in smaller companies (with market capitalizations less than $750 million
at time of purchase that offer strong potential for capital growth). Small
capitalization companies have the potential to show earnings growth over time
that is well above the growth rate of the overall economy. The Portfolio may
also invest in larger, more established companies that the Adviser believes may
offer the potential for strong capital growth due to their relative market
position, anticipated earnings growth, changes in management or other similar
opportunities. The Portfolio will follow a disciplined selling process to lessen
market risks.

For temporary defensive purposes, when in the opinion of the Adviser market
conditions so warrant, the Portfolio may invest all or a portion of its assets
in common stocks of larger, more established companies or in fixed-income
securities or short-term money market securities. To the extent the Portfolio is
engaged in temporary defensive investments, the Portfolio will not be pursuing
its investment objective.

The Portfolio may also invest up to 25% of its assets in similar securities of
foreign issuers. For further information on foreign investments and related
hedging techniques, see "Risk Factors; Matching the Fund to Your Investment
Needs," "Additional Information" and the Statement of Additional Information.

Equity Investments. The Portfolio invests primarily in common stock and other
securities with equity characteristics, such as trust or limited partnership
interests, rights and warrants. These investments may or may not pay dividends
and may or may not carry voting rights. The Portfolio may also invest in
convertible securities when, due to market conditions, it is more advantageous
to obtain a position in an attractive company by purchase of its convertible
securities than by purchase of its common stock. The convertible securities in
which the Portfolio invests may include any debt securities or preferred stock
which may be converted into common stock or which carries the right to purchase
common stock. Convertible securities entitle the holder to exchange the
securities for a specified number of shares of common stock, usually of the same
company, at specified prices within a certain period of time and to receive
interest or dividends until the holder elects to exercise the conversion
privilege. Since the Portfolio invests in both common stock and convertible
securities, the risks of the general equity markets may be tempered to a degree
by the Portfolio's investments in convertible securities which are often not as
volatile as equity securities.

Short-Term Instruments. The Portfolio intends to stay invested in the securities
described above to the extent practical in light of its objective and long-term
investment perspective. However, the Portfolio's assets may be invested in
short-term instruments with remaining maturities of 397 days or less to meet
anticipated redemptions and expenses or for day-to-day operating purposes and
when, in Bankers Trust's opinion, it is advisable to adopt a temporary defensive
position because of unusual and adverse conditions affecting the equity markets.
In addition, when the Portfolio experiences large cash inflows through the sale
of securities and desirable equity securities that are consistent with the
Portfolio's investment objective are unavailable in sufficient quantities or at
attractive prices, the Portfolio may hold short-term investments for a limited
time pending availability of such equity securities. Short-term instruments
consist of foreign and domestic: (i) short-term obligations of sovereign
governments, their agencies, instrumentalities, authorities or political
subdivisions; (ii) other short-term debt securities rated Aa or higher by
Moody's Investors Service, Inc. ("Moody's") or AA or higher by Standard & Poor's
Corporation ("S&P") or, if unrated, of comparable quality in the opinion of
Bankers Trust; (iii) commercial paper; (iv) bank obligations, including
negotiable certificates of deposit, time deposits and bankers' acceptances; and
(v) repurchase agreements. At the time the Portfolio invests in commercial
paper, bank obligations or repurchase agreements, the issuer or the issuer's
parent must have outstanding debt rated Aa or higher by Moody's or AA or higher
by S&P or outstanding commercial paper or bank obligations rated Prime-1 by
Moody's or A-1 by S&P; or, if no such ratings are available, the instrument must
be of comparable quality in the opinion of Bankers Trust. These instruments may
be denominated in U.S. dollars or in foreign currencies.

ADDITIONAL INVESTMENT TECHNIQUES
The Portfolio may also utilize the following investments and investment
techniques and practices: Rule 144A securities, when-issued and delayed delivery
securities, securities lending, repurchase agreements, foreign investments,
options on stocks, options on stock indices, futures contracts on stock indices,
options on futures contracts, foreign currency exchange transactions and options
on foreign currencies. See "Additional Information" for further information.

ADDITIONAL INVESTMENT LIMITATIONS
As a diversified fund, no more than 5% of the assets of the Portfolio may be
invested in the securities of one issuer (other than U.S. Government
securities), except that up to 25% of the Portfolio's assets may be invested
without regard to this limitation. The Portfolio will not invest more than 25%
of its assets in the securities of issuers in any one industry. These are
fundamental investment policies of the Portfolio which may not be changed
without investor approval. No more than 15% of the Portfolio's net assets may be
invested in illiquid or not readily marketable securities (including repurchase
agreements and time deposits with remaining maturities of more than seven
calendar days). Additional investment policies of the Portfolio are contained in
the Statement of Additional Information.

RISK FACTORS; MATCHING THE FUND TO YOUR
INVESTMENT NEEDS
By itself, the Fund does not constitute a balanced investment plan; the Fund and
the Portfolio seek to provide long-term capital growth, with the production of
any current income being incidental to this objective, by investments primarily
in growth-oriented common stocks of domestic corporations and, to a limited
extent, foreign corporations. The Fund is designed for those investors primarily
interested in capital growth from investments in smaller-sized growth companies.
In view of the long-term capital growth objective of the Fund and the smaller
size of the companies, the risks of investment in the Fund may be greater than
the general equity markets, and changes in domestic and foreign interest rates
may also affect the value of the Portfolio's investments, and rising interest
rates can be expected to reduce the Fund's share value. A description of a
number of investments and investment techniques available to the Portfolio,
including foreign investments and the use of options and futures, and certain
risks associated with these investments and techniques is included under
"Additional Information." The Fund's share price, yield and total return
fluctuate and your investment may be worth more or less than your original cost
when you redeem your shares.

RISKS OF INVESTING IN FOREIGN SECURITIES
In seeking its investment objectives, the Portfolio may invest in securities of
foreign issuers. Foreign securities may involve a higher degree of risk and may
be less liquid or more volatile than domestic investments. Foreign securities
usually are denominated in foreign currencies, which means their value will be
affected by changes in the strength of foreign currencies relative to the U.S.
dollar as well as the other factors that affect security prices. Foreign
companies may not be subject to accounting standards or governmental supervision
comparable to U.S. companies, and there often is less publicly available
information about their operations. Generally, there is less governmental
regulation of foreign securities markets, and security trading practices abroad
may offer less protection to investors such as the Portfolio. The value of such
investments may be adversely affected by changes in political or social
conditions, diplomatic relations, confiscatory taxation, expropriation,
nationalization, limitation on the removal of funds or assets, or imposition of
(or change in) exchange control or tax regulations in those foreign countries.
Additional risks of foreign securities include settlement delays and costs,
difficulties in obtaining and enforcing judgments, and taxation of dividends at
the source of payment. The Portfolio will not invest more than 5% of the value
of its total assets in the securities of issuers based in developing countries,
including Eastern Europe.

PORTFOLIO TURNOVER
The Portfolio intends to manage its holdings actively to pursue its investment
objective. Since the Portfolio has a long-term investment perspective, it does
not intend to respond to short-term market fluctuations or to acquire securities
for the purpose of short-term trading; however, it may take advantage of
short-term trading opportunities that are consistent with its objective. The
Portfolio's turnover rate for the year ended September 30, 1995 and for the
period from October 21, 1993 (commencement of operations) through September 30,
1994 was 161% and 154%, respectively. Because a higher portfolio turnover rate
increases transaction costs and may increase taxable capital gains, Bankers
Trust carefully weighs the anticipated benefits of short-term investment against
these consequences.

DERIVATIVES
The Portfolio may invest in various instruments that are commonly known as
derivatives. Generally, a derivative is a financial arrangement, the value of
which is based on, or "derived" from, a traditional security, asset, or market
index. Some "derivatives" such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities. There are,
in fact, many different types of derivatives and many different ways to use
them. There are a range of risks associated with those uses. Futures and options
are commonly used for traditional hedging purposes to attempt to protect a fund
from exposure to changing interest rates, securities prices, or currency
exchange rates and for cash management purposes as a low cost method of gaining
exposure to a particular securities market without investing directly in those
securities. However, some derivatives are used for leverage, which tends to
magnify the effects of an instrument's price changes as market conditions
change. Leverage involves the use of a small amount of money to control a large
amount of financial assets, and can in some circumstances, lead to significant
losses. The Adviser will use derivatives only in circumstances where the Adviser
believes they offer the most economic means of improving the risk/reward profile
of the Portfolio. Derivatives will not be used to increase portfolio risk above
the level that could be achieved using only traditional investment securities or
to acquire exposure to changes in the value of assets or indices that by
themselves would not be purchased for the Portfolio. The use of derivatives for
non-hedging purposes may be considered speculative. A description of the
derivatives that the Portfolio may use and some of their associated risks is
found under "Additional Information."

SPECIAL INFORMATION CONCERNING MASTER-FEEDER FUND STRUCTURE Unlike other
open-end management investment companies (mutual funds) which directly acquire
and manage their own portfolio securities, the Fund seeks to achieve its
investment objective by investing all of its Assets in the Portfolio, a separate
registered investment company with the same investment objective as the Fund.
Therefore, an investor's interest in the Portfolio's securities is indirect. In
addition to selling a beneficial interest to the Fund, the Portfolio may sell
beneficial interests to other mutual funds or institutional investors. Such
investors will invest in the Portfolio on the same terms and conditions and will
pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to sell their shares at
the same public offering price as the Fund due to variations in sales
commissions and other operating expenses. Therefore, investors in the Fund
should be aware that these differences may result in differences in returns
experienced by investors in the different funds that invest in the Portfolio.
Such differences in returns are also present in other mutual fund structures.
Information concerning other holders of interests in the Portfolio is available
from Bankers Trust at (800) 730- 1313.

The master-feeder structure has been developed relatively recently, so
shareholders should carefully consider this investment approach.

Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the Portfolio, the remaining funds may experience higher pro rata
operating expenses, thereby producing lower returns (however, this possibility
exists as well for traditionally structured funds which have large institutional
investors). Additionally, the Portfolio may become less diverse, resulting in
increased portfolio risk. Also, funds with a greater pro rata ownership in the
Portfolio could have effective voting control of the operations of the
Portfolio. Except as permitted by the Securities and Exchange Commission
("SEC"), whenever the Trust is requested to vote on matters pertaining to the
Portfolio, the Trust will hold a meeting of shareholders of the Fund and will
cast all of its votes in the same proportion as the votes of the Fund's
shareholders. Fund shareholders who do not vote will not affect the Trust's
votes at the Portfolio meeting. The percentage of the Trust's votes representing
Fund shareholders not voting will be voted by the Trustees or officers of the
Trust in the same proportion as the Fund shareholders who do, in fact, vote.

The Fund may withdraw its investment from the Portfolio at any time, if the
Board of Trustees of the Trust determines that it is in the best interests of
the shareholders of the Fund to do so. Upon any such withdrawal, the Board of
Trustees of the Trust would consider what action might be taken, including the
investment of all the Assets of the Fund in another pooled investment entity
having the same investment objectives as the Fund or the retaining of an
investment adviser to manage the Fund's Assets in accordance with the investment
policies described below with respect to the Portfolio.

The Fund's investment objective is not a fundamental policy and may be changed
upon notice to but without the approval of the Fund's shareholders. If there is
a change in the Fund's investment objective, the Fund's shareholders should
consider whether the Fund remains an appropriate investment in light of their
then-current needs. The investment objective of the Portfolio is also not a
fundamental policy. Shareholders of the Fund will receive 30 days prior written
notice with respect to any change in the investment objective of the Fund or the
Portfolio. See "Investment Objective, Policies and Risks" for a description of
the fundamental policies of the Portfolio that cannot be changed without
approval by the holders of "a majority of the outstanding voting securities" (as
defined in the 1940 Act) of the Portfolio.

For descriptions of the investment objective, policies and restrictions of the
Portfolio, see "Investment Objective, Policies and Risks." For descriptions of
the management of the Portfolio, see "Management of the Trust and BT Investment
Portfolios" herein and "Management of the Trust and Portfolios" in the Statement
of Additional Information. For descriptions of the expenses of the Portfolio,
see "Management of the Trust and BT Investment Portfolios" herein.

NET ASSET VALUE
The net asset value per share of the Fund is calculated on each day on which the
New York Stock Exchange Inc. (the "NYSE") is open (each such day being a
"Valuation Day"). The NYSE is currently open on each day, Monday through Friday,
except: (a) January 1st, Presidents' Day (the third Monday in February), Good
Friday, Memorial Day (the last Monday in May), July 4th, Labor Day (the first
Monday in September), Thanksgiving Day (the last Thursday in November) and
December 25th; and (b) the preceding Friday or the subsequent Monday when one of
the calendar-determined holidays falls on a Saturday or Sunday, respectively.

PURCHASE AND REDEMPTION OF SHARES
PURCHASE OF SHARES
The Trust accepts purchase orders for shares of the Fund at the net asset value
per share of the Fund next determined on each Valuation Day. See "Net Asset
Value" above. There is no sales charge on the purchase of shares, but costs of
distributing shares of the Fund may be reimbursed from its assets, as described
herein. Service Agents may impose initial and subsequent investment minimums
that differ from the amounts presented in the "Minimum Investments" table below.
Shares of the Fund may be purchased in only those states where they may be
lawfully sold.

Purchase orders for shares of the Fund that are received by a Service Agent and
transmitted to Bankers Trust, as the Trust's transfer agent (the "Transfer
Agent"), prior to the Valuation Time (currently 4:00 p.m., New York time or
earlier should the NYSE close earlier) on any Valuation Day will be effective at
that day's Valuation Time. The Trust and Signature reserve the right to reject
any purchase order.

Shares must be purchased in accordance with procedures established by the
Transfer Agent and Service Agents, including Bankers Trust, in connection with
customers' accounts. It is the responsibility of each Service Agent to transmit
to the Transfer Agent purchase and redemption orders and to transmit to Bankers
Trust as the Trust's custodian (the "Custodian") purchase payments on behalf of
its customers in a timely manner, and a shareholder must settle with the Service
Agent his or her entitlement to an effective purchase or redemption order as of
a particular time. Because Bankers Trust is the Custodian and Transfer Agent of
the Trust, funds may be transferred directly from or to a customer's account
with Bankers Trust to or from the Fund without incurring the additional costs or
delays associated with the wiring of Federal funds.

Certificates for shares will not be issued. Each shareholder's account will be
maintained by a Service Agent or the Transfer Agent.

MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For retirement accounts $ 500
Through automatic investment plans $1,000
TO ADD TO AN ACCOUNT $ 250
For retirement accounts $ 100
Through automatic investment plan $ 100
MINIMUM BALANCE $1,000
For retirement accounts None

REDEMPTION OF SHARES
Shareholders may redeem shares at the net asset value per share next determined
on each Valuation Day. Redemption requests should be transmitted by customers in
accordance with procedures established by the Transfer Agent and the
shareholder's Service Agent. Redemption requests for shares of the Fund received
by the Service Agent and transmitted to the Transfer Agent prior to the
Valuation Time (currently 4:00 p.m., New York time or earlier should the NYSE
close earlier) on each Valuation Day will be effective at that day's Valuation
Time and the redemption proceeds normally will be delivered to the shareholder's
account with the Service Agent on the next day, but in any event within seven
calendar days following receipt of the request.

Service Agents may allow redemptions or exchanges by telephone and may also
disclaim liability for following instructions communicated by telephone that the
Service Agent reasonably believes to be genuine. The Service Agent must provide
the investor with an opportunity to choose whether or not to utilize the
telephone redemption or exchange privilege. The Service Agent must employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine. If the Service Agent does not do so, it may be liable for any losses
due to unauthorized or fraudulent instructions. Such procedures may include,
among others, requiring some form of personal identification prior to acting
upon instructions received by telephone, providing written confirmation of such
transactions and/or tape recording of telephone instructions.

Redemption orders are processed without charge by the Trust. A Service Agent may
on at least 30 days' notice involuntarily redeem a shareholder's account with
the Fund having a minimum market value, but not if an account is below the
minimum due to a change in market value. See "Investment Minimums" above for
minimum balance amounts.

Automatic Cash Withdrawal Plan. The Fund may offer shareholders an automatic
cash withdrawal plan, under which shareholders who own shares of the Fund may
elect to receive periodic cash payments. Retirement plan accounts are eligible
for automatic cash withdrawal plans only where the shareholder is eligible to
receive qualified distributions. For further information regarding the automatic
cash withdrawal plan, shareholders should contact their Service Agent.

EXCHANGE PRIVILEGE
Shareholders may exchange their shares for shares of certain other funds in the
BT Family of Funds registered in their state. The Fund reserves the right to
terminate or modify the exchange privilege in the future. To make an exchange,
follow the procedures indicated in "Purchase of Shares" and "Redemption of
Shares" in that fund's prospectus. Before making an exchange, please note the
following:

* Call your Service Agent for information and a prospectus. Read the
prospectus for relevant information.

* Complete and sign an application, taking care to register your new account in
the same name, address and taxpayer identification number as your existing
account(s).

TAX-SAVING RETIREMENT PLANS
Retirement plans offer significant tax savings and are available to individuals,
partnerships, small businesses, corporations, nonprofit organizations and other
institutions. Contact your Service Agent or Bankers Trust for further
information. Bankers Trust can set up your new account in the Fund under a
number of several tax-sheltered plans. These plans contain special tax
advantages and let you invest for retirement while sheltering your investment
income from current taxes. Minimums may differ from those listed elsewhere in
the Prospectus.

* Individual Retirement Accounts (IRAs): personal savings plans that offer tax
advantages for individuals to set aside money for retirement and allow new
contributions of $2,000 per tax year.

* Rollover IRAs: tax-deferred retirement accounts that retain the special tax
advantages of lump sum distributions from qualified retirement plans and
transferred IRA accounts.

* Simplified Employee Pension Plans (SEP): a relatively easy and inexpensive
alternative to retirement planning for sole proprietors, partnerships and
corporations. Under a SEP, employers make tax-deductible contributions to
their own and to eligible employees' IRA accounts. Employee contributions are
available through a "Salary Deferral" SEP for businesses with fewer than 25
eligible employees.

* 401(k) Programs: defined contribution plans available to corporations allowing
tax-deductible employer contributions and permitting employees to contribute a
percentage of their wages on a tax-deferred basis.

* 403(b) Custodian Accounts: defined contribution plans open to employees of
most nonprofit organizations and educational institutions.

* Deferred Benefit Plans: plan sponsors may invest all or part of their
pension assets in the Fund.

DIVIDENDS, DISTRIBUTIONS AND TAXES
Distributions. The Fund distributes substantially all of its net investment
income and capital gains to shareholders each year. Income dividends if any, are
distributed on the first business day in April, July and October. In December,
another income dividend will be distributed plus any net capital gains. Unless a
shareholder instructs the Trust to pay such dividends and distributions in cash,
they will be automatically reinvested in additional shares of the Fund.

Federal Taxes. Distributions from the Fund's income and short-term capital gains
are taxed as dividends, and long-term capital gain distributions are taxed as
long-term capital gains. The Fund's distributions are taxable when they are
paid, whether you take them in cash or reinvest them in additional shares.
Distributions declared in December and paid in January are taxable as if paid on
December 31. The Fund will send each shareholder a tax statement by January 31
showing the tax status of the distributions received in the past year.

Capital Gains. You may realize a capital gain or loss when you redeem (sell) or
exchange shares. Because the tax treatment also depends on your purchase price
and your personal tax position, you should keep your regular account statements
to use in determining your tax.

"Buying a Dividend." On the ex-date for a distribution from income and/or
capital gains, the Fund's share value is reduced by the amount of the
distribution. If you buy shares just before the record date ("buying a
dividend"), you will pay the full price for the shares and then receive a
portion of the price back as a taxable distribution.

PERFORMANCE INFORMATION AND REPORTS
The Fund's performance may be used from time to time in advertisements,
shareholder reports or other communications to shareholders or prospective
shareholders. Performance information may include the Fund's investment results
and/or comparisons of its investment results to various unmanaged indices such
as the Russell 2000 Index or Lipper Small Company Growth Funds Average or
results of other mutual funds or investment or savings vehicles. The Fund's
investment results as used in such communications will be calculated on a total
rate of return basis in the manner set forth below. From time to time, fund
rankings may be quoted from various sources, such as Lipper Analytical Services,
Inc., Value Line and Morningstar, Inc.

The Trust may provide period and average annualized "total return" quotations
for the Fund. The Fund's "total return" refers to the change in the value of an
investment in the Fund over a stated period based on any change in net asset
value per share and including the value of any shares purchasable with any
dividends or capital gains distributed during such period. Period total return
may be annualized. An annualized total return is a compounded total return which
assumes that the period total return is generated over a one-year period, and
that all dividends and capital gain distributions are reinvested. An annualized
total return will be higher than a period total return if the period is shorter
than one year, because of the compounding effect.

Unlike some bank deposits or other investments which pay a fixed yield for a
stated period of time, the total return of the Fund will vary depending upon
interest rates, the current market value of the securities held by the Portfolio
and changes in the Fund's expenses. In addition, during certain periods for
which total return quotations may be provided, Bankers Trust, as Adviser,
Service Agent or Administrator, or Signature, as Distributor, may have
voluntarily agreed to waive portions of their fees on a month-to-month basis.
Such waivers will have the effect of increasing the Fund's net income (and
therefore its total return) during the period such waivers are in effect.

MANAGEMENT OF THE TRUST AND
BT INVESTMENT PORTFOLIOS
BOARD OF TRUSTEES
The affairs of the Trust and BT Investment Portfolios are managed under the
supervision of their respective Boards of Trustees. By virtue of the
responsibilities assumed by Bankers Trust, as the Administrator of the Trust and
BT Investment Portfolios, neither the Trust nor BT Investment Portfolios
requires employees other than its officers. None of the Trust's or BT Investment
Portfolios' officers devotes full time to the affairs of the Trust or BT
Investment Portfolios.

The Trustees of the Trust who are not "interested persons," (as defined in the
1940 Act) of the Trust or of the BT Investment Portfolios, as the case may be,
(the "Independent Trustees") have adopted written procedures reasonably
appropriate to deal with potential conflicts of interest, up to and including
creating separate boards of trustees, arising from the fact that several of the
same individuals are trustees of the Trust and BT Investment Portfolios. For
more information with respect to the Trustees of both the Trust and the
Portfolio, see "Management of the Trust and Portfolios" in the Statement of
Additional Information.

Bankers Trust, a New York banking corporation with principal offices at 280 Park
Avenue, New York, New York 10017, is a wholly owned subsidiary of Bankers Trust
New York Corporation. Bankers Trust conducts a variety of general banking and
trust activities and is a major wholesale supplier of financial services to the
international and domestic institutional markets. As of September 30, 1995,
Bankers Trust New York Corporation was the ninth largest bank holding company in
the United States with total assets of approximately $104 billion. Bankers Trust
is a worldwide merchant bank dedicated to servicing the needs of corporations,
governments, financial institutions and private clients through a global network
of over 120 offices in more than 40 countries. Investment management is a core
business of Bankers Trust, built on a tradition of excellence from its roots as
a trust bank founded in 1903. The scope of Bankers Trust's investment management
capability is unique due to its leadership positions in both active and passive
quantitative management and its presence in major equity and fixed income
markets around the world. Bankers Trust is one of the nation's largest and most
experienced investment managers with approximately $200 billion in assets under
management globally.

Bankers Trust, subject to the supervision and direction of the Board of Trustees
of BT Investment Portfolios, manages the Portfolio in accordance with the
Portfolio's investment objective and stated investment policies, makes
investment decisions for the Portfolio, places orders to purchase and sell
securities and other financial instruments on behalf of the Portfolio and
employs professional investment managers and securities analysts who provide
research services to the Portfolio. Bankers Trust may utilize the expertise of
any of its worldwide subsidiaries and affiliates to assist it in its role as
investment adviser.

All orders for investment transactions on behalf of the Portfolio are placed by
Bankers Trust with broker-dealers and other financial intermediaries that it
selects, including those affiliated with Bankers Trust. A Bankers Trust
affiliate will be used in connection with a purchase or sale of an investment
for the Portfolio only if Bankers Trust believes that the affiliate's charge for
the transaction does not exceed usual and customary levels. The Portfolio will
not invest in obligations for which Bankers Trust or any of its affiliates is
the ultimate obligor or accepting bank. The Portfolio may, however, invest in
the obligations of correspondents or customers of Bankers Trust.

Under its investment advisory agreement, Bankers Trust receives a fee from the
Portfolio computed daily and paid monthly at the annual rate of 0.65% of the
average daily net assets of the Portfolio.

Bankers Trust's officers have had extensive experience in managing investment
portfolios having objectives similar to those of the Portfolio. Bankers Trust
has been advised by its counsel that, in counsel's opinion, Bankers Trust
currently may perform the services for the Trust and the Portfolio described in
this Prospectus and the Statement of Additional Information without violation of
the Glass-Steagall Act or other applicable banking laws or regulations. State
laws on this issue may differ from the interpretations of relevant Federal law
and banks and financial institutions may be required to register as dealers
pursuant to state securities law.

ADMINISTRATOR
Under its Administration and Services Agreement with the Trust, Bankers Trust
calculates the net asset value of the Fund and generally assists the Board of
Trustees of the Trust in all aspects of the administration and operation of the
Trust. The Administration and Services Agreement provides for the Trust to pay
Bankers Trust a fee, computed daily and paid monthly, at the annual rate of
0.65% of the average daily net assets of the Fund.

Under an Administration and Services Agreement with BT Investment Portfolios,
Bankers Trust calculates the value of the assets of the Portfolio and generally
assists the Board of Trustees of the Portfolio in all aspects of the
administration and operation of the Portfolio. The Administration and Services
Agreement provides for the Portfolio to pay Bankers Trust a fee, computed daily
and paid monthly, at the annual rate of 0.10% of the average daily net assets of
the Portfolio. Under each Administration and Services Agreement, Bankers Trust
may delegate one or more of its responsibilities to others, including Signature,
at Bankers Trust's expense. For more information, see the Statement of
Additional Information.

DISTRIBUTOR
Under its Distribution Agreement with the Trust, Signature, as Distributor,
serves as the Trust's principal underwriter on a best efforts basis. In
addition, Signature provides the Trust with office facilities. Signature is a
wholly owned subsidiary of Signature Financial Group, Inc. ("SFG"). SFG and its
affiliates currently provide administration and distribution services for other
registered investment companies. The principal business address of SFG and
Signature is 6 St. James Avenue, Boston, Massachusetts 02116.

Pursuant to the terms of the Trust's Plan of Distribution pursuant to Rule 12b-1
under the 1940 Act (the "Plan"), Signature may seek reimbursement in an amount
not exceeding 0.20% of the Fund's average daily net assets annually for expenses
incurred in connection with any activities primarily intended to result in the
sale of the Fund's shares, including, but not limited to: compensation to and
expenses (including overhead and telephone expenses) of account executives or
other employees of Signature who, as their primary activity, engage in or
support the distribution of shares; printing of prospectuses, statements of
additional information and reports for other than existing Fund shareholders in
amounts in excess of that typically used in connection with the distribution of
shares of the Fund; costs of placing advertising in various media; services of
parties other than Signature or its affiliates in formulating sales literature;
and typesetting, printing and distribution of sales literature. All costs and
expenses in connection with implementing and operating the Plan will be paid by
the Fund, subject to the 0.20% of net assets limitation. All costs and expenses
associated with preparing the prospectus and statement of additional information
and in connection with printing them for and distributing them to existing
shareholders and regulatory authorities, which costs and expenses would not be
considered distribution expenses for purposes of the Plan, will also be paid by
the Fund. To the extent expenses of Signature under the Plan in any fiscal year
of the Trust exceed amounts payable under the Plan during that year, those
expenses will not be reimbursed in any succeeding fiscal year. Expenses incurred
in connection with distribution activities will be identified to the Fund or the
other series of the Trust involved, although it is anticipated that some
activities may be conducted on a Trust-wide basis, with the result that those
activities will not be identifiable to any particular series. In the latter
case, expenses will be allocated among the series of the Trust on the basis of
their relative net assets. It is not expected that any payment will be made
under the Plan in the foreseeable future.

SERVICE AGENT
All shareholders must be represented by a Service Agent. Bankers Trust acts as a
Service Agent pursuant to its Administration and Services Agreement with the
Trust and receives no additional compensation from the Fund for such shareholder
services. The service fees of any other Service Agents, including
broker-dealers, will be paid by Bankers Trust from its fees. The services
provided by a Service Agent may include establishing and maintaining shareholder
accounts, processing purchase and redemption transactions, arranging for bank
wires, performing shareholder sub-accounting, answering client inquiries
regarding the Trust, assisting clients in changing dividend options, account
designations and addresses, providing periodic statements showing the client's
account balance, transmitting proxy statements, periodic reports, updated
prospectuses and other communications to shareholders and, with respect to
meetings of shareholders, collecting, tabulating and forwarding to the Trust
executed proxies and obtaining such other information and performing such other
services as the Administrator or the Service Agent's clients may reasonably
request and agree upon with the Service Agent. Service Agents may separately
charge their clients additional fees only to cover provision of additional or
more comprehensive services not already provided under the Administration and
Services Agreement with Bankers Trust, or of the type or scope not generally
offered by a mutual fund, such as cash management services or enhanced
retirement or trust reporting. Each Service Agent has agreed to transmit to
shareholders, who are its customers, appropriate disclosures of any fees that it
may charge them directly.

ORGANIZATION OF THE TRUST
The Trust was organized on July 21, 1986 under the laws of the Commonwealth of
Massachusetts. The Fund is a separate series of the Trust and was established
and designated as a separate series of the Trust on August 12, 1992. The Trust
offers shares of beneficial interest of separate series, par value $0.001 per
share. The shares of the other series of the Trust are offered through separate
prospectuses. No series of shares has any preference over any other series.

The Trust is an entity commonly known as a "Massachusetts business trust." Under
Massachusetts law, shareholders of such a business trust may, under certain
circumstances, be held personally liable as partners for its obligations.
However, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which both inadequate
insurance existed and the Trust itself was unable to meet its obligations.

When matters are submitted for shareholder vote, shareholders of the Fund will
have one vote for each full share held and proportionate, fractional votes for
fractional shares held. A separate vote of the Fund is required on any matter
affecting the Fund on which shareholders are entitled to vote. Shareholders of
the Fund are not entitled to vote on Trust matters that do not affect the Fund.
There normally will be no meetings of shareholders for the purpose of electing
Trustees unless and until such time as less than a majority of Trustees holding
office have been elected by shareholders, at which time the Trustees then in
office will call a shareholders' meeting for the election of Trustees. Any
Trustee may be removed from office upon the vote of shareholders holding at
least two-thirds of the Trust's outstanding shares at a meeting called for that
purpose. The Trustees are required to call such a meeting upon the written
request of shareholders holding at least 10% of the Trust's outstanding shares.

The Portfolio is a series of BT Investment Portfolios, an open-end management
investment company. BT Investment Portfolios was organized as a trust under the
laws of the State of New York. BT Investment Portfolios' Declaration of Trust
provides that the Fund and other entities investing in the Portfolio (e.g.,
other investment companies, insurance company separate accounts and common and
commingled trust funds) will each be liable for all obligations of the
Portfolio. However, the risk of the Fund incurring financial loss on account of
such liability is limited to circumstances in which both inadequate insurance
existed and the Portfolio itself was unable to meet its obligations.
Accordingly, the Trustees of the Trust believe that neither the Fund nor its
shareholders will be adversely affected by reason of the Fund's investing in the
Portfolio. The interest in BT Investment Portfolios are divided into separate
series, such as the Portfolio. No series of BT Investment Portfolios has any
preference over any other series.

Each series in the Trust will not be involved in any vote involving a Portfolio
in which it does not invest its Assets. Shareholders of all the series of the
Trust will, however, vote together to elect Trustees of the Trust and for
certain other matters. Under certain circumstances, the shareholders of one or
more series could control the outcome of these votes.

The series of BT Investment Portfolios will vote separately or together in the
same manner as the series of the Trust. Under certain circumstances, the
investors in one or more series of BT Investment Portfolios could control the
outcome of these votes.

EXPENSES OF THE TRUST
The Fund bears its own expenses. Operating expenses for the Fund generally
consist of all costs not specifically borne by Bankers Trust or Signature,
including administration and service fees, fees for necessary professional
services, amortization of organizational expenses, and costs associated with
regulatory compliance and maintaining legal existence and shareholder relations.
Bankers Trust and Signature have agreed to reimburse the Fund to the extent
required by applicable state law for certain expenses that are described in the
Statement of Additional Information. The Portfolio bears its own expenses.
Operating expenses for the Portfolio generally consist of all costs not
specifically borne by Bankers Trust or Signature, including investment advisory
and administration and services fees, fees for necessary professional services,
amortization of organizational expenses, the costs associated with regulatory
compliance and maintaining legal existence and investor relations.

ADDITIONAL INFORMATION
Rule 144A Securities. The Portfolio may purchase securities in the United States
that are not registered for sale under Federal securities laws but which can be
resold to institutions under SEC Rule 144A. Provided that a dealer or
institutional trading market in such securities exists, these restricted
securities are treated as exempt from the Portfolio's 15% limit on illiquid
securities. Under the supervision of the Board of Trustees of the Portfolio,
Bankers Trust determines the liquidity of restricted securities and, through
reports from Bankers Trust, the Board will monitor trading activity in
restricted securities. Because Rule 144A is relatively new, it is not possible
to predict how these markets will develop. If institutional trading in
restricted securities were to decline, the liquidity of the Portfolio could be
adversely affected. No more than 10% of the Portfolio's assets may be invested
in securities restricted as to transfer or re-sale, including Rule 144A
securities.

When-Issued and Delayed Delivery Securities. The Portfolio may purchase
securities on a when-issued or delayed delivery basis. Delivery of and payment
for these securities may take place as long as a month or more after the date of
the purchase commitment. The value of these securities is subject to market
fluctuation during this period and no income accrues to the Portfolio until
settlement takes place. The Portfolio maintains with the custodian a segregated
account containing high grade liquid securities in an amount at least equal to
these commitments. When entering into a when-issued or delayed delivery
transaction, the Portfolio will rely on the other party to consummate the
transaction; if the other party fails to do so, the Portfolio may be
disadvantaged.

Securities Lending. The Portfolio is permitted to lend up to 30% of the total
value of its securities. These loans must be secured continuously by cash or
equivalent collateral or by a letter of credit at least equal to the market
value of the securities loaned plus accrued income. By lending its securities,
the Portfolio can increase its income by continuing to receive income on the
loaned securities as well as by the opportunity to receive interest on the
collateral. Any gain or loss in the market price of the borrowed securities
which occurs during the term of the loan inures to the Portfolio and its
investors. In lending securities to brokers, dealers and other organizations,
the Portfolio is subject to risk which, like those associated with other
extensions of credit, include delays in recovery and possible loss of rights in
the collateral should the borrower fail financially.

Foreign Investments. The Portfolio may invest in securities of foreign issuers
directly or in the form of American Depositary Receipts ("ADRs"), Global
Depositary Receipts ("GDRs"), European Depositary Receipts ("EDRs") or other
similar securities representing securities of foreign issuers. These securities
may not necessarily be denominated in the same currency as the securities they
represent. Designed for use in U.S. and European securities markets,
respectively, ADRs, GDRs and EDRs are alternatives to the purchase of the
underlying securities in their national markets and currencies. ADRs, GDRs and
EDRs are subject to the same risks as the foreign securities to which they
relate.

With respect to certain countries in which capital markets are either less
developed or not easily accessed, investments by the Portfolio may be made
through investment in other investment companies that in turn are authorized to
invest in the securities of such countries. Investment in other investment
companies is limited in amount by the 1940 Act, will involve the indirect
payment of a portion of the expenses, including advisory fees, of such other
investment companies and may result in a duplication of fees and expenses.

Options on Stocks. The Portfolio may write and purchase put and call options on
stocks. A call option gives the purchaser of the option the right to buy, and
obligates the writer to sell, the underlying stock at the exercise price at any
time during the option period. Similarly, a put option gives the purchaser of
the option the right to sell, and obligates the writer to buy, the underlying
stock at the exercise price at any time during the option period. A covered call
option, which is a call option with respect to which the Portfolio owns the
underlying stock, sold by the Portfolio exposes the Portfolio during the term of
the option to possible loss of opportunity to realize appreciation in the market
price of the underlying stock or to possible continued holding of a stock which
might otherwise have been sold to protect against depreciation in the market
price of the stock. A covered put option sold by the Portfolio exposes the
Portfolio during the term of the option to a decline in price of the underlying
stock. A put option sold by the Portfolio is covered when, among other things,
cash or liquid securities are placed in a segregated account to fulfill the
obligations undertaken.

To close out a position when writing covered options, the Portfolio may make a
"closing purchase transaction," which involves purchasing an option on the same
stock with the same exercise price and expiration date as the option which it
has previously written on the stock. The Portfolio will realize a profit or loss
for a closing purchase transaction if the amount paid to purchase an option is
less or more, as the case may be, than the amount received from the sale
thereof. To close out a position as a purchaser of an option, the Portfolio may
make a "closing sale transaction," which involves liquidating the Portfolio's
position by selling the option previously purchased.

The Portfolio intends to treat over-the-counter options ("OTC Options")
purchased and the assets used to "cover" OTC Options written as not readily
marketable and therefore subject to the limitations described in "Investment
Restrictions" in the Statement of Additional Information.

Options on Stock Indices. The Portfolio may purchase and write put and call
options on stock indices listed on stock exchanges. A stock index fluctuates
with changes in the market values of the stocks included in the index.

Options on stock indices are generally similar to options on stock except that
the delivery requirements are different. Instead of giving the right to take or
make delivery of stock at a specified price, an option on a stock index gives
the holder the right to receive a cash "exercise settlement amount" equal to (a)
the amount, if any, by which the fixed exercise price of the option exceeds (in
the case of a put) or is less than (in the case of a call) the closing value of
the underlying index on the date of exercise, multiplied by (b) a fixed "index
multiplier." Receipt of this cash amount will depend upon the closing level of
the stock index upon which the option is based being greater than, in the case
of a call, or less than, in the case of a put, the exercise price of the option.
The amount of cash received will be equal to such difference between the closing
price of the index and the exercise price of the option expressed in dollars
times a specified multiple. The writer of the option is obligated, in return for
the premium received, to make delivery of this amount. The writer may offset its
position in stock index options prior to expiration by entering into a closing
transaction on an exchange or the option may expire unexercised.

Because the value of an index option depends upon movements in the level of the
index rather than the price of a particular stock, whether the Portfolio will
realize a gain or loss from the purchase or writing of options on an index
depends upon movements in the level of stock prices in the stock market
generally or, in the case of certain indices, in an industry or market segment,
rather than movements in the price of a particular stock. Accordingly,
successful use by the Portfolio of options on stock indices will be subject to
Bankers Trust's ability to predict correctly movements in the direction of the
stock market generally or of a particular industry. This requires different
skills and techniques than predicting changes in the price of individual stocks.

Futures Contracts on Stock Indices. The Portfolio may enter into contracts
providing for the making and acceptance of a cash settlement based upon changes
in the value of an index of securities ("Futures Contracts"). This investment
technique is designed only to hedge against anticipated future change in general
market prices which otherwise might either adversely affect the value of
securities held by the Portfolio or adversely affect the prices of securities
which are intended to be purchased at a later date for the Portfolio. A Futures
Contract may also be entered into to close out or offset an existing futures
position.

In general, each transaction in Futures Contracts involves the establishment of
a position which will move in a direction opposite to that of the investment
being hedged. If these hedging transactions are successful, the futures
positions taken for the Portfolio will rise in value by an amount which
approximately offsets the decline in value of the portion of the Portfolio's
investments that are being hedged. Should general market prices move in an
unexpected manner, the full anticipated benefits of Futures Contracts may not be
achieved or a loss may be realized.

Although Futures Contracts would be entered into for hedging purposes only, such
transactions do involve certain risks. These risks could include a lack of
correlation between the Futures Contract and the equity market being hedged, a
potential lack of liquidity in the secondary market and incorrect assessments of
market trends which may result in poorer overall performance than if a Futures
Contract had not been entered into.

Brokerage costs will be incurred and "margin" will be required to be posted and
maintained as a good-faith deposit against performance of obligations under
Futures Contracts written for the Portfolio. The Portfolio may not purchase or
sell a Futures Contract if immediately thereafter its margin deposits on its
outstanding Futures Contracts would exceed 5% of the market value of the
Portfolio's total assets.

Options on Futures Contracts. The Portfolio may invest in options on such
Futures Contracts for similar purposes.

Foreign Currency Exchange Transactions. Because the Portfolio may buy and sell
securities denominated in currencies other than the U.S. dollar and receives
interest, dividends and sale proceeds in currencies other than the U.S. dollar,
the Portfolio from time to time may enter into foreign currency exchange
transactions to convert to and from different foreign currencies and to convert
foreign currencies to and from the U.S. dollar. The Portfolio either enters into
these transactions on a spot (i.e., cash) basis at the spot rate prevailing in
the foreign currency exchange market or uses forward contracts to purchase or
sell foreign currencies.

A forward foreign currency exchange contract is an obligation by the Portfolio
to purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract. Forward foreign currency exchange
contracts establish an exchange rate at a future date. These contracts are
transferable in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. A forward foreign currency
exchange contract generally has no deposit requirement and is traded at a net
price without commission. The Portfolio maintains with its custodian a
segregated account of high grade liquid assets in an amount at least equal to
its obligations under each forward foreign currency exchange contract. Neither
spot transactions nor forward foreign currency exchange contracts eliminate
fluctuations in the prices of the Portfolio's securities or in foreign exchange
rates, or prevent loss if the prices of these securities should decline.

The Portfolio may enter into foreign currency hedging transactions in an attempt
to protect against changes in foreign currency exchange rates between the trade
and settlement dates of specific securities transactions or changes in foreign
currency exchange rates that would adversely affect a portfolio position or an
anticipated investment position. Since consideration of the prospect for
currency parities will be incorporated into Bankers Trust's long-term investment
decisions, the Portfolio will not routinely enter into foreign currency hedging
transactions with respect to security transactions; however, Bankers Trust
believes that it is important to have the flexibility to enter into foreign
currency hedging transactions when it determines that the transactions would be
in the Portfolio's best interest. Although these transactions tend to minimize
the risk of loss due to a decline in the value of the hedged currency, at the
same time they tend to limit any potential gain that might be realized should
the value of the hedged currency increase. The precise matching of the forward
contract amounts and the value of the securities involved will not generally be
possible because the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of such securities
between the date the forward contract is entered into and the date it matures.
The projection of currency market movements is extremely difficult, and the
successful execution of a hedging strategy is highly uncertain.

Options on Foreign Currencies. The Portfolio may write covered put and call
options and purchase put and call options on foreign currencies for the purpose
of protecting against declines in the dollar value of portfolio securities and
against increases in the dollar cost of securities to be acquired. The Portfolio
may use options on currency to cross-hedge, which involves writing or purchasing
options on one currency to hedge against changes in exchange rates for a
different, but related currency. As with other types of options, however, the
writing of an option on foreign currency will constitute only a partial hedge up
to the amount of the premium received, and the Portfolio could be required to
purchase or sell foreign currencies at disadvantageous exchange rates, thereby
incurring losses. The purchase of an option on foreign currency may be used to
hedge against fluctuations in exchange rates although, in the event of exchange
rate movements adverse to the Portfolio's position, it may forfeit the entire
amount of the premium plus related transaction costs. In addition, the Portfolio
may purchase call options on currency when the Adviser anticipates that the
currency will appreciate in value.

There is no assurance that a liquid secondary market on an options exchange will
exist for any particular option, or at any particular time. If the Portfolio is
unable to effect a closing purchase transaction with respect to covered options
it has written, the Portfolio will not be able to sell the underlying currency
or dispose of assets held in a segregated account until the options expire or
are exercised. Similarly, if the Portfolio is unable to effect a closing sale
transaction with respect to options it has purchased, it would have to exercise
the options in order to realize any profit and will incur transaction costs upon
the purchase or sale of underlying currency. The Portfolio pays brokerage
commissions or spreads in connection with its options transactions.

As in the case of forward contracts, certain options on foreign currencies are
traded over-the-counter and involve liquidity and credit risks which may not be
present in the case of exchange-traded currency options. The Portfolio's ability
to terminate over-the-counter options ("OTC Options") will be more limited than
with exchange-traded options. It is also possible that broker-dealers
participating in OTC Options transactions will not fulfill their obligations.
Until such time as the staff of the SEC changes its position, the Portfolio will
treat purchased OTC Options and assets used to cover written OTC Options as
illiquid securities. With respect to options written with primary dealers in
U.S. Government securities pursuant to an agreement requiring a closing purchase
transaction at a formula price, the amount of illiquid securities may be
calculated with reference to the repurchase formula.

All options that the Portfolios write will be covered under applicable
requirements of the SEC.

The Portfolio will write and purchase options only to the extent permitted by
the policies of state securities authorities in states where shares of the Fund
are qualified for offer and sale.

There can be no assurance that the use of these portfolio strategies will be
successful.

Repurchase Agreements. In a repurchase agreement the Portfolio buys a security
and simultaneously agrees to sell it back at a higher price. In the event of the
bankruptcy of the other party to either a repurchase agreement or a securities
loan, the Portfolio could experience delays in recovering either its cash or the
securities it lent. To the extent that, in the meantime, the value of the
securities repurchased had decreased or the value of the securities lent had
increased, the Portfolio could experience a loss. In all cases, Bankers Trust
must find the creditworthiness of the other party to the transaction
satisfactory. A repurchase agreement is considered a collateralized loan under
the 1940 Act.

Asset Coverage. To assure that the Portfolio's use of futures and related
options, as well as when-issued and delayed-delivery securities and foreign
currency exchange transactions, are not used to achieve investment leverage, the
Portfolio will cover such transactions, as required under applicable
interpretations of the SEC, either by owning the underlying securities or by
establishing a segregated account with the Portfolio's custodian containing high
grade liquid debt securities in an amount at all times equal to or exceeding the
Portfolio's commitment with respect to these instruments or contracts.

<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

INVESTMENT ADVISER OF THE PORTFOLIO AND ADMINISTRATOR
BANKERS TRUST COMPANY

DISTRIBUTOR
SIGNATURE BROKER-DEALER SERVICES, INC.

CUSTODIAN AND TRANSFER AGENT
BANKERS TRUST COMPANY

INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.

COUNSEL
WILLKIE FARR & GALLAGHER

.............................

No person has been authorized to give any information or to make any
representations other than those contained in the Trust's Prospectuses, its
Statements of Additional Information or the Trust's official sales literature
in connection with the offering of the Trust's shares and, if given or made,
such other information or representations must not be relied on as having been
authorized by the Trust. This Prospectus does not constitute an offer in any
state in which, or to any person to whom, such offer may not lawfully be made.

............................
<PAGE>

BT INVESTMENT FUNDS

International Equity Fund

PROSPECTUS: January 29, 1996

Please read this Prospectus o Seeks long-term capital
carefully before investing and appreciation primarily from
retain it for future reference. It non-U.S. equities, or other
contains important information securities with equity
about the Fund that you should know characteristics.
and can refer to in deciding
whether the Fund's goals match your
own.

SHARES OF THE FUND ARE NOT DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, BANKERS TRUST COMPANY
AND THE SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
AN INVESTMENT IN THE FUND IS
SUBJECT TO RISK THAT MAY CAUSE THE
VALUE OF THE INVESTMENT TO
FLUCTUATE, AND WHEN THE INVESTMENT
IS REDEEMED, THE VALUE MAY BE
HIGHER OR LOWER THAN THE AMOUNT
ORIGINALLY INVESTED BY THE
INVESTOR.

<PAGE>

TABLE OF CONTENTS
- ------------------------------------------------------------------------------
PAGE
..............................................................................
Summary of Fund Expenses 3
Fund Financial Highlights 5
Investment Objective and Policies 6
Risk Factors; Matching the Fund to Your Investment Needs 8
Net Asset Value 12
Purchase and Redemption of Shares 13
Dividends, Distributions and Taxes 16
Performance Information and Reports 17
Management of the Trust and Portfolio 17
Additional Information 22
- ------------------------------------------------------------------------------

<PAGE>

SUMMARY OF FUND EXPENSES
The following table provides (i) a summary of expenses relating to purchases
and sales of the shares of the International Equity Fund (the "Fund") and the
annual operating expenses of the Fund and the expenses of the International
Equity Portfolio (the "Portfolio"), as a percentage of average net assets of
the Fund and (ii) an example illustrating the dollar cost of such expenses on
a $1,000 investment in the Fund. THE TRUSTEES OF THE BT INVESTMENT FUNDS (THE
"TRUST") BELIEVE THAT THE AGGREGATE PER SHARE EXPENSES OF THE FUND AND THE
PORTFOLIO WILL BE LESS THAN OR APPROXIMATELY EQUAL TO THE EXPENSES WHICH THE
FUND WOULD INCUR IF THE TRUST RETAINED THE SERVICES OF AN INVESTMENT ADVISER
AND THE INVESTABLE ASSETS ("ASSETS") OF THE FUND WERE INVESTED DIRECTLY IN THE
TYPE OF SECURITIES BEING HELD BY THE PORTFOLIO.
- --------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSES
(as a percentage of the average daily net assets of the Fund)
................................................................................
Investment advisory fee (after reimbursements of waivers) 0.56%
12b-1 fees 0.00
Other expenses (after reimbursements or waivers) 0.94
................................................................................
Total operating expenses (after reimbursements or waivers) 1.50%
................................................................................
EXAMPLE 1 year 3 years 5 years 10 years
................................................................................
You would pay the following expenses
on a $1,000 investment, assuming:
(1) 5% annual return and (2)
redemption at the end of
each time period $15 $47 $82 $179
- --------------------------------------------------------------------------------

The expense table and the example above show the costs and expenses that an
investor will bear directly or indirectly as a shareholder of the Fund. While
reimbursement of distribution expenses in amounts up to 0.20% of average net
assets are authorized to be made pursuant to the Plan of Distribution under Rule
12b-1 of the Investment Company Act of 1940, as amended (the "1940 Act"), it is
not expected that any payments will actually be made under that plan in the
foreseeable future. Bankers Trust Company ("Bankers Trust") has voluntarily
agreed to waive a portion of its investment advisory fee. Without such waiver,
the Portfolio's investment advisory fee would be equal to 0.65%. The expense
table and the example reflect a voluntary undertaking by Bankers Trust or
Signature Broker-Dealer Services, Inc. ("Signature") to waive or reimburse
expenses such that the total operating expenses will not exceed 1.50% of the
Fund's average net assets annually. In the absence of this undertaking, for the
period from January 1, 1995 to September 30, 1995, the total operating expenses
would have been equal to approximately 1.83% of the Fund's average net assets
annually. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Moreover, while each example assumes a 5% annual return, actual performance will
vary and may result in a return greater or less than 5%.

The Fund is sold by Signature as the Trust's distributor (the "Distributor") to
customers of Bankers Trust or to customers of another bank or a dealer or other
institution that has a sub-shareholder servicing agreement with Bankers Trust
(along with Bankers Trust, a "Servicing Agent"). Some Service Agents may impose
certain conditions on their customers in addition to or different from those
imposed by the Fund and may charge their customers a direct fee for their
services. Each Service Agent has agreed to transmit to shareholders who are its
customers appropriate disclosures of any fees that it may charge them directly.

For more information with respect to the expenses of the Fund and the Portfolio
see "Management of the Trust and Portfolio" herein.

<PAGE>

FUND FINANCIAL HIGHLIGHTS
The following table shows selected data for a share outstanding, total
investment return, ratios to average net assets and other supplemental data of
the Fund for each period indicated and has been audited by Coopers & Lybrand
L.L.P., the Fund's independent accountants, whose report thereon appears in
the Fund's Annual Report which is incorporated by reference in the Fund's
Statement of Additional Information.
<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
- -------------------------------------------------------------------------------------------
*Annualized
+ Less Than $0.01 Per Share
</TABLE>

<PAGE>

INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is long-term capital appreciation from
investment in foreign equity securities (or other securities with equity
characteristics); the production of any current income is incidental to this
objective.

The Trust seeks to achieve the investment objective of the Fund by investing all
the Assets of the Fund in the Portfolio, which has the same investment objective
as the Fund. There can be no assurances that the investment objective of either
the Fund or the Portfolio will be achieved. The investment objective of each of
the Fund and the Portfolio is not a fundamental policy and may be changed upon
notice to but without the approval of the Fund's shareholders or the Portfolio's
investors, respectively. See "Special Information Concerning Master-Feeder Fund
Structure" on page 11 herein.

INTERNATIONAL EQUITY PORTFOLIO
The Portfolio invests primarily in the equity securities of foreign issuers,
consisting of common stock and other securities with equity characteristics.
These issuers are primarily established companies based in developed countries
outside the United States. However, the Portfolio may also invest in securities
of issuers in underdeveloped countries. Investments in these countries will be
based on an acceptable degree of risk in anticipation of superior returns. Under
normal circumstances, the Portfolio will invest at least 65% of the value of its
total assets in the equity securities of issuers based in at least three
countries other than the United States. For further discussion of the unique
risks associated with investing in foreign securities in both developed and
underdeveloped countries, see "Risk Factors; Matching the Fund to Your
Investment Needs," "Additional Information" herein and the Statement of
Additional Information.

The Portfolio's investments will generally be diversified among several
geographic regions and countries. Criteria for determining the appropriate
distribution of investments among various countries and regions include the
prospects for relative growth among foreign countries, expected levels of
inflation, government policies influencing business conditions, the outlook for
currency relationships and the range of alternative opportunities available to
international investors.

In countries and regions with well-developed capital markets where more
information is available, Bankers Trust will seek to select individual
investments for the Portfolio. Criteria for selection of individual securities
include the issuer's competitive position, prospects for growth, managerial
strength, earnings quality, underlying asset value, relative market value and
overall marketability. The Portfolio may invest in securities of companies
having various levels of net worth, including smaller companies whose securities
may be more volatile than securities offered by larger companies with higher
levels of net worth.

In other countries and regions where capital markets are underdeveloped or not
easily accessed and information is difficult to obtain, the Portfolio may choose
to invest only at the market level. Here, the Portfolio may seek to achieve
country exposure through use of options or futures based on an established local
index. Similarly, country exposure may also be achieved through investments in
other registered investment companies. Restrictions on both these types of
investments are fully explained herein and in the Statement of Additional
Information.

The remainder of the Portfolio's assets will be invested in dollar and non-
dollar denominated short-term instruments. These investments are subject to the
conditions described in "Short-Term Instruments" below.

Equity Investments. The Portfolio invests primarily in common stock and other
securities with equity characteristics. For purposes of the Portfolio's policy
of investing at least 65% of the value of its total assets in the equity
securities of foreign issuers, equity securities are defined as common stock,
preferred stock, trust or limited partnership interests, rights and warrants,
and convertible securities, consisting of debt securities or preferred stock
that may be converted into common stock or that carry the right to purchase
common stock. The Portfolio invests in securities listed on foreign or domestic
securities exchanges and securities traded in foreign or domestic
over-the-counter markets and may invest in restricted or unlisted securities.

ADDITIONAL INVESTMENT TECHNIQUES
The Portfolio may also utilize the following investments and investment
techniques and practices: American Depositary Receipts, Global Depositary
Receipts and European Depositary Receipts, when-issued and delayed delivery
securities, Rule 144A securities, securities lending, repurchase agreements,
foreign currency exchange transactions, options on foreign currencies, options
on stocks, options on foreign stock indices, futures contracts on foreign stock
indices and options on futures contracts. See "Additional Information" for
further information.

RISK FACTORS; MATCHING THE FUND
TO YOUR INVESTMENT NEEDS
By itself, the Fund does not constitute a balanced investment plan; the Fund
seeks long-term capital appreciation from investment primarily in the equity
securities (or other securities with equity characteristics) of foreign issuers.
Changes in domestic and foreign interest rates may affect the value of the
Portfolio's investments, and rising interest rates can be expected to reduce the
Fund's share value. A description of a number of investments and investment
techniques available to the Portfolio, including foreign investments and the use
of options and futures, and certain risks associated with these investments and
techniques is included under "Additional Information." The Fund's share price
and total return fluctuate and your investment may be worth more or less than
your original cost when you redeem your shares.

RISK OF INVESTING IN FOREIGN SECURITIES
Investors should realize that investing in securities of foreign issuers
involves considerations not typically associated with investing in securities of
companies organized and operated in the United States. Although the Portfolio
intends to invest primarily in securities of established companies based in
developed countries, investors should realize that the value of the Portfolio's
investments may be adversely affected by changes in political or social
conditions, diplomatic relations, confiscatory taxation, expropriation,
nationalization, limitation on the removal of funds or assets, or imposition of
(or change in) exchange control or tax regulations in those foreign countries.
In addition, changes in government administrations or economic or monetary
policies in the United States or abroad could result in appreciation or
depreciation of portfolio securities and could favorably or unfavorably affect
the Portfolio's operations. Furthermore, the economies of individual foreign
nations may differ from the U.S. economy, whether favorably or unfavorably, in
areas such as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments position; it may
also be more difficult to obtain and enforce a judgment against a foreign
issuer. In general, less information is publicly available with respect to
foreign issuers than is available with respect to U.S. companies. Most foreign
companies are also not subject to the uniform accounting and financial reporting
requirements applicable to issuers in the United States. Any foreign investments
made by the Portfolio must be made in compliance with U.S. and foreign currency
restrictions and tax laws restricting the amounts and types of foreign
investments.

The Portfolio may invest in the securities of issuers based in underdeveloped
countries, including those in Eastern Europe. Investment in securities of
issuers based in underdeveloped countries entails all of the risks of investing
in securities of foreign issuers outlined in this section to a heightened
degree. These heightened risks include: (i) greater risks of expropriation,
confiscatory taxation, nationalization, and less social, political and economic
stability; (ii) the smaller size of the market for such securities and a low or
nonexistent volume of trading, resulting in lack of liquidity and in price
volatility; (iii) certain national policies which may restrict the Portfolio's
investment opportunities including restrictions on investing in issuers or
industries deemed sensitive to relevant national interests; and (iv) in the case
of Eastern Europe, the absence of developed capital market and legal structures
governing private or foreign investment and private property and the possibility
that recent favorable economic and political developments could be slowed or
reversed by unanticipated events. The Portfolio will not invest more than 5% of
the value of its total assets in securities of issuers based in Eastern Europe.

Because foreign securities generally are denominated and pay dividends or
interest in foreign currencies, and the Portfolio holds various foreign
currencies from time to time, the value of the net assets of the Portfolio as
measured in U.S. dollars will be affected favorably or unfavorably by changes in
exchange rates. Generally, the Portfolio's currency exchange transactions will
be conducted on a spot (i.e., cash) basis at the spot rate prevailing in the
currency exchange market. The cost of the Portfolio's currency exchange
transactions will generally be the difference between the bid and offer spot
rate of the currency being purchased or sold. In order to protect against
uncertainty in the level of future foreign currency exchange rates, the
Portfolio is authorized to enter into certain foreign currency exchange
transactions. See "Additional Information." In addition, while the volume of
transactions effected on foreign stock exchanges has increased in recent years,
in most cases it remains appreciably below that of the New York Stock Exchange
Inc. (the "NYSE"). Accordingly, the Portfolio's foreign investments may be less
liquid and their prices may be more volatile than comparable investments in
securities of U.S. companies. Moreover, the settlement periods for foreign
securities, which are often longer than those for securities of U.S. issuers,
may affect portfolio liquidity. In buying and selling securities on foreign
exchanges, the Portfolio normally pays fixed commissions that are generally
higher than the negotiated commissions charged in the United States. In
addition, there is generally less government supervision and regulation of
securities exchanges, brokers and issuers in foreign countries than in the
United States.

PORTFOLIO TURNOVER
Bankers Trust intends to manage the Portfolio actively in pursuit of its
investment objective. The Portfolio does not expect to trade in securities for
short-term profits but, when circumstances warrant, securities may be sold
without regard to the length of time held. The Portfolio's portfolio turnover
rate for the period January 1, 1995 to September 30, 1995, the years ended
December 31, 1994 and 1993 and the period from August 4, 1992 (commencement of
operations) to December 31, 1992 was 21%, 15%, 17% and 7%, respectively.

DERIVATIVES
The Portfolio may invest in various instruments that are commonly known as
derivatives. Generally, a derivative is a financial arrangement, the value of
which is based on, or "derived" from, a traditional security, asset or market
index. Some "derivatives" such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities. There are,
in fact, many different types of derivatives and many different ways to use
them. There are a range of risks associated with those uses. Futures and options
are commonly used for traditional hedging purposes to attempt to protect a fund
from exposure to changing interest rates, securities prices or currency exchange
rates and for cash management purposes as a low cost method of gaining exposure
to a particular securities market without investing directly in those
securities. However, some derivatives are used for leverage, which tends to
magnify the effects of an instrument's price changes as market conditions
change. Leverage involves the use of a small amount of money to control a large
amount of financial assets and can, in some circumstances, lead to significant
losses. The Adviser will use derivatives only in circumstances where the Adviser
believes they offer the most economic means of improving the risk/reward profile
of the Portfolio. Derivatives will not be used to increase portfolio risk above
the level that could be achieved using only traditional investment securities or
to acquire exposure to changes in the value of assets or indices that by
themselves would not be purchased for the Portfolio. The use of derivatives for
non-hedging purposes may be considered speculative. A description of the
derivatives that the Portfolio may use and some of their associated risks is
found under "Additional Information."

SPECIAL INFORMATION CONCERNING MASTER-FEEDER FUND STRUCTURE
Unlike other open-end management investment companies (mutual funds) which
directly acquire and manage their own portfolio securities, the Fund seeks to
achieve its investment objective by investing all of its Assets in the
Portfolio, a separate registered investment company with the same investment
objective as the Fund. Therefore, an investor's interest in the Portfolio's
securities is indirect. In addition to selling a beneficial interest to the
Fund, the Portfolio may sell beneficial interests to other mutual funds or
institutional investors. Such investors will invest in the Portfolio on the same
terms and conditions and will pay a proportionate share of the Portfolio's
expenses. However, the other investors investing in the Portfolio are not
required to sell their shares at the same public offering price as the Fund due
to variations in sales commissions and other operating expenses. Therefore,
investors in the Fund should be aware that these differences may result in
differences in returns experienced by investors in the different funds that
invest in the Portfolio. Such differences in returns are also present in other
mutual fund structures. Information concerning other holders of interests in the
Portfolio is available from Bankers Trust at (800) 730- 1313.

The master-feeder structure has been developed relatively recently, so
shareholders should carefully consider this investment approach.

Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the Portfolio, the remaining funds may experience higher pro rata
operating expenses, thereby producing lower returns (however, this possibility
exists as well for traditionally structured funds which have large institutional
investors). Additionally, the Portfolio may become less diverse, resulting in
increased portfolio risk. Also, funds with a greater pro rata ownership in the
Portfolio could have effective voting control of the operations of the
Portfolio. Except as permitted by the SEC, whenever the Trust is requested to
vote on matters pertaining to the Portfolio, the Trust will hold a meeting of
shareholders of the Fund and will cast all of its votes in the same proportion
as the votes of the Fund's shareholders. Fund shareholders who do not vote will
not affect the Trust's votes at the Portfolio meeting. The percentage of the
Trust's votes representing the Fund's shareholders not voting will be voted by
the Trustees or officers of the Trust in the same proportion as the Fund
shareholders who do, in fact, vote.

Certain changes in the Portfolio's investment objectives, policies or
restrictions may require the Fund to withdraw its interest in the Portfolio. Any
such withdrawal could result in a distribution "in kind" of portfolio securities
(as opposed to a cash distribution from the Portfolio). If securities are
distributed, the Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, the distribution in kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of
the Fund. Notwithstanding the above, there are other means for meeting
redemption requests, such as borrowing. The Fund may withdraw its investment
from the Portfolio at any time, if the Board of Trustees of the Trust determines
that it is in the best interests of the shareholders of the Fund to do so. Upon
any such withdrawal, the Board of Trustees of the Trust would consider what
action might be taken, including the investment of all the Assets of the Fund in
another pooled investment entity having the same investment objective as the
Fund or the retaining of an investment adviser to manage the Fund's assets in
accordance with the investment policies described below with respect to the
Portfolio.

The Fund's investment objective is not a fundamental policy and may be changed
upon notice to but without the approval of the Fund's shareholders. If there is
a change in the Fund's investment objective, the Fund's shareholders should
consider whether the Fund remains an appropriate investment in light of their
then-current needs. The investment objective of the Portfolio is also not a
fundamental policy. Shareholders of the Fund will receive 30 days prior written
notice with respect to any change in the investment objective of the Fund or the
Portfolio. See "Investment Objective and Policies" for a description of the
fundamental policies of the Portfolio that cannot be changed without approval by
the holders of "a majority of the outstanding voting securities" (as defined in
the 1940 Act) of the Portfolio.

For descriptions of the investment objective, policies and restrictions of the
Portfolio, see "Investment Objective and Policies." For descriptions of the
management of the Portfolio, see "Management of the Trust and Portfolio" herein
and in the Statement of Additional Information. For descriptions of the expenses
of the Portfolio, see "Management of the Trust and Portfolio" herein.

NET ASSET VALUE
The net asset value per share of the Fund is calculated on each day on which the
NYSE is open (each such day being a "Valuation Day"). The NYSE is currently open
on each day, Monday through Friday, except (a) January 1st, Presidents' Day (the
third Monday in February), Good Friday, Memorial Day (the last Monday in May),
July 4th, Labor Day (the first Monday in September), Thanksgiving Day (the last
Thursday in November) and December 25th; and (b) the preceding Friday or the
subsequent Monday when one of the calendar determined holidays falls on a
Saturday or Sunday, respectively.

PURCHASE AND REDEMPTION OF SHARES
PURCHASE OF SHARES
The Trust accepts purchase orders for shares of the Fund at the net asset value
per share of the Fund next determined on each Valuation Day. See "Net Asset
Value" above. There is no sales charge on the purchase of shares, but costs of
distributing shares of the Fund may be reimbursed from its assets, as described
herein. Service Agents may impose initial and subsequent investment minimums
that differ from the amounts presented in the "Minimum Investment" table below.
Shares of the Fund may be purchased in only those states where they may be
lawfully sold.

Purchase orders for shares of the Fund that are received by a Service Agent and
transmitted to Bankers Trust, as the Trust's transfer agent (the "Transfer
Agent"), prior to the Valuation Time (currently 4:00 p.m., New York time or
earlier, should the NYSE close earlier) on any Valuation Day will be effective
at that day's Valuation Time. The Trust and Signature reserve the right to
reject any purchase order.

Shares must be purchased in accordance with procedures established by the
Transfer Agent and Service Agents, including Bankers Trust, in connection with
customers' accounts. It is the responsibility of each Service Agent to transmit
to the Transfer Agent purchase and redemption orders and to transmit to Bankers
Trust as the Trust's custodian (the "Custodian") purchase payments on behalf of
its customers in a timely manner, and a shareholder must settle with the Service
Agent his or her entitlement to an effective purchase or redemption order as of
a particular time. Because Bankers Trust is the Custodian and Transfer Agent of
the Trust, funds may be transferred directly from or to a customer's account
with Bankers Trust to or from the Fund without incurring the additional costs or
delays associated with the wiring of federal funds.

Certificates for shares will not be issued. Each shareholder's account will be
maintained by a Service Agent or the Transfer Agent.

TO OPEN AN ACCOUNT $2,500
For retirement accounts $ 500
Through automatic investment plans $1,000

TO ADD TO AN ACCOUNT $ 250
For retirement accounts $ 100
Through automatic investment plan $ 100

MINIMUM BALANCE $1,000
For retirement accounts None

REDEMPTION OF SHARES
Shareholders may redeem shares at the net asset value per share next determined
on each Valuation Day. Redemption requests should be transmitted by customers in
accordance with procedures established by the Transfer Agent and the
shareholder's Service Agent. Redemption requests for shares of the Fund received
by the Service Agent and transmitted to the Transfer Agent prior to the
Valuation Time (currently 4:00 p.m., New York time or earlier, should the NYSE
close earlier) on each Valuation Day will be effective at that day's Valuation
Time and the redemption proceeds normally will be delivered to the shareholder's
account with the Service Agent on the next day, but in any event within seven
calendar days following receipt of the request.

Service Agents may allow redemptions or exchanges by telephone and may disclaim
liability for following instructions communicated by telephone that the Service
Agent reasonably believes to be genuine. The Service Agent must provide the
investor with an opportunity to choose whether or not to utilize the telephone
redemption or exchange privilege. The Service Agent must employ reasonable
procedures to confirm that instructions communicated by telephone are genuine.
If the Service Agent does not do so, it may be liable for any losses due to
unauthorized or fraudulent instructions. Such procedures may include, among
others, requiring some form of personal identification prior to acting upon
instructions received by telephone, providing written confirmation of such
transactions and/or tape recording of telephone instructions.