<PAGE>
- BT INVESTMENT FUNDS -
UTILITY FUND
SEMI-ANNUAL REPORT
-------------------------------------------------------------
JUNE - 1996
<PAGE>
- --------------------------------------------------------------------------------
UTILITY FUND
TABLE OF CONTENTS
- ----------------------------------------------------------------------
<TABLE>
<S> <C>
LETTER TO SHAREHOLDERS.................................................... 3
BT INVESTMENT UTILITY FUND
Statement of Assets and Liabilities................................... 6
Statement of Operations............................................... 6
Statements of Changes in Net Assets................................... 7
Financial Highlights.................................................. 7
Notes to Financial Statements......................................... 8
UTILITY PORTFOLIO
Schedule of Portfolio Investments..................................... 9
Statement of Assets and Liabilities................................... 10
Statement of Operations............................................... 10
Statements of Changes in Net Assets................................... 11
Financial Highlights.................................................. 11
Notes to Financial Statements......................................... 12
</TABLE>
2
<PAGE>
- --------------------------------------------------------------------------------
UTILITY FUND
LETTER TO SHAREHOLDERS
- ----------------------------------------------------------------------
We are pleased to present you with this newly-designed semi-annual report
for the BT Investment Funds
Utility Fund, providing a more detailed review of the market,
the portfolio, and our outlook -- all in an easier-to-read
format. Of course, we continue to include a complete
financial summary of the Fund's operations and a listing of
the Portfolio's holdings.
The BT Investment Funds Utility Fund (the "Fund")
returned 0.90% for the six months ended June 30, 1996,
outperforming its benchmark, the S&P Utility Index, which had
a return of 0.05% for the same time period. Since its inception on August 3,
1992, the Fund had a cumulative return of 31.92%.
- --------------------------------------------
OBJECTIVE
Seeks high level of
current income with
the preservation of
capital. Also seeks
to achieve growth
of income and
capital appreciation,
but only when
consistent with the
primary objective.
- --------------------------------------------
MARKET ACTIVITY
Much of the utility industry has begun to undergo a process of dramatic
change over the past six months. For
example, the electric utility sector is moving from a
vertically integrated, monopoly industry to one that is
expected to be significantly restructured and very
competitive over the next five to ten years. Clearly
reflecting the uncertainties and risks associated with this
transition, electric utility price performance is down about
1% year-to-date, as measured by the S&P Utility Index. The
electric utility sector was also impacted early in 1996 by
rising interest rates.
- --------------------------------------------
INVESTMENT
INSTRUMENTS
Equity securities
of public utility
companies including
the electric,
natural gas, water,
telephone, telegraph
and other public
communication
sectors.
- --------------------------------------------
Still, electric prices posted a gain in the month of June, most likely
reflecting investors growing appetite for defensive issues. Near-term
fundamentals remain stable, cost reductions continue to buoy earnings, and
second quarter earnings comparisons are expected to be relatively easy.
The telecommunications industry is also going through a transition,
following new federal legislation, known as the Telecom Bill, which was passed
by both the House and the Senate on February 1, 1996. This sweeping bipartisan
legislation allows long distance carriers to compete in the local telephone
market nationwide and ultimately allows the incumbent local exchange carriers to
enter into the long distance industry. Needless to say, price performance has
reflected the changing dynamics. The regional Bell operating companies and GTE,
for example, were down 8.7% in the first quarter and up 4.6% in the second
quarter. In general, the larger local exchange carriers continued to wring out
somewhat better results through cost cutting and enhanced demand growth, and
cellular operations continued to enjoy expanding margins, though slower
subscriber growth. Long distance carriers' results have been mixed, depending on
their core strategies. For the past six months, their overall access charges
fell, unit volume grew 10%, and pricing was stable.
The natural gas sector's fundamentals remain very positive, with a favorable
supply/demand imbalance, strong storage refill demand, and high prices.
INVESTMENT REVIEW
The Fund outperformed the S&P Utility Index for the past six months
primarily due to its sector weighting strategy. The Fund stayed overweighted in
the natural gas sector.
During the last six months of 1995, we had significantly increased the
Fund's holdings in telecommunications, in response to its top performance and
based on the belief that the final Telecom Bill would benefit telephone stocks.
Given the many unresolved issues and resulting volatility during the first half
of this year, however, we moved to an underweighted position in the
telecommunications sector and focused on specific high quality stock selection.
- --------------------------------------------
TEN LARGEST STOCK HOLDINGS
<TABLE>
<S> <C>
Ameritech Corp. Frontier Corp.
..............................................
GTE Corp. MCN Corp.
..............................................
BellSouth Corp. Enron Corp.
..............................................
SBC Communications
Inc. Williams Cos.
..............................................
Bell Atlantic Corp. Southern Co.
</TABLE>
We moved from an underweighted to a neutral position in electric utilities,
based on the Federal Reserve Board's cut in interest rates at the end of
January, which, in turn, led to general market expectations of a near-term
recession that would drive interest rates even lower. Instead, surprising
employment data and evidence of a slowly but steadily accelerating economy
quickly resulted
3
<PAGE>
- --------------------------------------------------------------------------------
UTILITY FUND
- --------------------------------------------------------------------------------
in interest rates moving up without a change in monetary policy. Even so, the
individual electric utility stocks in the portfolio had a positive impact on
Fund performance.
- --------------------------------------------
DIVERSIFICATION OF PORTFOLIO INVESTMENTS
BY INDUSTRY AS OF JUNE 30, 1996
(PERCENTAGES ARE BASED ON MARKET VALUE)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Other 2.15%
Telecommunications 41.59%
Utility - Gas 17.06%
U.S. Treasury Bill 0.96%
Utility - Electric 38.24%
</TABLE>
At the end of the semi-annual period, the Fund was 38.24% invested in
electric utilities, 17.06% invested in natural gas, and 41.59% invested in
telecommunications. Due to a change in the S&P Utility Index, whereby it
eliminated the telecommunications sector as of July 1, 1996, the Fund will be
looking at a modified benchmark for attribution comparisons going forward.
LOOKING AHEAD
For now, no meaningful shifts in Fund sector allocation are anticipated in
the remainder of 1996. In the electric utility sector, we believe near-term
economic optimism will probably have to wane before the sector can outperform.
On the other hand, as investors become more defensive in their stock market
positions in general, the attractive income and yield characteristics of these
utilities may outweigh any negative impact of a rising interest rate
environment, and we may actually see this sector outperform in the last half of
the year.
Looking further ahead, many electric utility companies will realign and/or
disaggregate their businesses, as some move to exit the generation business and
others exit the distribution business. Still others may merge to create larger
companies. We further believe that electric utilities will continue to seek new
business opportunities in the gas industry, international power industry, power
marketing, and other businesses to develop new products and services for its
electric customers. Given the big picture, we intend to remain neutrally
weighted in electric utilities for now, but will focus on those companies that
are well positioned for a deregulated market, i.e. those with earnings growth
potential, superior competitive positioning, a strong financial condition, and
minimal regulatory exposure.
With natural gas fundamentals overwhelmingly positive, we intend to continue
to overweight this sector. Upsides for this sector include storage levels over
30% below normal levels as the summer injection season continues, hot weather in
several regions of the country, and downed nuclear plants. We also anticipate
that supply additions, including those from Canada's Northern Border Expansion
project, will be tapped out through early 1998, prolonging the current
supply/demand imbalance for the next twelve months. And finally, analysts
maintain that the 1996 gas price forecast of $2.15/mcf, which is already well
above a 5-year range of $1.50-$1.70/mcf, will most likely prove conservative.
Given long distance telephone carriers' fundamentals over the past six
months, their earnings growth should be in the 10%-15% range over the next year
or so. There are also, no doubt, other significant opportunities in the
telecommunications industry, particularly in the local/long distance markets as
they deregulate. However, we believe many of the benefits are still a way off as
the FCC debates rules, and long distance carriers and regional Bell operating
companies argue over competitive rights. Given the changing dynamics of the
industry, telecommunications sector performance remains difficult to anticipate.
Thus the Fund will continue to concentrate on telecommunications companies with
strong fundamentals and competitive positioning.
We will, of course, continue to closely observe economic conditions and how
they affect the financial markets, as we seek to provide a high level of current
income.
* * *
We value your ongoing support of the Utility Fund and look forward to
serving your investment needs in the years ahead.
[SIG]
Jim Giblin
PORTFOLIO MANAGER OF THE UTILITY
PORTFOLIO
June 30, 1996
4
<PAGE>
UTILITY FUND
PERFORMANCE COMPARISON
The following graph illustrates the Fund's return versus the S&P Utility Index,
from August 31, 1992 to June 30, 1996, assuming a $10,000 initial investment:
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE
IN VALUE OF A $10,000
INVESTMENT IN THE
UTILITY FUND AND THE
S&P UTILITY INDEX
TOTAL RETURN
ENDED JUNE 30, 1996
One Year Since 8/3/92*
21.35 % 31.92 %
* The Fund's inception date
Investment return and principal value may
fluctuate so that shares, when redeemed,
may be worth more or less than their
original cost.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
UTILITY S&P UTILITY
FUND INDEX
<S> <C> <C>
8/31/92 10,000 10,000
9/30/92 9,970 10,072
12/31/92 10,215 10,327
3/31/93 11,004 11,441
6/30/93 11,239 11,712
9/30/93 11,784 12,532
12/31/93 11,343 11,818
3/31/94 10,526 10,842
6/30/94 10,059 10,839
9/30/94 10,223 10,890
12/31/94 10,019 10,879
3/31/95 10,415 11,630
6/30/95 10,839 12,494
9/30/95 11,829 13,895
12/31/95 13,036 15,353
3/31/96 12,750 14,623
6/30/96 13,153 15,361
</TABLE>
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
UTILITY FUND
STATEMENT OF ASSETS AND LIABILITIES JUNE, 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investment in Utility Portfolio, at Value.................... $ 8,481,306
Prepaid Expenses and Other................................... 9,696
Due from Bankers Trust....................................... 26,119
-----------
Total Assets..................................................... 8,517,121
-----------
LIABILITIES
Accrued Expenses and Other................................... 25,828
-----------
Total Liabilities................................................ 25,828
-----------
NET ASSETS ($.001 Par value per share, unlimited number of shares
of beneficial interest authorized)............................. $ 8,491,293
-----------
-----------
SHARES OUTSTANDING............................................... 745,985
-----------
-----------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE................... $ 11.38
-----------
-----------
COMPOSITION OF NET ASSETS
Paid in Capital.............................................. $ 9,959,917
Undistributed Net Investment Income.......................... 64,635
Accumulated Net Realized Loss from Investments............... (3,349,396)
Net Unrealized Appreciation on Investments................... 1,816,137
-----------
NET ASSETS, JUNE 30, 1996........................................ $ 8,491,293
-----------
-----------
</TABLE>
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Income Allocated from Utility Portfolio, net................. $ 165,497
-----------
EXPENSES
Administration and Services.................................. 29,030
Shareholders Report.......................................... 8,792
Registration................................................. 8,591
Professional................................................. 4,534
Trustees..................................................... 1,189
Miscellaneous................................................ 1,004
-----------
Total Expenses............................................... 53,140
Less: Expenses Absorbed by Bankers Trust..................... (24,110)
-----------
Net Expenses..................................................... 29,030
-----------
NET INVESTMENT INCOME............................................ 136,467
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net Realized Gain from Investments............................... 531,564
Net Unrealized Depreciation on Investments....................... (611,980)
-----------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS.................. (80,416)
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS....................... $ 56,051
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 8
6
<PAGE>
- --------------------------------------------------------------------------------
UTILITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE
JUNE 30, YEAR ENDED
1996 DECEMBER 31,
(UNAUDITED) 1995
------------ ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net Investment Income..................................................... $ 136,467 $ 553,070
Net Realized Gain (Loss) from Investments................................. 531,564 (976,540)
Net Unrealized Appreciation (Depreciation) on Investments................. (611,980) 4,040,936
------------ ----------------
Net Increase in Net Assets from Operations.................................... 56,051 3,617,466
------------ ----------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income..................................................... (72,564) (569,392)
------------ ----------------
Total Distribution............................................................ (72,564) (569,392)
------------ ----------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net Proceeds from Shares Sold............................................. 117,444 518,659
Dividends Reinvested...................................................... 65,670 401,054
Value of Shares Redeemed.................................................. (1,900,406) (10,646,176)
------------ ----------------
Net Decrease from Transactions in Shares of Beneficial Interest............... (1,717,292) (9,726,463)
------------ ----------------
TOTAL DECREASE IN NET ASSETS.................................................. (1,733,805) (6,678,389)
NET ASSETS
Beginning of Period........................................................... 10,225,098 16,903,487
------------ ----------------
End of Period (including Undistributed Net Investment Income of $64,635 and
$732 for 1996 and 1995, respectively)....................................... $8,491,293 $ 10,225,098
------------ ----------------
------------ ----------------
</TABLE>
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------
Contained below are selected data for a share outstanding, total investment
return, ratios to average net assets and other supplemental data for each of the
years presented for the Fund.
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED AUGUST 3, 1992
JUNE 30, FOR THE YEAR ENDED DECEMBER 31, (COMMENCEMENT
1996 -------------------------------- OF OPERATIONS) TO
(UNAUDITED) 1995 1994 1993 DECEMBER 31, 1993
------------ --------- ---------- --------- -----------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD............ $ 11.37 $ 9.10 $ 10.83 $ 10.10 $ 10.00
------------ --------- ---------- --------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income....................... 0.18 0.40 0.48 0.39 0.15
Net Realized and Unrealized Gain (Loss) on
Investments............................... (0.08) 2.28 (1.74) 0.73 0.10
------------ --------- ---------- --------- -------
Total from Investment Operations................ 0.10 2.68 (1.26) 1.12 0.25
------------ --------- ---------- --------- -------
DISTRIBUTION TO SHAREHOLDERS
Net Investment Income....................... (0.09) (0.41) (0.47) (0.39) (0.15)
------------ --------- ---------- --------- -------
Total Distributions............................. (0.09) (0.41) (0.47) (0.39) (0.15)
------------ --------- ---------- --------- -------
NET ASSET VALUE, END OF PERIOD.................. $ 11.38 $ 11.37 $ 9.10 $ 10.83 $ 10.10
------------ --------- ---------- --------- -------
------------ --------- ---------- --------- -------
TOTAL INVESTMENT RETURN......................... 0.90% 30.12% (11.67%) 11.04% 6.09%*
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Period (000's omitted)... $ 8,491 $ 10,225 $ 16,903 $ 37,558 $ 15,997
Ratios to Average Net Assets
Net Investment Income..................... 3.05%* 3.79% 4.57% 3.95% 4.55%*
Expenses, including Expenses of the
Portfolio................................ 1.25%* 1.25% 1.25% 1.25% 1.25%*
Decrease Reflected in Above Expense Ratio
Due to Absorption of Expenses by Bankers
Trust.................................... 0.92%* 0.65% 0.48% 0.39% 0.96%*
</TABLE>
- ------------------
* Annualized
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 8
7
<PAGE>
- --------------------------------------------------------------------------------
UTILITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
A. ORGANIZATION
BT Investment Funds ("the Trust") is registered under the Investment Company Act
of 1940 ("the Act"), as amended, as an open-end management investment company.
The Trust was organized on July 21, 1986, as a business trust under the laws of
the Commonwealth of Massachusetts. The Utility Fund (the "Fund") is one of the
funds offered to investors by the Trust. The Fund commenced operations and began
offering shares of beneficial interest on August 3, 1992. The Fund invests
substantially all of its assets in the Utility Portfolio (the "Portfolio"). The
Portfolio is an open-end management investment company registered under the Act.
The Fund seeks to achieve their investment objectives by investing all of its
investable assets in the Portfolio. The value of such investment in the
Portfolio reflects the Fund's proportionate interest in the net assets of the
Portfolio. At June 30, 1996, the Fund's investment was approximately 100% of the
Portfolio.
The financial statements of the Portfolio, including the Schedule of Portfolio
Investments, are contained elsewhere in this report.
B. INVESTMENT INCOME
The Fund earns income, net of expenses, daily on its investment in the
Portfolio. All of the net investment income and realized and unrealized gains
and losses from the security transactions of the Portfolio are allocated pro
rata among the investors in the Portfolio at the time of such determination.
C. DIVIDENDS
It is the Fund's policy to declare and distribute dividends quarterly to
shareholders from net investment income. Dividends payable to shareholders are
recorded by the Fund on the ex-dividend date. Distributions of net realized
short-term and long-term capital gains, if any, earned by the Fund will be made
annually to the extent they are not offset by any capital loss carryforward. On
June 28, 1996, dividend income of $0.0866 per share was declared by the Fund.
Total dividend distribution amounting to $64,602 is payable on July 1, 1996
which is the same as the ex-dividend date.
D. FEDERAL INCOME TAXES
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code. Therefore, no federal income tax provision is required. The Fund may
periodically make reclassifications among certain of its capital accounts as a
result of timing and characterization of certain income and capital gains
distributions determined annually in accordance with federal tax regulations
which may differ from generally accepted accounting principles.
E. OTHER
The Trust accounts separately for the assets, liabilities, and operations of the
Fund. Expenses directly attributable to the Fund are charged to that Fund, while
expenses which are attributable to all of the Trust's funds are allocated among
them.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts in the financial statements.
NOTE 2 -- FEES AND TRANSACTIONS WITH AFFILIATES
The Fund has entered into an Administration and Services Agreement ("Agreement")
with Bankers Trust Company ("Bankers Trust"). Under such Agreement, Bankers
Trust provides administrative, custody, transfer agency and shareholder services
to the Fund in return for a fee computed daily and paid monthly at an annual
rate of 0.65 of 1% of the Fund's average daily net assets. For the six months
ended June 30, 1996, this fee aggregated $29,030.
The Trust has entered into a Distribution Agreement with Signature Broker-Dealer
Services, Inc. ("Signature"). Under the Distribution Agreement with the Trust,
pursuant to Rule 12b-1 of the 1940 Act, Signature may seek reimbursement, at an
annual rate not exceeding 0.20 of 1% of the Fund's average daily net assets, for
expenses incurred in connection with any activities primarily intended to result
in the sale of the Fund's shares. For the six months ended June 30, 1996, there
were no reimbursable expenses incurred under this agreement.
Bankers Trust has voluntarily undertaken to waive and reimbursement expenses of
the Fund, to the extent necessary, to limit all expenses to 0.65 of 1% of the
average daily net assets of the Fund, excluding expenses of the Portfolio and
1.25 of 1% of the average daily net assets of the Fund, including expenses of
the Portfolio. For the six months ended June 30, 1996, expenses of the Fund have
been reduced by $24,110.
The Fund is subject to such limitations as may from time to time be imposed by
the Blue Sky laws of states in which the Fund sells its shares. Currently, the
most restrictive jurisdiction imposed expense limitation of 2.5% of the first
$30,000,000 of the average daily net assets, 2.0% of the next $70,000,000, and
1.5% of any excess over $100,000,000.
Certain trustees and officers of the Fund are also directors, officers and/or
employees of Signature. None of the trustees so affiliated received compensation
for services as trustees of the Fund. Similarly, none of the Fund's officers
received compensation from the Fund.
NOTE 3 -- CAPITAL LOSS CARRYFORWARD
At June 30, 1996, accumulated net realized capital loss carryforward available
as a reduction against future net realized capital gains aggregated $3,856,710
of which $2,813,113 and $1,043,597 will expire in 2002 and 2003, respectively.
8
<PAGE>
- --------------------------------------------------------------------------------
UTILITY PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- --------- ---------------------------------- ----------
<C> <S> <C>
COMMON STOCK 95.72%
TELECOMMUNICATIONS - 42.29%
6,000 ALLTEL Corp....................... $ 184,500
9,000 Ameritech Corp.................... 534,375
1,800 Bay Networks (a).................. 46,350
4,900 Bell Atlantic Corp................ 312,375
11,400 BellSouth Corp.................... 483,075
2,000 DSC Communications Corp. (a)...... 60,250
8,900 Frontier Corp..................... 272,562
11,350 GTE Corp.......................... 507,912
4,800 MCI Communications Corp........... 123,000
2,300 MFS Communications Company Inc.
(a).............................. 86,538
1,200 Newbridge Networks (a)............ 78,600
9,800 Nextel Communications Inc. (a).... 186,813
8,600 SBC Communications Inc............ 423,550
2,700 Southern New England
Telecommunications............... 113,400
2,900 Teleport Communications (a)....... 55,463
2,150 US West........................... 68,531
900 WorldCom Inc. (a)................. 49,837
----------
3,587,131
----------
UTILITY-ELECTRIC - 36.95%
4,000 American Electric Power Co........ 170,500
4,100 Baltimore Gas & Electric.......... 116,338
5,500 Carolina Power & Light Co......... 209,000
3,600 CILCORP Inc....................... 153,900
5,500 CINergy Corp...................... 176,000
5,000 CMS Energy........................ 154,375
7,200 DPL Inc........................... 175,500
5,000 DTE Energy Co..................... 154,375
3,700 Duke Power........................ 189,625
5,000 Enova Corp........................ 115,625
4,500 FPL Group......................... 207,000
7,500 LG&E Energy Corp.................. 171,563
<CAPTION>
SHARES SECURITY VALUE
- --------- ---------------------------------- ----------
<C> <S> <C>
4,100 Ohio Edison....................... $ 89,687
4,100 PacifiCorp........................ 91,225
6,300 Pinnacle West Capital............. 191,362
2,700 Portland General Corp............. 83,362
9,900 Southern Co....................... 243,788
3,400 Texas Utilities Co................ 145,350
2,600 Unicom Corp....................... 72,475
2,700 Union Electric Co................. 108,675
3,600 WPS Resources..................... 113,850
----------
3,133,575
----------
UTILITY-GAS - 16.48%
5,500 Brooklyn Union Gas Co............. 149,875
2,100 Coastal Corp...................... 87,675
6,200 Enron Corp........................ 253,425
11,000 MCN Corp.......................... 268,125
1,400 Pacific Enterprises............... 41,475
5,000 Questar Corp...................... 170,000
4,000 Sonat Inc......................... 180,000
5,000 Williams Cos...................... 247,500
----------
1,398,075
----------
TOTAL COMMON STOCK (Cost $6,302,638).......... 8,118,781
----------
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
- --------- ---------------------------------- ----------
<C> <S> <C>
SHORT TERM INSTRUMENTS - 0.94%
U.S. TREASURY BILLS - 0.94%
$65,000 5.00%*, 9/12/96................... 64,340
15,000 4.79%*, 8/8/96.................... 14,921
----------
TOTAL SHORT TERM INSTRUMENTS (Cost $79,252)... 79,261
----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $6,381,890)............. 96.66 % 8,198,042
Other Assets less Liabilities... 3.34 % 283,395
------- --------------
NET ASSETS...................... 100.00 % $ 8,481,437
------- --------------
------- --------------
</TABLE>
- ------------------
(a) Non-Income Producing Securities
* Discount rate
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 12
9
<PAGE>
- --------------------------------------------------------------------------------
UTILITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at Value (Cost $6,381,890)...................... $ 8,198,042
Cash......................................................... 5,896
Receivable for Securities Sold............................... 299,651
Dividend and Interest Receivable............................. 25,932
Prepaid Expenses and Other................................... 39
Due from Bankers Trust....................................... 10,452
-----------
Total Assets..................................................... 8,540,012
-----------
LIABILITIES
Payable for Securities Purchased............................. 46,400
Accrued Expenses and Other................................... 12,175
-----------
Total Liabilities................................................ 58,575
-----------
NET ASSETS....................................................... $ 8,481,437
-----------
-----------
COMPOSITION OF NET ASSETS
Paid in Capital.............................................. $ 6,665,285
Net Unrealized Appreciation on Investments................... 1,816,152
-----------
NET ASSETS, JUNE 30, 1996........................................ $ 8,481,437
-----------
-----------
</TABLE>
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividend (net of foreign witholding tax of $11).............. $ 187,081
Interest..................................................... 5,302
-----------
Total Investment Income.......................................... 192,383
-----------
EXPENSES
Advisory..................................................... 29,124
Administration and Services.................................. 4,481
Professional................................................. 8,457
Trustees..................................................... 1,408
Miscellaneous................................................ 586
-----------
Total Expenses............................................... 44,056
Less: Expenses Absorbed by Bankers Trust..................... (17,173)
-----------
Net Expenses..................................................... 26,883
-----------
NET INVESTMENT INCOME............................................ 165,500
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net Realized Gain from Investments............................... 531,571
Net Unrealized Depreciation on Investments....................... (611,989)
-----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS...................... (80,418)
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS....................... $ 85,082
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 12
10
<PAGE>
- --------------------------------------------------------------------------------
UTILITY PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE
JUNE 30, 1996 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1995
------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net Investment Income.................... $ 165,500 $ 648,004
Net Realized Gain (Loss) from
Investments............................. 531,571 (976,544)
Net Unrealized Appreciation
(Depreciation) on Securities............ (611,989) 4,040,966
------------- -----------------
Net Increase in Net Assets from Operations... 85,082 3,712,426
------------- -----------------
CAPITAL TRANSACTIONS
Proceeds from Capital Invested........... 117,444 539,419
Value of Capital Withdrawn............... (1,959,044) (12,746,962)
------------- -----------------
Net Decrease in Net Assets from Capital
Transactions................................ (1,841,600) (12,207,543)
------------- -----------------
TOTAL DECREASE IN NET ASSETS................. (1,756,518) (8,495,117)
NET ASSETS
Beginning of Period.......................... 10,237,955 18,733,072
------------- -----------------
End of Period................................ $ 8,481,437 $ 10,237,955
------------- -----------------
------------- -----------------
</TABLE>
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------
Contained below are selected ratios and supplemental data for each of the
periods indicated for the Utility Portfolio.
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED AUGUST 3, 1992
JUNE 30, FOR THE YEAR ENDED DECEMBER 31, (COMMENCEMENT OF
1996 ------------------------------- OPERATIONS) TO
(UNAUDITED) 1995 1994 1993 DECEMBER 31, 1992
------------ --------- --------- --------- -----------------
<S> <C> <C> <C> <C> <C>
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Period (000's omitted)..... $ 8,481 $ 10,238 $ 18,733 $ 37,590 $ 16,002
Ratios to Average Net Assets
Net Investment Income....................... 3.69%* 4.42% 5.21% 4.60% 5.20%*
Expenses, including Expenses of the
Portfolio................................. 0.60%* 0.60% 0.60% 0.60% 0.60%*
Decrease Reflected in Above Expense
Ratio Due to Absorption of Expenses by
Bankers Trust............................. 0.38%* 0.31% 0.27% 0.26% 0.57%*
Portfolio Turnover Rate........................... 10.31% 53.71% 11.43% 0.00% 0.00%
Average Commission Per Share...................... $ 0.05#
</TABLE>
- ----------------
* Annualized
# For the year beginning on or after September 1, 1995, the Portfolio is
required to disclose its average commission rate per share for purchases or
sales of equity securities.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 12
11
<PAGE>
- --------------------------------------------------------------------------------
UTILITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
A. ORGANIZATION
The Utility Portfolio (the "Portfolio") is registered under the Investment
Company Act of 1940 ("the Act"), as amended, as an open-end management
investment company. The Portfolio was organized on December 11, 1991 as an
unincorporated trust under the laws of New York, and commenced operations on
August 3, 1992. The Declaration of Trust permits the Board of Trustees (the
"Trustees") to issue beneficial interests in the Portfolio.
B. SECURITY VALUATION
The Portfolio's investments are valued each business day by an independent
pricing service approved by the Trustees. Securities traded on national
exchanges or traded in the NASDAQ National Market System are valued at the last
sales prices reported at the close of business each day. Over-the-counter
securities not included in the NASDAQ National Market System and listed
securities for which no sale was reported are valued at the mean of the bid and
asked prices. Short-term obligations with remaining maturities of 60 days or
less, are valued at amortized cost which with accrued interest approximates
value. Securities for which quotations are not available are stated at fair
value as determined by the Trustees.
C. SECURITY TRANSACTIONS AND INTEREST INCOME
Security transactions are accounted for on a trade date basis. Dividend income
is recorded on the ex-dividend date. Interest income is recorded on the accrual
basis and includes amortization of premium and discount on investments. Realized
gains and losses from securities transactions are recorded on the identified
cost basis.
All of the net investment income and realized and unrealized gains and losses
from the security transactions of the Portfolio are allocated pro rata among the
investors in the Portfolio at the time of such determination.
D. FEDERAL INCOME TAXES
It is the Portfolio's policy to comply with the requirements of the Internal
Revenue Code. Therefore, no federal income tax provision is required.
E. OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts in the financial statements.
NOTE 2 -- FEES AND TRANSACTIONS WITH AFFILIATES
The Portfolio has entered into an Administration and Services Agreement with
Bankers Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Portfolio in return for a fee computed daily and
paid monthly at an annual rate of 0.10 of 1% of the Portfolio's average daily
net assets. For the six months ended June 30, 1996, this fee aggregated $4,481.
The Portfolio has entered into an Advisory Agreement with Bankers Trust. Under
this Advisory Agreement, the Portfolio pays Bankers Trust an advisory fee
computed daily and paid monthly at an annual rate of 0.65 of 1% of the
Portfolio's average daily net assets. For the six months ended June 30, 1996,
this fee aggregated $29,124.
Bankers Trust has voluntarily undertaken to waive and reimbursement expenses of
the Portfolio, to the extent necessary, to limit all expenses to 0.60 of 1% of
the average daily net assets of the Portfolio. For the six months ended June 30,
1996, expenses of the Portfolio have been reduced by $17,173.
Certain trustees and officers of the Portfolio are also directors, officers
and/or employees of Signature Broker-Dealer Services, Inc., the distributor of
the BT Investment Funds. None of the trustees so affiliated received
compensation for services as trustees of the Portfolio. Similarly, none of the
Portfolio's officers received compensation from the Portfolio.
NOTE 3 -- PURCHASE AND SALE OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments, other
than short-term obligations, for the six months ended June 30, 1996 were
$903,623 and $2,671,158 respectively. For Federal income tax purposes, the tax
basis of investments held at June 30, 1996 was $6,404,719. The aggregate gross
unrealized appreciation was $1,844,319 and the aggregate gross unrealized
depreciation for all investments was $50,996 as of June 30, 1996.
12
<PAGE>
BT INVESTMENT FUNDS
UTILITY FUND
For shareholder account information
and current price and yield
quotations, shareholders may call
their relationship manager or
servicing agent. Prospectuses
containing more extensive information
regarding the BT Investment Utility
Fund may be obtained by calling or
writing to Investors Fiduciary Trust
Company or Signature Broker-Dealer
Services, Inc., the primary Servicing
Agent and Distributor, respectively,
of BT Investment Funds:
BT INVESTMENT FUNDS
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, MO 64105
(800) 730-1313
BT INVESTMENT FUNDS
Signature Broker-Dealer Services, Inc.
6 St. James Avenue
Boston, MA 02116
(800) 545-1074
You may write to the BT Investment
Utility Fund
at the following address:
BT INVESTMENT FUNDS
6 St. James Avenue
Boston, MA 02116
