BT INVESTMENT FUNDS
International Equity Fund
ANNUAL REPORT
SEPTEMBERo1996
International Equity Fund
Table of Contents
Letter to Shareholders 3
International Equity Fund
Statement of Assets and Liabilities6
Statement of Operations 6
Statement of Changes in Net Assets 7
Financial Highlights 7
Notes to Financial Statements 8
Report of Independent Accountants 9
International Equity Portfolio
Schedule of Portfolio Investments 10
Statement of Assets and Liabilities12
Statement of Operations 12
Statement of Changes in Net Assets 13
Financial Highlights 13
Notes to Financial Statements 14
Report of Independent Accountants 16
International Equity Fund
Letter to Shareholders
We are pleased to present you with this annual report for the BT Investment
International Equity Fund, providing a review of the market, the portfolio, and
our outlook as well as a complete financial summary of the Fund's operations and
a listing of the Portfolio's holdings.
The International Equity Fund (the "Fund") had a total return of 13.42% for the
twelve months ending September 30, 1996, as compared to 8.61% for the Morgan
Stanley Capital International ("MSCI") EAFE Index and 9.36% for the Lipper
International Equity Funds Average. Since its inception on August 4, 1992, the
Fund has returned 83.17%, cumulatively.
MARKET ACTIVITY
Europe
Continental Europe performed well for the year, although in the six months
ending September 30, 1996, the upsurge in the U.S. dollar depressed the
returns of these markets. In contrast, the sterling rallied on the back of
dollar strength, bringing the United Kingdom to equal performance with the
continent in dollar terms.
Still, a number of peripheral markets outperformed the U.K. in both local
currency and dollar terms. These include the devaluers-Spain, Sweden, and
Italy-where markets benefitted from both dollar and bond market strength,
as well as Ireland and Finland, which outperformed on the back of superior
GDP performance.
In contrast to the previous six months, Switzerland underperformed due to the
weak domestic economy and currency volatility. The European markets as a whole
have become increasingly sensitive to currency fluctuations, as the arrival of
the new common tender "Euro" nears and deutschemark hardness comes into
question.
The process of European monetary convergence actually propelled many of Europe's
markets in the latest six months, notably on the periphery where bond market
rallies and decreasing interest rates helped interest-sensitive sectors. At the
same time, the convergence hurt many exporters and domestic economy sensitive
stocks, as the drive toward fiscal discipline continues to restrain economic
activity. Much of this same dichotomous influence was felt in the European core
countries as well.
For much of the latest six-month period, the European market hinged on
expectations of a U.S. Federal Reserve Board tightening, which never
materialized. However, the U.S. and its G3 partners have succeeded in
talking up the U.S. dollar and cooling down the U.S. economy. This has
been a different form of monetary tightening, and it has helped prospects
in Europe and Japan. With U.S. inflation in check and real rates fairly high,
European markets seem to have concluded that the Bundesbank is not even
close to reversing its interest rate cycle.
Asia
The Japanese equity market has been relatively flat in local currency terms
since we last reported, but due to significant softening of the yen, it was
down in dollar terms. In fact, the Japanese market was the worst
performing major EAFE market for both the six months and year ending
September 30, 1996. Concerns abound over the sustainability of its
economic recovery, especially in light of the fiscal contraction underway.
Asia ex-Japan outperformed the EAFE Index overall for the year but
underperformed the Index over the latest six-month period. Performance
throughout the region was mixed. More specifically, in the six months
ending September 30, Hong Kong, the Philippines, Australia and Malaysia
modestly outperformed. Singapore and Thailand, on the other hand, gave up
the progress they made in the first half of the Fund's fiscal year, as they
were rocked in the second six months by fears of a hard economic landing and
by concerns over weak exports. Government efforts to restrain property
market speculation compounded liquidity problems.
South Africa
Weakness in the rand continued to lead to underperformance in this market in
dollar terms, though the market has reached new highs in local currency terms.
INVESTMENT REVIEW
Overall, the Fund added to its holdings in continental Europe during the latest
six-month period, staying significantly overweight in the peripheral markets.
The Fund remained
Objective
Seeks long term capital appreciation from investments in foreign equity
securities or other securities with equity characteristics.
Investment Instruments
Equity securities of foreign issuers, consisting of common stock and other
securities with equity characteristics; the investments are diversified among
several regions.
Ten Largest Stock Holdings
Internationale Nederlanden Groep KCI Konecranes Intl. Corp
adidas AG ABB AG
Dassault Systemes SA Philips Electronics
Barclays Plc Toyota Motor Corp
Volkswagen AG CRH Plc
International Equity Fund
Letter to Shareholders (continued)
underweight in the U.K., although it has increased its exposure to this market,
and reduced its weightings in Japan and in South Africa. We also increased the
Fund's cash exposure to approximately 9%, due to increased cash flows, interest
rate uncertainty, and high market volatility.
In Europe's peripheral markets, the Fund is focused primarily on defensive and
interest-sensitive sectors, such as utilities, energy, and financials. We
believe these areas should benefit the most from EMU convergence. These
selections were supplemented by such stocks as Acerinox, the lowest cost global
producer of stainless steel, and by such luxury goods stocks as Gucci Group. We
took profits in both Sweden's Astra, as concerns heightened over the company's
longer-term drug pipeline, and in Finland's UPM-Kymmene, as weakness in the pulp
and paper industry became evident.
We added a restructuring play in Germany, namely SGL Carbon, a world leader in
graphite manufacturing. We also purchased shares of Koninklijke Ahold, a
leading Dutch retailer, while we reduced holdings in Dutch airline company KLM,
as a reflection of Europe's sluggish economy.
Telecommunication stocks underperformed, weighed down by large privatizations in
France, Italy and Germany as well as by heightened competition in the current
deregulated environment. The Fund's sole exposure to the sector is STET, the
Italian telecom holding company, after we sold TeleDanmark and Orange Plc.
While remaining underweight in the United Kingdom, we are taking advantage of
the market's excellent yield support by gradually increasing the Fund's
exposure. We are focusing on shareholder friendly companies, adding positions
in Barclays and NatWest, both of which are generating significant cash and are
committed to enhancing shareholder value; Rolls Royce and British Aerospace,
both expected to benefit from further restructuring in the European aerospace
industry; and Millenium & Copthorne Hotels and British Land Company, both late-
cycle plays in the property and hotel sectors. We also concentrated exposure in
utilities, selling PowerGen, adding to National Power, which has a superior
international business strategy, and purchasing United Utilities, which is the
best positioned pure play, dual water/electric utility in the U.K.
In Japan, we established exposure to the blue chip office and commercial
property sector, where long-term post-bubble declines in prices have begun to
turn. Specifically, we purchased Sumitomo Realty and Development and Mitsubishi
Estate. We also added Takashimaya, a high-end department store, which opened
the largest store in Japan with no new employee hires. We purchased Takeda
Chemical Industries, a global pharmaceutical company with a strong drug
pipeline, scope for operating margin improvement, and a shareholder friendly
management team. We took profits in Toshiba. The Fund continues to avoid the
troubled financial sector.
The Fund remains overweighted in Hong Kong, which benefitted the Fund's
performance in the latest six month period. Our position is primarily in "red
chips," positioned to leverage Mainland China economic growth, including
regional conglomerates, strong specialty clothing concepts, and infrastructure
plays.
We established a presence in Korea and in Taiwan, and in Australia, we took
profits in National Australia Bank to establish more balance through the
resource and gaming operator sectors. We reduced our exposure to the Thai
market, which suffered from a deteriorating trade balance and growing foreign
debt exposure, and we remained underweighted in Singapore.
As a whole in Asia, we are looking for companies catering to growing domestic
consumerism, such as those in the leisure and gaming industries.
In South Africa, we maintained a core presence in blue chips with excellent
prospects.
Diversification of Portfolio Investments
By Country as of September 30, 1996 (percentages are based on market value)
Other 31%
Spain 4%
Netherlands 6%
Italy 6%
Hong Kong 7%
Germany 7%
United Kingdom 10%
Switzerland 3%
France 11%
Japan 15%
MANAGER OUTLOOK
Going forward, we believe that perceived fiscal restraints in Europe in an
effort to meet Maastricht requirements for EMU convergence will keep inflation
low but also hold back any opportunity for robust economic activity. Our
emphasis will continue to be, then, on beneficiaries of lower interest rates and
strong bond markets, such as utilities and financials in the periphery European
markets. We also are finding exciting opportunities in special niche sectors
such as luxury goods that capture renewed demand in both domestic and
International Equity Fund
Letter to Shareholders (continued)
foreign markets and are relatively insensitive to sluggish European economies.
In the European core, we are focusing on companies motivated by the need to
restructure their operations and demonstrating management sensitivity to
minority shareholder interests. Ultimately, we believe the EMU will happen, and
that as those nations who want to participate try to get their economies in
order to qualify, the equity markets in those nations will benefit.
In Japan, we believe there are still compelling opportunities from a bottom-up
perspective, though the prognosis here is still cloudy. We are skeptical about
the financial sector, in particular, as capital adequacy requirements will
likely depress stock prices. We continue to find value in those companies
benefitting from a weak yen regime, successfully restructuring operations,
focusing on global growth, and delivering value to Japanese consumers. As for
Asia ex-Japan, we remain positive on Hong Kong, the Philippines, Malaysia, and
Australia, and we remain cautious on Thailand.
We also stay concerned and cautious about South Africa, especially when the
Central Bank raised rates to defend its currency, rather than removing exchange
controls.
We will, of course, continue monitoring economic conditions and how they affect
the financial markets, as we seek long-term capital appreciation.
Michael Levy and Robert Reiner
Portfolio Managers of the
International Equity Portfolio
September 30, 1996
Comparison of Change in Value of a $10,000 Investment in the BT Investment
International Equity Fund and the Morgan Stanley Capital International EAFE
Index since August 31, 1992.
Total Return
Ended September 30, 1996
One Year Since 8/4/92*
13.42% 83.17%
* 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.
BT International Equity $18,057 MSCI EAFE Index $15,630
Aug-92 10000 10000
Sep-92 9665 9803
Dec-92 9606 9424
Mar-93 10424 10554
Jun-93 11084 11615
Sep-93 11944 12386
Dec-93 13196 12493
Mar-94 13717 12930
Jun-94 13266 13590
Sep-94 13977 13603
Dec-94 13738 13465
Mar-95 14046 13715
Jun-95 14961 13815
Sep-95 15911 14391
Dec-95 15950 14974
Mar-96 16862 15406
Jun-96 17881 15650
Sep-96 18057 15630
Past performance is not indicative of future performance.
International Equity Fund
Statement of Assets and Liabilities September 30, 1996
Assets
Investments in International Equity Portfolio, at Value $ 161,678,276
Receviable for Shares of Beneficial Interest Subscribed 166,693
Prepaid Expenses and Other 9,547
Total Assets 161,854,516
Liabilities
Due to Bankers Trust 80,666
Payable for Shares of Beneficial Interest Redeemed 43,077
Accrued Expenses and Other 39,127
Total Liabilities 162,870
Net Assets ($0.001 par value per share, unlimited
number of shares of beneficial interest authorized) $ 161,691,646
Composition of Net Assets
Paid-in Capital $ 135,977,614
Accumulated Net Investment Income 1,972,372
Accumulated Net Realized Gain from Investment
and Foreign Currency Transactions 3,984,951
Net Unrealized Appreciation on Investments, Foreign
Currencies and Forward Foreign Currency Contracts 19,756,709
Net Assets, September 30, 1996 $ 161,691,646
Net Asset Value, Offering and Redemption Price Per
Share (net assets divided by shares outstanding) $ 16.77
Shares Outstanding 9,641,288
Statement of Operations For the year ended September 30, 1996
Investment Income
Income Allocated from International Equity Portfolio, net $ 2,033,530
Expenses
Administration and Services 982,662
Shareholder Reports 16,059
Registration 40,624
Professional 13,029
Trustees 2,875
Miscellaneous 1,906
Total Expenses 1,057,155
Less: Expenses Absorbed by Bankers Trust (74,494)
Net Expenses 982,661
Net Investment Income 1,050,869
Realized and Unrealized Gain on Investments, Foreign
Currencies and Forward Foreign Currency Contracts
Net Realized Gain from:
Investment Transactions 5,057,199
Foreign Currency Transactions 1,023,498
Net Unrealized Appreciation on Investments, Foreign
Currencies and Forward Foreign Currency Contracts 7,989,401
Net Realized and Unrealized Gain on Investments,
Foreign Currencies and Forward Foreign Currency Contracts 14,070,098
Net Increase in Net Assets from Operations $ 15,120,967
See Notes to Financial Statements on Page 8
International Equity Fund
Statement of Changes in Net Assets
For the For the period
Year Ended January 1, 1995 to
September 30, 1996 September 30, 1995**
Increase in
Net Assets from:
Operations
Net Investment Income $ 1,050,869 $ 767,061
Net Realized Gain from
Investment and
Foreign Currency
Transactions 6,080,697 1,956,485
Net Change in
Unrealized
Appreciation
on Investments,
Foreign Currencies
and Forward Foreign
Currency Contracts 7,989,401 6,955,090
Net Increase in Net
Assets from Operations 15,120,967 9,678,636
Distributions to Shareholders
Net Investment Income (1,680,074) (16,362)
Net Realized Gain from
Investment Transactions (2,218,709) (62,809)
Total Distributions (3,898,783) (79,171)
Capital Transactions
in Shares of
Beneficial Interest
Proceeds from Sales
of Shares 98,926,188 35,856,451
Dividend Reinvestments 2,166,771 42,076
Cost of Shares Redeemed (33,430,708) (18,711,160)
Net Increase from
Capital Transactions
in Shares of
Beneficial Interest 67,662,251 17,187,367
Total Increase in
Net Assets 78,884,435 26,786,832
Net Assets
Beginning of Period 82,807,211 56,020,379
End of Period
(includes accumulated
net investment income
of $1,972,372 and
$799,626,
respecitvely) $ 161,691,646 $ 82,807,211
Financial Highlights
Contained below are selected data for a share outstanding, total investment
return, ratios to average net assets and other supplemental data for each of the
periods indicated for the International Equity Fund.
For the period
For the August 4, 1992
For the For the period
year ended (Commencement
year ended January 1, 1995 to
December 31, of Operations) to
September 30, 1996 September 30, 1995**
1994 1993 December 31, 1992
Per Share Operating Performance:
Net Asset Value, Beginning
of Period $15.47 $13.37
$13.18 $9.75 $10.00
Income from Investment Operations
Net Investment Income 0.18 0.14
0.10 0.05 0.03
Net Realized and Unrealized
Gain on Investments,
Foreign Currencies and
Forward Foreign
Currency Contracts 1.80 1.97
0.44 3.60 (0.28)
Total from Investment Operations 1.98 2.11
0.54 3.65 (0.25)
Distributions to Shareholders
Net Investment Income (0.31) (0.00)
(0.09) (0.15) --
Net Realized Gain from Investment
Transactions (0.37) (0.01)
(0.26) (0.07) --
Total Distributions (0.68) (0.01)
(0.35) (0.22) --
Net Asset Value, End of Period $16.77 $15.47
$13.37 $13.18 $9.75
Total Investment Return 13.42% 15.82%
4.12% 37.38% (6.01)%*
Supplemental Data and Ratios:
Net Assets, End of Period
(000's omitted) $161,692 $82,807
$56,020 $33,869 $8,218
Ratios to Average Net Assets:
Net Investment Income 0.91% 1.55%*
0.84% 0.79% 0.97%*
Expenses, including Expenses
of the International
Equity Portfolio 1.50% 1.50%*
1.50% 1.50% 1.50%*
Decrease Reflected in Above
Expense Ratio Due to
Absorption of Expenses by
Bankers Trust 0.26% 0.33%*
0.37% 0.62% 1.36%*
* Annualized
** On August 2, 1995, the Board of Trustees approved the change of the fiscal
year end from December 31 to September 30.
See Notes to Financial Statements on Page 8
International Equity Fund
Notes to Financial Statements
Note 1-Organization and Significant Accounting Policies
A. Organization
BT Investment Funds (the "Trust") is registered under the Investment Company Act
of 1940 (the "Act"), as amended, as an open-end management investment company.
The Trust was organized on July 21, 1986, as a business trust under the laws of
the Commonwealth of Massachusetts. The International Equity Fund (the "Fund") is
one of the funds offered to investors by the Trust. The Fund commenced
operations and began offering shares of beneficial interest on August 4, 1992.
The Fund invests substantially all of its assets in the International Equity
Portfolio (the "Portfolio"). The Portfolio is an open-end management investment
company registered under the Act. The Fund seeks to achieve its investment
objective by investing all of its investable assets in the Portfolio. The value
of such investment in the Portfolio reflects the Fund's proportionate interest
in the net assets of the Portfolio. At September 30, 1996, the Fund's investment
was approximately 98.10% 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 annually to
shareholders from net investment income, if any. Dividends and distributions
payable to shareholders are recorded by the Fund on the ex-dividend date.
Distributions of net realized short-term and long-term capital gains, if any,
earned by the Fund will also be made annually.
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 the timing and characterization of certain income and
capital gains distributions determined annually in accordance with federal tax
regulations which may differ from generally accepted accounting principles. For
the year ended September 30, 1996, $1,801,951 was reclassified from net realized
capital gain to undistributed net investment income.
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 with Bankers
Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Fund in return for a fee computed daily and paid
monthly at an annual rate of 0.85 of 1% of the Fund's average daily net assets.
For the year ended September 30, 1996, this fee aggregated $982,662.
On September 30, 1996, the Trust entered into a Distribution Agreement with
Edgewood Services, Inc. (`Edgewood''). Prior to September 30, Signature Broker-
Dealer Services, Inc. (`Signature'') was the Trust's distributor. Under the
Distribution Agreement with the Trust, pursuant to Rule 12b-1 of the 1940 Act,
Edgewood may seek reimbursement, at an annual rate not exceeding 0.20 of 1% of
the Fund's average daily net assets, for expenses incurred in connection with
any activities primarily intended to result in the sale of the Fund's shares.
For the year ended September 30, 1996, there were no reimbursable expenses
incurred under this agreement.
Bankers Trust has voluntarily undertaken to waive and reimburse expenses of the
Fund, to the extent necessary, to limit all expenses to 0.85 of 1% of the
average daily net assets of the Fund, excluding expenses of the Portfolio and
1.50 of 1% of the average daily net assets of the Fund, including expenses of
the Portfolio. For the year ended September 30, 1996, expenses of the Fund have
been reduced by $74,494.
The Fund is subject to such limitations as may from time to time be imposed by
the Blue Sky laws of states in which of the Fund sells its shares. Currently,
the most restrictive jurisdiction imposes expense limitations of 2.5% of the
first $30,000,000 of the average daily net assets, 2.0% of the next $70,000,000,
and 1.5% of any excess over $100,000,000.
Certain trustees and officers of the Fund are also directors, officers and/or
employees of Edgewood and/or Signature. None of the trustees so affiliated
received compensation for services as trustee of the Fund. Similarly, none of
the Fund's officers received compensation from the Fund.
Note 3-Shares of Beneficial Interest
At September 30, 1996, there were an unlimited number of shares of beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
For the For the period
year ended January 1, 1995
September 30, 1996 September 30, 1995
Shares Amount Shares Amount
Sold 6,278,513 $98,926,188 2,458,261 $35,856,451
Reinvested 146,008 2,166,771 2,716 42,076
Redeemed (2,134,450) (33,430,708) (1,298,482) (18,711,160)
Net
Increase 4,290,071 $67,662,251 1,162,495 $17,187,367
International Equity Fund
Report of Independent Accountants
To the Trustees and Shareholders of BT Investment Funds:
We have audited the accompanying statement of assets and liabilities of the
International Equity Fund (one of the Funds comprising BT Investment Funds) as
of September 30, 1996, and the related statement of operations for the year
then ended, the statement of changes in net assets for the year ended September
30, 1996 and the nine months ended September 30, 1995, and the financial
highlights for the year ended September 30, 1996, the nine months ended
September 30, 1995, for each of the two years in the period ended December 31,
1994 and for the period August 4, 1992 (commencement of operations) to December
31, 1992. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1996 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
International Equity Fund of BT Investment Funds as of September 30, 1996, the
results of its operations, the changes in its net assets and the financial
highlights for the periods referred to above, in conformity with generally
accepted accounting principles.
Coopers & Lybrand L.L.P.
Kansas City, Missouri
October 29, 1996
International Equity Fund
Schedule of Portfolio Investments September 30, 1996
Shares Description Value
COMMON STOCKS - 90.24%
Australia - 2.62%
265,000 Aristocrat Leisure (Entertainment) $ 744,415
307,300 Capral Aluminum Ltd. (Metals-Diversified) 936,191
206,960 News Corporation (Services) 1,085,778
140,000 TABCORP Holdings Ltd. (Capital Equipment) 691,280
134,000 WMC Ltd. (Mining) 862,058
4,319,722
Austria - 0.61%
10,000 OMV AG (Energy) 1,006,421
Brazil - 0.34%
8,600,000 Telec Brasileiras-Telebras"ON"
(Telecommunication) 561,877
Canada - 0.33%
24,800 Canadian Natural
Resources Ltd. (Energy) (a) 549,776
Finland - 2.34%
79,900 KCI Konecranes International Corp.
(Capital Equipment) (a) 2,221,631
36,800 Nokia AB ADR-A (Consumer Goods) 1,628,400
3,850,031
France - 11.62%
14,889 Accor SA (Diversified) 1,840,463
67,100 Assurances Generales de
France (Finance) 1,879,887
22,000 Chargeurs International
SA (Diversified) 814,136
11,750 Christian Dior (Consumer Goods) 1,375,041
13,987 Club Mediterranee (Services) 1,002,691
6,117 Compagnie Generale des
Eaux (Diversified) 664,878
2,200 Comptoirs Modernes (Retail-Grocery) 1,043,458
66,700 Dassault Systemes SA
(Computer Software) (a) 2,793,063
21,200 Genset ADR (Biopharmaceuticals) (a) 365,700
7,000 Groupe Danone (Food Processing) 1,022,611
20,944 Lyonnaise des Eaux-Dumez (Diversified) 1,874,746
7,900 Pathe SA (Services) (a) 2,018,891
29,800 SGS-Thomson Microelectronics N.V.
(Consumer Goods) (a) 1,411,775
13,251 Total SA - B (Energy) 1,043,639
19,150,979
Germany - 7.13%
31,000 adidas AG (Consumer Goods) (b) 2,822,986
40,600 BASF AG (Diversified) 1,277,650
6,500 Berliner Kraft & Licht (Utilities) 1,768,504
10,344 SAP AG - Vorzug (Computer Software) 1,739,485
16,000 SGL Carbon AG (Diversified) 1,867,174
6,100 Volkswagen AG (Consumer Goods) 2,275,552
11,751,351
Hong Kong - 6.91%
797,000 CDL Hotels International (Services) 432,872
127,000 Cheung Kong Holdings, Ltd. (Finance) 977,176
687,000 China Resources
Enterprises, Ltd. (Real Estate) 692,952
2,000,000 China Travel International Investment
Hong Kong Ltd. (Transportation) 594,853
500,000 First Pacific Co. (Diversified) (b) 756,498
2,412,000 First Sign International
Holdings Ltd. (Textile) 647,213
672,000 Founder Hong Kong Ltd. (Services) (a) 262,873
662,000 Giordano International Ltd. (Diversified) 582,129
770,000 Goldlion Holdings Ltd. (Consumer Goods) 652,205
806,000 Guangnan Holdings, Ltd. (Services) 536,778
28,200 Guangshen Railway Company Ltd.
(Transportation) (a) 535,800
138,000 Guoco Group (Finance) 674,564
166,000 Hutchison Whampoa Ltd. (Diversified) 1,116,255
133,000 Jardine Matheson Holdings (Diversified) $ 831,250
114,000 Pico Far East Holdings (Diversified) 25,061
626,000 Shanghai Industrial Holdings
Ltd. (Diversified) (a) 1,436,894
1,856,000 Theme International Holdings Ltd.
(Consumer Goods) 630,027
11,385,400
India - 0.37%
46,000 Tata Engineering and Locomotive
Company Ltd. (Diversified) (b) 603,750
Indonesia - 1.16%
217,500 Bukaka Teknik Utama PT
(Capital Equipment) 175,570
332,000 Ciputra Development PT (Real Estate) 264,422
498,000 Citra Marga Nusaphala Persada PT
(Capital Equipment) 337,674
545,000 Fiskaragung Perkasa PT (Consumer Goods)
(a) 404,738
207,000 Kalbe Farma PT (Pharmaceuticals) 494,597
265,200 Steady Safe PT (Transportation) 242,617
1,919,618
Ireland - 2.20%
192,600 Bank of Ireland (Finance) 1,517,663
207,300 CRH Plc. (Materials) 2,101,634
3,619,297
Italy - 5.34%
75,000 Bulgari SPA (Consumer Goods) 1,396,965
1,400,000 Credito Italiano (Finance) 1,608,751
246,700 Ente Nazionale Idrocarburi SPA (Oil) 1,261,824
1,020,000 Parmalat Finanziaria SPA (Finance) 1,467,626
62,000 Safilo SPA (Consumer Goods) 1,380,901
486,700 Societa Finanziaria
Telefonica (Services) 1,689,964
8,806,031
Japan - 15.44%
92,600 AJL Peps Trust (Consumer Goods) 1,828,850
68,000 Canon Inc.(Capital Equipment) 1,337,104
51,000 Daimaru Inc. (Services) 337,939
280 East Japan Railway Co.
(Transportation) 1,352,548
163,000 Hitachi Ltd. (Capital Equipment) 1,580,606
58,000 Jusco Co. (Services) 1,765,387
204,000 Mitsubishi Electric Corp.
(Capital Equipment) 1,392,054
64,000 Mitsubishi Estate Co. (Finance) 879,192
237,000 Mitsubishi Heavy Industry
(Capital Equipment) 1,930,047
200,000 Obayashi Corp. (Capital Equipment) 1,641,302
75,000 Sankyo Co. (Health & Personal) 1,919,192
30,000 Sony Corp. (Consumer Goods) 1,893,603
440,000 Sumitomo Metal Industries (Steel) 1,248,395
114,000 Sumitomo Realty &
Development (Finance) 878,222
108,000 Takashimaya Co. (Retail) 1,609,697
94,000 Takeda Chemical
Industries (Pharmaceuticals) 1,721,751
83,000 Toyota Motor Corp. (Consumer Goods) 2,123,906
25,439,795
Malaysia - 2.49%
76,000 Edaran Otomobil Nasional
(Consumer Goods) 748,933
97,000 Jaya Tiasa Holdings (Materials) 603,710
183,337 Kentucky Fried Chicken (Consumer Goods) 797,276
102,000 Perusahaan Otomobil Nasional BHD
(Consumer Goods) 553,441
127,000 Sungei Way Holdings (Diversified) 678,955
188,000 UMW Holdings BHD (Diversified) 723,798
4,106,113
Netherlands - 5.98%
18,000 Gucci Group (Consumer Goods) 1,305,000
See Notes to Financial Statements on Pages 14-15
International Equity Fund
Schedule of Portfolio Investments September 30, 1996
Shares Description Value
97,250 Internationale Nederlanden
Group NV (Finance) $ 3,035,332
32,200 KLM Royal Dutch Airlines (Transportation) 861,979
28,140 Koninklijke Ahold NV (Retail) 1,593,761
60,300 Philips Electronics (Consumer Goods) 2,178,117
18,750 Toolex Alpha NV ADR (Diversified) (a) 421,875
20,500 Toolex Alpha NV (Diversified) (a) 467,298
9,863,362
Philippines - 1.48%
3,720,000 Belle Corp. (Real Estate) (a) 1,091,824
1,270,100 Mondragon International Philippines
(Consumer Goods) (a) 726,187
1,232,400 Universal Robina Corp. (Consumer Goods) 622,424
2,440,435
Singapore - 0.52%
86,000 Far East Levingston Shipbuilding Ltd.
(Capital Equipment) 406,150
73,000 Singapore Land Ltd. (Finance) 443,257
849,407
South Africa - 0.53%
53,960 Fedsure Holdings Ltd. (Finance) (b) 392,522
6,932 Liberty Life Association of
Africa (Services) 209,725
19,600 Metro Cash and Carry Ltd. (Services) (b) 267,050
169 South African Breweries (Diversified) 4,508
873,805
South Korea - 0.60%
65,000 Korea Mobile Telecommunications
(Telecommunications) (a) 983,125
Spain - 4.25%
9,932 Acerinox (Steel) 1,156,368
61,204 Autopistas Concesionaria Espanola SA
(Diversified) 731,655
9,635 Banco Popular Espanol (Finance) 1,770,850
20,200 Fomento de Construcciones y Contratas
(Capital Equipment) 1,596,745
180,100 Iberdrola SA (Utilities) 1,746,229
7,001,847
Sweden - 2.02%
79,000 Nordbanken AB (Finance) 2,027,476
74,800 Svedala Industries (Capital Equipment) 1,298,611
3,326,087
Switzerland - 3.12%
1,791 ABB AG - Bearer (Machinery) 2,191,603
794 Ciba-Geigy AG, - B (Consumer Goods) 1,011,501
9,841 TAG Heuer International SA
(Consumer Goods) 1,931,147
5,134,251
Taiwan - 0.39%
28,130 Taiwan Fund, Inc. (Diversified) 650,506
Thailand - 0.66%
41,300 PTT Exploration & Production (Energy) 610,949
135,500 Thai Military Bank (Finance) 482,453
1,093,402
United Kingdom - 10.13%
170,000 Barclays Plc. (Finance) 2,495,656
98,600 British Aerospace Plc. (Aerospace) 1,628,608
160,000 British Land Company Plc.
(Real Estate) 1,140,657
692,500 Iceland Group (Services) 936,496
560,700 Lonrho (Diversified) 1,494,600
210,000 Millennium & Copthorne
Hotels Plc. (Services) 1,025,981
Shares Description Value
231,000 National Power Plc. (Utilities) $ 1,421,107
108,500 National Westminster
Bank Plc. (Finance) 1,151,780
96,600 Powerscreen International
Plc. (Diversified) 829,879
307,000 Rolls-Royce Plc. (Aerospace) 1,149,513
427,100 Storehouse Plc. (Services) 2,013,201
157,000 United Utilities Plc. (Utilities) 1,400,314
16,687,792
Venezuela - 1.10%
822,688 Electricidad de Caracas (Utilities) 816,585
155,902 Mavesa SA, ADR (Consumer Goods) (b) 1,004,009
1,820,594
Other - 0.56%
63,500 Latin American Equity Fund (Diversified) 928,688
Total Common Stocks (Cost $128,783,890) $ 148,723,462
PREFERRED STOCK CONVERTIBLE - 0.25%
South Africa - 0.25%
16,000 South African Breweries
(Diversified) (Cost $594,485) $ 423,234
Principal
Amount
CORPORATE DEBT CONVERTIBLE - 0.65%
South Africa - 0.65%
$280,000 Investec O/S Finance BVI,
6.375% 11/30/02 (Finance) 302,750
590,000 Liberty Life International,
6.50%, 9/30/04 (Finance) 772,900
Total Corporate Debt Convertible
(Cost $1,084,333) $ 1,075,650
SOVEREIGN DEBT - 0.66%
Italy - 0.66%
1,075,000 Republic of Italy, 5.00%, 6/28/01
(Finance) (Cost $1,083,701) $ 1,088,437
SHORT TERM INSTRUMENTS - 10.78%
U.S. Treasury Bills - 10.78%
18,030,0005.36%, 1/16/97 (Cost $17,754,106) $ 17,759,911
Total Investments (Cost $149,300,515) - 102.58% $ 169,070,694
Liabilities in Excess of Other Assets - (2.58%) (4,257,333)
Net Assets - 100% $ 164,813,361
(a) Non-Income Producing Security
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. This Security may be resold in transactions exempt from registrations,
normally to qualified institutional buyers.
Industry Diversification (as a percentage of Total Investments):
Consumer Goods 20.84%
Finance 14.10%
Diversified 12.45%
Services 11.13%
U.S. Treasury 10.50%
Capital Equipment 9.94%
Utilities 4.23%
Transportation 3.77%
Energy 2.64%
Retail 2.51%
Metals Diversified 2.49%
Materials 1.98%
Real Estate 1.89%
Other* 1.53%
100.00%
* No one industry represents more than 1.50% of Portfolio holdings.
See Notes to Financial Statements on Pages 14-15
11
International Equity Portfolio
Statement of Assets and Liabilities September 30, 1996
Assets
Investment at Value (Cost $149,300,515) $ 169,070,694
Cash* 369,172
Receivable for Foreign Taxes Withheld 152,263
Dividends and Interest Receivable 238,301
Net Unrealized Appreciation on
Forward Foreign Currency Contracts 143,547
Prepaid Expenses and Other 12,855
Total Assets 169,986,832
Liabilities
Due to Bankers Trust 60,426
Due to Custodian 707,593
Payable for Securities Purchased 4,314,462
Net Unrealized Depreciation on
Forward Foreign Currency Contracts 65,575
Accrued Expenses and Other 25,415
Total Liabilities 5,173,471
Net Assets $ 164,813,361
Composition of Net Assets
Paid-in Capital $ 145,003,353
Net Unrealized Appreciation on
Investments, Foreign Currencies
and Forward Foreign Currency Contracts 19,810,008
Net Assets, September 30, 1996 $ 164,813,361
Statement of Operations For the
year ended September 30, 1996
Investment Income
Dividends (net of foreign withholding
tax of $271,374) $ 2,358,966
Interest 457,553
Total Investment Income 2,816,519
Expenses
Advisory 759,552
Administration and Services 175,281
Professional 35,044
Trustees 3,004
Transfer Tax 14,335
Miscellaneous 1,633
Total Expenses 988,849
Less: Expenses Absorbed by
Bankers Trust (229,297)
Net Expenses 759,552
Net Investment Income 2,056,967
Realized and Unrealized Gain on
Investments, Forward Currencies
and Forward Foreign Currency Contracts
Net Realized Gain from:
Investment Transactions 5,103,507
Foreign Currency Transactions 1,024,419
Net Change in Unrealized Appreciation
of Investments, Foreign Currencies
and Forward Foreign Currency Contracts 8,042,701
Net Realized and Unrealized Gain on
Investments, Foreign Currencies and
Forward Foreign Currency Contracts 14,170,627
Net Increase in Net Assets from
Operations $ 16,227,594
* Includes foreign cash of $369,172 with a cost of
$327,112.
See Notes to Financial Statements on Pages 14-15
International Equity Portfolio
Statement of Changes in Net Assets
For the For the period
year ended January 1, 1995 to
September 30, 1996 September 30, 1995#
Increase in Net Assets
from Operations:
Net Investment Income $ 2,056,967 $ 1,188,602
Net Realized Gain from
Investment and Foreign
Currency Transactions 6,127,926 1,956,124
Net Change in Unrealized
Appreciation on
Investments, Foreign
Currencies and Forward
Foreign Currency Contracts 8,042,701 6,955,471
Net Increased in Net
Assets from Operations 16,227,594 10,100,197
Capital Transactions
Proceeds from
Capital Invested 104,050,782 35,819,720
Value of Capital Withdrawn (38,778,446) (18,648,629)
Net Increase in Net Assets
from Capital Transactions 65,272,336 17,171,091
Total Increase in Net Assets 81,499,930 27,271,288
Net Assets
Beginning of Period 83,313,431 56,042,143
End of Period $ 164,813,361 $ 83,313,431
Financial Highlights
Contained below are selected
supplemental data and ratios
for each of the periods
indicated for the
International Equity
Portfolio.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the period
For the August 4, 1992
For the For the period year ended (Commencement
year ended January 1, 1995 to December 31, of Operations) to
September 30, 1996 September 30,
1995# 1994 1993 December 31, 1992
Supplemental Data and Ratios:
Net Assets, End of Period (000s) omitted $164,813 $83,313 $56,042 $33,907 $8,225
Ratios to Average Net Assets:
Net Investment Income 1.76% 2.39%* 1.69% 1.64% 1.87%*
Expenses 0.65% 0.65%* 0.65% 0.65% 0.60%*
Decrease Reflected in Above Expense Ratios Due
to Absorption of Expenses by Bankers Trust 0.20% 0.22%* 0.24% 0.39% 0.93%*
Portfolio Turnover Rate 68% 21% 15% 17% 7%
Average Commission per Share** $0.01
</TABLE>
#On August 2, 1995, the Board of Trustees approved the change of the fiscal year
end from December 31 to September 30.
*Annualized
**For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for security trades on which
commissions are charged.
See Notes to Financial Statements on Pages 14-15
International Equity Portfolio
Notes to Financial Statements
Note 1-Organization and Significant Accounting Policies
A. Organization
The International Equity Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940 (the "Act"), as amended, as open-end management
investment company. The Portfolio was organized on December 11, 1991 as an
unincorporated trust under the laws of New York and commenced operations on
August 4, 1992. The Declaration of Trust permits the Board of Trustees (the
"Trustees") to issue beneficial interests in the Portfolio.
B. Security Valuation
The Portfolio's investments listed or traded on National Stock Exchanges or
other domestic or foreign exchanges are valued based on the closing price of the
security traded on that exchange prior to the time when the Portfolio assets are
valued. Short-term obligations with remaining maturities of 60 days or less are
valued at amortized cost. Other short-term debt securities are valued on a mark-
to-market basis until such time as they reach a remaining maturity of 60 days,
whereupon they will be valued at amortized cost using their value on the 61st
day. All other securities and other assets are valued at their fair value as
determined in good faith under procedures established by and under the general
supervision of the Trustees.
C. Security Transactions and Interest Income
Security transactions are accounted for on a trade date basis. Dividend income,
less foreign taxes withheld, if any, is recorded on the ex-dividend date or upon
receipt of ex-dividend notification in the case of certain foreign securities.
Interest income is recorded on the accrual basis and includes amortization of
premium and discount on investments. Realized gains and losses from securities
transactions are recorded on the identified cost basis.
All of the net investment income and realized and unrealized gains and losses
from the security and foreign currency transactions of the Portfolio are
allocated pro rata among the investors in the Portfolio at the time of such
determination.
D. Repurchase Agreements
The Portfolio may enter into repurchase agreements with financial institutions
deemed to be creditworthy by the Portfolio's Investment Advisers, subject to the
seller's agreement to repurchase such securities at a mutually agreed upon
price. Securities purchased subject to repurchase agreements are deposited with
the Portfolio's custodian, and pursuant to the terms of the repurchase agreement
must have an aggregate market value greater than or equal to the repurchase
price plus accrued interest at all times. If the value of the underlying
securities falls below the value of the repurchase price plus accrued interest,
the Portfolio will require the seller to deposit additional collateral by the
next business day. If the request for additional collateral is not met, or the
seller defaults on its repurchase obligation, the Portfolio maintains the right
to sell the underlying securities at market value and may claim any resulting
loss against the seller.
E. Foreign Currency Transactions
The books and records of the Portfolio are maintained in U.S. dollars. All
assets and liabilities initially expressed in foreign currencies are converted
into U.S. dollars at prevailing exchange rates. Purchases and sales of
investment securities, dividend and interest income, and certain expenses are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
F. Forward Foreign Currency Contracts
The Portfolio may enter into forward foreign currency contracts for the purpose
of settling specific purchases or sales of securities denominated in a foreign
currency or with respect to the Portfolio's investments. The net U.S. dollar
value of foreign currency underlying all contractual commitments held by the
Portfolio and the resulting unrealized appreciation or depreciation are
determined using prevailing exchange rates. With respect to forward foreign
currency contracts, losses in excess of amounts recognized in the Statement of
Assets and Liabilities may arise due to changes in the value of the foreign
currency or if the counterparty does not perform under the contract.
G. Option Contracts
Upon the purchase of a put option or a call option by a Portfolio, the premium
paid is recorded as an investment, the value of which is marked-to-market daily
to reflect the current market value. When a purchased option expires, the
Portfolio will realize a loss in the amount of the cost of the option. When the
Portfolio enters into a closing sale transaction, the Portfolio will realize a
gain or loss depending on whether the sale proceeds from the closing sale
transaction are greater or less than the cost of the option. When the Portfolio
exercises a put option, it realizes a gain or loss from the sale of the
underlying security and the proceeds from such sale will be decreased by the
premium originally paid. When the Portfolio exercises a call option, the cost of
the security which the Portfolio purchases upon exercise will be increased by
the premium originally paid.
H. Futures Contracts
The Portfolio may enter into financial futures contracts which are contracts to
buy a standard quantity of securities at a specified price on a future date.
The Portfolio is required to deposit either in cash or securities an amount
equal to a certain percentage of the contract amount. Subsequent payments are
made or received by the Portfolio each day, dependent on the daily fluctuations
in the value of the underlying security, and are recorded for financial
statement purposes as unrealized gains or losses by the Portfolio.
Futures contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are traded.
I. 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.
International Equity Portfolio
Notes to Financial Statements
J. 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 0.15 of 1% of the Portfolio's average daily
net assets. For the year ended September 30, 1996, this fee aggregated $175,281.
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 year ended September 30, 1996,
this fee aggregated $759,552.
Bankers Trust has voluntarily undertaken to waive and reimburse expenses of the
Portfolio, to the extent necessary, to limit all expenses to 0.65 of 1% of the
average daily net assets of the Portfolio. For the year ended September 30,
1996, expenses of the Portfolio have been reduced $229,297.
On September 30, 1996, the Trust entered into a Distribution Agreement with
Edgewood Services, Inc. (`Edgewood''). Prior to September 30, Signature
Broker-Dealer Services, Inc. (`Signature'') was the Trust's Distributor.
Certain trustees and officers of the Portfolio are also directors, officers
and/or employees of Edgewood and/or Signature. None of the trustees so
affiliated received compensation for services as trustee of the Portfolio.
Similarly, none of the Portfolio's officers received compensation from the
Portfolio.
For the year ended September 30, 1996, the Portfolio paid brokerage commissions
of $603,995.
Note 3-Purchases and Sales of Investment Securities
The aggregate cost of purchases and proceeds from sales of investments, other
than short-term obligations, for the year ended September 30, 1996, were
$132,762,664 and $75,463,529, respectively. For federal income tax purposes, the
tax basis of investments held at September 30, 1996 was $149,313,524. The
aggregate gross unrealized appreciation for all investments was $23,947,591 and
the aggregate gross unrealized depreciation for all investments was $4,190,151.
Note 4-Open Forward Foreign Currency Contracts
As of September 30, 1996, the International Equity Portfolio had the following
open forward foreign currency contracts outstanding:
Net
Unrealized
Appreciation
Contracts to Deliver In Exchange For Settlement Date Value (US$)
(Depreciation) (US$)
Sales
AUD 41,746 USD 32,993 10/01/96 33,135 (142)
AUD 3,289,201 USD 2,597,378 10/01/96 2,610,771 (13,393)
AUD 3,267,343 USD 2,572,897 10/08/96 2,585,416 (12,519)
AUD 3,396,879 USD 2,713,261 10/01/96 2,696,239 17,022
JPY 296,683,411 USD 2,677,658 10/01/96 2,661,315 16,343
JPY 286,594,676 USD 2,625,452 10/01/96 2,570,817 54,635
JPY 286,594,676 USD 2,690,090 1/06/97 2,608,489 81,601
Total Sales
143,547
Purchases
USD 2,677,657 AUD 3,396,879 10/01/96 2,696,238 18,581
USD 2,625,452 AUD 3,330,947 10/01/96 2,643,905 18,453
USD 2,690,090 AUD 3,396,879 1/06/97 2,680,715 (9,375)
USD 465,179 FRF 2,400,000 10/01/96 468,365 3,186
USD 1,175,398 GBP 750,325 10/01/96 1,174,483 (915)
USD 394 IDR 915,000 10/02/96 394 -
USD 188,815 ITL 287,000,000 10/01/96 188,258 (557)
USD 2,597,377 JPY 286,594,676 10/01/96 2,570,816 (26,561)
USD 2,572,897 JPY 286,595,000 10/08/96 2,572,897 -
USD 10,978 JPY 1,209,289 10/01/96 10,847 (131)
USD 2,713,261 JPY 295,474,118 10/01/96 2,650,468 (62,793)
USD 7,000,000 JPY 779,751,000 10/09/96 6,994,537 (5,463)
Total Purchases
(65,575)
Net Appreciation
77,972
International Equity Portfolio
Report of Independent Accountants
To the Trustees and Holders of Beneficial Interest of the International Equity
Portfolio:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the International Equity Portfolio (one of the
Portfolios comprising BT Investment Portfolios) as of September 30, 1996, and
the related statement of operations for the year then ended, the statement of
changes in net assets for the year ended September 30, 1996, and the nine months
ended September 30, 1995, and the financial highlights for the year ended
September 30, 1996, the nine months ended September 30, 1995, for each of the
two years in the period ended December 31, 1994 and for the period August 4,
1992 (commencement of operations) to December 31, 1992. These financial
statements and financial highlights are the responsibility of the Portfolio's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1996 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
International Equity Portfolio as of September 30, 1996, the results of its
operations, the changes in its net assets and the financial highlights for the
periods referred to above, in conformity with generally accepted accounting
principles.
Coopers & Lybrand L.L.P.
Kansas City, Missouri
October 29, 1996
16
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BT INVESTMENT FUNDS
International Equity 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
Funds may be obtained by calling or writing to Investors Fiduciary Trust Company
or Edgewood Services, Inc., the primary Servicing Agent and Distributor,
respectively, of BT Investment Funds:
BT Pyramid Mutual Funds
DST Systems, Inc.
210 West 10th St.
Kansas City, MO 64105
BT Investment Funds
Edgewood Securities, Inc.
Clearing Operations
P.O. Box 897
Pittsburgh, PA 15230-0897
You may write to the International Equity Fund
at the following address:
BT Investment Funds
Clearing Operations
P.O. Box 897
Pittsburgh, PA 15230-0897
Intermational Equity Fund
Appendix
Pie Chart- Page 4
The graphic representation here displayed consists of a pie chart representing
the Diversification of Portfolio Investments by Country in the International
Equity Portfolio as of September 30, 1996. Each slice of the pie represents an
investment Country and is sized according to the percentage of the Fund's
investment in that Country. The Countries and their percentages, starting at the
top of the pie and moving clockwise, are: Japan-15%; France-11%; Switzerland-3%;
United Kingdom-10%; Germany-7%; Hong Kong-7%; Italy-6%; Netherlands-6%; Spain-
4%; and Other-31%.
Line Graph-Page 5
The graphic representation here displayed consists of a boxed legend in the
upper left-hand corner of the corresponding line graph. The solid black line
represents BT Investment International Equity Fund (the `Fund''); the dashed
line represents the MSCI EAFE Index. The graph represents a comparison of change
in value of a $10,000 investment in the Fund and in the MSCI EAFE Index begining
August 31, 1992. The `y'' axis reflects quarterly computation periods from
August 1992 to September 1996. The `x'' axis reflects investment values in
$2,000 increments ranging from $8,000 to $20,000.
