<PAGE>
- BT INVESTMENT FUNDS -
-------------------
LATIN AMERICAN EQUITY FUND
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ANNUAL REPORT
-------------------
SEPTEMBER-1997
<PAGE>
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LATIN AMERICAN EQUITY FUND
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
LATIN AMERICAN EQUITY FUND
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . 5
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . 5
Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . 6
Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . 8
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . 9
LATIN AMERICAN EQUITY PORTFOLIO
Schedule of Portfolio Investments . . . . . . . . . . . . . . . . . . . .10
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . .11
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . .11
Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . . .12
Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . .12
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . .13
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . .15
2
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LATIN AMERICAN EQUITY FUND
LETTER TO SHAREHOLDERS
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We are pleased to present you with this annual report for the Latin American
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 Latin American Equity Fund (the "Fund") returned 47.00%* for the twelve
months ended September 30, 1997, as compared to 48.04% for the IFCI Latin
American Index** and 46.24% for the Lipper Latin American Average+. Since its
inception on October 25, 1993, the Fund delivered a total return of 60.09%
cumulatively, or 12.71% annualized, as of September 30, 1997.
MARKET ACTIVITY
In general, the Latin American markets posted very strong positive performance
for the year ended September 30, 1997, with Venezuela, Brazil, Mexico, and
Argentina the best performing markets and Chile and Peru the worst. This strong
performance, which continued to improve as the year progressed, was supported by
several factors. First, economic growth returned to the Latin American markets
overall, and inflation continued its downward trend. Second, the risk premium
for these markets declined significantly, as interest rates have fallen on Brady
Bonds. Third is a benign environment for international interest rates and
equity markets as a whole.
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OBJECTIVE
Seeks long-term capital appreciation through investment primarily in the equity
securities (or other securities with equity characteristics) of companies
domiciled in, or doing business in, Latin America++.
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More specifically, Venezuela benefited from its economic reform program, which
included the implementation of labor market reform, the introduction of private
capital into the oil industry, and strong oil prices. Brazil benefited from
tariff rebalancing and advancement in the privatization process of electrical
utilities and telecommunications companies, which, in turn, led to a significant
re-rating of public sector companies. Utility companies Telebras and
Electrobras performed particularly well, as their valuations have begun to be
brought in line with other privatized utility companies in the region. Lower
interest rates also led to a higher level of domestic investment in the
Brazilian stock market.
The Mexican equity market benefited from a stable currency and a strong
resumption in domestic economic growth, the first such resumption there since
the peso devaluation in December 1994. Consumer-oriented stocks were the best
performers in Mexico. Following the recession of 1995-96, strong domestic
economic growth over the twelve month period has also been the major factor
supporting the Argentine equity market. Colombian equities appreciated, as
interest rates declined substantially, sparking local interest in the market.
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INVESTMENT INSTRUMENTS
Primarily common and preferred stocks, rights, warrants, American Depository
Receipts ("ADRs") and convertible securities.
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Disappointing earnings growth has held back the markets in both Peru and Chile,
as have concerns about the political environment in the former and high real
interest rates in the latter.
INVESTMENT REVIEW
The Fund slightly underperformed its benchmark and slightly outperformed its
category average for the period. Strong stock selection in the last fiscal
quarter enabled us to recapture much of the underperformance from earlier in the
year. However, sector selection hampered the Fund during the first nine months
of the period. The Fund was underweight in Brazil during these months, due to
concern about the country's current account deficit and its lack of progress in
economic reform. The Fund was also overweight in Chile during these months
based on our view that global interest rates would rise, that Chile was the
market least susceptible to any such rise, and that interest rates within Chile
would fall. In addition, the Fund was overweight in Colombia and Peru.
Ten Largest Stock Holdings
Telefonos de Mexico SA ADR-L
Quilmes Industrial SA ADR
Grupo Industrial Bimbo SA
Banco Bradesco PN
Telebras ON
Companhia Vale de Rio Doce ADR
Corporacion Industrial San Luis
Formento Economico Mexicano
Companhia Energetica de Minas Gerais ADR
Grupo Televisa SA GDR
The most significant changes in our strategy took place in the last quarter of
the Fund's year when a new portfolio management team took over. First, we moved
the Fund's major underweighted position in Brazil to a moderate underweight, as
we grew more comfortable with the nation's economics. The Fund holds cheap
private sector stocks there as well as government-owned stocks, including
telecommunication companies and electrical utilities that should benefit from
privatization. Second, we reduced the Chilean position from overweighted to
underweighted, as market valuations are not particularly attractive there
currently.
During this period, we also increased the Fund's Argentine position to a neutral
one, and we added three stocks that we consider attrac-
- ------------------
* Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
** The IFCI Latin American Index reflects all markets in the Latin American
region. Indexes are unmanaged, and investments cannot be made in an index.
+ Lipper figures represent the average of the total returns reported by all
of the mutual funds designated by Lipper Analytical Services, Inc., as
falling into the respective categories indicated. These figures do not
reflect sales charges.
++ Foreign investing involves special risks, including currency risk,
increased volatility or foreign securities and differences in auditing and
other financial standards.
3
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LATIN AMERICAN EQUITY FUND
LETTER TO SHAREHOLDERS
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tively valued--Quilmes, Telecom Argentina, and YPF. We believe that Quilmes,
the country's leading brewer, is especially attractive and that it should
benefit from the economic recovery taking place in that nation.
DIVERSIFICATION OF PORTFOLIO INVESTMENTS
By Country as of September 30, 1997
(PERCENTAGES ARE BASED ON MARKET VALUE)
[CHART]
Venezuela 4%
Chile 7%
Argentina 8%
United States 10%
Colombia 4%
Peru 3%
Brazil 35%
Mexico 29%
- --------------------------------------------------------------------------------
In Mexico, we focused on consumer-oriented stocks, which we believe will benefit
from the recovery in domestic consumption. These stocks include Femsa, which is
Mexico's second largest brewer and a major holding of the Fund, Grupo Bimbo, and
Grupo Televisa. In Venezuela, the Fund owns the main utilities, CANTV and
Electridad de Caracas, both of which benefit from the country re-rating taking
place and the latter of which also benefits from tariff increases.
MANAGER OUTLOOK
Our outlook for the Latin American equity markets is generally positive, with
economic growth increasing and inflation trending down. Valuations remain at a
discount to other markets, and the economic reform programs that have begun this
decade have continued to progress. Our concerns going forward are a potential
rise in global interest rates and the possibilities of political instability in
Mexico and/or current account problems in Brazil.
Given this scenario, for the near term, we intend to remain overweighted in
Venezuela, neutral in Argentina, Colombia, and Peru, modestly underweighted in
Brazil and Mexico, and more substantially underweighted in Chile. At the same
time, we maintain our focus on individual stock selection, looking for
attractively-valued securities in markets where we are comfortable with the
economic outlook and on an opportunistic basis.
We will, of course, continue monitoring economic conditions and how they affect
the financial markets, as we seek long-term capital appreciation.
We value your ongoing support of the Latin American Equity Fund and look forward
to continuing to serve your investment needs in the years ahead.
/s/ Michael Levy
Michael Levy
Portfolio Manager of the
LATIN AMERICAN EQUITY PORTFOLIO
September 30, 1997
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PERFORMANCE COMPARISON
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COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE LATIN AMERICAN
EQUITY FUND AND THE IFCI LATIN AMERICAN INDEX SINCE OCTOBER 31, 1993.
TOTAL RETURN FOR THE PERIOD
ENDED SEPTEMBER 30, 1997
One Year Since 10/25/93*
47.00% 12.71%
* 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.
Latin American Equity IFCI Latin American
Fund - $15,961 Index - $15,933
--------------------- -------------------
Oct-93 10000 10000
Dec-93 12433 12111
Mar-94 12822 12275
Jun-94 10917 11051
Sep-94 14526 14736
Dec-94 11071 11018
Mar-95 7350 7686
Jun-95 8476 9100
Sep-95 8618 9602
Dec-95 8384 9161
Mar-96 9408 9652
Jun-96 10706 10584
Sep-96 10838 10763
Dec-96 11134 10869
Mar-97 12463 12536
Jun-97 14633 15248
Sep-97 15961 15933
Past performance is not indicative of future performance.
4
<PAGE>
<TABLE>
<CAPTION>
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LATIN AMERICAN EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1997
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investment in Latin American Equity Portfolio, at Value. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,404,451
Receivable for Shares of Beneficial Interest Subscribed. . . . . . . . . . . . . . . . . . . . . . . . . . . 66,112
Prepaid Expenses and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,891
------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,475,454
------------
LIABILITIES
Due to Bankers Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,320
Payable for Shares of Beneficial Interest Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,869
Accrued Expense and Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,094
------------
Total Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,283
------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,413,171
------------
------------
COMPOSITION OF NET ASSETS
Paid-in Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 33,427,295
Accumulated Net Realized Loss from Investment and Foreign Currency Transactions. . . . . . . . . . . . . . . (1,555,226)
Net Unrealized Appreciation on Investment and Foreign Currency Transactions. . . . . . . . . . . . . . . . . . 5,541,102
------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,413,171
------------
------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE (net assets divided by shares outstanding). . . . . . $15.74
------------
------------
SHARES OUTSTANDING ($0.001 par value per share, unlimited number of shares of beneficial interest authorized). 2,376,561
------------
------------
</TABLE>
<TABLE>
<CAPTION>
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STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 1997
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Income Allocated from Latin American Equity Portfolio, net . . . . . . . . . . . . . . . . . . . . . . . . . . $ 318,470
------------
EXPENSES
Administration and Services Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261,394
Printing and Shareholder Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000
Registration Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,587
Professional Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,245
Trustees Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,750
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,398
------------
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307,374
Less Expenses Absorbed by Bankers Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (32,222)
------------
Net Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275,152
------------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,318
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS ------------
Net Realized Gain (Loss) from:
Investment Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,804,111
Foreign Currency Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (55,362)
Net Change in Unrealized Appreciation on Investment and Foreign Currency Transactions. . . . . . . . . . . . 3,980,334
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS . . . . . . . . . . . . . . . 10,729,083
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,772,401
------------
------------
</TABLE>
See Notes to Financial Statements on Page 8
5
<PAGE>
<TABLE>
<CAPTION>
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LATIN AMERICAN EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $43,318$ 23,831
Net Realized Gain from Investment and Foreign Currency Transactions . . . . . 6,748,749 938,638
Net Change in Unrealized Appreciation on Investment and Foreign Currency
Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,980,334 1,901,030
------------ ------------
Net Increase in Net Assets from Operations . . . . . . . . . . . . . . . . . . . 10,772,401 2,863,499
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,313) --
------------ ------------
CAPITAL TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Proceeds from Sales of Shares . . . . . . . . . . . . . . . . . . . . . . . . 59,057,526 24,344,592
Dividend Reinvestments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,063 --
Cost of Shares Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (49,411,389) (23,835,412)
------------ ------------
NET INCREASE FROM CAPITAL TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST. . . . . 9,648,200 509,180
------------ ------------
TOTAL INCREASE IN NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . 20,416,288 3,372,679
NET ASSETS
Beginning of Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,996,883 13,624,204
------------ ------------
End of Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $37,413,171 $16,996,883
------------ ------------
------------ ------------
</TABLE>
See Notes to Financial Statements on Page 8
6
<PAGE>
<TABLE>
<CAPTION>
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LATIN AMERICAN EQUITY FUND
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------------------------------------------------------
Contained below are selected data for a share outstanding, total investment
return, ratios to average net assets and other supplemental data for the
periods indicated for the Latin American Equity Fund.
FOR THE PERIOD
FOR THE YEARS ENDED OCTOBER 25, 1993
SEPTEMBER 30, (COMMENCEMENT OF
------------------------------------- OPERATIONS) TO
1997 1996 1995 SEPTEMBER 30, 1994
------ ------ ------- ------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . $ 10.71 $ 8.50 $ 14.59 $ 10.00
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income. . . . . . . . . . . . . . . . 0.00** 0.02 0.03 --
Net Realized and Unrealized Gain (Loss) on
Investment and Foreign Currency Transactions . . . 5.03 2.19 (5.92) 4.59
------- ------- ------- -------
Total Income (Loss) from Investment Operations . . . . 5.03 2.21 (5.89) 4.59
------- ------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income. . . . . . . . . . . . . . . . 0.00** -- -- --
Net Realized Gain from Investment Transactions . . . -- -- (0.20) --
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . $15.74 $10.71 $8.50 $14.59
------- ------- ------- -------
------- ------- ------- -------
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . 47.00% 26.00% (40.68)% 50.01%*
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Period (000s omitted) . . . . . . $37,413 $16,997 $13,624 $27,489
Ratios to Average Net Assets:
Net Investment Income. . . . . . . . . . . . . . . 0.16% 0.16% 0.29% 0.03%*
Expenses, Including Expenses of the
Latin American Equity Portfolio. . . . . . . . . 2.00% 2.00% 2.00% 2.00%*
Decrease Reflected in Above Expense
Ratio Due to Absorption of Expenses by
Bankers Trust. . . . . . . . . . . . . . . . . . 0.44% 0.66% 1.17% 1.27%*
</TABLE>
- --------------------------------
* Annualized
** Less than $0.01
See Notes to Financial Statements on Page 8
7
<PAGE>
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LATIN AMERICAN EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
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NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
A. ORGANIZATION
BT Investment Funds (the "Trust") is registered under the Investment Company Act
of 1940 (the "Act"), as amended, as an open-end management investment company.
The Trust was organized on July 21, 1986, as a business trust under the laws of
the Commonwealth of Massachusetts. The Latin American Equity Fund (the "Fund")
is one of the funds offered to investors by the Trust. The Fund commenced
operations and began offering shares of beneficial interest on October 25, 1993.
The Fund invests substantially all of its assets in the Latin American Equity
Portfolio (the "Portfolio"). The Portfolio is an open-end management investment
company registered under the Act. The Fund seeks to achieve its investment
objective by investing all of its investable assets in the Portfolio. The value
of such investment in the Portfolio reflects the Fund's proportionate interest
in the net assets of the Portfolio. At September 30, 1997, 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. ORGANIZATION EXPENSES
Costs incurred by the Fund in connection with its organization and initial
registration are being amortized evenly over a five year period.
D. 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.
E. FEDERAL INCOME TAXES
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all of its taxable income to shareholders. 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,
1997, $55,882 of net realized gain was reclassified as unrealized appreciation,
$60,867 of net investment income as net realized gain, $21,862 of net investment
loss as paid-in-capital and $223,164 of net realized loss as paid-in-capital.
For the year ended September 30, 1997, the Latin American Equity Fund had a
capital loss carry forward of $1,544,174 which expires in 2004.
F. OTHER
The Trust accounts separately for the assets, liabilities, and operations of the
Fund. Expenses directly attributable to the Fund are charged to that Fund, while
expenses which are attributable to all of the Trust's Funds are allocated among
them.
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. Actual results could
differ from those estimates.
NOTE 2--FEES AND TRANSACTIONS WITH AFFILIATES
The Fund has entered into an Administration and Services Agreement with Bankers
Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Fund in return for a fee computed daily and paid
monthly at an annual rate of 0.95 of 1% of the Fund's average daily net assets.
For the year ended September 30, 1997, this fee aggregated $261,394.
The Trust entered into a Distribution Agreement with Edgewood Services, Inc.
("Edgewood"). Under the Distribution Agreement with the Trust, pursuant to Rule
12b-1 of the 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, 1997, there were no
reimbursable expenses incurred under this agreement.
Bankers Trust has voluntarily undertaken to waive and reimburse expenses of the
Fund, to the extent necessary, to limit all expenses to 1.00 of 1% of the
average daily net assets of the Fund, excluding expenses of the Portfolio and
2.00 of 1% of the average daily net assets of the Fund, including expenses of
the Portfolio. For the year ended September 30, 1997, expenses of the Fund have
been reduced by $32,222.
Certain trustees and officers of the Fund are also directors, officers and/or
employees of Edgewood. 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, 1997, there were an unlimited number of shares of beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sold 4,496,165 $ 59,057,526 2,527,607 $ 24,344,592
Reinvested 190 2,063 -- --
Redeemed (3,707,034) (49,411,389) (2,542,427) (23,835,412)
------------ ------------ ------------ ------------
Net Increase (Decrease) 789,321 $ 9,648,200 (14,820) $ 509,180
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
8
<PAGE>
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LATIN AMERICAN EQUITY FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Trustees and Shareholders of the BT Investment Funds:
We have audited the accompanying statement of assets and liabilities of the
Latin American Equity Fund (one of the Funds comprising BT Investment Funds) as
of September 30, 1997, and the related statement of operations for the year then
ended, the statement of changes in net assets for the each of the two years in
the period then ended and the financial highlights for the years ended September
30, 1997, 1996 and 1995 and the period October 25, 1993 (commencement of
operations) to September 30, 1994. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1997 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Latin American Equity Fund of BT Investment Funds as of September 30, 1997, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, 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
November 5, 1997
9
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
LATIN AMERICAN EQUITY PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 1997
- ------------------------------------------------------------------------------------------
SHARES DESCRIPTION VALUE
------ ----------- -----
<S> <C> <C>
COMMON STOCKS - 70.39%
ARGENTINA - 9.21%
25,834 Nortel Inversora SA, ADR (Telecom Services) (a). . . . $ 707,206
141,754 Quilmes Industrial SA, ADR (Brewery) . . . . . . . . . 2,197,187
17,700 Telecom Argentina SA, ADR (Telephone). . . . . . . . . 538,744
------------
3,443,137
------------
BRAZIL - 13.13%
7,500 Companhia Energetica de Minas Gerais, ADR (Electric) . 409,687
62,450 Companhia Paranaense de Energia, ADR (Electric). . . . 1,077,262
64,700 Companhia Vale de Rio Doce ADR (Steel) . . . . . . . . 1,505,338
13,180,900 Telecommunicacoes Brasileiras-Telebras ON
(Telecommunication) . . . . . . . . . . . . . . . . . 1,521,336
3,100 Telecommunicacoes Brasileiras SA Telebras,
ADR (Telecommunications). . . . . . . . . . . . . . . 399,125
------------
4,912,748
------------
CHILE - 8.65%
39,324 Chilgener SA, ADR (Utility). . . . . . . . . . . . . . 1,078,952
37,400 Embotelladora Andina, ADR (Beverages). . . . . . . . . 906,950
34,000 Quinenco SA, ADR (Diversified) (a) . . . . . . . . . . 539,750
30,500 Santa Isabel SA, ADR (Retail). . . . . . . . . . . . . 711,031
------------
3,236,683
------------
COLOMBIA - 2.42%
109,375 Banco Industrial Colombiano (Commercial Banks) . . . . 392,220
38,700 Cementos Diamante SA, ADR-B (Building and
Construction) (b) . . . . . . . . . . . . . . . . . . 512,775
------------
904,995
------------
MEXICO - 28.98%
48 Controladora de Farmacia (Retail). . . . . . . . . . . 25
148,600 Corporacion Industrial San Luis, SA de CV (Auto Parts) 1,301,829
146,400 Formento Economico Mexicano SA de CV (Brewery) . . . . 1,263,695
276,000 Grupo Financiero Banorte-Ser. B (Banks) (a). . . . . . 531,945
184,200 Grupo Industrial Bimbo SA de CV-Ser. A (Food). . . . . 1,684,901
246,000 Grupo Mexico SA-Ser. L (Other) . . . . . . . . . . . . 863,630
30,800 Grupo Televisa SA Spons, GDR (Television) (a). . . . . 1,103,025
26,250 Industrias Bachoco SA, ADR (Food) (a). . . . . . . . . 482,182
146,000 Kimberly Clark De Mexico-A (Paper) . . . . . . . . . . 764,610
50,000 Kimberly Clark De Mexico-B (Paper) . . . . . . . . . . 257,666
49,960 Telefonos de Mexico SA, ADR-L (Utilities-Telecom). . . 2,585,430
------------
10,838,938
------------
PERU - 4.24%
1,045 Alicorp Trabajo SA (Food) (a). . . . . . . . . . . . . 1,386
44,031 Compania de Minas Buenaventura SA-A (Metals
and Mining) . . . . . . . . . . . . . . . . . . . . . 399,299
9,000 Compania de Minas Buenaventura SA, ADR (Metals
and Mining) . . . . . . . . . . . . . . . . . . . . . 172,125
3,015 Compania de Minas Buenaventura-B (Metals
and Mining) . . . . . . . . . . . . . . . . . . . . . 27,114
96,000 Minsur SA (Other). . . . . . . . . . . . . . . . . . . 283,665
275,494 Tecsur SA SA-B (Engineering) . . . . . . . . . . . . . 335,194
10,000 YPF SA, ADR (Oil). . . . . . . . . . . . . . . . . . . 368,750
------------
1,587,533
------------
VENEZUELA - 3.75%
8,400 Compania Anonima Nacional Telefonos de
Venezuela, ADR (Telecom Services) . . . . . . . . . . 384,300
628,384 Electricidad de Caracas (Utilities). . . . . . . . . . 1,013,299
819 Siderurgica Venezolana Sivensa, Saica
SACA (Building & Construction) (a). . . . . . . . . . 4,594
------------
1,402,193
------------
TOTAL COMMON STOCKS (Cost $21,689,333) . . . . . . . . . . . . . . . . . . 26,326,227
------------
SHARES DESCRIPTION VALUE
------ ----------- -----
PREFERRED STOCK CONVERTIBLE - 20.71%
BRAZIL - 20.71%
156,910,449 Banco Bradesco PN (Banks). . . . . . . . . . . . . . . $ 1,653,573
19,808,300 Companhia Energetica de Minas Gerais PN (Electric) . . 1,106,084
17,900 Companhia Vale de Rio Doce PN (Steel). . . . . . . . . 0
848,254 CRT Corp., PN (Telecommunications) (a) . . . . . . . . 1,101,337
54,746,000 Lojas Americanas SA PN (Retail) (a). . . . . . . . . . 679,330
610,800 Mesbla PN (Retail) (a) (c) . . . . . . . . . . . . . . 0
86,255,000 Odebrecht SA PN (Building-Heavy Construction). . . . . 786,998
2,056,600 Petroleo Brasileiro SA Petrobras PN
(Oil-International) . . . . . . . . . . . . . . . . . 585,455
3,119,967 Telecommunicacoes de Sao Paulo SA PN (Telephone) . . . 950,822
80,726 Usiminas PN (Steel). . . . . . . . . . . . . . . . . . 881,652
------------
TOTAL PREFERRED STOCK CONVERTIBLE (Cost $7,036,455). . . . . . . . . . . . 7,745,251
------------
PREFERRED STOCK NON-CONVERTIBLE - 1.07%
COLOMBIA - 1.07%
13,800 Banco Ganadero SA, ADR (Banks)
(Cost $255,778) . . . . . . . . . . . . . . . . . . . 398,475
------------
SHORT TERM INSTRUMENT - 5.28%
U.S.A. - 5.28%
1,975,695 BT Institutional Cash Management Fund,
(Cost $1,975,695) . . . . . . . . . . . . . . . . . . 1,975,695
------------
TOTAL INVESTMENTS (Cost $30,957,261) . . . . . . . . . . . . . . . 97.44% 36,445,648
Assets in Excess of Other Liabilities. . . . . . . . . . . . . . . 2.56% 958,815
------ ------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00% $ 37,404,463
------ ------------
------ ------------
</TABLE>
- --------------------
(a) Non-Income Producing Security
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. This Security may be resold in transactions exempt from registrations,
normally to qualified institutional buyers.
(c) Issuer in bankruptcy
The following abbreviations are used in portfolio descriptions:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
Industry Diversification (as a percentage of Total Investments):
Telecommunications. . . . . . . . . 15.37%
Utilities . . . . . . . . . . . . . 12.83%
Beverages . . . . . . . . . . . . . 11.99%
Banks . . . . . . . . . . . . . . . 8.17%
Electrical. . . . . . . . . . . . . 7.12%
Steel . . . . . . . . . . . . . . . 6.55%
Food . . . . . . . . . . . . . . . 5.95%
Short Term Instrument . . . . . . . 5.42%
Retail. . . . . . . . . . . . . . . 3.81%
Building/Construction . . . . . . . 3.58%
Consumer Products . . . . . . . . . 3.57%
Television . . . . . . . . . . . . 3.03%
Paper . . . . . . . . . . . . . . . 2.80%
Oil . . . . . . . . . . . . . . . . 2.62%
Mining. . . . . . . . . . . . . . . 1.64%
Diversified . . . . . . . . . . . . 1.48%
Other*. . . . . . . . . . . . . . . 4.07%
------
100.00%
------
------
* No one industry represents more than 1% of Portfolio holdings.
See Notes to Financial Statements on Pages 13 and 14
10
<PAGE>
- --------------------------------------------------------------------------------
LATIN AMERICAN EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1997
- --------------------------------------------------------------------------------
ASSETS
Investments, at Value (Cost of $30,957,261) . . . . . . $ 36,445,648
Cash* . . . . . . . . . . . . . . . . . . . . . . . . . 469,532
Receivable for Securities Sold. . . . . . . . . . . . . 948,115
Dividends and Interest Receivable . . . . . . . . . . . 63,853
-------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . 37,927,148
-------------
LIABILITIES
Payable for Securities Purchased. . . . . . . . . . . . 488,818
Due to Bankers Trust. . . . . . . . . . . . . . . . . . 19,954
Accrued Expenses and Other. . . . . . . . . . . . . . . 13,913
-------------
Total Liabilities. . . . . . . . . . . . . . . . . . . . . . 522,685
-------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,404,463
-------------
-------------
COMPOSITION OF NET ASSETS
Paid-in Capital . . . . . . . . . . . . . . . . . . . . $ 31,919,616
Net Unrealized Appreciation on Investment and
Foreign Currency Transactions . . . . . . . . . . . . . 5,484,847
-------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,404,463
-------------
-------------
- -----------------------
* Includes foreign currency of $186,527 with a cost of $186,860.
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 1997
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign withholding tax of $30,676) . $ 501,913
Interest. . . . . . . . . . . . . . . . . . . . . . . . 92,106
-------------
TOTAL INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . 594,019
-------------
EXPENSES
Advisory Fees . . . . . . . . . . . . . . . . . . . . . 275,540
Administration and Services Fees. . . . . . . . . . . . 55,108
Professional Fees . . . . . . . . . . . . . . . . . . . 23,300
Trustees Fees . . . . . . . . . . . . . . . . . . . . . 2,100
Miscellaneous . . . . . . . . . . . . . . . . . . . . . 7,802
-------------
Total Expenses. . . . . . . . . . . . . . . . . . . . . 363,850
Less Expenses Absorbed by Bankers Trust . . . . . . . . (88,310)
-------------
Net Expenses. . . . . . . . . . . . . . . . . . . . . 275,540
-------------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . . 318,479
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT
and Foreign Currency Transactions
Net Realized Gain (Loss) from:
Investment Transactions . . . . . . . . . . . . . . . 6,804,394
Foreign Currency Transactions . . . . . . . . . . . . (55,382)
Net Change in Unrealized Appreciation on Investment
and Foreign Currency Transactions. . . . . . . . . . . 3,979,986
-------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENT
AND FOREIGN CURRENCY TRANSACTIONS. . . . . . . . . . . . . 10,728,998
-------------
NET INCREASE IN NET ASSETS FROM OPERATIONS . . . . . . . . . $ 11,047,477
-------------
-------------
See Notes to Financial Statements on Pages 13 and 14
11
<PAGE>
- --------------------------------------------------------------------------------
LATIN AMERICAN EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
------------------ ------------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net Investment Income . . . . . . . . . . . . . . . $ 318,479 $ 182,531
Net Realized Gain from Investment and Foreign
Currency Transactions. . . . . . . . . . . . . . . 6,749,012 938,670
Net Change in Unrealized Appreciation on
Investment and Foreign Currency
Transactions. . . . . . . . . . . . . . . . . . . . 3,979,986 1,901,005
--------------- ---------------
Net Increase in Net Assets from Operations. . . . . 11,047,477 3,022,206
--------------- ---------------
CAPITAL TRANSACTIONS
Proceeds from Capital Invested. . . . . . . . . . . 59,002,666 24,363,201
Value of Capital Withdrawn. . . . . . . . . . . . . (49,696,877) (23,992,125)
--------------- ---------------
Net Increase in Net Assets from Capital
Transactions . . . . . . . . . . . . . . . . . . . 9,305,789 371,076
--------------- ---------------
TOTAL INCREASE IN NET ASSETS . . . . . . . . . . . . . 20,353,266 3,393,282
NET ASSETS
Beginning of Year. . . . . . . . . . . . . . . . . . . 17,051,197 13,657,915
--------------- ---------------
End of Year. . . . . . . . . . . . . . . . . . . . . . $ 37,404,463 $ 17,051,197
--------------- ---------------
--------------- ---------------
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below are selected, ratios to average net assets and other
supplemental data for the periods indicated for the Latin American Equity
Portfolio.
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEARS ENDED OCTOBER 25, 1993
SEPTEMBER 30, (COMMENCEMENT OF
---------------------------------- OPERATIONS) TO
1997 1996 1995 SEPTEMBER 30, 1994
---- ---- ---- ------------------
<S> <C> <C> <C> <C>
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Period (000s omitted) . . . . . . . . . . $ 37,404 $ 17,051 $ 13,658 $ 27,366
Ratios to Average Net Assets:
Net Investment Income. . . . . . . . . . . . . . . . . . . . 1.16% 1.21% 1.27% 1.03%*
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00% 1.00% 1.00% 1.00%*
Decrease Reflected in Above Expense
Ratio Due to Absorption of Expenses by
Bankers Trust. . . . . . . . . . . . . . . . . . . . . . . 0.32% 0.31% 0.80% 0.79%*
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . . 122% 171% 161% 124%
Average Commission Per Share** . . . . . . . . . . . . . . . $0.0577 $0.0001
</TABLE>
- ---------------
* Annualized
** For fiscal years beginning on or after September 1, 1995, the Portfolio 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 13 and 14
12
<PAGE>
- --------------------------------------------------------------------------------
LATIN AMERICAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
A. ORGANIZATION
The Latin American Equity Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940 (the "Act"), as amended, as open-end management
investment company. The Portfolio was organized on August 6, 1993 as an
unincorporated trust under the laws of New York and commenced operations on
October 25, 1993. The Declaration of Trust permits the Board of Trustees (the
"Trustees") to issue beneficial interests in the Portfolio.
B. SECURITY VALUATION
The Portfolio's investments 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. However, in the event of default or bankruptcy by the
seller, realization and/or retention of the collateral may be subject to legal
proceedings.
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 and mark-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.
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. Actual results could
differ from those estimates.
13
<PAGE>
- --------------------------------------------------------------------------------
LATIN AMERICAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 2--FEES AND TRANSACTIONS WITH AFFILIATES
The Portfolio has entered into an Administration and Services Agreement with
Bankers Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Portfolio in return for a fee computed daily and
paid monthly at an annual rate of 0.20 of 1% of the Portfolio's average daily
net assets. For the year ended September 30, 1997, this fee aggregated $55,108.
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 1.00 of 1% of the
Portfolio's average daily net assets. For the year ended September 30, 1997,
this fee aggregated $275,540.
Bankers Trust has voluntarily undertaken to waive and reimburse expenses of the
Portfolio, to the extent necessary, to limit all expenses to 1.00 of 1% of the
average daily net assets of the Portfolio. For the year ended September 30,
1997, expenses of the Portfolio have been reduced by $88,310.
Certain trustees and officers of the Portfolio are also directors, officers
and/or employees of Edgewood Services, Inc. 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, 1997, the Portfolio paid brokerage commissions
of $69,625.
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, 1997, were
$39,670,191 and $26,029,040, respectively.
For federal income tax purposes, the tax basis of investments held at September
30, 1997 was $30,970,111. The aggregate gross unrealized appreciation for all
investments was $6,025,146 and the aggregate gross unrealized depreciation for
all investments was $549,609.
14
<PAGE>
- --------------------------------------------------------------------------------
LATIN AMERICAN EQUITY PORTFOLIO
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Trustees and Holders of Beneficial Interest of the Latin American Equity
Portfolio:
We have audited the accompanying statement of assets and liabilities, including
the schedule of portfolio investments, of the Latin American Equity Portfolio
(one of the Portfolios comprising BT Investment Portfolios) as of September 30,
1997, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended and the financial highlights for the years ended September 30, 1997, 1996
and 1995 and the period October 25, 1993 (commencement of operations) to
September 30, 1994. These financial statements and financial highlights are the
responsibility of the Portfolio's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1997 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Latin American Equity Portfolio of BT Investment Portfolios as of September 30,
1997, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, 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
November 5, 1997
15
<PAGE>
BT INVESTMENT FUNDS
LATIN AMERICAN EQUITY FUND
INVESTMENT ADVISER OF THE PORTFOLIO AND ADMINISTRATOR
BANKERS TRUST COMPANY
130 Liberty Street
New York, NY 10006
DISTRIBUTOR
EDGEWOOD SERVICES, INC.
Clearing Operations
P.O. Box 897
Pittsburgh, PA 15230-0897
CUSTODIAN AND TRANSFER AGENT
BANKERS TRUST COMPANY
130 Liberty Street
New York, NY 10006
INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.
1100 Main Street, Suite 900
Kansas City, MO 64105
COUNSEL
WILLKIE FARR & GALLAGHER
153 East 53rd Street
New York, NY 10022
- -----------------------------------
For information on how to invest, shareholder account information and current
price and yield information, please contact your relationship manager or the BT
Mutual Fund Service Center at (800) 730-1313.
- -----------------------------------
STA497200 (11/97)
