<PAGE>
- BT INVESTMENT FUNDS -
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UTILITY FUND
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SEMI-ANNUAL REPORT
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JUNE - 1997
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- --------------------------------------------------------------------------------
UTILITY FUND
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Letter to Shareholders. . . . . . . . . . . . . . . . . . .3
Utility Fund
Statement of Assets and Liabilities. . . . . . . . . . .5
Statement of Operations. . . . . . . . . . . . . . . . .5
Statement of Changes in Net Assets . . . . . . . . . . .6
Financial Highlights . . . . . . . . . . . . . . . . . .6
Notes to Financial Statements. . . . . . . . . . . . . .7
Utility Portfolio
Schedule of Portfolio Investments. . . . . . . . . . . .8
Statement of Assets and Liabilities. . . . . . . . . . .9
Statement of Operations. . . . . . . . . . . . . . . . .9
Statement of Changes in Net Assets . . . . . . . . . . 10
Financial Highlights . . . . . . . . . . . . . . . . . 10
Notes to Financial Statements. . . . . . . . . . . . . 11
2
<PAGE>
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UTILITY FUND
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
The Utility Fund (the "Fund") returned 5.69% for the six months ended June 30,
1997, outperforming its benchmark, the S&P Utility Index+, which had a return of
2.31% for the same time period. The Fund underperformed the Lipper Utility
Average++, which had a return of 7.54% for the semi-annual period. Since its
inception on August 3, 1992, the Fund is up 44.65% cumulatively, as of June 30,
1997. This is a 7.81% average annualized total return.* For the year ended June
30, 1997, the Fund returned 9.64%.
MARKET ACTIVITY
The utility industry continues to be in flux, and, as anticipated, competitive
and deregulation pressures continued to impact the sectors throughout the
semi-annual period. The first quarter was disappointing, as Bell operating
companies lost 8.35%, retracting much of the gains they had seen in the prior
two months. The electrics and natural gas distributors also had negative
quarters. In each case, the sectors were affected not only by transition within
the industries, but also, as interest-sensitive stocks, by the anticipation of
and then actual move by the Federal Reserve Board on March 25th. On that date,
the Fed raised the fed funds rate from 5.25% to 5.50%--the first official action
at all since January 1996 and the first increase in more than two years. It is
well worth noting that the overall equity market did not have a strong first
quarter either, with the S&P 500 Index+ down 4.16% in the month of March.
------------------------------------------------------------
OBJECTIVE
Seeks high level of current income with the preservation of
capital. Also seeks to achieve growth of income and capital
appreciation, but only when consistent with the primary
objective.
------------------------------------------------------------
Although the utility sectors still trailed the overall equity market during the
second quarter, the three broad groups did rally with both equities and an
improved bond market. The S&P 500 Index returned 17.47% for the quarter, while
natural gas distributors returned 13.2% and telephones almost matched the Index
with a quarterly return of 17.0%. Electrics were up 5.23% for the quarter.
------------------------------------------------------------
INVESTMENT INSTRUMENTS
Equity securities of public utility companies including the
electric, natural gas, water, telephone, telegraph and other
public communication sectors.
------------------------------------------------------------
Interestingly, for the semi-annual period as a whole, telephones, not as
impacted as electrics by deregulation, rallied nicely as the market interpreted
its deregulation less onerously. In fact, telephones were the top-performing
sector for the six months with a return of 18.51%.
INVESTMENT REVIEW
The Fund outperformed its benchmark for the semi-annual period primarily due to
its sector weighting strategy. During the period, we shifted the portfolio's
allocation toward telephones, which due to its outperformance even of the S&P
500 Index, helped the Fund's performance. To accomplish this re-balance, we
reduced the Fund's allocation to the electrics sector. The Fund's weighting in
natural gas remained virtually unchanged. As of June 30, 1997, the Fund was
allocated 23.1% to natural gas, 39.4% to telephones, and 33.9% to electrics.
Our position in the electrics is less than average for a utility fund, given its
poor performance recently. However, the historically high relative yields of
this sector, in our opinion, continue to warrant positions in the 30-35% range.
We continue to focus on high quality names in the electric, natural gas, and
telephone sectors.
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TEN LARGEST STOCK HOLDINGS
- --------------------------------------------------------------------------------
Bell Atlantic GTE Corp.
Ameritech Worldcom, Inc.
Teleport Communications Cinergy Corp.
Bellsouth Corp. Williams Cos.
SBC Communications Southern Co.
- --------------------------------------------------------------------------------
MANAGER OUTLOOK
We believe it likely that the Federal Reserve Board is on hold for a while,
which would be a positive for the interest-sensitive utilities stocks. At the
same time, sector deregulation, competition, and re-structuring issues have yet
to be wholly resolved. Electrics will probably remain the laggard of the
utilities due to the uncertainty of future legislation in each state. Still, we
believe that the worst is over for the utilities group as a whole, and we
anticipate maintaining our sector weightings for the near term.
Should the economy show a bit more steam in the second half of the year and
should inflation drift notably higher, interest rates, in turn, may be pushed
upward and lead the Federal Reserve Board to officially hike rates again either
at their August 19th or September 30th meeting. While such a hike would, as
usual, temporarily depress the equities markets, we expect favorable
fundamentals to result in an ongoing positive trend for stocks over the longer
term. This, combined with slow but sure resolution of the issues overhanging
the electric and telephone sectors in particular, still lead us to be cautiously
optimistic about the longer-term outlook for utilities.
- ---------------
* Past performance 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 FUND IS NOT
INSURED BY THE FDIC AND IS NOT A DEPOSIT, OBLIGATION OF, OR GUARANTEED BY
BANKERS TRUST COMPANY. THE FUND IS SUBJECT TO INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
** The S&P Utility Index was rebalanced from a weighting of electrics (36%),
natural gas (12%) and telecommunications (53%) to a current weighting of
electrics (75%) and natural gas (25%). The modified benchmark under
consideration consists of the following sectors: electrics (45%), natural
gas (15%), telephone (15%), long distance (15%) and cellular and wireless
(10%). The performance would be calculated using the following indices:
S&P Utility Index (60%), S&P Telecom-Telephone Index (15%), S&P
Telecom-Long Distance Index (15%) and S&P Telecom-Cellular/Wireless Index
(10%).
+ This index is 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. The figures do not
reflect sales charges.
3
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UTILITY FUND
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
DIVERSIFICATION OF PORTFOLIO INVESTMENTS
BY SECTOR AS OF JUNE 30, 1997
(PERCENTAGES ARE BASED ON MARKET VALUE)
[CHART]
Utility Gas, Natural Gas 21%
Telecommunications 40%
Other 3%
Utility-Electric 36%
We will, of course, continue to closely observe economic conditions and how they
affect the financial markets, as we seek to provide a high level of current
income.
As always, we appreciate your ongoing support of the BT Investment Utility Fund.
/s/ Jim Giblin
Jim Giblin
Portfolio Manager of the
UTILITY PORTFOLIO
June 30, 1997
PERFORMANCE COMPARISON
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE UTILITY FUND AND
THE S&P UTILITY INDEX SINCE AUGUST 31, 1992.
- --------------------------------------------------------------------------------
TOTAL RETURN
ENDED JUNE 30, 1997
One Year Since 8/3/92*
9.64% 44.65%
* 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.
- --------------------------------------------------------------------------------
[CHART]
Utility Fund - $14,421 S&P Utility Index - $16,198
---------------------- ---------------------------
8/92 10000 10000
9/92 9970 10072
12/92 10215 10327
3/93 11004 11441
6/93 11239 11712
9/93 11784 12532
12/93 11343 11818
3/94 10526 10842
6/94 10059 10839
9/94 10223 10890
12/94 10019 10879
3/95 10415 11630
6/95 10839 12494
9/95 11829 13895
12/95 13036 15353
3/96 12750 14623
6/96 13153 15361
9/96 12602 14843
12/96 13645 15833
3/97 13219 15300
6/97 14421 16198
Past performance is not indicative of future performance. The S&P Utility Index
is unmanaged, and investments may not be made in an index.
4
<PAGE>
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UTILITY FUND
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS
Investment in Utility Portfolio, at Value. . . . . . . . . . . . $ 6,819,477
Prepaid Expenses and Other . . . . . . . . . . . . . . . . . . . 3,787
------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 6,823,264
------------
LIABILITIES
Due to Bankers Trust . . . . . . . . . . . . . . . . . . . . . . 1,208
Accrued Expenses and Other . . . . . . . . . . . . . . . . . . . 24,803
------------
Total Liabilities. . . . . . . . . . . . . . . . . . . . . . . . 26,011
------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,797,253
------------
------------
SHARES OUTSTANDING ($0.001 par value per share,
unlimited number of shares of beneficial
interest authorized). . . . . . . . . . . . . . . . . . . . . . 563,564
------------
------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SHARE (net assets divided by shares outstanding). . . . . . $ 12.06
------------
------------
COMPOSITION OF NET ASSETS
Paid-in Capital. . . . . . . . . . . . . . . . . . . . . . . . $ 7,898,641
Overdistributed Net Investment Income. . . . . . . . . . . . . (729)
Accumulated Net Realized Loss from Investment Transactions . . (3,013,544)
Net Unrealized Appreciation on Investments . . . . . . . . . . 1,912,885
------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,797,253
------------
------------
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income Allocated from Utility Portfolio, net . . . . . . . . . $ 109,150
------------
EXPENSES
Administration and Services Fee. . . . . . . . . . . . . . . . 22,943
Printing and Shareholder Reports . . . . . . . . . . . . . . . 8,967
Registration Fees. . . . . . . . . . . . . . . . . . . . . . . 4,699
Professional Fees. . . . . . . . . . . . . . . . . . . . . . . 5,100
Trustees Fees. . . . . . . . . . . . . . . . . . . . . . . . . 1,394
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . 634
------------
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . 43,737
Less: Expenses Absorbed by Bankers Trust. . . . . . . . . . . (20,794)
------------
Net Expenses. . . . . . . . . . . . . . . . . . . . . . . . 22,943
------------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . . . . 86,207
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net Realized Gain from Investment Transactions . . . . . . . . 86,406
Net Change in Unrealized Depreciation on Investments . . . . . 182,908
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS. . . . . . . . . 269,314
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS . . . . . . . . . . . $ 355,521
------------
------------
See Notes to Financial Statements on Page 7
5
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UTILITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1997+ DECEMBER 31, 1996
----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net Investment Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 86,207 $ 242,846
Net Realized Gain from Investment Transactions . . . . . . . . . . . . . . . 86,406 781,009
Net Change in Unrealized Appreciation (Depreciation) on Investments. . . . . 182,908 (698,140)
----------------- -----------------
Net Increase in Net Assets from Operations . . . . . . . . . . . . . . . . . . 355,521 325,715
----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . (95,052) (235,462)
----------------- -----------------
CAPITAL TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net Proceeds from Shares Sold. . . . . . . . . . . . . . . . . . . . . . . . -- 100,980
Dividend Reinvestments . . . . . . . . . . . . . . . . . . . . . . . . . . . 88,384 213,511
Value of Shares Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . (1,295,665) (2,885,777)
----------------- -----------------
Net Decrease from Capital Transactions in Shares of Beneficial Interest. . . . (1,207,281) (2,571,286)
----------------- -----------------
TOTAL DECREASE IN NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . (946,812) (2,481,033)
----------------- -----------------
NET ASSETS
Beginning of Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,744,065 10,225,098
----------------- -----------------
End of Period (including undistributed net investment income (loss) of $(729)
and $8,116, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,797,253 $ 7,744,065
----------------- -----------------
----------------- -----------------
</TABLE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below are selected data for a share outstanding, total investment
return, ratios to average net assets and other supplemental data for each of the
periods presented for the Utility Fund.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
FOR THE DECEMBER 31,
SIX MONTHS ENDED -----------------------------------------------------
JUNE 30, 1997+ 1996 1995 1994 1993
---------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . $11.57 $11.37 $9.10 $10.83 $10.10
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income. . . . . . . . . . . . . 0.15 0.33 0.40 0.48 0.39
Net Realized and Unrealized Gain (Loss) on
Investment Transactions . . . . . . . . . . 0.50 0.19 2.28 (1.74) 0.73
-------- -------- -------- -------- --------
Total from Investment Operations . . . . . . . . 0.65 0.52 2.68 (1.26) 1.12
-------- -------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income. . . . . . . . . . . . . (0.16) (0.32) (0.41) (0.47) (0.39)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . $12.06 $11.57 $11.37 $9.10 $10.83
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . 5.69% 4.67% 30.12% (11.67)% 11.04%
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Period (000s omitted) . . . $6,797 $7,744 $10,225 $16,903 $37,558
Ratios to Average Net Assets:
Net Investment Income . . . . . . . . . . . 2.44%* 2.88% 3.79% 4.57% 3.59%
Expenses, including expenses of the
Utility Portfolio . . . . . . . . . . . . 1.25%* 1.25% 1.25% 1.25% 1.25%
Decrease Reflected in Above Expense
Ratio Due to Absorption of Expenses
by Bankers Trust. . . . . . . . . . . . . 1.08%* 1.13% 0.65% 0.48% 0.39%
</TABLE>
- ---------------
+ Unaudited
* Annualized
See Notes to Financial Statements on Page 7
6
<PAGE>
- --------------------------------------------------------------------------------
UTILITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
A. ORGANIZATION
BT Investment Funds (the "Trust") is registered under the Investment Company Act
of 1940 (the "Act"), as amended, as an open-end management investment company.
The Trust was organized on July 21, 1986, as an unincorporated business trust
under the laws of the Commonwealth of Massachusetts. The Utility Fund (the
"Fund") is one of the funds offered to investors by the Trust. The Fund
commenced operations and began offering shares of beneficial interest on August
3, 1992. The Fund invests substantially all of its assets in the Utility
Portfolio (the "Portfolio"). The Portfolio is an open-end management investment
company registered under the Act. The Fund seeks to achieve 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 June 30, 1997, the Fund's investment was
99.9% of the Portfolio.
The financial statements of the Portfolio, including the Schedule of Portfolio
Investments, are contained elsewhere in this report.
B. INVESTMENT INCOME
The Fund earns income, net of expenses, daily on its investment in the
Portfolio. All of the net investment income and realized and unrealized gains
and losses from the security transactions of the Portfolio are allocated pro
rata among the investors in the Portfolio at the time of such determination.
C. DIVIDENDS
It is the Fund's policy to declare and distribute dividends quarterly to
shareholders from net investment income. Dividends payable to shareholders are
recorded by the Fund on the ex-dividend date. Distributions of net realized
short-term and long-term capital gains, if any, earned by the Fund will be made
annually.
D. FEDERAL INCOME TAXES
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code and distribute substantially all of its income to shareholders. Therefore,
no federal income tax provision is required.
E. OTHER
The Trust accounts separately for the assets, liabilities and operations of the
Fund. Expenses directly attributable to the Fund are charged to that Fund, while
expenses which are attributable to the Trust are allocated among the Funds in
the Trust.
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 0.65 of 1% of the Fund's average daily net assets.
For the six months ended June 30, 1997, this fee aggregated $22,943.
Under the Distribution Agreement with the Trust, pursuant to Rule 12b-1 of the
Act, Edgewood Services, Inc. ("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 six months ended June 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 0.65 of 1% of the average
daily net assets of the Fund, excluding expenses of the Portfolio and 1.25 of 1%
of the average daily net assets of the Fund, including expenses of the
Portfolio. For the six months ended June 30, 1997, expenses of the Fund have
been reduced by $20,794.
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 trustees of the Fund. Similarly, none of the Fund's officers
received compensation from the Fund.
NOTE 3--SHARES OF BENEFICIAL INTEREST
At June 30, 1997, there were an unlimited number of shares of beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
FOR THE SIX MONTHS FOR THE YEAR ENDED
ENDED JUNE 30, 1997+ DECEMBER 31, 1996
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- -------- -----------
Sold . . . . . . . . -- $ -- 9,068 $ 100,980
Reinvested . . . . . 7,672 88,384 19,034 213,511
Redeemed . . . . . . (113,180) (1,295,665) (257,992) (2,885,777)
-------- ----------- -------- -----------
Net Decrease . . . . (105,508) $(1,207,281) (229,890) $(2,571,286)
-------- ----------- -------- -----------
-------- ----------- -------- -----------
- ---------------
+ Unaudited
7
<PAGE>
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UTILITY PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Description Value
- -------- ----------- -----------
COMMON STOCKS - 96.50%
TELECOMMUNICATIONS - 39.71%
6,000 Alltel Corp.. . . . . . . . . . . . . . . . . . . . $ 200,625
4,800 Ameritech Corp. . . . . . . . . . . . . . . . . . . 326,100
4,900 Bell Atlantic Corp. . . . . . . . . . . . . . . . . 371,788
6,400 BellSouth Corp. . . . . . . . . . . . . . . . . . . 296,800
6,150 GTE Corp. . . . . . . . . . . . . . . . . . . . . . 269,831
8,000 LCC International, Inc.-Cl. A (a) . . . . . . . . . 126,000
4,800 MCI Communications Corp.. . . . . . . . . . . . . . 183,750
4,500 SBC Communications, Inc.. . . . . . . . . . . . . . 278,437
8,900 Teleport Communications Group, Inc.-Cl. A (a) . . . 303,713
2,150 U.S. West Communications Group. . . . . . . . . . . 81,028
8,430 WorldCom, Inc. (a). . . . . . . . . . . . . . . . . 269,760
-----------
2,707,832
-----------
UTILITY-ELECTRIC - 35.72%
4,000 American Electric Power Co. . . . . . . . . . . . . 168,000
4,100 Baltimore Gas & Electric Co.. . . . . . . . . . . . 109,419
5,500 Carolina Power & Light Co.. . . . . . . . . . . . . 197,312
3,600 CILCORP, Inc. . . . . . . . . . . . . . . . . . . . 148,275
7,500 CINergy Corp. . . . . . . . . . . . . . . . . . . . 261,094
5,000 CMS Energy Corp.. . . . . . . . . . . . . . . . . . 176,250
7,200 DPL, Inc. . . . . . . . . . . . . . . . . . . . . . 177,300
3,700 Duke Power Co.. . . . . . . . . . . . . . . . . . . 177,369
5,000 Enova Corp. . . . . . . . . . . . . . . . . . . . . 120,313
4,500 FPL Group, Inc. . . . . . . . . . . . . . . . . . . 207,281
4,100 Ohio Edison Co. . . . . . . . . . . . . . . . . . . 89,431
6,300 Pinnacle West Capital Corp. . . . . . . . . . . . . 189,394
9,900 Southern Co.. . . . . . . . . . . . . . . . . . . . 216,563
2,700 Union Electric Co.. . . . . . . . . . . . . . . . . 101,756
3,600 WPS Resources Corp. . . . . . . . . . . . . . . . . 96,300
-----------
2,436,057
-----------
UTILITY-GAS - 21.07%
5,500 Brooklyn Union Gas Co.. . . . . . . . . . . . . . . $ 157,437
3,600 Coastal Corp. . . . . . . . . . . . . . . . . . . . 191,475
5,200 Enron Corp. . . . . . . . . . . . . . . . . . . . . 212,225
3,900 ENSERCH Corp. . . . . . . . . . . . . . . . . . . . 86,775
5,200 MCN Energy Group, Inc.. . . . . . . . . . . . . . . 159,250
5,000 Questar Corp. . . . . . . . . . . . . . . . . . . . 201,875
4,000 Sonat, Inc. . . . . . . . . . . . . . . . . . . . . 205,000
5,100 Williams Cos., Inc. . . . . . . . . . . . . . . . . 223,125
-----------
1,437,162
-----------
TOTAL COMMON STOCKS (Cost $4,668,147). . . . . . . . . . . . . 6,581,051
-----------
SHORT TERM INSTRUMENTS - 3.47%
236,606 BT Institutional Cash Management Fund,
5.47%, 7/01/97. . . . . . . . . . . . . . . . . . 236,606
TOTAL INVESTMENTS (Cost $4,904,753). . . . . . . . . . 99.97% 6,817,657
Other Assets in Excess of Liabilities. . . . . . . . . 0.03% 1,964
------- -----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . 100.00% $ 6,819,621
------- -----------
------- -----------
(a) Non-income producing security.
See Notes to Financial Statements on Page 11
8
<PAGE>
- --------------------------------------------------------------------------------
UTILITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS
Investments, at Value (Cost of $4,904,753) . . . . . . . . . . $ 6,817,657
Dividends and Interest Receivable. . . . . . . . . . . . . . . 11,279
Prepaid Expenses and Other . . . . . . . . . . . . . . . . . . 1,219
------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 6,830,155
------------
LIABILITIES
Due to Bankers Trust . . . . . . . . . . . . . . . . . . . . . 1,426
Accrued Expenses and Other . . . . . . . . . . . . . . . . . . 9,108
------------
Total Liabilities. . . . . . . . . . . . . . . . . . . . . . . . 10,534
------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,819,621
------------
------------
COMPOSITION OF NET ASSETS
Paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . $ 4,906,717
Net Unrealized Appreciation on Investments . . . . . . . . . . 1,912,904
------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,819,621
------------
------------
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 123,774
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,681
------------
TOTAL INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . . . 130,455
------------
EXPENSES
Advisory Fees. . . . . . . . . . . . . . . . . . . . . . . . . 23,078
Administration and Services Fee. . . . . . . . . . . . . . . . 3,551
Professional Fees. . . . . . . . . . . . . . . . . . . . . . . 10,899
Trustees Fees. . . . . . . . . . . . . . . . . . . . . . . . . 1,064
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . 72
------------
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . 38,664
Less: Expenses Absorbed by Bankers Trust. . . . . . . . . . . (17,361)
------------
Net Expenses. . . . . . . . . . . . . . . . . . . . . . . . 21,303
------------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . . . . 109,152
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net Realized Gain from Investment Transactions . . . . . . . . 86,408
Net Change in Unrealized Appreciation on Investments . . . . . 182,912
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS. . . . . . . . . 269,320
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS . . . . . . . . . . . $ 378,472
------------
------------
See Notes to Financial Statements on Page 11
9
<PAGE>
- --------------------------------------------------------------------------------
UTILITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1997+ DECEMBER 31, 1996
----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net Investment Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 109,152 $ 297,670
Net Realized Gain from Investment Transactions . . . . . . . . . . . . . . . 86,408 781,021
Net Change in Unrealized Appreciation (Depreciation) on Investments. . . . . 182,912 (698,149)
----------------- -----------------
Net Increase in Net Assets from Operations . . . . . . . . . . . . . . . . . . 378,472 380,542
----------------- -----------------
CAPITAL TRANSACTIONS
Proceeds from Capital Invested . . . . . . . . . . . . . . . . . . . . . . . 88,384 317,769
Value of Capital Withdrawn . . . . . . . . . . . . . . . . . . . . . . . . . (1,413,890) (3,169,611)
----------------- -----------------
Net Decrease in Net Assets from Capital Transactions . . . . . . . . . . . . . (1,325,506) (2,851,842)
----------------- -----------------
TOTAL DECREASE IN NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . (947,034) (2,471,300)
NET ASSETS
Beginning of Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,766,655 10,237,955
----------------- -----------------
End of Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,819,621 $ 7,766,655
----------------- -----------------
----------------- -----------------
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below are selected supplemental data and ratios to average net assets
for the periods indicated for the Utility Portfolio.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
FOR THE DECEMBER 31,
SIX MONTHS ENDED -----------------------------------------------------
JUNE 30, 1997+ 1996 1995 1994 1993
---------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Period (000s omitted). . . . . $ 6,820 $ 7,767 $ 10,238 $ 18,733 $ 37,590
Ratios to Average Net Assets:
Net Investment Income . . . . . . . . . . . . . 3.07%* 3.52% 4.42% 5.21% 4.60%
Expenses . . . . . . . . . . . . . . . . . . . 0.60%* 0.60% 0.60% 0.60% 0.60%
Decrease Reflected in Above Expense Ratio Due
to Absorption of Expenses by Bankers Trust . . 0.49%* 0.45% 0.31% 0.27% 0.26%
Portfolio Turnover Rate . . . . . . . . . . . . . . 12.16%* 24.90% 53.71% 11.43% 0.00%++
Average Commission Per Share** . . . . . . . . . . $ 0.056 $ 0.053
</TABLE>
- ---------------
+ Unaudited
++ Less than 0.01%
* Annualized
** For the year beginning on or after September 1, 1995, the Portfolio is
required to disclose its average commission rate per share for purchases
or sales of equity securities.
See Notes to Financial Statements on Page 11
10
<PAGE>
- --------------------------------------------------------------------------------
UTILITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
A. ORGANIZATION
The Utility Portfolio (the "Portfolio") is registered under the Investment
Company Act of 1940 (the "Act"), as amended, as an open-end management
investment company. The Portfolio was organized on December 11, 1991 as an
unincorporated trust under the laws of New York, and commenced operations on
August 3, 1992. The Declaration of Trust permits the Board of Trustees (the
"Trustees") to issue beneficial interests in the Portfolio.
B. SECURITY VALUATION
The Portfolio's investments are valued each business day by an independent
pricing service approved by the Trustees. Securities traded on national
exchanges or traded in the NASDAQ National Market System are valued at the last
sales prices reported at the close of business each day. Over-the-counter
securities not included in the NASDAQ National Market System and listed
securities for which no sale was reported are valued at the mean of the bid and
asked prices. Short-term obligations with remaining maturities of 60 days or
less are valued at amortized cost which, with accrued interest, approximates
value. Securities for which quotations are not available are stated at fair
value as determined by the Trustees.
C. SECURITY TRANSACTIONS AND INTEREST INCOME
Security transactions are accounted for on a trade date basis. Dividend income
is recorded on the ex-dividend date. Interest income is recorded on the accrual
basis and includes amortization of premium and discount on investments. Realized
gains and losses from securities transactions are recorded on the identified
cost basis.
All of the net investment income and realized and unrealized gains and losses
from the security transactions of the Portfolio are allocated pro rata among the
investors in the Portfolio at the time of such determination.
D. FEDERAL INCOME TAXES
It is the Portfolio's policy to comply with the requirements of the Internal
Revenue Code. Therefore, no federal income tax provision is required.
E. OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts in the financial statements.
NOTE 2--FEES AND TRANSACTIONS WITH AFFILIATES
The Portfolio has entered into an Administration and Services Agreement with
Bankers Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Portfolio in return for a fee computed daily and
paid monthly at an annual rate of 0.10 of 1% of the Portfolio's average daily
net assets. For the six months ended June 30, 1997, this fee aggregated $3,551.
The Portfolio has entered into an Advisory Agreement with Bankers Trust. Under
this Advisory Agreement, the Portfolio pays Bankers Trust an advisory fee
computed daily and paid monthly at an annual rate of 0.65 of 1% of the
Portfolio's average daily net assets. For the six months ended June 30, 1997,
this fee aggregated $23,078.
Bankers Trust has voluntarily undertaken to waive and reimburse expenses of the
Portfolio, to the extent necessary, to limit all expenses to 0.60 of 1% of the
average daily net assets of the Portfolio. For the six months ended June 30,
1997, expenses of the Portfolio have been reduced by $17,361.
Certain trustees and officers of the Portfolio are also directors, officers and
employees of Edgewood Services, Inc., the distributor of the BT Investment
Funds. None of the trustees so affiliated received compensation for services as
trustees of the Portfolio. Similarly, none of the Portfolio's officers received
compensation for services as trustees of the Portfolio.
NOTE 3--SALES OF INVESTMENT SECURITIES
The aggregate proceeds from sales of investments, other than short-term
obligations, for the six months ended June 30, 1997, were $1,150,368. For
federal income tax purposes, the tax basis of investments held at June 30, 1997
was $4,920,274. The aggregate gross unrealized appreciation was $1,919,049, and
the aggregate gross unrealized depreciation for all investments was $21,666 as
of June 30, 1997.
11
<PAGE>
BT INVESTMENT FUNDS
UTILITY 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. This report must be preceded or
accompanied by the Fund's current prospectus.
------------------------------------------------
Cusip #055922884
STA468100 (8/97)
