<PAGE>
- BT INVESTMENT FUNDS -
-------------------------
GLOBAL HIGH YIELD
SECURITIES FUND
-------------------------
ANNUAL REPORT
---------------
SEPTEMBER-1997
<PAGE>
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GLOBAL HIGH YIELD SECURITIES FUND
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . .3
GLOBAL HIGH YIELD SECURITIES 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
Report of Independent Accountants. . . . . . . . . . . . . . . . . . . .8
GLOBAL HIGH YIELD SECURITIES PORTFOLIO
Schedule of Portfolio Investments. . . . . . . . . . . . . . . . . . . .9
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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GLOBAL HIGH YIELD SECURITIES FUND
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
We are pleased to present you with this annual report for the Global High Yield
Securities 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 BT Investment Global High Yield Securities Fund (the "Fund") had a total
return of 20.40%* for the twelve months ended September 30, 1997, as compared to
15.05% for the Fund's benchmark and just 7.65% for the Lipper Global Income
Average**. The benchmark is calculated using the performances of three
appropriate indices in the following proportions: J.P. Morgan Emerging Markets
Bond Index: 1/3, Merrill Lynch High Yield Master Index: 1/3, and J.P. Morgan
Global Government Bond Index: 1/3+. Since its inception on December 14, 1993,
the Fund delivered a total return of 59.30% cumulatively, or 13.06% annualized,
as of September 30, 1997.
MARKET ACTIVITY
Overall, global high yield market activity during this annual period must be
described as diverse, with some markets performing extremely well and others
suffering from specific political, currency, or other economic conditions.
Spreads narrowed and widened correspondingly throughout the year.
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OBJECTIVE
Seeks a high level of current income, with a secondary objective of capital
appreciation, through investments in the global high yield debt markets.++
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U.S. MARKET
The high yield market in the U.S. had a strong year, supported by robust
economic growth and low inflationary pressures. The steady climb of the high
yield market was interrupted for an extended period only once, in the early
spring, when the Federal Reserve Board raised the fed funds rate by 0.25% to
5.50% on March 25th.
EMERGING MARKETS
The emerging markets' performance was mixed during the Fund's annual period.
The Asian markets were generally lackluster through the first half. Beginning
in July, these same markets sold off severely in response to the devaluation of
the Thai baht, and they have yet to show clear signs of recovery.
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INVESTMENT INSTRUMENTS
Primarily high yield, non-investment grade debt securities issued in many of the
world's securities markets.
- -------------------------------------------------------------------------------
In contrast, emerging debt markets in Latin America closely mirrored the high
yield market in the U.S. However, volatility passed through the region during
the initial stages of the Southeast Asian currency problems, as investors became
concerned about potential fallout effects. That brief period aside, positive
political developments, such as smooth elections in Mexico, and good economic
news, such as robust GDP growth figures in Argentina, helped not only to
stabilize these markets, but also to set the stage for a solid comeback in
September. Brazil also benefited from ongoing economic reform and strong
growth.
In Eastern European markets, promising political and economic reforms,
particularly in Russia and Bulgaria, generated strong positive total returns.
INVESTMENT REVIEW
The Fund significantly outperformed both its benchmark and its category average.
This was primarily due to overweight positions relative to the benchmark in
emerging markets, particularly Latin America and Eastern Europe.
The Fund also increased its positions in the U.S. market as spreads tightened in
emerging market bonds, particularly toward the end of the period. As spreads
tightened across the board, we purchased solid double-B credits as well as
companies we believed would tender for their outstanding bonds.
DIVERSIFICATION OF PORTFOLIO INVESTMENTS
BY COUNTRY AS OF SEPTEMBER 30, 1997
(PERCENTAGES ARE BASED ON MARKET VALUE)
[CHART]
South Africa 4%
Bulgaria 6%
Philippines 4%
Argentina 7%
Brazil 8%
Mexico 15%
China 10%
Morocco 3%
Other 12%
United States 31%
Though still overweight, the Fund decreased its investments in Latin America in
the late summer in order to lock in gains. In Asia, the Fund increased its
holdings of Chinese and Hong Kong issuers to approximately 10% of its assets, in
anticipation of a smooth handover of Hong Kong to Chinese authorities. We
continue to hold this position. In Southeast Asia, the Fund had reached a 10%
exposure prior to the Thai baht devaluation. That percentage has since been
reduced to less than 6%.
The Fund also benefited from its position in Russian Vneshenecom loans, which
surged to new highs in September, and from its holdings in Bulgarian Brady
Bonds, which also soared during the last fiscal quarter.
- ---------------------
* 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.
** Lipper figures represent the average of the total returns reported by
all of the mutual funds designated by Lipper Analytical Sevices, Inc. as
falling into the respective categories indicated. These figures do not
reflect sales charges.
+ Indexes are unmanaged, and investments cannot be made in an index.
++ Foreign investing involves special risks, including currency risk,
increased volatility of foreign securities, and differences in auditing
and other financial standards. Lower-rated bonds involve a higher degree
of risk than investment grade bonds in return for higher yield potential.
3
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GLOBAL HIGH YIELD SECURITIES FUND
LETTER TO SHAREHOLDERS (CONTINUED)
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MANAGER OUTLOOK
Going forward, we believe that the best value in the near to intermediate term
may be found at home in the U.S. and in Latin America. Thus, we will likely
build the Fund's positions in domestic credits and Latin American Brady Bonds
and individual corporate bonds.
We maintain our more long-term positive view on China/Hong Kong and, therefore,
intend to continue to hold the existing red chip companies in the portfolio.
Although the Chinese economy faces a number of structural concerns, we believe
the government has both the policy levers and political will to realize the
enormous potential of the country.
Although we are cautious about the markets in Southeast Asia, we intend to take
an opportunistic stance there to identify oversold or undervalued bonds. We
also will closely monitor the governments and central banks of Eastern Europe,
as they continue to implement key reforms. Finally, we believe that high yield
corporate credit markets, as opposed to purely sovereign or Brady bond markets,
are taking root in both Western and Eastern Europe as well as in South Africa.
This should provide a new range of investment opportunities in these regions
during the coming months.
We will, of course, continue to monitor economic conditions and how they affect
the financial markets, as we seek a high level of current income, with capital
appreciation as a secondary objective.
We value your ongoing support of the Global High Yield Securities Fund and look
forward to continuing to serve your investment needs in the years ahead.
/s/ Greg Hopper
Greg Hopper
PORTFOLIO MANAGER OF THE
GLOBAL HIGH YIELD SECURITIES PORTFOLIO
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PERFORMANCE COMPARISON
- -------------------------------------------------------------------------------
Comparison of Change in Value of a $10,000 Investment in the Global High Yield
Securities Fund and the blended JP Morgan Emerging Bond/Merrill Lynch High
Yield/JP Morgan Global Government Bond Index since December 31, 1993.
- -------------------------------------------------------------------------------
TOTAL RETURN FOR THE PERIOD
ENDED SEPTEMBER 30, 1997
One Year Since 12/14/93*
20.40% 13.06%**
* The Fund's inception date.
** Annualized.
Investment return and principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
- -------------------------------------------------------------------------------
[CHART]
Global High Yield JPM EMBI/ML High
Securities Fund - $15,883 Yield/JPM GGB - $14,687
------------------------- -----------------------
Dec-93 10000 10000
Mar-94 9870 9298
Jun-94 9711 9224
Sep-94 10259 9597
Dec-94 9694 9381
Mar-95 9128 9617
Jun-95 10207 10577
Sep-95 10699 10857
Dec-95 11496 11436
Mar-96 11920 11552
Jun-96 12346 11964
Sep-96 13192 12642
Dec-96 13953 13231
Mar-97 14216 13183
Jun-97 15171 14082
Sep-97 15883 14687
Past performance is not indicative of future performance.
4
<PAGE>
<TABLE>
<CAPTION>
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GLOBAL HIGH YIELD SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investment in Global High Yield Securities Portfolio, at Value . . . . . . . . . . . . . . . . . . . . . . $ 24,484,845
Deferred Organization Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,002
Prepaid Expenses and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,718
-----------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,494,565
-----------
LIABILITIES
Payable for shares of beneficial interest redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,136
Due to Bankers Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,230
Accrued Expenses and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,233
-----------
Total Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,599
-----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,445,966
-----------
-----------
COMPOSITION OF NET ASSETS
Paid-in Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,219,269
Undistributed Net Realized Gain from Investments and Foreign Currency Transactions . . . . . . . . . . . . 1,572,170
Net Unrealized Appreciation on Investments and Foreign Currency Transactions . . . . . . . . . . . . . . . 2,654,527
-----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,445,966
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE (net assets divided by shares outstanding). . . . . $ 12.01
-----------
-----------
SHARES OUTSTANDING ($0.001 par value per share, unlimited number of shares of
beneficial interest authorized) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,035,012
-----------
-----------
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STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Income Allocated from Global High Yield Securities Portfolio, net. . . . . . . . . . . . . . . . . . . . . $ 1,731,474
-----------
EXPENSES
Administration and Services Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223,857
Printing and Shareholder Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,700
Registration Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,384
Professional Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,695
Trustees Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,740
Deferred Organization Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,661
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,879
-----------
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264,916
Less Expenses Absorbed by Bankers Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (88,187)
-----------
Net Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176,729
-----------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,554,745
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS
Net Realized Gain (Loss) from:
Investment Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,836,740
Foreign Currency Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,012)
Net Change in Unrealized Appreciation on Investments and Foreign Currency Transactions . . . . . . . . . . 1,005,959
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS. . . . . . . . . . . 2,832,687
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,387,432
-----------
-----------
</TABLE>
See Notes to Financial Statements on Page 7
5
<PAGE>
<TABLE>
<CAPTION>
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GLOBAL HIGH YIELD SECURITIES 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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,554,745 $ 1,566,619
Net Realized Gain from Investment and Foreign Currency Transactions. . . . . . . . 1,826,728 855,081
Net Change in Unrealized Appreciation on Investments and Foreign Currency
Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,005,959 1,618,682
---------- ----------
Net Increase in Net Assets from Operations . . . . . . . . . . . . . . . . . . . . . 4,387,432 4,040,382
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,106,154) (1,488,712)
Net Realized Gain from Investment and Foreign Currency Transactions. . . . . . . . (489,931) --
---------- ----------
TOTAL DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,596,085) (1,488,712)
---------- ----------
CAPITAL TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Proceeds from Sales of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 18,915,362 10,018,654
Dividend Reinvestments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 475,271 381,174
Cost of Shares Redeemed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16,276,633) (16,324,044)
---------- ----------
NET INCREASE (DECREASE) FROM CAPITAL TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST . 3,114,000 (5,924,216)
---------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . . . . . . . . 4,905,347 (3,372,546)
NET ASSETS
Beginning of Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,540,619 22,913,165
---------- ----------
End of Year (includes (over) undistributed net investment income of $(26,709)
and $524,700, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,445,966 $ 19,540,619
---------- ----------
---------- ----------
</TABLE>
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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 Global High Yield Securities Fund.
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEARS ENDED DECEMBER 14, 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 . . . . . . . . . $11.20 $9.78 $10.29 $10.00
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income. . . . . . . . . . . . . . . . 0.75 0.87 0.77 0.31
Net Realized and Unrealized Gain (Loss) on
Investment and Foreign Currency Transactions . . . . 1.37 1.30 (0.41) (0.02)
------ ------ ------ ------
Total Income from Investment Operations. . . . . . . . 2.12 2.17 0.36 0.29
------ ------ ------ ------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income. . . . . . . . . . . . . . . . (1.06) (0.75) (0.87) --
Net Realized Gain from Investment Transactions . . . (0.25) -- -- --
------ ------ ------ ------
TOTAL DISTRIBUTIONS. . . . . . . . . . . . . . . . . . (1.31) (0.75) (0.87) --
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . $12.01 $11.20 $9.78 $10.29
------ ------ ------ ------
------ ------ ------ ------
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . 20.40% 23.31% 4.28% 3.66%*
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Period (000s omitted) . . . . . . $24,446 $19,541 $22,913 $14,738
Ratios to Average Net Assets:
Net Investment Income. . . . . . . . . . . . . . . 6.60% 8.04% 8.68% 5.44%*
Expenses, including Expenses of the
Global High Yield Securities Portfolio. . . . . . 1.50% 1.50% 1.74% 1.75%*
Decrease Reflected in Above Expense
Ratio Due to Absorption of Expenses by
Bankers Trust . . . . . . . . . . . . . . . . . . 0.68% 1.00% 0.87% 1.08%*
</TABLE>
- -------------------
* Annualized
See Notes to Financial Statements on Page 7
6
<PAGE>
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GLOBAL HIGH YIELD SECURITIES 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 Global High Yield Securities 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
December 14, 1993. The Fund invests substantially all of its assets in the
Global High Yield Securities 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 quarterly 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 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, $26,709 of overdistributed net investment income was reclassified to
paid-in-capital and $15,221 of undistributed net realized loss was reclassified
to paid-in-capital.
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 $223,857.
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 0.75 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, 1997, expenses of the Fund have
been reduced by $88,187.
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:
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
------------------------ -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ---------- --------- ----------
Sold 1,659,669 $ 18,915,362 955,647 $ 10,018,654
Reinvested 42,015 475,271 43,268 381,174
Redeemed (1,411,403) (16,276,633) (1,596,653) (16,324,044)
--------- ---------- --------- ----------
Net Increase (Decrease) 290,281 $ 3,114,000 (597,738) $ (5,924,216)
--------- ---------- --------- ----------
--------- ---------- --------- ----------
7
<PAGE>
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GLOBAL HIGH YIELD SECURITIES 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
Global High Yield Securities 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 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 December 14, 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
Global High Yield Securities 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
8
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL HIGH YIELD SECURITIES PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 1997
- --------------------------------------------------------------------------------
Principal
Amount Description Value
- --------- ----------- -----
CORPORATE DEBENTURES - 49.04%
CANADA - 1.37%
$ 500,000 Call-Net Enterprises, Inc., 0.00%, 8/15/07 (c). $ 335,000
---------
CHINA - 7.63%
500,000 Guangdong Enterprises, 8.875%, 5/22/07. . . . . 509,336
500,000 Huaneng Power International Plc., 1.75%, 5/21/04 521,500
500,000 Shanghai Industrial Holdings, 1.00%, 6/12/02. . 545,950
250,000 Zhuhai Highway Co. Ltd., 11.50%, 7/01/08 (b). . 292,397
---------
1,869,183
---------
COLOMBIA - 2.65%
500,000 Celcaribe SA, 0.00%, 3/15/04 (b) (c). . . . . . 650,000
---------
GERMANY - 0.96%
400,000 Impress Metal Packaging Holding, 9.875%, 5/29/07(b) 234,071
---------
INDONESIA - 1.94%
430,000 Indah Kiat International Finance Co., 12.50%,6/15/06 475,688
---------
MEXICO - 1.85%
250,000 Altos Hornos De Mexico, 11.875%, 4/30/04. . . . 280,625
150,000 Grupo Industrial Durango, 12.625%, 8/01/03. . . 171,937
---------
452,562
---------
PHILIPPINES - 3.93%
491,912 Bauang Private Power Corp., 10.17%, 3/15/08 . . 531,117
500,000 FDC Cayman Capital, 2.50%, 5/15/06. . . . . . . 430,000
---------
961,117
---------
SOUTH AFRICA - 3.97%
350,000 Liberty Life International, 6.50%, 9/30/04. . . 470,750
520,000 Samancor Overseas Financing, 7.00%, 6/30/04 . . 501,800
---------
972,550
---------
UNITED KINGDOM - 1.34%
500,000 Diamond Cable Co., 10.75%, 2/15/07 (c). . . . . 327,500
---------
U.S.A. - 23.40%
600,000 Allied Waste North America, 10.25%, 12/01/06 (b) 658,500
500,000 Empress River Casino Finance, 10.75%, 4/01/02 . 542,500
225,000 Felcor Suites LP, 7.625%, 10/01/07. . . . . . . 223,220
250,000 Forcenergy, Inc., 8.50%, 2/15/07. . . . . . . . 250,000
200,000 Hollywood Casino, 12.75%, 11/01/03. . . . . . . 218,500
250,000 Johns Manville International Group, 10.875%, 12/15/04 278,200
$ 400,000 Majestic Star Casino, 12.75%, 5/15/03 . . . . . $ 443,000
650,000 NBTY, Inc., 8.625%, 9/15/07 . . . . . . . . . . 650,000
250,000 PriCellular Wireless Corp., 10.75%, 11/01/04 (c) 271,250
500,000 PriCellular Wireless Corp., Cl. A, 0.00%, 10/01/03 508,750
650,000 Regal Cinemas, 8.50%, 10/01/07. . . . . . . . . 654,875
500,000 Twin Laboratories Inc., 10.25%, 5/15/06 (b) . . 542,500
250,000 United Meridian Corp., 10.375%, 10/15/05. . . . 274,375
200,000 U.S. Can Corp., Series B 10.125%, 10/15/06. . . 213,500
---------
5,729,170
---------
TOTAL CORPORATE DEBENTURES (Cost $11,336,475) . . . . . . . . 12,006,841
----------
GOVERNMENT BONDS - 40.17%
ARGENTINA - 7.00%
800,000 Argentina Discount, 6.875%, 3/31/23 . . . . . . 728,000
240,000 Argentina FRB, Series L, 6.75%, 3/31/05 . . . . 229,080
1,000,000 Argentina Par, Series L-GP, 5.50%, 3/31/23 (a). 757,500
---------
1,714,580
---------
BRAZIL - 8.22%
728,423 Brazil C Bond, 8.00%, 4/15/14 (e) . . . . . . . 620,070
900,000 Brazil DCB, Series L, 6.938%, 4/15/12 (a) . . . 763,875
700,000 Brazil New Money Bond, 6.938%, 4/15/09. . . . . 628,688
---------
2,012,633
---------
BULGARIA - 6.41%
1,400,000 Bulgaria Discount, Series A, 6.688%, 7/28/24 (a) 1,165,500
500,000 Bulgaria IAB, Series PDI, 6.688%, 7/28/11 . . . 403,750
---------
1,569,250
---------
MEXICO - 11.93%
1,000,000 Mexico Discount, Series B, 6.835%, 12/31/19 . . 958,750
750,000 Mexico Discount, Series D, 6.813%, 12/31/19 . . 716,250
1,000,000 Mexico Par, Series B, 6.250%, 12/31/19. . . . . 832,500
500,000 United Mexican States, 6.25%, 12/31/19. . . . . 413,600
---------
2,921,100
---------
MOROCCO - 3.07%
800,000 Morocco Reconstruction & Consolidation
Agreement, Series A, 6.813%, 1/01/09. . . . . 752,000
---------
PANAMA - 1.84%
518,701 Panama PDI, 6.687%, 7/17/16 (e) . . . . . . . . 450,621
---------
RUSSIA - 1.70%
400,000 Vnesheconombank Loan, 0.00%, 11/29/26 (d) . . . 414,760
---------
TOTAL GOVERNMENT BONDS (Cost $7,896,904). . . . . . . . . . . 9,834,944
---------
See Notes to Financial Statements on Pages 13 and 14
9
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL HIGH YIELD SECURITIES PORTFOLIO
SCHEDULE OF PORTFOLIO INVESTMENTS SEPTEMBER 30, 1997
- --------------------------------------------------------------------------------
Shares Description Value
- ------ ----------- -----
OTHER SECURITIES - 2.25%
HONG KONG - 2.20%
20,000 Swire Pacific Offshore, 9.33%. . . . . . . . . . . $ 537,500
---------
U.S.A. - 0.05%
500 IHF Holdings-Ser. I Warrants (Cost $0) . . . . . . 12,500
---------
TOTAL OTHER SECURITIES (Cost $500,000) . . . . . . . . . . . . . 550,000
---------
SHORT TERM INSTRUMENT - 7.37%
U.S.A. - 7.37%
1,804,950 BT Institutional Cash Management Fund,
(Cost $1,804,950) . . . . . . . . . . . . . . . . 1,804,950
---------
TOTAL INVESTMENTS (Cost $21,538,329) . . . . . . . . . 98.83% 24,196,735
Assets in Excess of Other Liabilities. . . . . . . . . 1.17% 288,125
------ ----------
Net Assets . . . . . . . . . . . . . . . . . . . . . . 100.00% 24,484,860
------ ----------
------ ----------
- ------------------
(a) Floating rate 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) Debt obligations initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(d) Non-income producing.
(e) Payment in-kind security.
See Notes to Financial Statements on Pages 13 and 14
10
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL HIGH YIELD SECURITIES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1997
- --------------------------------------------------------------------------------
ASSETS
Investments, at Value (Cost of $21,538,329). . . . . . . $ 24,196,735
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . 84,322
Dividends and Interest Receivable. . . . . . . . . . . . 464,556
----------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . 24,745,613
----------
LIABILITIES
Due to Bankers Trust . . . . . . . . . . . . . . . . . . 27,654
Payable for Securities Purchased . . . . . . . . . . . . 223,220
Accrued Expenses and Other . . . . . . . . . . . . . . . 9,879
----------
Total Liabilities. . . . . . . . . . . . . . . . . . . . . 260,753
----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . $ 24,484,860
----------
----------
COMPOSITION OF NET ASSETS
Paid-in Capital. . . . . . . . . . . . . . . . . . . . . $ 21,826,369
Net Unrealized Appreciation on Investment and
Foreign Currency Transactions . . . . . . . . . . . . . 2,658,491
----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . $ 24,484,860
----------
----------
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 1997
- -------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends. . . . . . . . . . . . . . . . . . . . . . . . $ 40,270
Interest . . . . . . . . . . . . . . . . . . . . . . . . 1,870,550
----------
TOTAL INVESTMENT INCOME. . . . . . . . . . . . . . . . . . 1,910,820
----------
EXPENSES
Advisory Fees. . . . . . . . . . . . . . . . . . . . . . 189,050
Administration and Services Fees . . . . . . . . . . . . 47,263
Professional Fees. . . . . . . . . . . . . . . . . . . . 23,450
Trustees Fees. . . . . . . . . . . . . . . . . . . . . . 2,040
----------
Total Expenses . . . . . . . . . . . . . . . . . . . . . 261,803
Less Expenses Absorbed by Bankers Trust. . . . . . . . . (84,568)
----------
Net Expenses . . . . . . . . . . . . . . . . . . . . . 177,235
----------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . 1,733,585
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND
FOREIGN CURRENCY TRANSACTIONS
Net Realized Gain (Loss) from:
Investment Transactions . . . . . . . . . . . . . . . . 1,839,214
Foreign Currency Transactions . . . . . . . . . . . . . (10,033)
Net Change in Unrealized Appreciation on
Investments and Foreign Currency Transactions . . . . . 1,006,745
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS. . . . . . . 2,835,926
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS . . . . . . . . $ 4,569,511
----------
----------
See Notes to Financial Statements on Pages 13 and 14
11
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL HIGH YIELD SECURITIES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
------------------ ------------------
INCREASE IN NET ASSETS FROM:
OPERATIONS
Net Investment Income . . . . . . . . $ 1,733,585 $ 1,718,740
Net Realized Gain from Investment
and Foreign Currency Transactions. . 1,829,181 859,124
Net Change in Unrealized Appreciation on
Investments and Foreign Currency
Transactions . . . . . . . . . . . . 1,006,745 1,621,753
---------- ----------
Net Increase in Net Assets from Operations 4,569,511 4,199,617
---------- ----------
CAPITAL TRANSACTIONS
Proceeds from Capital Invested. . . . 19,438,269 10,592,611
Value of Capital Withdrawn. . . . . . (19,266,075) (18,052,538)
---------- ----------
Net Increase (Decrease) in Net Assets from
Capital Transactions . . . . . . . . . 172,194 (7,459,927)
---------- ----------
TOTAL INCREASE (DECREASE) IN
NET ASSETS . . . . . . . . . . . . . . 4,741,705 (3,260,310)
NET ASSETS
Beginning of Year. . . . . . . . . . . 19,743,155 23,003,465
---------- ----------
End of Year. . . . . . . . . . . . . . $ 24,484,860 $ 19,743,155
---------- ----------
---------- ----------
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
Contained below are selected ratios to average net assets and other supplemental
data for the periods indicated for the Global High Yield Securities Portfolio.
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEARS ENDED DECEMBER 14, 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) . . . . . . . . . . . . $24,485 $19,743 $23,003 $14,729
Ratios to Average Net Assets:
Net Investment Income. . . . . . . . . . . . . . . . . . . . . 7.34% 8.78% 9.63% 6.44%*
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.75% 0.75% 0.75% 0.75%*
Decrease Reflected in Above Expense
Ratio Due to Absorption of Expenses by
Bankers Trust . . . . . . . . . . . . . . . . . . . . . . . . 0.30% 0.44% 0.45% 0.59%*
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . . . . 139% 207% 169% 347%
</TABLE>
- ------------------------
* Annualized
See Notes to Financial Statements on Pages 13 and 14
12
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL HIGH YIELD SECURITIES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
A. ORGANIZATION
The Global High Yield Securities 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
December 14, 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 are carried at fair market value as determined by
independent pricing services at the end of each business day. 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 by 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 valued at 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>
- --------------------------------------------------------------------------------
GLOBAL HIGH YIELD SECURITIES 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 0.10 of 1% of the Portfolio's average daily
net assets. For the year ended September 30, 1997, this fee aggregated $47,263.
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 0.80 of 1% of the
Portfolio's average daily net assets. For the year ended September 30, 1997,
this fee aggregated $189,050.
Bankers Trust has voluntarily undertaken to waive and reimburse expenses of the
Portfolio, to the extent necessary, to limit all expenses to 0.75 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 $84,568.
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.
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
$31,518,222 and $31,105,621, respectively.
For federal income tax purposes, the tax basis of investments held at September
30, 1997 was $21,607,399. The aggregate gross unrealized appreciation for all
investments was $2,728,631 and the aggregate gross unrealized depreciation for
all investments was $70,226.
NOTE 4--CREDIT RISKS
Although the Portfolio's investments are diversified, the Portfolio invests in
primarily high yield, non-investment grade debt securities issued in many of the
world's securities markets. Investments in higher yielding securities are
accompanied by a greater degree of credit risk and the risk tends to be more
sensitive to economic conditions than higher rated securities. The risk of loss
due to default by the issuer may be significantly greater for the holders of
high yielding securities because such securities are generally unsecured and are
often subordinated to other obligations of the issuer.
14
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL HIGH YIELD SECURITIES PORTFOLIO
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Trustees and Holders of Beneficial Interest of the BT Investment
Portfolios:
We have audited the accompanying statement of assets and liabilities, including
the schedule of portfolio investments, of the Global High Yield Securities
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 December 14, 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
Global High Yield Securities 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
GLOBAL HIGH YIELD SECURITIES 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.
--------------------
