BT INVESTMENT FUNDS, 497, 1998-02-03

BT INVESTMENT FUNDS
497, 1998-02-03

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(BULLET) BT INVESTMENT FUNDS (BULLET)
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INTERMEDIATE TAX FREE FUND
GLOBAL HIGH YIELD SECURITIES FUND
CAPITAL APPRECIATION FUND
SMALL CAP FUND
INTERNATIONAL EQUITY FUND
PACIFIC BASIN EQUITY FUND
LATIN AMERICAN EQUITY FUND
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PROSPECTUS
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JANUARY 31, 1998

BT Investment Funds (the "Trust") is an open-end, management investment company
(mutual fund) which consists of a number of separate investment funds. Each of
the funds listed above (each, a "Fund" and together, the "Funds") is a separate
series of BT Investment Funds.

Please read this Prospectus before investing, and keep it on file for future
reference. It contains important information, including how each Fund invests
and the services available to shareholders.

A Statement of Additional Information ("SAI") with the same date has been filed
with the Securities and Exchange Commission ("SEC") and is incorporated herein
by reference. You may request a free copy of the SAI or a paper copy of this
prospectus, if you have received your prospectus electronically, free of charge
by calling the Trust's Service Agent at 1-800-730-1313. The SAI, material
incorporated by reference into this document, and other information regarding
the Trust is maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).

UNLIKE OTHER MUTUAL FUNDS, EACH FUND SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE
BY INVESTING ALL OF ITS INVESTABLE ASSETS ("ASSETS") IN A SEPARATE INVESTMENT
COMPANY (A "PORTFOLIO") WITH AN IDENTICAL INVESTMENT OBJECTIVE. THE INVESTMENT
PERFORMANCE OF EACH FUND WILL CORRESPOND DIRECTLY TO THE INVESTMENT PERFORMANCE
OF THE CORRESPONDING PORTFOLIO. SEE "SPECIAL INFORMATION CONCERNING
MASTER-FEEDER FUND STRUCTURE" HEREIN.

BANKERS TRUST COMPANY ("BANKERS TRUST") IS THE INVESTMENT ADVISER (THE
"ADVISER") OF EACH PORTFOLIO. SHARES OF THE FUNDS ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, BANKERS TRUST OR ANY OTHER BANKING
OR DEPOSITORY INSTITUTION. SHARES ARE NOT FEDERALLY GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE U.S. GOVERNMENT, THE FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.

THE GLOBAL HIGH YIELD SECURITIES PORTFOLIO AND LATIN AMERICAN EQUITY PORTFOLIO
MAY INVEST IN LOWER-QUALITY DEBT SECURITIES, SOMETIMES CALLED "JUNK BONDS." THE
GLOBAL HIGH YIELD SECURITIES PORTFOLIO MAY INVEST IN THESE TYPES OF SECURITIES
WITHOUT LIMIT. INVESTORS SHOULD CONSIDER THAT THESE SECURITIES CARRY GREATER
RISKS, SUCH AS THE RISK OF DEFAULT, THAN OTHER DEBT SECURITIES. REFER TO "RISK
FACTORS: MATCHING THE FUND TO YOUR INVESTMENT NEEDS -- RISKS OF INVESTING IN
HIGH YIELD SECURITIES ("JUNK BONDS") HEREIN FOR FURTHER INFORMATION.

THE GLOBAL HIGH YIELD SECURITIES PORTFOLIO AND LATIN AMERICAN EQUITY PORTFOLIO
MAY BORROW MONEY FOR INVESTMENT IN SECURITIES. SUCH LEVERAGE WILL EXAGGERATE ANY
INCREASE OR DECREASE IN THE VALUE OF SHARES IN THE FUNDS. BORROWING ALSO
INVOLVES COSTS TO THE PORTFOLIO. SEE "ADDITIONAL INFORMATION -- LEVERAGE"
HEREIN. EACH OF THE CORRESPONDING FUNDS MAY BE CONSIDERED A SPECULATIVE
INVESTMENT AND IS DESIGNED FOR AGGRESSIVE INVESTORS.

LIKE SHARES OF ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

EDGEWOOD SERVICES, INC.
Clearing Operations (Bullet) P.O. Box 897 (Bullet) Pittsburgh, Pennsylvania
(Bullet) 15230-0897

<PAGE>

The Funds......................................................................3

Who May Invest.................................................................3

Investment Principles and Risks................................................4

Summary of Fund Expenses.......................................................5

Financial Highlights...........................................................7

Investment Objectives and Policies............................................11

Risk Factors: Matching the Fund to Your Investment Needs......................18

Special Information Concerning Master-Feeder Fund Structure...................21

Net Asset Value...............................................................22

Purchase and Redemption of Shares.............................................22

Dividends, Distributions and Taxes............................................27

Performance Information and Reports...........................................28

Management of the Trust and Portfolios........................................29

Additional Information........................................................33

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<PAGE>

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THE FUNDS
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The following is a description of each Fund's investment objectives.

INTERMEDIATE TAX FREE FUND'S investment objective is a high level of current
income exempt from federal income tax consistent with moderate risk of capital.
The Portfolio seeks to maintain a current yield that is greater than that
generally obtainable from a portfolio of short-term tax-exempt obligations,
subject to applicable quality restrictions.

GLOBAL HIGH YIELD SECURITIES FUND'S investment objective is high current income
from investment in a non-diversified portfolio of high yield, non-investment
grade debt securities issued in many of the world's securities markets. Capital
appreciation will be considered when consistent with the primary investment
objective of high current income.

CAPITAL APPRECIATION FUND'S investment objective is long-term capital growth;
the production of any current income is secondary to this objective. The
Portfolio invests primarily in growth-oriented common stocks of medium-sized
domestic corporations and, to a lesser extent, foreign corporations.

SMALL CAP FUND'S investment objective is long-term capital growth; the
production of any current income is secondary to this objective. The Portfolio
seeks to provide long-term capital growth by investing primarily in equity
securities of smaller sized growth companies.

INTERNATIONAL EQUITY FUND'S investment objective is long-term capital
appreciation from investment in foreign equity securities (or other securities
with equity characteristics); the production of any current income is incidental
to this objective. The Portfolio invests primarily in established companies
based in developed countries outside the United States, but the Portfolio may
also invest in emerging market securities.

PACIFIC BASIN EQUITY FUND'S investment objective is long-term capital
appreciation from investment primarily in the equity securities (or other
securities with equity characteristics) of companies domiciled in, or doing
business in the Pacific Basin region, other than Japan; the production of any
current income is incidental to this objective.

LATIN AMERICAN EQUITY FUND'S investment objective is long-term capital
appreciation from investment primarily in the equity securities (or other
securities with equity characteristics) of companies domiciled in, or doing
business in, Latin America; the production of any current income is incidental
to this objective.

The Trust seeks to achieve the investment objective of each Fund by investing
all the Assets of the Fund in the corresponding Portfolio. The Portfolios are
Intermediate Tax Free Portfolio, Global High Yield Securities Portfolio, Capital
Appreciation Portfolio, Small Cap Portfolio, International Equity Portfolio,
Pacific Basin Equity Portfolio and Latin American Equity Portfolio,
respectively. See "Investment Principles and Risks" and "Risk Factors: Matching
the Fund to Your Investment Needs" herein.

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WHO MAY INVEST

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The Capital Appreciation Fund, Small Cap Fund, International Equity Fund,
Pacific Basin Equity Fund, and Latin American Equity Fund are designed for
investors who are willing to accept short-term domestic and/or foreign stock
market fluctuations in pursuit of potentially higher long-term returns. These
Funds invest for growth and do not pursue income.

In addition, the International Equity Fund, Global High Yield Securities Fund,
Latin American Equity Fund and Pacific Basin Equity Fund may also be appropriate
for investors who want to pursue their investment goals in markets outside of
the United States. By including international investments in your portfolio, you
can achieve an extra level of diversification and also participate in
opportunities around the world.

The Intermediate Tax Free Fund is designed for conservative investors looking
for a relatively stable, high-grade investment, the income of which is free from
federal income tax. Because the Fund's Portfolio invests in high-grade
tax-exempt instruments with short to intermediate maturities its share price
should be more stable than that of a long-term bond fund, although it may be
less stable than that of a short-term bond fund.

<PAGE>

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Each Fund is not in itself a balanced investment plan. Investors should consider
their investment objective and tolerance for risk when making an investment
decision. When investors sell their Fund shares, they may be worth more or less
than what they originally paid for them.

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INVESTMENT PRINCIPLES AND RISKS
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The value of each Portfolio's investments varies based on many factors. The
value of bonds fluctuates based on changes in domestic or foreign interest
rates, the credit quality of the issuer, market conditions, and other economic
and political news. In general, bond prices rise when interest rates fall, and
vice versa. This effect is usually more pronounced for longer-term securities.
Lower-quality securities offer higher yields, but also carry more risk.

Stock values fluctuate, sometimes dramatically, in response to the activities of
individual companies and general market and economic conditions. Over time,
however, stocks have shown greater long-term growth potential than other types
of securities.

Because many foreign investments are denominated in foreign currencies, changes
in the value of these currencies can significantly affect a Fund's share price.
General economic factors in the various world markets can also impact the value
of an investor's investment, especially for securities in emerging markets. Many
investments in emerging markets can be considered speculative, and therefore may
offer higher income (for debt funds) and total return potential, but
significantly greater risk.

Each of the Global High Yield Securities Fund and Portfolio is classified as a
"non-diversified" investment company under the Investment Company Act of 1940,
as amended (the "1940 Act"), and may invest a greater portion of its assets in a
single issuer than a diversified fund. As a result, this Portfolio may be more
susceptible to any single economic, political or regulatory occurrence than a
diversified fund. See "Risk Factors: Matching the Fund to Your Investments Needs
- -- Non-Diversified Investment Company" for more information. Each other Fund and
Portfolio is classified as "diversified."

Bankers Trust may use various investment techniques to hedge a Portfolio's
risks, but there is no guarantee that these strategies will work as intended.
When an investor sells their Fund shares ("Shares"), they may be worth more or
less than what they originally paid for them. See "Risk Factors: Matching the
Fund to Your Investment Needs" herein for more information.

<PAGE>

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SUMMARY OF FUND EXPENSES
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Annual Operating Expenses are paid out of the assets of each Portfolio and Fund.
Each Portfolio pays an investment advisory fee and an administrative services
fee to Bankers Trust. Each Fund incurs expenses such as maintaining shareholder
records and furnishing shareholder statements. Each Fund must provide financial
reports.

The following table provides: (i) a summary of estimated expenses relating to
purchases and sales of Shares of the Funds and the annual operating expenses of
the Funds and the expenses of the corresponding Portfolio, as a percentage of
average net assets of the Fund, and (ii) an example illustrating the dollar cost
of such expenses on a $1,000 investment in each Fund. THE TRUSTEES OF THE TRUST
BELIEVE THAT THE AGGREGATE PER SHARE EXPENSES OF EACH FUND AND THE CORRESPONDING
PORTFOLIO WILL BE LESS THAN OR APPROXIMATELY EQUAL TO THE EXPENSES WHICH THE
FUND WOULD INCUR IF THE TRUST RETAINED THE SERVICES OF AN INVESTMENT ADVISER AND
THE ASSETS OF EACH FUND WERE INVESTED DIRECTLY IN THE TYPE OF SECURITIES BEING
HELD BY THE CORRESPONDING PORTFOLIO.

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<PAGE>

<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES
(as a percentage of the average daily net assets of the Fund)
<S><C>
...........................................................................................................................
INTERMEDIATE TAX FREE FUND
...........................................................................................................................
Investment advisory fee (after reimbursements or waivers) 0.26%
12b-1 fees None
Other expenses (after reimbursements or waivers) 0.59%
...........................................................................................................................
Total operating expenses (after reimbursements or waivers) 0.85%
...........................................................................................................................
GLOBAL HIGH YIELD SECURITIES FUND
...........................................................................................................................
Investment advisory fee (after reimbursements or waivers) 0.51%
12b-1 fees None
Other expenses (after reimbursements or waivers) 0.99%
...........................................................................................................................
Total operating expenses (after reimbursements or waivers) 1.50%
...........................................................................................................................
CAPITAL APPRECIATION FUND
...........................................................................................................................
Investment advisory fee (after reimbursements or waivers) 0.52%
12b-1 fees None
Other expenses (after reimbursements or waivers) 0.73%
...........................................................................................................................
Total operating expenses (after reimbursements or waivers) 1.25%
...........................................................................................................................
SMALL CAP FUND
...........................................................................................................................
Investment advisory fee (after reimbursements or waivers) 0.57%
12b-1 fees None
Other expenses (after reimbursements or waivers) 0.68%
...........................................................................................................................
Total operating expenses (after reimbursements or waivers) 1.25%
...........................................................................................................................
INTERNATIONAL EQUITY FUND
...........................................................................................................................
Investment advisory fee (after reimbursements or waivers) 0.58%
12b-1 fees None
Other expenses (after reimbursements or waivers) 0.92%
...........................................................................................................................
Total operating expenses (after reimbursements or waivers) 1.50%
...........................................................................................................................
</TABLE>

<PAGE>

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<TABLE>
<S><C>
PACIFIC BASIN EQUITY FUND
...........................................................................................................................
Investment advisory fee (after reimbursements or waivers) 0.63%
12b-1 fees None
Other expenses (after reimbursements or waivers) 1.12%
...........................................................................................................................
Total operating expenses (after reimbursements or waivers) 1.75%
...........................................................................................................................
LATIN AMERICAN EQUITY FUND
...........................................................................................................................
Investment advisory fee (after reimbursements or waivers) 0.80%
12b-1 fees None
Other expenses (after reimbursements or waivers) 1.20%
...........................................................................................................................
Total operating expenses (after reimbursements or waivers) 2.00%
...........................................................................................................................

EXAMPLES 1 YEAR 3 YEARS 5 YEARS 10 YEARS

You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time period:

Intermediate Tax Free Fund $ 9 $27 $47 $105
Global High Yield Securities Fund $15 $47 $82 $179
Capital Appreciation Fund $13 $40 $69 $151
Small Cap Fund $13 $40 $69 $151
International Equity Fund $15 $47 $82 $179
Pacific Basin Equity Fund $18 $55 $95 $206
Latin American Equity Fund $20 $63 $108 $233
</TABLE>

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The expense tables and the examples above show the costs and expenses that an
investor will bear directly or indirectly as a shareholder of each Fund.

Bankers Trust has voluntarily agreed to waive a portion of its investment
advisory fee with respect to each Portfolio. Without such waiver, each
Portfolio's investment advisory fee would be equal to the following:
Intermediate Tax Free Portfolio -- 0.40%; Global High Yield Securities Portfolio
- -- 0.80%; Capital Appreciation Portfolio -- 0.65%; Small Cap Portfolio -- 0.65%;
International Equity Portfolio -- 0.65%; Pacific Basin Equity Portfolio --
0.75%; and Latin American Equity Portfolio -- 1.00%. The expense tables and
examples reflect a voluntary undertaking by Bankers Trust to waive or reimburse
expenses such that the total aggregate operating expenses of each will not
exceed the following: Intermediate Tax Free Fund -- 0.85%; Global High Yield
Securities Fund -- 1.50%; Capital Appreciation Fund -- 1.25%; Small Cap Fund --
1.25%; International Equity Fund -- 1.50%; Pacific Basin Equity Fund -- 1.75%;
and Latin American Equity Fund -- 2.00%. In the absence of this undertaking, for
the fiscal year ended September 30, 1997 (as a percentage of a Fund's average
daily net assets) "Total Operating Expenses" would have been as follows:
Intermediate Tax Free Fund -- 1.15%; Global High Yield Securities Fund -- 2.18%;
Capital Appreciation Fund -- 1.54%; Small Cap Fund -- 1.42%; International
Equity Fund -- 1.68%; Pacific Basin Equity Fund -- 2.04%; and Latin American
Equity Fund -- 2.44%. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN. Moreover, while each example assumes a 5% annual return, actual
performance will vary and may result in a return greater or less than 5%.

The Funds are distributed by Edgewood Services, Inc. ("Edgewood," or the
"Distributor") to investors including customers of Bankers Trust or to customers
of another bank or a dealer or other institution that has a sub-shareholder
servicing agreement with Bankers Trust (along with Bankers Trust, a "Service
Agent"). Some Service Agents may impose certain conditions on their customers in
addition to or different from those imposed by the Funds and may charge their
customers a direct fee for their services, including transaction fees on
purchases and redemptions of Fund shares. Each Service Agent has agreed to
transmit to shareholders who are its customers appropriate disclosures of any
fees that it may charge them directly.

For more information about each Fund's and each Portfolio's expenses see
"Management of the Trust and Portfolios" herein.

<PAGE>

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FINANCIAL HIGHLIGHTS
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The following tables show selected data for a Share outstanding, total
investment return ratios to average net assets and other supplemental data for
each Fund for each of the periods indicated and has been audited by Coopers &
Lybrand L.L.P., the Funds' independent accountants, whose report thereon appears
in each Fund's Annual Report which is incorporated by reference.

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE TAX FREE FUND
FOR THE FOR THE FOR THE YEARS ENDED DECEMBER 31,
YEAR ENDED YEAR ENDED -----------------------------------
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996* 1995 1994 1993
<S><C>
.................................................................................................................................
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.34 $ 10.56 $ 9.72 $ 10.54 $ 9.99
.................................................................................................................................
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.44 0.33 0.47 0.42 0.41
Net Realized and Unrealized Gain (Loss) on
Investments 0.31 (0.22) 0.84 (0.82) 0.57
.................................................................................................................................
Total Income (Loss) from Investment
Operations 0.75 0.11 1.31 (0.40) 0.98
------- ------- ------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (0.44) (0.33) (0.47) (0.42) (0.41)
Net Realized Gain from Investment
Transactions -- -- -- -- (0.02)
.................................................................................................................................
Total Distributions (0.44) (0.33) (0.47) (0.42) (0.43)
.................................................................................................................................
NET ASSET VALUE, END OF PERIOD $ 10.65 $ 10.34 $ 10.56 $ 9.72 $ 10.54
======== ======= ======= ======= =======
TOTAL INVESTMENT RETURN 7.43% 4.09%** 13.71% (3.81)% 9.94%
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Period (000s omitted) $ 18,732 $22,008 $22,213 $25,303 $31,709
Ratios to Average Net Assets:
Net Investment Income 4.23% 4.25%** 4.58% 4.20% 3.88%
Expenses, Including Expenses of the
Intermediate Tax Free Portfolio 0.85% 0.85%** 0.85% 0.85% 0.85%
Decrease Reflected in Above Expense Ratio
Due to Absorption of Expenses by Bankers
Trust 0.30% 0.38%** 0.28% 0.36% 0.35%
</TABLE>
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* The Board of Trustees approved the change of the fiscal year end from
December 31 to September 30.
** Annualized.
7

<PAGE>

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<TABLE>
<CAPTION>
GLOBAL HIGH YIELD SECURITIES FUND
FOR THE PERIOD
FOR THE YEARS ENDED DECEMBER 14, 1993
SEPTEMBER 30, (COMMENCEMENT OF
--------------------------------- OPERATIONS) TO
1997 1996 1995 SEPTEMBER 30, 1994
<S><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>

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* Annualized.

<TABLE>
<CAPTION>
CAPITAL APPRECIATION FUND
FOR THE PERIOD
FOR THE FOR THE FOR THE PERIOD FOR THE MARCH 9, 1993
YEAR ENDED YEAR ENDED JANUARY 1, 1995 YEAR ENDED (COMMENCEMENT
SEPTEMBER 30, SEPTEMBER 30, TO SEPTEMBER 30, DECEMBER 31, OF OPERATIONS) TO
1997 1996 1996** 1994 DECEMBER 31, 1993
<S><C>
..................................................................................................................................
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.79 $ 16.83 $ 12.10 $ 11.72 $ 10.00
..................................................................................................................................
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net Investment Loss (0.13) (0.10) (0.07) (0.04) (0.01)
Net Realized and Unrealized Gain from
Investment Transactions 2.13 1.89 4.80 0.42 1.73
..................................................................................................................................
Total Income from Investment
Operations 2.00 1.79 4.73 0.38 1.72
------- ------- ------- -------- -------
DISTRIBUTIONS TO SHAREHOLDERS
Net Realized Gain from Investment
Transactions (3.07) (1.83) -- -- --
..................................................................................................................................
NET ASSET VALUE, END OF PERIOD $ 15.72 $ 16.79 $ 16.83 $ 12.10 $ 11.72
======= ======= ======== ======== =======
TOTAL INVESTMENT RETURN 14.64% 12.35% 39.09% 3.24% 21.54%*
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Period (000s
omitted) $49,002 $67,385 $ 57,380 $ 42,737 $17,573
Ratios to Average Net Assets:
Net Investment Loss (0.77)% (0.66)% (0.65)%* (0.57)% (0.23)%*
Expenses, Including Expenses of the
Capital Appreciation Portfolio 1.25% 1.25% 1.25%* 1.25% 1.25%*
Decrease Reflected in Above Expense
Ratio Due to Absorption of
Expenses by Bankers Trust 0.29% 0.26% 0.32%* 0.54% 0.74%*
</TABLE>

- --------------------------------------------------------------------------------
* Annualized.
** The Board of Trustees approved the change of the fiscal year end from
December 31 to September 30.

<PAGE>

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SMALL CAP FUND
FOR THE PERIOD
FOR THE YEARS ENDED OCTOBER 21, 1993
SEPTEMBER 30, (COMMENCEMENT
-------------------------------- OF OPERATIONS) TO
1997 1996 1995 SEPTEMBER 30, 1994
<S><C>
.............................................................................................................................
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 21.66 $ 18.50 $ 11.60 $ 10.00
.............................................................................................................................
INCOME FROM INVESTMENT OPERATIONS
Net Investment Loss (0.14) (0.12) (0.04) (0.03)
Net Realized and Unrealized Gain on Investments 3.58 4.65 6.94 1.63
.............................................................................................................................
Total Income from Investment Operations 3.44 4.53 6.90 1.60
.............................................................................................................................
DISTRIBUTIONS TO SHAREHOLDERS
Net Realized Gain from Investment Transactions (1.42) (1.37) -- --
.............................................................................................................................
NET ASSET VALUE, END OF PERIOD $ 23.68 $ 21.66 $ 18.50 $ 11.60
======== ======== ======== ========
TOTAL INVESTMENT RETURN 17.90% 26.41% 59.48% 17.06%*
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Period (000s omitted) $286,322 $242,236 $122,935 $ 21,332
Ratios to Average Net Assets:
Net Investment Loss (0.89)% (0.70)% (0.46)% (0.58)%*
Expenses, Including Expenses of the Small Cap Portfolio 1.25% 1.25% 1.25% 1.25%*
Decrease Reflected in Above Expense Ratio Due to Absorption of
Expenses by Bankers Trust 0.03% 0.22% 0.34% 0.86%*
</TABLE>

- --------------------------------------------------------------------------------
* Annualized.

<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, FOR THE PERIOD DECEMBER 31,
-------------------- JANUARY 1, 1995 TO ------------------
1997 1996 SEPTEMBER 30, 1996* 1994 1993
<S><C>
...............................................................................................................................
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.77 $ 15.47 $ 13.37 $ 13.18 $ 9.75
...............................................................................................................................
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.09 0.18 0.14 0.10 0.05
Net Realized and Unrealized Gain on Investments, Options,
Foreign Currencies and Forward Foreign Currency
Contracts 5.63 1.80 1.97 0.44 3.60
...............................................................................................................................
Total from Investment Operations 5.72 1.98 2.11 0.54 3.65
-------- -------- ------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income 0.16 (0.31) (0.00) (0.09) (0.15)
Net Realized Gain from Investment Transactions 0.20 (0.37) (0.01) (0.26) (0.07)
...............................................................................................................................
Total Distributions 0.36 (0.68) (0.01) (0.35) (0.22)
...............................................................................................................................
NET ASSET VALUE, END OF PERIOD $ 22.13 $ 16.77 $ 15.47 $ 13.37 $ 13.18
======== ======== ======= ======= =======
TOTAL INVESTMENT RETURN 34.76% 13.42% 15.82% 4.12% 37.38%
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Period (000s omitted) $525,520 $161,692 $82,807 $56,020 $33,869
Ratios to Average Net Assets:
Net Investment Income 0.53% 0.91% 1.55%** 0.84% 0.79%
Expenses, Including Expenses of the International
Equity Portfolio 1.50% 1.50% 1.50%** 1.50% 1.50%
Decrease Reflected in Above Expense Ratio Due to
Absorption of Expenses by Bankers Trust 0.18% 0.26% 0.33%** 0.37% 0.62%
</TABLE>

- --------------------------------------------------------------------------------
* On August 2, 1995, the Board of Trustees approved the change of the fiscal
year end from December 31 to September 30.
** Annualized.

<PAGE>

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PACIFIC BASIN EQUITY FUND
FOR THE PERIOD
FOR THE YEARS ENDED NOVEMBER 1, 1993
SEPTEMBER 30, (COMMENCEMENT OF
--------------------------------- OPERATIONS) TO
1997 1996 1995 SEPTEMBER 30, 1994
<S><C>
..............................................................................................................................
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.80 $ 10.96 $ 11.82 $ 10.00
..............................................................................................................................
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.05) (0.03) 0.01 (0.04)
Net Realized and Unrealized Gain (Loss) on Investment and
Foreign Currency Transactions (1.07) 0.87 (0.49) 1.86
..............................................................................................................................
Total Income (Loss) from Investment Operations (1.12) 0.84 (0.48) 1.82
------- ------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS
Net Realized Gain from Investment Transactions (0.52) -- (0.38) --
..............................................................................................................................
NET ASSET VALUE, END OF PERIOD $ 10.16 $ 11.80 $ 10.96 $ 11.82
======= ======= ======= ========
TOTAL INVESTMENT RETURN (9.97)% 7.66% (3.87)% 20.11%*
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Period (000s omitted) $26,501 $29,389 $24,504 $ 25,362
Ratios to Average Net Assets:
Net Investment Income (Loss) (0.42)% (0.24)% 0.12% (0.59)%*
Expenses, Including Expenses of the Pacific Basin Equity
Portfolio 1.75% 1.75% 1.75% 1.75%*
Decrease Reflected in Above Expense Ratio Due to Absorption of
Expenses by Bankers Trust 0.29% 0.31% 0.52% 0.60%*
</TABLE>

- --------------------------------------------------------------------------------
* Annualized.

<TABLE>
<CAPTION>
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>
..............................................................................................................................
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.

Further information about each Fund's performance
is contained in the Funds' Annual Reports dated September 30, 1997, which can be
obtained free of charge.

<PAGE>

- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------

The Trust seeks to achieve the investment objective of each Fund by investing
all of its Assets in the corresponding Portfolio, which has the same investment
objective as the Fund. Since the investment characteristics of each Fund will
correspond directly to those of the corresponding Portfolio, the following is a
discussion of the various investments of and techniques employed by each
Portfolio. Additional information about the investment policies of each
Portfolio appears in "Risk Factors: Matching the Fund to Your Investment Needs"
herein and in the SAI. There can be no assurance that the investment objective
of either a Fund or the corresponding Portfolio will be achieved. The investment
objective of each Fund and corresponding Portfolio is not fundamental policy and
may be changed upon notice to but without the approval of a Fund's shareholders
or a Portfolio's investors, respectively. See "Special Information Concerning
Master-Feeder Fund Structure" herein.

INTERMEDIATE TAX FREE PORTFOLIO

The Intermediate Tax Free Portfolio's investment objective is a high level of
current income exempt from fFederal income tax consistent with moderate risk of
capital. The Portfolio intends to manage its holdings actively. Portfolio
transactions are undertaken principally to accomplish the Portfolio's investment
objective in relation to expected movements in the general level of interest
rates, but the Portfolio may also engage in short-term trading consistent with
its objective.

The Portfolio seeks to maintain a current yield that is greater than that
generally obtainable from a portfolio of short-term tax-exempt obligations,
subject to applicable quality restrictions. The Portfolio seeks to increase
yields by adjusting the average maturity of its portfolio in light of prevailing
market conditions and credit considerations. The Portfolio will normally consist
of a portfolio of securities with a weighted average maturity of three to ten
years. The remaining maturity of securities generally will not exceed 20 years
at the time of investment. The Portfolio adjusts its holdings of long-term and
short-term debt securities to reflect its assessment of prospective changes in
interest rates, which may adversely affect current income. The success of this
strategy depends upon the ability of Bankers Trust to forecast changes in
interest rates.

The value of securities held by the Portfolio will generally fluctuate inversely
with changes in prevailing interest rates and will also be affected by changes
in the creditworthiness of issuers and other market factors. The quality
criteria applied in the selection of Portfolio securities are intended to
minimize adverse price changes due to credit considerations. The value of
municipal securities in the Portfolio can also be affected by market reaction to
legislative consideration of various tax reform proposals. Although the value of
the assets of the Portfolio and the net asset value of the Fund will fluctuate,
the Portfolio attempts to conserve the value of its assets to the extent
consistent with its objective.

QUALITY INFORMATION. The Portfolio will not purchase any municipal obligation
unless it is rated at least A, MIG-1 or Prime-1 by Moody's Investors Service,
Inc. ("Moody's") or A, SP-1 or A-1 by Standard & Poor's Ratings Group ("S&P") or
if unrated, in the Adviser's opinion it is of comparable quality. These
standards must be satisfied at the time an investment is made. If the quality of
the investment later declines, the Portfolio may continue to hold the
investment.

TAXABLE INVESTMENTS. The Portfolio attempts to invest 100% of its assets in
tax-exempt municipal securities; however the Portfolio is permitted to invest up
to 20% (or greater while maintaining a temporary defensive position) of the
value of its total assets in securities, the interest income on which is subject
to federal income or alternative minimum tax. The Portfolio may make taxable
investments pending investment of proceeds of tax-exempt securities, pending
settlement of purchases of portfolio securities, to maintain liquidity to meet
redemptions or when it is advisable in Bankers Trust's opinion because of
adverse market conditions. The taxable investments permitted for the Portfolio
include obligations of the U.S. and its agencies and instrumentalities, bank
obligations, commercial paper and repurchase agreements and other debt
securities which meet the Portfolio's quality requirements.

MUNICIPAL SECURITIES. The Portfolio may invest in notes and bonds issued by or
on behalf of states, territories and possessions of the United States and the
District of Columbia and their political subdivisions, agencies, authorities and
instrumentalities. These obligations may be general obligation instruments
secured by the issuer's pledge of its full faith, credit and taxing power for
the payment of principal and interest, or they may be revenue instruments
payable from specific revenue sources, but not generally backed by the issuer's
taxing power.
11

<PAGE>

- --------------------------------------------------------------------------------

These include industrial development bonds where payment is the responsibility
of the private industrial user of the facility financed by the instruments.

SHORT-TERM MUNICIPAL INVESTMENTS. For temporary defensive purposes or for
purposes of liquidity, the assets of the Portfolio may be invested in short-term
municipal obligations. These short-term obligations include municipal notes of
various types, including notes issued in anticipation of receipt of taxes, the
proceeds of the sale of bonds, other revenues or grant proceeds and project
notes, as well as municipal commercial paper and municipal demand obligations
such as variable rate demand notes and master demand obligations. The interest
rate on variable rate demand notes is adjustable at periodic intervals as
specified in the notes. Master demand obligations permit the investment of
fluctuating amounts at periodically adjusted interest rates. Although master
demand obligations are not marketable to third parties, the Portfolio considers
them to be liquid because they are payable on demand. There is no specific
percentage limitation on these investments. The credit quality of variable rate
demand notes and other municipal obligations is frequently enhanced by various
arrangements with domestic or foreign financial institutions, such as letters of
credit, guarantees and insurance, and these arrangements are considered when
investment quality is evaluated. These obligations will be of comparable quality
to municipal bonds and will be purchased in anticipation of a declining market
and rising interest rates, pending purchase of longer term investments or to
maintain liquidity to meet redemptions. The amortized cost method is used by the
Portfolio to value municipal securities with maturities of less than 60 days;
when these securities are subject to puts separate from the underlying
securities, no value is assigned to the puts. The cost of any such put is
carried as an unrealized loss from the time of purchase until it is exercised or
expires.

OTHER INVESTMENTS AND INVESTMENT TECHNIQUES. The Portfolio may also utilize the
following investments and investment techniques and practices: puts, zero coupon
municipal securities, repurchase agreements, Rule 144A securities, when-issued
and delayed delivery securities, and options and futures contracts. See "Risk
Factors: Matching the Fund to Your Investment Needs" and "Additional
Information" herein and the SAI for more information.

GLOBAL HIGH YIELD SECURITIES PORTFOLIO

The GLOBAL HIGH YIELD SECURITIES PORTFOLIO'S investment objective is high
current income from investment in a non-diversified portfolio of high yield
non-investment grade debt securities issued in many of the world's securities
markets. Capital appreciation will be considered when consistent with the
primary investment objective of high current income. The Portfolio intends to
invest in Brady bonds and other sovereign debt and in high risk, lower quality
debt securities commonly referred to as "junk bonds" and regarded as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation as well as in
the debt securities of issuers located in emerging markets, Brady bonds and
other sovereign debt.

Under normal circumstances, at least 65% of the Portfolio's assets will be
invested in high yield, non-investment grade debt securities of both
governmental and corporate issuers in both the major industrialized markets and
the so-called "emerging markets." See "Risk Factors: Matching the Fund to Your
Investment Needs -- Risks of Investing in Foreign Securities" and " -- Risks of
Investing in Emerging Markets" herein.

Although Bankers Trust considers both industrialized and emerging countries
eligible for investment pursuant to the Portfolio's objective, the Portfolio
will not be invested in all such markets at all times. Furthermore, investing in
some emerging markets may be neither feasible nor desirable from time to time,
due to the lack of adequate custodial arrangements for the Portfolio's assets,
exchange controls and overly burdensome repatriation rules, the lack of
organized and liquid securities markets, and unacceptable political risks. Under
normal circumstances, the Portfolio will invest in at least three emerging
markets countries. See "Risk Factors: Matching the Fund to Your Investment Needs
- -- Risks of Investing in Foreign Securities" and " -- Risks of Investing in
Emerging Markets" herein.

The Portfolio generally invests in securities which are rated BBB or lower by
S&P or Baa or lower by Moody's or, if unrated, of comparable quality in the
opinion of Bankers Trust. Securities which are rated BBB by S&P or Baa by
Moody's possess some speculative characteristics. A description of the rating
categories is contained in the Appendix in the SAI. THERE IS NO LOWER LIMIT WITH
RESPECT TO THE RATING CATEGORIES FOR SECURITIES IN WHICH THE PORTFOLIO MAY
INVEST. See

<PAGE>

- --------------------------------------------------------------------------------

"Risk Factors: Matching the Fund to Your Investment Needs -- Risks of Investing
In High Yield Securities ("Junk Bonds")" herein.

The Portfolio is not required to dispose of debt securities whose credit quality
declines at some point after the security is purchased; however, no more than
25% of the Portfolio's assets will be invested at any time in securities rated
less than CCC by S&P or Caa by Moody's or, if unrated, of comparable quality in
the opinion of Bankers Trust. S&P's lowest rating for bonds is CI, which is
reserved for income bonds on which no interest is being paid, and D, which is
reserved for debt in default and in respect of which payment of interest or
repayment of principal is in arrears. Moody's lowest rating is C, which is
applied to bonds which have extremely poor prospects for ever attaining any real
investment standing. The Portfolio may, from time to time, purchase defaulted
debt securities if, in the opinion of Bankers Trust, the issuer may resume
interest payments in the near future. The Portfolio will not invest more than
10% of its total assets (at the time of purchase) in defaulted debt securities,
which may be illiquid. Other than as set forth above, there is no restriction on
the percentage of the Portfolio's assets which may be invested in bonds of a
particular rating.

ASSET ALLOCATION. The Portfolio invests in debt obligations allocated among
diverse markets and denominated in various currencies, including multi-currency
units such as European Currency Units. The Portfolio may purchase securities
that are issued by the government or a company or financial institution of one
country but denominated in the currency (or multi-currency unit) of another
country.

NON-DIVERSIFIED INVESTMENT COMPANY. The Portfolio is classified as a
"non-diversified" investment company under the 1940 Act, which means the
Portfolio is not limited by the 1940 Act in the proportion of its assets that
may be invested in a single issuer. The Portfolio may, therefore, invest in the
securities of individual issuers to a greater degree than a diversified fund and
may be more susceptible to any single economic, political or regulatory
occurrence affecting those issuers. However, in order to enable the Fund (and
other registered investment companies which may in the future invest all their
assets in the Portfolio) to qualify as a regulated investment company (a "RIC")
the Portfolio must comply with the diversification requirement of Subchapter M
of the Internal Revenue Code of 1986, as amended (the "Code"), for U.S. federal
income tax purposes. See "Risk Factors: Matching the Fund to Your Investment
Needs -- Non-Diversified Investment Company" herein.

OTHER INVESTMENTS AND INVESTMENT TECHNIQUES. The Portfolio may also utilize the
following investments and investment techniques and practices: short-term
instruments, floating rate bonds, zero coupon bonds, sovereign and supranational
debt obligations, Brady bonds, loan participations and assignments, convertible
bonds, preferred stock, foreign currency exchange transactions, options on
foreign currencies, options on foreign bond indices, futures contracts on
foreign bond indices, options on futures contracts, Rule 144A securities,
when-issued or delayed delivery securities, securities lending, repurchase
agreements and reverse repurchase agreements. See "Risk Factors: Matching the
Fund to Your Investment Needs" and "Additional Information" herein and the SAI
for further information.

The Portfolio may borrow money for investment purposes. See "Investment
Restrictions" in the SAI.

CAPITAL APPRECIATION PORTFOLIO

The Capital Appreciation Portfolio's investment objective is long-term capital
growth; the production of any current income is secondary to this objective. The
Portfolio invests primarily in growth-oriented common stocks of medium-sized
domestic corporations and, to a lesser extent, foreign corporations.

Bankers Trust employs a flexible investment program in pursuit of the
Portfolio's investment objective. The Portfolio is not restricted to investments
in specific market sectors. The Portfolio may invest in any market sectors and
in companies of any size and may take advantage of any investment opportunity
with attractive long-term prospects. The Adviser takes advantage of its market
access and the research available to it to select investments in promising
growth companies that are involved in new technologies, new products, foreign
markets and special developments, such as research discoveries, acquisitions,
recapitalizations, liquidations or management changes, and companies whose stock
may be undervalued by the market. These situations are only illustrative of the
types of investment the Portfolio may make. The Portfolio is free to invest in
any common stock which in the Adviser's judgment provides above average
potential for long-term growth of capital and income.

<PAGE>

- --------------------------------------------------------------------------------

The Portfolio will generally invest a majority of its assets in equity
securities of medium-sized companies (companies with a market capitalization of
between $500 million and $5 billion), but may invest in securities of companies
having various levels of market capitalization, including smaller companies
whose securities may be more volatile and less liquid than securities issued by
larger companies with higher levels of net worth. Investments will be in
companies in various industries. Industry and company fundamentals along with
key investment themes and various quantitative screens will be used in the
investment process. Criteria for selection of individual securities include the
issuer's competitive environment and position, prospects for growth, managerial
strength, earnings momentum and quality, underlying asset value, relative market
value and overall marketability. The Portfolio will follow a disciplined selling
process to lessen market risks.

The Portfolio may also invest up to 25% of its assets in similar securities of
foreign issuers. For further information on foreign investments see "Risk
Factors: Matching the Fund to Your Investment Needs -- Risks of Investing in
Foreign Securities" herein.

OTHER INVESTMENTS AND INVESTMENT TECHNIQUES. The Portfolio may also utilize the
following investments and investment techniques and practices: short-term
instruments, options on stocks, options on stock indices, futures contracts on
stock indices, foreign investments, options on futures contracts, foreign
currency exchange transactions, options on foreign currencies, Rule 144A
securities, when-issued and delayed delivery securities, securities lending, and
repurchase agreements. See "Risk Factors: Matching the Fund to Your Investment
Needs" and "Additional Information" herein and the SAI for further information.

SMALL CAP PORTFOLIO

The Small Cap Portfolio's investment objective is long-term capital growth; the
production of any current income is secondary to this objective.

The Portfolio seeks to provide long term capital growth by investing primarily
in equity securities of smaller companies. The Portfolio's policy is to invest
in equity securities of smaller companies that Bankers Trust believes are in an
early stage or transitional point in their development and have demonstrated or
have the potential for above average capital growth. The Adviser will select
companies which have the potential to gain market Share in their industry,
achieve and maintain high consistent profitability or produce increases in
earnings. The Adviser also seeks companies with strong company management and
superior fundamental strength.

The Adviser employs a flexible investment program in pursuit of the Portfolio's
investment objective. The Adviser takes advantage of its market access and the
research available to it to select investments in promising growth companies
that are involved in new technologies, new products, foreign markets and special
developments, such as research discoveries, acquisitions, recapitalizations,
liquidations or management changes, and companies whose stock may be undervalued
by the market. These situations are only illustrative of the types of investment
the Portfolio may make. The Portfolio is free to invest in any common stock
which in the Adviser's judgment provides above average potential for long-term
growth of capital and income.

Under normal market conditions, the Portfolio will invest at least 65% of its
assets in smaller companies (with market capitalizations less than $750 million
at time of purchase) that offer strong potential for capital growth. Small
capitalization companies have the potential to show earnings growth over time
that is well above the growth rate of the overall economy. The Portfolio may
also invest in larger, more established companies that the Adviser believes may
offer the potential for strong capital growth due to their relative market
position, anticipated earnings growth, changes in management or other similar
opportunities. The Portfolio will follow a disciplined selling process to lessen
market risks.

For temporary defensive purposes, when in the opinion of the Adviser that market
conditions so warrant, the Portfolio may invest all or a portion of its Assets
in common stocks of larger, more established companies or in fixed-income
securities or short-term money market securities. To the extent the Portfolio is
engaged in temporary defensive investments, the Portfolio will not be pursuing
its investment objective.

The Portfolio may also invest up to 25% of its assets in similar securities of
foreign issuers. For further information on foreign investments and related
hedging techniques, see "Risk Factors: Matching the Fund to Your Investment
Needs -- Risks of Investing in Foreign Securities" herein.

14
<PAGE>

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OTHER INVESTMENTS AND TECHNIQUES. The Portfolio may also utilize the following
investments and investment techniques and practices: short-term instruments,
options on stocks, options on stock indices, futures contracts on stock indices,
options on future contracts, foreign currency exchange transactions, options on
foreign currencies, Rule 144A securities, when-issued and delayed delivery
securities, securities lending, foreign instruments and repurchase agreements.
See "Risk Factors: Matching the Fund to Your Investment Needs" and "Additional
Information" herein and the SAI for further information.

INTERNATIONAL EQUITY PORTFOLIO

The International Equity Portfolio's investment objective is long-term capital
appreciation from investment in foreign equity securities (or other securities
with equity characteristics); the production of any current income is incidental
to this objective. The Portfolio invests primarily in established companies
based in developed countries outside the United States, but the Portfolio also
invests in securities of issuers in emerging markets. See "Risk Factors:
Matching the Fund to Your Investment Needs -- Risks of Investing in Foreign
Securities" and " -- Risk of Investing in Emerging Markets" herein. Under normal
circumstances, the Portfolio will invest at least 65% of the value of its total
assets in the equity securities of issuers based in at least three countries
other than the United States. The Portfolio's investments will generally be
diversified among several geographic regions and countries.

In countries and regions with well-developed capital markets where more
information is available, Bankers Trust will seek to select individual
investments for the Portfolio. Criteria for selection of individual securities
include the issuer's competitive position, prospects for growth, managerial
strength, earnings quality, underlying asset value, relative market value and
overall marketability. The Portfolio may invest in securities of companies
having various levels of net worth, including smaller companies whose securities
may be more volatile than securities offered by larger companies with higher
levels of net worth.

In other countries and regions where capital markets are underdeveloped or not
easily accessed and information is difficult to obtain, the Portfolio may choose
to invest only at the market level. Here, to the extent available and consistent
with applicable regulations, the Portfolio may seek to achieve country exposure
through use of options or futures based on an established local index or through
investment in other registered investment companies rather than investing
directly in individual securities. Investment in other investment companies is
limited in amount by the 1940 Act, will involve the indirect payment of a
portion of the expenses, including advisory fees, of such other investment
companies and may result in a duplication of fees and expenses.

The Portfolio invests in securities listed on foreign or domestic securities
exchanges and securities traded in foreign or domestic over-the-counter markets
and may invest in restricted or unlisted securities.

OTHER INVESTMENTS AND INVESTMENT TECHNIQUES. The Portfolio may also utilize the
following investments and investment techniques and practices: short-term
instruments, foreign currency exchange transactions, options on foreign
currencies, American Depositary Receipts ("ADRs"), Global Depositary Receipts
("GDRs"), European Depositary Receipts ("EDRs"), options on stocks, options on
foreign stock indices, futures contracts on foreign stock indices, options on
futures contracts, Rule 144A securities, when-issued and delayed delivery
securities, securities lending and repurchase agreements. See "Risk Factors:
Matching the Fund to Your Investment Needs" and "Additional Information" herein
and the SAI for further information.

PACIFIC BASIN EQUITY PORTFOLIO

The Pacific Basin Equity Portfolio's investment objective is long-term capital
appreciation from investment primarily in the equity securities (or other
securities with equity characteristics) of companies domiciled in, or doing
business in the Pacific Basin region, other than Japan; the production of any
current income is incidental to this objective. Investment in such securities
involves certain considerations which are not normally involved in investment in
securities of U.S. issuers, and an investment in the Fund may be considered
speculative.

For purposes of this Prospectus, "issuers domiciled in, or doing business in,
the Pacific Basin region (other than Japan)" shall include securities of
issuers: (1) which are organized under the laws of Pacific Basin countries (see
below); (2) for which the principal securities trading market is in a Pacific
Basin country; or (3) which derive a significant proportion (at least 50
percent) of their revenues or profits from goods produced or sold, investments
made, or services performed in the countries of the Pacific Basin or which have
at least 50 percent of
15

<PAGE>

- --------------------------------------------------------------------------------

their assets situated in the countries of the Pacific Basin. It is expected
under normal conditions that at least 65% of the Portfolio's assets will be
invested in the equity securities of issuers based in at least three countries
in the Pacific Basin.

For the purpose of this Prospectus, the "Pacific Basin" includes, but is not
limited to, the following countries: Hong Kong, India, Indonesia, Malaysia, New
Zealand, Pakistan, the Philippines, the People's Republic of China ("China"),
Singapore, Sri Lanka, South Korea, Thailand, Taiwan and Vietnam. See "Risk
Factors: Matching the Fund to Your Investment Needs -- Risks of Investing in
Foreign Securities" and " -- Risks of Investing in Emerging Markets" herein and
"Foreign Securities: Special Consideration Concerning China and China Region" in
the SAI.

The Portfolio will be managed using a disciplined, value-oriented investment
philosophy that stresses the inherent value of, and the medium term outlook for,
the companies under examination. Experience has proven that often the real basis
of a business is quite different from that perceived by the market: a
misconception that usually results in its Shares trading below its true business
or replacement value. The exploitation of this "perception/reality" gap is a
hallmark of the investment style that has been adopted for the Portfolio, and a
potential source of value for its investors.

"Value" investing means trying to find companies which are mispriced by the
market for reasons of neglect, fashion or misconception. These opportunities
arise out of legislative changes, industrial restructuring and technology
advancements, for example. As a result, Bankers Trust and the sub-investment
adviser attach great importance to analyzing trends and accessing possible
breaks with traditional price patterns. At the company level, the emphasis is
placed on assessing the inherent "business" value of the firm. While this often
varies from the stock market's valuation, the Adviser and the sub-investment
adviser believe a company's stock price tends to gravitate to their "business"
value over time.

The Portfolio's investments will generally be diversified among several
geographic regions and countries in the Pacific Basin. Criteria for determining
the appropriate distribution of investment among various countries and regions
include the prospects for relative growth among foreign countries, expected
levels of inflation, government policies influencing business conditions, the
outlook for currency relationships and the range of alternative opportunities
available to international investors.

The Portfolio will not invest more than 20% of the value of its total assets in
issuers domiciled in China. Issuers domiciled in Hong Kong are not subject to
this limitation.

In countries and regions where capital markets are underdeveloped or not easily
accessed and information is difficult to obtain, the Portfolio may choose to
invest only at the market level. Here, to the extent available and consistent
with applicable regulations, the Portfolio may seek to achieve country exposure
through the use of options on futures based on an established local index or
through investment in other registered investment companies. Investment in other
investment companies is limited in amount by the 1940 Act, will involve the
indirect payment of a portion of the expenses, including advisory fees, of such
other investment companies and may result in a duplication of fees and expenses.

OTHER INVESTMENTS AND INVESTMENT TECHNIQUES. The Portfolio may also utilize the
following investments and investment techniques and practices: short-term
instruments, foreign currency exchange transactions, options on foreign
currencies, ADRs, GDRs, EDRs, options on stocks, options on foreign stock
indices, futures contracts on foreign stock indices, options on futures
contracts, Rule 144A securities, when-issued and delayed delivery securities,
securities lending and repurchase agreements. See "Risk Factors: Matching the
Fund to Your Investment Needs" and "Additional Information" herein and the SAI
for further information.

LATIN AMERICAN EQUITY PORTFOLIO

The Latin American Equity Portfolio's investment objective is long-term capital
appreciation from investment primarily in the equity securities (or other
securities with equity characteristics) of companies domiciled in, or doing
business in, Latin America; the production of any current income is incidental
to this objective. Investment in such securities involves certain considerations
which are not normally involved in investment in securities of U.S. issuers, and
an investment in the Fund
16

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may be considered speculative. See "Risk Factors: Matching the Fund to Your
Investment Needs -- Risks of Investing in Foreign Securities" and " -- Risk of
Investing in Emerging Markets" herein and "Foreign Securities: Special
Consideration Concerning Latin America" in the SAI. It is expected under normal
conditions that at least 65% of the Portfolio's total assets will be invested in
the equity securities of Latin American issuers.

The Portfolio may borrow money for investment purposes. See "Risk Factors:
Matching the Fund to Your Investment Needs" herein.

For purposes of this Prospectus, "Latin America" is defined as Mexico, and all
countries in Central America and South America, including Argentina, Brazil,
Chile, Colombia, Peru and Venezuela.

As used in this Prospectus, "securities of Latin American issuers" is defined
as: (i) securities of companies for which the principal securities trading
market is in Latin America; (ii) securities, traded in any market, of companies
that derive 50% or more of their total revenue from either goods or services
produced in Latin America or sales made in Latin America; (iii) securities of
companies organized under the laws of, and with a principal office in, Latin
America; or (iv) securities issued or guaranteed by the government of a country
in Latin America, its agencies or instrumentalities, political subdivisions or
the central bank of such a country. Determinations as to eligibility will be
made by Bankers Trust, under the supervision of the Board of Trustees of BT
Investment Portfolios, based on publicly available information and inquiries
made to the issuers.

Bankers Trust intends to consider investment only in those countries in Latin
America in which it believes investing is feasible and does not involve undue
political risks. As of the date of this Prospectus, this list included
Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela. Under normal
circumstances, the Portfolio's investments will be diversified among at least
three Latin American countries.

The Portfolio may invest in securities of companies having various levels of net
worth, including small companies whose securities may be more volatile than
securities offered by larger companies with higher levels of net worth.

In other countries and regions where capital markets are underdeveloped or not
easily accessed and information is difficult to obtain, the Portfolio may choose
to invest only at the market level. Here, to the extent available and consistent
with applicable regulations, the Portfolio may seek to achieve country exposure
through the use of options or futures based on an established local index or
through investment in other registered investment companies. Investment in other
investment companies is limited in amount by the 1940 Act, will involve the
indirect payment of a portion of the expenses, including advisory fees, of such
other investment companies and may result in a duplication of fees and expenses.

FIXED INCOME INVESTMENTS. For purposes of seeking capital appreciation, the
Portfolio may invest up to 35% of its total assets in debt securities of Latin
American issuers which are rated at least C by S&P or Moody's or, if unrated, of
comparable quality in the opinion of Bankers Trust. As an operating policy,
which may be changed by the Board of Trustees of BT Investment Portfolios, the
Portfolio will not invest more than 10% of its total assets in debt securities
rated BBB or lower by S&P or Baa or lower by Moody's. Securities which are rated
BBB by S&P or Baa by Moody's possess speculative characteristics. Bonds rated C
by S&P are of the lowest quality and may be used when the issuer has filed a
bankruptcy petition, but debt payments are still being paid. Moody's lowest
rating is C, which is applied to bonds which have extremely poor prospects of
ever attaining any real investment standing. See "Risk Factors: Matching the
Fund to Your Investment Needs -- Risks of Investing in High Yield Securities
(Junk Bonds)." Certain debt securities can provide the potential for capital
appreciation based on various factors such as changes in interest rates,
economic and market conditions, improvement in an issuer's ability to repay
principal and pay interest and ratings upgrades. Additionally, convertible bonds
offer the potential for capital appreciation through the conversion feature,
which enables the holder of the bond to benefit from increases in the market
price of the securities into which they are convertible.

OTHER INVESTMENTS AND INVESTMENT TECHNIQUES. The Portfolio may also utilize the
following investments and
17

<PAGE>

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investment techniques and practices: Brady bonds, foreign currency exchange
transactions, options on foreign currencies, ADRs, GDRs, EDRs, options on
stocks, options on foreign stock indices, futures contracts on foreign stock
indices, options on futures contracts, when-issued and delayed delivery
securities, Rule 144A securities, short-term instruments, repurchase agreements,
reverse repurchase agreements, leverage and securities lending. See "Risk
Factors: Matching the Fund to Your Investment Needs" and "Additional
Information" herein and the SAI for further information.

- --------------------------------------------------------------------------------
RISK FACTORS: MATCHING THE FUND TO YOUR
INVESTMENT NEEDS
- --------------------------------------------------------------------------------

The following pages contain more detailed information about types of instruments
in which a Portfolio may invest and strategies Bankers Trust may employ in
pursuit of a Portfolio's investment objective. A summary of risks and
restrictions associated with these instrument types and investment practices is
included as well.

Bankers Trust may not buy all of these instruments or use all of these
techniques to the full extent permitted unless it believes that doing so will
help a Portfolio achieve its goal. Holdings and recent investment strategies are
described in the financial reports of a Fund and the corresponding Portfolio,
which are sent to Fund Shareholders twice a year. For a free SAI or financial
report, call an Investment Professional.

RISKS OF INVESTING IN FOREIGN SECURITIES

Investors should realize that investing in securities of foreign issuers
involves considerations not typically associated with investing in securities of
companies organized and operated in the United States. Investors should realize
that the value of a Portfolio's foreign investments may be adversely affected by
changes in political or social conditions, diplomatic relations, confiscatory
taxation, expropriation, nationalization, limitation on the removal of funds or
assets, or imposition of (or change in) exchange control or tax regulations in
foreign countries. In addition, changes in government administrations or
economic or monetary policies in the United States or abroad could result in
appreciation or depreciation of portfolio securities and could favorably or
unfavorably affect the Portfolio's operations. Furthermore, the economies of
individual foreign nations may differ from the U.S. economy, whether favorably
or unfavorably, in areas such as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position; it may also be more difficult to obtain and enforce a
judgment against a foreign issuer. In general, less information is publicly
available with respect to foreign issuers than is available with respect to U.S.
companies. Most foreign companies are also not subject to the uniform accounting
and financial reporting requirements applicable to issuers in the United States.
Any foreign investments made by the Portfolio must be made in compliance with
U.S. and foreign currency restrictions and tax laws restricting the amounts and
types of foreign investments.

Because foreign securities generally are denominated and pay dividends or
interest in foreign currencies, the value of the net assets of a Portfolio as
measured in U.S. dollars will be affected favorably or unfavorably by changes in
exchange rates. In order to protect against uncertainty in the level of future
foreign currency exchange rates, each Portfolio is also authorized to enter into
certain foreign currency exchange transactions. Furthermore, a Portfolio's
foreign investments may be less liquid and their prices may be more volatile
than comparable investments in securities of U.S. companies. The settlement
periods for foreign securities, which are often longer than those for securities
of U.S. issuers, may affect portfolio liquidity. Finally, there may be less
government supervision and regulation of securities exchanges, brokers and
issuers in foreign countries than in the United States.

RISKS OF INVESTING IN EMERGING MARKETS

The world's industrialized markets generally include but are not limited to the
following: Australia, Austria, Belgium, Canada, Denmark, Finland, France,
Germany, Hong Kong, Ireland, Italy, Japan, Luxembourg, Malaysia, the
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland, the United Kingdom, and the United States; the world's emerging

<PAGE>

- --------------------------------------------------------------------------------

markets generally include but are not limited to the following: Argentina,
Botswana, Bolivia, Brazil, Bulgaria, Chile, China, Colombia, Costa Rica, the
Czech Republic, Ecuador, Egypt, Greece, Hungary, India, Indonesia, Israel, the
Ivory Coast, Jordan, Korea, Mexico, Morocco, Nicaragua, Nigeria, Pakistan, Peru,
the Philippines, Poland, Romania, Russia, Slovakia, Slovenia, South Africa,
South Korea, Sri Lanka, Taiwan, Thailand, Turkey, Uruguay, Venezuela, Vietnam
and Zimbabwe.

Investment in securities of issuers based in underdeveloped emerging markets
entails all of the risks of investing in securities of foreign issuers outlined
in this section to a heightened degree. These heightened risks include: (i)
greater risks of expropriation, confiscatory taxation, nationalization, and less
social, political and economic stability; (ii) the smaller size of the market
for such securities and a low or nonexistent volume of trading, resulting in
lack of liquidity and in price volatility; and (iii) certain national policies
which may restrict the Portfolio's investment opportunities including
restrictions on investing in issuers or industries deemed sensitive to relevant
national interests.

In addition to brokerage commissions, custodial services and other costs
relating to investment in emerging markets are generally more expensive than in
the United States. Such markets have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of a Portfolio to make intended security purchases due to settlement
problems could cause the Portfolio to miss attractive investment opportunities.
Inability to dispose of a security due to settlement problems could result
either in losses to the Portfolio due to subsequent declines in the value of the
security or, if the Portfolio has entered into a contract to sell the security,
could result in possible liability to the purchaser.

Further information about the foreign markets in which a Portfolio may invest,
including a further discussion of related risks and special considerations is
contained in the SAI.

RISKS OF INVESTING IN HIGH YIELD SECURITIES
("JUNK BONDS")

Lower-rated long-term securities, including securities rated from BB to D by S&P
or Ba to C by Moody's or, if unrated, of comparable quality in the opinion of
Bankers Trust, will usually offer higher yields than higher-rated securities.
However, there is more risk associated with these investments. This is because
of the reduced creditworthiness and increased risk of default that these
securities carry. Lower-rated long-term securities generally tend to reflect
short-term corporate and market developments to a greater extent than
higher-rated securities which react primarily to fluctuations in the general
level of interest rates. Lower rated long-term securities also involve greater
sensitivity to significant increases in interest rates. Short-term corporate and
market developments affecting the prices and liquidity of lower-rated long-term
securities could include adverse news impacting major issues or underwriters or
dealers in lower-rated long-term or unrated securities. In addition, since there
are fewer investors in lower-rated long-term securities, it may be harder to
sell securities at an optimum time.

An economic downturn may adversely affect the value of some lower-rated
long-term bonds. Such a downturn may especially affect highly leveraged
companies or companies in cyclically sensitive industries, where deterioration
in a company's cash flow may impair its ability to meet its obligation to pay
principal and interest to bondholders in a timely fashion. From time to time, as
a result of changing conditions, issuers of lower-rated long-term bonds may seek
or may be required to restructure the terms and conditions of the securities
they have issued. As a result of these restructurings, holders of lower-rated
long-term securities may receive less principal and interest than originally
expected at the time such bonds were purchased. In the event of a restructuring,
the Portfolio may bear additional legal or administrative expenses in order to
maximize recovery from an issuer. The secondary trading market for lower-rated
long-term bonds is generally less liquid than the secondary trading market for
higher-rated bonds.

The risk of loss due to default by the issuer is significantly greater for the
holders of high yield securities because such securities are generally unsecured
and are often subordinated to other obligations of the issuer. During an
economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of high yield securities may experience financial stress and
may not have sufficient revenues to meet their interest payment obligations. An
issuer's ability to service its debt obligations may also be adversely affected
by specific corporate developments, its inability to meet specific projected
business forecasts, or the unavailability of additional financing.

<PAGE>

- --------------------------------------------------------------------------------

Factors adversely affecting the market value of high yield and other Portfolio
securities will adversely affect the corresponding Fund's net asset value. In
addition, a Portfolio may incur additional expenses to the extent it is required
to seek recovery upon a default in the payment of principal or interest on its
portfolio holdings. As a matter of operating policy, the Global High Yield
Securities Portfolio and Latin American Equity Portfolio will not invest more
than 10% of their total assets (at the time of purchase) in default debt
securities, which may be illiquid.

RISKS OF INVESTING IN MEDIUM- AND SMALL-
CAPITALIZATION STOCKS

Historically, medium- and small-capitalization stocks have been more volatile in
price than the larger-capitalization stocks included in the S&P 500. Among the
reasons for the greater price volatility of these securities are the less
certain growth prospects of smaller firms, the lower degree of liquidity in the
markets for such stocks, and the greater sensitivity of medium- and small-size
companies to changing economic conditions. In addition to exhibiting greater
volatility, medium- and small-size company stocks may fluctuate independently of
larger company stocks. Medium- and small-size company stocks may decline in
price as large company stocks rise, or rise in prices as large company stocks
decline.

NON-DIVERSIFIED INVESTMENT COMPANY

The Global High Yield Securities Portfolio and Fund are each classified as a
"non-diversified" investment company so that with respect to 50% of the
Portfolio's assets, it will be able to invest more than 5% of its assets in
obligations of one or more issuers, while being limited with respect to the
other half of its assets to investments not exceeding 5% of the Portfolio's
total assets. (A "diversified" investment company would be required under the
1940 Act, to maintain at least 75% of its assets in cash (including foreign
currency), cash items, U.S. government securities, and other securities limited
per issuer to not more than 5% of the investment company's total assets.) In
order to enable the Fund to qualify as a regulated investment company under the
Code, the Portfolio, among other things, may not invest more than 25% of its
assets in obligations of any one issuer (other than U.S. government securities).
As a "non-diversified" investment company, the Portfolio may invest a greater
proportion of its assets in the securities of a smaller number of issuers and
therefore may be subject to greater market and credit risk than a more broadly
diversified fund.

ADDITIONAL INVESTMENT INFORMATION. The Portfolio will not have more than 25% of
the current value of its total assets invested in any single industry, provided
that this restriction shall not apply to debt securities issued or guaranteed by
the U.S. government or its agencies or instrumentalities.

<PAGE>

- --------------------------------------------------------------------------------
SPECIAL INFORMATION CONCERNING
MASTER-FEEDER FUND STRUCTURE
- --------------------------------------------------------------------------------

Unlike other open-end management investment companies (mutual funds) which
directly acquire and manage their own portfolio securities, each Fund seeks to
achieve its investment objective by investing all of its Assets in the
corresponding Portfolio, a separate registered investment company with the same
investment objectives as the corresponding Fund. Therefore, an investor's
interest in the Portfolio's securities is indirect. In addition to selling a
beneficial interest to the corresponding Fund, each Portfolio may sell
beneficial interests to other mutual funds or institutional investors. Such
investors will invest in a Portfolio on the same terms and conditions and will
pay a proportionate Share of the Portfolio's expenses. However, the other
investors investing in a Portfolio are not required to sell their Shares at the
same public offering price as the Fund due to variations in sales commissions
and other operating expenses. Therefore, investors in a Fund should be aware
that these differences may result in differences in returns experienced by
investors in the different funds that invest in the Portfolio. Such differences
in returns are also present in other mutual fund structures. Information
concerning other holders of interests in the Portfolio is available from Bankers
Trust, as the Administrator, at 1-800-730-1313.

The master-feeder fund structure is relatively complex, so shareholders should
carefully consider this investment approach.

Smaller funds investing in a Portfolio may be materially affected by the actions
of larger funds investing in the Portfolio. For example, if a large fund
withdraws from a Portfolio, the remaining funds may experience higher pro rata
operating expenses, thereby producing lower returns (however, this possibility
exists as well for traditionally structured funds which have large institutional
investors). Additionally, a Portfolio may become less diverse, resulting in
increased portfolio risk. Also, funds with a greater pro rata ownership in a
Portfolio could have effective voting control of the operations of the
Portfolio. Except as permitted by the SEC, whenever the Trust is requested to
vote on matters pertaining to a Portfolio, the Trust will hold a meeting of
shareholders of the Fund and will cast all of its votes in the same proportion
as the votes of the Fund's shareholders. Fund shareholders who do not vote will
not affect the Trust's votes at the Portfolio meeting. The percentage of the
Trust's votes representing Fund shareholders not voting will be voted by the
Trustees or officers of the Trust in the same proportion as the Fund
shareholders who do, in fact, vote.

Certain changes in the Portfolio's investment objectives, policies or
restrictions may require the Fund to withdraw its interest in the Portfolio. Any
such withdrawal could result in a distribution "in kind" of portfolio securities
(as opposed to a cash distribution from the Portfolio). If securities are
distributed, the Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, the distribution in kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of
the Fund. Notwithstanding the above, there are other means for meeting
redemption requests, such as borrowing.

A Fund may withdraw its investment from the Portfolio at any time, if the Board
of Trustees of the Trust determines that it is in the best interests of the
shareholders of the Fund to do so. Upon any such withdrawal, the Board of
Trustees of the Trust would consider what action might be taken, including the
investment of all the Assets of the Fund in another pooled investment entity
having the same investment objectives as the Fund or the retaining of an
investment adviser to manage the Fund's Assets in accordance with the investment
policies described herein with respect to the corresponding Portfolio.

Each Fund's investment objective is not a fundamental policy and may be changed
upon notice to but without the approval of the Fund's shareholders. If there is
a change in a Fund's investment objective, the Fund's shareholders should
consider whether the Fund remains an appropriate investment in light of their
then-current needs. The investment objective of each Portfolio is also not a
fundamental policy. Shareholders of the Funds will receive 30 days prior written
notice with respect to any change in the investment objective of a Fund or the
corresponding Portfolio. See "Investment Restrictions" in the SAI for a
description of the fundamental policies of each Portfolio that cannot be changed
without approval by "the vote of a majority of the outstanding voting
securities" (as defined in the 1940 Act) of the Portfolio.

For descriptions of the investment objective, policies and restrictions of each
Portfolio, see "Investment Objectives and Policies" herein and "Risk Factors:
Matching the Fund to Your Investment Needs" herein

<PAGE>

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and in the SAI. For descriptions of the management and expenses of the Trusts
and the Portfolios, see "Management of the Trust and Portfolios" herein and in
the SAI.

PORTFOLIO TURNOVER

The portfolio turnover rates for the following Portfolios for the fiscal years
ended September 30, 1997 and 1996, respectively, were as follows: Global High
Yield Securities Portfolio -- 139% and 207%; Capital Appreciation Portfolio --
167% and 271%; Small Cap Portfolio -- 188% and 159%; International Equity
Portfolio -- 63% and 68%; Pacific Basin Equity Portfolio -- 172% and 118%; and
Latin American Equity Portfolio -- 122% and 171%. The portfolio turnover rates
for the Intermediate Tax Free Portfolio for the fiscal year ended September 30,
1997 and the period from January 1, 1996 to September 30, 1996, were 171% and
130%, respectively.

These rates will vary from year to year. High turnover rates increase
transaction costs and may increase investable capital gains. Bankers Trust
considers these effects when evaluating the anticipated benefits of short-term
investing.

- --------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------

The net asset value ("NAV") per Share of each Fund is calculated on each day on
which the New York Stock Exchange, Inc. (the "NYSE") is open (each such day
being a "Valuation Day"). The NYSE is currently open on each day, Monday through
Friday, except: (a) January 1st, Martin Luther King Jr. Day (the third Monday in
January), Presidents' Day (the third Monday in February), Good Friday, Memorial
Day (the last Monday in May), July 4th, Labor Day (the first Monday in
September), Thanksgiving Day (the last Thursday in November) and December 25th;
and (b) the preceding Friday or the subsequent Monday when one of the
calendar-determined holidays falls on a Saturday or Sunday, respectively.

The NAV per Share of each Fund is calculated once on each Valuation Day as of
the close of regular trading on the NYSE (the "Valuation Time"), which is
currently 4:00 p.m., Eastern time or in the event that the NYSE closes early, at
the time of such early closing. The NAV per Share of a Fund is computed by
dividing the value of the Fund's Assets (i.e., the value of its investment in
the Portfolio and other assets), less all liabilities, by the total number of
its Shares outstanding as of the Valuation Time. The Portfolio's securities and
other assets are valued primarily on the basis of market quotations or, if
quotations are not readily available, by a method which the Portfolio's Board of
Trustees believes accurately reflects fair value.

Under procedures adopted by the Board, a NAV for a Fund later determined to have
been inaccurate for any reason will be recalculated. Purchases and redemptions
made at a NAV determined to have been inaccurate will be adjusted, although in
certain circumstances, such as where the difference between the original NAV and
the recalculated NAV divided by the recalculated NAV is 0.005% (1/2 of 1%) or
less or shareholder transactions are otherwise insubstantially affected, further
action is not required.

- --------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- --------------------------------------------------------------------------------

HOW TO BUY SHARES

The Trust accepts purchase orders for Shares of the Fund at the NAV per Share
next determined after the order is received on each Valuation Day. See "Net
Asset Value" herein. Shares of the Fund may be available through Investment
Professionals, such as broker/dealers and investment advisers (including Service
Agents).

Purchase orders for Shares of the Fund (including those purchased through a
Service Agent) that are transmitted to the Trust's Transfer Agent (the "Transfer
Agent"), prior to the Valuation Time on any Valuation Day will be effective at
that day's Valuation Time. The Trust and Transfer Agent reserve the right to
reject any purchase order. Shares must be purchased in accordance with
procedures established by the Transfer Agent and each Service Agent. It is the
responsibility of each Service Agent

<PAGE>

- --------------------------------------------------------------------------------

to transmit to the Transfer Agent purchase and redemption orders and to transmit
to Bankers Trust as the Trust's custodian (the "Custodian") purchase payments by
the following business day (trade date + 1) after an order for Shares is placed.
A shareholder must settle with the Service Agent for his or her entitlement to
an effective purchase or redemption order as of a particular time. Because
Bankers Trust is the Custodian and Transfer Agent of the Trust, funds may be
transferred directly from or to a customer's account held with Bankers Trust to
settle transactions with the Fund without incurring the additional costs or
delays associated with the wiring of federal funds.

The Trust and Bankers Trust have authorized one or more brokers to accept on the
Trust's behalf purchase and redemption orders. Such brokers are authorized to
designate other intermediaries to accept purchase and redemption orders on the
Trust's behalf. The Transfer Agent will be deemed to have received a purchase or
redemption order when an authorized broker or, if applicable, a broker's
authorized designee, accepts the order. Customer orders will be priced at the
appropriate Fund's NAV next computed after they are accepted by an authorized
broker or the broker's authorized designee.

Certificates for Shares will not be issued. Each shareholder's account will be
maintained by a Service Agent or Transfer Agent.

If orders are placed through an Investment Professional, it is the
responsibility of the Investment Professional to transmit the order to buy
Shares to the Transfer Agent before 4:00 p.m. Eastern time.

The Transfer Agent must receive payment within one business day after an order
for Shares is placed; otherwise, the purchase order may be canceled and the
investor could be held liable for resulting fees and/or losses.

MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For retirement accounts 500
Through automatic investment plans 1,000

TO ADD TO AN ACCOUNT $250
For retirement accounts 100
Through automatic investment plan 100

MINIMUM BALANCE $1,000
For retirement accounts None

IF YOU ARE NEW TO BT INVESTMENT FUNDS, complete and sign an account application
and mail it along with your check to the address listed below. If there is no
account application accompanying this Prospectus, call the BT Service Center at
1-800-730-1313.

BT Service Center
P.O. Box 419210
Kansas City, MO 64141-6210

Overnight mailings:

BT Service Center
210 West 10th Street, 8th Floor
Kansas City, MO 64105-1716

IF YOU ALREADY HAVE MONEY INVESTED IN A FUND IN THE BT FAMILY OF FUNDS, you can:

(Bullet) Mail an account application with a check,

(Bullet) Wire money into your account,

(Bullet) Open an account by exchanging from another fund in the BT Family of
Funds, or

(Bullet) Contact your Service Agent or Investment Professional.

If you are investing through a tax-sheltered retirement plan, such as an IRA,
for the first time, you will need a special application. Contact your Investment
Professional or BT Retirement Services Center at 1-800-677-7596 for more
information and a retirement account application.

23
<PAGE>

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ADDITIONAL INFORMATION ABOUT BUYING SHARES

<TABLE>
<CAPTION>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
<S><C>
BY WIRE Call the BT Service Center at Call your Investment Professional or wire additional
1-800-730-1313 to receive wire investment to:
instructions for account
establishment.
ROUTING NO.: 021001033
ATTN: Bankers Trust/IFTC Deposit
DDA NO.: 00-226-296
FBO: (Account name)
(Account number)
CREDIT: Fund Number (see below)
Investment Intermediate Tax Free Fund-467
Investment Global High Yield Securities Fund-478
Investment Capital Appreciation Fund-465
Investment Small Cap Fund-498
Investment International Equity Fund-463
Investment Pacific Basin Equity Fund-496
Investment Latin American Equity Fund-497

Specify the
complete name
of the Fund of
your choice,
and include
your account
number and your
name.

BY PHONE Contact your Service Agent, Contact your Service Agent, Investment Professional,
Investment Professional, or call BT's or call BT's Service Center at 1-800- 730-1313. If
Service Center at 1-800-730-1313. If you are an existing shareholder, you may exchange
you are an existing shareholder, you from another BT account with the same registration,
may exchange from another BT account including, name, address, and taxpayer ID number.
with the same registration,
including, name, address, and
taxpayer ID number.

BY MAIL Complete and sign the account Make your check
payable to the complete name of the application. Make
your check payable Fund of your choice. Indicate your
Fund account to the complete name of the Fund of
number on your check and mail to the address printed
your choice. Mail to the appropriate on your account
statement.
address indicated on the application.
</TABLE>

HOW TO SELL SHARES

You can arrange to take money out of your Fund account at any time by selling
(redeeming) some or all of your Shares. Your Shares shall be sold at the next
NAV calculated after an order is received by the Transfer Agent. Redemption
requests should be transmitted by customers in accordance with procedures
established by the Transfer Agent and the Shareholder's Service Agent.
Redemption requests for Shares of the Fund received by the Service Agent and
transmitted to the Transfer Agent prior to the Valuation Time on each Valuation
Day will be effective at that day's Valuation Time and the redemption proceeds
normally will be delivered to the

<PAGE>

- --------------------------------------------------------------------------------

shareholder's account the next day, but in any event within seven calendar days
following receipt of the request.

Service Agents may allow redemptions or exchanges by telephone and may disclaim
liability for following instructions communicated by telephone that the Service
Agent reasonably believes to be genuine. The Service Agent must provide the
investor with an opportunity to choose whether or not to utilize the telephone
redemption or exchange privilege. The Transfer Agent and the Service Agent must
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. If the Shareholder Servicing Agent does not do so, it may
be liable for any losses due to unauthorized or fraudulent instructions. Such
procedures may include, among others, requiring some form of personal
identification prior to acting upon instructions received by telephone,
providing written confirmation of such transactions and/or tape recording of
telephone instructions.

Redemption orders are processed without charge by the Trust. A Service Agent may
on at least 30 days' notice involuntarily redeem a shareholder's account with
the Fund having a balance below the minimum, but not if an account is below the
minimum due to a change in market value. See "Minimum Investments" above for
minimum balance amounts.

TO SELL SHARES IN A RETIREMENT ACCOUNT, your request must be made in writing,
except for exchanges to other eligible funds in the BT Family of Funds, which
can be requested by phone or in writing. For information on retirement
distributions, contact your Service Agent or call the BT Service Center at
1-800-730-1313.

IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR NON-RETIREMENT ACCOUNT SHARES, leave
at least $1,000 worth of shares in the account to keep it open.

TO SELL SHARES BY BANK WIRE you will need to sign up for these services in
advance when completing your account application.

CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE to protect you and Bankers
Trust from fraud. Redemption requests in writing must include a signature
guarantee if any of the following situations apply:

(Bullet) Your account registration has changed within the last 30 days,

(Bullet) The check is being mailed to a different address than the one on your
account (record address),

(Bullet) The check is being made payable to someone other than the account
owner,

(Bullet) The redemption proceeds are being transferred to a BT account with a
different registration, or

(Bullet) You wish to have redemption proceeds wired to a non-predesignated bank
account.

A signature guarantee is also required if you change the pre-designated bank
information for receiving redemption proceeds on your account.

You should be able to obtain a signature guarantee from a bank, broker, dealer,
credit union (if authorized under state law), securities exchange or
association, clearing agency, or savings association. A notary public cannot
provide a signature guarantee.

ADDITIONAL INFORMATION ABOUT SELLING SHARES

BY WIRE -- You must sign up for the wire feature before using it. To verify that
it is in place, call 1-800-730-1313. Minimum wire: $1,000. Your wire redemption
request must be received by the Transfer Agent before 4:00 p.m. Eastern time for
money to be wired on the next business day.

IN WRITING -- Write a signed "letter of instruction" with your name, the Fund's
name and Fund's number, your Fund account number, the dollar amount or number of
Shares to be redeemed, and mail to one of the following addresses:

BT Service Center
P.O. Box 419210
Kansas City, MO 64141-6210

Overnight mailings:

BT Service Center
210 West 10th Street, 8th Floor
Kansas City, MO 64105-1716

For Trust accounts, the trustee must sign the letter indicating capacity as
trustee. If the trustee's name is not on the account registration, provide a
copy of the trust document certified within the last 60 days.

For a Business or Organization account, at least one person authorized by
corporate resolution to act on the account must sign the letter.

Unless otherwise instructed, the Transfer Agent will send a check to the account
address of record. The Trust

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reserves the right to close investor accounts via 30 day notice in writing if
the Fund account balance falls below the Fund minimums.

INVESTOR SERVICES

BT Investment Funds provide a variety of services to help you manage your
account.

INFORMATION SERVICES

STATEMENTS AND REPORTS that your Investment Professional or the Transfer Agent
may send to you include the following:

(Bullet) Confirmation statements (after every transaction that affects your
account balance, including distributions or your account registration)

(Bullet) Account statements (monthly)

(Bullet) Financial reports (every six months)

To reduce expenses, only one copy of most financial reports will be mailed, even
if you have more than one account in the Fund. Call your Investment Professional
or the BT Service Center at 1-800-730-1313 if you need additional copies of
financial reports.

EXCHANGE PRIVILEGE

Shareholders may exchange their Shares for shares of certain other funds in the
BT Family of Funds registered in their state. The Fund reserves the right to
terminate or modify the exchange privilege in the future. To make an exchange,
follow the procedures indicated in "How to Buy Shares" and "How to Sell Shares"
herein. Before making an exchange, please note the following:

(Bullet) Call your Service Agent for information and a prospectus. Read the
prospectus for relevant information.

(Bullet) Your new account will have the identical account registration including
the same name, address and taxpayer identification number as your
existing account(s).

(Bullet) Each exchange represents the sale of shares of one fund and the
purchase of shares of another, which may produce a gain or loss for tax
purposes. Your Service Agent will receive a written confirmation of
each exchange transaction.

Note that exchanges out of a Fund may be limited to four per calendar year and
that they may have tax consequences for you.

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SYSTEMATIC PROGRAMS

TO MOVE MONEY FROM YOUR BANK ACCOUNT TO BT INVESTMENT FUNDS

<TABLE>
<CAPTION>
MINIMUM MINIMUM
INITIAL SUBSEQUENT FREQUENCY SETTING UP OR CHANGING
<S><C>
$1,000 $100 Monthly, bimonthly, For a new account, complete the appropriate section on
quarterly or semi- the application.
annually
For existing accounts, call
your Investment Professional
for an application. To change
the amount or frequency of
your investment, contact your
Investment Professional
directly or call 1-800-
730-1313. Call at least 10
business days prior to your
next scheduled investment
date.

SYSTEMATIC WITHDRAWAL PROGRAM LETS YOU SET UP PERIODIC REDEMPTIONS FROM YOUR
ACCOUNT.

MINIMUM FREQUENCY SETTING UP OR CHANGING

$100 Monthly, quarterly, semi- To establish, call your Investment Professional or call
annually or annually 1-800-730-1313 after your account is open. The accounts from
which the withdrawals will be
processed must have a minimum
balance of $10,000, other than
retirement accounts subject to
required minimum distributions.
</TABLE>

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TAX-SAVING RETIREMENT PLANS

Retirement plans offer significant tax savings and are available to individuals,
partnerships, small businesses, corporations, nonprofit organizations and other
institutions. Contact Bankers Trust for further information. Bankers Trust can
set up your new account in the Fund under a number of several tax-savings or
tax-deferred plans. Minimums may differ from those listed elsewhere in this
Prospectus.

(Bullet) Individual Retirement Accounts (IRAs): personal savings plans that
offer tax advantages for individuals to set aside money for retirement
and allow new contributions of $2,000 per tax year.

(Bullet) Rollover IRAs: tax-deferred retirement accounts that retain the special
tax advantages of lump sum distributions from qualified retirement
plans and transferred IRA accounts.

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DIVIDENDS, DISTRIBUTIONS, AND TAXES
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DISTRIBUTIONS. Each Fund distributes substantially all of its net investment
income and capital gains to shareholders each year. Each Fund distributes
capital gains annually. Normally, income dividends for the Global High Yield
Securities Fund, Small Cap Fund and the Capital Appreciation Fund are
distributed quarterly; income dividends for the International Equity Fund,
Pacific Basin Equity Fund and the Latin American Equity Fund are distributed
annually. Income dividends for the Intermediate Tax Free Fund are declared daily
and paid monthly. Unless a Shareholder instructs a Trust to pay such dividends
and distributions in cash, they will be automatically reinvested in additional
Shares of the Fund.

FEDERAL TAXES. Each Fund intends to qualify as a regulated investment company,
as defined in the Internal Revenue Code of 1986, as amended (the "Code").
Provided each Fund meets the requirements imposed by the Code and distributes
all of its income and gains, a Fund will not pay any federal income or excise
taxes.

Distributions from each Fund's income and short-term capital gains are taxes as
dividends, and long-term capital gain distributions are taxed as long-term
capital gains. Each Fund's capital gain distributions are taxable when they are
paid, whether you take them in cash or reinvest them in additional Shares.
Distributions declared to shareholders of record in November and December and
paid in January are taxable as if paid on December 31. Each Fund will send each
shareholder a tax statement by January 31 showing the tax status of the
distributions received on the past year.

The Intermediate Tax Free Fund intends to qualify to pay exempt-interest
dividends to its shareholders by having, at the close of each quarter of its
taxable year, at least 50% of the value of its total assets invested in
tax-exempt securities. An exempt-interest dividend is that part of dividend
distributions made by the Intermediate Tax Free Fund which consists of interest
received by the Intermediate Tax Free Fund derived from tax-exempt securities
held by the Intermediate Tax Free Portfolio. Exempt-interest dividends received
from the Intermediate Tax Free Fund will be treated for federal income tax
purposes as tax-exempt interest income. In view of the Intermediate Tax Free
Portfolio's investment policies, it is expected that substantially all the
Intermediate Tax Free Fund's dividends will be exempt-interest dividends,
although the Intermediate Tax Free Fund may from time to time distribute net
short-term capital gains or other minor amounts of taxable income.

Interest on certain tax-exempt municipal obligations issued after August 7, 1986
is a preference item for purposes of the federal alternative minimum tax
applicable to individuals and corporations. Under tax regulations to be used,
the portion of an exempt-interest dividend of a regulated investment company
that is allocable to these obligations will be treated as a preference item for
purposes of the alternative minimum tax. The Intermediate Tax Free Portfolio has
limited its investment to those securities the interest on which will not be
treated as preference items for purposes of the alternative minimum tax in the
opinion of bond counsel for the issuer. The Intermediate Tax Free Portfolio
currently has no intention of investing in obligations subject to the
alternative minimum tax under normal market conditions.

Corporations should, however, be aware that interest on all municipal securities
will be included in calculating: (i) adjusted current earning for purposes of
the alternative minimum tax applicable to them; (ii) the additional tax imposed
on certain corporations by the Superfund Revenue Act of 1986; and (iii) the
foreign branch profits tax imposed on effectively connected earnings and profits
of United States branches of foreign corporations. Furthermore, special tax
provisions may apply to certain
27

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financial institutions and property and casualty insurance companies, and they
should consult their tax advisors before purchasing Shares of the Intermediate
Tax Free Fund.

Certain provisions in the Tax Reform Act of 1986, as amended, relating to
issuance of municipal obligations, have reduced the volume of municipal
obligations qualifying for federal tax exemption and may continue to do so.

Interest on indebtedness incurred or continued by a shareholder (whether a
corporation or an individual) to purchase or carry Shares of these Funds is not
deductible. The U.S. Department of the Treasury has been given authority to
issue regulations which would disallow the interest deduction if incurred to
purchase or carry Share of the Fund owned by the taxpayer's spouse, minor child
or entity controlled by the taxpayer. Entities or persons who are "substantial
users" (or related persons) of facilities financed by tax-exempt bonds should
consult their tax advisers before purchasing Shares of the Fund.

CAPITAL GAINS. You may realize a capital gain or loss when you redeem (sell) or
exchange Shares. Because the tax treatment also depends on your purchase price
and your personal tax position, you should keep your regular account statements
to use in determining your tax.

"BUYING A DIVIDEND." On the ex-date for a distribution from capital gains, each
Fund's Share value is reduced by the amount of the distribution. If you buy
Shares just before the ex-date ("buying a dividend"), you will pay the full
price for the Shares and then receive a portion of the price back as a taxable
distribution.

OTHER TAX INFORMATION. You may be subject to state or local taxes on your
investment, depending on the laws in your area. You should consult with your own
tax adviser concerning the application of federal, state and local taxes to your
distributions from each Fund.

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PERFORMANCE INFORMATION AND REPORTS
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Each Portfolio's recent strategies and holdings, and the corresponding Fund's
performance, is detailed twice a year in the Funds' financial reports, which are
sent to all Fund shareholders.

For current Fund performance or a free copy of a Fund's financial report, please
contact a Service Agent.

Mutual fund performance is commonly measured as total return and/or yield. Each
Fund's performance is affected by the expenses of that Fund.

EXPLANATION OF TERMS

TOTAL RETURN is the change in value of an investment in a Fund over a given
period, assuming reinvestment of any dividends and capital gains. A cumulative
total return reflects actual performance over a stated period of time. An
average annual total return is a hypothetical rate of return that, if achieved
annually, would have produced the same cumulative total return if performance
had been constant over the entire period. Average annual total return
calculations smooth out variations in performance; they are not the same as
actual year-by-year results. Average annual total returns covering periods of
less than one year assume that performance will remain constant for the rest of
the year.

YIELD refers to the income generated by an investment in a Fund over a given
period of time, expressed as an annual percentage rate. Yields are calculated
according to a standard that is required for all stock and bond funds. Because
this differs from other accounting methods, the quoted yield may not equal the
income actually paid to shareholders. This difference may be significant for a
Fund investing in a Portfolio whose investments are denominated in foreign
currencies.

Performance information may include comparisons of a Fund's investment results
to various unmanaged indices or results of other mutual funds or investment or
savings vehicles. From time to time, Fund rankings may be quoted from various
sources, such as Lipper Analytical Services, Inc., Value Line, and Morningstar,
Inc.

Unlike some bank deposits or other investments which pay a fixed yield for a
stated period of time, the total return of a Fund will vary depending upon
interest rates, the current market value of the securities held by the
corresponding Portfolio and changes in the expenses of the Fund or Portfolio. In
addition, during certain periods for which total return may be provided, Bankers
Trust may have voluntarily agreed to waive portions of their fees, or reimburse
certain operating expenses of a Fund or Portfolio, on a month-to-month basis.
Such waivers will have the effect of increasing the Fund's net income (and
therefore its yield and total return) during the period such waivers are in
effect.

TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN INDICATION OF
FUTURE PERFORMANCE.
28

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MANAGEMENT OF THE TRUST AND PORTFOLIOS
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BOARD OF TRUSTEES

The Trust and each Portfolio are governed by a Board of Trustees which is
responsible for protecting the interests of investors. A majority of the
Trustees who are not "interested persons" (as defined in the 1940 Act) of the
Trust or the Portfolio, as the case may be, have adopted written procedures
reasonably appropriate to deal with potential conflicts of interest arising from
the fact that some of the same individuals are Trustees of the Trust and the
Portfolios, up to and including creating separate boards of trustees. See
"Management of the Trust and Portfolios" in the SAI for more information with
respect to the Trustees and officers of the Trust and each Portfolio.

INVESTMENT ADVISER

The Trust has not retained the services of an investment adviser since the Trust
seeks to achieve the investment objective of each of its Funds by investing all
the Assets of the Fund in the corresponding Portfolio. Each Portfolio has
retained the services of Bankers Trust as Adviser.

BANKERS TRUST COMPANY AND ITS AFFILIATES

As of December 31, 1997, Bankers Trust New York Corporation was the seventh
largest bank holding company in the United States with total assets of over $100
billion. Bankers Trust is a worldwide merchant bank dedicated to servicing the
needs of corporations, governments, financial institutions and private clients
through a global network of over 90 offices in more than 50 countries.
Investment management is a core business of Bankers Trust, built on a tradition
of excellence from its roots as a trust bank founded in 1903. The scope of
Bankers Trust's investment management capability is unique due to its leadership
positions in both active and passive quantitative management and its presence in
major equity and fixed income markets around the world. Bankers Trust is one of
the nation's largest and most experienced investment managers with over $300
billion in assets under management globally.

Bankers Trust has more than 50 years of experience managing retirement assets
for the nation's largest corporations and institutions. In the past, these
clients have been serviced through separate account and commingled fund
structures. Now, the BT Family of Funds brings Bankers Trust's extensive
investment management expertise -- once available to only the largest
institutions in the U.S. -- to individual investors. Bankers Trust's officers
have had extensive experience in managing investment portfolios having
objectives similar to those of each Portfolio.

Bankers Trust, subject to the supervision and direction of the Board of Trustees
of each Portfolio, manages each Portfolio in accordance with the Portfolio's
investment objective and stated investment policies, makes investment decisions
for the Portfolio, places orders to purchase and sell securities and other
financial instruments on behalf of the Portfolio and employs professional
investment managers and securities analysts who provide research services to the
Portfolio. Bankers Trust may utilize the expertise of any of its world wide
subsidiaries and affiliates to assist it in its role as investment adviser. All
orders for investment transactions on behalf of a Portfolio are placed by
Bankers Trust with broker-dealers and other financial intermediaries that it
selects, including those affiliated with Bankers Trust. A Bankers Trust
affiliate will be used in connection with a purchase or sale of an investment
for the Portfolio only if Bankers Trust believes that the affiliate's charge for
the transaction does not exceed usual and customary levels. The Portfolio will
not invest in obligations for which Bankers Trust or any of its affiliates is
the ultimate obligor or accepting bank. The Portfolio may, however, invest in
the obligations of correspondents and customers of Bankers Trust.

The Investment Advisory Agreement provides for each Portfolio to pay Bankers
Trust a fee, accrued daily and paid monthly, equal on an annual basis to the
following percentages of the average daily net assets of the Portfolio for its
then-current fiscal year: Intermediate Tax Free Portfolio, 0.40%; Global High
Yield Securities Portfolio, 0.80%; Capital Appreciation Portfolio, 0.65%; Small
Cap Portfolio, 0.65%; International Equity Portfolio, 0.65%; Pacific Basin
Equity Portfolio, 0.75%; and Latin American Equity Portfolio, 1.00%. With
respect to Global High Yield Securities Portfolio, Pacific Basin Equity
Portfolio, and Latin American Equity Portfolio, the investment advisory fee is
higher than that of most funds, but not necessarily higher than that of a
typical
29

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international fund, due to the greater complexity, expense and commitment of
resources involved in international investing. Under certain circumstances
Bankers Trust has agreed to pay fees to certain securities brokers, dealers and
other entities that facilitate the sale of Fund shares, and in connection
therewith provide administrative, shareholder, or distribution related services
to the Fund or its shareholders. Fees paid to entities that administer mutual
fund "supermarkets" may be higher than fees paid for other types of services.

Bankers Trust has been advised by its counsel that, in counsel's opinion,
Bankers Trust currently may perform the services for the Trust and the
Portfolios described in this Prospectus and the SAI without violation of the
Glass-Steagall Act or other applicable banking laws or regulations.

SUB-INVESTMENT ADVISER -- PACIFIC BASIN EQUITY PORTFOLIO

Bankers Trust has entered into a sub-investment advisory agreement (the
"Sub-Advisory Agreement") with BT Fund Managers (International) Limited ("BT
Fund Managers International"), a wholly owned registered investment advisory
subsidiary of Bankers Trust Australia Limited ("BTAL"). BTAL is a wholly owned
subsidiary of Bankers Trust New York Corporation. Under the Sub-Advisory
Agreement, Bankers Trust may receive investment advice and research services
with respect to companies based in the Pacific Basin and may grant BT Fund
Managers International investment management authority as well as the authority
to buy and sell securities if Bankers Trust believes it would be beneficial to
the Pacific Basin Equity Portfolio. Under the Sub-Advisory Agreement, BT Fund
Managers International receives a fee from Bankers Trust for providing
investment advice and research services, accrued daily and paid monthly, at the
annual rate of 0.60% of the average daily assets of the Portfolio.

PORTFOLIO MANAGERS

Gary Pollack, Principal of Bankers Trust, is responsible for the day-to-day
management of the Intermediate Tax Free Portfolio. Mr. Pollack has been employed
by Bankers Trust since 1978 and has managed the Portfolio's assets since the
Portfolio's commencement of operations.

Greg Hopper, Principal of Bankers Trust, has been responsible for the day-to-day
management of the Global High Yield Securities Portfolio since July, 1997. Mr.
Hopper joined Bankers Trust in 1993 and is responsible for the management of
corporate bond investments. He has ten years of investment experience.
Previously, he worked as an officer at Paine Webber Group (Mitchell Hutchins),
Drexel Burnham Lambert and Fleet Financial Group.

Mary P. Dugan, CFA, Vice President of Bankers Trust, and Timothy Woods, CFA,
Principal of Bankers Trust, share senior portfolio management responsibilities
of the Small Cap Portfolio. Ms. Dugan has worked on the Portfolio since she
joined Bankers Trust in 1994 and has managed the Portfolio's assets since 1996.
Ms. Dugan has fourteen years of investment analysis experience. Previously, Ms.
Dugan worked at Fred Alger Management, Dean Witter, Integrated Resources and
Equitable Investment Management Corporation. Mr. Woods has worked on the
Portfolio since 1994 and has managed the Portfolio's assets since 1996. Mr.
Woods joined Bankers Trust in 1992 and has fourteen years of investment and
financial experience.

Anthony Takazawa, CFA, Vice President of Bankers Trust, has senior management
responsibilities for the Capital Appreciation Portfolio. Mr. Takazawa joined
Bankers Trust in 1996 and has managed the Portfolio's assets since August, 1996.
Mr. Takazawa has nine years of investment and financial analysis experience.
Previously, Mr. Takazawa worked at Phoenix Mutual Life Insurance Company as an
investment analyst, portfolio manager and director or research.

Michael Levy, Managing Director of Bankers Trust, has been a manager of the
International Equity Portfolio since joining Bankers Trust in 1993, and has been
its primary manager since 1995. Mr. Levy is Bankers Trust's international equity
strategist and is head of the international equity team. He has served in each
of these capacities since 1993. The international equity team is responsible for
the day to day management of the Portfolio as well as other international equity
portfolios managed by Bankers Trust. Mr. Levy's experience prior to joining
Bankers Trust includes investment banking and equity analysis with Oppenheimer &
Company. He has twenty-six years of business experience, of which sixteen years
have been in the investment industry.

Robert Reiner, Managing Director of Bankers Trust, has been a manager of the
International Equity Portfolio since joining Bankers Trust in 1994 and its
co-manager since 1995. At Bankers Trust, he has been involved in

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developing analytical and investment tools for the group's international equity
team; his primary focus has been on Japanese and European markets. Prior to
joining Bankers Trust, he was an equity analyst and also provided macroeconomic
coverage for Scudder, Stevens & Clark from 1993 to 1994. He previously served as
Senior Analyst at Sanford C. Bernstein & Co. from 1991 to 1992, and was
instrumental in the development of Bernstein's International Value Fund. Mr.
Reiner spent more than nine years at Standard & Poor's Corporation, where he was
a member of its international ratings group. His tenure included managing the
day to day operations of the Standard & Poor's Corporation Tokyo office for
three years.

Julie Wang, Principal of Bankers Trust, has been a manager of the International
Equity Portfolio since joining Bankers Trust in 1994 and its co-manager since
1996. Ms. Wang has primary focus on the Asia-Pacific region and the Portfolio's
emerging market exposure. Prior to joining Bankers Trust, Ms. Wang was an
investment manager at American International Group, where she advised in the
management of $7 billion of assets in Southeast Asia, including private and
listed equities, bonds, loans and structured products. Ms. Wang received her
B.A.(economics) from Yale University and her MBA from the Wharton School.

Paul Durham, Executive Vice President of BTAL, has been responsible for the
day-to-day management of the Pacific Basin Equity Portfolio. Mr. Durham has been
employed by Bankers Trust since January, 1988 and has managed the Portfolio's
assets since November, 1993.

Bankers Trust investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for personal
investing and restricts certain transactions.

ADMINISTRATOR

Under its Administration and Services Agreement with the Trust, Bankers Trust
calculates the net asset value of each Fund and generally assists the Board of
Trustees of the Trust in all aspects of the administration and operation of the
Funds. The Administration and Services Agreement provides for the Trust to pay
Bankers Trust a fee, accrued daily and paid monthly equal on an annual basis to
the following percentages of the average daily net assets of the Fund for its
then-current fiscal year: Intermediate Tax Free Fund, 0.40%; Global High Yield
Securities Fund, 0.95%; Capital Appreciation Fund, 0.65%; Small Cap Fund, 0.65%;
International Equity Fund, 0.85%; Pacific Basin Equity Fund, 0.75%; and Latin
American Equity Fund, 0.95%.

Under an Administration and Services Agreement with each Portfolio, Bankers
Trust calculates the value of the assets of the Portfolio and generally assists
the respective Board of Trustees in all aspects of the administration and
operation of the Portfolios. The Administration and Services Agreements provide
for each Portfolio to pay Bankers Trust a fee, accrued daily and paid monthly,
equal on an annual basis to the following percentages of the Portfolio's average
daily net assets for its then-current fiscal year: Intermediate Tax Free
Portfolio, 0.05%; Global High Yield Securities Portfolio, 0.20%; Capital
Appreciation Portfolio, 0.10%; Small Cap Portfolio, 0.10%; International Equity
Portfolio, 0.15%; Pacific Basin Equity Portfolio, 0.25%; and Latin American
Equity Portfolio, 0.20%. Under each Administration and Services Agreement,
Bankers Trust may delegate one or more of its responsibilities to others,
including affiliates of Edgewood, at Bankers Trust's expense. For more
information, see the SAI.

DISTRIBUTOR

Edgewood Services, Inc. is the principal distributor for the Shares of the
Funds. In addition, Edgewood and its affiliates provide the Trust with office
facilities, and currently provide administration and distribution services for
other registered investment companies. The principal business address of
Edgewood and its affiliates is Clearing Operations, P.O. Box 897, Pittsburgh,
Pennsylvania 15230-0897.

SERVICE AGENT

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periodic reports, updated prospectuses and other communications to shareholders
and, with respect to meetings of shareholders, collecting, tabulating and
forwarding to the Trust executed proxies and obtaining such other information
and performing such other services as the Administrator or the Service Agent's
clients may reasonably request and agree upon with the Service Agent. Service
Agents may separately charge their clients additional fees only to cover
provision of additional or more comprehensive services not already provided
under the Administration and Services Agreement with Bankers Trust, or of the
type or scope not generally offered by a mutual fund, such as cash management
services or enhanced retirement or trust reporting. Each Service Agent has
agreed to transmit to shareholders, who are its customers, appropriate
disclosures of any fees that it may charge them directly.

CUSTODIAN AND TRANSFER AGENT

Bankers Trust acts as custodian of the assets of the Trust and each Portfolio
and serves as the transfer agent (the "Transfer Agent") for the Trust and each
Portfolio under the Administration and Services Agreement with the Trusts and
each Portfolio.

ORGANIZATION OF THE TRUST AND FUNDS

Each Fund is a mutual fund: an investment that pools shareholders' money and
invests it toward a specified goal. Each Fund is a separate series of BT
Investment Funds, a Massachusetts business trust. Each of the Global High Yield
Securities Portfolio, Small Cap Portfolio, Pacific Basin Equity Portfolio and
Latin American Equity Portfolio is a separate subtrust of BT Investment
Portfolios, a New York master trust fund. Each of the Capital Appreciation
Portfolio, International Equity Portfolio, and Intermediate Tax Free Portfolio
is a New York trust.

The Trust and BT Investment Portfolios reserve the right to add additional
series in the future. The Trust also reserves the right to issue more than one
class of Shares of each Fund.

The Trust or a Portfolio may hold special meetings and mail proxy materials.
These meetings may be called to elect or remove trustees, change fundamental
policies, approve Portfolio's investment advisory agreement, or for other
purposes. Shareholders not attending these meetings are encouraged to vote by
proxy. The Trust's Transfer Agent will mail proxy materials in advance,
including a voting card and information about the proposals to be voted on.

When matters are submitted for shareholder vote, shareholders of each Fund will
have one vote for each full Share held and proportionate, fractional votes for
fractional Shares held. A separate vote of one of the Funds is required on any
matter affecting only that Fund on which shareholders are entitled to vote.
Shareholders of a Fund are not entitled to vote on Trust matters that do not
affect that Fund and do not require a separate vote of the Fund. All series of
the Trust will vote together on certain matters, such as electing trustees or
approving independent public auditors. There normally will be no meetings of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of Trustees holding office have been elected by
shareholders, at which time the Trustees then in office will call a
shareholders' meeting for the election of Trustees. Any Trustee may be removed
from office upon the vote of shareholders holding at least two-thirds of the
Trust's outstanding Shares at a meeting called for that purpose. The Trustees
are required to call such a meeting upon the written request of shareholders
holding at least 10% of the Trust's outstanding Shares. The Trust will also
assist shareholders in communicating with one another as provided for in the
1940 Act.

Each series of the BT Investment Portfolios will vote separately on any matter
involving the corresponding Portfolio. Shareholders of all of the series of the
Trust will, however, vote together to elect Trustees of the Trust and for
certain other matters. Under certain circumstances, the shareholders of one or
more series could control the outcome of these votes. The series of BT
Investment Portfolios will vote together or separately on matters in the same
manner, and in the same circumstances, as do the series of the Trust. As with
the Trust, the investors in one or more series of BT Investment Portfolios could
control the outcome of these votes.

As of December 31, 1997, the following shareholders of record owned 25% or more
of the voting securities of a Fund, and, therefore, may, for certain purposes,
be deemed to control the Fund and be able to affect the outcome of certain
matters presented for a vote of its shareholders: Infid and Co. c/o Bankers
Trust Company, New York, New York owned approximately 29% of the Intermediate
Tax Free Fund, 74% of the Global High Yield Securities Fund, 40% of the Capital
Appreciation Fund, 26% of the Small Cap Fund, 56% of the Pacific Basin

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Fund and 36% of the Latin American Fund; Batrus & Co. c/o Bankers Trust Company,
New York, New York owned approximately 27% of the Capital Appreciation Fund;
Bankers Trust Company as trustee for Westinghouse Savannah River/Bechtel
Savannah River Inc. Savings and Investment Plan, Jersey City, New Jersey, owned
approximately 28% of the Small Cap Fund; and Charles Schwab & Co., San
Francisco, California, owned approximately 24% of the International Equity Fund
and 21% of the Latin American Fund.

Each Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a business trust may,
under certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.

Each Portfolio was organized as a trust under the laws of the State of New York.
Each Portfolio's Declaration of Trust provides that each Fund and other entities
investing in a Portfolio (e.g., other investment companies, insurance company
separate accounts and common and commingled trust funds) will each be liable for
all obligations of that Portfolio. However, the risk of a Fund incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance existed and a Portfolio itself was unable to meet its
obligations. Accordingly, the Trustees of the Trust believe that neither the
Funds nor their shareholders will be adversely affected by reason of the Funds
investing in the Portfolios. No series of BT Investment Portfolios has any
preference over any other series.

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ADDITIONAL INFORMATION
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EQUITY SECURITIES. As used herein, "equity securities" are defined as common
stock, preferred stock, trust or limited partnership interests, rights and
warrants to subscribe to or purchase such securities, sponsored or unsponsored
ADRs, EDRs, GDRs, and convertible securities, consisting of debt securities or
preferred stock that may be converted into common stock or that carry the right
to purchase common stock. Common stocks, the most familiar type, represent an
equity (ownership) interest in a corporation. Although equity securities have a
history of long-term growth in value, their prices fluctuate based on changes in
a company's financial condition and on overall market and economic conditions.
Smaller companies are especially sensitive to these factors.

DEBT SECURITIES. Bonds and other debt instruments are used by issuers to borrow
money from investors. The issuer pays the investor a fixed or variable rate of
interest, and must repay the amount borrowed at maturity. Some debt securities,
such as zero coupon bonds, do not pay current interest, but are purchased at a
discount from their face values. Debt securities, loans, and other direct debt
have varying degrees of quality and varying levels of sensitivity to changes in
interest rates. Longer-term bonds are generally more sensitive to interest rate
changes than short-term bonds.

Lower-quality foreign government securities are often considered to be
speculative and involve greater risk of default or price changes, or they may
already be in default. These risks are in addition to the general risks
associated with foreign securities.

CONVERTIBLE SECURITIES. A convertible security is a bond or preferred stock
which may be converted at a stated price within a specific period of time into a
specified number of shares of common stock of the same or different issuer.
Convertible securities are senior to common stock in a corporation's capital
structure, but usually are subordinated to non-convertible debt securities.
While providing a fixed income stream -- generally higher in yield than in the
income derived from a common stock but lower than that afforded by a
non-convertible debt security -- a convertible security also affords an investor
the opportunity, through its conversion feature, to participate in the capital
appreciation of common stock into which it is convertible.

In general, the market value of a convertible security is the higher of its
investment value (its value as a fixed income security) or its conversion value
(the value of the underlying shares of common stock if the security is
converted). As a fixed income security, the market value of a convertible
security generally increases when interest rates decline and generally decreases
when interest

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rates rise; however, the price of a convertible security generally increases as
the market value of the underlying stock increases, and generally decreases as
the market value of the underlying stock declines. Investments in convertible
securities generally entail less risk than investments in the common stock of
the same issuer.

PREFERRED STOCK. Preferred stock has a preference in liquidation (and, generally
dividends) over common stock but is subordinated in liquidation to debt. As a
general rule the market value of preferred stocks with fixed dividend rates and
no conversion rights varies inversely with interest rates and perceived credit
risk, with the price determined by the dividend rate. Some preferred stocks are
convertible into other securities, for example common stock, at a fixed price
and ratio or upon the occurrence of certain events. The market price of
convertible preferred stocks generally reflects an element of conversion value.
Because many preferred stocks lack a fixed maturity date, these securities
generally fluctuate substantially in value when interest rates change; such
fluctuations often exceed those of long-term bonds of the same issuer. Some
preferred stocks pay an adjustable dividend that may be based on an index,
formula, auction procedure or other dividend rate reset mechanism. In the
absence of credit deterioration, adjustable rate preferred stocks tend to have
more stable market values than fixed rate preferred stocks.

All preferred stocks are also subject to the same types of credit risks of the
issuer as corporate bonds. In addition, because preferred stock is junior to
debt securities and other obligations of an issuer, deterioration in the credit
rating of the issuer will cause greater changes in the value of a preferred
stock than in a more senior debt security with similar yield characteristics.
Preferred stocks may be rated by S&P and Moody's although there is no minimum
rating which a preferred stock must have (and a preferred stock may not be
rated) to be an eligible investment for a Portfolio. Bankers Trust expects,
however, that generally the preferred stocks in which a Portfolio invests will
be rated at least CCC by S&P or Caa by Moody's or, if unrated, of comparable
quality in the opinion of Bankers Trust. Preferred stocks rated CCC by S&P are
regarded as predominantly speculative with respect to the issuer's capacity to
pay preferred stock obligations and represent the highest degree of speculation
among securities rated between BB and CCC; preferred stocks rated Caa by Moody's
are likely to be in arrears on dividend payments. Moody's rating with respect to
preferred stocks does not purport to indicate the future status of payments of
dividends.

WARRANTS. Warrants are instruments which entitle the holder to buy underlying
equity securities at a specific price for a specific period of time. A warrant
tends to be more volatile than its underlying securities and ceases to have
value if it is not exercised prior to its expiration date. In addition, changes
in the value of a warrant do not necessarily correspond to changes in the value
of its underlying securities.

U.S. GOVERNMENT SECURITIES. U. S. government securities are high-quality debt
securities issued or guaranteed by the U.S. Treasury or by an agency or
instrumentality of the U.S. government. Not all U.S. government securities are
backed by the full faith and credit of the United States. For example,
securities issued by the Farm Credit Banks or by the Federal National Mortgage
Association are supported by the instrumentality's right to borrow money from
the U.S. Treasury under certain circumstances. However, securities issued by
other agencies or instrumentalities are supported only by the credit of the
entity that issued them.

ADRS, GDRS, AND EDRS. ADRs, GDRs, and EDRs are certificates evidencing ownership
of shares of a foreign-based issuer held in trust by a bank or similar financial
institution. Designed for use in U.S. and European securities markets,
respectively, ADRs, GDRs and EDRs are alternatives to the purchase of the
underlying securities in their national markets and currencies. ADRs, GDRs and
EDRs are subject to the same risks as the foreign securities to which they
relate. See "Risk Factors: Matching the Fund to Your Investment Needs -- Risks
of Investing in Foreign Securities" herein.

PUTS. The Intermediate Tax Free Portfolio may purchase municipal bonds or notes
together with the right to resell them at an agreed price or yield within a
specified period prior to maturity. This right to resell is known as a put. The
aggregate price paid for securities with puts may be higher than the price which
otherwise would be paid. Consistent with the investment objectives of the
Portfolio and subject to the supervision of the Trustees of the Portfolio, the
purpose of this practice is to permit the Portfolio to be fully invested in
tax-exempt securities while maintaining the necessary liquidity to purchase
securities on a when-issued basis, to meet unusually large redemptions, to
purchase at a later date securities

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other than those subject to the put and to facilitate Bankers Trust's ability to
manage the Portfolio actively. The principal risk of puts is that the put writer
may default on its obligation to repurchase. Bankers Trust will monitor each
writer's ability to meet its obligations under puts.

The amortized cost method is used by the Portfolio to value municipal securities
with maturities of less than 60 days; when these securities are subject to puts
separate from the underlying securities, no value is assigned to the puts. The
cost of any such put is carried as an unrealized loss from the time of purchase
until it is exercised or expires.

ZERO COUPON BONDS. Zero coupon bonds are the separate income or principal
components of a debt instrument. These involve risks that are similar to those
of other debt securities, although they may be more volatile, and certain zero
coupon bonds move in the same direction as interest rates.

ZERO COUPON MUNICIPAL SECURITIES. The Intermediate Tax Free Portfolio may invest
in zero coupon municipal securities which are debt securities issued or sold at
a discount from their face value which do not entitle the holder to any periodic
payment of interest prior to maturity or a specified redemption date (or cash
payment date). The amount of the discount varies depending on the time remaining
until maturity or cash payment date, prevailing interest rates, liquidity of the
security and perceived credit quality of the issuer. Zero coupon securities also
may take the form of debt securities that have been stripped of their unmatured
interest coupons, the coupons themselves and receipts or certificates
representing interests in such stripped debt obligations and coupons. The market
prices of zero coupon securities generally are more volatile than the market
prices of interest-bearing securities and are likely to respond to a greater
degree to changes in interest rates than interest-bearing securities having
similar maturities and credit qualities.

FLOATING RATE BONDS. Floating rate bonds may have interest rates that move in
tandem with a benchmark, helping to stabilize their prices.

SOVEREIGN AND SUPRANATIONAL DEBT OBLIGATIONS. Debt instruments issued or
guaranteed by foreign governments, agencies, and supranational organizations
("sovereign debt obligations"), especially sovereign debt obligations of
developing countries, may involve a high degree of risk, and may be in default
or present the risk of default. The issuer of the obligation or the governmental
authorities that control the repayment of the debt may be unable or unwilling to
repay principal and interest when due, and may require renegotiation or
rescheduling of debt payments. In addition, prospects for repayment of principal
and interest may depend on political as well as economic factors.

BRADY BONDS. "Brady bonds" are bonds issued as a result of a restructuring of a
country's debt obligations to commercial banks under the "Brady plan." Brady
bonds have been issued by the governments of Argentina, Costa Rica, Mexico,
Nigeria, Uruguay, Venezuela, Brazil and the Philippines, as well as other
emerging market countries. Most Brady bonds are currently rated below BBB by S&P
or Baa by Moody's. While Bankers Trust is not aware of the occurrence of any
payment defaults on Brady bonds, investors should recognize that these debt
securities have been issued only recently and, accordingly, do not have a long
payment history. Brady bonds may be collateralized or uncollateralized, are
issued in various currencies (primarily the U.S. dollar) and are actively traded
in the secondary market for Latin American debt.

RULE 144A SECURITIES. Rule 144A securities are securities in the United States
that are not registered for sale under federal securities laws but which can be
resold to institutions under SEC Rule 144A. Provided that a dealer or
institutional trading market in such securities exists, these restricted
securities are treated as exempt from the 15% limit on illiquid securities.
Under the supervision of the Board of Trustees of the Portfolio, Bankers Trust
determines the liquidity of restricted securities and, through reports from
Bankers Trust, the Board will monitor trading activity in restricted securities.
If institutional trading in restricted securities were to decline, the liquidity
of the Portfolio could be adversely affected.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. Each Portfolio may purchase
securities on a when-issued or delayed delivery basis. Delivery of and payment
for these securities may take place as long as a month or more after the date of
the purchase commitment. The value of these securities is subject to market
fluctuation during this period and no income accrues to the Portfolio until
settlement takes place. The Portfolio maintains with the custodian a segregated
account containing high grade liquid securities in an amount at least equal to
these commitments.

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REPURCHASE AGREEMENTS. In a repurchase agreement, a Portfolio buys a security at
one price and simultaneously agrees to sell it back at a higher price at a
future date. Delays or losses could result if the other party to the agreement
defaults or becomes insolvent.

REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a Portfolio
temporarily transfers possession of a portfolio instrument to another party in
return for cash. This could increase the risk of fluctuation in the Fund's yield
or in the market value of its assets. A reverse repurchase agreement is a form
of borrowing and will be counted towards each Portfolio's borrowing
restrictions. See "Additional Information -- Leverage" herein and the SAI.

INVESTMENT COMPANIES. With respect to certain countries in which capital markets
are either less developed or not easily accessed, investments by a Portfolio may
be made through investment in other registered investment companies that in turn
are authorized to invest in the securities of such countries. Investments in
other investment companies may also be made for other purposes, such as noted
below under "Short-Term Instruments," and is limited in amount by the 1940 Act,
will involve the indirect payment of a portion of the expenses, including
advisory fees, of such other investment companies and may result in a
duplication of fees and expenses.

SHORT-TERM INSTRUMENTS. Each Portfolio intends to stay invested in the
securities described above to the extent practical in light of its objective and
long-term investment perspective. However, a Portfolio's assets may be invested
in high quality short-term investments with remaining maturities of 397 days or
less, or in money market mutual funds, to meet anticipated redemptions and
expenses for day-to-day operating purposes and when, in Bankers Trust's opinion,
it is advisable to adopt a temporary defensive position because of unusual and
adverse conditions affecting the respective markets.

SECURITIES LENDING. Each Portfolio (other than the Intermediate Tax Free
Portfolio) is permitted to lend up to 30% of the total value of its securities.
These loans must be secured continuously by cash or equivalent collateral or by
a letter of credit at least equal to the market value of the securities loaned
plus accrued income. By lending its securities, the Portfolio can increase its
income by continuing to receive income on the loaned securities as well as by
the opportunity to receive interest on the collateral. During the term of the
loan, the Portfolio continues to bear the risk of fluctuations in the price of
the loaned securities. In lending securities to brokers, dealers and other
financial organizations, a Portfolio is subject to risks, which like those
associated with other extensions of credit, include delays in recovery and
possible loss of rights in the collateral should the borrower fail financially.

LEVERAGE. The Global High Yield Securities Portfolio and Latin American Equity
Portfolio may each borrow up to one-third of the value of its total assets, from
banks or through the use of reverse repurchase agreements, to increase its
holdings of portfolio securities. Under the 1940 Act, each Portfolio is required
to maintain continuous asset coverage of 300% with respect to such borrowings
and to sell (within three days) sufficient portfolio holdings to restore such
coverage if it should decline to less than 300% due to market fluctuations or
otherwise, even if such liquidations of a Portfolio's holdings may be
disadvantageous from an investment standpoint.

Leveraging by means of borrowing may exaggerate the effect of any increase or
decrease in the value of each Portfolio's securities and the corresponding
Fund's net asset value and money borrowed by a Portfolio will be subject to
interest and other costs (which may include commitment fees and/or the cost of
maintaining minimum average balances) which may or may not exceed the income
received from the securities purchased with borrowed funds.

LOAN PARTICIPATIONS AND ASSIGNMENTS. The Global High Yield Securities Portfolio
may invest in fixed and floating rate loans ("loans") arranged through private
negotiations between a borrower and one or more institutions ("lenders"). The
majority of the Portfolio's investments in loans in emerging markets is expected
to be in the form of participations in loans ("participations") and assignments
of portions of loans from third parties ("assignments"). The Portfolio may also
invest in loans, participations or assignments of loans to borrowers located in
the industrialized world. Participations typically will result in the
Portfolio's having a contractual relationship only with the lender, not the
borrower. The Portfolio will have the right to receive payments of principal,
interest and any fees to which it is entitled only from the lender selling the
participation and only upon receipt by the lender of the payments from the
borrower. In connection with purchasing participations, the Portfolio generally
will have no right to enforce compliance by

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the borrower with the terms of the loan agreement relating to the loan ("loan
agreement"), nor any rights of set-off against the borrower, and the Portfolio
may not directly benefit from any collateral supporting the loan in which it has
purchased the participation. As a result, the Portfolio will assume the credit
risk of both the borrower and the lender that is selling the participation. In
the event of the insolvency of the lender selling the participation, the
Portfolio may be treated as a general creditor of the lender and may not benefit
from any set-off between the lender and the borrower. The Portfolio will acquire
participations only if the lender interpositioned between the Portfolio and the
borrower is determined by Bankers Trust to be creditworthy. When the Portfolio
purchases assignments from lenders, the Portfolio will acquire direct rights
against the borrower on the loan; however, since assignments are arranged
through private negotiations between the potential assignees and assignors, the
rights and obligations acquired by the Portfolio as the purchaser of an
assignment may differ from, and be more limited than, those held by the
assigning lender.

The Portfolio may have difficulty disposing of assignments and participations.
The liquidity of such securities is limited and the Portfolio anticipates that
such securities could only be sold to a limited number of institutional
investors. The lack of a liquid secondary market could have an adverse impact on
the value of such securities and on the Portfolio's ability to dispose of
particular assignments or participations when necessary to meet the Portfolio's
liquidity needs or in response to a specific economic event, such as a
deterioration in the creditworthiness of the borrower. The lack of a liquid
secondary market for assignments and participations also may make it more
difficult in valuing the Portfolio and, therefore, calculating the net asset
value per Share of the Fund. All assignments and participations shall be
considered to be illiquid securities by the Portfolio. The investment by the
Portfolio in illiquid securities, including assignments and participations, is
limited to a total of 15% of net assets.

DERIVATIVES. Each Portfolio may invest in various instruments that are commonly
known as "derivatives." Generally, a derivative is a financial arrangement, the
value of which is based on, or "derived" from, a traditional security, asset, or
market index. Some derivatives such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities. There are,
in fact, many different types of derivatives and many different ways to use
them. There are a range of risks associated with those uses. Futures and options
are commonly used for traditional hedging purposes to attempt to protect a fund
from exposure to changing interest rates, securities prices, or currency
exchange rates and as a low cost method of gaining exposure to a particular
securities market without investing directly in those securities. However, some
derivatives are used for leverage, which tends to magnify the effects of an
instrument's price changes as market conditions change. Leverage involves the
use of a small amount of money to control a large amount of financial assets,
and can in some circumstances, lead to significant losses. Bankers Trust will
use derivatives only in circumstances where they offer the most efficient means
of improving the risk/reward profile of a Portfolio and when consistent with a
Portfolio's investment objective and policies. The use of derivatives for
non-hedging purposes may be considered speculative.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Each Portfolio (other than the
Intermediate Tax Free Portfolio) may enter into foreign currency exchange
transactions to convert to and from different foreign currencies and to convert
foreign currencies to and from the U.S. dollar. A Portfolio either enters into
these transactions on a spot (i.e., cash) basis at the spot rate prevailing in
the foreign currency exchange market or uses forward contracts to purchase or
sell foreign currencies.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency exchange
contract is an obligation by a Portfolio to purchase or to sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract. Forward foreign currency exchange contracts establish an
exchange rate at a future date. These contracts are transferable in the
interbank market conducted directly between currency traders (usually large
commercial banks) and their customers. A forward foreign currency exchange
contract generally has no deposit requirement and is traded at a net price
without commission. Neither spot transactions nor forward foreign currency
exchange contracts eliminate fluctuations in the prices of a Portfolio's
securities or in foreign exchange rates, or prevent loss if the prices of these
securities should decline.

A Portfolio may enter into foreign currency hedging transactions in an attempt
to protect against changes in foreign currency exchange rates between the trade
and settlement dates of specific securities transactions or

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changes in foreign currency exchange rates that would adversely affect a
portfolio position or an anticipated investment position. Although these
transactions tend to minimize the risk of loss due to a decline in the value of
the hedged currency, at the same time they tend to limit any potential gain that
might be realized should the value of the hedged currency increase. The precise
matching of the forward contract amounts and the value of the securities
involved will not generally be possible because the future value of such
securities in foreign currencies will change as a consequence of market
movements in the value of such securities between the date the forward contract
is entered into and the date it matures. The projection of currency market
movements is extremely difficult, and the successful execution of a hedging
strategy is highly uncertain.

OPTIONS ON FOREIGN CURRENCIES. Each Portfolio (other than the Intermediate Tax
Free Portfolio) may write covered put and call options and purchase put and call
options on foreign currencies for the purpose of protecting against declines in
the U.S. dollar value of portfolio securities and against increases in the U.S.
dollar cost of securities to be acquired. A Portfolio may use options on foreign
currency to cross-hedge, which involves writing or purchasing options on one
currency to hedge against changes in exchange rates for a different, but related
currency. As with other types of options, however, the writing of an option on a
foreign currency will constitute only a partial hedge up to the amount of the
premium received, and the Portfolio could be required to purchase or sell a
foreign currency at disadvantageous exchange rates, thereby incurring losses.
The purchase of an option on foreign currency may be used to hedge against
fluctuations in exchange rates although, in the event of exchange rate movements
adverse to a Portfolio's position, it may forfeit the entire amount of the
premium plus related transaction costs. In addition, a Portfolio may purchase
call options on a foreign currency when the investment adviser anticipates that
the currency will appreciate in value.

There is no assurance that a liquid secondary market will exist for any
particular option, or at any particular time. If a Portfolio is unable to effect
a closing purchase transaction with respect to covered options it has written,
the Portfolio will not be able to sell the underlying currency or dispose of
assets held in a segregated account until it closes out the options or the
options expire or are exercised. Similarly, if the Portfolio is unable to close
out options it has purchased, it would have to exercise the options in order to
realize any profit and will incur transaction costs. The Portfolio pays
brokerage commissions or spreads in connection with its options transactions.

OPTIONS ON STOCKS. Each Portfolio (except the Global High Yield Securities
Portfolio and the Intermediate Tax Free Portfolio) may write and purchase
options on stocks. A call option gives the purchaser of the option the right to
buy, and obligates the writer to sell, the underlying stock at the exercise
price at any time during the option period. Similarly, a put option gives the
purchaser of the option the right to sell, and obligates the writer to buy the
underlying stock at the exercise price at any time during the option period. A
covered call option with respect to which a Portfolio owns the underlying stock
sold by the Portfolio exposes the Portfolio during the term of the option to
possible loss of opportunity to realize appreciation in the market price of the
underlying stock or to possible continued holding of a stock which might
otherwise have been sold to protect against depreciation in the market price of
the stock. A covered put option sold by a Portfolio exposes the Portfolio during
the term of the option to a decline in price of the underlying stock.

OPTIONS ON STOCK AND BOND INDICES. Each Portfolio may purchase and write put and
call options on stock or bond indices listed on domestic and foreign stock
exchanges, in lieu of direct investment in the underlying securities of for
hedge purposes. The International Equity Portfolio may also purchase and write
over the counter options ("OTC Options") on domestic or foreign stock indices. A
stock or bond index fluctuates with changes in the market value of the stock
included in the index.

In some circumstances, the Portfolio's ability to terminate OTC Options may be
more limited than with exchange-traded options. It is also possible that
broker-dealers participating in OTC Options transactions will not fulfill their
obligations. Provided that a dealer or institutional trading market in such
securities exists, these restricted securities are not covered by the
Portfolio's 15% limit on illiquid securities. Under the supervision of the Board
of Trustees of the Portfolio, Bankers Trust determines the liquidity of
restricted securities and, through reports from Bankers Trust, the Board will
monitor trading activity in restricted securities. With respect to options
written with primary dealers in U.S. government securities pursuant to an
agreement requiring a closing purchase transaction at a formula price, the
amount of illiquid securities may be calculated with reference to the repurchase
formula.

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exchange listed options, which generally have standardized terms and performance
mechanics, all of the terms of an OTC Option, including such terms as method of
settlement, term exercise price, premium, guaranties and security, are set by
negotiation of the parties.

Unless the parties provide for it, no central clearing or guaranty function is
involved in an OTC Option. As a result, if a Counterparty fails to make or take
delivery of the security, currency or other instrument underlying an OTC Option
it has entered into with the Portfolio or fails to make a cash settlement
payment due in accordance with the terms of that option, the Portfolio will lose
any premium it paid for the option as well as any anticipated benefit of the
transaction. Thus, Bankers Trust must assess the creditworthiness of each such
Counterparty or any guarantor or credit enhancement of the Counterparty's credit
to determine the likelihood that the terms of the OTC Option will be met.

Options on securities indices are generally similar to options on stocks except
that the delivery requirements are different. Instead of giving the right to
take or make delivery of securities at a specified price, an option on a stock
or bond index gives the holders the right to receive a cash "exercise settlement
amount" equal to (a) the amount, if any, by which the fixed exercise price of
the option exceeds (in the case of a put) or is less than (in the case of a
call) the closing value of the underlying index on the date of the exercise,
multiplied by (b) a fixed "index multiplier."

Successful use by a Portfolio of options on security indices will be subject to
Bankers Trust's ability to predict correctly movement in the direction of the
security market generally or of a particular industry. This requires different
skills and techniques than predicting changes in the price of individual
securities.

FUTURES CONTRACTS ON STOCK AND BOND INDICES. Each Portfolio may enter into
contracts providing for the making and acceptance of a cash settlement based
upon changes in the value of an index of domestic or foreign securities
("Futures Contracts"). This investment technique may be used as a low-cost
method of gaining exposure to a particular securities market without investing
directly in those securities or to hedge against anticipated future changes in
general market prices which otherwise might either adversely affect the value of
securities held by the Portfolio or adversely affect the prices of securities
which are intended to be purchased at a later date for the Portfolio. A Futures
Contract may also be entered into to close out or offset an existing futures
position.

When used for hedging purposes, each transaction in Futures Contracts involves
the establishment of a position which will move in a direction opposite to that
of the investment being hedged. If these hedging transactions are successful,
the futures position taken for the Portfolio will rise in value by an amount
which approximately offsets the decline in value of the portion of the
Portfolio's investments that is being hedged. Should general market prices move
in an unexpected manner, the full anticipated benefits of Futures Contracts may
not be achieved or a loss may be realized.

The risks of Futures Contracts also include a potential lack of liquidity in the
secondary market and incorrect assessments of market.

Brokerage costs will be incurred and "margin" will be required to be posted and
maintained as a good faith deposit against performance of obligations under
Futures Contracts written for a Portfolio. A Portfolio may not purchase or sell
a Futures Contract if immediately thereafter its margin deposits on its
outstanding Futures Contracts, other than Futures Contracts used for hedging
purposes, would exceed 5% of the market value of the Portfolio's total assets.

OPTIONS ON FUTURES CONTRACTS. Each Portfolio may invest in options on futures
contracts for similar purposes. All options that a Portfolio writes will be
covered under applicable requirements of the SEC.

There can be no assurance that the use of these portfolio strategies will be
successful.

ASSET COVERAGE. To assure that a Portfolio's use of futures and related options,
as well as when-issued and delayed-delivery securities and foreign currency
exchange transactions, are not used to achieve investment leverage, a Portfolio
will cover such transactions, as required under applicable interpretations, of
the SEC, either by owning the underlying securities, entering into an
off-setting transaction, or by segregating with the Portfolio's custodian or
futures commission merchant liquid securities in an amount at all times equal to
or exceeding the Portfolio's commitment with respect to these instruments or
contracts.

<PAGE>

BT INVESTMENT FUNDS
INTERMEDIATE TAX FREE FUND
GLOBAL HIGH YIELD SECURITIES FUND
CAPITAL APPRECIATION FUND
SMALL CAP FUND
INTERNATIONAL EQUITY FUND
PACIFIC BASIN EQUITY FUND
LATIN AMERICAN EQUITY FUND

INVESTMENT ADVISER AND ADMINISTRATOR OF EACH PORTFOLIO
BANKERS TRUST COMPANY
130 Liberty Street
(One Bankers Trust Plaza)
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 (One
Bankers Trust Plaza)
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

...............................

No person has been authorized to give any information or to make any
representations other than those contained in the Trusts' Prospectuses, the
corresponding SAIs or the Trusts' official sales literature in connection with
the offering of the Trust's Shares and, if given or made, such other information
or representations must not be relied on as having been authorized by a Trust.
This Prospectus does not constitute an offer in any state in which, or to any
person to whom, such offer may not lawfully be made.

...............................

Cusip #055922801
#055922777
#055922819
#055922769
#055922868
#055922736

#055922785
COMBINV300 (1/98)

(BULLET) BT INVESTMENT FUNDS (BULLET)
- --------------------------------------------------------------------------------

INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------

Seeks long-term capital appreciation primarily from foreign equity securities,
or other securities with equity characteristics.

PROSPECTUS
- --------------------------------------------------------------------------------
JANUARY 31, 1998

BT Investment Funds (the "Trust") is an open-end, management investment company
(mutual fund) which consists of a number of separate investment funds.

Please read this Prospectus carefully before investing and retain it for future
reference. It contains important information about the International Equity Fund
(the "Fund") that you should know and can refer to in deciding whether the
Fund's goals match your own.

A Statement of Additional Information ("SAI") with the same date has been filed
with the Securities and Exchange Commission ("SEC"), and is incorporated herein
by reference. You may request a copy of the SAI or a paper copy of this
prospectus, if you have received your prospectus electronically, free of charge
by calling the Fund's Service Agent at 1-800-730-1313. The SAI, material
incorporated by reference into this document, and other information regarding
the Trust is maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).

UNLIKE OTHER MUTUAL FUNDS, THE FUND SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY
INVESTING ALL OF ITS INVESTABLE ASSETS ("ASSETS") IN THE INTERNATIONAL EQUITY
PORTFOLIO (THE "PORTFOLIO"), A SEPARATE INVESTMENT COMPANY WITH AN IDENTICAL
INVESTMENT OBJECTIVE. THE INVESTMENT PERFORMANCE OF THE FUND WILL CORRESPOND
DIRECTLY TO THE INVESTMENT PERFORMANCE OF THE PORTFOLIO. SEE "SPECIAL
INFORMATION CONCERNING MASTER-FEEDER FUND STRUCTURE" HEREIN.

BANKERS TRUST COMPANY ("BANKERS TRUST") IS THE INVESTMENT ADVISER (THE
"ADVISER") OF THE PORTFOLIO. SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED OR ENDORSED BY, BANKERS TRUST OR ANY OTHER BANKING OR
DEPOSITORY INSTITUTION. SHARES ARE NOT FEDERALLY GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE U.S. GOVERNMENT, THE FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.

EDGEWOOD SERVICES, INC.
Clearing Operations (Bullet) P.O. Box 897 (Bullet) Pittsburgh, Pennsylvania
(Bullet) 15230-0897

<PAGE>

- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
- --------------------------------------------------------------------------------
The Fund.......................................................................3
Who May Invest.................................................................3
Summary of Fund Expenses.......................................................4
Financial Highlights...........................................................5
Investment Objective and Policies..............................................6
Risk Factors: Matching the Fund to Your Investment Needs.......................7
Net Asset Value...............................................................11
Purchase and Redemption of Shares.............................................11
Dividends, Distributions and Taxes............................................16
Performance and Information Reports...........................................17
Management of the Trust and Portfolio.........................................17
Additional Information........................................................21
- --------------------------------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------
THE FUND
- --------------------------------------------------------------------------------

The Fund's investment objective is long-term capital appreciation from
investment in foreign equity securities (or other securities with equity
characteristics); the production of any current income is incidental to this
objective. The Portfolio invests primarily in established companies based in
developed countries outside the United States, but the Portfolio may also invest
in emerging market securities.

The Trust seeks to achieve the investment objective of the Fund by investing all
the Assets of the Fund in the Portfolio.

- --------------------------------------------------------------------------------
WHO MAY INVEST
- --------------------------------------------------------------------------------

The Fund is designed for investors who are willing to accept short-term domestic
and/or foreign stock market fluctuations in pursuit of potentially higher
long-term returns. The Fund invests for growth and does not pursue income.

The Fund is not in itself a balanced investment plan. Investors should consider
their investment objective and tolerance for risk when making an investment
decision. When investors sell their Fund shares, they may be worth more or less
than what they originally paid for them.

<PAGE>

- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------

The following table provides (i) a summary of expenses relating to purchases and
sales of the shares of the Fund and the annual operating expenses of the Fund
and the expenses of the Portfolio, as a percentage of average net assets of the
Fund and (ii) an example illustrating the dollar cost of such expenses on a
$1,000 investment in the Fund. THE TRUSTEES OF THE TRUST BELIEVE THAT THE
AGGREGATE PER SHARE EXPENSES OF THE FUND AND THE PORTFOLIO WILL BE LESS THAN OR
APPROXIMATELY EQUAL TO THE EXPENSES WHICH THE FUND WOULD INCUR IF THE TRUST
RETAINED THE SERVICES OF AN INVESTMENT ADVISER AND THE ASSETS OF THE FUND WERE
INVESTED DIRECTLY IN THE TYPE OF SECURITIES BEING HELD BY THE CORRESPONDING
PORTFOLIO.

- --------------------------------------------------------------------------------

<PAGE>

ANNUAL OPERATING EXPENSES
(as a percentage of the average daily net assets of the Fund)
<S> <C>
.........................................................................................................................
Investment advisory fee (after reimbursements or waivers) 0.58%
12b-1 fees None
Other expenses (after reimbursements or waivers) 0.92%
.........................................................................................................................
Total operating expenses (after reimbursements or waivers) 1.50%
.........................................................................................................................
EXAMPLE 1 year 3 Years 5 years 10 years
.........................................................................................................................
You would pay the following expenses on a $1,000 investment, assuming:
(1) 5% annual return and (2) redemption at the end of each time
period: $15 $47 $82 $179
- --------------------------------------------------------------------------------
</TABLE>

The expense table and the example above show the costs and expenses that an
investor will bear directly or indirectly as a shareholder of the Fund. Bankers
Trust has voluntarily agreed to waive a portion of its investment advisory fee.
Without such waiver, the Portfolio's investment advisory fee would be equal to
0.65%. The expense table and the example reflect a voluntary undertaking by
Bankers Trust to waive or reimburse expenses such that the total operating
expenses will not exceed 1.50% of the Fund's average net assets annually. In the
absence of this undertaking, for the fiscal year ended September 30, 1997,
"Total "Operating Expenses" would have been 1.68% of the Fund's average net
assets annually. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Moreover, while each example assumes a 5% annual return, actual performance will
vary and may result in a return greater or less than 5%.

The Fund is distributed by Edgewood Services, Inc. ("Edgewood," or the
"Distributor") to customers of Bankers Trust or to customers of another bank or
a dealer or other institution that has a sub-shareholder servicing agreement
with Bankers Trust (along with Bankers Trust, a "Service Agent"). Some Service
Agents may impose certain conditions on their customers in addition to or
different from those imposed by the Fund and may charge their customers a direct
fee for their services, including transaction fees on purchases and redemptions
of Fund shares. Each Service Agent has agreed to transmit to shareholders who
are its customers appropriate disclosures of any fees that it may charge them
directly.

For more information with respect to the expenses of the Fund and the Portfolio
see "Management of the Trust and Portfolio" herein.

<PAGE>

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

The following table shows selected data for a share outstanding, total
investment return, ratios to average net assets and other supplemental data of
the Fund for each period indicated and has been audited by Coopers & Lybrand
L.L.P., the Fund's independent accountants, whose report thereon appears in the
Fund's Annual Report which is incorporated by reference.

<TABLE>
<CAPTION>
FOR THE
YEAR ENDED FOR THE
SEPTEMBER 30, FOR THE PERIOD YEAR ENDED
-------------------- JANUARY 1, 1995 TO DECEMBER 31,
1997 1996 SEPTEMBER 30, 1995* 1994 1993
-------- -------- ------------------- ------- -------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD.................. $ 16.77 $ 15.47 $ 13.37 $ 13.18 $ 9.75
-------- -------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income............................... 0.09 0.18 0.14 0.10 0.05
Net Realized and Unrealized Gain on Investments,
Options, Foreign Currencies and Forward Foreign
Currency Contracts............................... 5.63 1.80 1.97 0.44 3.60
-------- -------- -------- ------- -------
Total from Investment Operations...................... 5.72 1.98 2.11 0.54 3.65
-------- -------- -------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income............................... 0.16 (0.31) (0.00) (0.09) (0.15)
Net Realized Gain from Investment Transactions...... 0.20 (0.37) (0.01) (0.26) (0.07)
-------- -------- -------- ------- -------
Total Distributions................................... 0.36 (0.68) (0.01) (0.35) (0.22)
-------- -------- -------- ------- -------
Net Asset Value, End of Period........................ $ 22.13 $ 16.77 $ 15.47 $ 13.37 $ 13.18
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
Total Investment Return............................... 34.76% 13.42% 15.82% 4.12% 37.38%
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Period (000s omitted)............ $525,520 $161,692 $82,807 $56,020 $33,869
Ratios to Average Net Assets:
Net Investment Income............................ 0.53% 0.91% 1.55%** 0.84% 0.79%
Expenses, Including Expenses of the International
Equity Portfolio............................... 1.50% 1.50% 1.50%** 1.50% 1.50%
Decrease Reflected in Above Expense
Ratio Due to Absorption of Expenses by
Bankers Trust.................................. 0.18% 0.26% 0.33%** 0.37% 0.62%
</TABLE>

* On August 2, 1995, the Board of Trustees approved the change of the fiscal
year end from December 31 to September 30.
** Annualized

Further information about the Fund's performance is contained in the Fund's
Annual Report dated September 30, 1997, which can be obtained free of charge.

<PAGE>

- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

The Trust seeks to achieve the investment objective of the Fund by investing all
the Assets of the Fund in the Portfolio, which has the same investment objective
as the Fund. There can be no assurances that the investment objective of either
the Fund or the Portfolio will be achieved. The investment objective of the Fund
and the Portfolio is not a fundamental policy and may be changed upon notice to,
but without the approval of, the Fund's shareholders or the Portfolio's
investors, respectively. See "Special Information Concerning Master-Feeder Fund
Structure" herein.

INTERNATIONAL EQUITY PORTFOLIO

Under normal circumstances, the Portfolio invests at least 65% of the value of
its total assets in the equity securities of foreign issuers, consisting of
common stock and other securities with equity characteristics. These issuers are
primarily established companies based in developed countries outside the United
States. However, the Portfolio may also invest in securities of issuers in
underdeveloped countries. Investments in these countries will be based on what
the Adviser believes to be an acceptable degree of risk in anticipation of
superior returns. The Portfolio will at all times be invested in the securities
of issuers based in at least three countries other than the United States. For
further discussion of the unique risks associated with investing in foreign
securities in both developed and underdeveloped countries, see "Risk Factors:
Matching the Fund to Your Investment Needs," and "Additional Information" herein
and the SAI.

The Portfolio's investments will generally be diversified among several
geographic regions and countries. Criteria for determining the appropriate
distribution of investments among various countries and regions include the
prospects for relative growth among foreign countries, expected levels of
inflation, government policies influencing business conditions, the outlook for
currency relationships and the range of alternative opportunities available to
international investors.

In other countries and regions where capital markets are underdeveloped or not
easily accessed and information is difficult to obtain, the Portfolio may choose
to invest only at the market level. Here, the Portfolio may seek to achieve
country exposure through use of options or futures based on an established local
index. Similarly, country exposure may also be achieved through investments in
other registered investment companies. Restrictions on both these types of
investments are fully explained herein and in the SAI.

The remainder of the Portfolio's assets will be invested in dollar and
non-dollar denominated short-term instruments. These investments are subject to
the conditions described in "Short-Term Instruments" below.

EQUITY INVESTMENTS. The Portfolio invests primarily in common stocks and other
securities with equity characteristics. For purposes of the Portfolio's policy
of investing at least 65% of the value of its total assets in the equity
securities of foreign issuers, "equity securities" are defined as common stock,
preferred stock, trust or limited partnership interests, rights and warrants,
and convertible securities, (consisting of debt securities or preferred stock
that may be converted into common stock or that carry the right to purchase
common stock). The Portfolio invests in securities listed on foreign or domestic
securities exchanges and securities traded in foreign or domestic
over-the-counter markets, in addition to investment in restricted or unlisted
securities.

With respect to certain countries in which capital markets are either less
developed or not easily accessed, investments by the Portfolio may be made
through investment in other investment companies that in turn are authorized to
invest in the securities of such countries. Investment in other investment
companies is limited in amount by the Investment Company Act of 1940 (the "1940
Act"), will involve the indirect payment of a portion of the expenses, including
advisory fees, of such other investment companies and may result in a
duplication of fees and expenses.

<PAGE>

- --------------------------------------------------------------------------------

SHORT-TERM INSTRUMENTS. The Portfolio intends to stay invested in the securities
described above to the extent practical in light of its objective and long-term
investment perspective. However, the Portfolio's assets may be invested in
short-term instruments with remaining maturities of 397 days or less (or in
money market mutual funds) to meet anticipated redemptions and expenses or for
day-to-day operating purposes and when, in Bankers Trust's opinion, it is
advisable to adopt a temporary defensive position because of unusual and adverse
conditions affecting the equity markets. In addition, when the Portfolio
experiences large cash inflows through the sale of securities and desirable
Equity securities that are consistent with the Portfolio's investment objective
are unavailable in sufficient quantities or at attractive prices, the Portfolio
may hold short-term investments for a limited time pending availability of such
Equity securities. Short-term instruments consist of foreign and domestic: (i)
short-term obligations of sovereign governments, their agencies,
instrumentalities, authorities or political subdivisions; (ii) other short-term
debt securities rated Aa or higher by Moody's Investors Service, Inc.
("Moody's") or AA or higher by Standard & Poor's Ratings Group ("S&P") or, if
unrated, of comparable quality in the opinion of Bankers Trust; (iii) commercial
paper; (iv) bank obligations, including negotiable certificates of deposit, time
deposits and bankers' acceptances; and (v) repurchase agreements. At the time
the Portfolio invests in commercial paper, bank obligations or repurchase
agreements, the issuer or the issuer's parent must have outstanding debt rated
Aa or higher by Moody's or AA or higher by S&P or outstanding commercial paper
or bank obligations rated Prime-1 by Moody's or A-1 by S&P; or, if no such
ratings are available, the instrument must be of comparable quality in the
opinion of Bankers Trust. These instruments may be denominated in U.S. dollars
or in foreign currencies and will have been determined to be of high quality by
a nationally recognized statistical rating organization, or if unrated, by
Bankers Trust. For more information on these rating categories see "Appendix" in
the SAI.

ADDITIONAL INVESTMENT TECHNIQUES

The Portfolio may also utilize the following investments and investment
techniques and practices: American Depositary Receipts ("ADRs"), Global
Depositary Receipts ("GDRs"), European Depositary Receipts ("EDRs"), when-issued
and delayed delivery securities, Rule 144A securities, securities lending,
repurchase agreements, foreign currency exchange transactions, options on
foreign currencies, options on stocks, options on foreign stock indices, futures
contracts on foreign stock indices and options on futures contracts. See
"Additional Information" herein for further information.

ADDITIONAL INVESTMENT LIMITATIONS

As a diversified fund, no more than 5% of the assets of the Portfolio may be
invested in the securities of one issuer (other than U.S. government
securities), except that up to 25% of the Portfolio's assets may be invested
without regard to this limitation. The Portfolio will not invest more than 25%
of its assets in the securities of issuers in any one industry. These are
fundamental investment policies of the Portfolio which may not be changed
without investor approval. No more than 15% of the Portfolio's net assets may be
invested in illiquid or not readily marketable securities (including repurchase
agreements and time deposits with remaining maturities of more than seven
calendar days). Additional investment policies of the Portfolio are contained in
the SAI.

By itself, the Fund does not constitute a balanced investment plan; the Fund
seeks long-term capital appreciation from investment primarily in the Equity
securities (or other securities with equity characteristics) of foreign issuers.
Changes in domestic and foreign interest rates may affect the value of the
Portfolio's investments, and rising interest rates can be expected to reduce the
Fund's share value. A description of a number of investments and investment
techniques available to the Portfolio, including foreign investments and the use
of options and futures, and certain risks associated with these investments and
techniques is included under "Additional Information" herein. The Fund's share
price and total return fluctuate and your investment may be worth more or less
than your original cost when you redeem your shares.

<PAGE>

- --------------------------------------------------------------------------------

RISKS OF INVESTING IN FOREIGN SECURITIES

Investors should realize that investing in securities of foreign issuers
involves considerations not typically associated with investing in securities of
companies organized and operated in the United States. Although the Portfolio
intends to invest primarily in securities of established companies based in
developed countries, investors should realize that the value of the Portfolio's
investments may be adversely affected by changes in political or social
conditions, diplomatic relations, confiscatory taxation, expropriation,
nationalization, limitation on the removal of funds or assets, or imposition of
(or change in) exchange control or tax regulations in those foreign countries.
In addition, changes in government administrations or economic or monetary
policies in the United States or abroad could result in appreciation or
depreciation of portfolio securities and could favorably or unfavorably affect
the Portfolio's operations. Furthermore, the economies of individual foreign
nations may differ from the U.S. economy, whether favorably or unfavorably, in
areas such as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments position; it may
also be more difficult to obtain and enforce a judgment against a foreign
issuer. In general, less information is publicly available with respect to
foreign issuers than is available with respect to U.S. companies. Most foreign
companies are also not subject to the uniform accounting and financial reporting
requirements applicable to issuers in the United States. Any foreign investments
made by the Portfolio must be made in compliance with U.S. and foreign currency
restrictions and tax laws restricting the amounts and types of foreign
investments.

The Portfolio may invest in the securities of issuers based in underdeveloped
countries. Investment in securities of issuers based in underdeveloped countries
entails all of the risks of investing in securities of foreign issuers outlined
in this section to a heightened degree. These heightened risks include: (i)
greater risks of expropriation, confiscatory taxation, nationalization, and less
social, political and economic stability; (ii) the smaller size of the market
for such securities and a low or nonexistent volume of trading, resulting in
lack of liquidity and in price volatility; and (iii) certain national policies
which may restrict the Portfolio's investment opportunities including
restrictions on investing in issuers or industries deemed sensitive to relevant
national interests.

Because foreign securities generally are denominated and pay dividends or
interest in foreign currencies, and the Portfolio holds various foreign
currencies from time to time, the value of the net assets of the Portfolio as
measured in U.S. dollars will be affected favorably or unfavorably by changes in
exchange rates. Generally, the Portfolio's currency exchange transactions will
be conducted on a spot (i.e., cash) basis at the spot rate prevailing in the
currency exchange market. The cost of the Portfolio's currency exchange
transactions will generally be the difference between the bid and offer spot
rate of the currency being purchased or sold. In order to protect against
uncertainty in the level of future foreign currency exchange rates, the
Portfolio is authorized to enter into certain foreign currency exchange
transactions. See "Additional Information" herein.

In addition, while the volume of transactions effected on foreign stock
exchanges has increased in recent years, in most cases it remains appreciably
below that of the New York Stock Exchange, Inc. (the "NYSE"). Accordingly, the
Portfolio's foreign investments may be less liquid and their prices may be more
volatile than comparable investments in securities of U.S. companies. Moreover,
the settlement periods for foreign securities, which are often longer than those
for securities of U.S. issuers, may affect portfolio liquidity. In buying and
selling securities on foreign exchanges, the Portfolio normally pays fixed
commissions that are generally higher than the negotiated commissions charged in
the United States. In addition, there is generally less government supervision
and regulation of securities exchanges, brokers and issuers in foreign countries
than in the United States.

Further information about the foreign securities in which the Portfolio may
invest, including a further discussion of related risks and special
considerations is contained in the SAI.

RISKS OF INVESTING IN EMERGING MARKETS

<PAGE>

- --------------------------------------------------------------------------------

Chile, China, Colombia, Costa Rica, the Czech Republic, Ecuador, Egypt, Greece,
Hungary, India, Indonesia, Israel, the Ivory Coast, Jordan, Korea, Mexico,
Morocco, Nicaragua, Nigeria, Pakistan, Peru, the Philippines, Poland, Romania,
Russia, Slovakia, Slovenia, South Africa, South Korea, Sri Lanka, Taiwan,
Thailand, Turkey, Uruguay, Venezuela, Vietnam and Zimbabwe.

Further information about the foreign markets in which a Portfolio may invest,
including a further discussion of related risks and special considerations is
contained in the SAI.

PORTFOLIO TURNOVER

Bankers Trust intends to manage the Portfolio actively in pursuit of its
investment objective. The Portfolio does not expect to trade in securities for
short-term profits but, when circumstances warrant, securities may be sold
without regard to the length of time held. The Portfolio's portfolio turnover
rates for the fiscal years ended September 30, 1997 and 1996, were 63% and 68%,
respectively.

DERIVATIVES

The Portfolio may invest in various instruments that are commonly known as
"derivatives." Generally, a derivative is a financial arrangement, the value of
which is based on, or "derived" from, a traditional security, asset or market
index. Some "derivatives" such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities. There are,
in fact, many different types of derivatives and many different ways to use
them. There are a range of risks associated with those uses. Futures and options
are commonly used for traditional hedging purposes to attempt to protect a fund
from exposure to changing interest rates, securities prices or currency exchange
rates and for cash management purposes as a low cost method of gaining exposure
to a particular securities market without investing directly in those
securities. However, some derivatives are used for leverage, which tends to
magnify the effects of an instrument's price changes as market conditions
change. Leverage involves the use of a small amount of money to control a large
amount of financial assets and can, in some circumstances, lead to significant
losses. Bankers Trust, as the Portfolio's Adviser will use derivatives only in
circumstances where the Adviser believes they offer the most economic means of
improving the risk/reward profile of the Portfolio. Derivatives will not be used
to increase portfolio risk above the level that could be achieved using only
traditional investment securities or to acquire exposure to changes in the value
of assets or indices that by themselves would not be purchased for the
Portfolio. The use of derivatives for non-hedging purposes may be considered
speculative. A description of the derivatives that the Portfolio may use and
some of their associated risks is found under "Additional Information" herein.

SPECIAL INFORMATION CONCERNING MASTER-FEEDER FUND STRUCTURE

<PAGE>

- --------------------------------------------------------------------------------

with the same investment objective as the Fund. Therefore, an investor's
interest in the Portfolio's securities is indirect. In addition to selling a
beneficial interest to the Fund, the Portfolio may sell beneficial interests to
other mutual funds or institutional investors. Such investors will invest in the
Portfolio on the same terms and conditions and will pay a proportionate share of
the Portfolio's expenses. However, the other investors investing in the
Portfolio are not required to sell their shares at the same public offering
price as the Fund due to variations in sales commissions and other operating
expenses. Therefore, investors in the Fund should be aware that these
differences may result in differences in returns experienced by investors in the
different funds that invest in the Portfolio. Such differences in returns are
also present in other mutual fund structures. Information concerning other
holders of interests in the Portfolio is available from Bankers Trust at
1-800-730-1313.

The master-feeder fund structure is relatively complex, so shareholders should
carefully consider this investment approach.

Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the Portfolio, the remaining funds may experience higher pro rata
operating expenses, thereby producing lower returns (however, this possibility
exists as well for traditionally structured funds which have large institutional
investors). Additionally, the Portfolio may become less diverse, resulting in
increased portfolio risk. Also, funds with a greater pro rata ownership in the
Portfolio could have effective voting control of the operations of the
Portfolio. Except as permitted by the SEC, whenever the Trust is requested to
vote on matters pertaining to the Portfolio, the Trust will hold a meeting of
shareholders of the Fund and will cast all of its votes in the same proportion
as the votes of the Fund's shareholders. Fund shareholders who do not vote will
not affect the Trust's votes at the Portfolio meeting. The percentage of the
Trust's votes representing the Fund's shareholders not voting will be voted by
the Trustees or officers of the Trust in the same proportion as the Fund
shareholders who do, in fact, vote.

The Fund may withdraw its investment from the Portfolio at any time, if the
Board of Trustees of the Trust determines that it is in the best interests of
the shareholders of the Fund to do so. Upon any such withdrawal, the Board of
Trustees of the Trust would consider what action might be taken, including the
investment of all the Assets of the Fund in another pooled investment entity
having the same investment objective as the Fund or the retaining of an
investment adviser to manage the Fund's assets in accordance with the investment
policies described below with respect to the Portfolio.

The Fund's investment objective is not a fundamental policy and may be changed
upon 30 days prior written notice to, but without approval of, the Fund's
shareholders. If there is a change in the Fund's investment objective, the
Fund's shareholders should consider whether the Fund remains an appropriate
investment in light of their then-current needs.

See "Investment Objective, Policies and Restrictions" in the SAI for a
description of the additional fundamental policies of the fund that cannot be
changed without approval by a "vote of a majority of the outstanding voting
securities" (as defined in the 1940 Act) of the Fund.

<PAGE>

- --------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------

The net asset value ("NAV") per share of the Fund is calculated on each day on
which the NYSE is open (each such day being a "Valuation Day"). The NYSE is
currently open on each day, Monday through Friday, except (a) January 1st,
Martin Luther King, Jr. Day (the third Monday in January), Presidents' Day (the
third Monday in February), Good Friday, Memorial Day (the last Monday in May),
July 4th, Labor Day (the first Monday in September), Thanksgiving Day (the last
Thursday in November) and December 25th; and (b) the preceding Friday or the
subsequent Monday when one of the calendar determined holidays falls on a
Saturday or Sunday, respectively.

The NAV per share of the Fund is calculated once on each Valuation Day as of the
close of regular trading on the NYSE (the "Valuation Time"), which is currently
4:00 p.m., Eastern time or in the event that the NYSE closes early, at the time
of such early closing. The NAV per share of the Fund is computed by dividing the
value of the Fund's Assets (i.e., the value of its investment in the Portfolio
and other assets), less all liabilities, by the total number of its shares
outstanding as of the Valuation Time. The Portfolio's securities and other
assets are valued primarily on the basis of market quotations or, if quotations
are not readily available, by a method which the Portfolio's Board of Trustees
believes accurately reflects fair value.

Under procedures adopted by the Board, a NAV for a Fund later determined to have
been inaccurate for any reason will be recalculated. Purchases and redemptions
made at a NAV determined to have been inaccurate will be adjusted, although in
certain circumstances, such as where the difference between the original NAV and
the recalculated NAV divided by the recalculated NAV is 0.005 (1/2 of 1%) or
less or shareholder transactions are otherwise insubstantially affected, further
action is not required.

- --------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- --------------------------------------------------------------------------------

HOW TO BUY SHARES

The Trust accepts purchase orders for shares of the Fund at the NAV per share
next determined after the order is received on each Valuation Day. See "Net
Asset Value" herein. Shares of the Fund may be available through Investment
Professionals, such as broker/dealers and investment advisers (including Service
Agents).

Purchase orders for shares of the Fund (including those purchased through a
Service Agent) that are transmitted to the Trust's Transfer Agent (the "Transfer
Agent"), prior to the Valuation Time on any Valuation Day will be effective at
that day's Valuation Time. The Trust and Transfer Agent reserve the right to
reject any purchase order.

Shares must be purchased in accordance with procedures established by the
Transfer Agent and each Service Agent. It is the responsibility of each Service
Agent to transmit to the Transfer Agent purchase and redemption orders and to
transmit to Bankers Trust as the Trust's custodian (the "Custodian") purchase
payments by the following business day (trade date + 1) after an order for
shares is placed. A shareholder must settle with the Service Agent for his or
her entitlement to an effective purchase or redemption order as of a particular
time. Because Bankers Trust is the Custodian and Transfer Agent of the Trust,
funds may be transferred directly from or to a customer's account held with
Bankers Trust to settle transactions with the Fund without incurring the
additional costs or delays associated with the wiring of federal funds.

The Trust and Bankers Trust have authorized one or more brokers to accept on the
Trust's behalf purchase and redemption orders. Such brokers are authorized to
designate other intermediaries to accept purchase and redemption orders on the
Trust's behalf. The Transfer Agent will be deemed to have received a purchase or
redemption order when an authorized broker or, if applicable, a broker's
authorized designee, accepts the order. Customer orders will be priced at the
Fund's NAV next computed after they are accepted by an authorized broker or the
broker's authorized designee.

Certificates for shares will not be issued. Each shareholder's account will be
maintained by a Service Agent or Transfer Agent.

If orders are placed through an Investment Professional, it is the
responsibility of the Investment Professional to transmit the order to buy
shares to the Transfer Agent before 4:00 p.m. Eastern time.

11
<PAGE>
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

The Transfer Agent must receive payment within one business day after an order
for shares is placed; otherwise, the purchase order may be canceled and the
investor could be held liable for resulting fees and/or losses.

MINIMUM INVESTMENTS

TO OPEN AN ACCOUNT $2,500
For retirement accounts 500
Through automatic investment plans 1,000

TO ADD TO AN ACCOUNT $250
For retirement accounts 100
Through automatic investment plan 100

MINIMUM BALANCE $1,000
For retirement accounts None

BT Service Center
P.O. Box 419210
Kansas City, MO 64141-6210

Overnight mailings:

BT Service Center
210 West 10th Street, 8th Floor
Kansas City, MO 64105-1716

IF YOU ALREADY HAVE MONEY INVESTED IN A FUND IN THE BT FAMILY OF FUNDS, you can:

(Bullet) Mail an account application with a check,

(Bullet) Wire money into your account,

(Bullet) Open an account by exchanging from another fund in the BT Family of
Funds, or

(Bullet) Contact your Service Agent or Investment Professional.

If you are investing through a tax-sheltered retirement plan, such as an IRA,
for the first time, you will need a special application. Contact your Investment
Professional or call BT Retirement Services Center at 1-800-677-7596 for more
information and a retirement account application.

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ADDITIONAL INFORMATION ABOUT BUYING SHARES

<TABLE>
<S> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
BY WIRE Call the BT Service Center at Call your Investment
Professional or wire 1-800-730-1313 to receive wire
instructions additional investment to:
for account establishment.
ROUTING NO.: 021001033
ATTN: Bankers Trust/IFTC Deposit
DDA NO.: 00-226-296
FBO: (Account name)
(Account number)
CREDIT: BT Investment International Equity
Fund-463

BY PHONE Contact your Service Agent, Investment Contact your Service Agent, Investment
Professional, or call BT's Service Center at Professional, or call BT's Service Center at
1-800-730-1313. If you are an existing 1-800-730-1313. If you are an existing
shareholder, you may exchange from another BT shareholder, you may exchange from another BT
account with the same registration, account with the same registration,
including, name, address, and taxpayer ID including, name, address, and taxpayer ID
number. number.

BY MAIL Complete and sign the account application. Make your check payable to the complete name
Make your check payable to the complete name of the Fund of your choice. Indicate your
of the Fund of your choice. Mail to the Fund account number on your check and mail to
appropriate address indicated on the the address printed on your account
application. statement.
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HOW TO SELL SHARES

You can arrange to take money out of your Fund account at any time by selling
(redeeming) some or all of your shares. Your shares shall be sold at the next
NAV calculated after an order is received by the Transfer Agent. Redemption
requests should be transmitted by customers in accordance with procedures
established by the Transfer Agent and the Shareholder's Service Agent.
Redemption requests for shares of the Fund received by the Service Agent and
transmitted to the Transfer Agent prior to the Valuation Time on each Valuation
Day will be effective at that day's Valuation Time and the redemption proceeds
normally will be delivered to the shareholder's account the next day, but in any
event within seven calendar days following receipt of the request.

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retirement distributions, contact your Service Agent or call the BT Service
Center at 1-800-730-1313.