o BT INVESTMENT FUNDS o
PACIFIC BASIN EQUITY FUND
ANNUAL REPORT
SEPTEMBER o 1998
<PAGE>
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PACIFIC BASIN EQUITY FUND
Table of Contents
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Letter to Shareholders 3
Pacific Basin Equity Fund
Statement of Assets and Liabilities 6
Statement of Operations 6
Statements of Changes in Net Assets 7
Financial Highlights 7
Notes to Financial Statements 8
Report of Independent Accountants 9
Tax Information 9
Pacific Basin Equity Portfolio
Schedule of Portfolio Investments 10
Statement of Assets and Liabilities 12
Statement of Operations 12
Statements of Changes in Net Assets 13
Statement of Cash Flows 13
Financial Highlights 14
Notes to Financial Statements 15
Report of Independent Accountants 18
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The Fund is not insured by the FDIC and is not a deposit,
obligation of or guarantee by Bankers Trust Company. The Fund
is subject to investment risks, including possible loss of
principal amount invested.
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2
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Pacific Basin Equity Fund
Letter to Shareholders
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We are pleased to present you with this annual report for the year ended
September 30, 1998 for the Pacific Basin Equity Fund (the "Fund"). It provides a
review of the market, the Portfolio, and our outlook, as well as a complete
financial summary of the Fund's operations and a listing of the Portfolio's
holdings.
MARKET ACTIVITY
Overall, the region's equity markets experienced extreme weakness throughout the
fiscal year, reflecting concerns over weak currencies, high interest rates,
financial system instability, and slowing economic growth.
Early in the year, high growth rates and strength in the U.S. dollar caused
structural problems in Asian countries with currencies tied to the U.S. dollar.
Strong demand for imports coupled with declining export competitiveness placed
downward pressure on their exchange rates. This was exacerbated by weakness in
the Japanese yen, which, in turn, caused fears of a break in the Hong Kong
dollar and a Chinese devaluation.
Central banks in these Asian countries responded by increasing domestic interest
rates. This action reduced growth and corporate earnings expectations, causing
equity markets to fall sharply. Many Asian companies also had U.S. dollar-based
debts, which rapidly increased in size as their own nations' currencies
weakened. The result was widespread bankruptcies and a withdrawal of money by
international investors.
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Ten Largest Stock Holdings
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Smartone Telecommunications Datacraft Asia Ltd.
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Elec & Eltek International National Mutual Asia Ltd.
Holdings Ltd.
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Mahanagar Telecommunications ITC Ltd., GDR
Nigam Ltd., GDR
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Pohang Iron & Steel Road King Infrastructure Ltd.
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New World Infrastructure Ltd. Taiwan Semiconductor
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Asian equity markets were also dragged down by developments in other emerging
market regions. This was particularly true of Russia, which devalued its ruble
and defaulted on its domestic debt only weeks after entering into a new
International Monetary Fund (IMF)-assisted bailout. Extreme currency weakness in
Latin America also affected investor sentiment.
Still, some stabilization was found in the Asian equity markets late in the
fiscal year, based on several government actions. These include:
o government intervention in the Hong Kong equity market
o implementation of capital controls in Malaysia, and
o the Federal Reserve Board's decision to officially reduce the fed funds rate
by 0.25% on September 29, 1998, reflecting its concern over developments in
global financial system instability and a possible slowdown in U.S. economic
growth.
<TABLE>
<CAPTION>
Periods ended September 30, 1998 Cumulative Total Returns Average Annual Total Returns
- ------------------------------------------------------------------------------------------------------------------------------
Past 1 Past 3 Since Past 1 Past 3 Since
year years inception year years inception
<S><C>
BT Investment Pacific Basin Equity Fund* -52.21% -53.68% -47.37% -52.21% -22.63% -12.25%
(inception 11/1/93)
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MSCI Combined Far East Free
Ex Japan Index** -55.60% -59.94% -58.10% -55.60% -26.28% -16.22%
- ------------------------------------------------------------------------------------------------------------------------------
MSCI Combined Asia ex
Japan Index ** -53.45% -57.40% -56.46% -53.45% -24.76% -15.56%
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Lipper Pacific Basin
Ex Japan Average*** -48.90% -49.91% -49.76% -48.90% -21.13% -13.18%
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</TABLE>
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* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
** The MSCI Far East Free ex Japan Index includes China Free, Hong Kong,
Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan and
Thailand. The MSCI Combined Asia Free ex Japan Index includes those same
markets as the Far East Free ex Japan Index as well as India, New Zealand,
Pakistan and Sri Lanka. Indices are unmanaged, and investments cannot be
made in an index.
*** Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling
into the respective categories indicated. These figures do not reflect sales
charges.
3
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Pacific Basin Equity Fund
Letter to Shareholders (continued)
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Diversification of Portfolio Investments
By Country as of September 30, 1998
(percentages are based on market value)
[PIE CHART APPEARS HERE]
Taiwan 14% Thailand 4%
South Korea 9% Hong Kong 31%
Singapore 14%
India 11%
Philippines 5%
Pakistan 1%
Malaysia 11%
INVESTMENT REVIEW
The Fund slightly outperformed its benchmarks, primarily due to strong
currency management in the first half of the fiscal year. The Fund
underperformed its category average, as stock selection in Hong Kong detracted
from performance early in the year. Asset allocation had a neutral impact on
relative returns.
The Fund's largest position continues to be in Hong Kong. However, exposure to
this market has been reduced, as the possibility of a competitive devaluation in
China and/or a break in the Hong Kong dollar peg has increased significantly.
The Fund's largest Hong Kong position is in the mobile telecommunications
company, Smartone Telecommunications. This company has outperformed in recent
months due to stronger than expected earnings. Another significant position here
is in China-related infrastructure companies, including Road King
Infrastructure, New World Infrastructure, Pacific Ports, and Cosco Pacific.
Although these stocks have underperformed and would be affected by a Chinese
devaluation as they have some U.S. dollar debt, we remain comfortable with this
position. A devaluation would also stimulate domestic demand in China, partly
offsetting the current deflationary forces in the economy. In turn, Chinese
interest rates could fall further. This scenario would be particularly favorable
for these infrastructure companies, as the discount rate used to value them
would also fall, making them more attractive to investors.
The Fund currently has about 9% of its assets invested in Malaysia. The
Malaysian government implemented capital controls on September 1, 1998 that
prevent international investors from repatriating funds from the sale of assets
for one year. This move enabled some recovery in stock prices, as local
investors were attracted by falling domestic interest rates and decreasing
chances of foreign selling. However, we view this market's recent strength as
artificial, since it would not have occurred without government intervention,
and it may not be sustainable. While we maintain our holdings in the Malaysian
equity market, we do not anticipate committing any additional allocation to this
country while these capital controls remain in place. The Fund also has the
option of selling its equity exposure and holding in Malaysian cash, if the
outlook for this equity market deteriorates.
We have taken advantage of the equity market weakness in Singapore and Taiwan to
build positions in electronics companies. These include Datacraft Asia, Elec &
Eltek, Taiwan Semiconductor, Advanced Semiconductor Engineering, ASE Test, and
Siliconware Precision. Such companies have low cost bases. They are also well
positioned, in our opinion, to benefit from the outsourcing trend among U.S.
technology companies regarding their component production. Furthermore, these
companies have considerable growth potential, as evidenced by Datacraft Asia's
recent earnings report, which showed 46% growth in the company's U.S. dollar
earnings in the year to date through June 1998.
Exposure to Korea is close to neutral relative to the Fund's benchmarks. Korea
is showing reform potential, and since January, its currency, the won, has
rebounded. Interest rates have fallen considerably. This currency strength
largely reflects an improvement in Korea's underlying economic fundamentals, in
particular the huge turnaround in the current account from deficit to surplus.
Although its equity market performance has remained weak amid expectation of
negative company earnings, widespread labor disputes, and further downward
revisions of its domestic growth forecasts, there are reasons to be optimistic
about its longer-term potential.
o President D. J. Kim is committed to reform and is particularly focused on
dismantling the large conglomerate companies known as the Chaebol system. This
bodes well for the ongoing restructuring process, even if the pace of change
is slow.
o The positive effects of capital market deregulation have started to emerge
with several foreign companies announcing their intention to enter the Korean
market and acquire local businesses at very low valuations.
o The government has hinted at the possibility of further privatizations,
including those of companies the Fund holds, such as Pohang Iron and Steel
(POSCO) and SK Telecom. These are internationally competitive companies, which
are likely to attract strong interest from international investors if they
were to be offered to the market.
The Fund now has considerable exposure to India and Pakistan, as the outlook for
these markets is more positive. Specific holdings include ICICI, a financial
company, BSES, a utility company, Mahanagar Telecommunications Nigam, a
telecommunications company, and ITC, a tobacco company. Both of these nations'
equity markets should experience positive growth. They are less exposed to the
rest of Asia, and company profits should be supported by domestic economic
growth.
4
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Pacific Basin Equity Fund
Letter to Shareholders (concluded)
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MANAGER OUTLOOK
The reduction in U.S. interest rates has improved investor sentiment toward the
Pacific Basin region somewhat. However, for the time being, the focus will
likely remain on other major emerging markets, such as Brazil. The possibility
of a devaluation in Brazil has increased markedly, and if it does happen, it
could lead to another round of destabilizing currency falls throughout the
emerging markets. So, too, could fears of a more significant slowdown in the
U.S. economy. In this environment, Asian equity markets will likely continue to
be constrained by weak growth, currency pressures, political instability, and a
lack of support from international investors.
Another risk we foresee for Asian equity market performance is further weakness
in the Japanese economy. Still, the Japanese government's recent success in
submitting the banking legislation to its parliament has increased the chance of
further policy action to stimulate its economy. The yen also strengthened
significantly in early October, and this has removed some of the pressure on
other currencies in the region. There are also signs that the worst of the
economic slowdown is over in China.
Still, we believe that most Asian economies will experience weak growth for some
time, primarily due to the extent of the financial problems in the region. Thus,
for the year ahead, we believe there may be:
o significant growth contractions in Korea, Thailand, and Indonesia
o moderate growth contractions in Malaysia, Hong Kong, and Singapore
o 4%-6% growth in China, Taiwan, and India.
Given this outlook, the Fund's overall positioning remains defensive with a
reasonable cash level and biases towards:
o utilities, such as telecommunication and infrastructure companies, which tend
to have more stable cash flows
o electronics companies in Singapore and Taiwan, which have low cost bases and
are well positioned, we believe, to benefit from further U.S. outsourcing, and
o consumer domestic franchises, which have a domestic brand name, established
distribution networks, and tend to be fairly defensive in nature.
We will, of course, continue monitoring economic conditions and how they affect
the financial markets, as we seek to provide long-term capital appreciation.
We value your ongoing support of the Pacific Basin Equity Fund and look forward
to continuing to serve your investment needs in the years ahead.
/s/ Paul Durham
_______________
Paul Durham
Portfolio Manager of the
Pacific Basin Equity Portfolio
September 30, 1998
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Performance Comparison
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Comparison of Change in Value of a $10,000 Investment in the Pacific Basin
Equity Fund and the MSCI Combined Asia Free ex Japan Index as of November 30,
1993.
Total Return for the Year
Ended September 30, 1998
One Year Since 11/1/93*
-52.21% -12.25%**
* The Fund's inception date.
** Annualized.
Investment return and principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
[GRAPH APPEARS HERE - PLOT POINTS BELOW]
MSCI Combined
Pacific Basin Asia Free
Equity Fund- ex Japan Index-
$5,263 $4,354
Nov-93 10,000 10,000
Dec-93 13,127 12,419
Mar-94 10,392 9,840
Jun-94 11,115 10,195
Sep-94 12,198 11,310
Dec-94 10,913 10,136
Mar-95 10,614 9,799
Jun-95 11,641 10,531
Sep-95 11,727 10,306
Dec-95 11,705 10,348
Mar-96 12,518 11,308
Jun-96 12,775 11,353
Sep-96 12,625 10,963
Dec-96 13,223 11,187
Mar-97 12,888 10,816
Jun-97 13,559 11,481
Sep-97 11,366 9,432
Dec-97 6,929 6,487
Mar-98 7,866 7,036
Jun-98 5,263 4,354
Sep-98 5,263 4,354
Past performance is not indicative of future performance.
5
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Pacific Basin Equity Fund
Statement of Assets and Liabilities September 30, 1998
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<TABLE>
<S><C>
Assets
Investment in Pacific Basin Equity Portfolio, at Value $ 4,242,442
Receivable for Shares of Beneficial Interest Subscribed 12
Prepaid Expenses and Other 8,678
Due from Bankers Trust 41,577
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Total Assets 4,292,709
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Liabilities
Payable for Shares of Beneficial Interest Redeemed 5,691
Accrued Expenses and Other 18,818
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Total Liabilities 24,509
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Net Assets $ 4,268,200
=============
Composition of Net Assets
Paid-in Capital $ 20,866,362
Undistributed Net Investment Income 2,471,739
Accumulated Net Realized Loss from Investment, Futures, Foreign Currency and Forward Foreign
Currency Transactions (17,038,404)
Net Unrealized Depreciation on Investment, Foreign Currency and Forward Foreign Currency Contracts (2,031,497)
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Net Assets $ 4,268,200
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Net Asset Value, Offering and Redemption Price Per Share (net assets divided by shares outstanding) $ 3.85
=============
Shares Outstanding ($0.001 par value per share, unlimited number of shares of beneficial interest authorized) 1,109,700
=============
</TABLE>
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Statement of Operations For the year ended September 30, 1998
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<TABLE>
<S><C>
Investment Income
Income Allocated from Pacific Basin Equity Portfolio, net $ 149,240
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Expenses
Administration and Services Fees 95,257
Registration Fees 6,572
Printing and Shareholder Reports 12,730
Professional Fees 13,420
Trustees Fees 3,113
Miscellaneous 9,162
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Total Expenses 140,254
Less Expenses Absorbed by Bankers Trust (44,997)
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Net Expenses 95,257
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Net Investment Income 53,983
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Realized and Unrealized Gain (Loss) on Investment, Futures, Foreign Currency and
Forward Foreign Currency Contracts
Net Realized Gain (Loss) from:
Investment Transactions (16,382,412)
Futures Transactions (46,256)
Foreign Currency Transactions (85,292)
Forward Foreign Currency Transactions 2,503,152
Net Change in Unrealized Appreciation/Depreciation on Investment, Foreign Currency and
Forward Foreign Currency Contracts 1,768,180
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Net Realized and Unrealized Loss on Investment, Futures, Foreign Currency and
Forward Foreign Currency Contracts (12,242,628)
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Net Decrease in Net Assets from Operations $ (12,188,645)
=============
</TABLE>
See Notes to Financial Statements on Page 8
6
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Pacific Basin Equity Fund
Statements of Changes in Net Assets
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<TABLE>
<CAPTION>
For the For the
year ended year ended
September 30, 1998 September 30, 1997
------------------ ------------------
<S><C>
Increase (Decrease) in Net Assets from:
Operations
Net Investment Income/(Expenses in Excess of Income) $ 53,983 $ (133,310)
Net Realized Gain (Loss) from Investment, Futures, Foreign Currency and
Forward Foreign Currency Transactions (14,010,808) 2,191,753
Net Change in Unrealized Appreciation/Depreciation on Investment,
Foreign Currency and Forward Foreign Currency Contracts 1,768,180 (4,795,001)
--------------- ---------------
Net Decrease in Net Assets from Operations (12,188,645) (2,736,558)
--------------- ---------------
Distributions to Shareholders
Net Investment Income (270,311) --
Net Realized Gains (1,872,886) (1,399,729)
--------------- ---------------
Total Distributions (2,143,197) (1,399,729)
--------------- ---------------
Capital Transactions in Shares of Beneficial Interest
Proceeds from Sales of Shares 32,705,049 57,656,522
Dividend Reinvestments 856,416 574,917
Cost of Shares Redeemed (41,462,722) (56,983,156)
--------------- ---------------
Net Increase (Decrease) from Capital Transactions in Shares of Beneficial Interest (7,901,257) 1,248,283
--------------- ---------------
Total Decrease in Net Assets (22,233,099) (2,888,004)
Net Assets
Beginning of Year 26,501,299 29,389,303
--------------- ---------------
End of Year (including undistributed net investment income of $2,471,739 and
$367,937, respectively) $ 4,268,200 $ 26,501,299
=============== ===============
</TABLE>
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Financial Highlights
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Contained below are selected data for a share outstanding, total investment
return, ratios to average net assets and other supplemental data for the
periods indicated for the Pacific Basin Equity Fund.
<TABLE>
<CAPTION>
For the period
For the years ended November 1, 1993
September 30, (Commencement of
------------------------------------- Operations) to
1998 1997 1996 1995 September 30, 1994
---- ---- ---- ---- ------------------
<S><C>
Per Share Operating Performance:
Net Asset Value, Beginning of Period $10.16 $11.80 $10.96 $11.82 $10.00
------ ------ ------ ------ ------
Income fromInvestment Operations
Net Investment Income/
(Expenses in Excess of Income) 0.24 (0.05) (0.03) 0.01 (0.04)
Net Realized and Unrealized Gain (Loss) on
Investment, Futures, Foreign Currency, and
Forward Foreign Currency Contracts (5.32) (1.07) 0.87 (0.49) 1.86
------ ------ ------ ------ ------
Total Income (Loss) from Investment Operations (5.08) (1.12) 0.84 (0.48) 1.82
------ ------ ------ ------ ------
Distributions to Shareholders
Net Investment Income (0.24) -- -- -- --
Net Realized Gains (0.99) (0.52) -- (0.38) --
------ ------ ------ ------ ------
Total Distributions (1.23) (0.52) -- (0.38) --
------ ------ ------ ------ ------
Net Asset Value, End of Period $3.85 $10.16 $11.80 $10.96 $11.82
====== ====== ====== ====== ======
Total Investment Return (52.21)% (9.97)% 7.66% (3.87)% 20.11%*
Supplemental Data and Ratios:
Net Assets, End of Period (000s omitted) $4,268 $26,501 $29,389 $24,504 $25,362
Ratios to Average Net Assets:
Net Investment Income/(Expenses in Excess
of Income) 0.43% (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% 1.75%*
Decrease Reflected in Above Expense
Ratio Due to Absorption of Expenses by
Bankers Trust 0.70% 0.29% 0.31% 0.52% 0.60%*
</TABLE>
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* Annualized
See Notes to Financial Statements on Page 8
7
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Pacific Basin Equity Fund
Notes to Financial Statements
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Note 1--Organization and Significant Accounting Policies
A. Organization
BT Investment Funds (the "Trust") is registered under the Investment Company Act
of 1940 (the "Act"), as amended, as an open-end management investment company.
The Trust was organized on July 21, 1986, as a business trust under the laws of
the Commonwealth of Massachusetts. The Pacific Basin Equity Fund (the "Fund") is
one of the funds offered to investors by the Trust. The Fund commenced
operations and began offering shares of beneficial interest on November 1, 1993.
The Fund invests substantially all of its assets in the Pacific Basin Equity
Portfolio (the "Portfolio"). The Portfolio is an open-end management investment
company registered under the Act. The Fund seeks to achieve its investment
objective by investing all of its investable assets in the Portfolio. The value
of such investment in the Portfolio reflects the Fund's proportionate interest
in the net assets of the Portfolio. At September 30, 1998, the Fund's investment
was approximately 100% of the Portfolio.
The financial statements of the Portfolio, including the Schedule of Portfolio
Investments, are contained elsewhere in this report and should be read in
conjunction with these financial statements.
B. Valuation
Valuation of securities by the Portfolio is discussed in Note 1B of the
Portfolio's Notes to Financial Statements.
C. Investment Income
The Fund's income net of expenses is earned daily on its investment in the
Portfolio. All of the net investment income and realized and unrealized gains
and losses from the security transactions of the Portfolio are allocated pro
rata among the investors in the Portfolio at the time of such determination.
D. Organization Expenses
Costs incurred by the Fund in connection with its organization and initial
registration are being amortized evenly over a five year period.
E. Distributions
It is the Fund's policy to declare and distribute dividends annually to
shareholders from net investment income, if any. Dividends and distributions
payable to shareholders are recorded by the Fund on the ex-dividend date.
Distributions of net realized short-term and long-term capital gains, if any,
earned by the Fund will also be made annually.
F. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all of its taxable income to shareholders. Therefore, no federal
income tax provision is required. The Fund may periodically make
reclassifications among certain of its capital accounts as a result of
differences in the characterization and allocation of certain income and capital
gains determined annually in accordance with federal tax regulations which may
differ from generally accepted accounting principles. The Fund has a capital
loss carryforward in the amount of $923,827 expiring in 2006. In addition the
Fund has post October capital losses of $15,783,008 to next year.
G. Other
The Trust accounts separately for the assets, liabilities, and operations of
each Fund. Expenses directly attributable to the Fund are charged to that Fund
while expenses which are attributable to all of the Trust's funds are allocated
among the Funds. Investment transactions are accounted for on a trade date
basis. Realized gains and losses are determined on the identified cost basis.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts in the financial statements. Actual results could
differ from those estimates.
Note 2--Fees and Transactions with Affiliates
The Fund has entered into an Administration and Services Agreement with Bankers
Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Fund in return for a fee computed daily and paid
monthly at an annual rate of 0.75% of the Fund's average daily net assets.
Bankers Trust has voluntarily undertaken to waive its fees and reimburse
expenses of the Fund, to the extent necessary, to limit all expenses to 0.75%
of the average daily net assets of the Fund, excluding expenses of the
Portfolio and 1.75% of the average daily net assets of the Fund, including
expenses of the Portfolio.
The Trust has entered into a distribution agreement with ICCDistributors, Inc.
("ICC") under which ICC will serve as distributor for shares sold on behalf of
the Fund.
The Trust is a participant with other affiliated entities in a revolving credit
facility (the "revolver") and a discretionary demand line of credit facility
collectively (the "credit facilities") in the amounts of $50,000,000 and
$100,000,000, respectively. A commitment fee of .07% per annum on the average
daily amount of the available commitment is payable on a calendar quarter basis,
and apportioned equally among all Funds. Amounts borrowed under the credit
facilities will bear interest at a rate per annum equal to the Federal Funds
Rate plus .45%. No amounts were drawn down or outstanding under the credit
facilities as of and for the year ended September 30, 1998.
Note 3--Shares of Beneficial Interest
At September 30, 1998, there were an unlimited number of shares of beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
For the year ended For the year ended
September 30, 1998 September 30, 1997
-------------------------- ---------------------------
Shares Amount Shares Amount
--------- ----------- --------- -----------
<S><C>
Sold 5,691,053 $ 32,705,049 4,938,090 $ 57,656,522
Reinvested 175,395 856,416 50,080 574,917
Redeemed (7,364,032) (41,462,722) (4,870,624) (56,983,156)
---------- ------------ ---------- ------------
Net Increase (Decrease) (1,497,584) $ (7,901,257) 117,546 $ 1,248,283
========== ============ ========== ============
</TABLE>
Note 4--Risks of Investing in Emerging Markets
The risks involved when investing in emerging markets are of a nature generally
not encountered when investing in securities traded on major international
markets.
Investment in securities of issuers based in underdeveloped emerging markets
involves special risks and considerations not typically associated with
investing in U.S. companies. These 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. Additionally, developments effecting emerging
market investments can not always be foreseen.
8
<PAGE>
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Pacific Basin Equity Fund
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Trustees of BT Investment Funds and Shareholders of Pacific Basin Equity
Fund:
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Pacific Basin Equity Fund, (one of the Funds comprising BTInvestment Funds,
hereafter referred to as the "Fund") at September 30, 1998, and the results of
its operations, the changes in its net assets and the financial highlights for
each of the fiscal periods presented, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at September 30, 1998 by correspondence with the
transfer agent, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
November 6, 1998
- --------------------------------------------------------------------------------
Tax Information (Unaudited) For the Year Ended September 30, 1998
- --------------------------------------------------------------------------------
During the year ended September 30, 1998, the Fund received income from foreign
sources in the amount of $233,506. The Fund paid foreign taxes in the amount of
$15,512, or $.014 per share. Such amounts are eligible for the foreign tax
credit. You should consult your tax advisor relating to the appropriate
treatment of foreign taxes paid.
9
<PAGE>
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Pacific Basin Equity Portfolio
Schedule of Portfolio Investments September 30, 1998
- --------------------------------------------------------------------------------
Shares Security Value
- --------------------------------------------------------------------------------
COMMON STOCK - 93.10%
Hong Kong - 28.65%
1,372,486 Champion Technology Holdings
(Telecommunication Equipment) $ 20,191
13,000 Cheung Kong Holdings Ltd. (Real Estate) 60,227
55,000 China Telecom (Hong Kong) Ltd.
(Cellular Telecom) (a) 86,592
217,000 Cosco Pacific Ltd. (Commercial Services) 90,312
43,000 Dairy Farm International Holdings Ltd.
(Retail) (a) 45,580
59,000 Guangdong Kelon Elec. Hldgs. H Shares
(Appliances) 39,592
6,000 Guangzhou Investment Company Ltd.
(Real Estate) 534
496,423 Moulin International Holding Ltd. (Diversified) 42,922
310,000 National Mutual Asia Ltd. (Financial Services) 151,020
126,800 New World Infrastructure Ltd. (Building) (a) 130,907
593,000 Pacific Ports Co. Ltd. (Transportation Svcs) 48,977
197,000 Peregerine Investment Holdings Ltd.
(Finance) (a)(b) --
213,299 Road King Infrastructure Ltd.
(Building & Construction) 116,986
11,600 Shandong Huaneng Power Company Ltd.,
ADR (Electric Generation) 52,200
117,000 Smartone Telecommunications Holdings
(Cellular Telecom) 319,338
124,750 Wong's International Holdings Ltd.
(Electronics) 10,303
-----------
1,215,681
-----------
India - 9.87%
6,750 BSES Ltd. (Utility) (a) 88,931
7,330 Industrial Credit & Investment Corporation
of India Ltd., GDR 144A (d)
(Financial Services) 61,389
6,249 ITC Ltd., GDR (Tobacco) 124,980
12,070 Mahanagar Telecommunications Nigam
Ltd., GDR 144A (d) (Telecommunications) 143,331
-----------
418,631
-----------
Malaysia (c) - 9.96%
33,000 Amway (Malaysia) Holdings BHD
(Diversified) (b) 36,300
154,000 Berjaya Sports Toto BHD (Gaming)(b) 84,000
145,000 KFCHoldings (Retail) (b) 61,427
84,000 Malaysia International Shipping BHD
(Transportation) (b) 58,342
187,000 Malaysia Mining Corp. - A BHD
(Other-Non-ferrous) (b) 29,920
66,000 MNI Holdings BHD (Diversified) (b) 41,520
61,000 RJ Reynolds BHD (Tobacco) (b) 32,164
1,000 Tanjong PLC (Gaming) (b) 676
132,000 Technology Resources Industries BHD
(Telecommunications) (b) 29,040
45,000 Telekom Malaysia (Telecommunications) (b) 49,091
-----------
422,480
-----------
Shares Security Value
- --------------------------------------------------------------------------------
Pakistan - 0.25%
6,435 Engro Chemical Pakistan Ltd. (Chemicals) (a)(b) $ 7,746
1,606 Pakistan State Oil Co. Ltd. (Oil-International) (a) 2,801
-----------
10,547
-----------
Philippines - 5.16%
320,000 Philippine Gold Plc. (Gold Mining) (a)(b) 47,571
2,050 Philippine Long Distance Telephone Co.
(Telecommunications) 43,109
39,400 San Miguel Corp.-A (Food) 36,023
71,500 San Miguel Corp.-B (Food) 92,337
-----------
219,040
-----------
Singapore - 13.28%
9,000 Comfort Group Ltd. (Transportation Svcs) 1,465
48,000 Datacraft Asia Ltd. (Telecommunication
Equipment) 129,600
16,300 Development Bank of Singapore Ltd. (Banks) 65,605
29,000 Elec & Eltek International Holdings Ltd.
(Electronic) 143,840
46,000 Keppelfels Ltd. (Shipbuilding) 50,914
3,000 Jurong Shipyard Limited (Shipbuilding) 10,654
5,500 Natsteel Electronics (Electronic Products) 12,045
5,300 Overseas Union Bank Ltd. (Banks) 7,560
22,000 Rothmans Industries (Tobacco) 93,104
29,000 Singapore Telecommunication 48,405
-----------
563,192
-----------
South Korea - 8.49%
17,800 Amkor Technologies (Electronic
Components) (a) 86,775
790 Daewoo Heavy Industries (Machinery) 2,673
120 Hyundai Heavy Industries (Machinery) 1,795
146 Kookmin Bank (Banks) 355
491 Kookmin Bank, GDR 144A (d) (Banks) 1,159
3,370 Pohang Iron & Steel (Iron/Steel) 134,645
4,820 Samsung Heavy Industries (Shipbuilding) 20,448
232 SK Telecommunications (Telecommunications) 112,368
-----------
360,218
-----------
Taiwan - 13.50%
11,900 Advanced Semiconductor Engineering, GDR
(Electronic Components) (a) 108,290
2,500 ASE Test Ltd. (Electronic Components) (a) 60,313
7,730 Fubon Insurance, GDR (Insurance) (a)(b) 80,624
13,473 Siliconware Precision Industries Co. GDR
(Electronic Components) (a) 111,152
11,098 Taiwan Semiconductor (Electronic
Components) (a)(b) 136,687
11,454 Yageo Corp., GDR (Electronic Components) (a) 75,883
-----------
572,949
-----------
See Notes to Financial Statements on Pages 15 through 17
10
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Portfolio
Schedule of Portfolio Investments September 30, 1998
- --------------------------------------------------------------------------------
Shares Security Value
- --------------------------------------------------------------------------------
Thailand - 3.94%
25,000 Hanamicroelectronics (Circuit Breakers) (a) $ 71,429
14,100 KCE Electronics Public Co. Ltd.
(Circuit Boards) (a) 9,269
19,100 Shinawatra Computer Public Co. Ltd.
(Computers) (a) 58,918
17,500 Siam City Cement Co. (Building Products) (a) 27,434
-----------
167,050
-----------
Total Common Stock (Cost $5,914,717) 3,949,788
-----------
OTHER SECURITIES - 0.13%
Hong Kong - 0.05%
362,238 Moulin International Holdings Ltd.
Warrants (Diversified) (a)(b) 2,103
67,200 Tai Fook Group Warrants (Diversified
Financial Services) (a)(b) 86
-----------
2,189
-----------
Indonesia - 0.08%
57,567 Indah Kiat Paper & Pulp Corp. PT
Warrants (Paper) (a) 3,228
-----------
South Korea - 0.00%
2,173 Samsung Heavy Industries Rights
Expire 10/8/98 (Shipbuilding) (a) --
-----------
Total Other Securities (Cost $11,891) 5,417
-----------
Shares Security Value
- --------------------------------------------------------------------------------
SOVEREIGN DEBT - 0.44%
Pakistan - 0.44%
42,000 Republic of Pakistan, 6.00%, 2/26/02(b)
(Cost $42,000) $ 18,690
-----------
Total Investments (Cost $5,968,608) 93.67% $ 3,973,895
Other Assets in Excess of Liabilities 6.33% 268,552
------ -----------
Net Assets 100.00% $ 4,242,447
====== ===========
- -------------------
(a) Non-income producing security
(b) Illiquid securities fair valued by the valuation committee of the Board of
Trustees (See Footnote 1)
(c) As of September 1, 1998, the repatriation of proceeds received from the sale
of Malaysian securities has been blocked until at least 9/1/99.These securities
are considered illiquid and are being fair valued using methods determined in
good faith by the valuation committee of the Board of Trustees
(d) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registrations,
normally to qualified institutional buyers.
Abbreviations:
GDR - Global Depository Receipt
BHD - Berhad
Industry Diversification (as a percentage of Total Investments):
(Unaudited)
Cellular Telecom 21.04%
Electronics 20.91%
Other* 10.85%
Tobacco 6.33%
Building 6.28%
Financial Services 4.77%
Telecommunication Equip 3.79%
Iron/Steel 3.41%
Food 3.25%
Diversified 3.11%
Transportation Svcs 2.75%
Shipbuilding 2.71%
Commercial Services 2.29%
Utility 2.25%
Gaming 2.14%
Retail 2.08%
Insurance 2.04%
-------
Total 100.00%
=======
* No one industry represents more than 2% of Portfolio Holdings
See Notes to Financial Statements on Pages 15 through 17
11
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Portfolio
Statement of Assets and Liabilities September 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S><C>
Assets
Investments, at Value (Cost of $5,968,608) $ 3,973,895
Cash* 351,995
Due from Bankers Trust 7,686
Receivable for Securities Sold 72,898
Unrealized Appreciation on Forward Foreign Currency Contracts 82,864
Dividends and Interest Receivable 16,254
-------------
Total Assets 4,505,592
-------------
Liabilities
Payable for Securities Purchased 127,296
Unrealized Depreciation on Forward Foreign Currency Contracts 115,052
Accrued Expenses and Other 20,797
-------------
Total Liabilities 263,145
-------------
Net Assets $ 4,242,447
=============
Composition of Net Assets
Paid-in Capital $ 6,274,449
Net Unrealized Depreciation on Investments, Foreign Currencies
and Forward Foreign Currency Contracts (2,032,002)
-------------
Net Assets $ 4,242,447
=============
</TABLE>
- -------------------
* Includes foreign cash of $179,836 with a cost of $184,647.
- --------------------------------------------------------------------------------
Statement of Operations For the year ended September 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S><C>
Investment Income
Dividends (net of foreign withholding tax of $15,512) $ 217,994
Interest 58,456
-------------
Total Investment Income 276,450
-------------
Expenses
Advisory Fees 95,400
Administration and Services Fees 31,800
Registration Fees 9,359
Professional Fees 31,627
Trustees Fees 2,655
Miscellaneous 788
-------------
Total Expenses 171,629
Less Expenses Absorbed by Bankers Trust (44,429)
-------------
Net Expenses 127,200
-------------
Net Investment Income 149,250
-------------
Realized and Unrealized Gain (Loss) on Investments, Futures, Foreign Currencies,
and Forward Foreign Currency Contracts
Net Realized Gain (Loss) from:
Investment Transactions (16,382,422)
Foreign Futures Transactions (46,256)
Foreign Currency Transactions (85,292)
Forward Foreign Currency Transactions 2,503,154
Net Change in Unrealized Appreciation/Depreciation on Investments, Foreign Currencies,
and Forward Foreign Currency Contracts 1,768,257
-------------
Net Realized and Unrealized Loss on Investments, Futures, Foreign Currencies,
and Forward Foreign Currency Contracts (12,242,559)
-------------
Net Decrease in Net Assets from Operations $ (12,093,309)
=============
</TABLE>
See Notes to Financial Statements on Pages 15 through 17
12
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Portfolio
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the
year ended year ended
September 30, 1998 September 30, 1997
------------------ ------------------
<S><C>
Decrease in Net Assets from:
Operations
Net Investment Income $ 149,250 $ 107,086
Net Realized Gain (Loss) from Investment, Futures, Foreign Currency
and Forward Foreign Currency Transactions (14,010,816) 2,192,429
Net Change in Unrealized Appreciation/Depreciation on Investments, Foreign
Currencies and Forward Foreign Currency Contracts 1,768,257 (4,789,185)
-------------- --------------
Net Decrease in Net Assets from Operations (12,093,309) (2,489,670)
-------------- --------------
Capital Transactions
Proceeds from Capital Invested 33,236,914 58,200,896
Value of Capital Withdrawn (43,431,238) (58,790,078)
-------------- --------------
Net Decrease in Net Assets from Capital Transactions (10,194,324) (589,182)
-------------- --------------
Total Decrease in Net Assets (22,287,633) (3,078,852)
Net Assets
Beginning of Year 26,530,080 29,608,932
-------------- --------------
End of Year $ 4,242,447 $ 26,530,080
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
Statement of Cash Flows For the year ended September 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S><C>
Net Increase (Decrease) in Cash:
Cash Flows From Operating Activities:
Dividends and Interest Received $ 308,750
Operating Expenses Paid (149,616)
Interest Paid on Overdrafts (2,184)
Change in Foreign Currency Translation 2,336
--------------
Net Cash Provided by Operating Activities 159,286
--------------
Cash Flows From Investing Activities:
Purchase of Portfolio Securities (14,940,710)
Proceeds from Disposition of Portfolio Securities 20,200,735
Proceeds from Settlement of Forward ForeignCurrency Contracts 2,957,621
Settlement of Variation Margin, Net (46,256)
--------------
Net Cash Provided by Investing Activities 8,171,390
--------------
Net Cash Provided by Operating and Investing Activities 8,330,676
Cash Flows From Financing Transactions:
Receipts for Shareholder Purchases and Reinvested Distributions 33,236,914
Payments for Shareholder Redemptions and Distributions (43,431,238)
--------------
Net Cash Used in Financing Activities (10,194,324)
--------------
Net Decrease in Cash (1,863,648)
Cash at Beginning of Year 2,215,643
--------------
Cash at End of Year $ 351,995
==============
</TABLE>
See Notes to Financial Statements on Pages 15 through 17
13
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Portfolio
Financial Highlights
- --------------------------------------------------------------------------------
Contained below are selected ratios to average net assets and other supplemental
data for the periods indicated for the Pacific Basin Equity Portfolio.
<TABLE>
<CAPTION>
For the period
For the years ended November 1, 1993
September 30, (Commencement of
------------------------------------------- Operations) to
1998 1997 1996 1995 September 30, 1994
---- ---- ---- ---- ------------------
<S><C>
Supplemental Data and Ratios:
Net Assets, End of Period (000s omitted) $4,242 $26,530 $29,609 $24,656 $25,366
Ratios to Average Net Assets:
Net Investment Income 1.17% 0.33% 0.51% 0.87% 0.16%*
Expenses 1.00% 1.00% 1.00% 1.00% 1.00%*
Decrease Reflected in Above Expense
Ratio Due to Absorption of Expenses by
Bankers Trust 0.35% 0.14% 0.11% 0.20% 0.26%*
Portfolio Turnover Rate 125% 172% 118% 104% 40%
</TABLE>
- -------------------
* Annualized
See Notes to Financial Statements on Pages 15 through 17
14
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Portfolio
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 1---Organization and Significant Accounting Policies
A. Organization
The Pacific Basin Equity Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940 (the "Act"), as amended, as an open-end
management investment company. The Portfolio was organized on August 6, 1993 as
an unincorporated trust under the laws of New York and commenced operations on
November 1, 1993. The Declaration of Trust permits the Board of Trustees (the
"Trustees") to issue beneficial interests in the Portfolio.
B. Security Valuation
The Portfolio's investments listed or traded on National Stock Exchanges or
other domestic or foreign exchanges are valued based on the closing price of the
security traded on that exchange prior to the time when the Portfolio assets are
valued. Short-term debt securities are valued at market value until such time as
they reach a remaining maturity of 60 days, whereupon they are valued at
amortized cost using their value on the 61st day. All other securities and other
assets are valued at their fair value as determined in good faith under
procedures established by and under the general supervision of the Trustees. At
September 30, 1998 the total value of fair valued securities was $718,537
representing 18% of total investments.
C. Security Transactions and Investment Income
Security transactions are accounted for on a trade date basis. Dividend income,
less foreign taxes withheld, if any, is recorded on the ex-dividend date or upon
receipt of ex-dividend notification in the case of certain foreign securities.
Interest income is recorded on the accrual basis and includes amortization of
premium and discount on investments. Realized gains and losses from securities
transactions are recorded on the identified cost basis.
All of the net investment income and realized and unrealized gains and losses
from the security and foreign currency transactions of the Portfolio are
allocated pro rata among the investors in the Portfolio at the time of such
determination.
D. Organization Expenses
Costs incurred by the Portfolio in connection with its organization and initial
registration are being amortized evenly over a five year period.
E. Repurchase Agreements
The Portfolio may enter into repurchase agreements with financial institutions
deemed to be creditworthy by the Portfolio's Investment Advisor, subject to the
seller's agreement to repurchase such securities at a mutually agreed upon
price. Securities purchased subject to repurchase agreements are deposited with
the Portfolio's custodian, and pursuant to the terms of the repurchase agreement
must have an aggregate market value greater than or equal to the repurchase
price plus accrued interest at all times. If the value of the underlying
securities falls below the value of the repurchase price plus accrued interest,
the Portfolio will require the seller to deposit additional collateral by the
next business day. If the request for additional collateral is not met, or the
seller defaults on its repurchase obligation, the Portfolio maintains the right
to sell the underlying securities at market value and may claim any resulting
loss against the seller. However, in the event of default or bankruptcy by the
seller, realization and/or retention of the collateral may be subject to legal
proceedings.
F. Foreign Currency Transactions
The books and records of the Portfolio are maintained in U.S. dollars. All
assets and liabilities initially expressed in foreign currencies are converted
into U.S. dollars at prevailing exchange rates. Purchases and sales of
investment securities, dividend and interest income, and certain expenses are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
G. Forward Foreign Currency Contracts
The Portfolio may enter into forward foreign currency contracts for the purpose
of settling specific purchases or sales of securities denominated in a foreign
currency or with respect to the Portfolio's investments. The net U.S. dollar
value of foreign currency underlying all contractual commitments held by the
Portfolio and the resulting unrealized appreciation or depreciation are
determined using prevailing exchange rates. With respect to forward foreign
currency contracts, losses in excess of amounts recognized in the Statement of
Assets and Liabilities may arise due to changes in the value of the foreign
currency or if the counterparty does not perform under the contract.
H. Option Contracts
Upon the purchase of a put option or a call option by the Portfolio, the premium
paid is recorded as an investment and marked-to-market daily to reflect the
current market value. When a purchased option expires, the Portfolio will
realize a loss in the amount of the cost of the option. When the Portfolio
enters into a closing sale transaction, the Portfolio will realize a gain or
loss depending on whether the sale proceeds from the closing sale transaction
are greater or less than the cost of the option. When the Portfolio exercises a
put option, it realizes a gain or loss from the sale of the underlying security
and the proceeds from such sale will be decreased by the premium originally
paid. When the Portfolio exercises a call option, the cost of the security which
the Portfolio purchases upon exercise will be increased by the premium
originally paid.
I. Futures Contracts
The Portfolio may enter into financial futures contracts which are contracts to
buy a standard quantity of securities at a specified price on a future date. The
Portfolio is required to deposit either in cash or securities an amount equal to
a certain percentage of the contract amount. Variation margin payments are made
or received by the Portfolio each day, dependent on the daily fluctuations in
the value of the underlying security, and are recorded for financial statement
purposes as unrealized gains or losses by the Portfolio.
Futures contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are traded.
J. Federal Income Taxes
The Portfolio is considered a partnership under the Internal Revenue Code.
Therefore, no federal income tax provision is necessary.
K. Other
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts in the financial statements. Actual results could
differ from those estimates.
Note 2--Fees and Transactions with Affiliates
The Portfolio has entered into an Administration and Services Agreement with
Bankers Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Portfolio in return for a fee computed daily and
paid monthly at an annual rate of 0.25% of the Portfolio's average daily net
assets.
15
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Portfolio
Notes to Financial Statements
- --------------------------------------------------------------------------------
The Portfolio has entered into an Advisory Agreement with Bankers Trust. Under
this Advisory Agreement, the Portfolio pays Bankers Trust an advisory fee
computed daily and paid monthly at an annual rate of 0.75% of the Portfolio's
average daily net assets.
Bankers Trust has entered into a Sub-Advisory Agreement with BT Portfolio
Managers International Limited ("BT Portfolio Managers International"), a wholly
owned subsidiary of Bankers Trust Australia Limited, for the Pacific Basin
Equity Portfolio. Under this Agreement, BT Portfolio Managers International
receives a fee from Bankers Trust for providing investment advice and research
services, computed daily and paid monthly at an annual rate of 0.60% of the
Portfolio's average daily net assets.
Bankers Trust has voluntarily undertaken to waive its fees and reimburse
expenses of the Portfolio, to the extent necessary, to limit all expenses to
1.00% of the average daily net assets of the Portfolio.
The Portfolio is a participant with other affiliated entities in a revolving
credit facility (the "revolver") and a discretionary demand line of credit
facility collectively (the "credit facilities") in the amounts of $50,000,000
and $100,000,000, respectively. A commitment fee of .07% per annum on the
average daily amount of the available commitment is payable on a calendar
quarter basis, and apportioned equally among all participants. Amounts borrowed
under the credit facilities will bear interest at a rate per annum equal to the
Federal Funds Rate plus .45%. No amounts were drawn down or outstanding under
the credit facilities as of and for the year ended September 30, 1998.
Note 3--Purchases and Sales of Investment Securities
The aggregate cost of purchases and proceeds from sales of investments, other
than short-term obligations, for the year ended September 30, 1998, were
$14,743,114 and $20,205,996, respectively.
For Federal income tax purposes, the tax basis of investments held at September
30, 1998 was $6,300,177. The aggregate gross unrealized appreciation for all
investments was $218,996, and the aggregate gross unrealized depreciation for
all investments was $2,545,278.
18
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Portfolio
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 4--Open Forward Foreign Currency Contracts
As of September 30, 1998, the Pacific Basin Equity Portfolio had the following
open forward foreign currency contracts outstanding:
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
Contracts to Deliver In Exchange For Settlement Date Value (US$) (Depreciation) (US$)
- --------------------------------------------------------------------------------------------------------------------------------
<S><C>
Sales
- --------------------------------------------------------------------------------------------------------------------------------
Hong Kong Dollar 4,000,000 US Dollar 513,149 10/27/98 515,464 $ (2,315)
Hong Kong Dollar 9,895,900 US Dollar 1,273,604 10/27/98 1,275,245 (1,641)
Hong Kong Dollar 2,172,175 US Dollar 280,028 10/27/98 279,919 109
Hong Kong Dollar 19,352,525 US Dollar 2,442,483 1/13/99 2,476,458 (33,975)
Hong Kong Dollar 14,209,200 US Dollar 1,802,855 1/13/99 1,818,289 (15,434)
Hong Kong Dollar 4,865,000 US Dollar 620,022 1/13/99 622,553 (2,531)
South Korean Won 493,805,000 US Dollar 355,000 2/10/99 351,588 3,412
Philippines Peso 5,477,800 US Dollar 122,000 11/16/98 123,583 (1,583)
Singapore Dollar 725,085 US Dollar 410,000 10/20/98 430,343 (20,343)
Singapore Dollar 38,137 US Dollar 22,000 10/20/98 22,634 (634)
Singapore Dollar 1,218,807 US Dollar 714,424 12/9/98 724,532 (10,108)
Thai Baht 6,568,440 US Dollar 165,119 1/29/99 164,129 990
Thai Baht 24,990 US Dollar 624 1/29/99 624 0
Taiwan Dollar 17,988,280 US Dollar 508,000 10/13/98 523,280 (15,280)
Taiwan Dollar 9,075,200 US Dollar 256,000 10/13/98 263,998 (7,998)
- --------------------------------------------------------------------------------------------------------------------------------
Total Sales $ (107,331)
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Purchases
- --------------------------------------------------------------------------------------------------------------------------------
Hong Kong Dollar 4,732,961 US Dollar 604,118 10/27/98 609,918 $ 5,800
Hong Kong Dollar 1,010,263 US Dollar 129,000 10/27/98 130,189 1,189
Hong Kong Dollar 1,179,300 US Dollar 150,000 10/27/98 151,972 1,972
Hong Kong Dollar 500,000 US Dollar 64,000 10/27/98 64,433 433
Hong Kong Dollar 1,379,400 US Dollar 176,000 10/27/98 177,758 1,758
Hong Kong Dollar 1,801,085 US Dollar 229,000 10/27/98 232,099 3,099
Hong Kong Dollar 5,210,066 US Dollar 668,000 10/27/98 671,400 3,400
Hong Kong Dollar 230,000 US Dollar 29,588 10/27/98 29,639 51
Hong Kong Dollar 25,000 US Dollar 3,216 10/27/98 3,222 6
Hong Kong Dollar 2,921,187 US Dollar 370,000 1/13/99 373,811 3,811
Hong Kong Dollar 7,475,000 US Dollar 946,203 1/13/99 956,543 10,340
Hong Kong Dollar 7,825,000 US Dollar 990,130 1/13/99 1,001,331 11,201
Hong Kong Dollar 220,000 US Dollar 27,958 1/13/99 28,152 194
Hong Kong Dollar 13,119,000 US Dollar 1,673,406 1/13/99 1,678,781 5,375
Hong Kong Dollar 3,280,000 US Dollar 419,512 1/13/99 419,727 215
Hong Kong Dollar 3,586,538 US Dollar 459,283 1/13/99 458,954 (329)
South Korean Won 141,200,000 US Dollar 100,000 2/10/99 100,534 534
Singapore Dollar 35,000 US Dollar 20,790 10/1/98 20,716 (74)
Singapore Dollar 314,968 US Dollar 189,000 10/20/98 186,936 (2,064)
Singapore Dollar 105,810 US Dollar 63,542 10/20/98 62,799 (743)
Singapore Dollar 154,990 US Dollar 87,000 10/20/98 91,988 4,988
Singapore Dollar 94,516 US Dollar 54,000 10/20/98 56,096 2,096
Singapore Dollar 480,168 US Dollar 279,574 12/9/98 285,441 5,867
Taiwan Dollar 12,352,157 US Dollar 349,000 10/13/98 359,325 10,325
Taiwan Dollar 14,711,323 US Dollar 422,254 10/13/98 427,953 5,699
- --------------------------------------------------------------------------------------------------------------------------------
Total Purchases $ 75,143
- --------------------------------------------------------------------------------------------------------------------------------
Net Unrealized Depreciation $ (32,188)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Portfolio
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Trustees Holders of Beneficial Interest of Pacific Basin Equity
Portfolio:
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of portfolio investments, and the related statements of
operations, of changes in net assets and cash flows and the financial highlights
present fairly, in all material respects, the financial position of the Pacific
Basin Equity Portfolio, (hereafter referred to as the "Portfolio") at September
30, 1998, and the results of its operations, the changes in its net assets, its
cash flows and the financial highlights for each of the fiscal periods
presented, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Portfolio's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
September 30, 1998 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
November 6, 1998
18
<PAGE>
This page intentionally left blank.
<PAGE>
BT INVESTMENT FUNDS
PACIFIC BASIN EQUITY FUND
Investment Advisor and Administrator of the Portfolio
BANKERS TRUST COMPANY
130 Liberty Street
New York, NY 10006
Distributor
ICC DISTRIBUTORS, INC.
P.O. Box 7558
Portland, ME 04112-9892
Custodian and Transfer Agent
BANKERS TRUST COMPANY
130 Liberty Street
New York, NY 10006
Independent Accountants
PRICEWATERHOUSECOOPERS LLP
250 West Pratt Street
Baltimore, MD 21201
Counsel
WILLKIE FARR & GALLAGHER
787 7th Avenue
New York, NY 10019
-------------------
For information on how to invest, shareholder account information
and current price and yield information, please contact your
relationship manager or the BT Mutual Fund Service Center at (800)
730-1313. This report must be preceded or accompanied by a current
prospectus for the Fund.
-------------------
BT Investment Pacifc Basin Equity CUSIP#055922736
STA496200 (9/98)
