1933 Act File No. 33-07404
1940 Act File No. 811-4760
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. ....................
Post-Effective Amendment No. 49 ..................... X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 49 ................................... X
BT INVESTMENT FUNDS
(Exact Name of Registrant as Specified in Charter)
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
Jay S. Neuman, Esquire Copies to: Burton M. Leibert, Esq.
Federated Investors Tower Willkie Farr & Gallagher
Pittsburgh, Pennsylvania 15222-3779 One Citicorp Center
(Name and Address of Agent for Service) 153 East 53rd Street
...... New York, New York 10022
It is proposed that this filing will become effective
(check appropriate box)
[x] immediately upon filing pursuant to paragraph (b) [ ] on ..... pursuant to
paragraph (b) [ ] 60 days after filing pursuant to paragraph (a)(1) [ ] on
(date) pursuant to paragraph (a)(1) [ ] 75 days after filing pursuant to
paragraph (a)(2) [ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Cash Management Portfolio, Treasury Money Portfolio, NY Tax Free Money
Portfolio, and Tax Free Money Portfolio have also executed this Amendment to the
Registration Statement.
<PAGE>
CROSS-REFERENCE SHEET
This Amendment to the Registration Statement of BT INVESTMENT FUNDS, which
is comprised of seventeen funds, relates only to (1) Cash Management Fund, (2)
Treasury Money Fund, (3) NY Tax Free Money Fund, and (4) Tax Free Money Fund,
and is comprised of the following:
PART A......INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page....................(1-4) Cover Page.
Item 2. Synopsis (1-4) Summary of the Funds' Expenses.
Item 3. Condensed Financial
Information (1-4) Financial Highlights;
(1-4) Performance Information
and Reports.
Item 4. General Description of
Registrant. (1-4) The Funds; (1-4) Who May Want
to Invest; (1-4) Investment
Objectives and Policies; (1-4) Risk
Factors: Matching the Funds to Your
Investment Needs.
Item 5. Management of the Fund (1-4) Management of the Trust
and Portfolios.
Item 6. Capital Stock and Other
Securities (1-4) Dividends, Distributions and
Taxes.
Item 7. Purchase of Securities Being
Offered (1-4) Net Asset Value; (1-4) Purchase
and Redemption of Shares.
Item 8. Redemption or Repurchase (1-4) Purchase and Redemption of
Shares.
Item 9. Legal Proceedings None.
<PAGE>
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page....................(1-4) Cover Page.
Item 11. Table of Contents (1-4) Table of Contents.
Item 12. General Information and
History (1-4) Organization of the Trust.
Item 13. Investment Objectives and
Policies (1-4) Investment Objectives and
Policies.
Item 14. Management of the Fund (1-4) Management of the Trust and
Portfolios.
Item 15. Control Persons and Principal
Holders of Securities (1-4) Management of the Trust and
Portfolios,(1-4) Trustee Compensation.
Item 16. Investment Advisory and Other
Services (1-4) Investment Adviser;
(1-4) Administrator.
Item 17. Brokerage Allocation (1-4) Portfolio Transactions and
Brokerage Commissions.
Item 18. Capital Stock and Other
Securities Not Applicable.
Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered (1-4) Purchase and Redemption
Information.
Item 20. Tax Status (1-4) Taxes.
Item 21. Underwriters Not applicable.
Item 22. Calculation of Performance
Data (1-4) Performance Information.
Item 23. Financial Statements..........(1-4) Incorporated by reference to
the Registrant's Annual Reports
dated December 31, 1997 (File Nos.
33-07404 and 811-4760).
- BT INVESTMENT FUNDS -
CASH MANAGEMENT FUND
TREASURY MONEY FUND
NY TAX FREE MONEY FUND
TAX FREE MONEY FUND
A family of money market funds each of which seeks high current income to the
extent consistent with liquidity and capital preservation.
PROSPECTUS
APRIL 30, 1998
BT Investment Funds (the "Trust") is an open-end management investment company
(mutual fund) which consists of a number of separate investment series. Each of
the Funds listed above (each, a "Fund" and collectively, the "Funds") is a
separate series of BT Investment Funds.
Please read this Prospectus carefully before investing and retain it for future
reference. It contains important information about the Funds that you should
know and can refer to in deciding whether a 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 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 Funds' 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 THE PORTFOLIOS. 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 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 PRINCIPAL AMOUNT INVESTED. EACH FUND INTENDS TO MAINTAIN A CONSTANT $1.00 PER
SHARE NET ASSET VALUE ("NAV"), ALTHOUGH THERE CAN BE NO ASSURANCE THAT IT WILL
BE ABLE TO DO SO. BECAUSE THE NY TAX FREE MONEY FUND MAY INVEST A SIGNIFICANT
PORTION OF ITS ASSETS IN SECURITIES OF A SINGLE ISSUER, AN INVESTMENT IN THE
FUND MAY INVOLVE ADDITIONAL RISKS COMPARED TO A FULLY DIVERSIFIED MONEY MARKET
FUND.
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.
5800 CORPORATE DRIVE - PITTSBURGH, PENNSYLVANIA - 15237-5829
<PAGE>
TABLE OF CONTENTS
PAGE
The
Funds
3
Who May Want to
Invest
3
Summary of the Funds' Expenses
4
Financial Highlights
5
Investment Objectives and Policies
9
Risk Factors: Matching the Funds to Your Investment Needs 17
Net Asset Value
18
Purchase and Redemption of Shares 18
Dividends, Distributions and Taxes 23
Performance Information and
Reports 24
Management of the Trust and
Portfolios 25
<PAGE>
THE FUNDS
Each Fund seeks a high level of current income consistent with liquidity
and the preservation of capital through investment in high quality money market
instruments. See "Risk Factors: Matching the Funds to Your Investment Needs"
herein.
WHO MAY WANT TO INVEST
Each Fund is designed for conservative investors looking for high current income
approximating money market rates while remaining conveniently liquid with a
stable NAV. While each Portfolio invests in high quality money market
securities, you should be aware that your investment is not without risk. All
money market instruments, including U.S. government securities and municipal
obligations, can change in value when interest rates or an issuer's
creditworthiness changes.
The Trust seeks to achieve the investment objectives of the Funds by investing
all the Assets of the Funds in the Portfolios. The Portfolios are: Cash
Management Portfolio, Treasury Money Portfolio, NY Tax Free Money Portfolio, and
Tax Free Money Portfolio, respectively.
Cash Management Portfolio invests in money market instruments, including bank
obligations, commercial paper, corporate debt obligations, U.S. government
obligations, and repurchase agreements.
Treasury Money Portfolio invests only in (a) direct obligations of the U.S.
Treasury, including Treasury bills, notes, and bonds, and (b) repurchase
agreements collateralized by such obligations.
Tax Free Money Portfolio invests primarily in obligations issued by states and
their authorities, agencies, instrumentalities and political subdivisions which
are exempt from federal income taxes ("Municipal Obligations").
NY Tax Free Money Portfolio invests primarily in Municipal Obligations of the
State of New York and its authorities, agencies, instrumentalities and political
subdivisions, as well as of certain other governmental issuers which are exempt
from New York State and City income taxes.
<PAGE>
SUMMARY OF THE FUNDS' EXPENSES
The following table provides (i) a summary of expenses relating to purchases
and sales of shares of Cash Management Fund, Treasury Money Fund, NY Tax Free
Money Fund and Tax Free Money Fund and the aggregate annual operating expenses
of each Fund and the expenses of the corresponding Portfolio (as defined below),
as a percentage of average net assets of that 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.
ANNUAL OPERATING EXPENSES
(as a percentage of the average daily net assets of the Funds)
Cash Treasury NY Tax Free Tax Free
Management Fund Money Fund Money Fund Money Fund
Investment advisory fee 0.14% 0.15% 0.14% 0.14%
12b-1 fees None None None None
Other expenses
(after reimbursements or waivers) 0.61% 0.60% 0.61% 0.61%
Total operating expenses
(after reimbursements or waivers) 0.75% 0.75% 0.75% 0.75%
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 $8 $24 $42 $93
The expense table and the example above show the costs and expenses that an
investor will bear directly or indirectly as a shareholder of each of the Funds.
The expense table and the example reflect voluntary undertakings by Bankers
Trust to waive or reimburse expenses such that the total operating expenses of
each Fund will not exceed 0.75% of each Fund's average net assets annually. In
the absence of these undertakings, for the fiscal year ended December 31, 1997,
the total operating expenses would be equal to the following approximate
percentages of the Funds' average daily net assets: 0.70% for Cash Management
Fund, 0.77% for Treasury Money Fund, 0.81% for NY Tax Free Money Fund and 0.82%
for Tax Free Money Fund. 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 Funds are 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 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 with respect to the expenses of the Funds and Portfolios
see "Management of the Trust and Portfolios" herein.
<PAGE>
FINANCIAL HIGHLIGHTS
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 the periods indicated and have been audited by Coopers & Lybrand
L.L.P., the Funds' independent accountants, whose reports thereon appear in the
Funds' Annual Reports which are incorporated by reference.
CASH MANAGEMENT
FOR THE YEARS ENDED DECEMBER 31,
1997 1996 1995 1994 1993
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of Year $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.05 0.05 0.05 0.04 0.03
Net Realized Gain (Loss) from
Investment Transactions (0.00)+ 0.00+ 0.00+ (0.01) (0.00)+
Total from Investment Operations 0.05 0.05 0.05 0.03 0.03
CONTRIBUTIONS OF CAPITAL - 0.00+ - 0.01 -
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (0.05) (0.05) (0.05) (0.04) (0.03)
Net Realized Gain from
Investment Transactions - - - - (0.00)+
TOTAL DISTRIBUTIONS (0.05) (0.05) (0.05) (0.04) (0.03)
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL INVESTMENT RETURN 4.98% 4.82%++ 5.35% 3.67%++ 2.54%
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Year (000s omitted) $138,423 $118,969 $135,998 $159,172
$76,578
Ratios to Average Net Assets:
Net Investment Income 4.88% 4.72% 5.22% 3.70% 2.51%
Expenses, including expenses of the
Cash Management Portfolio 0.75% 0.75% 0.74% 0.73% 0.75%
Decrease Reflected in Above Expense
Ration Due to Absorption of Expenses
by Bankers Trust 0.03% 0.03% 0.02% 0.08% 0.05%
CASH MANAGEMENT
FOR THE PERIOD FROM
OCTOBER 5, 1988
(COMMENCEMENT OF
FOR THE YEARS ENDED DECEMBER 31, OPERATIONS) TO
1992 1991 1990 1989 DECEMBER 31, 1988
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of Year $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.03 0.06 0.08 0.09 0.02
Net Realized Gain (Loss) from
Investment Transactions 0.00+ 0.00+ - - -
Total from Investment Operations 0.03 0.06 0.08 0.09 0.02
CONTRIBUTIONS OF CAPITAL - - - - -
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (0.03) (0.06) (0.08) (0.09) (0.02)
Net Realized Gain from
Investment Transactions (0.00)+ (0.00)+ - - -
TOTAL DISTRIBUTIONS (0.03) (0.06) (0.08) (0.09) (0.02)
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL INVESTMENT RETURN 3.05% 5.68% 7.85% 8.85% 8.13%*
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Year (000s omitted) $99,649 $127,164 $101,892
$90,947 $30,024
Ratios to Average Net Assets:
Net Investment Income 3.04% 5.53% 7.58% 8.49% 7.80%*
Expenses, including expenses of the
Cash Management Portfolio 0.75% 0.75% 0.75% 0.75%1 0.75%*
Decrease Reflected in Above Expense
Ration Due to Absorption of Expenses
by Bankers Trust 0.04% 0.03% 0.11%1 0.08% 0.36%1
*Annualized.
+Less than $0.01 per share.
++Increased by approximately 0.08% and 0.96% due to Contributions of Capital for
the years ended December 31, 1996 and 1994, respectively.
1For the periods, ratio did not include any Cash Management Portfolio expenses
or any voluntary absorption of the Portfolio's expenses by Bankers Trust, since
the Fund did not begin investing its Assets in the Cash Management Portfolio
until July 23, 1990.
Further information about the Fund's performance is contained in the Fund's
Annual Report, dated December 31, 19976, which can be obtained free of charge.
NY TAX FREE MONEY
FOR THE YEARS ENDED DECEMBER 31,
1997 1996 1995 1994 1993
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of Year $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.03 0.03 0.03 0.02 0.02
Net Realized Loss from
Investment Transactions (0.00)+ (0.00)+ (0.00)+ (0.00) (0.00)+
Total from Investment Operations 0.03 0.03 0.03 0.02 0.02
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (0.03) (0.03) (0.03) (0.02) (0.02)
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL INVESTMENT RETURN 2.86% 2.68% 3.12% 2.11% 1.68%
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Year (000s omitted) $85,364 $75,858 $70,765 $79,101
$103,938
Ratios to Average Net Assets:
Net Investment Income 2.83% 2.64% 3.07% 2.05% 1.66%
Expenses, including expenses of the
NY Tax Free Money Portfolio 0.75% 0.75% 0.75% 0.75% 0.75%
Decrease Reflected in Above Expense
Ration Due to Absorption of Expenses
by Bankers Trust 0.06% 0.09% 0.07% 0.08% 0.06%
NY TAX FREE MONEY
FOR THE PERIOD FROM
OCTOBER 5, 1988
(COMMENCEMENT OF
FOR THE YEARS ENDED DECEMBER 31, OPERATIONS) TO
1992 1991 1990 1989 DECEMBER 31, 1988
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of Year $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.02 0.04 0.05 0.05 0.01
Net Realized Loss from
Investment Transactions (0.00)+ (0.00)+ - - -
Total from Investment Operations 0.02 0.04 0.05 0.05 0.01
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (0.02) (0.04) (0.05) (0.05) (0.01)
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL INVESTMENT RETURN 2.38% 4.07% 5.17% 5.36% 4.73%*
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Year (000s omitted) $101,196 $98,905 $70,122 $63,315
$7,553
Ratios to Average Net Assets:
Net Investment Income 2.38% 4.00% 5.06% 5.21% 4.70%*
Expenses, including expenses of the
NY Tax Free Money Portfolio 0.75% 0.75% 0.75%1 0.66%1 0.75%1
Decrease Reflected in Above Expense
Ration Due to Absorption of Expenses
by Bankers Trust 0.05% 0.03% 0.3%1 0.30% 1.46%1
*Annualized.
+Less than $0.01 per share.
1For the periods, ratio did not include any NY Tax Free Money Portfolio expenses
or any voluntary absorption of the Portfolio's expenses by Bankers Trust, since
the Fund did not begin investing its Assets in the NY Tax Free Money Portfolio
until February 19, 1991.
Further information about the Fund's performance is contained in the Fund's
Annual Report dated December 31, 1997, which can be obtained free of charge.
TAX FREE MONEY
FOR THE YEARS ENDED DECEMBER 31,
1997 1996 1995 1994 1993
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of Year $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.03 0.03 0.03 0.02 0.02
Net Realized Gain (Loss) from
Investment Transactions (0.00)+ (0.00)+ (0.00)+ 0.00+ 0.00+
Total from Investment Operations 0.03 0.03 0.03 0.02 0.02
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (0.03) (0.03) (0.03) (0.02) (0.02)
Net Realized Gain from
Investment Transactions - - - (0.00)+ -
TOTAL DISTRIBUTIONS (0.03) (0.03) (0.03) (0.02) (0.02)
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL INVESTMENT RETURN 2.94% 2.84% 3.34% 2.27% 1.97%
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Year (000s omitted) $150,483 $117,972 $119,993
$110,043 $111,285
Ratios to Average Net Assets:
Net Investment Income 2.90% 2.80% 3.28% 2.21% 1.95%
Expenses, including expenses of the
Tax Free Money Portfolio 0.75% 0.75% 0.75% 0.75% 0.75%
Decrease Reflected in Above Expense
Ration Due to Absorption of Expenses
by Bankers Trust 0.05% 0.07% 0.07% 0.08% 0.05%
TAX FREE MONEY
FOR THE PERIOD FROM
JUNE 10, 1987
(COMMENCEMENT OF
FOR THE YEARS ENDED DECEMBER 31, OPERATIONS) TO
1992 1991 1990 1989 1988 DECEMBER 31, 1987
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of Year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.03 0.04 0.05 0.06 0.05 0.03
Net Realized Gain (Loss) from
Investment Transactions (0.00)+(0.00)+ - - - -
Total from Investment Operations 0.03 0.04 0.05 0.06 0.05 0.03
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (0.03) (0.04) (0.05) (0.06) (0.05) (0.03)
Net Realized Gain from
Investment Transactions - - - - - -
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL INVESTMENT RETURN 2.69% 4.29% 5.59% 5.98% 4.91% 4.60%*
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Year
(000s omitted) $51,473 $143,559 $142,199 $194,983 $40,194 $20,768
Ratios to Average Net Assets:
Net Investment Income 2.66% 4.20% 5.45% 5.77% 4.89% 4.54%*
Expenses, including expenses of the
Tax Free Money Portfolio 0.75% 0.75% 0.75%1 0.75%1 0.66%1 0.50%*1
Decrease Reflected in Above Expense
Ration Due to Absorption of Expenses
by Bankers Trust 0.05% 0.03% 0.04%1 0.17%1 0.75%1 1.50%*1
*Annualized.
+Less than $0.01 per share.
1For the periods, ratio did not include any Tax Free Money Portfolio expenses or
any voluntary absorption of the Portfolio's expenses by Bankers Trust, since the
Fund did not begin investing its Assets in the Tax Free Money Portfolio until
February 19, 1991.
Further information about the Fund's performance is contained in the Fund's
Annual Report dated December 31, 1997, which can be obtained free of charge.
TREASURY MONEY
FOR THE YEARS ENDED DECEMBER 31,
1997 1996 1995 1994 1993
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of Year $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.05 0.05 0.05 0.03 0.02
Net Realized Gain (Loss) from
Investment Transactions (0.00)+ 0.00+ 0.00+ (0.00)+ 0.00+
Total from Investment Operations 0.05 0.05 0.05 0.03 0.02
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (0.05) (0.05) (0.05) (0.03) (0.02)
Net Realized Gain from
Investment Transactions - - (0.00)+ - (0.00)+
TOTAL DISTRIBUTIONS (0.05) (0.05) (0.05) (0.03) (0.02)
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL INVESTMENT RETURN 4.86% 4.71% 5.19% 3.40% 2.43%
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Year (000s omitted) $268,274 $554,716 $615,084
$696,915 $643,145
Ratios to Average Net Assets:
Net Investment Income 4.74% 4.61% 5.06% 3.36% 2.39%
Expenses, including expenses of the
Treasury Money Portfolio 0.75% 0.75% 0.75% 0.75% 0.75%
Decrease Reflected in Above Expense
Ration Due to Absorption of Expenses
by Bankers Trust 0.02% 0.01% 0.02% 0.02% 0.01%
TREASURY MONEY
FOR THE PERIOD FROM
OCTOBER 5, 1988
(COMMENCEMENT OF
FOR THE YEARS ENDED DECEMBER 31, OPERATIONS) TO
1992 1991 1990 1989 DECEMBER 31, 1988
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of Year $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.03 0.05 0.07 0.08 0.01
Net Realized Gain (Loss) from
Investment Transactions 0.00+ 0.00+ 0.00+ - -
Total from Investment Operations 0.03 0.05 0.07 0.08 0.01
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (0.03) (0.05) (0.07) (0.08) (0.01)
Net Realized Gain from
Investment Transactions (0.00)+ (0.00)+ (0.00)+ - -
Total Distributions (0.03) (0.05) (0.07) (0.08) (0.01)
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL INVESTMENT RETURN 3.10% 5.30% 7.61% 8.55% 8.15%*
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Year (000s omitted)
$1,302,365 $539,260 $473,913 $337,391 $5,566
Ratios to Average Net Assets:
Net Investment Income 2.90% 5.11% 7.30% 8.06% 7.77%*
Expenses, including expenses of the
Treasury Money Portfolio 0.75% 0.75% 0.75% 0.75%1 0.75%*1
Decrease Reflected in Above Expense
Ration Due to Absorption of Expenses
by Bankers Trust 0.05% 0.00% 0.01%1 0.12%1 1.53%*1
*Annualized.
+Less than $0.01 per share.
1For the periods, ratio did not include any Treasury Money Portfolio expenses or
any voluntary absorption of the Portfolio's expenses by Bankers Trust, since the
Fund did not begin investing its Assets in the Treasury Money Portfolio until
July 23, 1990.
Further information about the Fund's performance is contained in the Fund's
Annual Report dated December 31, 1997, which can be obtained free of charge.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
Each Fund seeks a high level of current income consistent with liquidity and the
preservation of capital through investment in high quality money market
instruments. The Funds offer investors a convenient means of diversifying their
holdings of short-term securities while relieving those investors of the
administrative burdens typically associated with purchasing and holding these
instruments, such as coordinating maturities and reinvestments, providing for
safekeeping and maintaining detailed records. High quality short-term
instruments may result in a lower yield than instruments with a lower quality or
longer term.
The Trust seeks to achieve the investment objective of each Fund by investing
all the Assets of the Fund in the corresponding Portfolio, each of which has the
same investment objective as the corresponding Fund. There can be no assurances
that the investment objective of either the Funds or the Portfolios will be
achieved. The investment objective of each Fund and each Portfolio is a
fundamental policy and may not be changed without the approval of the Fund's
shareholders or the Portfolio's investors, respectively. See "Special
Information Concerning Master-Feeder Fund Structure" herein. Since the
investment characteristics of the Funds will correspond directly to those of the
Portfolios, the following is a discussion of the various investments and
investment policies of the Portfolios. Additional information about the
investment policies of the Portfolios appears in the SAI.
CASH MANAGEMENT PORTFOLIO
The Portfolio, in pursuing its investment objective, will comply with Rule
2a-7 ("Rule 2a-7") under the Investment Company Act of 1940 (the "1940 Act").
Thus, descriptions of investment techniques and portfolio instruments are
qualified by the provisions and limitations of Rule 2a-7.
The Portfolio will attempt to achieve its investment objectives by investing in
the following money market instruments:
OBLIGATIONS OF BANKS AND OTHER FINANCIAL INSTITUTIONS. The Portfolio may invest
in U.S. dollar-denominated fixed rate or variable rate obligations of U.S. or
foreign financial institutions, including banks, which are rated in the highest
short-term rating category by any two nationally recognized statistical rating
organizations ("NRSROs") (or one NRSRO if that NRSRO is the only such NRSRO
which rates such obligations) or, if not so rated, are believed by Bankers
Trust, acting under the supervision of the Board of Trustees of the Portfolio,
to be of comparable quality. Obligations of domestic and foreign financial
institutions in which the Portfolio may invest include, but are not limited to,
certificates of deposit, bankers' acceptances, bank time deposits, commercial
paper, and other U.S. dollar-denominated instruments issued or supported by the
credit of U.S. or foreign financial institutions, including banks.
If Bankers Trust, acting under the supervision of the Board of Trustees of the
Portfolio, deems the instruments to present minimal credit risk, the Portfolio
may invest in obligations of foreign banks or foreign branches and subsidiaries
of U.S. and foreign financial institutions, including banks. Investments in
these obligations may entail risks that are different from those of investments
in obligations of U.S. financial institutions, including banks, because of
differences in political, regulatory and economic systems and conditions. These
risks include future political and economic developments, currency blockage, the
possible imposition of withholding taxes on interest payments, differing reserve
requirements, reporting and recordkeeping requirements and accounting standards,
possible seizure or nationalization of deposits, difficulty or inability of
pursuing legal remedies and obtaining judgments in foreign courts, possible
establishment of exchange controls or the adoption of other foreign governmental
restrictions that might affect adversely the payment of principal and interest
on financial institution obligations. Under normal market conditions, the
Portfolio will invest more than 25% of its assets in the bank and other
financial institution obligations described above. The Portfolio's concentration
of its investments in the obligations of banks and other financial institutions
will cause the Portfolio to be subject to the risks peculiar to these industries
to a greater extent than if its investments were not so concentrated.
COMMERCIAL PAPER. The Portfolio may invest in fixed rate or variable rate
commercial paper, issued by U.S. or foreign entities. Commercial paper when
purchased by the Portfolio must be rated in the highest short-term rating
category by any two NRSROs (or one NRSRO if that NRSRO is the only such NRSRO
which rates such security) or, if not so rated, must be believed by Bankers
Trust, acting under the supervision of the Board of Trustees of the Portfolio,
to be of comparable quality. Any commercial paper issued by a foreign entity
corporation and purchased by the Portfolio must be U.S. dollar-denominated and
must not be subject to foreign withholding tax at the time of purchase.
Investing in foreign commercial paper generally involves risks similar to those
described above relating to obligations of foreign banks or foreign branches and
subsidiaries of U.S. and foreign banks.
VARIABLE RATE MASTER DEMAND NOTES. Variable rate master demand notes are
unsecured instruments that permit the indebtedness thereunder to vary and
provide for periodic adjustments in the interest rate. Because variable rate
master demand notes are direct lending arrangements between the Portfolio and
the issuer, they are not ordinarily traded. Although no active secondary market
may exist for these notes, the Portfolio will purchase only those notes under
which it may demand and receive payment of principal and accrued interest daily
or may resell the note to a third party. While the notes are not typically rated
by credit rating agencies, issuers of variable rate master demand notes must
satisfy Bankers Trust, acting under the supervision of the Board of Trustees of
the Portfolio, that the same criteria as set forth above for issuers of
commercial paper are met. In the event an issuer of a variable rate master
demand note defaulted on its payment obligation, the Portfolio might be unable
to dispose of the note because of the absence of a secondary market and could,
for this or other reasons, suffer a loss to the extent of the default. The face
maturities of variable rate notes subject to a demand feature may exceed 397
days in certain circumstances. (See "Quality and Maturity of the Fund's
Securities" herein.)
U.S. GOVERNMENT OBLIGATIONS. The Portfolio may invest in obligations issued
or guaranteed by the U.S. Treasury or by agencies or instrumentalities of the
U.S. government ("U.S. Government Obligations"). Obligations of certain agencies
and instrumentalities of the U.S. government, such as short-term obligations of
the Government National Mortgage Association, are supported by the "full faith
and credit" of the U.S. government; others, such as those of the Export-Import
Bank of the U.S., are supported by the right of the issuer to borrow from the
U.S. Treasury; others, such as those of the Federal National Mortgage
Association, are supported by the discretionary authority of the U.S. government
to purchase the agency's obligations; and still others, such as those of the
Student Loan Marketing Association, are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. government would
provide financial support to U.S. government-sponsored instrumentalities if it
is not obligated to do so by law.
OTHER DEBT OBLIGATIONS. The Portfolio may invest in deposits, bonds, notes and
debentures and other debt obligations that at the time of purchase have, or are
comparable in priority and security to other securities of such issuer which
have, outstanding short-term obligations meeting the above short-term rating
requirements, or if there are no such short-term ratings, are determined by
Bankers Trust, acting under the supervision of the Board of Trustees of the
Portfolio, to be of comparable quality and are rated in the top three highest
long-term rating categories by the NRSROs rating such security.
ASSET-BACKED SECURITIES. The Portfolio may also invest in securities generally
referred to as asset-backed securities, which directly or indirectly represent a
participation interest in, or are secured by and payable from, a stream of
payments generated by particular assets such as motor vehicle or credit card
receivables. Asset-backed securities provide periodic payments that generally
consist of both interest and/or principal payments. Consequently, the life of an
asset-backed security varies with the prepayment and loss experience of the
underlying assets.
<PAGE>
REPURCHASE AGREEMENTS. The Portfolio may engage in repurchase agreement
transactions with banks and governmental securities dealers approved by the
Portfolio's Board of Trustees. Under the terms of a typical repurchase
agreement, the Portfolio would acquire U.S. Government Obligations (or any other
securities permitted by Rule 2a-7) regardless of maturity any remaining maturity
for a relatively short period (usually not more than one week), subject to an
obligation of the seller to repurchase, and the Portfolio to resell, the
obligation at an agreed price and time, thereby determining the yield during the
Portfolio's holding period. This arrangement results in a fixed rate of return
that is not subject to market fluctuations during the Portfolio's holding
period. The value of the underlying securities will be at least equal at all
times to the total amount of the repurchase obligations, including interest. The
Portfolio bears a risk of loss in the event that the other party to a repurchase
agreement defaults on its obligations and the Portfolio is delayed in or
prevented from exercising its rights to dispose of the collateralized
securities, including the risk of a possible decline in the value of the
underlying securities during the period in which the Portfolio seeks to assert
these rights. Bankers Trust, acting under the supervision of the Board of
Trustees of the Portfolio, reviews the creditworthiness of those banks and
dealers with which the Portfolio enters into repurchase agreements and monitors
on an ongoing basis the value of the securities subject to repurchase agreements
to ensure that it is maintained at the required level.
REVERSE REPURCHASE AGREEMENTS. The Portfolio may enter into reverse repurchase
agreements. In a reverse repurchase agreement the Portfolio agrees to sell
portfolio securities to financial institutions such as banks and broker- dealers
and to repurchase them at a mutually agreed date and price. At the time the
Portfolio enters into a reverse repurchase agreement it will earmark cash, U.S.
Government Obligations or other high grade, liquid debt instruments having a
value equal to the repurchase price, including accrued interest. Reverse
repurchase agreements involve the risk that the market value of the securities
sold by the Portfolio may decline below the repurchase price of the securities.
Reverse repurchase agreements are considered to be borrowings by the Portfolio
for purposes of the limitations described in "Additional Investment Limitations"
below and in the SAI. The Portfolio may only enter into reverse repurchase
agreements for temporary purposes to satisfy redemptions and not for leverage.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. To secure prices deemed
advantageous at a particular time, the Portfolio may purchase securities on a
when-issued or delayed delivery basis, in which case delivery of the securities
occurs beyond the normal settlement period; payment for or delivery of the
securities would be made prior to the reciprocal delivery or payment by the
other party to the transaction. The Portfolio will enter into when-issued or
delayed delivery transactions for the purpose of acquiring securities and not
for the purpose of leverage. When-issued securities purchased by the Portfolio
may include securities purchased on a "when, as and if issued" basis under which
the issuance of the securities depends on the occurrence of a subsequent event.
Securities purchased on a when-issued or delayed delivery basis may expose the
Portfolio to risk because the securities may experience fluctuations in value
prior to their actual delivery. The Portfolio does not accrue income with
respect to a when-issued or delayed delivery security prior to its stated
delivery date. Purchasing securities on a when-issued or delayed-delivery basis
can involve the additional risk that the yield available in the market when the
delivery takes place may be higher than that obtained in the transaction itself.
Upon purchasing a security on a when-issued or delayed delivery basis, the
Portfolio will earmark cash, U.S. Government Obligations or other liquid debt
instruments in an amount at least equal to the when-issued or delayed delivery
commitment.
INVESTMENT IN OTHER INVESTMENT COMPANIES. In accordance with applicable law, the
Portfolio may invest its assets in other money market funds with comparable
investment objectives. In general, the Portfolio may not (1) purchase more than
3% of any other money market fund's voting stock; (2) invest more than 5% of its
assets in any single money market fund; and (3) invest more that 10% of its
assets in other money market funds.
ILLIQUID SECURITIES. The Portfolio may not invest more than 10% of its net
assets in securities which are illiquid or otherwise not readily marketable
(such securities may include securities which are subject to legal or
contractual restrictions on resale and repurchase agreements with maturities
over seven days). If a security becomes illiquid after purchase by the
Portfolio, the Portfolio will normally sell the security as soon as is
reasonably practicable unless if to do so would not be in the best interests of
shareholders.
<PAGE>
CREDIT ENHANCEMENT. Certain of the Portfolio's acceptable investments may be
credit-enhanced by a guaranty, letter of credit, or insurance from a third
party. Any bankruptcy, receivership, default, or change in the credit quality of
the third party providing the credit enhancement could adversely affect the
quality and marketability of the underlying security and could cause losses to
the Portfolio and effect the Portfolio's share price. Subject to the
diversification limits contained in Rule 2a-7. the Portfolio may have more than
25% of its total assets invested in securities issued by or credit-enhanced by
banks or other financial institutions.
SECURITIES LENDING. The Portfolio is permitted to lend up to 33 1/3% of the
total value of its securities. These loans must be secured continuously by cash
or securities issued or guaranteed by the United States government, its agencies
or instrumentalities 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 may 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 organizations, the Portfolio is subject to risks
which, like those associated with other extensions of credit, include delays in
receiving additional collateral, in recovery should the borrower fail
financially and possible loss of the collateral. Upon receipt of appropriate
regulatory approval, cash collateral may be invested in a money market fund
managed by Bankers Trust (or its affiliates) and Bankers Trust may serve as the
Portfolio's lending agent and may share in revenue received from securities
lending transactions as compensation for this service.
TREASURY MONEY PORTFOLIO
The Treasury Money Portfolio will attempt to achieve its investment objectives
by investing only in (a) direct obligations of the U.S. Treasury, including
Treasury bills, notes and bonds, and (b) repurchase agreements collateralized by
such obligations. Information about the repurchase agreements in which the
Portfolio may invest appears under the caption "Cash Management Portfolio --
Repurchase Agreements." While obligations of the U.S. Treasury are guaranteed by
the U.S. government as to the timely payment of principal and interest, the
market value of such obligations is not guaranteed and may rise and fall in
response to changes in interest rates. The shares of the Treasury Money Fund and
the interests in the Treasury Money Portfolio are not guaranteed or insured by
the U.S. government.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. To secure prices deemed
advantageous at a particular time, the Portfolio may purchase securities on a
when-issued or delayed delivery basis, in which case delivery of the securities
occurs beyond the normal settlement period; payment for or delivery of the
securities would be made prior to the reciprocal delivery or payment by the
other party to the transaction. The Portfolio will enter into when-issued or
delayed delivery transactions for the purpose of acquiring securities and not
for the purpose of leverage. When-issued securities purchased by the Portfolio
may include securities purchased on a "when, as and if issued" basis under which
the issuance of the securities depends on the occurrence of a subsequent event.
Securities purchased on a when-issued or delayed delivery basis may expose the
Portfolio to risk because the securities may experience fluctuations in value
prior to their actual delivery. The Portfolio does not accrue income with
respect to a when-issued or delayed delivery security prior to its stated
delivery date. Purchasing securities on a when-issued or delayed-delivery basis
can involve the additional risk that the yield available in the market when the
delivery takes place may be higher than that obtained in the transaction itself.
Upon purchasing a security on a when-issued or delayed delivery basis, the
Portfolio will earmark cash, U.S. Government Obligations or other liquid debt
instruments in an amount at least equal to the when-issued or delayed delivery
commitment.
NY TAX FREE MONEY PORTFOLIO AND TAX FREE MONEY PORTFOLIO
NY TAX FREE MONEY PORTFOLIO. The NY Tax Free Money Portfolio will attempt
to achieve its investment objectives by investing, under normal market
conditions, no less than 80% of its net assets in Municipal Obligations and no
less than 65% of its net assets in Municipal Obligations of the State of New
York and its authorities, agencies, instrumentalities and political
subdivisions, as well as of certain other governmental issuers, such as Puerto
Rico, which are exempt from New York State and City income taxes ("New York
Municipal Obligations"). While the Portfolio is authorized to invest up to 20%
of its net assets in taxable securities, it is anticipated that ordinarily the
Portfolio's assets will be substantially invested in New York Municipal
Obligations. Dividends paid by the Portfolio that are derived from interest
attributable to New York Municipal Obligations will be excluded from gross
income for federal income tax purposes and exempt from New York State and New
York City personal income taxes. Dividends derived from interest on Municipal
Obligations other than New York Municipal Obligations will be exempt from
Federal income tax, but will be subject to New York State and New York City
income taxes.
The NY Tax Free Money Portfolio is classified as a "non-diversified"
investment company under the 1940 Act, which means that the Portfolio is not
limited in the proportion of its assets that it may invest in obligations of a
single issuer. However, Rule 2a-7 under the 1940 Act does contain, in addition
to other requirements for money market funds, certain diversification
requirements with which the Portfolio intends to comply. Additionally, the
Portfolio intends to conduct its operations so that each of its investors may
qualify as a "regulated investment company" for purposes of the Internal Revenue
Code of 1986, as amended (the "Code"), which will relieve each investor of any
liability for federal income tax to the extent its earnings are distributed to
its shareholders. To permit such qualification, among other requirements, the NY
Tax Free Money Portfolio will limit its investments so that, at the close of
each quarter of the taxable year: (i) not more than 25% of the market value of
the Portfolio's total assets will be invested in the securities of a single
issuer; and (ii) with respect to 50% of the market value of its total assets,
not more than 5% of the market value of its total assets will be invested in the
securities of a single issuer and the Portfolio will not own more than 10% of
the outstanding voting securities of a single issuer. The NY Tax Free Money
Portfolio's assumption of large positions in the obligations of a small number
of issuers may cause the Portfolio's yield to fluctuate to a greater extent than
that of a diversified company, such as the Tax Free Money Portfolio, as a result
of changes in the financial condition or in the market's assessment of the
issuers. In addition, the NY Tax Free Money Portfolio's concentration in New
York Municipal Obligations may entail a greater level of risk than other types
of money market funds.
The Tax Free Money Portfolio and the NY Tax Free Money Portfolio may invest in
securities of other investment companies that invest in high quality, short-term
securities in which the Portfolio could itself invest and that determine their
NAV per share based on the amortized cost method, provided that the investments
are within the limits prescribed by the 1940 Act. Under the 1940 Act, the
Portfolio may not invest in securities of other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization, if: (i)
more than 10% of the market value of the Portfolio's total assets would be
invested in securities of other investment companies; (ii) more than 5% of the
market value of the Portfolio's total assets would be invested in the securities
of any one investment company; or (iii) the Portfolio would own more than 3% of
any other investment company's voting securities. The Portfolio will not invest
in any investment company which is, or the investment adviser of which is, an
"affiliated person" under the 1940 Act of the Portfolio or the Trust.
TAX FREE MONEY PORTFOLIO. The Tax Free Money Portfolio will attempt to achieve
its investment objectives by investing, under normal market conditions, no less
than 80% of its net assets in Municipal Obligations. While the Tax Free Money
Portfolio is authorized to invest up to 20% of its net assets in taxable
securities, it is anticipated that ordinarily the Portfolio's assets will be
substantially invested in Municipal Obligations. Although not a policy of the
Tax Free Money Portfolio, the Portfolio generally intends to invest no more than
25% of its assets in Municipal Obligations of issuers in any one state,
territory or possession of the United States.
SPECIAL CONSIDERATIONS AFFECTING THE NY TAX FREE MONEY PORTFOLIO AND THE FUND
The Portfolio's ability to achieve its investment objective is dependent upon
the ability of the issuers of New York Municipal Obligations to meet their
continuing obligations for the payment of principal and interest. New York State
and New York City face long-term economic problems that could affect their
ability and that of other issuers of New York Municipal Obligations to meet
their financial obligations.
Other considerations affecting the Portfolio's investments in New York
Municipal Obligations are summarized in the SAI.
MUNICIPAL OBLIGATIONS. The two principal classifications of Municipal
Obligations consist of "notes" and "bonds." Municipal Obligations are further
classified as "general obligation" and "revenue" issues and the securities held
by the Portfolios may include "moral obligation" issues, which are normally
issued by special purpose authorities. General obligation bonds are secured by
the issuer's pledge of its full faith, credit and taxing power for the payment
of principal and interest. Revenue bonds are payable only from the revenues
derived from a particular facility or class of facilities or in some cases, from
the proceeds of a special excise tax or other specific revenue source, such as
the user of the facility being financed. The Portfolios may invest in "private
activity" bonds, described below, which as a general rule will be revenue bonds
and, accordingly, are not payable from the unrestricted revenues of the issuer.
Among other instruments, the Portfolios may purchase tax-exempt commercial paper
and short-term municipal notes, such as tax anticipation notes, bond
anticipation notes, revenue anticipation notes, construction loan notes and
other forms of short-term loans. These notes are issued with a short-term
maturity in anticipation of the receipt of tax funds, the proceeds of bond
placements or other revenues. The NY Tax Free Money Portfolio and the Tax Free
Money Portfolio may also acquire participations in privately negotiated loans to
municipal borrowers. The types, forms and offerings of Municipal Obligations are
continually changing, and the Portfolios could invest in instruments that may be
developed and offered in the market place in the future, provided they meet the
Portfolios' investment quality and federal income tax criteria. These new
instruments will be described in the Funds' then current prospectus prior to an
investment by a Portfolio. A more detailed discussion of the categories of
Municipal Obligations is contained in the SAI.
Interest income on certain types of private activity bonds issued after August
7, 1986 to finance nongovernmental activities is a specific tax preference item
for purposes of the federal individual and corporate alternative minimum taxes.
Individual and corporate shareholders of the Funds may be subject to a federal
alternative minimum tax to the extent the Portfolios' income is derived from
interest on these bonds. Accordingly, these private activity bonds are not
included in the term "Municipal Obligations" for purposes of determining
compliance with the 80% test described under "Additional Investment Limitations"
below. However, while up to 20% of the Portfolios' net assets may be invested in
these private activity bonds, it is anticipated that they will ordinarily not
constitute a significant portion of the securities held by each Portfolio.
Dividends paid by the Funds which are derived from interest income on Municipal
Obligations are a "current earnings" adjustment item for purposes of the Federal
corporate alternative minimum tax.
Certain Municipal Obligations bear interest at rates that are not fixed, but
that vary with changes in specified market rates or indices. Certain of these
obligations may carry a demand feature that permits the Portfolios to tender
them back to the issuer or remarketing agent at par value prior to maturity. The
Portfolios may invest in floating rate and variable rate obligations carrying
stated maturities in excess of one year at the date of purchase by the
Portfolios if the obligations carry demand features that comply with conditions
established by the SEC or its staff. Each Portfolio will limit its purchases of
floating rate and variable rate Municipal Obligations to those meeting the
quality standards set forth below. Frequently these obligations are secured by
letters of credit or other credit support arrangements provided by banks. The
quality of the underlying credit or of the bank, as the case may be, must also
be equivalent to the quality standards set forth below, as determined by Bankers
Trust under the supervision of the Boards of Trustees of the Portfolios.
The Portfolios may invest in the following Municipal Obligations: (i) notes
rated MIG-1 or VMIG-1 by Moody's Investors Service, Inc. ("Moody's) or SP-1 or
higher by Standard & Poor's ("S&P") (or an equivalent rating by another NRSRO or
which are considered to be of comparable quality by Bankers Trust pursuant to
guidelines established and maintained in good faith by the Board of Trustees of
the respective Portfolio; (ii) other Municipal Obligations issued by issuers
with municipal notes outstanding that are comparable in priority and security to
the Municipal Obligations to be purchased where such comparable municipal notes
have received short-term ratings meeting the rating criteria described above, or
(iii) where there are no outstanding rated municipal notes of the issuer which
are comparable in priority and security to the Municipal Obligations to be
purchased, the Portfolios may purchase such Municipal Obligations if (a) they
are unrated and, at the time of issuance, had a maturity of 397 days or less, or
(b) such Municipal Obligations have not received short-term ratings but have
received long-term ratings from NRSRO's, and all of such long-term ratings are
in the three highest long-term rating categories. The NY Tax Free Money
Portfolio may also invest in municipal notes rated MIG-2 or VMIG-2 by Moody's or
SP-2 by S&P when Bankers Trust deems it advisable, but such holdings will be
limited by Rule 2a-7. A description of the ratings set for above is provided in
the Appendix to the SAI.
The Portfolios may invest in Municipal Obligations the income on which may be
derived from economically related projects or projects of a similar type. To the
extent that a Portfolio's assets are concentrated in Municipal Obligations
payable from revenues on economically related projects and facilities, or issued
by issuers in particular states, the Portfolio will be subject to the particular
risks presented by those projects, facilities or states to a greater extent than
it would be if the Portfolio's assets were not so concentrated. In addition, the
Portfolios may invest in private activity bonds the interest on which is not
subject to an alternative minimum tax, as described above, and may invest
without limitation in Municipal Obligations backed by letters of credit or
guarantees issued by banks or other financial institutions.
TAXABLE INVESTMENTS. When, in the opinion of Bankers Trust, adverse market
conditions exist for Municipal Obligations or New York Municipal Obligations and
a "defensive" investment posture is warranted, each Portfolio may temporarily
invest more than 20% of its total assets in "Taxable Investments," which are
money market instruments having maturity and quality characteristics comparable
to those discussed above for Municipal Obligations, but that produce interest
that is not exempt from federal income taxation; furthermore, the NY Tax Free
Money Portfolio may temporarily invest more than 35% of its total assets in
instruments that produce income excluded from gross income for federal income
tax purposes but subject to New York State and New York City personal income
taxation. Periods when a defensive posture is warranted include those periods
when the NY Tax Free Money Portfolio's monies available for investment exceed
the New York Municipal Obligations available for purchase that meet the
Portfolio's rating, maturity and other investment criteria. Each Portfolio may
invest in Taxable Investments pending the investment of proceeds from sales of
shares or portfolio securities into Municipal Obligations or in anticipation of
redemptions. Each Portfolio also has the right to hold cash reserves as it deems
necessary for temporary defensive purposes. While each Portfolio is authorized
to invest up to 20% of its net assets under normal market conditions in Taxable
Investments, it is anticipated that they will not ordinarily constitute a
significant portion of either Portfolio's investments.
Taxable Investments will be limited to: (i) U.S. government securities; (ii)
commercial paper and certificates of deposit, bankers' acceptances and short-
term obligations of foreign and domestic banks with total assets of $1 billion
or more, in each case rated Prime-1 by Moody's or A-1 or higher by S&P, or, if
not rated, believed to be of equivalent investment quality by Bankers Trust
acting under the supervision of the Board of Trustees; (iii) short-term
corporate debt obligations of issuers which have commercial paper outstanding
meeting the rating requirements described herein or, if such commercial paper is
unrated, or if no such commercial paper is outstanding, the issuers of which
have outstanding debt rated at least Aa by Moody's or AA by S&P; and (iv)
repurchase agreements with an underlying security that would otherwise qualify
for investment by the Portfolio. Taxable Investments are described in more
detail under the caption "Cash Management Portfolio" herein.
ADDITIONAL INVESTMENT TECHNIQUES
The Cash Management Portfolio and the Treasury Money Portfolio may each enter
into reverse repurchase agreements and lend securities held by it to brokers,
dealers and other financial organizations. Loans of securities by a Portfolio,
if and when made, may not exceed 20% of the Portfolio's total assets and will be
collateralized by cash, letters of credit or U.S. Government Obligations that
are maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. The Tax Free Money Portfolio and the NY
Tax Free Money Portfolio may also enter into reverse repurchase agreements and
purchase participation interests and standby commitments. See "Investment
Objectives and Policies" in the SAI for a more detailed description of reverse
repurchase agreements, participation interests and standby commitments.
QUALITY AND MATURITY OF THE PORTFOLIO'S SECURITIES
Each Portfolio will maintain a dollar-weighted average maturity of 90 days or
less. All securities in which each Portfolio invests will have, or be deemed to
have, remaining maturities of 397 days or less on the date of their purchase,
will be denominated in U.S. dollars and will have been granted the required
ratings established herein by two NRSROs (or one such NRSRO if that NRSRO is the
only such NRSRO which rates the security), or if unrated, are believed by
Bankers Trust, under the supervision of the respective Portfolio's Board of
Trustees, to be of comparable quality. Currently, there are five rating agencies
which have been designated by the SEC as an NRSRO. These organizations and their
highest short-term rating category (which may also be modified by a "+") are:
Duff and Phelps Credit Rating Co., D-1; Fitch IBCA, Inc. F1; Moody's Investors
Service Inc., Prime-1; Standard & Poor's, A-1; and Thomson BankWatch, Inc., T-1.
A description of such ratings is provided in the Appendix to the SAI. Bankers
Trust, acting under the supervision of and procedures adopted by the Board of
Trustees of each Portfolio, will also determine that all securities purchased by
a Portfolio present minimal credit risks. Bankers Trust will cause a Portfolio
to dispose of any security as soon as practicable if the security is no longer
of the requisite quality, unless such action would not be in the best interest
of that Portfolio. High-quality, short-term instruments may result in a lower
yield than instruments with a lower quality or longer term.
<PAGE>
ADDITIONAL INVESTMENT LIMITATIONS
Each Fund's and Portfolio's investment objectives, together with the
investment restrictions described in this paragraph and the SAI, except as
noted, are "fundamental policies," which means that they may not be changed
without the approval of the holders of each Fund's and each Portfolio's
outstanding voting securities. The Funds have the same investment restrictions
as the Portfolios, except that each Fund may invest all of its Assets in another
open-end investment company with the same investment objectives, such as the
corresponding Portfolio. The Tax Free Money Portfolio and the NY Tax Free Money
Portfolio will invest at least 80% of their respective net assets in tax-exempt
Municipal Obligations under normal market conditions. Each Portfolio may not
invest more than 25% of its total assets in the securities of issuers in any
single industry, (excluding U.S. Government Obligations and repurchase
agreements collateralized by U.S. Government Obligations), except that, under
normal market conditions, more than 25% of the total assets of the Cash
Management Portfolio will be invested in obligations of banks and other
financial institutions. As an operating policy, the Cash Management Portfolio
and the Treasury Money Portfolio may not invest more than 5% of their respective
total assets in the obligations of any one issuer except: (1) as may be
permitted by Rule 2a-7; and (2) for U.S. Government Obligations and repurchase
agreements collaterlized fully thereby, which may be purchased without
limitation. The same is true with respect to 75% of the assets of the Tax Free
Money Portfolio. This restriction, however, shall not preclude the purchase by
the Tax Free Money Portfolio of issues backed by letters of credit or guarantees
of banks or other financial institutions, even though any such bank or financial
institution provides a letter of credit or guarantee with respect to securities
that in the aggregate represent more than 5%, but not more than 10%, of the
total assets of the Portfolio, where the Portfolio considers the issuer of the
security (and not the letter of credit or guarantee) the principal obligor of
the obligation. Each Portfolio is also authorized to borrow for temporary
purposes to meet redemptions, including entering into reverse repurchase
transactions, in an amount up to 5% of its total assets for temporary purposes,
but not for leverage, and to pledge its assets to the same extent in connection
with these borrowings. At the time of an investment, a Portfolio's aggregate
holdings of repurchase agreements having remaining maturities of more than seven
calendar days (or which may not be terminated within seven calendar days upon
notice by the Portfolio), time deposits having a remaining maturity of more than
seven calendar days, and other illiquid securities (including floating and
variable rate Municipal Obligations having a demand feature of more than seven
calendar days), restricted securities and securities lacking readily available
market quotations will not exceed 10% of the Portfolio's net assets. If changes
in the liquidity of certain securities cause a Portfolio to exceed such 10%
limit, that Portfolio will take steps to bring the aggregate amount of its
illiquid securities back below 10% of its net assets as soon as practicable,
unless such action would not be in the best interest of the Portfolio. The
Funds' and the Portfolios' limitations on investment in a single industry and on
borrowing may not be changed without the approval of the shareholders of a Fund
or the investors in a Portfolio, as the case may be. All other investment
policies and limitations described in this prospectus may be changed by a vote
of the Trustees of the Trust or Portfolio Trust, as applicable.
The SAI contains further information on the Funds' and the Portfolios'
investment restrictions.
RISK FACTORS: MATCHING THE FUNDS TO YOUR INVESTMENT NEEDS
Each Fund is designed for conservative investors looking for high current
income approximating taxable or tax free, as the case may be, money market rates
while remaining conveniently liquid with a stable share price. Each Portfolio
adheres to the following practices which enable the corresponding Fund to
attempt to maintain a $1.00 share price: limiting average maturity of the
securities held by the Portfolio to 90 days or less; buying securities which
mature, or are deemed to mature in 397 days or less; and buying only high
quality securities with minimal credit risks. The Fund cannot guarantee a $1.00
share price, but these practices help to minimize any price fluctuations that
might result from rising or declining interest rates. While each Portfolio
invests in high quality money market securities, investors should be aware that
an investment in a Fund is not without risk. All money market instruments,
including U.S. Government Obligations, can change in value when interest rates
or an issuer's creditworthiness changes.
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 a
corresponding Portfolio, a separate registered investment company with the same
investment objectives as the Fund. Therefore, an investor's interest in a
Portfolio's securities is indirect. In addition to selling a beneficial interest
to each Fund, each Portfolio may sell beneficial interests to other mutual funds
or institutional investors. Such investors will invest in that 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
respective Fund due to variations in sales commissions and other operating
expenses. Therefore, investors in each of the Funds should be aware that these
differences may result in differences in returns experienced by investors in the
different funds that invest in each of the Portfolios. Such differences in
returns are also present in other mutual fund structures. Information concerning
other holders of interests in any of the Portfolios 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 a Portfolio may be materially affected by the actions
of larger funds investing in the same 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 a Portfolio, the Trust will hold a meeting of
shareholders of the respective 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 a 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.
Certain changes in a Portfolio's investment objectives, policies or restrictions
may require the respective 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, a 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 a
Fund. Notwithstanding the above, there are other means for meeting redemption
requests, such as borrowing.
Each Fund may withdraw its investment from a corresponding 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 herein with respect to the Portfolio.
Each Fund's investment objective is a fundamental policy and may not be changed
without the 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. The
investment objective of each Portfolio is a fundamental policy. Shareholders of
the Fund will receive 30 days prior written notice with respect to any change in
the investment objective of the Fund or its corresponding Portfolio. See
"Investment Objectives and Policies" herein and in the SAI for a description of
the fundamental policies of each Portfolio that cannot be changed without
approval by the holders of "a majority of the outstanding voting securities" (as
defined in the 1940 Act) of that Portfolio.
For descriptions of the investment objectives, policies, and restrictions of the
Portfolios, see "Investment Objectives and Policies" herein and in the SAI. For
descriptions of the management and expenses of the Portfolios, see "Management
of the Trust and Portfolios" herein and in the SAI.
NET ASSET VALUE
The NAV per share of each Fund is calculated on each day on which the Fund is
open (each such day being a "Valuation Day"). The Funds are currently open on
each day, Monday through Friday, except (a) January 1st, Martin Luther King,
Jr.'s Birthday (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), Columbus Day (the second Monday in
October), Veteran's Day (November 11th), 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 twice on each Valuation Day as of
12:00 noon, Eastern time, and as of the close of regular trading on the New York
Stock Exchange Inc. (the "NYSE"), 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 (each
a "Valuation Time"). The NAV per share of each Fund is computed by dividing the
value of the Fund's assets (i.e., the value of its investment in the
corresponding Portfolio and other assets), less all liabilities, by the total
number of its shares outstanding. Each Fund's NAV per share will normally be
$1.00.
The assets of each Portfolio are valued by using the amortized cost method of
valuation. This method involves valuing each security held by a Portfolio at its
cost at the time of its purchase and thereafter assuming a constant amortization
to maturity of any discount or premium. Accordingly, immaterial fluctuations in
the market value of the securities held by a Portfolio will not be reflected in
the corresponding Fund's NAV. The Board of Trustees of each Portfolio will
monitor the valuation of assets by this method and will make such changes as it
deems necessary to assure that assets are valued fairly and in good faith by
that Portfolio.
PURCHASE AND REDEMPTION OF SHARES
HOW TO BUY SHARES
The Trust accepts purchase orders for shares of the Funds at the NAV per share
next determined after the order is received on each Valuation Day. See "Net
Asset Value" herein. Shares of the Funds may be available through Investment
Professionals, such as broker/dealers and investment advisers (including Service
Agents).
Purchase orders for shares of the Funds (including those purchased through a
Service Agent) that are transmitted to the Trust's Transfer Agent (the "Transfer
Agent"), prior to a Valuation Time on any Valuation Day will be effective at
that day's applicable Valuation Time. If the purchase order is received by the
Service Agent and transmitted to the Transfer Agent after 12:00 noon (Eastern
time) and prior to the close of the NYSE, the shareholder will receive the
dividend declared on the following day even if Bankers Trust, as the Trust's
custodian (the "Custodian"), receives federal funds on that day. If the purchase
order is received prior to 12:00 noon, the shareholder will receive that
Valuation Day's dividend. The Trust and Transfer Agent reserve the right to
reject any purchase order.
Another mutual fund investing in a Portfolio may accept purchase orders up until
a time later than 12:00 noon, Eastern time. Such orders, when transmitted to and
executed by a Portfolio, may have an impact on the corresponding Fund's
performance.
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 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.
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 the applicable Valuation 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.
Certificates for shares will not be issued. Each shareholder's account will be
maintained by a Service Agent or Transfer Agent.
<PAGE>
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:
o Mail an account application with a check,
o Wire money into your account,
o Open an account by exchanging from another fund in the BT Family of Funds, or
o Contact your Service Agent or Investment Professional.
If you are investing through a tax-sheltered retirement plan, such as an
individual retirement account ("IRA"), for the first time, you will need a
special application. Contact your Investment Professional for more information
and a retirement account application.
ADDITIONAL INFORMATION ABOUT BUYING SHARES
<TABLE>
<CAPTION>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
<S> <C> <C>
BY WIRE Call the BT Service Center at Call your Investment Professional or wire
1-800-730-1313 to receive additional investment to:
wire 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
Cash Management Fund - 471
Treasury Money Fund - 472
NY Tax Free Money Fund - 470
Tax Free Money Fund - 469
<PAGE>
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, or call Investment Professional, or call
BT's Service Center at 1-800-730-1313. BT's Service
Center at 1-800-730-1313.
If you are an existing shareholder, If you are an existing shareholder, you may
you may exchange from another BT exchange from another BT account
account with the same registration, with the same registration, including,
including, name, address, and taxpayer name, address, and taxpayer ID number.
ID number.
BY MAIL Complete and sign the account appli- Make your check payable to the complete
cation. Make your check payable to name of the Fund of your choice. Indicate
the complete name of the Fund of your Fund account number on your check
your choice. Mail to the appropriate and mail to the address printed on your
address indicated on the application. account statement.
</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 Funds received by the Service Agent and
transmitted to the Transfer Agent prior to 12:00 noon (Eastern time) on each
Valuation Day will be redeemed at the NAV per share as of 12:00 noon (Eastern
time) and the redemption proceeds normally will be delivered to the
shareholder's account with the Service Agent on that day; no dividend will be
paid on the day of redemption. Redemption requests received by the Service Agent
and transmitted to the Transfer Agent after 12:00 noon (Eastern time) on each
Valuation Day and prior to the close of the NYSE will be redeemed at the NAV per
share as of the close of the NYSE and the redemption proceeds normally will be
delivered to the shareholder's account with the Service Agent the next day, but
in any event within seven calendar days following receipt of the request. Shares
redeemed in this manner will receive the dividend declared on the day of the
redemption.
Another mutual fund investing in a Portfolio may accept redemption orders up
until a time later than 12:00 noon, Eastern time. Such orders, when transmitted
to, and executed by, a Portfolio may have an impact on the corresponding Fund's
performance.
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.
<PAGE>
CHECKWRITING. Shareholders of the Funds may redeem shares by check. Checks may
not be used to close an account. Shareholders will continue to earn dividends on
shares to be redeemed until the check clears. Checks will be returned to
shareholders at the end of the month. There is no charge for redemption of
shares by check. Additional information regarding the checkwriting privilege may
be obtained from a Service Agent.
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:
o Your account registration has changed within the last 30 days,
o The check is being mailed to a different address than the one on your
account (record address),
o The check is being made payable to someone other than the account owner,
o The redemption proceeds are being transferred to a BT account with a
different registration, or
o 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 reserves the right to close investor accounts via
30 day notice in writing if the Fund account balance falls below the Fund
minimums.
<PAGE>
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:
o Confirmation statements (after every transaction that affects your account
balance, including distributions or your account registration)
o Account statements (monthly)
o 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 Funds reserve 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:
o Call your Service Agent for information and a prospectus. Read the prospectus
for relevant information.
o Complete and sign an application, taking care to register your new account in
the same name, address and taxpayer identification number as your existing
account(s).
o 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.
SYSTEMATIC PROGRAMS
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO BT INVESTMENT FUNDS
MINIMUM MINIMUM FREQUENCY SETTING UP OR CHANGING
INITIAL SUBSEQUENT
$1,000 $100 Monthly, bimonthly, For a new account, complete the
appropriate section
quarterly or semi- on 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-annually or To establish, call your Investment Professional or call
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.
<PAGE>
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.
o 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.
o ROLLOVER IRAS: tax-deferred retirement accounts that retain the special tax
advantages of lump sum distributions from qualified retirement plans and
transferred IRA accounts.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Portfolio determines its net income and realized capital gains, if any, on
each Valuation Day and allocates all such income and gain pro rata among the
corresponding Fund and the other investors in that Portfolio at the time of such
determination. Each Fund declares dividends from its net income daily and pays
the dividends monthly. Each Fund reserves the right to include realized short-
term gains, if any, in such daily dividends. Distributions of each Fund's pro
rata share of the corresponding Portfolio's net realized long-term capital
gains, if any, and any undistributed net realized short-term capital gains are
normally declared and paid annually at the end of the fiscal year in which they
were earned to the extent they are not offset by any capital loss carryforwards.
Unless a shareholder instructs the Trust to pay dividends or capital gains
distributions in cash, dividends and distributions will automatically be
reinvested at NAV in additional shares of the Fund that paid the dividend or
distribution.
The Funds intend to qualify as regulated investment companies, as defined in the
Code. Provided a Fund meets the requirements imposed by the Code, that Fund will
not pay any federal income or excise taxes. Each Portfolio will also not be
required to pay any federal income or excise taxes. Dividends paid by a Fund
from its taxable net investment income and distributions by a Fund of its net
realized short-term capital gains (whether from tax-exempt or taxable
obligations) are taxable to shareholders as ordinary income, whether received in
cash or reinvested in additional shares of that Fund. Exempt-interest dividends
may be excluded by shareholders of a Fund from their gross income for federal
income tax purposes although (i) a portion of these dividends will be a specific
preference item for purposes of the federal individual and corporate alternative
minimum taxes to the extent they are derived from certain types of private
activity bonds issued after August 7, 1986 and (ii) all exempt-interest
dividends will be a component of the "current earnings" adjustment item for
purposes of the federal corporate alternative minimum tax. In addition,
corporate shareholders may incur a greater federal "environmental" tax liability
through receipt of Fund dividends and distributions. Each Fund's dividends and
distributions will not qualify for the dividends-received deduction for
corporations.
Statements as to the tax status of each shareholder's dividends and
distributions, if any, are mailed annually. Each shareholder will also receive,
if appropriate, various written notices after the end of a Fund's prior taxable
year as to the federal income tax status of his or her dividends and
distributions which were received from that Fund during that year. Furthermore,
if appropriate, the statements from the Tax Free Money Fund will set forth the
dollar amount of the shareholder's exempt-interest dividends which is excluded
from federal income taxation, and the statements from the NY Tax Free Money Fund
will set forth the dollar amount of the shareholder's exempt-interest dividends
which is excluded from federal income and exempt from New York State and City
personal income taxes. These statements will also designate the amount of
exempt-interest dividends that is a specific preference item for purposes of the
federal individual and corporate alternative minimum taxes. Shareholders should
consult their tax advisers to assess the consequences of investing in a Fund
under state and local laws and to determine whether dividends paid by a Fund
that represent interest derived from U.S. Government Obligations are exempt from
any applicable state or local income taxes.
PERFORMANCE INFORMATION AND REPORTS
From time to time, the Trust may advertise "current yield," "effective yield"
and/or "tax equivalent yield" for a Fund. All yield figures are based on
historical earnings and are not intended to indicate future performance. The
"current yield" of a Fund refers to the income generated by an investment in the
Fund over a seven-day period (which period will be stated in the advertisement).
This income is then "annualized;" that is, the amount of income generated by the
investment during that week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the investment. The "effective yield" is
calculated similarly but, when annualized, the income earned by an investment in
a Fund is assumed to be reinvested. The "effective yield" will be slightly
higher than the "current yield" because of the compounding effect of this
assumed reinvestment. The "tax equivalent yield" demonstrates the yield on a
taxable investment necessary to produce an after-tax yield equal to a Fund's tax
free yield. It is calculated by increasing the yield shown for the Fund to the
extent necessary to reflect the payment of specified tax rates. The Trust may
include this information in sales material and advertisements for a Fund.
Yield is a function of the quality, composition and maturity of the securities
held by the corresponding Portfolio and operating expenses of a Fund and the
corresponding Portfolio. In particular, a Fund's yield will rise and fall with
short-term interest rates, which can change frequently and sharply. In periods
of rising interest rates, the yield of a Fund will tend to be somewhat lower
than prevailing market rates, and in periods of declining interest rates, the
yield will tend to be somewhat higher. In addition, when interest rates are
rising, the inflow of net new money to a Fund from the continuous sale of its
shares will likely be invested by the corresponding Portfolio in instruments
producing higher yields than the balance of that Portfolio's securities, thereby
increasing the current yield of the Fund. In periods of falling interest rates,
the opposite can be expected to occur. Accordingly, yields will fluctuate and do
not necessarily indicate future results. While yield information may be useful
in reviewing the performance of a Fund, it may not provide a basis for
comparison with bank deposits, other fixed rate investments, or other investment
companies that may use a different method of calculating yield. Any fees charged
by Service Agents for processing purchase and/or redemption transactions will
effectively reduce the yield for those shareholders.
From time to time, advertisements or reports to shareholders may compare the
yield of a Fund to that of other mutual funds with similar investment objectives
or to that of a particular index. The yield of the Cash Management Fund might be
compared with, for example, the IBC First Tier All Taxable Money Fund Average,
that of the Treasury Money Fund might be compared with IBC U.S. Treasury and
Repo All Taxable Money Fund Average, and that of Tax Free Money Fund and the NY
Tax Free Money Fund might be compared with IBC State Specific All Tax Free Money
Fund Average and IBC Stockbroker and General Purpose All Tax Free Money Fund
Average, which are averages compiled by IBC Money Fund Report, a widely
recognized, independent publication that monitors the performance of money
market mutual funds. Similarly, the yield of a Fund might be compared with
rankings prepared by Micropal Limited and/or Lipper Analytical Services, Inc.,
which are widely recognized, independent services that monitor the investment
performance of mutual funds. The yield of a Fund might also be compared with the
average yield reported by the Bank Rate Monitor for money market deposit
accounts offered by the 50 leading banks and thrift institutions in the top five
standard metropolitan areas. Shareholders may make inquiries regarding the
Funds, including current yield quotations and performance information, by
contacting any Service Agent.
Shareholders will receive financial reports semi-annually that include listings
of investment securities held by a Fund's corresponding Portfolio at those
dates. Annual reports are audited by independent accountants.
MANAGEMENT OF THE TRUST AND PORTFOLIOS
BOARD OF TRUSTEES
Affairs of the Trust and the Portfolios are managed under the supervision of
their respective Board of Trustees. By virtue of the responsibilities assumed by
Bankers Trust, the administrator of the Trust and each Portfolio, neither the
Trust nor any Portfolio require employees other than its executive officers.
None of the executive officers of the Trust or any Portfolio devotes full time
to the affairs of the Trust or Portfolios.
The Trustees of the Trust who are not "interested persons" (as defined in the
1940 Act) (the "Independent Trustees") of the Trust or of the Portfolios, as the
case may be, have adopted written procedures reasonably appropriate to deal with
potential conflicts of interest, up to and including creating separate boards of
trustees, arising from the fact that several of the same individuals are
trustees of the Trust and the Portfolios. For more information with respect to
the Trustees of both the Trust and the Portfolios, see "Management of the Trust
and Portfolios" in the SAI.
<PAGE>
INVESTMENT ADVISER
The Trust has not retained the services of an investment adviser since the Trust
seeks to achieve the investment objective of each Fund by investing all the
Assets of the Fund in the corresponding Portfolio. Each Portfolio has retained
the services of Bankers Trust, as investment adviser.
BANKERS TRUST COMPANY AND ITS AFFILIATES
Bankers Trust Company, a New York banking corporation with principal offices at
130 Liberty Street, (One Bankers Trust Plaza), New York, New York 10006, is a
wholly-owned subsidiary of Bankers Trust New York Corporation. Bankers Trust
conducts a variety of general banking and trust activities and is a major
wholesale supplier of financial services to the international and domestic
institutional market. 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 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. Of that total, approximately $69.3
billion are in cash assets alone. This makes Bankers Trust one of the nation's
leading managers of cash funds.
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. Bankers Trust's officers have had extensive experience in managing
investment portfolios having objectives similar to those of the Portfolios.
Bankers Trust, subject to the supervision and direction of the Board of Trustees
of each Portfolio, manages each Portfolio in accordance with that Portfolio's
investment objectives and stated investment policies, makes investment decisions
for each Portfolio, places orders to purchase and sell securities and other
financial instruments on behalf of each Portfolio and employs professional
investment managers and securities analysts who provide research services to
each Portfolio. All orders for investment transactions on behalf of any
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 a Portfolio only if Bankers Trust believes that the affiliate's
charge for the transaction does not exceed usual and customary levels. Each
Portfolio will not invest in obligations for which Bankers Trust or any of its
affiliates is the ultimate obligor or accepting bank. Each Portfolio may,
however, invest in the obligations of correspondents and customers of Bankers
Trust.
Under its Investment Advisory Agreement, Bankers Trust receives a fee from each
Portfolio, computed daily and paid monthly, at the annual rate of 0.15% of the
average daily net assets of each Portfolio. 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.
ADMINISTRATOR
Under its Administration and Services Agreement with the Trust, Bankers Trust
calculates the NAV per share of each Fund and generally assists the Board of
Trustees of the Trust in all aspects of the administration and operation of the
Trust. The Administration and Services Agreement provides for the Trust to pay
Bankers Trust a fee, computed daily and paid monthly, at the annual rate of
0.55% of the average daily net assets of each Fund.
Under an Administration and Services Agreement with each Portfolio, Bankers
Trust calculates the value of the assets of that Portfolio and generally assists
the Board of Trustees of that Portfolio in all aspects of the administration and
operation of that Portfolio. Each Administration and Services Agreement provides
for the Portfolio to pay Bankers Trust a fee, computed daily and paid monthly,
at the annual rate of 0.05% of the average daily net assets of that Portfolio.
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 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
All shareholders must be represented by a Service Agent. Bankers Trust acts as a
Service Agent pursuant to its Administration and Services Agreement with the
Trust and receives no additional compensation from the Fund for such shareholder
services. The service fees of any other Service Agents, including broker-
dealers, will be paid by Bankers Trust from its fees. The services provided by a
Service Agent may include establishing and maintaining shareholder accounts,
processing purchase and redemption transactions, performing shareholder sub-
accounting, answering client inquiries regarding the Trust, investing client
cash account balances automatically in Fund shares and processing redemption
transactions at the request of clients, assisting clients in changing dividend
options, account designations and addresses, providing periodic statements
showing the client's account balance and integrating these statements with those
of other transactions and balances in the client's other accounts serviced by
the Service Agent, transmitting proxy statements, 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, arranging for bank wires 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. In addition, investors may
be charged a transaction fee if they effect transactions in Fund shares through
a broker or agent. Each Service Agent has agreed to transmit to shareholders,
who are its customers, appropriate disclosures of any fees that it may charge to
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 for the Trust and each Portfolio under the
respective Administration and Services Agreement with the Trust and each
Portfolio.
ORGANIZATION OF THE TRUST
The Trust was organized on July 21, 1986 under the laws of the Commonwealth of
Massachusetts. Each Fund is a separate series of the Trust. The Trust offers
shares of beneficial interest of separate series, par value $0.001 per share.
The shares of the other series of the Trust are offered through separate
prospectuses. No series of shares has any preference over any other series.
The Trust is an entity 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.
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 a Fund is required on any matter
affecting the Fund on which shareholders are entitled to vote. Shareholders of
one Fund are not entitled to vote on a matter that does not affect that Fund.
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.
Each Portfolio, in which all the Assets of a corresponding Fund will be
invested, is organized as a trust under the laws of the State of New York. Each
Portfolio's Declaration of Trust provides that a Fund and other entities
investing in that 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 that Portfolio itself was unable to meet
its obligations. Accordingly, the Trustees of the Trust believe that neither a
Fund nor its shareholders will be adversely affected by reason of a Fund's
investing in the corresponding Portfolio. In addition, whenever the Trust is
requested to vote on matters pertaining to the fundamental policies of a
Portfolio, the Trust will hold a meeting of the corresponding Fund's
shareholders and will cast its vote as instructed by the Fund's shareholders.
Each series in the Trust will not be involved in any vote involving a Portfolio
in which it does not invest its Assets. Shareholders of all 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.
As of April 1, 1998,, Private Bank Sweep, New York, New York, acting in
various capacities for numberous accounts, owned 49.47% of Cash Management Fund,
77.57% of Tax Free Money Fund, and 75.00% of NY Tax Free Money Fund and,
therefore, may, for certain purposes, be deemed to control such Funds and be
able to affect the outcome of certain matters presented for a vote of the Funds'
respective shareholders.
EXPENSES OF THE FUNDS AND PORTFOLIOS
Each Fund bears its own expenses. Operating expenses for each Fund generally
consist of all costs not specifically borne by Bankers Trust or Edgewood,
including administration and services fees, fees for necessary professional
services, the costs of regulatory compliance and costs associated with
maintaining legal existence and shareholder relations. Bankers Trust has agreed
to reimburse a Fund to the extent required by applicable state law for certain
expenses that are described in the SAI. Each Portfolio bears its own expenses.
Operating expenses for each Portfolio generally consist of all costs not
specifically borne by Bankers Trust or Edgewood, including investment advisory
and administration and services fees, fees for necessary professional services,
amortization of organizational expenses, the costs associated with regulatory
compliance and maintaining legal existence and investor relations.
<PAGE>
BT INVESTMENT FUNDS
CASH MANAGEMENT FUND
TREASURY MONEY FUND
NY TAX FREE MONEY FUND
TAX FREE MONEY FUND
INVESTMENT ADVISER OF THE PORTFOLIOS AND ADMINISTRATOR
BANKERS TRUST COMPANY
130 Liberty Street
(One Bankers Trust Plaza)
New York, NY 10006
DISTRIBUTOR
EDGEWOOD SERVICES, INC.
5800 Corporate Drive
Pittsburgh, PA 15237-5829
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 Trust's Prospectuses, its SAIs
or the Trust's 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 the 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.
Cusips #055922108
#055922405
#055922207
#055922306
COMBMON300 (4/98)
BT INVESTMENT FUNDS
CASH MANAGEMENT FUND
TREASURY MONEY FUND
TAX FREE MONEY FUND
NY TAX FREE MONEY FUND APRIL 30, 1998
STATEMENT OF ADDITIONAL INFORMATION
BT Investment Funds (the "Trust") is an open-end management investment
company that offers investors a selection of investment portfolios, each having
distinct investment objectives and policies. This Statement of Additional
Information relates to the following investment portfolios (each a "Fund" and,
collectively, the "Funds"), each of which seeks a high level of current income
consistent with liquidity and the preservation of capital.
CASH MANAGEMENT FUND - a diversified investment portfolio that seeks a
high level of current income through investment in a Portfolio of high
quality money market instruments.
TREASURY MONEY FUND - a diversified investment portfolio that seeks a high
level of current income through investment in a Portfolio of direct
obligations of the U.S. Treasury and repurchase agreements collateralized
by such obligations.
TAX FREE MONEY FUND - a diversified investment portfolio that seeks a high
level of current income exempt from Federal income taxes through
investment in a Portfolio primarily of obligations issued by states and
their authorities, agencies, instrumentalities and political subdivisions.
NY TAX FREE MONEY FUND - a nondiversified investment portfolio that seeks
a high level of current income exempt from Federal, New York State and New
York City income taxes through investment in a Portfolio primarily of
obligations of the State of New York and its authorities, agencies,
instrumentalities and political subdivisions.
As described in the Prospectus, the Trust seeks to achieve the investment
objective of each Fund by investing all the investable assets ("Assets") of the
Fund in a diversified (or nondiversified, in the case of the NY Tax Free Money
Fund) open-end management investment company having the same investment
objective as such Fund. These investment companies are, respectively, Cash
Management Portfolio, Treasury Money Portfolio, Tax Free Money Portfolio, and NY
Tax Free Money Portfolio (collectively, the "Portfolios").
Since the investment characteristics of each Fund will correspond directly
to those of the respective Portfolio in which the Fund invests all of its
Assets, the following is a discussion of the various investments of and
techniques employed by the Portfolios.
Shares of the Funds are sold by Edgewood Services, Inc. ("Edgewood"), the
Trust's distributor (the "Distributor"), to clients and customers (including
affiliates and correspondents) of Bankers Trust Company ("Bankers Trust"), the
Portfolios' Adviser, and to clients and customers of other organizations.
The Trust's Prospectus for the Funds, dated April 30, 1998, provides the
basic information investors should know before investing. This Statement of
Additional Information ("SAI"), which is not a Prospectus, is intended to
provide additional information regarding the activities and operations of the
Trust and should be read in conjunction with the Prospectus. You may request a
copy of the Prospectus or a paper copy of this SAI, if you have received it
electronically, free of charge by calling the Trust at the telephone number
listed below or by contacting any Service Agent. Capitalized terms not otherwise
defined in this Statement of Additional Information have the meanings accorded
to them in the Trust's Prospectus.
INVESTMENT ADVISER OF THE PORTFOLIOS AND ADMINISTRATOR
BANKERS TRUST COMPANY
DISTRIBUTOR
EDGEWOOD SERVICES, INC.
5800 CORPORATE DRIVE PITTSBURGH, PENNSYLVANIA 15237-5829
1-(800)-730-1313
<PAGE>
i
TABLE OF CONTENTS
Investment Objectives and Policies...............................1
Net Asset Value.................................................12
Purchase and Redemption Information.............................13
Management of the Trust and Portfolios..........................14
Organization of the Trust.......................................19
Taxes...........................................................20
Performance Information.........................................21
Financial Statements............................................22
Appendix: Description of Ratings...............................23
<PAGE>
51
INVESTMENT OBJECTIVES AND POLICIES
The Trust's Prospectus discusses the investment objective of each Fund and
the policies to be employed to achieve those objectives by its corresponding
Portfolio. This section contains supplemental information concerning the types
of securities and other instruments in which the Portfolios may invest, the
investment policies and portfolio strategies that the Portfolios may utilize and
certain risks attendant to those investments, policies and strategies.
BANK OBLIGATIONS
For purposes of the Portfolios' investment policies with respect to bank
obligations, the assets of a bank will be deemed to include the assets of its
domestic and foreign branches. Obligations of foreign branches of U.S. banks and
foreign banks may be general obligations of the parent bank in addition to the
issuing bank or may be limited by the terms of a specific obligation and by
government regulation. If Bankers Trust, acting under the supervision of the
Board of Trustees, deems the instruments to present minimal credit risk, each
Portfolio other than Treasury Money Portfolio may invest in obligations of
foreign banks or foreign branches of U.S. banks, which include banks located in
the United Kingdom, Grand Cayman Island, Nassau, Japan and Canada. Investments
in these obligations may entail risks that are different from those of
investments in obligations of U.S. domestic banks because of differences in
political, regulatory and economic systems and conditions. These risks include
future political and economic developments, currency blockage, the possible
imposition of withholding taxes on interest payments, differing reserve
requirements, reporting and recordkeeping requirements and accounting standards,
possible seizure or nationalization of foreign deposits, difficulty or inability
of pursuing legal remedies and obtaining judgments in foreign courts, possible
establishment of exchange controls or the adoption of other foreign governmental
restrictions that might affect adversely the payment of principal and interest
on bank obligations. Foreign branches of U.S. banks and foreign banks may also
be subject to less stringent reserve requirements and to different accounting,
auditing, reporting and recordkeeping standards than those applicable to
domestic branches of U.S. banks.
COMMERCIAL PAPER
Commercial paper obligations in which the Portfolios may invest are
short-term, unsecured negotiable promissory notes of U.S. or foreign
corporations that at the time of purchase meet the rating criteria described in
the Prospectus. Investments in foreign commercial paper generally involve risks
similar to those described above relating to obligations of foreign banks or
foreign branches of U.S. banks.
U.S. GOVERNMENT OBLIGATIONS
The Portfolios may invest in direct obligations issued by the U.S.
Treasury or, in the case of the Portfolios other than Treasury Money Portfolio,
in obligations issued or guaranteed by the U.S. Treasury or by agencies or
instrumentalities of the U.S. government ("U.S. Government Obligations").
Certain short-term U.S. Government Obligations, such as those issued by the
Government National Mortgage Association ("GNMA"), are supported by the "full
faith and credit" of the U.S. government; others, such as those of the
Export-Import Bank of the United States, are supported by the right of the
issuer to borrow from the U.S. Treasury; others, such as those of the Federal
National Mortgage Association are solely the obligations of the issuing entity
but are supported by the discretionary authority of the U.S. government to
purchase the agency's obligations; and still others, such as those of the
Student Loan Marketing Association, are supported by the credit of the
instrumentality. No assurance can be given that the U.S. government would
provide financial support to U.S. government-sponsored instrumentalities if it
is not obligated to do so by law.
Examples of the types of U.S. Government Obligations that the Portfolios
may hold include, but are not limited to, in addition to those described above
and direct U.S. Treasury obligations, the obligations of the Federal Housing
Administration ("FHA"), Farmers Home Administration, Small Business
Administration, General Services Administration, Central Bank for Cooperatives,
Federal Farm Credit Banks, Federal Farm Credit Banks Funding Corp., Federal Home
Loan Banks, Federal Home Loan Mortgage Corporation, Federal Intermediate Credit
Banks, Federal Land Banks and Maritime Administration.
LENDING OF PORTFOLIO SECURITIES
The Portfolios, other than Tax Free Money Portfolio and NY Tax Free Money
Portfolio, have the authority to lend portfolio securities to brokers, dealers
and other financial organizations. By lending its securities, a Portfolio may
increase its income by continuing to receive payments in respect of dividends
and interest on the loaned securities as well as by either investing the cash
collateral in short-term securities or obtaining yield in the form of a fee paid
by the borrower when irrevocable letters of credit and U.S. Government
Obligations are used as collateral. Each Portfolio will adhere to the following
conditions whenever its securities are loaned: (i) the Portfolio must receive at
least 100% collateral from the borrower; (ii) the borrower must increase this
collateral whenever the market value of the securities including accrued
interest rises above the level of the collateral; (iii) the Portfolio must be
able to terminate the loan at any time; (iv) the Portfolio must receive
substitute payments in respect of all dividends, interest or other distributions
on the loaned securities; and (v) voting rights on the loaned securities may
pass to the borrower; provided, however, that if a material event adversely
affecting the investment occurs, the Board of Trustees must retain the right to
terminate the loan and recall and vote the securities. REVERSE REPURCHASE
AGREEMENTS
The Portfolios may borrow funds for temporary or emergency purposes, such
as meeting larger than anticipated redemption requests, and not for leverage, by
among other things, agreeing to sell portfolio securities to financial
institutions such as banks and broker-dealers and to repurchase them at a
mutually agreed date and price (a "reverse repurchase agreement"). At the time a
Portfolio enters into a reverse repurchase agreement it will place in a
segregated custodial account cash, U.S. Government Obligations or high-grade
debt obligations having a value equal to the repurchase price, including accrued
interest. Reverse repurchase agreements involve the risk that the market value
of the securities sold by a Portfolio may decline below the repurchase price of
those securities. Reverse repurchase agreements are considered to be borrowings
by a Portfolio.
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES
To secure prices deemed advantageous at a particular time, the Cash
Management Portfolio and Treasury Money Portfolio may purchase securities on a
when-issued or delayed-delivery basis, in which case delivery of the securities
occurs beyond the normal settlement period; payment for or delivery of the
securities would be made at the same time as the reciprocal delivery or payment
by the other party to the transaction. A Portfolio will enter into when-issued
or delayed-delivery transactions for the purpose of acquiring securities and not
for the purpose of leverage. When-issued securities purchased by a Portfolio may
include securities purchased on a "when, as, and if issued" basis under which
the issuance of the securities depends on the occurrence of a subsequent event.
Securities purchased on a when-issued or delayed-delivery basis may expose
a Portfolio to risk because the securities may experience fluctuations in value
prior to their actual delivery. A Portfolio does not accrue income with respect
to a when-issued or delayed-delivery security prior to its stated delivery date.
Purchasing securities on a when-issued or delayed-delivery basis can involve the
additional risk that the yield available in the market when the delivery takes
place may be higher than that obtained in the transaction itself. Upon
purchasing a security on a when-issued or delayed-delivery basis, a Portfolio
will segregate with the Portfolio's custodian high grade liquid debt instruments
in an amount at least equal to the when-issued or delayed-delivery commitment.
<PAGE>
ASSET-BACKED SECURITIES
The Cash Management Portfolio may also invest in securities generally
referred to as asset-backed securities, which directly or indirectly represent a
participation interest in, or are secured by and payable from, a stream of
payments generated by particular assets such as motor vehicle or credit card
receivables. Asset-backed securities may provide periodic payments that consist
of interest and/or principal payments. Consequently, the life of an asset-backed
security varies with the prepayment and loss experience of the underlying
assets." PARTICIPATION INTERESTS
Tax Free Money Portfolio and NY Tax Free Money Portfolio may purchase from
financial institutions participation interests in Municipal Obligations. A
participation interest gives the Portfolio an undivided interest in the
Municipal Obligation in the proportion that the Portfolio's participation
interest bears to the total principal amount of the Municipal Obligation. These
instruments may be variable rate or fixed rate with remaining maturities of one
year or less. If the participation interest is unrated or has been given a
rating below that which otherwise is permissible for purchase by the Portfolio,
the participation interest will be backed by an irrevocable letter of credit or
guarantee of a bank that the Portfolio's Board of Trustees has determined meets
the prescribed quality standards for the Portfolio, or the payment obligation
otherwise will be collateralized by U.S. government securities or other
securities deemed appropriate by the Portfolio's Board of Trustees, or, in the
case of an unrated participation interest that is not backed or collateralized
as described above, but that otherwise meets the Trustees' procedures and
standards for creditworthiness and high quality, the underlying Municipal
Obligation must be a permissible investment for the Portfolio. For certain
participation interests, the Portfolio will have the right to demand payment, on
seven days' notice, for all or any part of the Portfolio's participation
interest in the Municipal Obligation, plus accrued interest. As to these
instruments, each Portfolio intends to exercise its right to demand payment from
the issuer of the demand feature only upon a default under the terms of the
Municipal Obligation, as needed to provide liquidity to meet redemptions or to
maintain a high quality investment portfolio. In the event an issuer of a demand
feature defaulted on its payment obligation, the Portfolio might be unable to
dispose of the participation interest because of the absence of a secondary
market and could, for this or other reasons, suffer a loss to the extent of the
default.
Neither Portfolio currently intends to invest more than 5% of its total
assets in participation interests.
STANDBY COMMITMENTS
Tax Free Money Portfolio and NY Tax Free Money Portfolio each may acquire
standby commitments or "puts" solely to facilitate portfolio liquidity; neither
Portfolio intends to exercise its rights thereunder for trading purposes. The
maturity of a Municipal Obligation is not to be considered shortened by any
standby commitment to which the obligation is subject. Thus, standby commitments
do not affect the dollar-weighted average maturity of a Portfolio.
When Municipal Obligations are subject to puts separate from the
underlying securities, no value is assigned to the put. Because of the
difficulty of evaluating the likelihood of exercise or the potential benefit of
a put, the Board of Trustees has determined that puts shall have a fair market
value of zero, regardless of whether any direct or indirect consideration was
paid.
Since the value of the put is partly dependent on the ability of the put
writer to meet its obligation to repurchase, each Portfolio's policy is to enter
into put transactions only with put writers who are approved by Bankers Trust.
It is the Portfolios' general policy to enter into put transactions only with
those put writers which are determined to present minimal credit risks. In
connection with this determination, the Board of Trustees will review regularly
Bankers Trust's list of approved put writers, taking into consideration, among
other things, the ratings, if available, of their equity and debt securities,
their reputation in the municipal securities markets, their net worth, their
efficiency in consummating transactions and any collateral arrangements, such as
letters of credit securing the puts written by them. Commercial banks normally
will be members of the Federal Reserve System, and other dealers will be members
of the National Association of Securities Dealers, Inc. or members of a national
securities exchange. Other put writers will have outstanding debt rated Aa or
better by Moody's Investors Service, Inc. ("Moody's") or AA or better by
Standard & Poor's ("S&P"), or will be of comparable quality in Bankers Trust's
opinion, or such put writers' obligations will be collateralized and of
comparable quality in Bankers Trust's opinion. The Board of Trustees has
directed Bankers Trust not to enter into put transactions with any put writer
that, in the judgment of Bankers Trust using the above-described criteria, is or
becomes a recognizable credit risk. Neither Portfolio is able to predict whether
all or any portion of any loss sustained could subsequently be recovered from a
put writer in the event that a put writer should default on its obligation to
repurchase an underlying security.
Neither Portfolio currently intends to invest more than 5% of its net
assets in standby commitments.
MUNICIPAL OBLIGATIONS
The two principal classifications of Municipal Obligations are "notes" and
"bonds."
Municipal Notes. Municipal notes generally fund short-term capital needs and
have maturities of one year or less. Tax Free Money Portfolio and NY Tax Free
Money Portfolio may invest in municipal notes, which include:
Tax Anticipation Notes. Tax anticipation notes are issued to finance
working capital needs of municipalities. Generally, they are issued in
anticipation of various seasonal tax revenue, such as income, sales, use and
business taxes, and are payable from these specific future taxes.
Revenue Anticipation Notes. Revenue anticipation notes are issued in
expectation of receipt of other types of revenue, such as Federal revenues
available under Federal revenue sharing programs.
Bond Anticipation Notes. Bond anticipation notes are issued to provide
interim financing until long-term financing can be arranged. In most cases, the
long-term bonds provide funds for the repayment of these notes.
Miscellaneous, Temporary and Anticipatory Instruments. These instruments
may include notes issued to obtain interim financing pending entering into
alternate financial arrangements, such as receipt of anticipated Federal, state
or other grants or aid, passage of increased legislative authority to issue
longer-term instruments or obtaining other refinancing.
Construction Loan Notes. Construction loan notes are sold to provide
construction financing. Permanent financing, the proceeds of which are applied
to the payment of construction loan notes, is sometimes provided by a commitment
of the GNMA to purchase the loan, accompanied by a commitment by the FHA to
insure mortgage advances thereunder. In other instances, permanent financing is
provided by commitments of banks to purchase the loan. A Portfolio will only
purchase construction loan notes that are subject to permanent GNMA or bank
purchase commitments.
Tax-Exempt Commercial Paper. Tax-exempt commercial paper is a short-term
obligation with a stated maturity of 365 days or less. It is issued by agencies
of state and local governments to finance seasonal working capital needs or as
short-term financing in anticipation of longer-term financing. Municipal
Bonds. Municipal bonds generally fund longer-term capital needs than municipal
notes and have maturities exceeding one year when issued. Tax Free Money
Portfolio and NY Tax Free Money Portfolio may invest in municipal bonds, but
only to the extent that their remaining maturities are determined not to exceed
397 days under rules promulgated under the Investment Company Act of 1940 (the
"1940 Act"). Municipal bonds include:
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General Obligation Bonds. Issuers of general obligation bonds include
states, counties, cities, towns and regional districts. The proceeds of these
obligations are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and sewer
systems. The basic security behind general obligation bonds is the issuer's
pledge of its full faith and credit and taxing power for the payment of
principal and interest. The taxes that can be levied for the payment of debt
service may be limited or unlimited as to the rate or amount of special
assessments.
Revenue Bonds. The principal security for a revenue bond is generally the
net revenues derived from a particular facility, group of facilities or, in some
cases, the proceeds of a special excise tax or other specific revenue source.
Revenue bonds are issued to finance a wide variety of capital projects,
including electric, gas, water and sewer systems; highways, bridges, and
tunnels; port and airport facilities; colleges and universities; and hospitals.
Although the principal security behind these bonds may vary, many provide
additional security in the form of a debt service reserve fund that may be used
to make principal and interest payments on the issuer's obligations. Housing
finance authorities have a wide range of security, including partially or fully
insured mortgages, rent subsidized and/or collateralized mortgages, certificates
of deposit and/or the net revenues from housing or other public projects. Some
authorities provide further security in the form of a state's ability (without
obligation) to make up deficiencies in the debt service reserve fund.
Private Activity Bonds. Private activity bonds, which are considered
Municipal Obligations if the interest paid thereon is excluded from gross income
for Federal income tax purposes and is not a specific tax preference item for
Federal individual and corporate alternative minimum tax purposes, are issued by
or on behalf of public authorities to raise money to finance various privately
operated facilities such as manufacturing facilities, certain hospital and
university facilities and housing projects. These bonds are also used to finance
public facilities such as airports, mass transit systems and ports. The payment
of the principal and interest on these bonds is dependent solely on the ability
of the facility's user to meet its financial obligations and generally the
pledge, if any, of real and personal property so financed as security for
payment.
SPECIAL CONSIDERATIONS RELATING TO NEW YORK MUNICIPAL OBLIGATIONS
The NY Tax Free Money Portfolio invests in obligations of New York (the
"State") issuers which results in its performance being subject to risks
associated with the overall conditions present within the State. The following
information is a general summary of the State's financial condition and a brief
summary of the prevailing economic conditions. This information is based on
official statements relating to securities that are believed to be reliable but
should not be considered as a complete description of all relevant information.
The State has achieved fiscal balance for the past several years after
years of recording large deficits during the 1980's. Fiscal balance has been
achieved as a result of growth in tax receipts and a focus on reducing
governmental disbursements. Evidence of the State's improved financial condition
is seen in the reduction of the 1996-1997 fiscal year end accumulated General
Fund deficit (GAAP Basis) to $995 million compared to a recent high of $3.3
billion (recorded in fiscal year 1994-1995). On a cash basis, the State is
projecting to close fiscal year 1997-1998 (current fiscal year) with a surplus
of $465 million.
The State's fiscal year 1997-1998 Financial Plan (current fiscal year)
through December 1997 continued to be balanced with a projected cash surplus of
$1.83 billion, $1.3 billion higher than estimated through the first two quarters
of fiscal year 1997-1998 (the "Mid-Year Update"). The State will use a majority
of the surplus to accelerate $1.18 billion in personal income tax refund
payments by increasing the reserve for such payments. This acceleration
decreases reported personal income receipts by $1.18 billion in fiscal year
1997-1998, while increasing available personal income receipts in fiscal year
1998-1999, as these refunds will no longer be a charge against current revenues
in fiscal year 1998-1999. As a result, projections of available receipts in
fiscal year 1997-1998 (current fiscal year) have been increased only $103
million over the Mid-Year Update.
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The State projects that disbursements will increase by $565 million over
the Mid-Year Update as a result of prepaying General Fund expenditures for
fiscal year 1998-1999. In the absence of this one-time payment of expenditures,
General Fund disbursements would have remained nearly unchanged.
The General Fund closing balance is projected to be $465 million at the
end of fiscal year 1997-1998, a decline of almost 50% (over the Mid-Year
Update), as a result of using the surplus generated from higher than anticipated
receipts to prepay fiscal year 1998-1999 expenditures (discussed above).
The Governor presented his 1998-1999 Executive Budget to the Legislature
on January 20, 1998. The Executive Budget also contains financial projections
for the State's 1999-2000 to 2000-2001 fiscal years, detailed estimates of
receipts and a proposed Capital Program and Financing Plan for the 1999-2000
through 2002-2003 fiscal years. There can be no assurance that the Legislature
will enact into law the Executive Budget, as proposed by the Governor, or that
the State's adopted budget projections will not differ materially and adversely
from the projections set forth below.
The fiscal year 1998-1999 Financial Plan is projected to be balanced on a
cash basis in the General fund, with the use of only $62 million in
non-recurring resources (less than 0.2% of General fund disbursements compared
to $2.3 billion for the current fiscal year). Total General Fund receipts,
including transfers from other funds, are projected to be $36.22 billion, a 2.9%
increase over projected receipts in the current fiscal year. The increase in
General Fund receipts is anticipated from an increase in personal income tax
receipts and user taxes (primarily sales tax). Total General Fund disbursements,
including transfers to other funds, are projected to be $36.18 billion or 2.9%
over projected expenditures (including the prepayments discussed above), for the
current fiscal year. The increase in spending primarily reflects increases in
school aid and Medicare programs. The Executive Budget projects a closing
General Fund balance of $500 million, slightly higher than projected for the
current fiscal year.
The State's economy continued to improve, as the rate of growth in
non-agricultural employment increased to 1.4% through November 1997 compared to
0.7% growth in 1995. New York's rate of growth in employment was below the rate
of growth of the United States, resulting in a stable unemployment rate of 6.3%
since 1995. New York's growth in personal income also underperformed the United
States expanding 4.7% and 5.4%, in 1996 and 1997 respectively, compared to 5.6%
and 5.8% for the United States. New York's growth in personal income has been
driven primarily by the exceptional performance of the financial markets.
Moderate economic growth is projected to continue in 1998 and 1999 for
employment, wages, and personal income, although growth will lessen gradually
during the course of the next two years. Personal income is projected to
increase 4.7% in 1998 and 4.4% in 1999 (compared to 5.1% a nd 4.3% growth in
United States personal income, as projected by the State Division of the
Budget). Overall employment growth is expected to continue at a modest rate,
reflecting the slowing growth in the national economy, continued spending
restraint in government and restructuring in health care, social service and
banking sectors.
The State's financial health is evidenced by its debt ratings. The State's
improved financial condition is evidenced by the recent upgrade in the State's
debt rating to A from A- by S&P. The State is rated A2 by Moody's.
The Fund's concentration in municipal securities issued by the State and
its political subdivisions provides a greater level of risk than a funds which
is diversified across numerous states and municipal entities. The ability of the
State or its municipalities to meet their obligations will depend upon the
availability of tax and other revenues, economic, political, and demographic
conditions within the State, and the underlying fiscal condition of the State,
its counties, and its municipalities.
YEAR 2000 MATTERS
Like other mutual funds, financial and business organizations and individuals
around the world, the Funds could be adversely affected if the computer systems
used by Bankers Trust and other service providers do not properly process and
calculate date-related information and data from and after January 1, 2000. This
is commonly known as the "Year 2000 Problem." Bankers Trust is taking steps that
it believes are reasonably designed to address the Year 2000 Problem with
respect to computer systems that it uses and to obtain reasonable assurances
that comparable steps are being taken by the Funds' other major service
providers. At this time, however, there can be no assurance that these steps
will be sufficient to avoid any adverse impact to the Funds nor can there be any
assurance that the Year 2000 Problem will not have an adverse effect on the
companies whose securities are held by the Funds or on global markets or
economies, generally.
RATING SERVICES
The ratings of Moody's and S&P represent their opinions as to the quality
of the Municipal Obligations and other securities that they undertake to rate.
It should be emphasized, however, that ratings are relative and subjective and
are not absolute standards of quality. Although these ratings are an initial
criterion for selection of portfolio investments, Bankers Trust also makes its
own evaluation of these securities, subject to review by the Board of Trustees.
After purchase by a Portfolio, an obligation may cease to be rated or its rating
may be reduced below the minimum required for purchase by the Portfolio. Neither
event would require a Portfolio to eliminate the obligation from its portfolio,
but Bankers Trust will consider such an event in its determination of whether a
Portfolio should continue to hold the obligation. A description of the ratings
categories of Moody's and S&P is set forth in the Appendix to this SAI.
THE FOLLOWING FUNDAMENTAL INVESTMENT RESTRICTIONS AND NON-FUNDAMENTAL
INVESTMENT OPERATING POLICIES HAVE BEEN ADOPTED BY THE TRUST, WITH RESPECT TO
THE RESPECTIVE FUND, AND BY EACH RESPECTIVE PORTFOLIO BECAUSE OF REQUIREMENTS OF
FEDERAL OR STATE SECURITIES LAWS OR REGULATIONS. UNLESS AN INVESTMENT INSTRUMENT
OR TECHNIQUE IS DESCRIBED IN THE RESPECTIVE PROSPECTUS OR ELSEWHERE HEREIN, THE
RESPECTIVE FUND AND THE CORRESPONDING PORTFOLIO MAY NOT INVEST IN THAT
INVESTMENT INSTRUMENT OR ENGAGE IN THAT INVESTMENT TECHNIQUE.
INVESTMENT RESTRICTIONS
The investment restrictions below have been adopted by the Trust with
respect to each of the Funds and by the Portfolios as fundamental policies.
Under the 1940 Act, a "fundamental" policy may not be changed without the vote
of a majority of the outstanding voting securities of the Fund or Portfolio,
respectively, to which it relates, which is defined in the 1940 Act as the
lesser of (a) 67% or more of the shares present at a shareholder meeting if the
holders of more than 50% of the outstanding shares are present or represented by
proxy, or (b) more than 50% of the outstanding shares. The percentage
limitations contained in the restrictions listed below apply at the time of the
purchase of the securities. Whenever a Fund is requested to vote on a change in
the investment restrictions of a Portfolio, the Trust will hold a meeting of
Fund shareholders and will cast its votes as instructed by the 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 of the Trust in the same
proportion as the Fund shareholders who do, in fact, vote.
ALL FUNDS AND PORTFOLIOS
Under investment policies adopted by the Trust, on behalf of each Fund,
and by the Portfolios, each Fund and each Portfolio may not:
1. Borrow money, except for temporary or emergency (not leveraging) purposes
in an amount not exceeding 5% of the value of the Fund's or the
Portfolio's total assets (including the amount borrowed), as the case may
be, calculated in each case at the lower of cost or market.
2. Pledge, hypothecate, mortgage or otherwise encumber more than 5% of the
total assets of the Fund or the Portfolio, as the case may be, and only to
secure borrowings for temporary or emergency purposes.
<PAGE>
3. Invest more than 5% of the total assets of the Fund or the Portfolio, as
the case may be, in any one issuer (other than U.S. Government
Obligations) or purchase more than 10% of any class of securities of any
one issuer; provided, however, that (i) up to 25% of the assets of the
Cash Management Fund, the Treasury Money Fund and the Tax Free Money Fund
(and Cash Management Portfolio, Treasury Money Portfolio and Tax Free
Money Portfolio), and all of the assets of the NY Tax Free Money Fund (and
NY Tax Free Money Portfolio), may be invested without regard to this
restriction, and (ii) this restriction shall not preclude the purchase by
the Tax Free Money Fund (or Tax Free Money Portfolio) of issues guaranteed
by the U.S. government, its agencies or instrumentalities or backed by
letters of credit or guarantees of one or more commercial banks or other
financial institutions, even though any one such commercial bank or
financial institution provides a letter of credit or guarantee with
respect to securities which in the aggregate represent more than 5%, but
not more than 10%, of the total assets of the Fund or the Portfolio, as
the case may be; provided, however, that nothing in this investment
restriction shall prevent the Trust from investing all or part of a Fund's
assets in an open-end management investment company with the same
investment objectives as such Fund.
4. Invest more than 25% of the total assets of the Fund or the Portfolio, as
the case may be, in the securities of issuers in any single industry;
provided that (i) this limitation shall not apply to the purchase of U.S.
Government Obligations, (ii) under normal market conditions more than 25%
of the total assets of the Cash Management Fund (or Cash Management
Portfolio) will be invested in obligations of foreign and U.S. Banks, and
(iii) with respect to the Tax Free Money Fund and the NY Tax Free Money
Fund (or Tax Free Money Portfolio or NY Tax Free Money Portfolio), this
limitation shall not apply to the purchase of Municipal Obligations or
letters of credit or guarantees of banks that support Municipal
Obligations; provided, however, that nothing in this investment
restriction shall prevent the Trust from investing all or part of a Fund's
Assets in an open-end management investment company with the same
investment objectives as such Fund.
5. Make short sales of securities, maintain a short position or purchase any
securities on margin, except for such short-term credits as are necessary
for the clearance of transactions.
6. Underwrite the securities issued by others (except to the extent the Fund
or Portfolio may be deemed to be an underwriter under the Federal
securities laws in connection with the disposition of its portfolio
securities) or knowingly purchase restricted securities, except that the
Tax Free Money Fund and the NY Tax Free Money Fund (and Tax Free Money
Portfolio and NY Tax Free Money Portfolio) each may bid, separately or as
part of a group, for the purchase of Municipal Obligations directly from
an issuer for its own portfolio in order to take advantage of any lower
purchase price available. To the extent these securities are illiquid,
they will be subject to the Fund's or the Portfolio's 10% limitation on
investments in illiquid securities; provided, however, that nothing in
this investment restriction shall prevent the Trust from investing all or
part of a Fund's Assets in an open-end management investment company with
the same investment objectives as such Fund.
7. Purchase or sell real estate, real estate investment trust securities,
commodities or commodity contracts, or oil, gas or mineral interests, but
this shall not prevent the Fund or the Portfolio from investing in
obligations secured by real estate or interests therein.
8. Make loans to others, except through the purchase of qualified debt
obligations, the entry into repurchase agreements and, with respect to the
Cash Management Fund, the Treasury Money Fund (or Cash Management
Portfolio and Treasury Money Portfolio), the lending of portfolio
securities.
9. Invest more than an aggregate of 10% of the net assets of the Fund or the
Portfolio, respectively, (taken, in each case, at current value) in (i)
securities that cannot be readily resold to the public because of legal or
contractual restrictions or because there are no market quotations readily
available or (ii) other "illiquid" securities (including time deposits and
repurchase agreements maturing in more than seven calendar days);
provided, however, that nothing in this investment restriction shall
prevent the Trust from investing all or part of a Fund's assets in an
open-end management investment company with the same investment objectives
as such Fund.
10. Purchase more than 10% of the voting securities of any issuer or invest in
companies for the purpose of exercising control or management; provided,
however, that nothing in this investment restriction shall prevent the
Trust from investing all or part of a Fund's Assets in an open-end
management investment company with the same investment objectives as such
Fund.
11. Purchase securities of other investment companies, except to the extent
permitted under the 1940 Act or in connection with a merger,
consolidation, reorganization, acquisition of assets or an offer of
exchange; provided, however, that nothing in this investment restriction
shall prevent the Trust from investing all or part of a Fund's Assets in
an open-end management investment company with the same investment
objectives as such Fund.
12. Issue any senior securities, except insofar as it may be deemed to have
issued a senior security by reason of (i) entering into a repurchase
agreement or (ii) borrowing in accordance with terms described in the
Prospectus and this SAI.
13. Purchase or retain the securities of any issuer if any of the officers or
trustees of the Fund or the Portfolio or its investment adviser owns
individually more than 1/2 of 1% of the securities of such issuer, and
together such officers and directors own more than 5% of the securities of
such issuer.
14. Invest in warrants, except that the Fund or the Portfolio may invest in
warrants if, as a result, the investments (valued in each case at the
lower of cost or market) would not exceed 5% of the value of the net
assets of the Fund or the Portfolio, as the case may be, of which not more
than 2% of the net assets of the Fund or the Portfolio, as the case may
be, may be invested in warrants not listed on a recognized domestic stock
exchange. Warrants acquired by the Fund or the Portfolio as part of a unit
or attached to securities at the time of acquisition are not subject to
this limitation.
15. As to the Tax Free Money Fund and the NY Tax Free Money Fund (or Tax Free
Money Portfolio and NY Tax Free Money Portfolio), neither the Fund (nor
the Portfolio as the case may be) will invest less than 80% of its net
assets in Municipal Obligations under normal market conditions; provided,
however, that nothing in this restriction shall prevent the Trust from
investing all or part of a Fund's Assets in an open-end management
investment company with the same investment objectives as such Fund.
Additional Restrictions. In order to comply with certain statutes and
policies each Portfolio (or Trust, on behalf of the Fund) will not as a matter
of operating policy (except that no operating policy shall prevent a Fund from
investing all of its Assets in an open-end investment company with substantially
the same investment objectives):
(i) borrow money (including through dollar roll transactions) for any purpose
in excess of 10% of the Portfolio's (Fund's) total assets (taken at cost),
except that the Portfolio (Fund) may borrow for temporary or emergency
purposes up to 1/3 of its total assets;
(ii) pledge, mortgage or hypothecate for any purpose in excess of 10% of the
Portfolio's (Fund's) total assets (taken at market value), provided that
collateral arrangements with respect to options and futures, including
deposits of initial deposit and variation margin, are not considered a
pledge of assets for purposes of this restriction;
<PAGE>
(iii) purchase any security or evidence of interest therein on margin, except
that such short-term credit as may be necessary for the clearance of
purchases and sales of securities may be obtained and except that deposits
of initial deposit and variation margin may be made in connection with the
purchase, ownership, holding or sale of futures;
(iv) sell any security which it does not own unless by virtue of its ownership
of other securities it has at the time of sale a right to obtain
securities, without payment of further consideration, equivalent in kind
and amount to the securities sold and provided that if such right is
conditional the sale is made upon the same conditions;
(v) invest for the purpose of exercising control or management;
(vi) purchase securities issued by any investment company except by purchase in
the open market where no commission or profit to a sponsor or dealer
results from such purchase other than the customary broker's commission,
or except when such purchase, though not made in the open market, is part
of a plan of merger or consolidation; provided, however, that securities
of any investment company will not be purchased for the Portfolio (Fund)
if such purchase at the time thereof would cause (a) more than 10% of the
Portfolio's (Fund's) total assets (taken at the greater of cost or market
value) to be invested in the securities of such issuers; (b) more than 5%
of the Portfolio's (Fund's) total assets (taken at the greater of cost or
market value) to be invested in any one investment company; or (c) more
than 3% of the outstanding voting securities of any such issuer to be held
for the Portfolio (Fund); and, provided further, that the Portfolio shall
not invest in any other open-end investment company unless the Portfolio
(Fund) (1) waives the investment advisory fee with respect to assets
invested in other open-end investment companies and (2) incurs no sales
charge in connection with the investment (as an operating policy, each
Portfolio will not invest in another open-end registered investment
company);
(vii) invest more than 15% of the Portfolio's (Fund's) total net (taken at the
greater of cost or market value) in securities that are illiquid or not
readily marketable not including (a) Rule 144A securities that have been
determined to be liquid by the Board of Trustees; and (b) commercial paper
that is sold under section 4(2) of the 1933 Act which: (i) is not traded
flat or in default as to interest or principal; and (ii) is rated in one
of the two highest categories by at least two nationally recognized
statistical rating organizations and the Portfolio's (Fund's) Board of
Trustees have determined the commercial paper to be liquid; or (iii) is
rated in one of the two highest categories by one nationally recognized
statistical rating agency and the Portfolio's (Fund's) Board of Trustees
have determined that the commercial paper is equivalent quality and is
liquid;
(viii)no more than 5% of the Portfolio's (Fund's) total assets are invested in
securities issued by issuers which (including predecessors) have been in
operation less than three years;
(ix) invest more than 10% of the Portfolio's (Fund's) total assets (taken at
the greater of cost or market value) in securities that are restricted as
to resale under the 1933 Act (other than Rule 144A securities deemed
liquid by the Portfolio's (Fund's) Board of Trustees);
(x) with respect to 75% of the Portfolio's (Fund's) total assets, purchase
securities of any issuer if such purchase at the time thereof would cause
the Portfolio (Fund) to hold more than 10% of any class of securities of
such issuer, for which purposes all indebtedness of an issuer shall be
deemed a single class and all preferred stock of an issuer shall be deemed
a single class, except that futures or option contracts shall not be
subject to this restriction;
(xi) if the Portfolio (Fund) is a "diversified" fund with respect to 75%
of its assets, invest more than 5% of its total assets in the securities
(excluding U.S. government securities) of any one issuer;
<PAGE>
(xii) purchase or retain in the Portfolio's (Fund's) portfolio any securities
issued by an issuer any of whose officers, directors, trustees or security
holders is an officer or Trustee of the Portfolio (Trust), or is an
officer or partner of the Adviser, if after the purchase of the securities
of such issuer for the Portfolio (Fund) one or more of such persons owns
beneficially more than 1/2 of 1% of the shares or securities, or both, all
taken at market value, of such issuer, and such persons owning more than
1/2 of 1% of such shares or securities together own beneficially more than
5% of such shares or securities, or both, all taken at market value;
(xiii)invest more than 5% of the Portfolio's (Fund's) net assets in warrants
(valued at the lower of cost or market) (other than warrants acquired by
the Portfolio (Fund) as part of a unit or attached to securities at the
time of purchase), but not more than 2% of the Portfolio's (Fund's) net
assets may be invested in warrants not listed on the American Stock
Exchange or the New York Stock Exchange, Inc. ("NYSE");
(xiv) make short sales of securities or maintain a short position, unless at all
times when a short position is open it owns an equal amount of such
securities or securities convertible into or exchangeable, without payment
of any further consideration, for securities of the same issue and equal
in amount to, the securities sold short, and unless not more than 10% of
the Portfolio's (Fund's) net assets (taken at market value) is represented
by such securities, or securities convertible into or exchangeable for
such securities, at any one time (the Portfolio (Fund) has no current
intention to engage in short selling);
Each Fund will comply with the state securities laws and regulations of
all states in which it is registered. Each Portfolio will comply with the
permitted investments and investment limitations in the securities laws and
regulations of all states in which the corresponding Fund, or any other
registered investment company investing in the Portfolio, is registered.
For purposes of diversification under the 1940 Act, identification of the
"issuer" of a Municipal Obligation depends on the terms and conditions of the
obligation. If the assets and revenues of an agency, authority, instrumentality
or other political subdivision are separate from those of the government
creating the subdivision, and the obligation is backed only by the assets and
revenues of the subdivision, the subdivision will be regarded as the sole
issuer. Similarly, if a private activity bond is backed only by the assets and
revenues of the nongovernmental user, the nongovernmental user will be deemed to
be the sole issuer. If in either case the creating government or another entity
guarantees an obligation or issues a letter of credit to secure the obligation,
the guarantee or letter of credit will be considered a separate security issued
by the government or entity and would be separately valued.
PORTFOLIO TURNOVER
Each of the Portfolios may attempt to increase yields by trading to take
advantage of short-term market variations, which results in higher portfolio
turnover. This policy does not result in higher brokerage commissions to the
Portfolios, however, as the purchases and sales of portfolio securities are
usually effected as principal transactions. The Portfolios' turnover rates are
not expected to have a material effect on their income and have been and are
expected to be zero for regulatory reporting purposes.
<PAGE>
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities and other financial instruments for a
Portfolio are made by Bankers Trust, which also is responsible for placing these
transactions, subject to the overall review of the Board of Trustees. Although
investment requirements for each Portfolio are reviewed independently from those
of the other accounts managed by Bankers Trust and those of the other
Portfolios, investments of the type the Portfolios may make may also be made by
these other accounts or Portfolios. When a Portfolio and one or more other
Portfolios or accounts managed by Bankers Trust are prepared to invest in, or
desire to dispose of, the same security or other financial instrument, available
investments or opportunities for sales will be allocated in a manner believed by
Bankers Trust to be equitable to each. In some cases, this procedure may affect
adversely the price paid or received by a Portfolio or the size of the position
obtained or disposed of by a Portfolio.
Purchases and sales of securities on behalf of the Portfolios usually are
principal transactions. These securities are normally purchased directly from
the issuer or from an underwriter or market maker for the securities. The cost
of securities purchased from underwriters includes an underwriting commission or
concession and the prices at which securities are purchased from and sold to
dealers include a dealer's mark-up or mark-down. U.S. Government Obligations are
generally purchased from underwriters or dealers, although certain newly issued
U.S. Government Obligations may be purchased directly from the U.S. Treasury or
from the issuing agency or instrumentality.
Over-the-counter purchases and sales are transacted directly with
principal market makers except in those cases in which better prices and
executions may be obtained elsewhere and principal transactions are not entered
into with persons affiliated with the Portfolios except pursuant to exemptive
rules or orders adopted by the Securities and Exchange Commission (the "SEC").
Under rules adopted by the SEC, broker-dealers may not execute transactions on
the floor of any national securities exchange for the accounts of affiliated
persons, but may effect transactions by transmitting orders for execution.
In selecting brokers or dealers to execute portfolio transactions on
behalf of a Portfolio, Bankers Trust seeks the best overall terms available. In
assessing the best overall terms available for any transaction, Bankers Trust
will consider the factors it deems relevant, including the breadth of the market
in the investment, the price of the investment, the financial condition and
execution capability of the broker or dealer and the reasonableness of the
commission, if any, for the specific transaction and on a continuing basis. In
addition, Bankers Trust is authorized, in selecting parties to execute a
particular transaction and in evaluating the best overall terms available, to
consider the brokerage, but not research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934, as amended) provided to
the Portfolio involved, the other Portfolios and/or other accounts over which
Bankers Trust or its affiliates exercise investment discretion. Bankers Trust's
fees under its agreements with the Portfolios are not reduced by reason of its
receiving brokerage services.
NET ASSET VALUE
The Prospectus discusses the time at which the net asset values of the
Funds are determined for purposes of sales and redemptions. The net asset value
of a Fund's investment in a Portfolio is equal to the Fund's pro rata share of
the total investment of the Fund and of the other investors in the Portfolio
less the Fund's pro rata share of the Portfolio's liabilities. The following is
a description of the procedures used by the Portfolios in valuing their assets.
The valuation of each Portfolio's securities is based on their amortized
cost, which does not take into account unrealized capital gains or losses.
Amortized cost valuation involves initially valuing an instrument at its cost
and thereafter assuming a constant amortization to maturity of any discount or
premium, generally without regard to the impact of fluctuating interest rates on
the market value of the instrument. Although this method provides certainty in
valuation, it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price a Portfolio would receive if
it sold the instrument.
<PAGE>
The Portfolios' use of the amortized cost method of valuing their
securities is permitted by a rule adopted by the SEC. Each Portfolio will also
maintain a dollar-weighted average portfolio maturity of 90 days or less,
purchase only instruments having remaining maturities of two years or less and
invest only in securities determined by or under the supervision of the Board of
Trustees to be of high quality with minimal credit risks.
Pursuant to the rule, the Board of Trustees of each Portfolio also has
established procedures designed to allow investors in the Portfolio, such as the
Trust, to stabilize, to the extent reasonably possible, the investors' price per
share as computed for the purpose of sales and redemptions at $1.00. These
procedures include review of each Portfolio's holdings by the Portfolio's Board
of Trustees, at such intervals as it deems appropriate, to determine whether the
value of the Portfolio's assets calculated by using available market quotations
or market equivalents deviates from such valuation based on amortized cost.
The rule also provides that the extent of any deviation between the value
of each Portfolio's assets based on available market quotations or market
equivalents and such valuation based on amortized cost must be examined by the
Portfolio's Board of Trustees. In the event the Portfolio's Board of Trustees
determines that a deviation exists that may result in material dilution or other
unfair results to investors or existing shareholders, pursuant to the rule, the
respective Portfolio's Board of Trustees must cause the Portfolio to take such
corrective action as such Board of Trustees regards as necessary and
appropriate, including: selling portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio maturity;
withholding dividends or paying distributions from capital or capital gains;
redeeming shares in kind; or valuing the Portfolio's assets by using available
market quotations.
Each investor in a Portfolio, including the corresponding Fund, may add to
or reduce its investment in the Portfolio on each day the Portfolio determines
its net asset value. At the close of each such business day, the value of each
investor's beneficial interest in the Portfolio will be determined by
multiplying the net asset value of the Portfolio by the percentage, effective
for that day, which represents that investor's share of the aggregate beneficial
interests in the Portfolio. Any additions or withdrawals, which are to be
effected as of the close of business on that day, will then be effected. The
investor's percentage of the aggregate beneficial interests in the Portfolio
will then be recomputed as the percentage equal to the fraction (i) the
numerator of which is the value of such investor's investment in the Portfolio
as of the close of business on such day plus or minus, as the case may be, the
amount of net additions to or withdrawals from the investor's investment in the
Portfolio effected as of the close of business on such day, and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of the
close of business on such day plus or minus, as the case may be, the amount of
net additions to or withdrawals from the aggregate investments in the Portfolio
by all investors in the Portfolio. The percentage so determined will then be
applied to determine the value of the investor's interest in the Portfolio as of
the close of the following business day.
PURCHASE AND REDEMPTION INFORMATION
The Trust may suspend the right of redemption or postpone the date of
payment for shares during any period when: (a) trading on the NYSE is restricted
by applicable rules and regulations of the SEC; (b) the NYSE is closed for other
than customary weekend and holiday closings; (c) the SEC has by order permitted
such suspension; or (d) an emergency exists as determined by the SEC.
Edgewood is the principal Distributor for shares of the Funds. In addition
to Edgewood's duties as Distributor, Edgewood and its affiliates may, in their
discretion, perform additional functions in connection with transactions in the
shares of the Funds.
<PAGE>
MANAGEMENT OF THE TRUST AND PORTFOLIOS
Each Board of Trustees is composed of persons experienced in financial
matters who meet throughout the year to oversee the activities of the Funds or
Portfolios they represent. In addition, the Trustees review contractual
arrangements with companies that provide services to the Funds/Portfolios and
review the Funds' performance.
The Trustees and officers of the Trust and the Portfolios, their
birthdates, and their principal occupations during the past five years are set
forth below. Their titles may have varied during that period. Unless otherwise
indicated, the address of each officer is 5800 Corporate Drive, Pittsburgh,
Pennsylvania 15237-5829.
TRUSTEES OF THE TRUST
S. LELAND DILL (birthdate: March 28, 1930) -- Trustee; Retired; Director,
Coutts Group, Coutts (U.S.A.) International; Coutts Trust Holdings Ltd;
Director, Zweig Series Trust; formerly Partner of KPMG Peat Marwick; Director,
Vinters International Company Inc.; General Partner of Pemco (an investment
company registered under the 1940 Act). His address is 5070 North Ocean Drive,
Singer Island, Florida 33404.
KELVIN J. LANCASTER (birthdate: December 10, 1924)-- Trustee; Professor,
Department of Economics, Columbia University. His address is 35 Claremont
Avenue, New York, New York 10027.
PHILIP SAUNDERS, JR. (birthdate: October 11, 1935) -- Trustee; Principal,
Philip Saunders Associates (Consulting); former Director of Financial Industry
Consulting, Wolf & Company; President, John Hancock Home Mortgage Corporation;
and Senior Vice President of Treasury and Financial Services, John Hancock
Mutual Life Insurance Company, Inc. His address is 445 Glen Road, Weston,
Massachusetts 02193.
TRUSTEES OF THE PORTFOLIOS
CHARLES P. BIGGAR (birthdate: October 13, 1930) -- Trustee; Retired;
Director of Chase/NBW Bank Advisory Board; Director, Batemen, Eichler, Hill
Richards Inc.; formerly Vice President of International Business Machines and
President of the National Services and the Field Engineering Divisions of IBM.
His address is 12 Hitching Post Lane, Chappaqua, New York 10514.
S. LELAND DILL (birthdate: March 28, 1930) -- Trustee; Retired; Director,
Coutts Group; and Coutts (U.S.A.) International; Coutts Trust Holdings Ltd;
Director, Zweig Series Trust; formerly Partner of KPMG Peat Marwick; Director,
Vinters International Company Inc.; General Partner of Pemco (an investment
company registered under the 1940 Act). His address is 5070 North Ocean Drive,
Singer Island, Florida 33404.
PHILIP SAUNDERS, JR. (birthdate: October 11, 1935) -- Trustee; Principal,
Philip Saunders Associates (Consulting); former Director of Financial Industry
Consulting, Wolf & Company; President, John Hancock Home Mortgage Corporation;
and Senior Vice President of Treasury and Financial Services, John Hancock
Mutual Life Insurance Company, Inc. His address is 445 Glen Road, Weston,
Massachusetts 02193.
OFFICERS OF THE TRUST AND THE PORTFOLIOS
Unless otherwise specified, each officer listed below holds the same
position with the Trust and each Portfolio.
RONALD M. PETNUCH (birthdate: February 27, 1960) -- President and
Treasurer; Senior Vice President, Federated Services Company ("FSC"); formerly,
Director of Proprietary Client Services, Federated Administrative Services
("FAS"), and Associate Corporate Counsel, Federated Investors ("FI").
<PAGE>
CHARLES L. DAVIS, JR. (birthdate: March 23, 1960) -- Vice President and
Assistant Treasurer; Vice President, FAS.
JAY S. NEUMAN (birthdate: April 22, 1950) -- Secretary; Corporate Counsel,
FI.
Messrs. Petnuch, Davis, and Neuman also hold similar positions for other
investment companies for which Edgewood or an affiliate serves as the
principal underwriter.
No person who is an officer or director of Bankers Trust is an officer or
Trustee of the Trust or the Portfolios. No director, officer or employee of
Edgewood or any of its affiliates will receive any compensation from the Trust
or any Portfolio for serving as an officer or Trustee of the Trust or the
Portfolios.
TRUSTEE COMPENSATION TABLE
AGGREGATE AGGREGATE TOTAL COMPENSATION
NAME OF PERSON, COMPENSATION COMPENSATION FROM FUND COMPLEX**
POSITION FROM TRUST*+ FROM PORTFOLIOS+ PAID TO TRUSTEES***
Kelvin Lancaster,
Trustee of Trust $13,125 N/A $27,500
Philip Saunders, Jr.,
Trustee of Trust and
Portfolios $13,125 $13,750 $27,500
Charles Biggar,
Trustee of Portfolios N/A $13,750 $27,500
S. Leland Dill,
Trustee of Trust
and Portfolios $13,125 $13,750 $27,500
* The aggregate compensation is provided for the BT Investment Funds which is
comprised of 16 funds.
+ Information is provided for the Trust's most recent fiscal year ended December
31, 1997.
** Aggregated information is furnished for the BT Family of Funds which consists
of the following: BT Investment Funds, BT Institutional Funds, BT Pyramid
Funds, BT Advisor Funds, BT Investment Portfolios, Cash Management Portfolio,
Treasury Money Portfolio, Tax Free Money Portfolio, NY Tax Free Money
Portfolio, International Equity Portfolio, Short Intermediate U.S. Government
Securities Portfolio, Intermediate Tax Free Portfolio, Asset Management
Portfolio, Equity 500 Index Portfolio, and Capital Appreciation Portfolio.
*** The compensation is provided for the calendar year ended December 31, 1997.
Bankers Trust reimbursed the Funds and Portfolios for a portion of their
Trustees fees for the period above. See "Investment Adviser" and "Administrator"
below.
As of April 1, 1998, the Trustees and officers of the Trust and the
Portfolios owned in the aggregate less than 1% of the shares of any Fund or of
the Trust (all series taken together).
<PAGE>
As of April 1, 1998, the following shareholders of record owned 5% or more
of the outstanding shares of Cash Management Fund: Private Bank Sweep, New York,
New York, owned approximately 69,528,122 shares (49.528%); and Circuit City
Credit Card Master Trust, New York, New York, owned approximately 29,106,725
shares (20.709%).
As of April 1, 1998, the following shareholders of record owned 5% or more
of the outstanding shares of Treasury Money Fund: Private Bank Sweep, New York,
New York, owned approximately 45,279,809 shares (14.43%); Bankers Trust Company,
New York, New York, owned approximately 25,645,099 shares (8.17%); American
Savings, Stockton, California, owned approximately 19,462,171 shares (6.20%);
and Nevada Power Company, Las Vegas, Nevada, owned approximately 17,093,625
shares (5.44%).
As of April 1, 1998, the following shareholders of record owned 5% or more
of the outstanding shares of Tax Free Money Fund: Private Bank Sweep, New York,
New York, owned approximately 115,972,258 shares (77.57%); and Burling
Associates, New York, New York, owned approximately 10,156,567 shares (6.79%).
As of April 1, 1998, the following shareholder of record owned 5% or more
of the outstanding shares of NY Tax Free Money Fund: Private Bank Sweep, New
York, New York, owned approximately 65,027,720 shares (75.00%).
INVESTMENT ADVISER
Under the terms of an investment advisory agreement between each Portfolio
and Bankers Trust (the "Advisory Agreement"), Bankers Trust manages each
Portfolio subject to the supervision and direction of the Board of Trustees.
Bankers Trust will: (i) act in strict conformity with each Portfolio's
Declaration of Trust, the 1940 Act and the Investment Advisors Act of 1940, as
the same may from time to time be amended; (ii) manage each Portfolio in
accordance with the Portfolio's investment objectives, restrictions and policies
as stated in the relevant Prospectus and herein; (iii) make investment decisions
for each Portfolio; and (iv) place purchase and sale orders for securities and
other financial instruments on behalf of each Portfolio.
Bankers Trust bears all expenses in connection with the performance of
services under the Advisory Agreement. The Trust and each Portfolio bears
certain other expenses incurred in its operation, including: taxes, interest,
brokerage fees and commissions, if any; fees of Trustees of the Trust or the
Portfolio who are not officers, directors or employees of Bankers Trust,
Edgewood or any of their affiliates; SEC fees and state Blue Sky qualification
fees; administrative and services fees; certain insurance premiums; outside
auditing and legal expenses; costs of maintenance of corporate existence; costs
attributable to investor services, including, without limitation, telephone and
personnel expenses; costs of preparing and printing Prospectus and statements of
additional information for regulatory purposes and for distribution to existing
shareholders; costs of shareholders' reports and meetings of shareholders,
officers and Trustees of the Trust or the Portfolio; and any extraordinary
expenses.
For the fiscal years ended December 31, 1997, 1996, and 1995, Bankers
Trust earned $6,544,181, $4,935,288, and $3,847,729, respectively, as
compensation for investment advisory services provided to Cash Management
Portfolio. During the same periods, Bankers Trust reimbursed $940,530, $761,230,
and $578,251, respectively, to Cash Management Portfolio to cover expenses.
For the fiscal years ended December 31, 1997, 1996, and 1995, Bankers
Trust earned $3,067,422, $2,787,544, and $1,764,890, respectively, as
compensation for investment advisory services provided to Treasury Money
Portfolio. During the same periods, Bankers Trust reimbursed $60,612, $60,530,
and $69,965, respectively, to Treasury Money Portfolio to cover expenses.
For the fiscal years ended December 31, 1997, 1996, and 1995, Bankers
Trust earned $205,614, $187,326, and $180,724, respectively, as compensation for
investment advisory services provided to Tax Free Money Portfolio. During the
same periods, Bankers Trust reimbursed $30,823, $43,832, and $31,541,
respectively, to Tax Free Money Portfolio to cover expenses.
For the fiscal years ended December 31, 1997, 1996, and 1995, Bankers
Trust earned $141,157, $129,423, and $125,340, respectively, as compensation for
investment advisory services provided to NY Tax Free Money Portfolio. During the
same periods, Bankers Trust reimbursed $29,305, $41,003, and $29,751,
respectively, to NY Tax Free Money Portfolio to cover expenses.
Bankers Trust may have deposit, loan and other commercial banking
relationships with the issuers of obligations which may be purchased on behalf
of the Portfolios, including outstanding loans to such issuers which could be
repaid in whole or in part with the proceeds of securities so purchased. Such
affiliates deal, trade and invest for their own accounts in such obligations and
are among the leading dealers of various types of such obligations. Bankers
Trust has informed the Portfolios that, in making its investment decisions, it
does not obtain or use material inside information in its possession or in the
possession of any of its affiliates. In making investment recommendations for
the Portfolios, Bankers Trust will not inquire or take into consideration
whether an issuer of securities proposed for purchase or sale by a Portfolio is
a customer of Bankers Trust, its parent or its subsidiaries or affiliates and,
in dealing with its customers, Bankers Trust, its parent, subsidiaries, and
affiliates will not inquire or take into consideration whether securities of
such customers are held by any fund managed by Bankers Trust or any such
affiliate.
ADMINISTRATOR
Under the Administration and Services Agreements, Bankers Trust is
obligated on a continuous basis to provide such administrative services as the
respective Board of Trustees of the Trust and each Portfolio reasonably deems
necessary for the proper administration of the Trust and each Portfolio. Bankers
Trust will generally assist in all aspects of the Funds' and Portfolios'
operations; supply and maintain office facilities (which may be in Bankers
Trust's own offices), statistical and research data, data processing services,
clerical, accounting, bookkeeping and recordkeeping services (including without
limitation the maintenance of such books and records as are required under the
1940 Act and the rules thereunder, except as maintained by other agents of the
Trust or the Portfolios), internal auditing, executive and administrative
services, and stationery and office supplies; prepare reports to shareholders or
investors; prepare and file tax returns; supply financial information and
supporting data for reports to and filings with the SEC and various state Blue
Sky authorities; supply supporting documentation for meetings of the Board of
Trustees; provide monitoring reports and assistance regarding compliance with
the Trust's and each Portfolio's Declaration of Trust, by-laws, investment
objectives and policies and with Federal and state securities laws; arrange for
appropriate insurance coverage; calculate the net asset value, net income and
realized capital gains or losses of the Trust; and negotiate arrangements with,
and supervise and coordinate the activities of, agents and others retained to
supply services.
Pursuant to a sub-administration agreement (the "Sub-Administration
Agreement") FSC performs such sub-administration duties for the Trust and each
Portfolio as from time to time may be agreed upon by Bankers Trust and FSC. The
Sub-Administration Agreement provides that FSC will receive such compensation as
from time to time may be agreed upon by FSC and Bankers Trust. All such
compensation will be paid by Bankers Trust.
Bankers Trust has agreed that if in any fiscal year the aggregate expenses
of any Fund and its respective Portfolio (including fees pursuant to the
Advisory Agreement, but excluding interest, taxes, brokerage and, if permitted
by the relevant state securities commissions, extraordinary expenses) exceed the
expense limitation of any state having jurisdiction over the Fund, Bankers Trust
will reimburse the Fund for the excess expense to the extent required by state
law. As of the date of this SAI, the most restrictive annual expense limitation
applicable to any Fund is 2.5% of the Fund's first $30 million of average annual
net assets, 2.0% of the next $70 million of average annual net assets and 1.5%
of the remaining average annual net assets.
<PAGE>
For the fiscal years ended December 31, 1997, 1996, and 1995, Bankers
Trust earned compensation of $717,130, $762,676, and $944,849, respectively, for
administrative and other services provided to the Cash Management Fund and
reimbursed $12,060, $19,705, and $4,831, respectively, to the Cash Management
Fund to cover expenses.
For the fiscal years ended December 31, 1997, 1996, and 1995, Bankers Trust
earned compensation of $2,181,394, $1,645,096, and $1,282,576, respectively, for
administrative and other services provided to the Cash Management Portfolio.
For the fiscal years ended December 31, 1997, 1996, and 1995, Bankers
Trust earned compensation of $2,204,379, $3,152,044, and $3,438,574,
respectively, for administrative and other services provided to the Treasury
Money Fund and reimbursed $51,565, $56,587, and $56,179, respectively, to the
Treasury Money Fund to cover expenses.
For the fiscal years ended December 31, 1997, 1996, and 1995, Bankers Trust
earned compensation of $1,022,474, $929,181, and $588,297, respectively, for
administrative and other services provided to the Treasury Money Portfolio.
For the fiscal years ended December 31, 1997, 1996, and 1995, Bankers
Trust earned $752,445, $685,637, and $661,345, respectively, for administrative
and other services provided to the Tax Free Money Fund and reimbursed $37,359,
$46,825, and $47,614, respectively, to the Tax Free Money Fund to cover
expenses.
For the fiscal years ended December 31, 1997, 1996, and 1995, Bankers Trust
earned $68,538, $62,442, and $60,241, respectively, for administrative and other
services provided to Tax Free Money Portfolio.
For the fiscal years ended December 31, 1997, 1996, and 1995, Bankers
Trust earned compensation of $516,579, $473,735, and $458,735, respectively, for
administrative and other services provided to the NY Tax Free Money Fund and
reimbursed $29,632, $34,578, and $29,518, respectively, to the NY Tax Free Money
Fund to cover expenses.
For the fiscal years ended December 31, 1997, 1996, and 1995, Bankers Trust
earned $47,052, $43,141, and $41,780, respectively, for administrative and other
services provided to the NY Tax Free Money Portfolio.
CUSTODIAN AND TRANSFER AGENT
Bankers Trust, 130 Liberty Street, (One Bankers Trust Plaza), New York,
New York 10006, serves as custodian and transfer agent for the Trust and as
custodian for each Portfolio pursuant to the Administration and Services
Agreements discussed above. As custodian, Bankers Trust holds the Funds' and
each Portfolio's assets. For such services, Bankers Trust receives monthly fees
from each Fund and Portfolio, which are included in the administrative services
fees discussed above. As transfer agent for the Trust, Bankers Trust maintains
the shareholder account records for each Fund, handles certain communications
between shareholders and the Trust and causes to be distributed any dividends
and distributions payable by the Trust. Bankers Trust is also reimbursed by the
Funds for its out-of-pocket expenses. Bankers Trust will comply with the
self-custodian provisions of Rule 17f-2 under the 1940 Act.
USE OF NAME
The Trust and Bankers Trust have agreed that the Trust may use "BT" as
part of its name for so long as Bankers Trust serves as investment adviser. The
Trust has acknowledged that the term "BT" is used by and is a property right of
certain subsidiaries of Bankers Trust and that those subsidiaries and/or Bankers
Trust may at any time permit others to use that term.
<PAGE>
The Trust may be required, on 60 days' notice from Bankers Trust at any
time, to abandon use of the acronym "BT" as part of its name. If this were to
occur, the Trustees would select an appropriate new name for the Trust, but
there would be no other material effect on the Trust, its shareholders or
activities.
BANKING REGULATORY MATTERS
Bankers Trust has been advised by its counsel that in its opinion Bankers
Trust may perform the services for the Portfolios contemplated by the Advisory
Agreements and other activities for the Trust and the Portfolios described in
the Prospectus and this SAI without violation of the Glass-Steagall Act or other
applicable banking laws or regulations. However, counsel has pointed out that
future changes in either Federal or state statutes and regulations concerning
the permissible activities of banks or trust companies, as well as future
judicial or administrative decisions or interpretations of present and future
statutes and regulations, might prevent Bankers Trust from continuing to perform
those services for the Trust or the Portfolios. If the circumstances described
above should change, the Trust's Board of Trustees would review the Trust's
relationship with Bankers Trust and consider taking all actions necessary in the
circumstances.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd Street, New
York, New York 10022-4669, serves as Counsel to the Trust and from time to time
provides certain legal services to Bankers Trust. Coopers & Lybrand L.L.P., 1100
Main Street, Suite 900, Kansas City, Missouri 64105 has been selected as
Independent Accountants for the Trust.
ORGANIZATION OF THE TRUST
Shares of the Trust do not have cumulative voting rights, which means that
holders of more than 50% of the shares voting for the election of Trustees can
elect all Trustees. Shares are transferable but have no preemptive, conversion
or subscription rights. Shareholders generally vote by Fund, except with respect
to the election of Trustees and the ratification of the selection of independent
accountants.
The Trust is not required to hold annual meetings of shareholders but will
hold special meetings of shareholders when in the judgment of the Trustees it is
necessary or desirable to submit matters for a shareholder vote. Shareholders
have under certain circumstances the right to communicate with other
shareholders in connection with requesting a meeting of shareholders for the
purpose of removing one or more Trustees without a meeting. Upon liquidation of
a Fund, shareholders of that Fund would be entitled to share pro rata in the net
assets of the Fund available for distribution to shareholders.
Massachusetts law provides that shareholders could under certain
circumstances be held personally liable for the obligations of the Trust.
However, the Declaration of Trust disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of this disclaimer be given in
each agreement, obligation or instrument entered into or executed by the Trust
or a Trustee. The Declaration of Trust provides for indemnification from the
Trust's property for all losses and expenses of any shareholder held personally
liable for the obligations of the Trust. Thus, the risk of shareholders
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Trust itself would be unable to meet its obligations,
a possibility that the Trust believes is remote. Upon payment of any liability
incurred by the Trust, the shareholder paying the liability will be entitled to
reimbursement from the general assets of the Trust. The Trustees intend to
conduct the operations of the Trust in a manner so as to avoid, as far as
possible, ultimate liability of the shareholders for liabilities of the Trust.
Whenever the Trust is requested to vote on a matter pertaining to a
Portfolio, the Trust will vote its shares without a meeting of shareholders of
the respective Fund if the proposal is one, if which made with respect to a
Fund, would not require the vote of shareholders of that Fund as long as such
action is permissible under applicable statutory and regulatory requirements.
For all other matters requiring a vote, the Trust will hold a meeting of
shareholders of the respective Funds and, at the meeting of investors in a
Portfolio, the Trust will cast all of its votes in the same proportion as the
votes all its shares at the Portfolio meeting, other investors with a greater
pro rata ownership of the Portfolio could have effective voting control of the
operations of the Portfolio.
The Trust was organized under the name BT Tax-Free Investment Trust and
assumed its current name of BT Investment Funds on May 16, 1988.
TAXES
The following is only a summary of certain tax considerations generally
affecting the Funds and their shareholders, and is not intended as a substitute
for careful tax planning. Shareholders are urged to consult their tax advisers
with specific reference to their own tax situations.
As described above and in the Prospectus: (i) the Cash Management Fund and
the Treasury Money Fund are designed to provide investors with current income;
(ii) the Tax Free Money Fund is designed to provide investors with current
income excluded from gross income for Federal income tax purposes and (iii) the
NY Tax Free Money Fund is designed to provide investors with current income
excluded from gross income for Federal income tax purposes and exempt from New
York State and New York City personal income taxes. The Funds are not intended
to constitute balanced investment programs and are not designed for investors
seeking capital gains, maximum income or maximum tax-exempt income irrespective
of fluctuations in principal. Investment in the Tax Free Money Fund or the NY
Tax Free Money Fund would not be suitable for tax-exempt institutions, qualified
retirement plans, H.R. 10 plans and individual retirement accounts since such
investors would not gain any additional tax benefit from the receipt of
tax-exempt income.
Each Fund intends to qualify as a separate regulated investment company
under the Internal Revenue Code of 1986, as amended (the "Code"). Provided that
each Fund is a regulated investment company, each Fund will not be liable for
Federal income taxes to the extent all of its taxable net investment income and
net realized long-and short-term capital gains, if any, are distributed to its
shareholders. Although the Trust expects the Funds to be relieved of all or
substantially all Federal income taxes, depending upon the extent of their
activities in states and localities in which their offices are maintained, in
which their agents or independent contractors are located or in which they are
otherwise deemed to be conducting business, that portion of a Fund's income
which is treated as earned in any such state or locality could be subject to
state and local tax. Any such taxes paid by a Fund would reduce the amount of
income and gains available for distribution to its shareholders.
While each Fund does not expect to realize net long-term capital gains,
any such gains realized will be distributed annually as described in the
Prospectus. Such distributions ("capital gain dividends"), if any, will be
taxable to shareholders as long-term capital gains, regardless of how long a
shareholder has held Fund shares, and will be designated as capital gain
dividends in a written notice mailed by the Fund to shareholders after the close
of the Fund's prior taxable year.
If a shareholder fails to furnish a correct taxpayer identification
number, fails to report fully dividend or interest income or fails to certify
that he or she has provided a correct taxpayer identification number and that he
or she is not subject to "backup withholding," then the shareholder may be
subject to a 31% backup withholding tax with respect to (i) any taxable
dividends and distributions and (ii) the proceeds of any redemptions of Fund
shares. An individual's taxpayer identification number is his or her social
security number. The 31% backup withholding tax is not an additional tax and may
be credited against a taxpayer's regular Federal income tax liability.
Because the Tax Free Money Fund and the NY Tax Free Money Fund will
distribute exempt-interest dividends, all or a portion of any interest on
indebtedness incurred by a shareholder to purchase or carry shares of these
Funds will not be deductible for Federal income and New York State and New York
City personal income tax purposes. In addition, the Code may require a
shareholder of these Funds, if he receives exempt-interest dividends, to treat
as taxable income a portion of certain otherwise nontaxable social security and
railroad retirement benefit payments. Furthermore, that portion of any
exempt-interest dividend paid by one of these Funds which represents income from
private activity bonds held by the Fund may not retain its tax-exempt status in
the hands of a shareholder who is a "substantial user" of a facility financed by
such bonds, or a "related person" thereof. Moreover, as noted in the Prospectus
for these Funds, (i) some or all of a Fund's dividends and distributions may be
specific preference items, or a component of an adjustment item, for purposes of
the Federal individual and corporate alternative minimum taxes and (ii) the
receipt of a Fund's dividends and distributions may affect a corporate
shareholder's Federal "environmental" tax liability. In addition, the receipt of
Fund dividends and distributions may affect a foreign corporate shareholder's
Federal "branch profits" tax liability and a Subchapter S corporate
shareholder's Federal "excess net passive income" tax liability. Shareholders
should consult their own tax advisers as to whether they are (i) "substantial
users" with respect to a facility or "related" to such users within the meaning
of the Code and (ii) subject to a Federal alternative minimum tax, the Federal
"environmental" tax, the Federal "branch profits" tax or the Federal "excess net
passive income" tax.
Each Tax Free Money Fund shareholder will receive after the close of the
calendar year an annual statement as to the Federal income tax status of his
dividends and distributions from the Fund for the prior calendar year. Each NY
Tax Free Money Fund shareholder will receive after the close of the calendar
year an annual statement as to the Federal income and New York State and City
personal income tax status of his dividends and distribution from the Fund for
the prior calendar year. These statements will also designate the amount of
exempt-interest dividends that is a specific preference item for purposes of the
Federal individual and corporate alternative minimum taxes. Each shareholder
will also receive, if appropriate, various written notices after the close of
the Funds' prior taxable year as to the Federal income status of his dividends
and distributions which were received from the Funds during the Funds' prior
taxable year. Shareholders should consult their tax advisers as to any state and
local taxes that may apply to these dividends and distributions. The dollar
amount of dividends excluded from Federal income taxation or exempt from New
York State and City personal income taxation, and the dollar amount subject to
such income taxation, if any, will vary for each shareholder depending upon the
size and duration of each shareholder's investment in a Fund. To the extent that
the Funds earn taxable net investment income, each of the Funds intends to
designate as taxable dividends the same percentage of each day's dividend as its
taxable net investment income bears to its total net investment income earned on
that day. Therefore, the percentage of each day's dividend designated as
taxable, if any, may vary from day to day.
PERFORMANCE INFORMATION
From time to time a Fund may quote its performance in terms of "current
yield," "effective yield" or "tax equivalent yield" in reports or other
communications to shareholders or in advertising material.
The effective yield is an annualized yield based on a compounding of the
unannualized base period return. These yields are each computed in accordance
with a standard method prescribed by the rules of the SEC, by first determining
the "net change in account value" for a hypothetical account having a share
balance of one share at the beginning of a seven-day period (the "beginning
account value"). The net change in account value equals the value of additional
shares purchased with dividends from the original share and dividends declared
on both the original share and any such additional shares. The unannualized
"base period return" equals the net change in account value divided by the
beginning account value. Realized gains or losses or changes in unrealized
appreciation or depreciation are not taken into account in determining the net
change in account value. The tax equivalent yields of the Tax Free Money Fund
and the NY Tax Free Money Fund are computed by dividing the portion of a Fund's
yield which is tax exempt by one minus a stated income tax rate and adding the
product to that portion, if any, of the Fund's yield that is not tax exempt.
<PAGE>
The yields are then calculated as follows:
Base Period Return = Net Change in Account Value
Beginning Account Value
Current Yield = Base Period Return x 365/7
Effective Yield = [(1 + Base Period Return)365/7] - 1
Tax Equivalent Yield = Current Yield
(1 - Tax Rate)
The following table sets forth various measures of the performance for
each of the Funds for the seven days ended December 31, 1997.
Cash
Tax Free NY Tax Free Management Treasury
Money Fund Money Fund Fund Money Fund
Current Yield 3.22% 3.20% 5.06% 4.93%
Effective Yield 3.27% 3.25% 5.19% 5.05%
Tax Equivalent Yield 5.41% 6.14% N/A N/A
* Assumes a maximum Federal rate of 31%.
** Assumes a maximum combined Federal, New York State and New York City tax
rate of 39%
FINANCIAL STATEMENTS
The financial statements for the Funds and the Portfolios for the fiscal
year ended December 31, 1997, are incorporated herein by reference to the Funds'
Annual Report dated December 31, 1997. A copy of the Funds' Annual Report may be
obtained without charge by contacting the respective Fund.
<PAGE>
APPENDIX
DESCRIPTION OF RATINGS
DESCRIPTION OF S&P CORPORATE BOND RATINGS:
AAA - Bonds rated AAA have the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
AA - Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
S&P's letter ratings may be modified by the addition of a plus or a minus
sign, which is used to show relative standing within the major categories,
except in the AAA rating category.
DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS:
Aaa - Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
Moody's applies the numerical modifiers 1, 2 and 3 to each generic rating
classification from Aa through B. The modifier 1 indicates that the security
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the issue ranks in the
lower end of its generic rating category. DESCRIPTION OF FITCH IBCA, INC.
("FITCH") CORPORATE BOND RATINGS:
AAA--Securities of this rating are regarded as strictly high-grade,
broadly marketable, suitable for investment by trustees and fiduciary
institutions, and liable to but slight market fluctuation other than through
changes in the money rate. The factor last named is of importance varying with
the length of maturity. Such securities are mainly senior issues of strong
companies, and are most numerous in the railway and public utility fields,
though some industrial obligations have this rating. The prime feature of an AAA
rating is showing of earnings several times or many times interest requirements
with such stability of applicable earnings that safety is beyond reasonable
question whatever changes occur in conditions. Other features may enter in, such
as a wide margin of protection through collateral security or direct lien on
specific property as in the case of high class equipment certificates or bonds
that are first mortgages on valuable real estate. Sinking funds or voluntary
reduction of the debt by call or purchase are often factors, while guarantee or
assumption by parties other than the original debtor may also influence the
rating.
AA--Securities in this group are of safety virtually beyond question, and
as a class are readily salable while many are highly active. Their merits are
not greatly unlike those of the AAA class, but a security so rated may be of
junior though strong lien f in many cases directly following an AAA security f
or the margin of safety is less strikingly broad. The issue may be the
obligation of a small company, strongly secured but influenced as to ratings by
the lesser financial power of the enterprise and more local type of market.
<PAGE>
DESCRIPTION OF DUFF & PHELPS' CORPORATE BOND RATINGS:
AAA--Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury Funds.
AA+, AA, AA--High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic conditions.
DESCRIPTION OF S&P'S MUNICIPAL BOND RATINGS:
AAA--Prime--These are obligations of the highest quality. They have the
strongest capacity for timely payment of debt service.
General Obligation Bonds--In a period of economic stress, the issuers will
suffer the smallest declines in income and will be least susceptible to
autonomous decline. Debt burden is moderate. A strong revenue structure appears
more than adequate to meet future expenditure requirements.
Quality of management appears superior.
Revenue Bonds--Debt service coverage has been, and is expected to remain,
substantial; stability of the pledged revenues is also exceptionally strong due
to the competitive position of the municipal enterprise or to the nature of the
revenues. Basic security provisions (including rate covenant, earnings test for
issuance of additional bonds and debt service reserve requirements) are
rigorous. There is evidence of superior management.
AA--High Grade--The investment characteristics of bonds in this group are
only slightly less marked than those of the prime quality issues. Bonds rated AA
have the second strongest capacity for payment of debt service.
S&P's letter ratings may be modified by the addition of a plus or a minus
sign, which is used to show relative standing within the major rating
categories, except in the AAA rating category.
DESCRIPTION OF MOODY'S MUNICIPAL BOND RATINGS:
Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
Moody's may apply the numerical modifier 1 in each generic rating
classification from Aa through B. The modifier 1 indicates that the security
within its generic rating classification possesses the strongest investment
attributes.
<PAGE>
DESCRIPTION OF S&P MUNICIPAL NOTE RATINGS:
Municipal notes with maturities of three years or less are usually given
note ratings (designated SP-1 or SP-2) to distinguish more clearly the credit
quality of notes as compared to bonds. Notes rated SP-1 have a very strong or
strong capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given the designation of SP-1+.
Notes rated SP-2 have a satisfactory capacity to pay principal and interest.
DESCRIPTION OF MOODY'S MUNICIPAL NOTE RATINGS:
Moody's ratings for state and municipal notes and other short-term loans
are designated Moody's Investment Grade (MIG) and for variable rate demand
obligations are designated Variable Moody's Investment Grade (VMIG). This
distinction recognizes the differences between short-term credit risk and
long-term risk. Loans bearing the designation MIG-1/VMIG-1 are of the best
quality, enjoying strong protection from established cash flows of funds for
their servicing or from established and broad-based access to the market for
refinancing, or both. Loans bearing the designation MIG-1/VMIG-2 are of high
quality, with ample margins of protection, although not as large as the
preceding group.
DESCRIPTION OF S&P COMMERCIAL PAPER RATINGS:
Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics are denoted A-1+.
DESCRIPTION OF MOODY'S COMMERCIAL PAPER RATINGS:
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Issuers rated Prime-1 (or related supporting institutions) are
considered to have a superior capacity for repayment of short-term promissory
obligations.
DESCRIPTION OF FITCH COMMERCIAL PAPER RATINGS:
F1+--Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F1--Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than the strongest
issue.
DESCRIPTION OF DUFF & PHELPS' COMMERCIAL PAPER RATINGS:
Duff 1+--Highest certainty of timely payment. Short term liquidity,
including internal operating factors and/or access to alternative sources of
funds, is outstanding, and safety is just below risk free U.S. Treasury short
term obligations.
Duff 1--Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk factors are
minor.
DESCRIPTION OF THOMPSON BANK WATCH SHORT-TERM RATINGS:
T-1--The highest category; indicates a very high likelihood that principal
and interest will be paid on a timely basis.
<PAGE>
T-2--The second-highest category; while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1".
T-3--The lowest investment-grade category; indicates that while the
obligation is more susceptible to adverse developments (both internal and
external) than those with higher ratings, the capacity to service principal and
interest in a timely fashion is considered adequate.
T-4--The lowest rating category; this rating is regarded as non-investment
grade and therefore speculative.
DESCRIPTION OF THOMPSON BANKWATCH LONG-TERM RATINGS:
AAA--The highest category; indicates that the ability to repay principal
and interest on a timely basis is extremely high.
AA--The second-highest category; indicates a very strong ability to repay
principal and interest on a timely basis, with limited incremental risk compared
to issues rated in the highest category.
A--The third-highest category; indicates the ability to repay principal
and interest is strong. Issues rated "a" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.
BBB--The lowest investment-grade category; indicates an acceptable
capacity to repay principal and interest. Issues rated "BBB" are, however, more
vulnerable to adverse developments (both internal and external) than obligations
with higher ratings.
NON-INVESTMENT GRADE
(ISSUES REGARDED AS HAVING SPECULATIVE CHARACTERISTICS IN THE LIKELIHOOD OF
TIMELY REPAYMENT OF PRINCIPAL AND INTEREST.)
BB--While not investment grade, the "BB" rating suggests that the
likelihood of default is considerably less than for lower-rated issues. However,
there are significant uncertainties that could affect the ability to adequately
service debt obligations.
B--Issues rated "B" show a higher degree of uncertainty and therefore
greater likelihood of default than higher-rated issues. Adverse development
could well negatively affect the payment of interest and principal on a timely
basis.
CCC--Issues rated "CCC" clearly have a high likelihood of default, with
little capacity to address further adverse changes in financial circumstances.
CC--"CC" is applied to issues that are subordinate to other obligations
rated "CCC" and are afforded less protection in the event of bankruptcy or
reorganization.
D--Default
These long-term debt ratings can also be applied to local currency debt.
In such cases the ratings defined above will be preceded by the designation
"local currency".
RATINGS IN THE LONG-TERM DEBT CATEGORIES MAY INCLUDE A PLUS (+) OR MINUS
(-) DESIGNATION, WHICH INDICATES WHERE WITHIN THE RESPECTIVE CATEGORY THE ISSUE
IS PLACED.
<PAGE>
INVESTMENT ADVISER OF THE PORTFOLIOS AND ADMINISTRATOR
BANKERS TRUST COMPANY
DISTRIBUTOR
EDGEWOOD SERVICES, INC.
CUSTODIAN AND TRANSFER AGENT
BANKERS TRUST COMPANY
INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.
COUNSEL
WILLKIE FARR & GALLAGHER
--------------------
No person has been authorized to give any information or to make any
representations other than those contained in the Trust's Prospectus, its
Statements of Additional Information or the Trust's 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 the Trust. Neither the Prospectus nor this SAI constitutes an
offer in any state in which, or to any person to whom, such offer may not
lawfully be made.
--------------------
Cusip #055922108
Cusip #055922405
Cusip #055922306
Cusip #055922207
BT0275F (4/98)
PART C OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits:
(a) Financial Statements:
Incorporated by reference to the Registrant's Annual Reports
dated December 31, 1997 (File Nos. 33-07404 and 811-4760).
(b) Exhibits:
(1) (i) Conformed Copy of Declaration of Trust of the Trust; (9) (ii)
Supplement to Declaration of Trust; (9) (iii) Second Supplement to
Declaration of Trust; (9)
(2) Copy of By-Laws of the Trust; (9)
(3) Not applicable.
(4) Copy of Specimen stock certificates for shares of beneficial
interest of the Trust; (1)
(5) Not applicable.
(6) Conformed Copy of Distributor's Contract; (10) (i) Schedule A of
Exhibit A to the Distributor's Contract; + (ii)Schedule A of
Exhibit B to the Distributor's Contract; +
(7) Not applicable.
(8) Conformed Copy of Custodian Agreement between the Registrant and
Bankers Trust Company; (12)
(i) Conformed Copy of Amendment #2 to Exhibit A of the Custodian
Agreement; (14)
(9) (i) Administration and Services Agreement; (6)
(ii) Schedule of Fees under Administration and Services
Agreement; (7)
(iii) Exhibit D to the Administration and Services Agreement; (12)
(10) Not applicable.
(11) Conformed copy of Consent of Independent Public Accountants; + (12)
Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Conformed Copy of Plan of Distribution; (10)
(16) Copy of Schedules for Computation of Performance Quotations; (2)
(17) Copy of Financial Data Schedules; +
- -----------------------------------
+ All exhibits have been filed electronically.
1. Incorporated by reference to the Registrant's registration statement on
Form N-1A ("Registration Statement") as filed with the Securities and
Exchange Commission ("Commission") on October 24, 1986.
2. Incorporated by reference to Post-Effective Amendment No. 14 to
Registrant's Registration Statement as filed with the Commission on
February 13, 1992.
6. Incorporated by reference to Post-Effective Amendment No. 23 to
Registrant's Registration Statement as filed with the Commission on April
30, 1993.
7. Incorporated by reference to Post-Effective Amendment No. 29 to
Registrant's Registration Statement as filed with the Commission on
November 8, 1993.
9. Incorporated by reference to Post-Effective Amendment No. 34 to
Registrant's Registration Statement as filed with the Commission on July
31, 1995.
10. Incorporated by reference to Post-Effective Amendment No. 40 to
Registrant's Registration Statement as filed with the Commission on January
30, 1997.
12. Incorporated by reference to Post-Effective Amendment No. 44 to
Registrant's Registration Statement as filed with the Commission on July 1,
1997.
14. Incorporated by reference to Post-Effective Amendment No. 46 to
Registrant's Registration Statement as filed with the Commission on January
28, 1998.
<PAGE>
(18) Not applicable.
(19) Conformed Copy of Power of Attorney; (13)
ITEM 25. Persons Controlled by or Under Common Control with Registrant:
Not applicable.
ITEM 26. Number of Holders of Securities:
Title of Class Number of Record Holders
as of April 17, 1998
Tax Free Money Fund 145
NY Tax Free Money Fund 118
Cash Management Fund 240
Treasury Money Fund 642
Intermediate Tax Free Fund 78
Small Cap Fund 626
Pacific Basin Equity Fund 195
BT Investment Lifecycle Short Range Fund 53
BT Investment Lifecycle Mid Range Fund 41
BT Investment Lifecycle Long Range Fund 42
Latin American Equity Fund 328
International Equity Fund 10,208
Global High Yield Securities Fund 162
Capital Appreciation Fund 285
Global Emerging Markets Equity Fund 0
International Small Company Equity Fund 0
ITEM 27. Indemnification; (11)
ITEM 28. Business and Other Connections of Investment Adviser:
Bankers Trust serves as investment adviser to each Fund's Portfolio.
Bankers Trust, a New York banking corporation, is a wholly owned
subsidiary of Bankers Trust New York Corporation. Bankers Trust
conducts a variety of commercial banking and trust activities and is
a major wholesale supplier of financial services to the international
institutional market. To the knowledge of the Trust, none of the
directors or officers of Bankers Trust, except those set forth below,
is or has been at anytime during the past two fiscal years engaged in
any other business, profession, vocation or employment of a
substantial nature, except that certain directors and officers also
hold various positions with and engage in business for Bankers Trust
New York Corporation. Set forth below are the names and principal
businesses of the directors and officers of Bankers Trust who are or
during the past two fiscal years have been engaged in any other
business, profession, vocation or employment of a substantial nature.
These persons may be contacted c/o Bankers Trust Company, 130 Liberty
Street, New York, New York 10006.
11. Incorporated by reference to Post-Effective Amendment No. 38 to
Registrant's Registration Statement as filed with the Commission on April
29, 1996.
13. Incorporated by reference to Post-Effective Amendment No. 45 to
Registrant's Registration Statement as filed with the Commission on
September 10, 1997.
<PAGE>
George B. Beitzel, International Business Machines Corporation, Old
Orchard Road, Armonk, NY 10504. Director, Bankers Trust Company;
Retired senior vice president and Director, International Business
machines Corporation; Director, Computer Task Group; Director,
Phillips Petroleum Company; Director, Caliber Systems, Inc.
(formerly, Roadway Services Inc.); Director, Rohm and Haas Company;
Director, TIG Holdings; Chairman emeritus of Amherst College; and
Chairman of the Colonial Willimsburg Foundation.
Richard H. Daniel, Bankers Trust Company, 130 Liberty Street, New
York, New York 10006. Vice chairman and chief financial officer,
Bankers Trust Company and Bankers Trust New York Corporation;
Beneficial owner, general partner, Daniel Brothers, Daniel Lingo &
Assoc., Daniel Pelt & Assoc.; Beneficial owner, Rhea C. Daniel Trust.
Philip A. Griffiths, Bankers Trust Company, 130 Liberty Street, New
York, New York 10006. Director, Institute for Advanced Study;
Director, Bankers Trust Company; Chairman, Committee on Science,
Engineering and Public Policy of the National Academies of Sciences
and Engineering & the Institute of Medicine; and Chairman and member,
Nominations Committee and Committee on Science and Engineering
Indicators, National Science Board; Trustee, North Carolina School of
Science and Mathematics and the Woodward Academy.
William R. Howell, J.C. Penney Company, Inc., P.O. Box 10001, Plano,
TX 75301-0001. Chairman Emeritus, J.C. Penney Company, Inc.; Director,
Bankers Trust Company; Director, Exxon Corporation; Director,
Halliburton Company; Director, Warner-Lambert Corporation; Director,
The Williams Companies, Inc.; and Director, National Retail
Federation.
Vernon E. Jordan, Jr., Akin, Gump, Strauss, Hauer & Feld, LLP, 1333
New Hampshire Ave., N.W., Washington, DC 20036. Senior Partner, Akin,
Gump, Strauss, Hauer & Feld, LLP; Director, Bankers Trust Company;
Director, American Express Company; Director, Dow-Jones, Inc.;
Director, J.C. Penney Company, Inc.; Director, Revlon Group
Incorporated; Director, Ryder System, Inc.; Director, Sara Lee
Corporation; Director, Union Carbide Corporation; Director, Xerox
Corporation; Trustee, Brookings Institution; Trustee, The Ford
Foundation; and Trustee, Howard University.
David Marshall, 130 Liberty Street, New York, New York 10006. Chief
Information Officer and Executive Vice President, Bankers Trust New
York Corporation; Senior Managing Director, Bankers Trust Company.
Hamish Maxwell, Philip Morris Companies Inc., 120 Park Avenue, New
York, NY 10006. Retired Chairman and Chief Executive Officer, Philip
Morris Companies Inc.; Director, Bankers Trust Company; Director, The
News Corporation Limited; Director, Sola International Inc.; and
Chairman, WWP Group pic.
Frank N. Newman, Bankers Trust Company, 130 Liberty Street, New York,
New York 10006. Chairman of the Board, Chief Executive Officer and
President, Bankers Trust New York Corporation and Bankers Trust
Company; Director, Bankers Trust Company; Director, Dow-Jones, Inc.;
and Director, Carnegie Hall.
N.J. Nicholas Jr., 745 Fifth Avenue, New York, NY 10020. Director,
Bankers Trust Company; Director, Boston Scientific Corporation; and
Director, Xerox Corporation.
<PAGE>
Russell E. Palmer, The Palmer Group, 3600 Market Street, Suite 530,
Philadelphia, PA 19104. Chairman and Chief Executive Officer of The
Palmer Group; Director, Bankers Trust Company; Director,
Allied-Signal Inc.; Director, Federal Home Loan Mortgage Corporation;
Director, GTE Corporation; Director, The May Department Stores
Company; Director, Safeguard Scientifics, Inc.; and Trustee,
University of Pennsylvania.
Donald L. Staheli, Bankers Trust Company, 130 Liberty Street, New
York, New York 10006. Chairman of the Board and Chief Executive
Officer, Continental Grain Company; Director, Bankers Trust Company;
Director, ContiFinancial Corporation; Director, Prudential Life
Insurance Company of America; Director, Fresenius Medical Care, A.g.;
Director, America-China Society; Director, National Committee on
United States-China Relations; Director, New York City Partnership;
Chairman, U.S.-China Business Council; Chairman, Council on Foreign
Relations; Chairman, National Advisor Council of Brigham Young
University's Marriott School of Management; Vice Chairman, The Points
of Light Foundation; and Trustee, American Graduate School of
International Management.
Patricia Carry Stewart, c/o Office of the Secretary, 130 Liberty
Street, New York, NY 10006. Director, Bankers Trust Company;
Director, CVS Corporation; Director, Community Foundation for Palm
Beach and Martin Counties; Trustee Emerita, Cornell University.
George J. Vojta, Bankers Trust Company, 130 Liberty Street, New York,
NY 10006. Vice Chairman, Bankers Trust New York Corporation and
Bankers Trust Company; Director, bankers Trust Company; Director;
Alicorp S.A.; Director; Northwest Airlines; Director, Private Export
Funding Corp.; Director, New York State Banking Board; Director, St.
Lukes-Roosevelt Hospital Center; Partner, New York City Partnership;
and Chairman, Wharton Financial Services Center.
Paul A. Volcker, Bankers Trust Company, 130 Liberty Street, New York,
New York 10006. Director, Bankers Trust Company; Director, American
Stock Exchange; Director, Nestle S.A.; Director, Prudential Insurance
Company; Director, UAL Corporation; Chairman, Group of 30; North
American Chairman, Trilateral Commission; Co-Chairman, Bretton Woods
Committee; Co-Chairman, U.S./Hong Kong Economic Cooperation
Committee; Director, American Council on Germany; Director, Aspen
Institute; Director, Council on Foreign Relations; Director, The
Japan Society; and Trustee, The American Assembly.
Melvin A. Yellin, Bankers Trust Company, 130 Liberty Street, New
York, New York 10006. Senior Managing Director and General Counsel of
Bankers Trust New York Corporation and Bankers Trust Company;
Director, 1136 Tenants Corporation; and Director, ABA Securities
Association.
ITEM 29. Principal Underwriters
a) Edgewood Service, Inc., the principal underwriter for shares of
the Registrant, also acts as principal underwriter for the following
open-end investment companies: BT Pyramid Mutual Funds, BT Advisor
Funds, BT Institutional Funds, Excelsior Institutional Trust
(formerly, UST Master Funds, Inc.), Excelsior Tax-Exempt Funds, Inc.
(formerly, UST Master Tax-Exempt Funds, Inc.), Excelsior
Institutional Trust, FTI Funds, FundManager Portfolios, Marketvest
Funds, Marketvest Funds, inc. and Old Westbury Funds, Inc.
<PAGE>
b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
Lawrence Caracciolo Director, President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Arthur L. Cherry Director, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
J. Christopher Donahue Director, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Ronald M. Petnuch Vice President, President and Treasurer
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Thomas P. Schmitt Vice President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, Assistant Secretary
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Thomas J. Ward Assistant Secretary, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Kenneth W. Pegher, Jr. Treasurer, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
(c) Not Applicable.
ITEM 30. Location of Accounts and Records:
BT INVESTMENT FUNDS: 130 Liberty Street
(Registrant) New York, NY 10006
BANKERS TRUST COMPANY: 130 Liberty Street
(Investment Adviser, New York, NY 10006
Administrator, and
Custodian)
INVESTORS FIDUCIARY 127 West 10th Street,
TRUST COMPANY: Kansas City, MO 64105
(Transfer Agent and Dividend
Disbursing Agent)
EDGEWOOD SERVICES, INC.: 5800 Corporate Drive
(Distributor) Pittsburgh, PA 15237-5829
ITEM 31. Management Services:
Not applicable.
<PAGE>
ITEM 32. Undertakings:
Registrant hereby undertakes to file a post-effective amendment,
using financial statements on behalf of Global High Yield Securities
Fund which need not be certified, within four to six months from the
effective date of Post-Effective Amendment No. 47.
Registrant hereby undertakes to file a post-effective amendment,
using financial statements on behalf of International Small Company
Equity Fund which need not be certified, within four to six months
from the effective date of Post-Effective Amendment No. 45.
The Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest annual
report, with respect to the respective series of the Trust, to
shareholders upon request and without charge.
The Registrant undertakes to comply with Section 16(c) of the 1940
Act as though such provisions of the Act were applicable to the
Registrant except that the request referred to in the third full
paragraph thereof may only be made by shareholders who hold in the
aggregate at least 10% of the outstanding shares of the Registrant,
regardless of the net asset value or values of shares held by such
requesting shareholders.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, BT INVESTMENT FUNDS, certifies
that it meets all of the requirements for effectiveness of this Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized, in the City of
Pittsburgh and the Commonwealth of Pennsylvania on the 30th day of April, 1998.
BT INVESTMENT FUNDS
By: /s/ Jay S. Neuman
Jay S. Neuman, Secretary
April 30, 1998
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following persons in
the capacity and on the date indicated:
NAME TITLE DATE
By: /s/ Jay S. Neuman Attorney in Fact April 30, 1998
Jay S. Neuman For the Persons
SECRETARY Listed Below
/s/ RONALD M. PETNUCH* President and Treasurer
Ronald M. Petnuch (Chief Executive Officer,
Principal Financial and
Accounting Officer)
/s/ S. LELAND DILL* Trustee
S. Leland Dill
/s/ KELVIN J. LANCASTER* Trustee
Kelvin J. Lancaster
/s/ PHILIP SAUNDERS, JR.* Trustee
Philip Saunders, Jr.
*By Power of Attorney
<PAGE>
SIGNATURES
CASH MANAGEMENT PORTFOLIO has duly caused this Post Effective Amendment
No. 49 to the Registration Statement on Form N-1A of BT Investment Funds to be
signed on their behalf by the undersigned, thereto duly authorized, in the City
of Pittsburgh and the Commonwealth of Pennsylvania on the 30th day of April,
1998.
CASH MANAGEMENT PORTFOLIO
By: /s/ Jay S. Neuman
Jay S. Neuman, Secretary
April 30, 1998
This Post Effective Amendment No. 49 to the Registration Statement of BT
Investment Funds has been signed below by the following persons in the
capacities indicated with respect to CASH MANAGEMENT PORTFOLIO.
NAME TITLE DATE
By: /s/ Jay S. Neuman Attorney in Fact April 30, 1998
Jay S. Neuman For the Persons
SECRETARY Listed Below
/s/ RONALD M. PETNUCH* President and Treasurer
Ronald M. Petnuch (Chief Executive Officer,
Principal Financial and
Accounting Officer)
/s/ S. LELAND DILL* Trustee
S. Leland Dill
/s/ KELVIN J. LANCASTER* Trustee
Kelvin J. Lancaster
/s/ PHILIP SAUNDERS, JR.* Trustee
Philip Saunders, Jr.
*By Power of Attorney
<PAGE>
SIGNATURES
TREASURY MONEY PORTFOLIO has duly caused this Post Effective Amendment No.
49 to the Registration Statement on Form N-1A of BT Investment Funds to be
signed on their behalf by the undersigned, thereto duly authorized, in the City
of Pittsburgh and the Commonwealth of Pennsylvania on the 30th day of April,
1998.
TREASURY MONEY PORTFOLIO
By: /s/ Jay S. Neuman
Jay S. Neuman, Secretary
April 30, 1998
This Post Effective Amendment No. 49 to the Registration Statement of BT
Investment Funds has been signed below by the following persons in the
capacities indicated with respect to TREASURY MONEY PORTFOLIO.
NAME TITLE DATE
By: /s/ Jay S. Neuman Attorney in Fact April 30, 1998
Jay S. Neuman For the Persons
SECRETARY Listed Below
/s/ RONALD M. PETNUCH* President and Treasurer
Ronald M. Petnuch (Chief Executive Officer,
Principal Financial and
Accounting Officer)
/s/ S. LELAND DILL* Trustee
S. Leland Dill
/s/ KELVIN J. LANCASTER* Trustee
Kelvin J. Lancaster
/s/ PHILIP SAUNDERS, JR.* Trustee
Philip Saunders, Jr.
*By Power of Attorney
<PAGE>
SIGNATURES
NY TAX FREE MONEY PORTFOLIO has duly caused this Post Effective Amendment
No. 49 to the Registration Statement on Form N-1A of BT Investment Funds to be
signed on their behalf by the undersigned, thereto duly authorized, in the City
of Pittsburgh and the Commonwealth of Pennsylvania on the 30th day of April,
1998.
NY TAX FREE MONEY PORTFOLIO
By: /s/ Jay S. Neuman
Jay S. Neuman, Secretary
April 30, 1998
This Post Effective Amendment No. 49 to the Registration Statement of BT
Investment Funds has been signed below by the following persons in the
capacities indicated with respect to NY TAX FREE MONEY PORTFOLIO.
NAME TITLE DATE
By: /s/ Jay S. Neuman Attorney in Fact April 30, 1998
Jay S. Neuman For the Persons
SECRETARY Listed Below
/s/ RONALD M. PETNUCH* President and Treasurer
Ronald M. Petnuch (Chief Executive Officer,
Principal Financial and
Accounting Officer)
/s/ S. LELAND DILL* Trustee
S. Leland Dill
/s/ KELVIN J. LANCASTER* Trustee
Kelvin J. Lancaster
/s/ PHILIP SAUNDERS, JR.* Trustee
Philip Saunders, Jr.
*By Power of Attorney
<PAGE>
SIGNATURES
TAX FREE MONEY PORTFOLIO has duly caused this Post Effective Amendment No.
49 to the Registration Statement on Form N-1A of BT Investment Funds to be
signed on their behalf by the undersigned, thereto duly authorized, in the City
of Pittsburgh and the Commonwealth of Pennsylvania on the 30th day of April,
1998.
TAX FREE MONEY PORTFOLIO
By: /s/ Jay S. Neuman
Jay S. Neuman, Secretary
April 30, 1998
This Post Effective Amendment No. 49 to the Registration Statement of BT
Investment Funds has been signed below by the following persons in the
capacities indicated with respect to TAX FREE MONEY PORTFOLIO.
NAME TITLE DATE
By: /s/ Jay S. Neuman Attorney in Fact April 30, 1998
Jay S. Neuman For the Persons
SECRETARY Listed Below
/s/ RONALD M. PETNUCH* President and Treasurer
Ronald M. Petnuch (Chief Executive Officer,
Principal Financial and
Accounting Officer)
/s/ S. LELAND DILL* Trustee
S. Leland Dill
/s/ KELVIN J. LANCASTER* Trustee
Kelvin J. Lancaster
/s/ PHILIP SAUNDERS, JR.* Trustee
Philip Saunders, Jr.
*By Power of Attorney
Exhibit 6(i) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
SCHEDULE A
OF
EXHIBIT A
TO THE
DISTRIBUTOR'S CONTRACT
AS LAST AMENDED: DECEMBER 18, 1997
The provisions of the Distributor's Contract between BT Investment Funds
and Edgewood Services, Inc. shall be effective with respect to each Fund and
Class as of the date set forth below. Name of Fund Effective Date Fee [None]
Exhibit 6(ii) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
SCHEDULE A
OF
EXHIBIT B
TO THE
DISTRIBUTOR'S CONTRACT
AS LAST REVISED: DECEMBER 18, 1997
The provisions of the Distributor's Contract between BT Investment Funds
and Edgewood Services, Inc. shall be effective with respect to each Fund and
Class as of the date set forth below.
Name of Fund Effective Date
Cash Management Fund December 18, 1997
Treasury Money Fund December 18, 1997
Tax Free Money Fund December 18, 1997
NY Tax Free Money Fund December 18, 1997
International Equity Fund December 18, 1997
Intermediate Tax Free Fund December 18, 1997
Capital Appreciation Fund December 18, 1997
BT Investment Lifecycle Long Range Fund December 18, 1997
BT Investment Lifecycle Mid Range Fund December 18, 1997
BT Investment Lifecycle Short Range Fund December 18, 1997
Global High Yield Securities Fund December 18, 1997
Latin American Equity Fund December 18, 1997
Small Cap Fund December 18, 1997
Pacific Basin Equity Fund December 18, 1997
Global Emerging Markets Equity Fund December 18, 1997
International Small Company Equity Fund December 18, 1997
Exhibit 11 under Form N-1A
Exhibit 23 under Item 601/Reg. S-K
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Post-Effective Amendment No. 49
to the Registration Statement of Cash Management Fund, Treasury Money Fund, NY
Tax Free Money Fund, and Tax Free Money Fund (four of the Funds comprising BT
Investment Funds) on Form N-1A of our reports dated February 19, 1998 on our
audits of the financial statements and financial highlights of the Cash
Management Portfolio, Treasury Money Portfolio, NY Tax Free Money Portfolio, and
Tax Free Money Portfolio, which reports are included in the Annual Reports to
Shareholders for the year ended December 31, 1997 which are incorporated by
reference in the Post-Effective Amendment to the Registration Statement. We also
consent to the reference in the Statement of Additional Information to our Firm
under the caption "Counsel and Independent Accounts."
By: Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Kansas City, Missouri
April 29, 1998
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<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the BT
Investment Cash Management Fund Annual Report dated December 31, 1997 and is
qualified in its entirety by reference to such Annual Report.
</LEGEND>
<CIK> 0000797657
<NAME> BT INVESTMENT FUNDS
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<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the BT
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qualified in its entirety by reference to such Annual Report.
</LEGEND>
<CIK> 0000797657
<NAME> BT INVESTMENT FUNDS
<SERIES>
<NUMBER> 4
<NAME> BT INVESTMENT TREASURY MONEY FUND
<S> <C>
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<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the BT
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qualified in its entirety by reference to such Annual Report.
</LEGEND>
<CIK> 0000797657
<NAME> BT INVESTMENT FUNDS
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<NUMBER> 2
<NAME> BT INVESTMENT NY TAX FREE MONEY FUND
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<ARTICLE> 6
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</LEGEND>
<CIK> 0000797657
<NAME> BT INVESTMENT FUNDS
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