SEPTEMBER 30, 1999,
AS UPDATED THROUGH OCTOBER 31, 1999
[GRAPHIC OMITTED] BT Mutual Funds
Pacific Basin
Equity Fund
Annual Report
TRUST: BT INVESTMENT FUNDS
INVESTMENT ADVISOR: BANKERS TRUST COMPANY
<PAGE>
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Pacific Basin Equity Fund
Table of Contents
- --------------------------------------------------------------------------------
Letter to Shareholders ..........................................3
Pacific Basin Equity Fund
Statements of Assets and Liabilities .........................7
Statements of Operations .....................................8
Statements of Changes in Net Assets ..........................9
Financial Highlights ........................................10
Notes to Financial Statements ...............................11
Report of Independent Accountants ...........................13
Tax Information .............................................13
Pacific Basin Equity Portfolio
Schedules of Portfolio Investments ..........................14
Statements of Assets and Liabilities ........................18
Statements of Operations ....................................19
Statements of Changes in Net Assets .........................20
Financial Highlights ........................................20
Notes to Financial Statements ...............................21
Report of Independent Accountants ...........................25
Proxy Results ..................................................26
-------------------
The Fund is not insured by the FDIC and is not a deposit, obligation of or
guarantee by Bankers Trust Company. The Fund is subject to investment risks,
including possible loss of principal amount invested.
-------------------
2
<PAGE>
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Pacific Basin Equity Fund
Letter to Shareholders
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We are pleased to present you with this annual report for the period ended
October 31, 1999 for the Pacific Basin Equity Fund (the "Fund"). It provides a
review of the market, the Portfolio, and our outlook, as well as a complete
financial summary of the Fund's operations and a listing of the Portfolio's
holdings. Please note that the Fund's Board of Trustees approved a change in its
fiscal year end from September 30, 1999 to October 31, 1999, thus, while this is
an annual report, our review covers the most recent thirteen months and life of
the Fund as of the end of October.
MARKET ACTIVITY
Since September 1998, Asia ex-Japan equity markets staged a stunning recovery of
86.8% in US dollar terms after massive declines experienced during previous
months' crisis.
o The initial surge was based on:
-lower interest rates globally and in Asia particularly, where rates dropped
to pre-crisis levels
-sustained strengthening of the yen
-rapidly improving liquidity conditions
-short covering by hedge funds, as those funds experienced their own credit
crunch.
o The rally continued into the first half of 1999, despite a couple of US
interest rate hikes, as global commodity prices troughed and Asia's economic
recovery proved to be stronger than expected. Such economic recovery, in
turn, was supported by large current account surpluses and strong export
growth as intra-regional trade resumed.
o In the last few months of the fiscal period, the region's markets pulled back
slightly, on rising risk aversion due to concerns over US interest rates,
Year 2000 preparedness, and equity supply. This was especially true for the
smaller, less liquid Asian markets.
Star performers were primarily the harder hit countries of the Asia fallout,
including Indonesia, South Korea, and Malaysia, whose equity markets each
tripled over the Fund's fiscal period.
o Nearly half of Indonesia's 315.1% return (in US dollar terms) was from its
strong currency. This strength, in turn, reflected improving inflation data
and gradual reduction of political risk over the Bank Bali scandal,
uncontrolled violence in East Timor, and selection of Megawati as Vice
President.
o South Korea was up 249.0%, benefiting from a V-shaped GDP recovery, corporate
deleveraging, and reform efforts. During the third calendar quarter, the
Korean market retreated from its highs on the back of the Daewoo bankruptcy,
as investors braced for a potential liquidity squeeze resulting from bond
redemptions.
o With capital markets stabilizing, Malaysia replaced its capital controls with
an exit tax. Morgan Stanley Capital International (MSCI) also announced that
it will reinstate Malaysia back into various market indices sometime in the
year 2000. Malaysia rose 212.7% during the period.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Periods ended October 31, 1999 Cumulative Total Returns Average Annual Total Returns
- -----------------------------------------------------------------------------------------------------------------------
Past 1 Past 1 Past 3 Past 5 Since Past 1 Past 3 Past 5 Since
month year years years inception year years years inception
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pacific Basin Equity Fund/1 5.47% 54.50% (20.43)% (20.35)% (5.37)% 54.50% (7.33)% (4.45)% (0.92)%
(inception 11/1/93)
- -----------------------------------------------------------------------------------------------------------------------
MSCI Combined Far East
Free Ex Japan Index/2 4.71% 49.28% (28.37)% (29.89)% (20.50)% 49.28% (10.53)% (6.86)% (3.75)%
- -----------------------------------------------------------------------------------------------------------------------
MSCI Combined Asia Ex
Japan Index/2 3.12% 50.69% (25.15)% (29.88)% (20.25)% 50.69% (9.21)% (6.85)% (3.70)%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Pacific Basin
Ex Japan Average/3 3.92% 48.33% (15.48)% (17.64)% (14.62)% 48.33% (6.21)% (4.14)% (2.81)%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
1/ Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost. During the period the
Fund waived certain expenses. Had these fees and expenses not been waived,
the Fund's return would have been lower.
2/ The MSCI Far East Free ex Japan Index includes China Free, Hong Kong,
Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand.
The MSCI Combined Asia Free ex Japan Index includes those same markets as the
Far East Free ex Japan Index as well as India, New Zealand, Pakistan and Sri
Lanka. Indexes are unmanaged, and investments cannot be made in an index.
3/ Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper, Inc. as falling into the respective
categories indicated. These figures do not reflect sales charges.
3
<PAGE>
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Pacific Basin Equity Fund
Letter to Shareholders
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Diversification of Portfolio Investments
By Country as of October 31, 1999
(percentages are based on market value)
[GRAPHIC OMITTED]
Taiwan 14% Thailand 4%
South Korea 25% China 1%
Singapore 10% Hong Kong 30%
Philippines 2% India 6%
Indonesia 4%
Malaysia 4%
Those countries less affected by last year's regional crisis, such as Taiwan,
India, the Philippines, and Hong Kong, comparatively lagged, but still produced
impressive returns of 45%-75%.
o Taiwan was able to shake off mounting China/Taiwan tensions, although market
momentum was stalled recently in the aftermath of the October earthquakes.
o India was the best performer in the last six months of the fiscal period amid
signs of cyclical recovery and optimism surrounding the October 1999 general
elections.
o Hong Kong moved up based primarily on interest rate cuts in China and the
government's disclosure of its strategy for disposing of part of its $207
billion equity portfolio.
Results were mixed in some of the other Asian equity markets.
o Although Singapore's economy never suffered a recession during the regional
crisis, investors rewarded its equity market, up 135.3%, for the
restructuring efforts of the government and corporations there.
o Thailand was adversely affected by stubbornly sticky non-performing loans.
INVESTMENT REVIEW
The Fund outperformed both its benchmarks and its Lipper category average for
the one month and the one year periods ended October 31, 1999. Fund
outperformance during the fiscal period can be attributed primarily to asset
allocation. That is, the Fund benefited from its overweight position in Malaysia
and its underweightings in Taiwan and India. In the middle of the period, we
shifted from overweighted positions in Thailand and
Ten Largest Stock Holdings
Samsung Electronics 5.9% Sun Hung Kai Properities 2.9%
Hutchison Whampoa 5.4% Sk Telecom Co. Ltd.-ADR 2.8%
Cheung Kong Holdings Ltd. 4.5% Singapore Airlines Ltd. 2.6%
Cable & Wireless Hkt. Ltd. 3.1% Shin Corp. Public Co. Ltd. 2.3%
Asustek Computer Inc. GDR 3.0% Korea Telecom Corp. ADR 2.2%
Hong Kong to being underweight, which also contributed to strong performance. An
underweighting in South Korea during the first half of the fiscal period
adversely impacted the Fund, but our subsequent overweighting of that market
enhanced returns during the second half. Being underweight in Singapore did not
help.
During the second half of the fiscal period, we carried out several stock
specific and sector allocation strategies for the Fund.
o We reduced the Fund's holdings in financials, including State Bank of India,
ICICI, Panin Bank, PCI Bank, Krung Thai Bank, Shinhan Bank, Samsung
Securities, and Fubon Insurance.
o Property companies New World Development and Metro Pacific were sold.
o We increased the Portfolio's exposure to the technology sector with Samsung
Electronics, Johnson Electric, Yageo, and Advanced Semiconductor Engineering.
o In telecommunications, we switched out of MTNL for VSNL, sold Hong Kong
Telecom and SmarTone on strong price moves, and increased our holdings in
Korea Telecom.
o Consumer companies Gudang Garam, Resorts World, and Singapore Press Holdings
were added.
o To benefit from overall regional recovery, we purchased conglomerates
Hutchison Whampoa and Jardine Matheson and established positions in airlines
through Cathay Pacific and Singapore Airlines.
Upon the fiscal period end, we increased the cash position of the Fund to
provide cushion for possible volatility of fund flows over Year 2000 issues.
MANAGER OUTLOOK
Asian markets stand to benefit from the cyclical global recovery underway. We
believe that global liquidity conditions will improve even further once US bond
yields peak. While the easy money has clearly been made in Asia
4
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Pacific Basin Equity Fund
Letter to Shareholders
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with local interest rates having bottomed, it is our view that equity returns in
Asia going forward will be more muted but still healthy, driven by strong
earnings performance and restructuring. We are particularly optimistic on
Taiwan, India, and, once the Daewoo crisis is sorted out, South Korea.
As we approach the end of 1999, we expect increased volatility in the region's
equity markets on Year 2000 concerns. However, we believe that Year 2000 will
pose only limited and temporary setbacks to the region. Further moderate US
interest rate hikes will also, in our opinion, not derail the region's ongoing
economic recovery.
We will, of course, continue monitoring economic conditions and how they affect
the financial markets, as we seek to provide long-term capital appreciation.
We value your ongoing support of the Pacific Basin Equity Fund and look forward
to continuing to serve your investment needs in the years ahead.
/s/ Julie Wang
Julie Wang
Portfolio Manager of the Pacific Basin Equity Portfolio
October 31, 1999
5
<PAGE>
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Pacific Basin Equity Fund
Performance Comparison
- --------------------------------------------------------------------------------
Comparison of Change in
Value of a $10,000
Investment in the Pacific
Basin Equity Fund and the
MSCI Combined Asia Ex
Japan Index since November
30, 1993.
- -----------------------------------------
Total Return for the Periods
Ended October 31, 1999
One Five Since
Year Year 11/1/93/1
54.50% (4.45)%/2 (0.92)%/2
Ended September 30, 1999
One Five Since
Year Year 11/1/93/1
70.46% (5.36)%/2 (1.82)%/2
1/ The Fund's inception date.
2/ Annualized.
Investment return and principal
value will fluctuate so that shares,
when redeemed, may be worth more
or less than their original cost.
- -----------------------------------------
As of October 31, 1999
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
Pacific Basin Equity Fund - $9,463 MSCI Combined Asia Ex Japan Index - $7,975
<S> <C> <C>
Nov-93 10000 10000
Mar-94 10392 9840
Sep-94 12198 11310
Mar-95 10614 9799
Sep-95 11727 10306
Mar-96 12518 11308
Sep-96 12625 10963
Mar-97 12888 10816
Sep-97 11366 9432
Mar-98 7866 7036
Sep-98 5263 4354
Mar-99 7150 6253
Sep-99 8972 7734
Oct-99 9463 7975
</TABLE>
As of September 30, 1999
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
Pacific Basin Equity Fund - $8,972 MSCI Combined Asia Ex Japan Index - $7,734
<S> <C> <C>
Nov-93 10000 10000
Mar-94 10392 9840
Sep-94 12198 11310
Mar-95 10614 9799
Sep-95 11727 10306
Mar-96 12518 11308
Sep-96 12625 10963
Mar-97 12888 10816
Sep-97 11366 9432
Mar-98 7866 7036
Sep-98 5263 4354
Mar-99 7150 6253
Sep-99 8972 7734
</TABLE>
Past performance is not indicative of future performance. Performance figures
assume the reinvestment of dividends and capital gain distributions.
6
<PAGE>
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Pacific Basin Equity Fund
Statements of Assets and Liabilities
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<TABLE>
<CAPTION>
October 31, 1999/1 September 30, 1999
------------------ ------------------
<S> <C> <C>
Assets
Investment in Pacific Basin Equity Portfolio, at Value .............................. $ 6,649,892 $ 6,418,993
Receivable for Shares of Beneficial Interest Subscribed ............................. 20,000 --
Prepaid Expenses and Other .......................................................... 7,923 9.587
Due from Bankers Trust .............................................................. 36,715 34,515
------------ ------------
Total Assets ........................................................................... 6,714,530 6,463,095
------------ ------------
Liabilities
Accrued Expenses and Other .......................................................... 30,347 28,214
------------ ------------
Total Liabilities ................................................................... 30,347 28,214
------------ ------------
Net Assets ............................................................................. $ 6,684,183 $ 6,434,881
============ ============
Composition of Net Assets
Paid-in Capital ..................................................................... $ 22,338,766 $ 22,443,503
Undistributed Net Investment Income ................................................. 94,758 102,125
Accumulated Net Realized Loss from Investment, Futures, Foreign Currency, and Forward
Foreign Currency Transactions .................................................... (16,793,378) (16,918,698)
Net Unrealized Appreciation on Investment, Foreign Currencies and Forward
Foreign Currency Contracts ....................................................... 1,044,037 807,951
------------ ------------
Net Assets ............................................................................. $ 6,684,183 $ 6,434,881
============ ============
Net Asset Value, Offering and Redemption Price Per Share (net assets divided by
shares outstanding) ................................................................. $ 4.05 $ 3.84
============ ============
Shares Outstanding ($0.001 par value per share, unlimited number of shares of
beneficial interest authorized) ..................................................... 1,649,296 1,675,041
============ ============
</TABLE>
- ----------
1/ On September 8, 1999, the Board of Trustees approved the change of the fiscal
year end from September 30 to October 31.
See Notes to Financial Statements.
7
<PAGE>
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Pacific Basin Equity Fund
Statements of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period For the
October 1, 1999 to year ended
October 31, 1999/1 September 30, 1999
------------------ ------------------
<S> <C> <C>
Investment Income
Income Allocated from Pacific Basin Equity Portfolio, net ..................... $ 5,388 $ 44,652
----------- -----------
Expenses
Administration and Services Fees .............................................. 4,164 45,620
Professional Fees ............................................................. 4,872 32,280
Registration Fees ............................................................. 2,238 19,240
Printing and Shareholder Reports .............................................. 1,496 18,181
Trustees Fees ................................................................. 333 6,380
Miscellaneous ................................................................. 85 3,606
----------- -----------
Total Expenses ................................................................ 13,188 125,307
Less Fees Waived/Expenses Reimbursed by Bankers Trust ......................... (9,024) (79,687)
----------- -----------
Net Expenses ............................................................... 4,164 45,620
----------- -----------
Net Investment (Expenses in Excess of) Income .................................... 1,225 (968)
----------- -----------
Realized and Unrealized Gain (Loss) on Investment, Futures, Foreign Currencies and
Forward Foreign Currency Contracts
Net Realized Gain (Loss) from:
Investment Transactions .................................................... 125,318 219,940
Foreign Futures Transactions ............................................... -- (11,760)
Foreign Currency Transactions .............................................. 3,611 (39,122)
Forward Foreign Currency Transactions ...................................... (12,203) 54,730
Net Change in Unrealized Appreciation/Depreciation on Investment,
Foreign Currencies and Forward Foreign Currency Contracts .................. 236,086 2,839,448
----------- -----------
Net Realized and Unrealized Gain on Investment, Futures, Foreign Currencies and
Forward Foreign Currency Contracts ......................................... 352,812 3,063,236
----------- -----------
Net Increase in Net Assets from Operations ....................................... $ 354,037 $ 3,062,268
=========== ===========
</TABLE>
- ----------
1/ On September 8, 1999, the Board of Trustees approved the change of the fiscal
year end from September 30 to October 31.
See Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period For the For the
October 1, 1999 to year ended year ended
October 31, 1999/1 September 30, 1999 September 30, 1998
------------------ ------------------ ------------------
<S> <C> <C> <C>
Increase (Decrease) in Net Assets from:
Operations
Net Investment Income/(Expenses in Excess of Income) ....... $ 1,225 $ (968) $ 53,983
Net Realized Gain (Loss) from Investment, Futures,
Foreign Currency and Forward Foreign Currency
Transactions ............................................ 116,726 223,788 (14,010,808)
Net Change in Unrealized Appreciation/Depreciation
on Investments, Foreign Currencies and Forward
Foreign Currency Contracts .............................. 236,086 2,839,448 1,768,180
------------ ------------ ------------
Net Increase (Decrease) in Net Assets from Operations ......... 354,037 3,062,268 (12,188,645)
------------ ------------ ------------
Distributions to Shareholders
Net Investments Income ..................................... -- -- (270,311)
Net Realized Gains ......................................... -- (2,341,154) (1,872,886)
------------ ------------ ------------
Total Distributions ........................................... -- (2,341,154) (2,143,197)
------------ ------------ ------------
Capital Transactions in Shares of Beneficial Interest
Proceeds from Sales of Shares .............................. 308,457 23,576,704 32,705,049
Dividend Reinvestments ..................................... -- 82 856,416
Cost of Shares Redeemed .................................... (413,192) (22,131,219) (41,462,722)
------------ ------------ ------------
Net Increase (Decrease) from Capital Transactions in
Shares of Beneficial Interest .............................. (104,735) 1,445,567 (7,901,257)
------------ ------------ ------------
Total Increase (Decrease) in Net Assets ....................... 249,302 2,166,681 (22,233,099)
Net Assets
Beginning of Period ........................................... 6,434,881 4,268,200 26,501,299
------------ ------------ ------------
End of Period (including undistributed net investment
income of ($94,758, $102,125 and $2,471,739 respectively) .. $ 6,684,183 $ 6,434,881 $ 4,268,200
============ ============ ============
</TABLE>
- ----------
1/ On September 8, 1999, the Board of Trustees approved the change of the fiscal
year end from September 30 to October 31.
See Notes to Financial Statements.
9
<PAGE>
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Pacific Basin Equity Fund
Financial Highlights
- --------------------------------------------------------------------------------
Contained below are selected data for a share outstanding, total investment
return, ratios to average net assets and other supplemental data for the periods
indicated for the Pacific Basin Equity Fund.
<TABLE>
<CAPTION>
For the period For the years ended September 30,
October 1, 1999 to ----------------------------------------------------
October 31, 1999/1 1999 1998 1997 1996 1995
------------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value, Beginning of Period .............. $ 3.84 $ 3.85 $ 10.16 $ 11.80 $ 10.96 $ 11.82
------- ------- ------- ------- ------- -------
Income from Investment Operations
Net Investment (Expenses in
Excess of) Income ........................... 0.00/2 (0.00)/2 0.24 (0.05) (0.03) 0.01
Net Realized and Unrealized Gain (Loss) on
Investments, Futures, Foreign Currency and
Forward Foreign Currency Transactions ....... .21 2.03 (5.32) (1.07) 0.87 (0.49)
------- ------- ------- ------- ------- -------
Total from Investment Operations .................. .21 2.03 (5.08) (1.12) 0.84 (0.48)
------- ------- ------- ------- ------- -------
Distributions to Shareholders
Net Investment Income .......................... -- -- (0.24) -- -- --
Net Realized Gains ............................. -- (2.04) (0.99) (0.52) -- (0.38)
------- ------- ------- ------- ------- -------
Total Distributions ............................... -- (2.04) (1.23) (0.52) -- (0.38)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period .................... $ 4.05 $ 3.84 $ 3.85 $ 10.16 $ 11.80 $ 10.96
======= ======= ======= ======= ======= =======
Total Investment Return ........................... 5.47% 70.46% (52.21)% (9.97)% 7.66% (3.87)%
Supplemental Data and Ratios:
Net Assets, End of Period (000s omitted) ....... $ 6,684 $ 6,435 $ 4,268 $26,501 $29,389 $24,504
Ratios to Average Net Assets:
Net Investment Income/(Expenses in Excess
of Income) ............................... 0.22%/3 --% 0.43% (0.42)% (0.24)% 0.12%
Expenses, Including Expenses of the
Pacific Basin Equity Portfolio ............ 1.75%/3 1.75% 1.75% 1.75% 1.75% 1.75%
Decrease Reflected in Above Expense
Ratio Due to Fees Waived/Expenses
Reimbursed by Bankers Trust ............... 4.53%/3 2.02% 0.70% 0.29% 0.31% 0.52%
</TABLE>
- ----------
1/ On September 8, 1999, the Board of Trustees approved the change of the fiscal
year end from September 30 to October 31.
2/ Less than .01 per share.
3/ Annualized.
See Notes to Financial Statements.
10
<PAGE>
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Pacific Basin Equity Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 1--Organization and Significant Accounting Policies
A. Organization
BT Investment Funds (the "Trust") is registered under the Investment Company Act
of 1940 (the "Act"), as amended, as an open-end management investment company.
The Trust was organized on July 21, 1986, as a business trust under the laws of
the Commonwealth of Massachusetts. The Pacific Basin Equity Fund (the "Fund") is
one of the funds offered to investors by the Trust. The Fund began operations on
November 1, 1993. The Fund seeks to achieve its investment objective by
investing substantially all of its assets in the Pacific Basin Equity Portfolio
(the "Portfolio"). The Portfolio is an open-end management investment company
registered under the Act. The value of the Fund's investment in the Portfolio
reflects its proportionate interest in the net assets of the Portfolio. At
September 30, 1999, the Fund's investment was approximately 100% of the
Portfolio. At October 31, 1999, the Fund's investment was approximately 100% of
the Portfolio.
The financial statements of the Portfolio, including the Schedule of Portfolio
Investments, are contained elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
B. Valuation
Valuation of securities by the Portfolio is discussed in Note 1B of the
Portfolio's Notes to Financial Statements.
C. Investment Income
The Fund's income net of expenses is earned daily on its investment in the
Portfolio. All of the net investment income and realized and unrealized gains
and losses from the security transactions of the Portfolio are allocated pro
rata among the investors in the Portfolio at the time of such determination.
D. Distributions
It is the Fund's policy to declare and distribute dividends annually to
shareholders from net investment income. Dividends and distributions payable to
shareholders are recorded by the Fund on the ex-dividend date. Distributions of
net realized short-term and long-term capital gains, if any, earned by the Fund
are also made annually to the extent they are not offset by any capital loss
carryforwards.
E. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders. Therefore, no federal income tax provision is
required. The Fund may periodically make reclassifications among certain of its
capital accounts as a result of the differences in the characterization and
allocation of certain income and capital gain distributions determined annually
in accordance with federal tax regulations which may differ from generally
accepted accounting principles. The Fund has capital loss carryforwards in the
amounts of $923,827, $15,140,818, and $579,060 expiring in 2005, 2006, and 2007,
respectively.
F. Other
The Trust accounts separately for the assets, liabilities, and operations of
each fund. Expenses directly attributable to a fund are charged to that fund
while expenses which are attributable to all of the Trust's funds are allocated
among the funds. Investment transactions are accounted for on a trade date
basis. Realized gains and losses are determined on the identified cost basis.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts in the financial statements. Actual results could
differ from those estimates.
Note 2--Fees and Transactions with Affiliates
The Fund has entered into an Administration and Services Agreement with Bankers
Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Fund in return for a fee computed daily and paid
monthly at an annual rate of .75% of the Fund's average daily net assets.
ICC Distributors, Inc. provides distribution services to the Fund.
Bankers Trust has voluntarily undertaken to waive its fees and reimburse
expenses of the Fund, to the extent necessary, to limit all expenses to .75% of
the average daily net assets of the Fund, excluding expenses of the Portfolio
and 1.75% of the average daily net assets of the Fund, including expenses of the
Portfolio.
Bankers Trust was a wholly owned subsidiary of Bankers Trust Corporation ("BT
Corp."). On June 4, 1999, BT Corp. was acquired by Deutsche Bank AG ("Deutsche
Bank"). As a result of the transaction, Bankers Trust became an indirect
wholly-owned subsidiary of Deutsche Bank.
11
<PAGE>
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Pacific Basin Equity Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 3--Shares of Beneficial Interest
At October 31, 1999, there were an unlimited number of shares of beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
For the period For the
October 1, 1999 to year ended
October 31, 1999 September 30, 1999
------------------ ------------------
Shares Amount Shares Amount
------ ------ ------ ------
Sold 78,212 $ 308,457 6,563,583 $ 23,576,704
Reinvested -- -- 22 82
Redeemed (103,957) (413,192) (5,998,264) (22,131,219)
-------- --------- ---------- ------------
Net Increase/
(Decrease) (25,745) $(104,735) 565,341 $ 1,445,567
======== ========= ========== ============
For the
year ended
September 30, 1998
-------------------------
Shares Amount
------- ------
Sold 5,691,053 $ 32,705,049
Reinvested 175,395 856,416
Redeemed (7,364,032) (41,462,722)
---------- ------------
Net Decrease (1,497,584) $ (7,901,257)
========== ============
Note 4--Risks of Investing in Emerging Markets
The risks involved when investing in emerging markets are of a nature generally
not encountered when investing in securities traded on major international
markets.
Investment in securities of issuers based in underdeveloped emerging markets
involves special risks and considerations not typically associated with
investing in U.S. companies. These risks include: (i) greater risks of
expropriation, confiscatory taxation, nationalization, and less social,
political and economic stability; (ii) the smaller size of the market for such
securities and a low or nonexistent volume of trading, resulting in lack of
liquidity and in price volatility. Additionally, developments affecting emerging
market investments can not always be foreseen.
12
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Fund
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Trustees of BT Investment Funds and
Shareholders of Pacific Basin Equity Fund:
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the Pacific Basin Equity Fund (one of the funds comprising BT Investment Funds,
hereafter referred to as the "Fund") at October 31, 1999 and September 30, 1999
and the results of its operations, the changes in its net assets and the
financial highlights for each of the fiscal periods presented, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1999 and
September 30, 1999 by correspondence with the transfer agent, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
November 19, 1999
- --------------------------------------------------------------------------------
Tax Information (Unaudited For the Periods Ended October 31, 1999 and
September 30, 1999)
- --------------------------------------------------------------------------------
During the period from October 1, 1999, through October 31, 1999, the Fund
received income from foreign sources in the amount of $6,994. The Fund paid
foreign taxes in the amount of $217 or $0.0001 per share. Such amounts are
eligible for the foreign tax credit. You should consult your tax advisor
relating to the appropriate treatment of foreign taxes paid.
During the year ended September 30, 1999, the Fund received income from foreign
sources in the amount of $99,531. The Fund paid foreign taxes in the amount of
$9,742 or $0.006 per share. Such amounts are eligible for the foreign tax
credit. You should consult your tax advisor relating to the appropriate
treatment of foreign taxes paid.
13
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Portfolio
Schedule of Portfolio Investments October 31, 1999
- --------------------------------------------------------------------------------
Shares Security Value
------ -------- -----
COMMON STOCKS - 95.6%
China - 1.1%
34,700 Guangdong Kelon Electrical Holdings
Co. Ltd. Series H ....................... $ 30,817
1,770 Huaneng Power International, ADR .......... 21,461
5,100 Shandong Huaneng Power Co.
Ltd. ADR ................................ 21,037
----------
73,315
----------
Hong Kong - 28.6%
18,151 Bank of East Asia Ltd. .................... 39,715
9,100 Cable & Wireless HKT Ltd. ADR ............ 207,594
1,145 Cable & Wireless HKT Ltd. ................. 2,616
48,000 Cathay Pacific Airways .................... 97,612
32,900 Cheung Kong Holdings Ltd. ................. 298,532
28,000 China Telecom (Hong Kong) Ltd. (a) ........ 95,862
48,000 Guoco Group Ltd. .......................... 128,502
61,000 Henderson Investments Ltd. ................ 37,489
89,560 Hong Kong and China Gas Co. Ltd. .......... 118,729
36,000 Hutchison Whampoa Ltd. .................... 361,412
14,000 Jardine Matheson Holdings Ltd. (a) ........ 60,200
9,000 Johnson Electric Holdings Ltd. ............ 48,652
145 New World China Land Ltd (a) .............. 67
605,000 Pacific Ports Company Ltd. (a) ............ 69,303
197,000 Peregrine Investments Holdings
Ltd. (a)(b) ............................. 0
19,600 SmarTone Telecommunication Holdings ....... 69,121
24,000 Sun Hung Kai Properties Ltd. .............. 193,834
24,685 Wharf Holdings Ltd. ....................... 71,327
----------
1,900,567
----------
India - 5.4%
3,191 I.T.C. Ltd. GDR ........................... 60,469
2,700 Larsen and Toubro Ltd. GDR ................ 58,590
3,970 Mahanagar Telephone Nigam Ltd.
GDR Rule 144A (c) ....................... 33,050
2,250 Mahanagar Telephone Nigam
Ltd. GDR ................................ 18,731
7,000 Mahindra Mahindra Ltd. GDR ................ 53,725
5,300 Videsh Sanchar Nigam Ltd. GDR ............. 84,668
3,000 Videsh Sanchar Nigam Ltd. GDR
Rule 144A (c) ........................... 47,925
----------
357,158
----------
Indonesia - 4.0%
2,200 PT Indosat TBK ADR ........................ 35,063
32,000 PT Gudang Garam Tbk ....................... 82,520
20,500 PT Hanjaya Mandala Sampoerna Tbk (a) ...... 47,758
88,500 PT Indofood Sukses Makmur Tbk (a) ......... 105,033
----------
270,374
----------
Malaysia - 4.2%
48,000 Berjaya Sports Toto BHD ................... 104,211
81,000 KFC Holdings .............................. 104,021
Shares Security Value
------ -------- -----
16,000 Malaysia Intl Shipping Corp (Foreign) ..... $ 24,000
9,000 New Straits Times Press BHD (a) ........... 20,013
9,000 Resorts World Berhad ...................... 25,816
----------
278,061
----------
Philippines - 1.9%
89,800 Ayala Land, Inc. .......................... 22,925
905,000 Digital Telecom Philippines (a) ........... 32,458
30,250 San Miguel Corp. - Class B ................ 43,699
137,200 SM Prime Holdings, Inc. ................... 24,262
----------
123,344
----------
Singapore - 9.6%
67,000 Keppel Telecommunication and
Transportation Ltd. ..................... 70,872
23,500 Natsteel Electronics Ltd. ................. 91,806
10,500 Oversea-Chinese Banking Corp. Ltd. ........ 78,884
16,580 Singapore Airlines Ltd. ................... 175,382
8,800 Singapore Press Holdings Ltd. ............. 150,735
80,000 Wing Tai Holdings Ltd. .................... 70,199
----------
637,878
----------
South Korea - 24.3%
4,150 Housing & Commercial Bank GDR ............. 109,975
3,700 Kookmin Bank .............................. 57,682
14,730 Korea Electric Power Corp ADR ............. 231,998
4,100 Korea Telecom Corp ADR (a) ................ 144,525
3,300 L.G. Chemical Ltd. ........................ 99,867
1,100 Pohang Iron & Steel Co. Ltd. .............. 135,356
3,400 Pohang Iron & Steel Co. Ltd. ADR .......... 113,475
2,346 Samsung Electronics ....................... 391,163
1,100 Samsung Fire & Marine Insurance ........... 48,604
9,270 Shinhan Bank .............................. 98,148
14,200 SK Telecom Co. Ltd. ADR ................... 185,488
----------
1,616,281
----------
Taiwan - 13.1%
4,007 Advanced Semiconductor Engineering
Inc. GDR ................................ 81,042
14,008 Asustek Computer Inc. GDR ................. 197,863
7,925 China Steel Corp GDR Rule 144A (c) ........ 134,884
296 Fubon Insurance Co. GDR (a) ............... 2,723
2,640 Fubon Insurance Co. GDR
Rule 144A (a)(c) ........................ 24,288
10,913 Siliconware Precision Industries Co. GDR .. 117,588
3,932 Taiwan Semiconductor ADR .................. 136,146
10,604 Yageo Corp. GDR ........................... 60,973
19,869 Yageo Corp. Rule 144A (c) ................. 114,247
----------
869,754
----------
Thailand - 3.4%
35,600 Shin Corp. Public Co. Ltd. Foreign (a) .... 146,642
22,133 Siam City Cement Co. Ltd. Foreign (a) ..... 81,422
----------
228,064
----------
Total Common Stocks (Cost $5,297,169) ..... 6,354,796
----------
See Notes to Financial Statements.
14
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Portfolio
Schedule of Portfolio Investments October 31, 1999
- --------------------------------------------------------------------------------
Shares Security Value
------ -------- -----
WARRANTS - 0.0%
Indonesia - 0.0%
7,567 Indah Kiat Paper & Pulp Corp.
PT Warrants (a) ......................... $ 2,217
----------
Total Warrants (Cost $1,001) ............. 2,217
----------
OTHER SECURITIES - 0.1%
775 Samsung Securities Rights ................. 8,206
----------
Total Other Securities (Cost $0) ..................... 8,206
----------
Total Investments (Cost $5,298,170) ......... 95.7% 6,365,219
Other Assets in Excess of Liabilities ....... 4.3% 284,681
----- ----------
Total Net Assets ............................ 100.0% $6,649,900
===== ==========
- ----------
(a) Non-Income Producing Securities
(b) Illiquid Securities fair valued by the valuation committee of the Board of
Trustees (See Footnote 1)
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
Abbreviations:
ADR - American Depository Receipt
BHD - Berhad
GDR - Global Depository Receipt
Industry Diversification (as a percentage of Total Investments):
% of
Market
Industry Value
-------- -------
Telecommunications ................. 16.26%
Real Estate ........................ 10.17%
Semi-Conductors .................... 9.56%
Diversified ........................ 8.66%
Steel .............................. 7.49%
Electronics ........................ 6.81%
Utilities .......................... 6.18%
Banks .............................. 5.42%
Airlines ........................... 4.29%
Computers .......................... 3.11%
Publishing ......................... 2.68%
Retail Foods ....................... 2.32%
Telecommunications Equipment ....... 2.30%
Financial Services ................. 2.15%
Tobacco ............................ 2.05%
Foods .............................. 1.65%
Gaming ............................. 1.64%
Chemicals .......................... 1.57%
Transportation Services ............ 1.47%
Construction Materials ............. 1.28%
Insurance .......................... 1.19%
Other* ............................. 1.75%
------
100.00%
======
- ----------
*No one industry represents more than 1% of Portfolio holdings.
See Notes to Financial Statements.
15
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Portfolio
Schedule of Portfolio Investments September 30, 1999
- --------------------------------------------------------------------------------
Shares Security Value
------ -------- -----
COMMON STOCKS - 89.5%
China - 1.2%
34,700 Guangdong Kelon Electrical Holdings
Co. Ltd. Series H ........................ $ 34,844
1,770 Huaneng Power International ADR ............ 22,014
5,100 Shandong Huaneng Power Co.
Ltd. ADR ................................. 22,312
----------
79,170
----------
Hong Kong - 24.6%
18,151 Bank of East Asia Ltd. ..................... 39,375
1,145 Cable & Wireless HKT Ltd. .................. 2,513
82,000 Cathay Pacific Airways ..................... 147,794
25,900 Cheung Kong Holdings Ltd. .................. 215,901
28,000 China Telecom (Hong Kong) Ltd. (a) ......... 86,333
278,299 First Pacific Co. Ltd. ..................... 170,186
48,000 Guoco Group Ltd. ........................... 126,063
61,000 Henderson Investments Ltd. ................. 39,659
89,560 Hong Kong and China Gas Co. Ltd. ........... 120,489
16,000 Hutchison Whampoa Ltd. ..................... 148,824
20,500 Johnson Electric Holdings Ltd. ............. 99,497
14,000 Jardine Matheson Holdings Ltd. ............. 57,400
145 New World China Land Ltd. (a) .............. 84
605,000 Pacific Ports Co. Ltd.(a) .................. 70,099
197,000 Peregrine Investments Holding Ltd. (a)(b) .. 0
40,600 SmarTone Telecommunication Holdings ........ 124,922
8,000 Sun Hung Kai Properties Ltd. ............... 61,023
24,685 Wharf Holdings Ltd. ........................ 71,345
----------
1,581,507
----------
India - 9.3%
5,791 I.T.C. Ltd. GDR ............................ 146,512
7,600 Larsen and Toubro Ltd. GDR ................. 168,340
2,250 Mahanagar Telephone Nigam
Ltd. GDR ................................. 22,781
7,570 Mahanagar Telephone Nigam Ltd.
GDR Rule 144A (c) ........................ 76,647
7,000 Mahindra Mahindra Ltd. GDR ................. 62,825
5,300 Videsh Sanchar Nigam Ltd. GDR .............. 74,598
3,000 Videsh Sanchar Nigam Ltd. GDR
Rule 144A (c) ............................ 42,225
----------
593,928
----------
Indonesia - 3.6%
34,000 PT Hanjaya Mandala Sampoerna (a) ........... 60,127
241,000 PT Indah Kiat Pulp & Paper (a) ............. 85,816
88,500 PT Indofood Sukses Makmur (a) .............. 83,948
----------
229,891
----------
Malaysia - 3.8%
48,000 Berjaya Sports Toto BHD .................... 101,684
81,000 KFC Holdings (Malaysia) BHD ................ 101,037
16,000 Malaysia Intl Shipping Corp BHD
(Foreign) ................................ 21,895
9,000 New Straits Times Press BHD (a) ............ 18,355
----------
242,971
----------
Shares Security Value
------ -------- -----
Philippines - 1.2%
905,000 Digital Telecom Philippines (a) ............ $ 34,077
30,250 San Miguel Corp. - Class B ................. 45,857
----------
79,934
----------
Singapore - 9.3%
67,000 Keppel Telecommunication and
Transportation Ltd. ...................... 66,982
23,500 Natsteel Electronics Ltd. .................. 87,755
10,000 Overseas-Chinese Banking Corp. Ltd. ........ 77,626
16,580 Singapore Airlines Ltd. .................... 161,854
8,800 Singapore Press Holdings Ltd. .............. 138,691
80,000 Wing Tai Holdings Ltd. ..................... 63,512
----------
596,420
----------
South Korea - 19.8%
4,150 Housing & Commercial Bank GDR .............. 79,369
9,700 Korea Electric Power ADR ................... 155,806
4,100 Korea Telecom Corp ADR (a) ................. 151,700
6,600 LG Chemical Ltd. ........................... 191,522
1,100 Pohang Iron & Steel Co. Ltd. ............... 125,283
1,000 Pohang Iron & Steel Co. Ltd. ADR ........... 31,313
1,246 Samsung Electronics ........................ 201,783
3,230 Samsung Securities Co. Ltd. ............... 104,882
920 SK Telecom Co. Ltd. ........................ 85,083
14,200 SK Telecom Co. Ltd. ADR .................... 146,438
----------
1,273,179
----------
Taiwan - 13.3%
4,007 Advanced Semiconductor Engineering,
Inc. GDR ................................. 77,435
14,008 Asustek Computer Inc. GDR .................. 185,256
7,925 China Steel Corp. GDR Rule 144A (c) ........ 157,866
296 Fubon Insurance Co. GDR (a) ................ 2,368
2,640 Fubon Insurance Co. GDR
Rule 144A (a)(c) ......................... 21,120
10,913 Siliconware Precision Industries Co. GDR ... 113,776
3,932 Taiwan Semiconductor ADR ................... 115,994
10,604 Yageo Corp. GDR ............................ 61,509
19,869 Yageo Corp. Rule 144A (c) .................. 115,240
----------
850,564
----------
Thailand - 3.4%
35,600 Shin Corp. Public Co. Ltd. Foreign (a) ..... 147,015
22,133 Siam City Cement Co. Ltd. Foreign (a) ...... 68,145
----------
215,160
----------
Total Common Stocks (Cost $4,899,768) ..... 5,742,724
----------
See Notes to Financial Statements.
16
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Portfolio
Schedule of Portfolio Investments September 30, 1999
- --------------------------------------------------------------------------------
Shares Security Value
------ -------- -----
WARRANTS - 0.0%
Indonesia - 0.0%
7,567 Indah Kiat Paper & Pulp Corp.
PT Warrants (a) .......................... $ 2,264
----------
Total Warrants (Cost $1,001) .............. 2,264
----------
SHORT-TERM INSTRUMENTS - 7.8%
U.S.A. - 7.8%
500,000 Institutional Cash Management Fund
(Cost $500,000) .......................... 500,000
----------
Total Investments (Cost $5,400,769) .......... 97.3% 6,244,988
Other Assets in Excess of Liabilities ........ 2.7% 174,013
----- ----------
Net Assets ................................... 100.0% $6,419,001
===== ==========
- ----------
(a) Non-Income Producing Securities
(b) Illiquid Securities fair valued by the valuation committee of the Board of
Trustees (See Footnote 1).
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
Abbreviations:
ADR - American Depository Receipt
BHD - Berhad
GDR - Global Depository Receipt
Industry Diversification (as a percentage of Total Investments):
% of
Market
Industry Value
-------- ------
Telecommunications ............... 14.64%
Diversified ...................... 9.87%
Cash (BT Money Market) ........... 8.01%
Electronics ...................... 7.65%
Semi-Conductors .................. 6.33%
Real Estate ...................... 6.09%
Utilities ........................ 5.13%
Steel ............................ 5.04%
Airlines ......................... 4.96%
Financial Services ............... 3.70%
Tobacco .......................... 3.31%
Banks ............................ 3.14%
Chemicals ........................ 3.07%
Computers ........................ 2.97%
Publishing ....................... 2.51%
Telecommunications Equipment ..... 2.35%
Retail Foods ..................... 2.35%
Gaming ........................... 1.63%
Transportation Services .......... 1.47%
Paper ............................ 1.41%
Foods ............................ 1.34%
Construction Materials ........... 1.09%
Autos & Trucks ................... 1.01%
Other* ........................... 0.93%
------
100.00%
======
- ----------
*No one industry represents more than 1% of Portfolio holdings.
See Notes to Financial Statements.
17
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Portfolio
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
October 31, 1999/2 September 30, 1999
------------------ ------------------
<S> <C> <C>
Assets
Investments, at Value (Cost $5,298,170 and $5,400,769, respectively) .. $6,365,219 $6,244,988
Cash/1 ................................................................ 302,732 223,387
Receivable for Securities Sold ........................................ -- 464
Due from Bankers Trust ................................................ 13,342 2,824
Unrealized Appreciation on Forward Foreign Currency Contracts ......... 50,410 70,848
Dividends and Interest Receivable ..................................... 7,498 9,483
---------- ----------
Total Assets ............................................................. 6,739,201 6,551,994
---------- ----------
Liabilities
Unrealized Depreciation on Forward Foreign Currency Contracts ......... 74,024 107,436
Accrued Expenses and Other ............................................ 15,277 25,557
---------- ----------
Total Liabilities ........................................................ 89,301 132,993
---------- ----------
Net Assets ............................................................... $6,649,900 $6,419,001
========== ==========
Composition of Net Assets
Paid-in Capital ....................................................... $5,605,858 $5,611,046
Net Unrealized Appreciation on Investments, Foreign Currency and
Forward Foreign Currency Contracts ................................. 1,044,042 807,955
---------- ----------
Net Assets ............................................................... $6,649,900 $6,419,001
========== ==========
</TABLE>
- ----------
1/ Includes foreign cash of $56,634 and $82,903 with a cost of $56,217 and
$82,750, respectively.
2/ On September 8, 1999, the Board of Trustees approved the change of the fiscal
year end from September 30 to October 31.
See Notes to Financial Statements.
18
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Portfolio
Statement of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period For the
October 1, 1999 to year ended
October 31, 1999/1 September 30, 1999
------------------ ------------------
<S> <C> <C>
Investment Income
Dividends (net of foreign withholding tax of $217 and $9,742, respectively) .. $ 6,776 $ 91,132
Interest ..................................................................... 4,146 15,254
----------- -----------
Total Investment Income ......................................................... 10,922 106,386
----------- -----------
Expenses
Advisory Fees ................................................................ 4,110 45,917
Professional Fees ............................................................ 15,635 31,610
Administration and Services Fees ............................................. 1,383 15,306
Trustees Fees ................................................................ 277 6,526
Custody Fees ................................................................. -- 3,027
Miscellaneous ................................................................ 140 1,576
----------- -----------
Total Expenses ............................................................... 21,545 103,962
Less Fees Waived/Expenses Reimbursed by Bankers Trust ........................ (16,011) (42,228)
----------- -----------
Net Expenses .............................................................. 5,534 61,734
----------- -----------
Net Investment Income ........................................................... 5,388 44,652
----------- -----------
Realized and Unrealized Gain (Loss) on Investments, Foreign Currencies,
Forward Foreign Currency and Foreign Futures Contracts
Net Realized Gain (Loss) from:
Investment Transactions ................................................... 125,320 219,929
Foreign Futures Transactions .............................................. -- (11,759)
Foreign Currency Transactions ............................................. 3,611 (39,122)
Forward Foreign Currency Transactions ..................................... (12,203) 54,732
Net Change in Unrealized Appreciation/Depreciation on Investments,
Foreign Currencies, and Forward Foreign Currency Contracts ................ 236,087 2,839,957
----------- -----------
Net Realized and Unrealized Gain on Investments, Foreign Currencies,
Forward Foreign Currency and Foreign Futures Contracts ....................... 352,815 3,063,737
----------- -----------
Net Increase in Net Assets from Operations ...................................... $ 358,203 $ 3,108,389
=========== ===========
</TABLE>
- ----------
1/ On September 8, 1999, the Board of Trustees approved the change of the fiscal
year end from September 30 to October 31.
See Notes to Financial Statements.
19
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Portfolio
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period For the For the
October 1, 1999 to year ended year ended
October 31, 1999/1 September 30, 1999 September 30, 1998
------------------ ------------------ ------------------
<S> <C> <C> <C>
Increase (Decrease) in Net Assets from:
Operations
Net Investment Income ............................ $ 5,388 $ 44,652 $ 149,250
Net Realized Gain (Loss) from Investments, Foreign
Currency, Forward Foreign Currency and Foreign
Futures Transactions .......................... 116,728 223,780 (14,010,816)
Net Change in Unrealized Appreciation/Depreciation
on Investments, Foreign Currencies and Forward
Foreign Currency Contracts ..................... 236,087 2,839,957 1,768,257
------------ ------------ ------------
Net Increase (Decrease) in Net Assets from Operations 358,203 3,108,389 (12,093,309)
------------ ------------ ------------
Capital Transactions
Proceeds from Capital Invested ................... 291,116 23,483,698 33,236,914
Value of Capital Withdrawn ....................... (418,420) (24,415,533) (43,431,238)
------------ ------------ ------------
Net Decrease in Net Assets from Capital Transactions (127,304) (931,835) (10,194,324)
------------ ------------ ------------
Total Increase (Decrease) in Net Assets ............. 230,899 2,176,554 (22,287,633)
Net Assets
Beginning of Period ................................. 6,419,001 4,242,447 26,530,080
------------ ------------ ------------
End of Period ....................................... $ 6,649,900 $ 6,419,001 $ 4,242,447
============ ============ ============
</TABLE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Contained below are selected ratios to average net assets and other supplemental
data for the periods indicated for the Pacific Basin Equity Portfolio.
<TABLE>
<CAPTION>
For the period For the years ended September 30,
October 1, 1999 to ---------------------------------------------------------
October 31, 1999/1 1999 1998 1997 1996 1995
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Supplemental Data and Ratios:
Net Assets, End of Period (000s omitted) ..... $ 6,650 $ 6,419 $ 4,242 $26,530 $29,609 $24,656
Ratios to Average Net Assets:
Net Investment Income ..................... 0.97%/2 0.73% 1.17% 0.33% 0.51% 0.87%
Expenses .................................. 1.00%/2 1.00% 1.00% 1.00% 1.00% 1.00%
Decrease Reflected in Above Expense
Ratio Due to Fees Waived/Expenses
Reimbursed by Bankers Trust ............. 2.88%/2 0.69% 0.35% 0.14% 0.11% 0.20%
Portfolio Turnover Rate ...................... 17% 170% 125% 172% 118% 104%
</TABLE>
- ----------
1/ On September 8, 1999, the Board of Trustees approved the change of the fiscal
year end from September 30 to October 31.
2/ Annualized.
See Notes to Financial Statements.
20
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Portfolio
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 1--Organization and Significant Accounting Policies
A. Organization
The Pacific Basin Equity Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940 (the "Act"), as amended, as an open-end
management investment company. The Portfolio was organized on August 6, 1993 as
an unincorporated trust under the laws of New York and began operations on
November 1, 1993. The Declaration of Trust permits the Board of Trustees (the
"Trustees") to issue beneficial interests in the Portfolio.
B. Security Valuation
The Portfolio's investments listed or traded on National Stock Exchanges or
other domestic or foreign exchanges are valued based on the closing price of the
security traded on that exchange. Short-term debt securities are valued at
market value until such time as they reach a remaining maturity of 60 days,
whereupon they are valued at amortized cost using their value on the 61st day.
All other securities and other assets are valued at their fair value as
determined in good faith under procedures established by and under the general
supervision of the Trustees. At October 31, 1999 and September 30, 1999,
respectively, the total value of fair valued securities was $0 representing 0%
of total investments.
C. Security Transactions and Investment Income
Security transactions are accounted for on a trade date basis. Dividend income,
less foreign taxes withheld, if any, is recorded on the ex-dividend date or upon
receipt of ex-dividend notification in the case of certain foreign securities.
Interest income is recorded on the accrual basis and includes amortization of
premium and discount on investments. Realized gains and losses from securities
transactions are recorded on the identified cost basis.
All of the net investment income and realized and unrealized gains and losses
from the security and foreign currency transactions of the Portfolio are
allocated pro rata among the investors in the Portfolio at the time of such
determination.
D. Foreign Currency Transactions
The books and records of the Portfolio are maintained in U.S. dollars. All
assets and liabilities initially expressed in foreign currencies are converted
into U.S. dollars at prevailing exchange rates. Purchases and sales of
investment securities, dividend and interest income, and certain expenses are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
E. Forward Foreign Currency Contracts
The Portfolio may enter into forward foreign currency contracts for the purpose
of settling specific purchases or sales of securities denominated in a foreign
currency or with respect to the Portfolio's investments. The net U.S. dollar
value of foreign currency underlying all contractual commitments held by the
Portfolio and the resulting unrealized appreciation or depreciation are
determined using prevailing exchange rates. With respect to forward foreign
currency contracts, losses in excess of amounts recognized in the Statement of
Assets and Liabilities may arise due to changes in the value of the foreign
currency or if the counterparty does not perform under the contract.
F. Futures Contracts
The Portfolio may enter into financial futures contracts which are contracts to
buy a standard quantity of securities at a specified price on a future date. The
Portfolio is required to deposit either in cash or securities an amount equal to
a certain percentage of the contract amount. Variation margin payments are made
or received by the Portfolio each day, dependent on the daily fluctuations in
the value of the underlying security, and are recorded for financial statement
purposes as unrealized gains or losses by the Portfolio.
Futures contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are traded.
G. Federal Income Taxes
The Portfolio is considered a partnership under the Internal Revenue Code.
Therefore, no federal income tax provision is necessary.
H. Other
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts in the financial statements. Actual results could
differ from those estimates.
Note 2--Fees and Transactions with Affiliates
The Portfolio has entered into an Administration and Services Agreement with
Bankers Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Portfolio in return for a fee computed daily and
paid monthly at an annual rate of .25% of the Portfolio's average daily net
assets.
The Portfolio has entered into an Advisory Agreement with Bankers Trust. Under
this Advisory Agreement, the Portfolio pays Bankers Trust an advisory fee
computed daily and paid monthly at an annual rate of .75% of the Portfolio's
average daily net assets.
Bankers Trust has entered into a Sub-Advisory Agreement with BT Portfolio
Managers International Limited ("BT Portfolio Managers International"), a wholly
owned subsidiary of Bankers Trust Australia Limited, for the Pacific Basin
Equity Portfolio. Under this Agreement, BT Portfolio Managers International
receives a fee from Bankers Trust for providing investment advice and research
services, computed daily and paid monthly at an annual rate of .60% of the
Portfolio's average daily net assets.
21
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Portfolio
Notes to Financial Statements
- --------------------------------------------------------------------------------
Bankers Trust has voluntarily undertaken to waive its fees and reimburse
expenses of the Portfolio, to the extent necessary, to limit all expenses to
1.00% of the average daily net assets of the Portfolio.
The Portfolio may invest in the Institutional Cash Management Fund (the "Fund"),
an open-end management investment company managed by Bankers Trust Company (the
"Company"). The Fund is offered as a cash management option to the Portfolio and
other accounts managed by the Company. Distributions from the Fund to the
Portfolio for the periods ended October 31, 1999, and September 30, 1999,
amounted to $1,642 and $1,343 respectively, which are included in dividend
income.
At September 30, 1999 the Portfolio was a participant with other affiliated
entities in a revolving credit facility in the amount of $100,000,000, which
expires April 29, 2000. A commitment fee of .10% per annum on the average daily
amount of the available commitment is payable on a quarterly basis and
apportioned equally among all participants. On October 8, 1999, the revolving
credit facility was increased to $150,000,000. No amounts were drawn down or
outstanding under the credit facility for the periods ended September 30, 1999,
and October 31, 1999.
Bankers Trust was a wholly owned subsidiary of Bankers Trust Corporation ("BT
Corp."). On June 4, 1999, BT Corp. was acquired by Deutsche Bank AG ("Deutsche
Bank"). As a result of the transaction, Bankers Trust became an indirect
wholly-owned subsidiary of Deutsche Bank.
Note 3--Purchases and Sales of Investment Securities
The aggregate cost of purchases and proceeds from sales of investments, other
than short-term obligations, for the period ended October 31, 1999, were
$1,311,697 and $1,039,615, respectively. For the year ended September 30, 1999
the amounts were $9,141,260 and $10,343,651, respectively.
For Federal income tax purposes, the tax basis of investments held at October
31, 1999 was $5,600,200. The aggregate gross unrealized appreciation for all
investments at October 31, 1999 was $1,138,724, and the aggregate gross
unrealized depreciation for all investments was $373,705. At September 30, 1999
the tax basis of investments held was $5,689,049. The aggregate gross unrealized
appreciation for all investments at September 30, 1999 was $965,329 and the
aggregate gross unrealized depreciation for all investments was $409,390.
22
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Portfolio
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 4--Open Forward Foreign Currency Contracts
At October 31, 1999, the Pacific Basin Equity Portfolio had the following open
foreign currency contracts outstanding::
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
(Depreciation)
Contracts to Deliver In Exchange For Settlement Date Value (US$) (US$)
- ------------------------------------------------------------------------------------------------------------
Sales
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Hong Kong Dollar 109,564 US Dollar 14,000 4/17/00 14,069 $ (69)
Hong Kong Dollar 9,376,923 US Dollar 1,186,652 12/17/99 1,206,237 (19,585)
Hong Kong Dollar 2,161,584 US Dollar 272,000 2/24/00 277,864 (5,864)
Hong Kong Dollar 6,886,614 US Dollar 866,514 2/24/00 885,249 (18,735)
Hong Kong Dollar 459,314 US Dollar 58,000 2/24/00 59,043 (1,043)
Hong Kong Dollar 866,855 US Dollar 110,000 2/24/00 111,431 (1,431)
Hong Kong Dollar 75,000 US Dollar 9,518 2/24/00 9,641 (123)
Hong Kong Dollar 115,000 US Dollar 14,598 2/24/00 14,783 (185)
South Korean Won 59,102,400 US Dollar 48,000 2/14/00 49,384 (1,384)
South Korean Won 183,464,000 US Dollar 152,000 2/14/00 153,295 (1,295)
South Korean Won 82,144,000 US Dollar 68,000 2/14/00 68,636 (636)
Taiwan Dollar 3,200,515 US Dollar 97,000 2/11/00 101,016 (4,016)
Taiwan Dollar 3,205,365 US Dollar 97,000 2/11/00 101,169 (4,169)
Taiwan Dollar 3,374,874 US Dollar 102,000 2/11/00 106,519 (4,519)
Taiwan Dollar 3,374,160 US Dollar 102,000 2/11/00 106,496 (4,496)
Taiwan Dollar 2,715,430 US Dollar 82,000 2/11/00 85,705 (3,705)
Taiwan Dollar 1,285,920 US Dollar 38,000 2/11/00 40,587 (2,587)
- ------------------------------------------------------------------------------------------------------------
Total Sales $ (73,842)
- ------------------------------------------------------------------------------------------------------------
Purchases
- ------------------------------------------------------------------------------------------------------------
Hong Kong Dollar 1,427,112 US Dollar 180,000 12/17/99 183,582 3,582
Hong Kong Dollar 350,865 US Dollar 44,000 12/17/99 45,135 1,135
Hong Kong Dollar 712,332 US Dollar 90,000 12/17/99 91,634 1,634
Hong Kong Dollar 6,886,614 US Dollar 872,496 12/17/99 885,886 13,390
Hong Kong Dollar 10,564,367 US Dollar 1,351,755 2/24/00 1,358,010 6,255
South Korean Won 324,710,400 US Dollar 271,497 2/14/00 271,316 (182)
Taiwan Dollar 7,388,192 US Dollar 224,000 2/11/00 233,189 9,189
Taiwan Dollar 2,682,050 US Dollar 79,000 2/11/00 84,652 5,652
Taiwan Dollar 1,761,760 US Dollar 52,000 2/11/00 55,605 3,605
Taiwan Dollar 5,324,262 US Dollar 162,078 2/11/00 168,046 5,968
- ------------------------------------------------------------------------------------------------------------
Total Purchases $ 50,228
- ------------------------------------------------------------------------------------------------------------
Net Unrealized Depreciation $ (23,614)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Portfolio
Notes to Financial Statements
- --------------------------------------------------------------------------------
At September 30, 1999, the Pacific Basin Equity Portfolio had the following open
forward foreign currency contracts outstanding:
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
(Depreciation)
Contracts to Deliver In Exchange For Settlement Date Value (US$) (US$)
- ------------------------------------------------------------------------------------------------------------
Sales
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Hong Kong Dollar 109,564 US Dollar 14,000 4/17/00 14,050 $ (50)
Hong Kong Dollar 75,000 US Dollar 9,518 2/24/00 9,633 (115)
Hong Kong Dollar 115,000 US Dollar 14,598 2/24/00 14,771 (173)
Hong Kong Dollar 459,314 US Dollar 58,000 2/24/00 58,995 (995)
Hong Kong Dollar 866,855 US Dollar 110,000 2/24/00 111,341 (1,341)
Hong Kong Dollar 762,336 US Dollar 96,000 10/19/99 98,129 (2,129)
Hong Kong Dollar 1,648,873 US Dollar 207,000 10/19/99 212,246 (5,246)
Hong Kong Dollar 2,161,584 US Dollar 272,000 2/24/00 277,639 (5,639)
Hong Kong Dollar 2,740,508 US Dollar 345,000 10/19/99 352,763 (7,763)
Hong Kong Dollar 2,741,025 US Dollar 345,000 10/19/99 352,829 (7,829)
Hong Kong Dollar 4,510,202 US Dollar 567,000 10/19/99 580,561 (13,561)
Hong Kong Dollar 6,886,614 US Dollar 866,513 2/24/00 884,532 (18,019)
Hong Kong Dollar 9,376,923 US Dollar 1,186,652 12/17/99 1,206,175 (19,523)
South Korean Won 183,464,000 US Dollar 152,000 2/14/00 150,654 1,346
South Korean Won 82,144,000 US Dollar 68,000 2/14/00 67,454 546
South Korean Won 59,102,400 US Dollar 48,000 2/14/00 48,533 (533)
Taiwan Dollar 1,285,920 US Dollar 38,000 2/11/00 40,300 (2,300)
Taiwan Dollar 2,715,430 US Dollar 82,000 2/11/00 85,099 (3,099)
Taiwan Dollar 3,200,515 US Dollar 97,000 2/11/00 100,302 (3,302)
Taiwan Dollar 3,205,365 US Dollar 97,000 2/11/00 100,454 (3,454)
Taiwan Dollar 3,374,160 US Dollar 102,000 2/11/00 105,744 (3,744)
Taiwan Dollar 3,374,874 US Dollar 102,000 2/11/00 105,766 (3,765)
- ------------------------------------------------------------------------------------------------------------
Total Sales $(100,688)
- ------------------------------------------------------------------------------------------------------------
Purchases
- ------------------------------------------------------------------------------------------------------------
Hong Kong Dollar 9,376,923 US Dollar 1,192,993 10/19/99 1,207,013 $ 14,020
Hong Kong Dollar 6,886,614 US Dollar 872,496 12/17/99 885,841 13,344
Hong Kong Dollar 2,227,120 US Dollar 280,000 10/19/99 286,679 6,679
Hong Kong Dollar 10,564,367 US Dollar 1,351,755 2/24/00 1,356,911 5,157
Hong Kong Dollar 1,427,112 US Dollar 180,000 12/17/99 183,573 3,573
Hong Kong Dollar 798,900 US Dollar 100,000 10/19/99 102,836 2,836
Hong Kong Dollar 712,332 US Dollar 90,000 12/17/99 91,629 1,629
Hong Kong Dollar 350,865 US Dollar 44,000 12/17/99 45,133 1,133
South Korean Won 324,710,400 US Dollar 271,497 2/14/00 266,641 (4,856)
Taiwan Dollar 7,388,192 US Dollar 224,000 2/11/00 231,540 7,540
Taiwan Dollar 2,682,050 US Dollar 79,000 2/11/00 84,053 5,053
Taiwan Dollar 5,324,262 US Dollar 162,078 2/11/00 166,858 4,780
Taiwan Dollar 1,761,760 US Dollar 52,000 2/11/00 55,212 3,212
- ------------------------------------------------------------------------------------------------------------
Total Purchases $ 64,100
- ------------------------------------------------------------------------------------------------------------
Net Unrealized Depreciation $ (36,588)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Note 5--Risks of Investing in Emerging Markets
The risks involved when investing in emerging markets are of a nature generally
not encountered when investing in securities traded on major international
markets.
Investment in securities of issuers based in underdeveloped emerging markets
involves special risks and considerations not typically associated with
investing in U.S. companies. These risks include: (i) greater risks of
expropriation, confiscatory taxation, nationalization, and less social,
political and economic stability; (ii) the smaller size of the market for such
securities and a low or nonexistent volume of trading, resulting in lack of
liquidity and in price volatility. Additionally, developments affecting emerging
market investments cannot always be foreseen.
24
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Portfolio
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Trustees and Holders of Beneficial Interest of
Pacific Basin Equity Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Pacific Basin Equity Portfolio
(hereafter referred to as the "Portfolio") at October 31, 1999 and September 30,
1999 and the results of its operations, the changes in its net assets and the
financial highlights for each of the fiscal periods presented, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Portfolio's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1999 and
September 30, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
November 19, 1999
25
<PAGE>
- --------------------------------------------------------------------------------
Pacific Basin Equity Fund
Proxy Results (unaudited)
- --------------------------------------------------------------------------------
For the year ended September 30, 1999, the Bankers Trust Funds shareholders
voted on the following proposals at the annual meeting of shareholders on
October 8, 1999 or as adjourned. The description of each proposal and number of
shares voted are as follows:
1. To elect the Bankers Trust Funds Board of Trustees.
Shares Shares Voted
Voted Withheld
For Authority
--------- ------------
Messr Biggar 1,163,100 3,570
Messr Dill 1,163,100 3,570
Messr Hale 1,163,100 3,570
Messr Langton 1,163,100 3,570
Messr Saunders 1,163,100 3,570
Messr Van Benschoten 1,163,100 3,570
Dr. Gruber 1,163,100 3,570
Dr. Herring 1,163,100 3,570
2. To approve the New Investment Advisory Agreement with Bankers Trust Company.
For Against Abstain
--------- ------- -------
1,159,773 1,827 5,070
3. To approve the New Investment Advisory Agreement with Morgan Grenfell, Inc.
For Against Abstain
--------- ------- -------
1,156,127 1,827 8,716
4. To approve the New Investment Sub-advisory Agreement with Morgan Grenfell
Investment Services Ltd.
For Against Abstain
--------- ------- -------
1,156,127 1,827 8,716
5. To ratify the selection of PricewaterhouseCoopers LLP as the independent
accountants of the Fund and its corresponding Portfolio.
For Against Abstain
--------- ------- -------
1,159,773 1,827 5,070
26
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<PAGE>
[GRAPHIC OMITTED] Bankers Trust
Architects of Value
For information on how to invest, shareholder account information and current
price and yield information, please contact your relationship manager or write
to us at: BT Service Center
P.O. Box 419210
Kansas City, MO 64141-6210
or call our toll-free number: 1-800-730-1313
This report must be preceded or accompanied by a current prospectus for the
Fund.
Pacific Basin Equity Fund CUSIP #055922736
BT Investment Funds 496ANN (9/99)
Distributed by:
ICC Distributors, Inc.
Two Portland Square
Portland, ME 04101
