PROSPECTUS: JANUARY 31, 1999
AS REVISED APRIL 12, 1999
[GRAPHIC GOES HERE]
BT Mutual Funds
International
Equity Fund
With the goal of
achieving long-term
capital appreciation
primarily through
investment in the
stocks and other
equity securities of
companies in
developed countries
outside the United
States
TRUST: BT INVESTMENT FUNDS
INVESTMENT ADVISER: BANKERS TRUST COMPANY
[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.]
<PAGE>
Overview
of the International Equity Fund
Goal: The Fund invests for long-term capital appreciation.
Core Strategy: The Fund invests primarily in the stocks and
other equity securities of companies in developed countries
outside the United States.
INVESTMENT POLICIES AND STRATEGIES
The Fund invests all of its assets in a master
portfolio with the same investment objective
as the Fund. The Fund, through the master
portfolio, seeks to achieve that objective by
investing primarily in companies in developed
foreign countries. The Fund may also invest a
portion of its assets in companies based in
emerging markets. The companies are selected
by an extensive tracking system plus the input
of experts from various financial disciplines.
International Equity Fund
Overview of the International Equity Fund
3 Goal
3 Core Strategy
3 Investment Policies and Strategies
4 Principal Risks of Investing in the Fund
4 Who Should Consider Investing in the Fund
5 Total Returns, After Fees and Expenses
6 Annual Fund Operating Expenses
A Detailed Look at the International Equity Fund
7 Objective
7 Strategy
7 Principal Investments
8 Investment Process
8 Risks
10 Management of the Fund
11 Calculating the Fund's Share Price
11 Performance Information
11 Dividends and Distributions
11 Tax Considerations
12 Buying and Selling Fund Shares
13 Financial Highlights
3
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<PAGE>
Overview of the International Equity Fund
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the Fund could lose money, or the Fund's performance could
trail that of other investments. For example:
[] Stocks that the Investment Adviser has selected could perform poorly; or
[] The stock market could perform poorly in one or more of the countries in
which the Fund has invested.
Beyond the risks common to all stock investing, an investment in the Fund could
also lose money or underperform alternative investments as a result of risks in
the foreign countries in which the Fund invests:
[] Adverse political, economic or social developments could undermine the value
of the Fund's investments or prevent the Fund from realizing their full value;
[] Accounting and financial reporting standards differ from those in the U.S.
and could convey incomplete information when compared to information typically
provided by U.S. companies; or
[] The currency of a country in which the Fund invests may decrease in value
relative to the U.S. dollar, which could affect the value of the investment to
U.S. investors.
WHO SHOULD CONSIDER INVESTING IN THE FUND
You should consider investing in the International Equity Fund if you are
seeking long-term capital appreciation. There is, of course, no guarantee that
the Fund will realize its goal. Moreover, you should be willing to accept
greater short-term fluctuation in the value of your investment than you would
typically experience investing in bond or money market funds.
You should not consider investing in the International Equity Fund if you are
pursuing a short-term financial goal, if you seek regular income or if you
cannot tolerate fluctuations in the value of your investments.
The Fund by itself does not constitute a balanced investment program. It can,
however, afford you exposure to investment opportunities not available to
someone who invests in U.S. securities alone. Diversifying your investments may
improve your long-run investment return and lower the volatility of your
overall investment portfolio.
An investment in the International Equity Fund is not a deposit of Bankers
Trust Company or any other bank, and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
4
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<PAGE>
Overview of the International Equity Fund
[GRAPHIC GOES HERE]
Year-by-Year Returns
(each full calendar year since inception)
0
37.38%
1993
4.11%
1994
16.10%
1995
21.32%
1996
17.37%
1997
20.82%
1998
Since inception, the Fund's highest return in any calendar quarter was 19.44%
and its lowest quarterly return was -16.58%. Past performance offers no
indication of how the Fund will perform in the future.
TOTAL RETURNS, AFTER FEES AND EXPENSES
The bar chart and table on this page can help you evaluate the potential risk
and rewards of investing in the Fund by showing changes in the Fund's
performance year to year. The bar chart shows the Fund's actual return for each
full calendar year since the Fund began selling shares on August 4, 1992 (its
inception date). The table compares the Fund's average annual return with the
Morgan Stanley Capital International (MSCI) EAFE Index over the last one and
five years and since its inception. Bear in mind that the Index is a passive
measure of combined national stock market returns. It does not factor in the
costs of buying, selling and holding stocks -- costs which are reflected in the
Fund's results.
- --------------------------------------
The MSCI EAFE Index of major markets in Europe, Australia and the Far East
(EAFE) is a widely accepted benchmark of international stock performance. It is
a model, not an actual portfolio. It tracks stocks in Australia, Austria,
Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan,
the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland and the United Kingdom.
Average Annual Returns
(as of December 31, 1998)
<TABLE>
<CAPTION>
Since Inception
1 year 5 years (August 4, 1992)(1)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
International Equity Fund 20.82% 15.77% 17.34%
- -------------------------------------------------------------------------------------
EAFE Index 20.00% 9.19% 11.93%
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Lipper International Fund Universe(2) 13.02% 7.69% 11.04%
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</TABLE>
(1)The EAFE Index and Lipper International Fund Universe averages are calculated
from July 31, 1992.
(2)Unweighted average return, net of fees and expenses, of all mutual funds that
invested primarily in stocks and other equity securities of companies outside
the United States.
5
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<PAGE>
Overview of the International Equity Fund
ANNUAL FUND OPERATING EXPENSES
(expenses paid from Fund assets)
The Annual Fees and Expenses table to the right describes the fees and expenses
that you may pay if you buy and hold shares of the International Equity Fund.
Expense Example. The example below illustrates the expenses you would have
incurred on a $10,000 investment in the Fund. The numbers assume that the Fund
earned an annual return of 5% over the periods shown, the Fund's operating
expenses remained the same and you sold your shares at the end of the period.
You may use this hypothetical example to compare the Fund's expense history
with other funds.(1) Your actual costs may be higher or lower.
(1)Information on the annual operating expenses reflects the expenses of both
the Fund and the International Equity Portfolio, the master fund in which
the International Equity Fund invests its assets. (A further discussion of
the relationship between the Fund and the Portfolio appears in the
"Organizational Structure" section of this prospectus.)
(2)Bankers Trust has agreed, for the 16-month period from the Fund's fiscal year
end of September 30, 1998, to waive its fees and reimburse expenses so that
total expenses will not exceed 1.50%.
(3)Based on expenses, after fee waivers and reimbursements for the first 16
months only.
Annual Fees and Expenses
Percentage of Average
Daily Net Assets(1)
----------------------------
Management Fees 0.65 %
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Distribution and Service (12b-1) Fees None
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Other Fund Operating Expenses 1.05 %
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Total Fund Operating Expenses 1.70 %
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Less: Fee Waivers or Expense
Reimbursement (0.20)%(2)
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Net Expenses 1.50 %
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Expense Example(3)
1 year 3 years 5 years 10 years
--------------------------------------------
$153 $520 $921 $2,047
6
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<PAGE>
A detailed look
at the International Equity Fund
OBJECTIVE
The Fund seeks long-term capital appreciation. Under normal circumstances, the
Fund invests at least 65% of its total assets in the stocks and other
securities with equity characteristics of companies in developed countries
outside the United States.
The Fund invests for capital appreciation, not income; any dividend and
interest income is incidental to the pursuit of its objective. While we give
priority to capital appreciation, we cannot offer any assurance of achieving
this objective. The Fund's objective is not a fundamental policy. We must
notify shareholders before we change it, but we do not require their approval
to do so.
STRATEGY
The Fund invests for the long term. We employ a strategy of growth at a
reasonable price. We seek to identify companies outside the United States that
combine strong potential for earnings growth with reasonable investment value.
Such companies typically exhibit increasing rates of profitability and cash
flow, yet their share prices compare favorably to other stocks in a given
market and to their global peers. In evaluating stocks, we consider factors
such as sales, earnings, cash flow and enterprise value. Enterprise value is a
company's market capitalization plus the value of its net debt. We further
consider the relationship between these and other quantitative factors.
Together, these indicators of growth and value may identify companies with
improving prospects before the market in general has taken notice.
PRINCIPAL INVESTMENTS
Almost all the companies in which the Fund invests are based in the developed
foreign countries that make up the EAFE Index, plus Canada. The Fund may also
invest a portion of its assets in companies based in the emerging markets of
Latin America, the Middle East, Europe, Asia and Africa if we believe that
their return potential more than compensates for the extra risks associated
with these markets. While we have invested in emerging markets in the past,
under normal market conditions we do not consider this a central element of the
Fund's strategy. Typically, we would not hold more than 15% of net assets in
emerging markets.
[GRAPHIC OMITTED]
Best/Worst Performing Stock Markets
US Stocks (S&P 500)
0
New Zealand Belgium
-12% 55%
Finland Austria
-9% 104%
New Zealand United Kingdom
-37% 10%
Finland Hong Kong
-17% 50%
Denmark Hong Kong
-28% 32%
US Hong Kong
10% 116%
Hong Kong Finland
-5% 52%
Austria Switzerland
-4% 45%
Japan Spain
-15% 41%
Malaysia Switzerland
-88% 45%
Norway Finland
-30% 123%
Returns in U.S. dollars
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This chart does not represent the performance of any of the BT Mutual Funds.
Past performance is not a guarantee of future results.
From 1988 to 1998, the difference in annual returns between the strongest
performing markets and the weakest averaged 81%, according to Factset. And the
United States, notwithstanding some outstanding years during this period, never
posted the best annual return. Thus, by maintaining a presence across the
developed markets, investors can potentially improve their returns compared to
investing solely in U.S. stocks.
7
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<PAGE>
A Detailed Look at the International Equity Fund
INVESTMENT PROCESS
Company research lies at the heart of our investment process, as it does with
many stock mutual funds. We track several thousand companies to arrive at the
approximately 100 stocks the Fund normally holds. But our process brings an
added dimension to this fundamental research. It draws on the insight of
experts from a range of financial disciplines -- regional stock market
specialists, global industry specialists, economists and quantitative analysts.
They challenge, refine and amplify each other's ideas. Their close
collaboration is a critical element of our investment process.
RISKS
BELOW WE SET FORTH SOME OF THE PROMINENT RISKS ASSOCIATED WITH INTERNATIONAL
INVESTING, AS WELL AS INVESTING IN GENERAL, AND WE DETAIL OUR APPROACHES TO
CONTAINING THEM. ALTHOUGH WE ATTEMPT TO ASSESS THE LIKELIHOOD THAT THESE RISKS
MAY ACTUALLY OCCUR AND TO LIMIT THEM, WE MAKE NO GUARANTEE THAT WE WILL
SUCCEED.
Primary Risks
Market Risk. Although individual stocks can outperform their local markets,
deteriorating market conditions might cause an overall weakness in the stock
prices of the entire market.
Stock Selection Risk. A risk that pervades all investing is the risk that the
securities an investor has selected will not perform to expectations. To
minimize this risk, we monitor each of the stocks in the Fund according to
three basic quantitative criteria. We subject a stock to intensive review if:
[] its rate of price appreciation begins to trail that of its national stock
index;
[] the financial analysts who follow the stock, both within Bankers Trust and
outside, cut their estimates of the stock's future earnings; or
[] the stock's price approaches the downside target we set when we first bought
the stock (and may since have modified to reflect changes in market and
economic conditions).
In this review, we seek to learn if the deteriorating performance accurately
reflects deteriorating prospects or if, in our view, it merely reflects
investor overreaction to temporary circumstances.
Political Risk. Some foreign governments have limited the outflow of profits to
investors abroad, extended diplomatic disputes to include trade and financial
relations, and imposed high taxes on corporate profits. While these political
risks have not occurred recently in the major countries in which the Fund
invests, we analyze countries and regions to try to anticipate these risks.
Information Risk. Financial reporting standards for companies based in foreign
markets differ from those in the United States. Since the "numbers" themselves
sometimes mean different things, the Investment Adviser devotes much of its
research effort to understanding and assessing the impact of these differences
upon a company's financial conditions and prospects.
Foreign Stock Market Risk. From time to time, foreign capital markets have
exhibited more volatility than those in the United States. Trading stocks on
some foreign exchanges is inherently more difficult than trading in the United
States for reasons including:
[] Liquidity Risk. Stocks that trade less can be more difficult or more costly
to buy, or to sell, than more liquid or active stocks. This liquidity risk is a
factor of the trading volume of a particular stock, as well as the size and
liquidity of the entire local market. On the whole, foreign exchanges are
smaller and less liquid than the U.S. market. This can make buying and selling
certain shares more difficult and costly. Relatively small transactions in some
instances can have a disproportionately large effect on the price and supply of
shares. In certain situations, it may become virtually impossible to sell a
stock in an orderly fashion at a price that approaches our estimate of its
value.
[] Regulatory Risk. Some foreign governments regulate their exchanges less
stringently, and the rights of shareholders may not be as firmly established.
The management of certain foreign companies may be less focused on short-term
earnings than some U.S. companies. For example, they may pay lower dividends.
In an effort to reduce these foreign stock market risks, the Fund diversifies
its investments, just as you may spread your investments among a range of
securities so that a setback in one need not overwhelm your entire strategy. In
this way, a reversal in one market or stock need not undermine the pursuit of
long-term capital appreciation.
Currency Risk. The Fund invests in foreign securities denominated in foreign
currencies. This creates the possibility that changes in foreign exchange rates
will affect the value of foreign securities or the U.S. dollar amount of income
or gain received on these securities. The Investment Adviser seeks to minimize
this risk by actively managing the currency exposure of the Fund.
- --------------------------------------------------------------------------------
Portfolio Turnover. The portfolio turnover rate measures the frequency that the
Portfolio sells and replaces the securities it holds within a given period.
Historically, this Fund has had a low portfolio turnover rate.
Currency management is used to offset investment risk ("hedging") and, where
possible, to add to investment returns. Currency management activities include
the use of forward contracts and may include the use of other instruments.
There is no guarantee that these currency management activities will work and
they could cause losses to the Fund.
8
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<PAGE>
A Detailed Look at the International Equity Fund
Emerging Market Risk. To the extent that the Fund invests in emerging markets
to enhance overall returns, it may face higher political, information, and
stock market risks. In addition, profound social changes and business practices
that depart from norms in developed countries' economies have hindered the
orderly growth of emerging economies and their stock markets in the past. High
levels of debt tend to make emerging economies heavily reliant on foreign
capital and vulnerable to capital flight. For all these reasons, the Fund
carefully limits and balances its commitment to these markets.
Secondary Risks
Small Company Risk. Although the Fund generally invests in the shares of large,
well-established companies, it may occasionally take advantage of exceptional
opportunities presented by smaller companies. Such opportunities pose unique
risks, which we take into account in considering an investment. Small company
stocks tend to experience steeper fluctuations in price -- down as well as up
- -- than the stocks of larger companies. A shortage of reliable information, the
same information gap that creates opportunity in small company investing, can
also pose added risk. Industrywide reversals have had a greater impact on small
companies, since they lack a large company's financial resources. Small company
managers typically have less experience coping with adversity or capitalizing
on opportunity than their counterparts at larger companies. Finally, small
company stocks are typically less liquid than large company stocks: when things
are going poorly, it is harder to find a buyer for a small company's shares.
Pricing Risk.When price quotations for securities are not readily available, we
determine their value by the method that most accurately reflects their current
worth in the judgement of the Board of Trustees. This procedure implies an
unavoidable risk, the risk that our prices are higher or lower than the prices
that the securities might actually command if we sold them. If we have valued
the securities too highly, you may end up paying too much for Fund shares when
you buy. If we underestimate their price, you may not receive the full market
value for your Fund shares when you sell.
Futures and Options. Although not one of its principal investment strategies,
the Fund may invest in futures contracts and options on futures contracts.
These investments, when made, are for hedging purposes. If the Fund invests in
futures contracts and options on futures contracts for non-hedging purposes,
the margin and premiums required to make those investments will not exceed 5%
of the Fund's net asset value after taking into account unrealized profits and
losses on the contracts. Futures contracts and options on futures contracts
used for non-hedging purposes involve greater risks than stock investments.
Euro Risk. On January 1, 1999, eleven countries of the European Economic and
Monetary Union (EMU) began implementing a plan to replace their national
currencies with a new currency, the euro. Full conversion to the euro is slated
to occur by July 1, 2002.
Although it is impossible to predict the impact of the conversion to the euro
on the Fund, the risks may include:
[] changes in the relative strength and value of the U.S. dollar or other major
currencies;
[] adverse effects on the business or financial condition of European issuers
that the Fund holds in its portfolio;
[] that the systems used to purchase and sell euro-denominated securities may
not work;
[] uncertainty about how existing financial contracts will be treated after euro
implementation; and
[] unpredictable effects on trade and commerce generally.
These and other factors could increase volatility in financial markets
worldwide and could adversely affect the value of securities held by the Fund.
Year 2000 Risk. As with most businesses, the Fund faces the risk that the
computer systems of its Investment Adviser and other companies on which it
relies for service or in which it invests will not accommodate the changeovers
necessary from dates in the year 1999 to dates in the year 2000. These risks
could adversely affect:
[] The companies in which the Fund invests, which could impact the value of the
Fund's investments;
[] Our ability to service your Fund account, including our ability to meet your
requests to buy and sell Fund shares; and
[] Our ability to trade securities held by the Fund or to accurately price
securities held by the Fund.
We are working both internally and with our business partners and service
providers to address this problem. If we -- or our business partners, service
providers, government agencies or other market participants -- do not succeed,
it could materially affect shareholder services or the value of the Fund's
shares.
- --------------------------------------------------------------------------------
Futures contracts and options on futures contracts are used as a low cost
method of gaining exposure to a particular securities market without investing
directly in those securities.
9
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<PAGE>
A Detailed Look at the International Equity Fund
Temporary Defensive Position. We may from time to time adopt a temporary
defensive position in response to extraordinary adverse political, economic or
stock market events. We could place up to 100% of the Fund's assets in U.S. or
foreign government money market investments, or other short-term bonds that
offer comparable safety, if the situation warranted. To the extent we might
adopt such a position and over the course of its duration, the Fund may not
meet its goal of long-term capital appreciation.
MANAGEMENT OF THE FUND
Board of Trustees. The Fund's shareholders, voting in proportion to the number
of shares each owns, elect a Board of Trustees, and the Trustees supervise all
the Fund's activities on their behalf.
Investment Adviser. Under the supervision of the Board of Trustees, Bankers
Trust Company, with headquarters at 130 Liberty Street, New York, NY 10006,
acts as the Fund's investment adviser. As investment adviser, Bankers Trust
makes the Fund's investment decisions and assumes responsibility for the
securities the Fund owns. It buys and sells securities for the Fund and
conducts the research that leads to the purchase and sale decisions. Bankers
Trust received a fee of 0.65% of the Fund's average daily net assets for its
services in the last fiscal year.
As of December 31, 1998, Bankers Trust was the eighth largest bank holding
company in the United States with total assets of approximately $156 billion.
Bankers Trust is a worldwide merchant bank dedicated to servicing the needs of
corporations, governments, financial institutions and private clients through a
global network of over 96 offices in more than 43 countries.
Bankers Trust's officers bring wide experience to managing both the Fund and
its Portfolio. The firm's own record dates back to its founding as a trust
company in 1903. It has invested retirement assets on behalf of the nation's
largest corporations and institutions for more than 50 years. Today, the assets
under its global management total $338 billion. The scope of the firm's
capability is broad: It is a leader in both the active and passive quantitative
investment disciplines and maintains a major presence in stock and bond markets
worldwide.
On March 11, 1999, Bankers Trust announced that it had reached an agreement
with the United States Attorney's Office in the Southern District of New York
to resolve an investigation concerning inappropriate transfers of unclaimed
funds and related recordkeeping problems that occurred between 1994 and early
1996. Pursuant to its agreement with the U.S. Attorney's Office, Bankers Trust
pleaded guilty to misstating entries in the bank's books and records and agreed
to pay a $60 million fine to federal authorities. Separately, Bankers Trust
agreed to pay a $3.5 million fine to the State of New York. The events leading
up to the guilty pleas did not arise out of the investment advisory or mutual
fund management activities of Bankers Trust or its affiliates.
As a result of the plea, absent an order from the SEC, Bankers Trust would not
be able to continue to provide investment advisory services to the Fund. The
SEC has granted a temporary order to permit Bankers Trust and its affiliates to
continue to provide investment advisory services to registered investment
companies. There is no assurance that the SEC will grant a permanent order.
Bankers Trust is a wholly owned subsidiary of Bankers Trust Corporation. On
November 30, 1998, Bankers Trust Corporation entered into an Agreement and Plan
of Merger with Deutsche Bank AG under which Bankers Trust Corporation would
merge with and into a subsidiary of Deutsche Bank AG. Deutsche Bank AG is a
major global banking institution that is engaged in a wide range of financial
services, including investment management, mutual funds, retail and commercial
banking, investment banking and insurance. The transaction is contingent upon
various regulatory approvals, and continuation of the Fund's advisory
relationship with Bankers Trust thereafter is subject to the approval of fund
shareholders. If the transaction is approved and completed, Deutsche Bank AG,
as Bankers Trust's new parent company, will control its operations as
investment adviser. Bankers Trust believes that, under this new arrangement,
the services provided to the Fund will be maintained at their current level.
Portfolio Managers. The following portfolio managers are responsible for the
day-to-day management of the master portfolio's investments:
Michael Levy, Managing Director of Bankers Trust and Co-Lead Manager of the
Fund.
[] Joined Bankers Trust and the Fund in 1993.
[] Bankers Trust's international equity strategist, overseeing the design and
implementation of the firm's proprietary stock selection process.
[] 27 years of business experience, 17 of them as an investment professional.
[] Degrees in mathematics and geophysics from the University of Michigan.
Robert Reiner, Managing Director of Bankers Trust and Co-Lead Manager of the
Fund.
[] Joined Bankers Trust and the Fund in 1994.
[] Specializes in Japanese and European stock and market analysis. - Served as
a Senior Financial Analyst at Scudder, Stevens & Clark from 1993 to 1994.
[] 17 years of investment industry experience.
[] Degrees from the University of Southern California and Harvard University.
10
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<PAGE>
A Detailed Look at the International Equity Fund
Julie Wang, Principal of Bankers Trust and Co-Manager of the Fund.
[] Joined Bankers Trust and the Fund in 1994.
[] Focuses on the Fund's Asia-Pacific investments and its emerging markets
exposure.
[] Served as Investment Manager for American International Group's Southeast
Asia portfolio from 1991 to 1994.
[] 10 years of investment management experience.
[] Bachelors degree in economics from Yale University, MBA from The Wharton
School, University of Pennsylvania.
Other Services. Bankers Trust provides administrative services -- such as
portfolio accounting, legal services and others -- for the Fund. In addition,
Bankers Trust -- or your broker or financial advisor -- performs the functions
necessary to establish and maintain your account. In addition to setting up the
account and processing your purchase and sale orders, these functions include:
[] keeping accurate, up-to-date records for your individual Fund account;
[] implementing any changes you wish to make in your account information;
[] processing your requests for cash dividends and distributions from the Fund;
[] answering your questions on the Fund's investment performance or
administration;
[] sending proxy reports and updated prospectus information to you; and
[] collecting your executed proxies.
Brokers and financial advisors may charge additional fees to investors only for
those services not otherwise included in the Bankers Trust servicing agreement,
such as cash management or special trust or retirement-investment reporting.
Organizational Structure. The International Equity Fund is a "feeder fund" that
invests all of its assets in a "master portfolio," the International Equity
Portfolio. The Fund and the Master Portfolio have the same investment
objective. The Master Portfolio is advised by Bankers Trust.
The Master Portfolio may accept investments from other feeder funds. The
feeders bear the Master Portfolio's expenses in proportion to their assets.
Each feeder can set its own transaction minimums, fund-specific expenses, and
other conditions. This arrangement allows the Fund's Trustees to withdraw the
Fund's assets from the Master Portfolio if they believe doing so is in the
shareholder's best interests. If the Trustees withdraw the Fund's assets, they
would then consider whether the Fund should hire its own investment adviser,
invest in a different master portfolio, or take other action.
CALCULATING THE FUND'S SHARE PRICE
We calculate the daily price of the Fund's shares (also known as the "Net Asset
Value" or "NAV") in accordance with the standard formula for valuing mutual
fund shares at the close of regular trading on the New York Stock Exchange
every day the Exchange is open for business.
- --------------------------------------------------------------------------------
The Exchange is open every week, Monday through Friday, except when the
following holidays are celebrated: New Year's Day, Martin Luther King, Jr. Day
(the third Monday in January), Presidents' Day (the third Monday in February),
Good Friday, Memorial Day (the last Monday in May), July 4th, Labor Day (the
first Monday in September), Thanksgiving Day (the fourth Thursday in November)
and Christmas Day.
The formula calls for deducting all of the Fund's liabilities from the total
value of its assets -- the market value of the securities it holds, plus its
cash reserves -- and dividing the result by the number of shares outstanding.
(Note that prices for securities that trade on foreign exchanges can change
significantly on days when the New York Stock Exchange is closed and you cannot
buy or sell Fund shares. Price changes in the securities the Fund owns may
ultimately affect the price of Fund shares the next time the NAV is
calculated.)
We value the securities in the Fund at their stated market value if price
quotations are available. When price quotations for a particular security are
not readily available, we determine their value by the method that most
accurately reflects their current worth in the judgment of the Board of
Trustees. You can find the Fund's daily share price in the mutual fund listings
of most major newspapers.
PERFORMANCE INFORMATION
The Fund's performance can be used in advertisements that appear in various
publications. It may be compared to the performance of various indexes and
investments for which reliable performance data is available. The Fund's
performance may also be compared to averages, performance rankings, or other
information prepared by recognized mutual fund statistical services.
DIVIDENDS AND DISTRIBUTIONS
Dividends and capital gains distributions, if any, are paid annually. We
automatically reinvest all dividends and any capital gains, unless you elect to
receive your distributions in cash.
TAX CONSIDERATIONS
The Fund does not ordinarily pay income taxes. You and other shareholders pay
taxes on the income or capital gains from the Fund's holdings. Your taxes will
vary from year to year, based on the amount of capital gains distributions and
dividends paid out by the Fund. You owe the taxes whether you receive cash or
choose to have distributions and dividends reinvested. Distributions and
dividends usually create the following tax liability:
11
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<PAGE>
A Detailed Look at the International Equity Fund
Transaction Tax Status
- ------------------------------------------------------------
Income dividends Ordinary income
Short-term capital gains distributions Ordinary income
Long-term capital gains distributions Capital gains
Every year the Fund will send you information on the distributions for the
previous year. In addition, if you sell your Fund shares you may have a capital
gain or loss.
Transaction Tax Status
- -------------------------------------------------------------
Your sale of shares owned more than Capital gains or
one year losses
Your sale of shares owned for one Gains treated as
year or less ordinary income;
losses subject to
special rules.
The tax considerations for tax deferred accounts or non-taxable entities will
be different.
Because each investor's tax circumstances are unique and because the tax laws
are subject to change, we recommend that you consult your tax advisor about
your investment.
BUYING AND SELLING FUND SHARES
You can purchase or redeem shares in a Fund by mail, wire transfer or through
an authorized broker or financial advisor. Contact your broker or financial
advisor for details. You may also call the BT Service Center at 1-800-730-1313.
We may close your Fund account on 30 days' notice if it fails to meet minimum
balance requirements for any reason other than a change in market value. In
addition, if your sell order exceeds $250,000, we reserve the right to redeem
it "in kind" with a pro-rata distribution of stocks actually held by the Fund,
rather than in cash.
Your broker or financial advisor may charge transaction fees on the purchase
and sale of Fund shares.
Exchange Privileges. You can exchange all or part of your shares of another BT
Mutual Fund up to four times a year. Before buying shares through an exchange
you should be sure to get a copy of that fund's prospectus and read it
carefully. Please note also that you may have to pay taxes on the shares you
sell in the exchange.
Account Minimums. The Fund requires a minimum investment of $2,500 to open
accounts, $250 for subsequent investments, and a minimum balance of $1,000 to
maintain them. It requires a $500 minimum investment to open a retirement
account, $100 for subsequent investments, but imposes no minimum balance.
Automatic investment accounts, which credit money from your checking account to
the purchase of fund shares bi-weekly, monthly, quarterly, or semi-annually,
call for a minimum $1,000 opening investment and at least $100 for each
subsequent purchase of shares.
Each Fund's Shareholder Guide and Statement of Additional Information contain
complete information on buying and selling Fund shares and maintaining a Fund
account. If you have not already received your free copy of the Shareholder
Guide or wish to obtain a free copy of the Statement of Additional Information,
please call the BT Service Center at 1-800-730-1313.
12
----
<PAGE>
A Detailed Look at the International Equity Fund
The table below provides a picture of the Fund's financial performance for the
past five years. The information selected reflects financial results for a
single Fund share. The total returns in the table represent the rate of return
that an investor would have earned on an investment in the Fund, assuming
reinvestment of all dividends and distributions. This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with the Fund's
financial statements, is included in the Fund's annual report. The annual
report is available free of charge by calling the BT Service Center at
1-800-730-1313.
Financial Highlights
<TABLE>
<CAPTION>
For the
period
January 1,
For the For the For the 1995 For the
year ended year ended year ended through year ended
September 30, September 30, September 30, September 30, December 31,
1998 1997 1996 1995(1) 1994
--------------- --------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value, Beginning of Period $ 22.13 $ 16.77 $ 15.47 $ 13.37 $ 13.18
- -------------------------------------------------------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income 0.02 0.09 0.18 0.14 0.10
- -------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss) on
Investment, Option, Foreign Currency,
Forward Foreign Currency and Foreign
Futures Contracts ( 0.87) 5.63 1.80 1.97 0.44
- -------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations ( 0.85) 5.72 1.98 2.11 0.54
- -------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders
Net Investment Income ( 0.01) ( 0.16) ( 0.31) -- ( 0.09)
- -------------------------------------------------------------------------------------------------------------------------
Net Realized Gains ( 0.59) ( 0.20) ( 0.37) ( 0.01) ( 0.26)
- -------------------------------------------------------------------------------------------------------------------------
Total Distributions ( 0.60) ( 0.36) ( 0.68) ( 0.01) ( 0.35)
- -------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 20.68 $ 22.13 $ 16.77 $ 15.47 $ 13.37
- -------------------------------------------------------------------------------------------------------------------------
Total Investment Return ( 3.73)% 34.76% 13.42% 15.82 % 4.12%
- -------------------------------------------------------------------------------------------------------------------------
Supplemental Data and Ratios:
Net Assets, End of Period (000s omitted) $1,251,580 $525,520 $161,692 $ 82,807 $56,020
- -------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Net Investment Income 0.61% 0.53% 0.91% 1.55%2 0.84%
- -------------------------------------------------------------------------------------------------------------------------
Expenses, Including Expenses of the
International Equity Portfolio 1.50% 1.50% 1.50% 1.50%2 1.50%
Decrease Reflected in Above Expense Ratio
Due to Absorption of Expenses by
Bankers Trust 0.20% 0.18% 0.26% 0.33%2 0.37%
- -------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate(3) 65% 63% 68% 21% 15%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)On August 2, 1995, the Fund changed its fiscal year-end from December 31 to
September 30.
(2)Annualized
(3)The portfolio turnover rate is the rate for the master fund in which the Fund
invests its assets.
13
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<PAGE>
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<PAGE>
[GRAPHIC GOES HERE]
BANKERS TRUST
Architects of Value
Additional information about each Fund's investments and performance is
available in the Fund's annual and semi-annual reports to shareholders. In the
Fund's annual report, you will find a discussion of the market conditions and
investment strategies that significantly affected the Fund's performance during
its last fiscal year.
You can find more detailed information about each Fund in the current Statement
of Additional Information, dated January 31, 1999, which we have filed
electronically with the Securities and Exchange Commission (SEC) and which is
incorporated by reference. To receive your free copy of the Statement of
Additional Information, the annual or semi-annual report, or if you have
questions about investing in a Fund, 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
You can find reports and other information about each Fund on the SEC website
(http://www.sec.gov), or you can get copies of this information, after payment
of a duplicating fee, by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-6009. Information about each Fund, including its
Statement of Additional Information, can be reviewed and copied at the SEC's
Public Reference Room in Washington, D.C. For information on the Public
Reference Room, call the SEC at 1-800-SEC-0330.
You can find information about buying and selling shares in a Fund in the
Shareholder Guide. If you have not already received a copy of the Guide, call
the BT Service Center to obtain one free of charge.
CUSIP #055922868
International Equity Fund STA463300 (4/99)
BT Investment Funds 811-4760
Distributed by:
ICC Distributors, Inc.
Two Portland Square
Portland, ME 04101
