BT INVESTMENT FUNDS, 485APOS, 1999-02-26

BT INVESTMENT FUNDS
485APOS, 1999-02-26

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As filed with the Commission on February 26, 1999
1933 Act File No. 33-07404
1940 Act File No. 811-4760

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
-----

Pre-Effective Amendment No. ............................

Post-Effective Amendment No. 59 ................................ X
--- -----

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
-----

Amendment No. 59 ............................................ X
------ -----

BT INVESTMENT FUNDS
(Exact Name of Registrant as Specified in Charter)

One South Street
Baltimore, Maryland 21202
(Address of Principal Executive Offices)

(410) 895-5000
(Registrant's Telephone Number)

Daniel O. Hirsch Copies To: Burton M .Leibert, Esq.
One South Street Willkie Farr & Gallagher
Baltimore, MD 21202 787 Seventh Ave.
(Name and Address of Agent for Service) New York, New York 10019

It is proposed that this filing will become effective (check appropriate box)

[ ] immediately upon filing pursuant to paragraph (b)
[ ] on pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[X] on April 30, 1999 pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)

<PAGE>

[ ] on (date) pursuant to paragraph (a)(2) of rule 485.

If appropriate, check the following box:

[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

Cash Management Portfolio, Tax Free Money Portfolio, NY Tax Free Money Portfolio
and Treasury Money Portfolio have also executed this Amendment to the
Registration Statement.

<PAGE>

PROSPECTUS: APRIL 30, 1999

BT Mutual Funds (logo)

CASH MANAGEMENT FUND

TREASURY MONEY FUND

NY TAX FREE MONEY FUND

TAX FREE MONEY FUND

With the goal of achieving a high level of current income consistent with
liquidity and the preservation of capital

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>

TABLE OF CONTENTS

00 CASH MANAGEMENT FUND

00 TREASURY MONEY FUND

00 NY TAX FREE MONEY FUND

00 TAX FREE MONEY FUND

00 INFORMATION CONCERNING ALL FUNDS
00 Management of the Funds
00 Calculating a Fund's Share Price
00 Performance Information
00 Dividends and Distributions
00 Tax Considerations
00 Buying and Selling Fund Shares

2
<PAGE>

CASH MANAGEMENT FUND
OVERVIEW OF THE CASH MANAGEMENT FUND
00 Goal
00 Core Strategy
00 Investment Policies and Strategies
00 Principal Risks of Investing in the Fund
00 Who Should Consider Investing in the Fund
00 Total Returns, After Fees and Expenses
00 Annual Fund Operating Expenses

A DETAILED LOOK AT THE CASH MANAGEMENT FUND
00 Objective
00 Strategy
00 Principal Investments
00 Risks
00 Financial Highlights

<PAGE>

Overview
OF THE CASH MANAGEMENT FUND

GOAL: The Fund seeks a high level of current income consistent with liquidity
and the preservation of capital.

CORE STRATEGY: The Fund invests in high quality money market instruments.

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 in high quality money market instruments,
maintaining a dollar-weighted average maturity of 90 days or less. The Fund
attempts to maintain a stable share price by investing in securities that are
valued in U.S. dollars, have remaining maturities of 397 days or less and are of
the highest quality. The Fund invests more than 25% of its total assets in banks
and other financial institutions.

<PAGE>

PRINCIPAL RISKS OF INVESTING IN THE FUND
Although the Fund seeks to preserve the value of your investment at $1.00 a
share, there are risks associated with investing in the Fund. For example:

o A rise in interest rates could cause the bond market and individual
securities in the Fund's portfolio to decline in value.

o An issuer's creditworthiness could decline, which in turn may cause the
value of a security in the Fund's portfolio to decline.

o Changes in interest rates or economic downturns could have a negative
effect on issuers in the financial services industry.

<PAGE>

WHO SHOULD CONSIDER INVESTING IN THE FUND
You should consider investing in the Cash Management Fund if you are a
conservative investor who is looking for an investment that offers income
approximating money market rates, preserves the value of your investment, and
yet can easily be converted into cash.

You should NOT consider investing in the Cash Management Fund if you seek
long-term capital growth. Although it provides a convenient means of
diversifying short-term investments, the Fund by itself does not constitute a
balanced investment program.

AN INVESTMENT IN THE CASH MANAGEMENT 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. ALTHOUGH THE FUND
SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS
POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.

6
<PAGE>

TOTAL RETURNS, AFTER FEES AND EXPENSES
The bar chart and table on this page can help you evaluate the potential risk
and reward 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 October 5, 1988 (its
inception date). The table shows the Fund's average annual return.
<TABLE>
<CAPTION>

YEAR-BY-YEAR RETURNS FOR EACH FULL CALENDAR YEAR SINCE INCEPTION
[BAR CHART]

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

- -------------- ----------- ----------- ------------ ----------- ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- -------------- ----------- ----------- ------------ ----------- ----------- ------------ ----------- ----------- -----------
</TABLE>

Since inception, the Fund's highest return in any calendar quarter was TK% and
its lowest quarterly return was TK%. Past performance offers no indication of
how the Fund will perform in the future.

AVERAGE ANNUAL RETURNS
(AS OF DECEMBER 31, 1998)
<TABLE>
<CAPTION>

- ---------------------------------------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS (OCTOBER 5, 1988)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash Management Fund
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

As of December 31, 1998, the Fund's 7-day yield was TK. To learn the current
7-day yield, investors may call the Bankers Trust Service Center at
1-800-730-1313.

The 7-day yield, which is often referred to as the "current yield," is the
income generated by the Fund over a seven-day period. This amount is then
annualized, which means that we assume the Fund generates the same income every
week for a year. The "total return" of the Fund is the change in the value of an
investment in the Fund over a given period. Average annual returns are
calculated by averaging the year-by-year returns of the Fund over a given
period.

7
<PAGE>

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 Cash Management Fund.
<TABLE>
<CAPTION>

--------------------------------------------------------- ---------------------------------
PERCENTAGE OF AVERAGE
DAILY NET ASSETS(1)
--------------------------------------------------------- ---------------------------------
<S> <C>
Management Fees 0.14%
-------------------------------------------------------- ---------------------------------
Distribution and Service (12b-1) Fees None
--------------------------------------------------------- ---------------------------------
Other Fund Operating Expenses 0.67%
--------------------------------------------------------- ---------------------------------
Total Fund Operating Expenses 0.81%
--------------------------------------------------------- ---------------------------------
Less: Fee Waivers or Expense Reimbursements (0.06)%2
--------------------------------------------------------- ---------------------------------
NET EXPENSES 0.75%
--------------------------------------------------------- ---------------------------------
</TABLE>

Expense Example: The example below illustrates the expenses you would have
incurred on a $10,000 investment in the Fund. It assumes that the Fund earned an
annual return of 5% over the periods shown, that the Fund's operating expenses
remained the same, and that you sold your shares at the end of the period.

Expense Example(3)

- -------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------
$57 $261 $460 $1036
- -------------------------------------------------------

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 Tax Free Money Portfolio, the master portfolio in which
the Tax Free Money Fund invests its assets. (A further discussion of the
relationship between the Fund and the master 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 December 31, 1998, to waive its fees and reimburse
expenses so that total expenses will not exceed 0.75%.
3 Based on expenses, after fee waivers and reimbursements for the first 16
months only.
8

<PAGE>

A detailed look
AT THE CASH MANAGEMENT FUND

OBJECTIVE
The Cash Management Fund seeks a high level of current income consistent with
liquidity and the preservation of capital by investing in high quality
short-term money market instruments.

While we give priority to earning income and maintaining the value of the Fund's
principal at $1.00 per share, all money market instruments, including U.S.
government obligations, can change in value when interest rates change or an
issuer's creditworthiness changes.

9
<PAGE>

STRATEGY
The Fund seeks current income, maintaining a dollar-weighted average maturity of
90 days or less, by investing in high quality money market securities. The Fund
follows two policies designed to maintain a stable share price:

o Generally, Fund securities are valued in U.S. dollars and have remaining
maturities of 397 days (about 13 months) or less at the time of purchase.
The Fund may also invest in securities that have features that reduce their
maturities to 397 days or less at the time of purchase.

o The Fund buys U.S. government debt obligations, money market instruments
and other debt obligations that at the time of purchase:

- have received the highest short-term rating from two nationally
recognized statistical rating organizations; - have received the highest
short-term rating from one rating organization (if only one organization
rates the security);

- if unrated, are determined to be of similar quality by the Fund's
Investment Adviser; or

- that have no short-term rating, but are rated in one of the top three
highest long-term rating categories, or are determined to be of similar
quality by the Fund's Investment Adviser.

10
<PAGE>

PRINCIPAL INVESTMENTS

The Fund may invest in high-quality, short-term, dollar-denominated money market
instruments paying a fixed, variable or floating interest rate. These include:

o Debt obligations issued by U.S. and foreign banks, financial institutions,
corporations or other entities, including certificates of deposit,
euro-time deposits, commercial paper (including asset-backed commercial
paper), notes, funding agreements and U.S. government securities.
Securities that do not satisfy the maturity restrictions for a money market
fund may be specifically structured so that they are eligible investments
for money market funds. For example, some securities have features which
have the effect of shortening the security's maturity.

o U.S. government securities that are issued or guaranteed by the U.S.
Treasury, or by agencies or instrumentalities of the U.S. Government.

o Repurchase agreements, which are agreements to buy securities at one price,
with a simultaneous agreement to sell back the securities at a future date
at an agreed-upon price.

o Asset Backed Securities, which are generally participations in a pool of
assets whose payment is derived from the payments generated by the
underlying assets. Payments on the asset backed security generally consist
of interest and/or principal.

Because many of the Fund's principal investments are issued or credit-enhanced
by banks or other financial institutions, the Fund may invest more than 25% of
its total assets in the financial services industry.

11
<PAGE>

<PAGE>

RISKS
BELOW WE SET FORTH SOME OF THE PROMINENT RISKS ASSOCIATED WITH MONEY MARKET
MUTUAL FUNDS, AND WE DETAIL OUR APPROACHES TO CONTAIN 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. IF A SECURITY NO LONGER MEETS THE
FUND'S REQUIREMENTS, WE WILL ATTEMPT TO SELL THAT SECURITY WITHIN A REASONABLE
TIME, UNLESS SELLING THE SECURITY WOULD NOT BE IN THE FUND'S BEST INTEREST.

PRIMARY RISKS

o We limit the dollar-weighted average maturity of the securities held by the
Fund to 90 days or less. Generally, rates of short-term investments
fluctuate less than longer-term bonds.

o We primarily buy securities with remaining maturities of 13 months or less.
This reduces the risk that the issuer's creditworthiness will change, or
that the issuer will default on the principal and interest payments of the
obligation.

13
<PAGE>

Market Risk. Although individual securities may outperform their market, the
entire market may decline as a result of rising interest rates, regulatory
developments, or deteriorating economic conditions.

Security Selection Risk. While the Fund invests in short-term securities, which
by nature are relatively stable investments, the risk remains that the
securities we have selected will not perform as expected. This could cause the
Fund's returns to lag behind those of similar money market funds. We attempt to
limit this risk by diversifying the Fund's investments so that a single setback
need not undermine the pursuit of its objective and by investing in money market
instruments that receive the highest short-term debt ratings as described above.

Repurchase Agreement Risk. A repurchase agreement exposes the Fund to the risk
that the party that sells the securities defaults on its obligation to
repurchase them. In this circumstance, the Fund can lose money because:

o it cannot sell the securities at the agreed-upon time and price

o the securities lose value before they can be sold

The Fund seeks to reduce this risk by monitoring, under the supervision of the
Board of Trustees, the creditworthiness of the sellers with whom it enters into
repurchase agreements. The Fund also monitors the value of the securities to
ensure that they are at least equal to the total amount of the repurchase
obligations, including interest.

Concentration Risk. Because the Fund may invest more than 25% of its total
assets in the financial services industry, it may be vulnerable to setbacks in
that industry. Banks and other financial service companies are highly dependent
on short-term interest rates and

14
<PAGE>

can be adversely affected by downturns in the U.S. and foreign economies or
changes in banking regulations.

Prepayment Risk. When a bond issuer, such as an issuer of asset-backed
securities, retains the right to pay off a high yielding bond before it comes
due, the Fund may have no choice but to reinvest the proceeds at lower interest
rates. Thus, prepayment may reduce the Fund's income. It may also create a
capital gains tax liability, because bond issuers usually pay a premium for the
right to pay off bonds early.

SECONDARY RISK

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 changeover
necessary from dates in the year 1999 to dates in the year 2000. These risks
could adversely affect:

o the companies in which the Fund invests, which could impact the value of
the Fund's investments

o our ability to service your Fund account, including our ability to meet
your requests to buy and sell Fund shares

o 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.

15
<PAGE>

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 rates 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 _____________________, 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 YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00
----- ----- ----- -----

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.05 0.05 0.05 0.04
Net Realized Gain (Loss) from
Investment Transactions (0.00)(1) (0.00)(1) (0.00)(1) (0.01)
------ ------ ------ ------
Total from Investment Operations 0.05 0.05 0.05 0.03
---- ---- ---- ----
CONTRIBUTIONS OF CAPITAL - 0.001 - 0.01
- ---- - ----
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (0.05) (0.05) (0.05) (0.04)
Net Realized Gain from
Investment Transactions - - - -
(0.05) (0.05) (0.05) (0.04)
TOTAL DISTRIBUTIONS
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00
===== ===== ===== =====
TOTAL INVESTMENT RETURN 4.98% 4.82%(2) 5.35% 3.67%(2)
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Year
(000s omitted) $138,423 $118,969 $135,998 $159,172
Ratios to Average Net Assets:
Net Investment Income 4.88% 4.72% 5.22% 3.70%
Expenses, Including
Expenses of the Cash
Management Portfolio 0.75% 0.75% 0.74% 0.73%
Decrease Reflected in Above
Expense Ratio Due to
Absorption of Expenses by
Bankers Trust 0.03% 0.03% 0.02% 0.08%
--------------------------------------------------------------------------------------
</TABLE>

1 Less than $0.01 per share.

16
<PAGE>

2 Increased by approximately 0.08% and 0.96% due to Contributions of Capital
for the years ended December 31, 1996 and 1994, respectively.

17
<PAGE>

TREASURY MONEY FUND
OVERVIEW OF THE TREASURY MONEY FUND
00 Goal
00 Core Strategy
00 Investment Policies and Strategies
00 Principal Risks of Investing in the Fund
00 Who Should Consider Investing in the Fund
00 Total Returns, After Fees and Expenses
00 Annual Fund Operating Expenses

A DETAILED LOOK AT THE TREASURY MONEY FUND
00 Objective
00 Strategy
00 Principal Investments
00 Risks
00 Financial Highlights

18
<PAGE>

Overview
OF THE TREASURY MONEY FUND

GOAL: The Fund seeks a high level of current income consistent with liquidity
and the preservation of capital.

CORE STRATEGY: The Fund invests in debt obligations of the U.S. Treasury or
repurchase agreements collateralized by U.S. Treasury debt obligations.

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 in U.S. Treasury obligations, either
directly or through repurchase agreements. The Fund maintains a dollar-weighted
average maturity of 90 days or less. The Fund attempts to maintain a stable
share price by investing in securities that are valued in U.S. dollars and have
remaining maturities of 397 days or less.

19
<PAGE>

PRINCIPAL RISKS OF INVESTING IN THE FUND
Although the Fund seeks to preserve the value of your investment at $1.00 a
share, there are risks associated with investing in the Fund. For example, a
sharp rise in interest rates could cause the bond market and individual
securities in the Fund's portfolio to decline in value.

20
<PAGE>

WHO SHOULD CONSIDER INVESTING IN THE FUND
You should consider investing in the Treasury Money Fund if you are looking for
an investment that offers income approximating money market rates, preserves the
value of your investment and yet can easily be converted into cash.

You should NOT consider investing in the Treasury Money Fund if you seek
long-term capital growth. Although it provides a convenient means of
diversifying short-term investments, the Fund by itself does not constitute a
balanced investment program.

AN INVESTMENT IN THE TREASURY MONEY 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. ALTHOUGH THE FUND
SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS
POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.

21
<PAGE>

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 November 1, 1988 (its
inception date). The table shows the Fund's average annual return.
<TABLE>
<CAPTION>

YEAR-BY-YEAR RETURNS FOR EACH FULL CALENDAR YEAR SINCE INCEPTION
[BAR CHART]

- ------------ ---------- --------- ---------- --------- ---------- --------- ---------- --------- ----------
TK TK TK TK TK TK TK TK TK TK
- ------------ ---------- --------- ---------- --------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ------------ ---------- --------- ---------- --------- ---------- --------- ---------- --------- ----------
</TABLE>

Since inception, the Fund's highest return in any calendar quarter was TK% and
its lowest quarterly return was TK%. Past performance offers no indication of
how the Fund will perform in the future.

AVERAGE ANNUAL RETURNS
(AS OF DECEMBER 31, 1998)
<TABLE>
<CAPTION>

- ---------------------------------------------------------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS (NOVEMBER 11, 1988)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Treasury Money Fund TK TK TK TK
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

As of December 31, 1998, the Fund's 7-day yield was TK. To learn the current
7-day yield, investors may call the Bankers Trust Service Center at
1-800-730-1313.

THE 7-DAY YIELD, WHICH IS OFTEN REFERRED TO AS THE "CURRENT YIELD," IS THE
INCOME GENERATED BY THE FUND OVER A SEVEN DAY PERIOD. THIS AMOUNT IS THEN
ANNUALIZED, WHICH MEANS THAT WE ASSUME THE FUND GENERATES THE SAME INCOME EVERY
WEEK FOR A YEAR. THE "TOTAL RETURN" OF THE FUND IS THE CHANGE IN THE VALUE OF AN
INVESTMENT IN THE FUND OVER A GIVEN PERIOD. AVERAGE ANNUAL RETURNS ARE
CALCULATED BY AVERAGING THE YEAR-BY-YEAR RETURNS OF THE FUND OVER A GIVEN
PERIOD.

22
<PAGE>

23
<PAGE>

--------------------------------------------------------- ---------------------------------
PERCENTAGE OF AVERAGE
DAILY NET ASSETS(1)
--------------------------------------------------------- ---------------------------------
<S> <C>
Management Fees 0.15%
--------------------------------------------------------- ---------------------------------
Distribution and Service (12b-1) Fees none
--------------------------------------------------------- ---------------------------------
Other Fund Operating Expenses 0.62%
--------------------------------------------------------- ---------------------------------
Total Fund Operating Expenses 0.77%
--------------------------------------------------------- ---------------------------------
Less: Fee Waivers or Expense Reimbursements (0.02)%2
--------------------------------------------------------- ---------------------------------
NET EXPENSES 0.75%
--------------------------------------------------------- ---------------------------------
</TABLE>

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, that the Fund's operating
expenses remained the same, and that you redeem your shares at the end of the
period.

Expense Example(3)

- -------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------
$77 $249 $439 $988
- -------------------------------------------------------

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 Tax Free Money Portfolio, the master portfolio in which
the Tax Free Money Fund invests its assets. (A further discussion of the
relationship between the Fund and the master portfolio appears in the
"Organizational Structure" section of this prospectus.)

2 (0.08)%2 Bankers Trust has agreed, for the 16-month period from the Fund's
fiscal year end of December 31, 1998, to waive its fees and reimburse
expenses so that total expenses will not exceed 0.75%.

3 Based on expenses, after fee waivers and reimbursements for the first 16
months only.

24
<PAGE>

A detailed look
AT THE TREASURY MONEY FUND

OBJECTIVE
The Treasury Money Fund seeks a high level of current income consistent with
liquidity and the preservation of capital by investing in debt obligations of
the U.S. Treasury or repurchase agreements collateralized by U.S. Treasury debt
obligations

25
<PAGE>

STRATEGY
The Fund seeks current income, maintaining a dollar-weighted average maturity of
90 days or less, by investing only in U.S. Treasury obligations and repurchase
agreements backed by obligations of the U.S. Treasury. Fund securities are
valued in U.S. dollars and have remaining maturities of 397 days (about 13
months) or less at the time of purchase. The Fund may also invest in securities
that have features that reduce their maturities to 397 days or less at the time
of purchase. Although the U.S. government guarantees the timely payment of
interest and principal, it does not guarantee the market value of these
obligations, which may change in response to changes in interest rates.

26
<PAGE>

PRINCIPAL INVESTMENTS
The Fund invests in U.S. Treasury obligations, either directly or through
repurchase agreements. In a repurchase agreement, the Fund buys securities at
one price with a simultaneous agreement to sell back the securities at a future
date at an agreed-upon price.

The Fund may invest in Treasury obligations with remaining maturities of 397
days or less at the time of purchase and the dollar-weighted average maturity of
the Fund remains 90 days or less.

27
<PAGE>

RISKS
BELOW WE SET FORTH SOME OF THE PROMINENT RISKS ASSOCIATED WITH "GOVERNMENT"
MONEY MARKET MUTUAL FUNDS, AND WE DETAIL OUR APPROACHES TO CONTAIN 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. IF A SECURITY NO
LONGER MEETS THE FUND'S REQUIREMENTS, WE WILL ATTEMPT TO SELL THAT SECURITY
WITHIN A REASONABLE TIME, UNLESS SELLING THE SECURITY WOULD NOT BE IN THE FUND'S
BEST INTEREST.

PRIMARY RISKS

Interest Rate Risk. Money market instruments, like all debt securities, face the
risk that the securities will decline in value because of changes in interest
rates. Generally, investments subject to interest rate risk will decrease in
value when interest rates rise and increase when interest rates decline. While
the Fund seeks to maintain a $1.00 share price, it cannot guarantee that this
will always happen. To minimize such price fluctuations, the Fund adheres to the
following practices:

o We limit the dollar-weighted average maturity of the securities held by the
Fund to 90 days or less. Generally, rates of short-term investments
fluctuate less than longer-term bonds.

o We primarily buy securities with remaining maturities of 13 months or less.

Market Risk. Although individual securities may outperform their market, the
entire market may decline as a result of rising interest rates, regulatory
developments or deteriorating economic conditions.

Security Selection Risk. While the Fund invests in short-term securities, which
by nature are relatively stable investments, the risk remains that the
securities we have selected will

28
<PAGE>

not perform as expected. This, in turn, could cause the Fund's returns to lag
behind those of similar money market funds.

o it cannot sell the securities at the agreed-upon time and price

o the securities lose value before they can be sold

SECONDARY RISK

o the companies in which the Fund invests, which could impact the value of
the Fund's investments o our ability to service your Fund account,
including

o our ability to meet your requests to buy and sell Fund shares

o our ability to trade securities held by the Fund or to accurately price
securities held by the Fund

29
<PAGE>

30
<PAGE>

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 rates 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 , 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 YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00
----- ----- ----- -----

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.05 0.05 0.05 0.03
Net Realized Gain (Loss) from
Investment Transactions (0.00)(1) (0.00)(1) (0.00)(1) (0.00)(1)
Total from Investment Operations 0.05 0.05 0.05 0.03
---- ---- ---- ----
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (0.05) (0.05) (0.05) (0.03)
Net Realized Gain from
Investment Transactions - - (0.00)(1) -
- - ------ -
Total Distributions (0.05) (0.05) (0.05) (0.03)
------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00
===== ===== ===== =====
TOTAL INVESTMENT RETURN 4.86% 4.71% 5.19% 3.40%
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Year
(000s omitted) $ 268,274 $ 554,716 $ 615,084 $ 696,915
Ratios to Average Net Assets:
Net Investment Income 4.74% 4.61% 5.06% 3.36%
Expenses, Including Expenses of
the Treasury Money Portfolio 0.75% 0.75% 0.75% 0.75%
Decrease Reflected in Above
Expense Ratio Due to Absorption of
Expenses by Bankers Trust 0.02% 0.01% 0.02% 0.02%
-------------------------------------------------------------------------------
</TABLE>

(1) Less than $0.01 per share.

31
<PAGE>

NY TAX FREE MONEY FUND
OVERVIEW OF THE NY TAX FREE MONEY FUND
00 Goal
00 Core Strategy
00 Investment Policies and Strategies
00 Principal Risks of Investing in the Fund
00 Who Should Consider Investing in the Fund
00 Total Returns, After Fees and Expenses
00 Annual Fund Operating Expenses

A DETAILED LOOK AT THE NY TAX FREE MONEY FUND
00 Objective
00 Strategy
00 Principal Investments
00 Risks
00 Financial Highlights

32
<PAGE>

Overview
OF THE NY TAX FREE MONEY FUND

GOAL: The Fund seeks a high level of current income exempt from Federal and New
York income tax consistent with liquidity and the preservation of capital.

CORE STRATEGY: The Fund invests primarily in municipal bonds and notes with
remaining maturities of 397 days (about 13 months) or less, whose interest
payments are exempt from Federal income tax. The Fund is nondiversified, which
means it is not limited in the amount of assets that it may invest in
obligations of a single issuer.

MUNICIPAL BONDS AND NOTES: STATE AND LOCAL GOVERNMENT ENTITIES ISSUE BONDS (WITH
MATURITIES OF ONE YEAR OR MORE) AND NOTES (WITH MATURITIES OF LESS THAN ONE
YEAR). THE INTEREST INVESTORS EARN FROM THESE OBLIGATIONS IS EXEMPT FROM FEDERAL
INCOME TAX. INTEREST ON BONDS AND NOTES FROM NEW YORK ISSUERS AND ISSUERS IN
CERTAIN OTHER LOCALES, MOST NOTABLY PUERTO RICO, IS EXEMPT FROM NEW YORK STATE
AND CITY INCOME TAX AS WELL.

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 municipal bonds and notes
from New York issuers (or issuers in other locales) whose interest payments are
exempt from New York State and City income taxes. The Fund maintains a
dollar-weighted average maturity of 90 days or less. The Fund attempts to
maintain a stable share price by investing in securities that are valued in U.S.
dollars and have remaining maturities of 397 days or less.

33
<PAGE>

PRINCIPAL RISKS OF INVESTING IN THE FUND
Although the Fund seeks to preserve the value of your investment at $1.00 a
share, there are risks associated with investing in the Fund. For example:

o A sharp rise in interest rates could cause the bond market and individual
securities in the Fund's portfolio to decline in value.

o New York's local economy could suffer a reversal that would undermine or
cast doubt on the ability of New York municipal issuers to meet their
financial obligations.

o An issuer's creditworthiness could decline, which in turn may cause the
value of a security in the Fund's portfolio to decline.

34
<PAGE>

WHO SHOULD CONSIDER INVESTING IN THE FUND
You should consider investing in the NY Tax Free Money Fund if you are seeking a
highly liquid investment that offers current income exempt from Federal income
taxes while preserving the value of your principal. The Fund offers an added
advantage to New York residents by emphasizing investments whose interest income
is exempt from New York State and City tax.

You should NOT consider investing in the NY Tax Free Money Fund if you seek
long-term capital growth.

Although it provides a convenient means of diversifying short-term investments,
the Fund by itself does not constitute a balanced investment program.

AN INVESTMENT IN THE NY TAX FREE MONEY 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. ALTHOUGH THE FUND
SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS
POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.

35
<PAGE>

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 September 27, 1988
(its inception date). The table shows the Fund's average annual return.
<TABLE>
<CAPTION>

YEAR-BY-YEAR RETURNS FOR EACH FULL CALENDAR YEAR SINCE INCEPTION
[BAR CHART]

- -------------- ----------- ----------- ------------ ----------- ----------- ------------ ----------- ----------- -----------
TK TK TK TK TK TK TK TK TK TK
- -------------- ----------- ----------- ------------ ----------- ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- -------------- ----------- ----------- ------------ ----------- ----------- ------------ ----------- ----------- -----------
</TABLE>

Since inception, the Fund's highest return in any calendar quarter was TK% and
its lowest quarterly return was TK%. Past performance offers no indication of
how the Fund will perform in the future.

AVERAGE ANNUAL RETURNS
(AS OF DECEMBER 31, 1998)
<TABLE>
<CAPTION>

- -----------------------------------------------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS (SEPTEMBER 27, 1988)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NY Tax Free Money Fund TK TK TK TK
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

As of December 31, 1998, the Fund's tax equivalent yield was TK. To learn the
current yield, investors may call the Bankers Trust Service Center at
1-800-730-1313.

THE TAX EQUIVALENT YIELD DEMONSTRATES THE YIELD ON A TAXABLE INVESTMENT
NECESSARY TO PRODUCE AN AFTER-TAX YIELD EQUAL TO A FUND'S TAX FREE YIELD. YIELD
IS THE INCOME GENERATED BY A FUND OVER A SEVEN-DAY PERIOD. THIS AMOUNT IS THEN
ANNUALIZED, WHICH MEANS THAT WE ASSUME THE FUND GENERATES THE SAME INCOME EVERY
WEEK FOR A YEAR. THE "TOTAL RETURN" OF A FUND IS THE CHANGE IN THE VALUE OF AN
INVESTMENT IN THE FUND OVER A GIVEN PERIOD. AVERAGE ANNUAL RETURNS ARE
CALCULATED BY AVERAGING THE YEAR-BY-YEAR RETURNS OF THE FUND OVER A GIVEN
PERIOD.

36
<PAGE>

37
<PAGE>

ANNUAL FEES AND EXPENSES
<TABLE>
<CAPTION>

--------------------------------------------------------- ---------------------------------
PERCENTAGE OF AVERAGE
DAILY NET ASSETS1
--------------------------------------------------------- ---------------------------------
<S> <C>
Management Fees 0.14%
--------------------------------------------------------- ---------------------------------
Distribution and Service (12b-1) Fees none
--------------------------------------------------------- ---------------------------------
Other Fund Operating Expenses 0.71%
--------------------------------------------------------- ---------------------------------
Total Fund Operating Expenses 0.85%
--------------------------------------------------------- ---------------------------------
Less: Fee Waivers or Expense Reimbursements (0.10)%2
--------------------------------------------------------- ---------------------------------
NET EXPENSES 0.75%
--------------------------------------------------------- ---------------------------------
</TABLE>

Expense Example(3)

- -------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------
$77 $264 $473 $1076
- -------------------------------------------------------

3 Based on expenses, after fee waivers and reimbursements for the first 16
months only.

38
<PAGE>

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.

A detailed look
AT THE NY TAX FREE MONEY FUND

OBJECTIVE
The NY Tax Free Money Fund seeks a high level of current income exempt from
Federal income tax consistent with liquidity and the preservation of capital by
investing in high quality, short-term, tax-exempt money market instruments. The
Fund concentrates its investments in municipal bonds and notes from the State of
New York or governmental issuers in other locales, such as Puerto Rico, whose
interest payments are exempt from New York State and City income taxes.

While we give priority to earning income and maintaining the value of the Fund's
principal at $1.00 per share, all money market instruments can change in value
when interest rates or an issuer's creditworthiness changes.

39
<PAGE>

STRATEGY
The Fund seeks current income, maintaining a dollar-weighted average maturity of
90 days or less, by concentrating its investments in the bonds and notes of New
York issuers. The Fund follows two policies designed to maintain a stable share
price and to generate income exempt from Federal and New York State and City
income taxes:

o The Fund primarily buys short-term NY municipal obligations that at the
time of purchase:

o have received one of the top two short-term ratings from two
nationally recognized statistical rating organizations;

o have received one of the top two short-term ratings from one rating
organization (if only one organization rates the security); or

o if unrated, are determined to be of comparable quality by the Fund's
Investment Adviser.

o that have no short-term rating, but are rated in one of the top three
highest long-term rating categories, and are determined to be of
similar quality by the Fund's Investment Adviser.

40
<PAGE>

PRINCIPAL INVESTMENTS
The Fund primarily invests in the following types of investments:

o GENERAL OBLIGATION NOTES AND BONDS, which an issuer backs with its full
faith and credit. That means the government entity will repay the bond out
of its general tax revenues.

o REVENUE NOTES AND BONDS, which are payable from specific revenue sources.
These are often tied to the public works project the bonds are financing,
but are not generally backed by the issuer's taxing power.

o TAX-EXEMPT COMMERCIAL PAPER, tax-exempt debt of borrowers that matures in
270 days or less.

o SHORT-TERM MUNICIPAL NOTES, such as tax anticipation notes, that are issued
in anticipation of the receipt of tax revenues.

o MUNICIPAL OBLIGATIONS, backed by letters of credit (a document issued by a
bank guaranteeing the issuer's payments for a stated amount), general bank
guarantees or municipal bond insurance.

o FLOATING RATE BONDS, whose interest rates vary with changes in specified
market rates or indexes. The Fund may invest in high quality floating rate
bonds with maturities of one year or more if it has the right to sell them
back at their face value prior to maturity. The Fund may also invest in
securities that have features that reduce their maturities on their
purchase date.

o PRIVATE ACTIVITY BONDS, which are revenue bonds that finance
nongovernmental activities, such as private industry construction. Note
that the interest on these bonds may be subject to local, state and Federal
taxes, including the alternative minimum tax.

41
<PAGE>

Under normal conditions, the Fund invests at least 80% of its net assets in
municipal bonds and notes, and at least 65% of its assets in notes and bonds of
the State of New York and its related agencies and authorities and issuers in
certain other locales that are exempt from New York State and City income tax.

The Fund may invest more than 35% of its total assets in notes and bonds that
are exempt from Federal income taxes but not from New York State and City income
tax when money available for investment exceeds the supply of New York debt
securities that meet the Fund's criteria.

42
<PAGE>

RISKS
BELOW WE SET FORTH SOME OF THE PROMINENT RISKS ASSOCIATED WITH MONEY TAX FREE
MARKET MUTUAL FUNDS, AND WE DETAIL OUR APPROACHES TO CONTAIN 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. IF A SECURITY NO LONGER
MEETS THE FUND'S REQUIREMENTS, WE WILL ATTEMPT TO SELL THAT SECURITY WITHIN A
REASONABLE TIME, UNLESS SELLING THE SECURITY WOULD NOT BE IN THE FUND'S BEST
INTEREST.

PRIMARY RISKS

Credit Risk. A money market instrument's credit quality depends on the issuer's
ability to pay interest on the security and repay the debt: the lower the credit
rating, the greater the risk that the security's issuer will default, or fail to
meet its payment obligations. The credit risk of a security may also depend on
the credit quality of any bank or financial institution that provides credit
enhancement for it. To minimize credit risk, the Fund only buys high quality
securities with minimal credit risk. Also, the Fund primarily buys securities
with remaining maturities of 13 months or less. This reduces the risk that the
issuer's creditworthiness will change, or that the issuer will default on the
principal and interest payments of the obligation.

43
<PAGE>

Concentration Risk. The Fund is a nondiversified investment company. While it
may not invest more than 25% of its assets in the securities of a single issuer,
it may invest a greater proportion of its assets in the securities of a smaller
number of issuers than a diversified mutual fund may do. The Fund's income is
thus subject to changes in the market's assessment of one or a few municipal
securities issuers. Similarly, because of the Fund's concentration in New York
municipal securities, the Fund has a relatively large exposure to financial
stresses arising from a regional economic downturn. Bankers Trust attempts to
limit this risk by spreading out investments across issuers to the extent
possible, and by complying with the diversification requirements that govern
money market funds.

44
<PAGE>

SECONDARY RISK

o the issuers in which the Fund invests, which could impact the value of the
Fund's investments

o our ability to service your Fund account, including our ability to meet
your requests to buy and sell Fund shares

o our ability to trade securities held by the Fund or to accurately price
securities held by the Fund

Temporary Defensive Position. In response to adverse political, economic or
market events, the Fund may adopt a temporary defensive position in which it
places more than 20% of the Fund's assets in high quality money market
investments that are subject to Federal income tax. To the extent that the Fund
might do so, it may not meet its goal of a high level of current tax-free
income.

45
<PAGE>

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 rates 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 ________________________, 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 YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00
----- ----- ----- -----

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.03 0.03 0.03 0.02
Net Realized Loss from
Investment Transactions (0.00)(1) (0.00)(1) (0.00)(1) (0.00)(1)
Total from Investment Operations 0.03 0.03 0.03 0.02
---- ---- ---- ----

DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (0.03) (0.03) (0.03) (0.02)
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00
===== ===== ===== =====
TOTAL INVESTMENT RETURN 2.86% 2.68% 3.12% 2.11%
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Year
(000s omitted) $ 85,364 $ 75,858 $ 70,765 $ 79,101
Ratios to Average Net Assets:
Net Investment Income 2.83% 2.64% 3.07% 2.05%
Expenses, Including Expenses of
the NY Tax Free Money Portfolio 0.75% 0.75% 0.75% 0.75%
Decrease Reflected in Above
Expense Ratio Due to Absorption of
Expenses by Bankers Trust 0.06% 0.09% 0.07% 0.08%
-------------------------------------------------------------------------------
</TABLE>

1 Less than $0.01 per share.

46
<PAGE>

TAX FREE MONEY FUND
OVERVIEW OF THE TAX FREE MONEY FUND
00 Goal
00 Core Strategy
00 Investment Policies and Strategies
00 Principal Risks of Investing in the Fund
00 Who Should Consider Investing in the Fund
00 Total Returns, After Fees and Expenses
00 Annual Fund Operating Expenses

A DETAILED LOOK AT THE TAX FREE MONEY FUND
00 Objective
00 Strategy
00 Principal Investments
00 Risks
00 Financial Highlights

47
<PAGE>

Overview
OF THE TAX FREE MONEY FUND

GOAL: The Fund seeks a high level of current income exempt from Federal income
tax consistent with liquidity and the preservation of capital.

CORE STRATEGY: The Fund invests primarily in municipal bonds and notes with
remaining maturities of 397 days (about 13 months) or less, whose interest
payments are exempt from Federal income tax.

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 in high quality short-term, tax-exempt
money market instruments, maintaining a dollar-weighted average maturity of 90
days or less. The Fund attempts to maintain a stable share price and to generate
tax-exempt income by investing in high quality municipal obligations that are
valued in U.S. dollars and have remaining maturities of 397 days or less.

48
<PAGE>

PRINCIPAL RISKS OF INVESTING IN THE FUND
Although the Fund seeks to preserve the value of your investment at $1.00 a
share, there are risks associated with investing in the Fund. For example:

o A sharp rise in interest rates could cause the bond market and individual
securities in the Fund's portfolio to decline in value.

o An issuer's creditworthiness could decline, which in turn may cause the
value of a security in the Fund's portfolio to decline.

49
<PAGE>

WHO SHOULD CONSIDER INVESTING IN THE FUND
You should consider investing in the Tax Free Money Fund if you are seeking a
highly liquid investment that offers current income exempt from Federal income
taxes while preserving the value of your principal.

You should NOT consider investing in the Tax Free Money Fund if you seek
long-term capital growth.

Although it provides a convenient means of diversifying short-term investments,
the Fund by itself does not constitute a balanced investment program.

AN INVESTMENT IN THE TAX FREE MONEY 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. ALTHOUGH THE FUND
SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS
POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.

50
<PAGE>

TOTAL RETURNS, AFTER FEES AND EXPENSES
The bar chart and table on this page can help you evaluate the potential risk
and reward 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 of the past
ten years. The table shows the Fund's average annual return.
<TABLE>
<CAPTION>

YEAR-BY-YEAR RETURNS FOR THE PAST 10 FULL CALENDAR YEARS
[BAR CHART]

Since inception, the Fund's highest return in any calendar quarter was TK% and
its lowest quarterly return was TK%. Past performance offers no indication of
how the Fund will perform in the future.

AVERAGE ANNUAL RETURNS
(AS OF DECEMBER 31, 1998)
<TABLE>
<CAPTION>

- -----------------------------------------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS (JUNE 10, 1987)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Free Money Fund TK TK TK TK
- -----------------------------------------------------------------------------------------------------------------
</TABLE>

As of December 31, 1998, the Fund's tax equivalent yield was TK. To learn the
current yield, investors may call the Bankers Trust Service Center at
1-800-730-1313.

51
<PAGE>

ANNUAL FEES AND EXPENSES
<TABLE>
<CAPTION>

--------------------------------------------------------- ---------------------------------
PERCENTAGE OF AVERAGE
DAILY NET ASSETS1
--------------------------------------------------------- ---------------------------------
<S> <C>
Management Fees 0.14%
--------------------------------------------------------- ---------------------------------
Distribution and Service (12b-1) Fees none
--------------------------------------------------------- ---------------------------------
Other Fund Operating Expenses 0.69%
--------------------------------------------------------- ---------------------------------
Total Fund Operating Expenses 0.83%
--------------------------------------------------------- ---------------------------------
Less: Fee Waivers or Expense Reimbursements (0.08)%2
--------------------------------------------------------- ---------------------------------
NET EXPENSES 0.75%
--------------------------------------------------------- ---------------------------------
</TABLE>

Expense Example(3)
- ------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------
$77 $261 $465 $1054
- ------------------------------------------------------

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 Cash Management Portfolio, the master portfolio in which
the Cash Management Fund invests its assets. (A further discussion of the
relationship between the Fund and the master portfolio appears in the
"Organizational Structure" section of this prospectus.)

2 (0.06)%2 Bankers Trust has agreed, for the 16-month period from the Fund's
fiscal year end of December 31, 1998, to waive its fees and reimburse
expenses so that total expenses will not exceed 0.75%.

52
<PAGE>

3 Based on expenses, after fee waivers and reimbursements for the first 16
months only.

53
<PAGE>

A detailed look
AT THE TAX FREE MONEY FUND

OBJECTIVE
The Tax Free Money Fund seeks a high level of current income exempt from Federal
income tax consistent with liquidity and the preservation of capital by
investing in high quality, short-term, tax-exempt money market instruments.

54
<PAGE>

STRATEGY
The Fund seeks current income, maintaining a dollar-weighted average maturity of
90 days or less, by investing in high quality short-term municipal obligations.
The Fund follows two policies designed to maintain a stable share price and to
generate income from Federal tax:

o Generally, fund securities are valued in U.S. dollars and have remaining
maturities of 397 days (about 13 months) or less at the time of purchase.
The Fund may also invest in securities that have features that reduce their
maturities to 397 days or less at the time of purchase.

o The Fund buys short-term municipal obligations that at the time of
purchase:

o have received the top short-term rating from two nationally recognized
statistical rating organizations;

o have received the highest short-term rating from one rating
organization (if only one organization rates the security); or

o if unrated, are determined to be of comparable quality by the Fund's
Investment Adviser.

o that have no short-term rating, but are rated in one of the top three
highest long-term rating categories, and are determined to be of
similar quality by the Fund's Investment Adviser.

55
<PAGE>

PRINCIPAL INVESTMENTS
The Fund primarily invests in the following types of investments:

o GENERAL OBLIGATION NOTES AND BONDS, which an issuer backs with its full
faith and credit. That means the government entity will repay the bond out
of its general tax revenues.

o REVENUE NOTES AND BONDS, payable from specific revenue sources. These are
often tied to the public works project the bonds are financing, but are not
generally backed by the issuer's taxing power.

o TAX-EXEMPT COMMERCIAL PAPER, tax-exempt debt that matures in 270 days or
less.

o SHORT-TERM MUNICIPAL NOTES, such as tax anticipation notes, that are issued
in anticipation of the receipt of tax revenues.

o MUNICIPAL OBLIGATIONS, backed by letters of credit (a document issued by a
bank guaranteeing the issuer's payments for a stated amount), general bank
guarantees or municipal bond insurance.

o PRIVATE ACTIVITY BONDS, which are revenue bonds that are used to finance
nongovernmental activities, such as private industry construction. Note
that the interest on these bonds may be subject to Federal taxes, including
the alternative minimum tax.

Under normal conditions, the Fund invests at least 80% of its net assets in
municipal bonds and notes that pay interest exempt from Federal income tax.
Ordinarily, the Fund expects to invest substantially all of its assets in
municipal bonds and notes that pay interest exempt from Federal income tax.

56
<PAGE>

57
<PAGE>

RISKS
BELOW WE SET FORTH SOME OF THE PROMINENT RISKS ASSOCIATED WITH TAX FREE MONEY
MARKET MUTUAL FUNDS, AND WE DETAIL OUR APPROACHES TO CONTAIN 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. IF A SECURITY NO LONGER
MEETS THE FUND'S REQUIREMENTS, WE WILL ATTEMPT TO SELL THAT SECURITY WITHIN A
REASONABLE TIME, UNLESS SELLING THE SECURITY WOULD NOT BE IN THE FUND'S BEST
INTEREST.

PRIMARY RISKS

o Credit Risk. A money market instrument's credit quality depends on the
issuer's ability to pay interest on the security and repay the debt: the
lower the credit rating, the greater the risk that the security's issuer
will default, or fail to meet its payment obligations. The credit risk of a
security may also depend on the credit quality of any bank or financial
institution that provides credit enhancement for it. To minimize credit
risk, the Fund only buys high quality securities with minimal credit risk.
Also, the Fund primarily buys securities with remaining maturities of 13
months or less.

58
<PAGE>

This reduces the risk that the issuer's creditworthiness will change, or
that the issuer will default on the principal and interest payments of the
obligation.

Security Selection Risk. While the Fund invests in short-term securities, which
by nature are relatively stable types of investments, the risk remains that the
securities we have selected will not perform as expected. This could cause the
Fund's returns to lag behind those of similar money market funds. We attempt to
limit this risk by diversifying the Fund's investments so that a single setback
need not undermine the pursuit of its objective and by investing in money market
instruments that receive the highest short-term ratings as described above.

59
<PAGE>

SECONDARY RISK

o the issuers in which the Fund invests, which could impact the value of the
Fund's investments

o our ability to service your Fund account, including our ability to meet
your requests to buy and sell Fund shares

o our ability to trade securities held by the Fund or to accurately price
securities held by the Fund

60
<PAGE>

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 rates 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 , 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

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.03 0.03 0.03 0.02
Net Realized Gain (Loss) from
Investment Transactions (0.00)(1) (0.00)(1) (0.00)(1) (0.00)(1)
Total from Investment Operations 0.03 0.03 0.03 0.02
---- ---- ---- ----

DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (0.03) (0.03) (0.03) (0.02)
Net Realized Gain from
Investment Transactions - - - (0.00(1)
(0.03) (0.03) (0.03) (0.02)
TOTAL DISTRIBUTIONS
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $ 1.00 $1.00
===== ===== ====== =====

TOTAL INVESTMENT RETURN 2.94% 2.84% 3.34% 2.27%
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Year
(000s omitted) $150,483 $117,972 $119,993 $110,043
Ratios to Average Net Assets:
Net Investment Income 2.90% 2.80% 3.28% 2.21%
Expenses, Including Expenses of
the Tax Free Money Portfolio 0.75% 0.75% 0.75% 0.75%
Decrease Reflected in Above
Expense Ratio Due to Absorption of
Expenses by Bankers Trust 0.05% 0.07% 0.07% 0.08%
-------------------------------------------------------------------------------
</TABLE>

(1) Less than $0.01 per share.

61
<PAGE>

MANAGEMENT OF THE FUND
Board of Trustees. Each 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.

The Funds paid the following fees to Bankers Trust for investment advisory
services in the last fiscal year:
<TABLE>
<CAPTION>

Fund Percentage of Average Daily Net Assets
- ------------------------------------------------------- -----------------------------------------------------
<S> <C>
Cash Management Fund 0.14%
- ------------------------------------------------------- -----------------------------------------------------
Treasury Money Fund 0.15%
- ------------------------------------------------------- -----------------------------------------------------
NY Tax Free Money Fund 0.14%
- ------------------------------------------------------- -----------------------------------------------------
Tax Free Money Fund 0.14 %
- ------------------------------------------------------- -----------------------------------------------------
</TABLE>

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 Funds and
their Portfolios. 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

62
<PAGE>

institutions for more than 50 years. Today, the assets under its global
management exceed $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.

The Investment Adviser 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 retail and commercial banking, investment banking
and insurance. The transaction is contingent upon various regulatory approvals,
as well as the approval of each Fund's shareholders. If the transaction is
approved and completed, Deutsche Bank AG, as the Investment Adviser's new parent
company, will control the operations of the Investment Adviser. Bankers Trust
believes that, under this new arrangement, the services provided to the Fund
will be maintained at their current level.

Other Services. Bankers Trust provides administrative services--such as
portfolio accounting, legal services and others--for the Funds. In addition,
Bankers Trust, or your broker or financial advisor, performs the functions
necessary to establish and maintain your account. Besides setting up the account
and processing your purchase and sale orders, these functions include:

o keeping accurate, up-to-date records for your individual Fund account

o implementing any changes you wish to make in your account information

o processing your requests for cash dividends and distributions from the Fund

o answering your questions on the Fund's investment performance or
administration

o sending proxy reports and updated prospectus information to you

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<PAGE>

o 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.

64
<PAGE>

Organizational Structure. The Funds are "feeder funds" that invest all of their
assets in a "master portfolio." The Funds and their corresponding Master
Portfolio are listed below:
<TABLE>
<CAPTION>

Fund Master Portfolio
- ------------------------------------------------------- -----------------------------------------------------
<S> <C>
Cash Management Fund Cash Management Portfolio
- ------------------------------------------------------- -----------------------------------------------------
Treasury Money Fund Treasury Money Portfolio
- ------------------------------------------------------- -----------------------------------------------------
NY Tax Free Money Fund NY Tax Free Money Portfolio
- ------------------------------------------------------- -----------------------------------------------------
Tax Free Money Fund Tax Free Money Portfolio
- ------------------------------------------------------- -----------------------------------------------------
</TABLE>

Each Fund and its master portfolio have the same investment objective. Each
master portfolio is advised by Bankers Trust.

A master portfolio may accept investments from other feeder funds. A feeder
bears 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 a Fund's Trustees to withdraw the Fund's
assets from the master portfolio if they believe doing so is in the
shareholders' best interests. If the Trustees withdraw a 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.

65
<PAGE>

CALCULATING THE FUND'S SHARE PRICE
We calculate the price of each Fund's shares (also known as the "Net Asset
Value" or "NAV") each day the Fund is open for business, as of 12:00 noon,
Eastern time, and as of the close of regular trading on the New York Stock
Exchange. If the markets for a Fund's primary investments closes early, the Fund
will cease taking purchase orders at that time. In accordance with the standard
formula for valuing mutual fund shares, we deduct all of a Fund's liabilities
from the total value of its assets and divide the result by the number of shares
outstanding.

Each Fund uses the amortized cost method to account for any premiums or
discounts above or below the face value of any securities it buys. This method
writes down the premium--or marks up the discount--at a constant rate until
maturity. It does not reflect daily fluctuations in market value. Each Fund's
Net Asset Value will normally be $1.00 a share.

OPEN FOR BUSINESS: EACH FUND 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), COLUMBUS DAY (THE SECOND MONDAY IN
OCTOBER), VETERANS' DAY (NOVEMBER 11), THANKSGIVING DAY (THE FOURTH THURSDAY IN
NOVEMBER) AND CHRISTMAS DAY. THE MARKETS FOR A FUND'S PRIMARY INVESTMENTS MAY
CLOSE EARLY ON THE BUSINESS DAY BEFORE EACH OF THESE HOLIDAYS. THEY MAY ALSO
CLOSE EARLY ON THE DAY AFTER THANKSGIVING AND THE DAY BEFORE CHRISTMAS EVE.

66
<PAGE>

DIVIDENDS AND DISTRIBUTIONS
Each Fund declares dividends from its net income daily and pays the dividends on
a monthly basis.

Each Fund reserves the right to include in the daily dividend any short-term
capital gains on securities that it sells. Also, each Fund will normally declare
and pay annually any long-term capital gains as well as any short-term capital
gains that it did not distribute during the year.

Dividends paid by the Tax Free Money Fund and the NY Tax Free Money Fund on
municipal notes and bonds are exempt from Federal income tax. Dividends paid by
the NY Tax Free Money Fund on New York municipal notes and bonds are excluded
from Federal income taxes and exempt from New York City and State personal
income taxes. If the Fund makes a taxable investment, you will have to pay
Federal income taxes on any interest earned.

We automatically reinvest all dividends and capital gains, if any, unless you
tell us otherwise.

67
<PAGE>

TAX CONSIDERATIONS
CASH MANAGEMENT FUND AND TREASURY MONEY FUND
The Funds do 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 gain distributions and
dividends paid out by your 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:
<TABLE>
<CAPTION>

---------------------------------------------------- ---------------------------------------
TRANSACTION TAX STATUS
---------------------------------------------------- ---------------------------------------
<S> <C>
Income dividends Ordinary income
---------------------------------------------------- ---------------------------------------
Short-term capital gain distributions Ordinary income
---------------------------------------------------- ---------------------------------------
Long-term capital gain distributions Capital gains
---------------------------------------------------- ---------------------------------------
</TABLE>

Every year, your Fund will send you information on the distributions for the
previous year.

TAX FREE MONEY AND NY TAX FREE MONEY
The Tax Free Money Fund attempts to invest 100% of its assets in tax-exempt
municipal securities that generate tax-exempt income. The NY Tax Free Money Fund
attempts to invest 100% of its assets in municipal obligations that are excluded
from Federal income taxes and exempt from New York City and State personal
income taxes. However, each Fund may invest up to 20% (or greater while
maintaining a temporary defensive position) of the value of its total assets in
securities that generate income subject to Federal or alternative minimum tax
(and New York City tax, in the case of the NY Tax Free Money Fund). Income
exempt from Federal income tax may be subject to state and local income tax. Any
capital gains distributed by the Funds may be taxable.

68
<PAGE>

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.

69
<PAGE>

BUYING AND SELLING FUND SHARES

CONTACTING THE BT MUTUAL FUNDS

BT SERVICE CENTER
BY PHONE: 1-800-730-1313
Address: P.O. Box 419210
Kansas City, MO 64141-6210
Address for overnight mail: 210 West 10th Street, 8th floor
KANSAS CITY, MO 64105-1716

BT RETIREMENT SERVICES CENTER
BY PHONE: 1-800-677-7596
Address: P.O. Box 419210
Kansas City, MO 64141-6210
Address for overnight mail: 210 West 10th Street, 8th floor
Kansas City, MO 64105-1716

OUR REPRESENTATIVES ARE AVAILABLE TO ASSIST YOU PERSONALLY MONDAY THROUGH
FRIDAY, 9:00 A.M. TO 6:00 P.M., EASTERN TIME, EACH DAY THE NEW YORK STOCK
EXCHANGE IS OPEN FOR BUSINESS. YOU CAN REACH THE BT SERVICE CENTER'S AUTOMATED
ASSISTANCE LINE 24 HOURS A DAY, 7 DAYS A WEEK.

HOW TO OPEN YOUR FUND ACCOUNT
If you are new to BT Mutual Funds, mail your completed application, along with
your check payable to the BT Fund you have selected (or to "BT Funds" if you are
investing in more than one fund), to the BT Service Center.

70
<PAGE>

If this is your first BT Mutual Fund investment through a tax-sheltered
retirement plan, such as an IRA, you will need a special application form. This
form is available from your financial advisor, or by calling the BT Retirement
Services Center at 1-800-677-7596.

MINIMUM ACCOUNT INVESTMENTS

To open:
a standard investment account $2,500
a retirement account 500
an automatic investment plan account 1,000
To add to:
a standard investment account $250
a retirement account 100
an automatic investment plan account 100
Minimum account balances:
non-retirement accounts $1,000
retirement accounts none

TWO WAYS TO BUY AND SELL SHARES IN YOUR ACCOUNT

MAIL

BUYING: Send your check, payable to the BT Fund you have selected, to the BT
Service Center. The addresses are shown under "Contacting the BT Mutual Funds."
Be sure to include your Fund number and account number (see your account
statement) on your check. We cannot accept starter checks or third-party checks.
If you are investing in

71
<PAGE>

more than one fund, make your check payable to "BT Funds" and include your
account number and the names and numbers of the funds you have selected.

SELLING: Send a signed letter to the BT Service Center with your name, your fund
number and account number, the fund's name and either the number of shares you
wish to sell or the dollar amount you wish to receive. You must leave at least
$1,000 invested in your account to keep it open. Unless exchanging into another
BT Fund, you must submit a written authorization to sell shares in a retirement
account.

WIRE:

BUYING: You may buy shares by wire only if your account is authorized to do so.
You or your financial advisor must call the BT Service Center at 1-800-730-1313
to notify us in advance of a wire transfer purchase. Inform the BT
Representative of the amount of your purchase and receive a trade confirmation
number. Instruct your bank to send payment by wire using the wire instructions
noted below. All wires must be received by 4:00 p.m., Eastern time, the next
business day.

ROUTING NO.: 021001033
ATTN: Bankers Trust/BT Funds
DDA NO.: 00-226-296

FBO: (Account name)
(Account number)
CREDIT: (Fund name and number)

Refer to your account statement for the account name, number and fund number.

SELLING: You may sell shares by wire only if your account is authorized to do
so. For your protection, you may not change the destination bank account over
the phone. To sell by wire, contact your financial advisor or the BT Service
Center at 1-800-730-1313.

72
<PAGE>

Inform the BT Representative of the amount of your redemption and receive your
trade confirmation number. The minimum redemption by wire is $1,000. We must
receive your order by 4:00 p.m., Eastern time, to wire your account the next
business day.

IMPORTANT INFORMATION ABOUT BUYING AND SELLING SHARES
o After receiving your order, we buy or sell your shares at the next price
calculated on a day the Fund is open for business.

o We accept payment for shares only in U.S. dollars by check, bank or Federal
Funds wire transfer, or by electronic bank transfer.

o We remit proceeds from the sale of shares in U.S. dollars (unless the
redemption is so large that it is made "in-kind").

o You may place orders to buy and sell by calling your financial advisor or
the BT Service Center at 1-800-730-1313. If you pay for shares by check and
the check fails to clear, or if you order shares by phone and fail to pay
for them by 4:00 p.m., Eastern time, the next business day, we have the
right to cancel your order, hold you liable or charge you or your account
for any losses or fees the Fund or its agents have incurred. Unless you
request a wire, we will send you a check.

o You may buy and sell shares of the Fund through authorized brokers and
financial advisors as well as from BT Mutual Funds directly. The same terms
and conditions apply. Specifically, once you place your order with a broker
or financial advisor, it is considered received by the BT Service Center.
It is then your broker or financial advisor's responsibility to transmit
the order to the BT Service Center by the next business day. You should
contact your broker or financial advisor if you have a dispute as to when
your order was placed with the Fund.

o If we receive your purchase order and payment before 12 noon Eastern time
you will receive the dividends declared that day. If we receive it after
12:00 noon Eastern time, you will not.

73
<PAGE>

o If we receive your order to sell shares after 12:00 noon Eastern time you
will receive the dividends declared that day. If we receive it before 12:00
noon Eastern time, you will not.

o We do not issue share certificates.

o We process all sales orders free of charge.

o Unless otherwise instructed, we normally mail a check for the proceeds from
the sale of your shares to your account address the next business day and
no later than within seven days.

o We reserve the right to close your account on 30 days' notice if it fails
to meet minimum balance requirements.

o If you sell shares by mail or wire, you may be required to obtain a
signature guarantee. Please contact your financial advisor or the BT
Service Center for more information.

o Selling shares of trust accounts and business or organization accounts may
require additional documentation. Please contact your financial advisor or
the BT Service Center for more information.

o During periods of heavy market activity, you may have trouble reaching the
BT Service Center by telephone. If this occurs, you should make your
request by mail.

74
<PAGE>

SPECIAL SHAREHOLDER SERVICES
To help make investing with us as easy as possible, and to help you build your
investment, we offer the following special services. You can obtain further
information about these programs by calling the BT Service Center at
1-800-730-1313.

o REGULAR INVESTMENTS: You can make regular investments of $100 or more
automatically from your checking account bi-weekly, monthly, quarterly, or
semi-annually.

o EXCHANGE PRIVILEGES: You can exchange all or part of your shares for shares
in another BT Mutual Fund. When you exchange shares, you are selling shares
in one fund to purchase shares in another. Before buying shares through an
exchange, you should be sure to get a copy of that fund's prospectus and
read it carefully. You may only order exchanges over the phone if your
account is authorized to do so. Please note that exchanges out of a Fund
may be limited to four times a year and you may have to pay taxes on the
shares you sell in the exchange.

o REGULAR WITHDRAWALS: You can arrange regular monthly, quarterly, semiannual
and annual sales of shares in your account. The minimum transaction is
$100, and the account must have a balance of at least $10,000 to qualify.

o CHECKWRITING: We issue you a checkbook linked to your fund account. You can
sell shares by writing a check for the desired amount free of charge, but
you cannot close your account by check. You continue to earn dividends on
the shares you sell by check until the check clears. We return canceled
checks for your records, at the end of the month.

o ACCOUNT STATEMENTS AND FUND REPORTS: We or your financial advisor will
furnish you with a written confirmation of every transaction that affects
your account balance. You will also receive monthly statements reflecting
the balances in your account. The Fund's Investment Adviser will send you a
report every six months on the Fund's overall performance, its current
holdings and its investing strategies.

75
<PAGE>

BACK COVER

Additional information about each Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders.

You can find more detailed information about each Fund in the current Statement
of Additional Information, dated April 30, 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.

CASH MANAGEMENT FUND CUSIP #s: 055922108
TREASURY MONEY FUND 055922405
NY TAX FREE MONEY FUND 055922207
TAX FREE MONEY FUND 055922306
BT Investment Funds [Product Code]

76
<PAGE>

811 - 4760

77
<PAGE>

STATEMENT OF
ADDITIONAL INFORMATION
April 30, 1999
BT Investment Funds
o Cash Management Fund
o Tax Free Money Fund
o NY Tax Free Money Fund

BT Institutional Funds
o Institutional Cash Management Fund
o Institutional Treasury Money Fund

BT Investment Funds and BT Institutional Funds (each, a "Trust" and,
collectively, the "Trusts") are open-end management investment companies that
offer investors a selection of investment portfolios, each having distinct
investment objectives and policies. The Investment Cash Management Fund,
Investment Tax Free Money Fund, Investment NY Tax Free Money Fund, Institutional
Cash Management Fund and Institutional Treasury Money Fund (each a "Fund" and,
collectively, the "Funds") are described herein.

* 1 moved from here; text not shown* 2 moved from here; text not shown Unlike
other mutual funds, the Trusts seek to achieve the investment objectives of
each Fund by investing all the investable assets of the Fund in a diversified
(or nondiversified, in the case of the NY Tax Free Money Fund) open-end
management investment company having the same investment objective as such Fund.
These investment companies are, respectively, Cash Management Portfolio, Tax
Free Money Portfolio, NY Tax Free Money Portfolio and Treasury Money Portfolio
(collectively, the "Portfolios").

* 3 moved from here; text not shownShares of the Funds are sold by ICC
Distributors, Inc. ("ICC Distributors"), the Trust's distributor (the
"Distributor"), to clients and customers (including affiliates and
correspondents) of Bankers Trust Company ("Bankers Trust"), the Portfolios'
investment adviser ("Adviser"), and to clients and customers of other
organizations.

The Trusts' Prospectuses for the Funds, dated April 30, 1999, provide the
basic information investors should know before investing. This Statement of
Additional Information ("SAI"), which is not a Prospectus, is intended to
provide additional information regarding the activities and operations of the
Trusts and should be read in conjunction with the Prospectuses. You may
request a copy of the Prospectuses or a paper copy of this SAI, if you have
received it electronically, free of charge by calling the Trusts at the
telephone number listed below or by contacting any Bankers Trust service agent
("Service Agent"). Capitalized terms not otherwise defined in this Statement of
Additional Information have the meanings accorded to them in the Trusts'
Prospectuses. The financial statements for each Fund and the corresponding
Portfolio for the fiscal year ended December 31, 1998, are incorporated herein
by reference to the Annual Report to shareholders for each Fund and each
Portfolio dated December 31, 1998. A copy of each Fund's and the corresponding
Portfolio's Annual Report may be obtained without charge by calling each Fund at
the telephone number listed below.

Investment Adviser of the Portfolio and Administrator
BANKERS TRUST COMPANY
Distributor
ICC DISTRIBUTORS, INC.

Two Portland Square Portland, Maine 04101 1-800-730-1313

(A redherring appears here, rotated 90 degrees, with the following text:)

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may any
offers to buy be accepted prior to the time the registration statement becomes
effective. This Statement of Additional Information does not constitute a
prospectus.

<PAGE>
TABLE OF CONTENTS

PAGE

INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS.............................1

Investment Objectives.....................................................1

Investment Policies.......................................................1

Additional Risk Factors...................................................6

Investment Restrictions...................................................8

NET ASSET VALUE.............................................................12

PURCHASE AND REDEMPTION INFORMATION.........................................13

Purchase of Shares.......................................................13

Redemption of Shares.....................................................16

MANAGEMENT OF THE TRUST AND PORTFOLIOS......................................19

Trustees of BT Investment Funds..........................................19

Trustees of BT Institutional Funds.......................................20

Trustees of the Portfolios...............................................20

Officers of the Trust and the Portfolios.................................20

Trustee Compensation Table...............................................21

Investment Adviser.......................................................21

Administrator............................................................23

Distributor..............................................................24

Service Agent............................................................25

Custodian and Transfer Agent.............................................25

Expenses.................................................................25

Use of Name..............................................................25

Banking Regulatory Matters...............................................26

Counsel and Independent Accountants......................................26

ORGANIZATION OF THE TRUST...................................................26
<PAGE>
DIVIDENDS AND TAXES.........................................................27

PERFORMANCE INFORMATION.....................................................29

FINANCIAL STATEMENTS........................................................31

APPENDIX: DESCRIPTION OF RATINGS............................................32
<PAGE>

INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS

Investment Objectives

The following is a description of each Fund's investment objective. There can,
of course, be no assurance that any Fund will achieve its investment objective.

Investment Cash Management Fund seeks a high level of current income consistent
with liquidity and the preservation of capital through investment in a Portfolio
of high quality money market instruments.

** 1 Investment Tax Free Money Fund seeks a high level of current income
exempt from Federal income taxes consistent with liquidity and the preservation
of capital through investment in a Portfolio primarily of obligations issued by
states and their authorities, agencies, instrumentalities and political
subdivisions.

** 2 Investment NY Tax Free Money Fund seeks a high level of current income
exempt from Federal and New York income taxes consistent with liquidity and the
preservation of capital through investment in a Portfolio primarily of
obligations of the State of New York and its authorities, agencies,
instrumentalities and political subdivisions.

Institutional Cash Management Fund seeks a high level of current income
consistent with liquidity and the preservation of capital through investment in
a portfolio of high quality money market instruments.

Institutional Treasury Money Fund seeks a high level of current income
consistent with liquidity and the preservation of capital through investment in
a portfolio of direct obligations of the U.S. Treasury and repurchase agreements
in respect of those obligations.

Investment Policies

Each Fund seeks to achieve its investment objective(s) by investing all of its
assets in the corresponding Portfolio, which has the same investment objective
as the Fund. Each Trust may withdraw a Fund's investment from the corresponding
Portfolio at any time if the Board of Trustees of the Trust determines that it
is in the best interests of the Fund to do so.

** 3 Since the investment characteristics of each Fund will correspond directly
to those of the respective Portfolio in which the Fund invests all of its
assets, the following is a discussion of the various investments of and
techniques employed by the Portfolios.

QUALITY AND MATURITY OF THE PORTFOLIO'S SECURITIES. Each Portfolio will maintain
a dollar-weighted average maturity of 90 days or less. All securities in which
each Portfolio invests will have, or be deemed to have, remaining maturities of
397 days or less on the date of their purchase, will be denominated in U.S.
dollars and will have been granted the required ratings established herein by
two nationally recognized statistical rating organizations ("NRSROs") (or one
such NRSRO if that NRSRO is the only such NRSRO which rates the security), or if
unrated, are believed by Bankers Trust, under the supervision of the respective
Portfolio's Board of Trustees, to be of comparable quality. Currently, there are
five rating agencies which have been designated by the Securities and Exchange
Commission (the "SEC") as an NRSRO. These organizations and their highest
short-term rating category (which may also be modified by a "+") are: Duff and
Phelps Credit Rating Co., D-1; Fitch IBCA, Inc. F1; Moody's Investors Service
Inc. ("Moody's"), Prime-1; Standard & Poor's, A-1; and Thomson BankWatch, Inc.,
T-1. A description of such ratings is provided in the Appendix. Bankers Trust,
acting under the supervision of and procedures adopted by the Board of Trustees
of each Portfolio, will also determine that all securities purchased by a
Portfolio present minimal credit risks. Bankers Trust will cause a Portfolio to
dispose of any security as soon as practicable if the security is no longer of
the requisite quality, unless such action would not be in the best interest of
that Portfolio. High-quality, short-term instruments may result in a lower yield
than instruments with a lower quality or longer term.

OBLIGATIONS OF BANKS AND OTHER FINANCIAL INSTITUTIONS. For purposes of the
Portfolios' investment policies with respect to bank obligations, the assets of
a bank will be deemed to include the assets of its domestic and foreign
branches. Obligations of foreign branches of U.S. banks and foreign banks may be
general obligations of the parent bank in addition to the issuing bank or may be
limited by the terms of a specific obligation and by government regulation. If
Bankers Trust, acting under the supervision of the Board of Trustees, deems the
instruments to present minimal credit risk, each Portfolio other than Treasury
Money Portfolio may invest in obligations of foreign banks or foreign branches
of U.S. banks, which include banks located in the United Kingdom, Grand Cayman
Island, Nassau, Japan and Canada.

1
<PAGE>

Investments in these obligations may entail risks that are different from those
of investments in obligations of U.S. domestic banks because of differences in
political, regulatory and economic systems and conditions. These risks include
future political and economic developments, currency blockage, the possible
imposition of withholding taxes on interest payments, differing reserve
requirements, reporting and recordkeeping requirements and accounting standards,
possible seizure or nationalization of foreign deposits, difficulty or inability
of pursuing legal remedies and obtaining judgments in foreign courts, possible
establishment of exchange controls or the adoption of other foreign governmental
restrictions that might affect adversely the payment of principal and interest
on bank obligations. Foreign branches of U.S. banks and foreign banks may also
be subject to less stringent reserve requirements and to different accounting,
auditing, reporting and recordkeeping standards than those applicable to
domestic branches of U.S. banks.

COMMERCIAL PAPER. Commercial paper obligations in which the Portfolios may
invest are short-term, unsecured negotiable promissory notes of U.S. or foreign
corporations that at the time of purchase meet the rating criteria described in
the Prospectus. Investments in foreign commercial paper generally involve risks
similar to those described above relating to obligations of foreign banks or
foreign branches of U.S. banks.

VARIABLE RATE MASTER DEMAND NOTES. Variable rate master demand notes are
unsecured instruments that permit the indebtedness thereunder to vary and
provide for periodic adjustments in the interest rate. Because variable rate
master demand notes are direct lending arrangements between a Portfolio and the
issuer, they are not ordinarily traded. Although no active secondary market may
exist for these notes, a Portfolio will purchase only those notes under which it
may demand and receive payment of principal and accrued interest daily or may
resell the note to a third party. While the notes are not typically rated by
credit rating agencies, issuers of variable rate master demand notes must
satisfy Bankers Trust, acting under the supervision of the Board of Trustees of
a Portfolio, that the same criteria as set forth above for issuers of commercial
paper are met. In the event an issuer of a variable rate master demand note
defaulted on its payment obligation, a Portfolio might be unable to dispose of
the note because of the absence of a secondary market and could, for this or
other reasons, suffer a loss to the extent of the default. The face maturities
of variable rate notes subject to a demand feature may exceed 397 days in
certain circumstances. (See "Quality and Maturity of the Fund's Securities"
herein.)

U.S. GOVERNMENT OBLIGATIONS. The Portfolios may invest in direct obligations
issued by the U.S. Treasury or, in the case of the Portfolios other than
Treasury Money Portfolio, in obligations issued or guaranteed by the U.S.
Treasury or by agencies or instrumentalities of the U.S. government ("U.S.
Government Obligations"). Certain short-term U.S. Government Obligations, such
as those issued by the Government National Mortgage Association ("GNMA"), are
supported by the "full faith and credit" of the U.S. government; others, such as
those of the Export-Import Bank of the United States, are supported by the right
of the issuer to borrow from the U.S. Treasury; others, such as those of the
Federal National Mortgage Association are solely the obligations of the issuing
entity but are supported by the discretionary authority of the U.S. government
to purchase the agency's obligations; and still others, such as those of the
Student Loan Marketing Association, are supported by the credit of the
instrumentality. No assurance can be given that the U.S. government would
provide financial support to U.S. government-sponsored instrumentalities if it
is not obligated to do so by law.

Examples of the types of U.S. Government Obligations that the Portfolios may
hold include, but are not limited to, in addition to those described above and
direct U.S. Treasury obligations, the obligations of the Federal Housing
Administration ("FHA"), Farmers Home Administration, Small Business
Administration, General Services Administration, Central Bank for Cooperatives,
Federal Farm Credit Banks, Federal Farm Credit Banks Funding Corp., Federal Home
Loan Banks, Federal Home Loan Mortgage Corporation, Federal Intermediate Credit
Banks, Federal Land Banks and Maritime Administration.

OTHER DEBT OBLIGATIONS. The Portfolios may invest in deposits, bonds, notes
and debentures and other debt obligations that at the time of purchase have, or
are comparable in priority and security to other securities of such issuer which
have, outstanding short-term obligations meeting the above short-term rating
requirements, or if there are no such short-term ratings, are determined by
Bankers Trust, acting under the supervision of the Board of Trustees of the
Portfolio, to be of comparable quality and are rated in the top three highest
long-term rating categories by the NRSROs rating such security.

CREDIT ENHANCEMENT. Certain of a Portfolio's acceptable investments may be
credit-enhanced by a guaranty, letter of credit, or insurance from a third
party. Any bankruptcy, receivership, default, or change in the credit quality of

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the third party providing the credit enhancement could adversely affect the
quality and marketability of the underlying security and could cause losses to
the Portfolio and affect the Portfolio's share price. Subject to the
diversification limits contained in Rule 2a-7, each Portfolio may have more than
25% of its total assets invested in securities issued by or credit-enhanced by
banks or other financial institutions.

LENDING OF PORTFOLIO SECURITIES. The Portfolios, other than Tax Free Money
Portfolio and NY Tax Free Money Portfolio, have the authority to lend portfolio
securities to brokers, dealers and other financial organizations. By lending its
securities, a Portfolio may increase its income by continuing to receive
payments in respect of dividends and interest on the loaned securities as well
as by either investing the cash collateral in short-term securities or obtaining
yield in the form of a fee paid by the borrower when irrevocable letters of
credit and U.S. Government Obligations are used as collateral. Each Portfolio
will adhere to the following conditions whenever its securities are loaned: (i)
the Portfolio must receive at least 100% collateral from the borrower; (ii) the
borrower must increase this collateral whenever the market value of the
securities including accrued interest rises above the level of the collateral;
(iii) the Portfolio must be able to terminate the loan at any time; (iv) the
Portfolio must receive substitute payments in respect of all dividends, interest
or other distributions on the loaned securities; and (v) voting rights on the
loaned securities may pass to the borrower; provided, however, that if a
material event adversely affecting the investment occurs, the Board of Trustees
must retain the right to terminate the loan and recall and vote the securities.
Cash collateral may be invested in a money market fund managed by Bankers Trust
(or its affiliates) and Bankers Trust may serve as a Portfolio's lending agent
and may share in revenue received from securities lending transactions as
compensation for this service.

REPURCHASE AGREEMENTS. The Portfolios may engage in repurchase agreement
transactions with banks and governmental securities dealers approved by the
Portfolio's Board of Trustees. Under the terms of a typical repurchase
agreement, a Portfolio would acquire U.S. Government Obligations (or any other
securities permitted by Rule 2a-7) regardless of maturity any remaining maturity
for a relatively short period (usually not more than one week), subject to an
obligation of the seller to repurchase, and the Portfolio to resell, the
obligation at an agreed price and time, thereby determining the yield during the
Portfolio's holding period. This arrangement results in a fixed rate of return
that is not subject to market fluctuations during the Portfolio's holding
period. The value of the underlying securities will be at least equal at all
times to the total amount of the repurchase obligations, including interest.
Each Portfolio bears a risk of loss in the event that the other party to a
repurchase agreement defaults on its obligations and the Portfolio is delayed in
or prevented from exercising its rights to dispose of the collateralized
securities, including the risk of a possible decline in the value of the
underlying securities during the period in which the Portfolio seeks to assert
these rights. Bankers Trust, acting under the supervision of the Board of
Trustees of each Portfolio, reviews the creditworthiness of those banks and
dealers with which the Portfolios enter into repurchase agreements and monitors
on an ongoing basis the value of the securities subject to repurchase agreements
to ensure that it is maintained at the required level.

REVERSE REPURCHASE AGREEMENTS. The Portfolios may borrow funds for temporary or
emergency purposes, such as meeting larger than anticipated redemption requests,
and not for leverage, by among other things, agreeing to sell portfolio
securities to financial institutions such as banks and broker-dealers and to
repurchase them at a mutually agreed date and price (a "reverse repurchase
agreement"). At the time a Portfolio enters into a reverse repurchase agreement
it will place in a segregated custodial account cash, U.S. Government
Obligations or high-grade debt obligations having a value equal to the
repurchase price, including accrued interest. Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Portfolio may
decline below the repurchase price of those securities. Reverse repurchase
agreements are considered to be borrowings by a Portfolio.

WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES. To secure prices deemed
advantageous at a particular time, the Cash Management Portfolio and Treasury
Money Portfolio may purchase securities on a when-issued or delayed-delivery
basis, in which case delivery of the securities occurs beyond the normal
settlement period; payment for or delivery of the securities would be made
prior to the reciprocal delivery or payment by the other party to the
transaction. A Portfolio will enter into when-issued or delayed-delivery
transactions for the purpose of acquiring securities and not for the purpose of
leverage. When-issued securities purchased by a Portfolio may include securities
purchased on a "when, as, and if issued" basis under which the issuance of the
securities depends on the occurrence of a subsequent event.

Securities purchased on a when-issued or delayed-delivery basis may expose a
Portfolio to risk because the securities may experience fluctuations in value
prior to their actual delivery. A Portfolio does not accrue income with respect
to a when-
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issued or delayed-delivery security prior to its stated delivery date.
Purchasing securities on a when-issued or delayed-delivery basis can involve the
additional risk that the yield available in the market when the delivery takes
place may be higher than that obtained in the transaction itself. Upon
purchasing a security on a when-issued or delayed-delivery basis, a Portfolio
will identify, as part of a segregated account, cash or liquid securities in
an amount at least equal to the when-issued or delayed-delivery commitment.

ASSET-BACKED SECURITIES. The Cash Management Portfolio may also invest in
securities generally referred to as asset-backed securities, which directly or
indirectly represent a participation interest in, or are secured by and payable
from, a stream of payments generated by particular assets such as motor vehicle
or credit card receivables. Asset-backed securities may provide periodic
payments that consist of interest and/or principal payments. Consequently, the
life of an asset-backed security varies with the prepayment and loss experience
of the underlying assets."

PARTICIPATION INTERESTS. Tax Free Money Portfolio and NY Tax Free Money
Portfolio may purchase from financial institutions participation interests in
Municipal Obligations. A participation interest gives the Portfolio an undivided
interest in the Municipal Obligation in the proportion that the Portfolio's
participation interest bears to the total principal amount of the Municipal
Obligation. These instruments may be variable rate or fixed rate with remaining
maturities of one year or less. If the participation interest is unrated or has
been given a rating below that which otherwise is permissible for purchase by
the Portfolio, the participation interest will be backed by an irrevocable
letter of credit or guarantee of a bank that the Portfolio's Board of Trustees
has determined meets the prescribed quality standards for the Portfolio, or the
payment obligation otherwise will be collateralized by U.S. government
securities or other securities deemed appropriate by the Portfolio's Board of
Trustees, or, in the case of an unrated participation interest that is not
backed or collateralized as described above, but that otherwise meets the
Trustees' procedures and standards for creditworthiness and high quality, the
underlying Municipal Obligation must be a permissible investment for the
Portfolio. For certain participation interests, the Portfolio will have the
right to demand payment, on seven days' notice, for all or any part of the
Portfolio's participation interest in the Municipal Obligation, plus accrued
interest. As to these instruments, each Portfolio intends to exercise its right
to demand payment from the issuer of the demand feature only upon a default
under the terms of the Municipal Obligation, as needed to provide liquidity to
meet redemptions or to maintain a high quality investment portfolio. In the
event an issuer of a demand feature defaulted on its payment obligation, the
Portfolio might be unable to dispose of the participation interest because of
the absence of a secondary market and could, for this or other reasons, suffer a
loss to the extent of the default.

Neither Portfolio currently intends to invest more than 5% of its total assets
in participation interests.

STANDBY COMMITMENTS. Tax Free Money Portfolio and NY Tax Free Money Portfolio
each may acquire standby commitments or "puts" solely to facilitate portfolio
liquidity; neither Portfolio intends to exercise its rights thereunder for
trading purposes. The maturity of a Municipal Obligation is not to be considered
shortened by any standby commitment to which the obligation is subject. Thus,
standby commitments do not affect the dollar-weighted average maturity of a
Portfolio.

When Municipal Obligations are subject to puts separate from the underlying
securities, no value is assigned to the put. Because of the difficulty of
evaluating the likelihood of exercise or the potential benefit of a put, the
Board of Trustees has determined that puts shall have a fair market value of
zero, regardless of whether any direct or indirect consideration was paid.

Since the value of the put is partly dependent on the ability of the put writer
to meet its obligation to repurchase, each Portfolio's policy is to enter into
put transactions only with put writers who are approved by Bankers Trust. It is
the Portfolios' general policy to enter into put transactions only with those
put writers which are determined to present minimal credit risks. In connection
with this determination, the Board of Trustees will review regularly Bankers
Trust's list of approved put writers, taking into consideration, among other
things, the ratings, if available, of their equity and debt securities, their
reputation in the municipal securities markets, their net worth, their
efficiency in consummating transactions and any collateral arrangements, such as
letters of credit securing the puts written by them. Commercial banks normally
will be members of the Federal Reserve System, and other dealers will be members
of the National Association of Securities Dealers, Inc. or members of a national
securities exchange. Other put writers will have outstanding debt rated Aa or
better by Moody's or AA or better by Standard & Poor's Ratings Group ("S&P"),
or will be of comparable quality in Bankers Trust's opinion, or such put
writers' obligations will be collateralized and of comparable quality in Bankers
Trust's opinion. The Board of Trustees has directed Bankers Trust not to enter
into put

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transactions with any put writer that, in the judgment of Bankers Trust using
the above-described criteria, is or becomes a recognizable credit risk. Neither
Portfolio is able to predict whether all or any portion of any loss sustained
could subsequently be recovered from a put writer in the event that a put writer
should default on its obligation to repurchase an underlying security.

Neither Portfolio currently intends to invest more than 5% of its net assets in
standby commitments.

MUNICIPAL OBLIGATIONS. The two principal classifications of Municipal
Obligations are "notes" and "bonds." Municipal Obligations are further
classified as "general obligation" and "revenue" issues and the securities held
by the Tax Free Money Portfolio and NY Tax Free Money Portfolio may include
"moral obligations" which are normally issued by special purpose authorities.

Municipal Notes. Municipal notes generally fund short-term capital needs and
have maturities of one year or less. Tax Free Money Portfolio and NY Tax Free
Money Portfolio may invest in municipal notes, which include:

Tax Anticipation Notes. Tax anticipation notes are issued to finance working
capital needs of municipalities. Generally, they are issued in anticipation of
various seasonal tax revenue, such as income, sales, use and business taxes, and
are payable from these specific future taxes.

Revenue Anticipation Notes. Revenue anticipation notes are issued in expectation
of receipt of other types of revenue, such as Federal revenues available under
Federal revenue sharing programs.

Bond Anticipation Notes. Bond anticipation notes are issued to provide interim
financing until long-term financing can be arranged. In most cases, the
long-term bonds provide funds for the repayment of these notes.

Miscellaneous, Temporary and Anticipatory Instruments. These instruments may
include notes issued to obtain interim financing pending entering into alternate
financial arrangements, such as receipt of anticipated Federal, state or other
grants or aid, passage of increased legislative authority to issue longer-term
instruments or obtaining other refinancing.

Construction Loan Notes. Construction loan notes are sold to provide
construction financing. Permanent financing, the proceeds of which are applied
to the payment of construction loan notes, is sometimes provided by a commitment
of the GNMA to purchase the loan, accompanied by a commitment by the FHA to
insure mortgage advances thereunder. In other instances, permanent financing is
provided by commitments of banks to purchase the loan. A Portfolio will only
purchase construction loan notes that are subject to permanent GNMA or bank
purchase commitments.

Tax-Exempt Commercial Paper. Tax-exempt commercial paper is a short-term
obligation with a stated maturity of 365 days or less. It is issued by agencies
of state and local governments to finance seasonal working capital needs or as
short-term financing in anticipation of longer-term financing.

Municipal Bonds. Municipal bonds generally fund longer-term capital needs than
municipal notes and have maturities exceeding one year when issued. Tax Free
Money Portfolio and NY Tax Free Money Portfolio may invest in municipal bonds,
but only to the extent that their remaining maturities are determined not to
exceed 397 days under rules promulgated under the Investment Company Act of 1940
(the "1940 Act"). Municipal bonds include:

General Obligation Bonds. Issuers of general obligation bonds include states,
counties, cities, towns and regional districts. The proceeds of these
obligations are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and sewer
systems. The basic security behind general obligation bonds is the issuer's
pledge of its full faith and credit and taxing power for the payment of
principal and interest. The taxes that can be levied for the payment of debt
service may be limited or unlimited as to the rate or amount of special
assessments.

Revenue Bonds. The principal security for a revenue bond is generally the net
revenues derived from a particular facility, group of facilities or, in some
cases, the proceeds of a special excise tax or other specific revenue source.
Revenue bonds are issued to finance a wide variety of capital projects,
including electric, gas, water and sewer systems; highways, bridges, and
tunnels; port and airport facilities; colleges and universities; and hospitals.
Although the principal security behind these bonds may vary, many provide
additional security in the form of a debt service reserve fund that may be used
to make principal and interest payments on the issuer's obligations. Housing
finance authorities have a wide range of security, including partially or fully
insured mortgages, rent subsidized and/or collateralized mortgages, certificates
of deposit and/or the net revenues from housing or other public projects. Some
authorities provide further security in the form of a state's ability (without
obligation) to make up deficiencies in the debt service reserve fund.

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Private Activity Bonds. Private activity bonds, which are considered Municipal
Obligations if the interest paid thereon is excluded from gross income for
Federal income tax purposes and is not a specific tax preference item for
Federal individual and corporate alternative minimum tax purposes, are issued by
or on behalf of public authorities to raise money to finance various privately
operated facilities such as manufacturing facilities, certain hospital and
university facilities and housing projects. These bonds are also used to finance
public facilities such as airports, mass transit systems and ports. The payment
of the principal and interest on these bonds is dependent solely on the ability
of the facility's user to meet its financial obligations and generally the
pledge, if any, of real and personal property so financed as security for
payment.

Additional Risk Factors

In addition to the risks discussed above, the Portfolios' investments may be
subject to the following risk factors:

SPECIAL CONSIDERATIONS RELATING TO NEW YORK MUNICIPAL OBLIGATIONS. The NY Tax
Free Money Portfolio invests in obligations of New York (the "State") issuers
which results in its performance being subject to risks associated with the
overall conditions present within the State. The following information is a
general summary of the State's financial condition and a brief summary of the
prevailing economic conditions. This information is based on official statements
relating to securities that are believed to be reliable but should not be
considered as a complete description of all relevant information.

The State has achieved fiscal balance for the past several years after years of
recording large deficits during the 1980's. Fiscal balance has been achieved as
a result of growth in tax receipts and a focus on reducing governmental
disbursements. Evidence of the State's improved financial condition is seen in
the reduction of the 1996-1997 fiscal year end accumulated General Fund deficit
(GAAP Basis) to $995 million compared to a recent high of $3.3 billion (recorded
in fiscal year 1994-1995). On a cash basis, the State is projecting to close
fiscal year 1997-1998 (current fiscal year) with a surplus of $465 million.

The State's fiscal year 1997-1998 Financial Plan (current fiscal year) through
December 1997 continued to be balanced with a projected cash surplus of $1.83
billion, $1.3 billion higher than estimated through the first two quarters of
fiscal year 1997-1998 (the "Mid-Year Update"). The State will use a majority of
the surplus to accelerate $1.18 billion in personal income tax refund payments
by increasing the reserve for such payments. This acceleration decreases
reported personal income receipts by $1.18 billion in fiscal year 1997-1998,
while increasing available personal income receipts in fiscal year 1998-1999, as
these refunds will no longer be a charge against current revenues in fiscal year
1998-1999. As a result, projections of available receipts in fiscal year
1997-1998 (current fiscal year) have been increased only $103 million over the
Mid-Year Update.

The State projects that disbursements will increase by $565 million over the
Mid-Year Update as a result of prepaying General Fund expenditures for fiscal
year 1998-1999. In the absence of this one-time payment of expenditures, General
Fund disbursements would have remained nearly unchanged.

The General Fund closing balance is projected to be $465 million at the end of
fiscal year 1997-1998, a decline of almost 50% (over the Mid-Year Update), as a
result of using the surplus generated from higher than anticipated receipts to
prepay fiscal year 1998-1999 expenditures (discussed above).

The Governor presented his 1998-1999 Executive Budget to the Legislature on
January 20, 1998. The Executive Budget also contains financial projections for
the State's 1999-2000 to 2000-2001 fiscal years, detailed estimates of receipts
and a proposed Capital Program and Financing Plan for the 1999-2000 through
2002-2003 fiscal years. There can be no assurance that the Legislature will
enact into law the Executive Budget, as proposed by the Governor, or that the
State's adopted budget projections will not differ materially and adversely from
the projections set forth below.

The fiscal year 1998-1999 Financial Plan is projected to be balanced on a cash
basis in the General fund, with the use of only $62 million in non-recurring
resources (less than 0.2% of General fund disbursements compared to $2.3 billion
for the current fiscal year). Total General Fund receipts, including transfers
from other funds, are projected to be $36.22 billion, a 2.9% increase over
projected receipts in the current fiscal year. The increase in General Fund
receipts is anticipated from an increase in personal income tax receipts and
user taxes (primarily sales tax). Total General Fund disbursements, including
transfers to other funds, are projected to be $36.18 billion or 2.9% over
projected expenditures (including the prepayments discussed above), for the
current fiscal year. The increase in spending primarily reflects increases in
school aid and Medicare programs. The Executive Budget projects a closing
General Fund balance of $500

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million, slightly higher than projected for the current fiscal year.

The State's economy continued to improve, as the rate of growth in
non-agricultural employment increased to 1.4% through November 1997 compared to
0.7% growth in 1995. New York's rate of growth in employment was below the rate
of growth of the United States, resulting in a stable unemployment rate of 6.3%
since 1995. New York's growth in personal income also underperformed the United
States expanding 4.7% and 5.4%, in 1996 and 1997 respectively, compared to 5.6%
and 5.8% for the United States. New York's growth in personal income has been
driven primarily by the exceptional performance of the financial markets.

Moderate economic growth is projected to continue in 1998 and 1999 for
employment, wages, and personal income, although growth will lessen gradually
during the course of the next two years. Personal income is projected to
increase 4.7% in 1998 and 4.4% in 1999 (compared to 5.1% and 4.3% growth in
United States personal income, as projected by the State Division of the
Budget). Overall employment growth is expected to continue at a modest rate,
reflecting the slowing growth in the national economy, continued spending
restraint in government and restructuring in health care, social service and
banking sectors.

The State's financial health is evidenced by its debt ratings. The State's
improved financial condition is evidenced by the recent upgrade in the State's
debt rating to A from A- by S&P. The State is rated A2 by Moody's.

The Fund's concentration in municipal securities issued by the State and its
political subdivisions provides a greater level of risk than a fund which is
diversified across numerous states and municipal entities. The ability of the
State or its municipalities to meet their obligations will depend upon the
availability of tax and other revenues, economic, political, and demographic
conditions within the State, and the underlying fiscal condition of the State,
its counties, and its municipalities.

YEAR 2000 MATTERS. Like other mutual funds, financial and business
organizations and individuals around the world, the Funds could be adversely
affected if the computer systems used by Bankers Trust and other service
providers do not properly process and calculate date-related information and
data from and after January 1, 2000. This is commonly known as the "Year 2000
Problem." Bankers Trust is taking steps that it believes are reasonably designed
to address the Year 2000 Problem with respect to computer systems that it uses
and to obtain reasonable assurances that comparable steps are being taken by the
Funds' other major service providers. At this time, however, there can be no
assurance that these steps will be sufficient to avoid any adverse impact to the
Funds nor can there be any assurance that the Year 2000 Problem will not have an
adverse effect on the companies whose securities are held by the Funds or on
global markets or economies, generally.

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

Smaller funds investing in a Portfolio may be materially affected by the actions
of larger funds investing in the Portfolio. For example, if a large fund
withdraws from a Portfolio, the remaining funds may experience higher pro rata
operating expenses, thereby producing lower returns (however, this possibility
exists as well for traditionally structured funds which have large institutional
investors). Additionally, a Portfolio may become less diverse, resulting in
increased portfolio risk. Also, funds with a greater pro rata ownership in a
Portfolio could have effective voting control of the operations of the
Portfolio. Except as permitted by the SEC, whenever the Trust is requested to
vote on matters pertaining to a Portfolio, the Trust will hold a meeting of
shareholders of the Fund and will cast all of its votes in the same proportion
as the votes of the Fund's shareholders. Fund shareholders who do

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not vote will not affect the Trust's votes at the Portfolio meeting. The
percentage of the Trust's votes representing the Fund's shareholders not voting
will be voted by the Trustees or officers of the Trust in the same proportion as
the Fund shareholders who do, in fact, vote.

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

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

Each Fund's investment objective is not a fundamental policy and may be changed
upon notice to, but without the approval of, the Fund's shareholders. If there
is a change in the Fund's investment objective, the Fund's shareholders should
consider whether the Fund remains an appropriate investment in light of their
then-current needs. The investment objective of each Portfolio is also not a
fundamental policy. Shareholders of the Funds will receive 30 days prior written
notice with respect to any change in the investment objective of the Fund or the
corresponding Portfolio.

RATING SERVICES. The ratings of Moody's and S&P represent their opinions as to
the quality of the Municipal Obligations and other securities that they
undertake to rate. It should be emphasized, however, that ratings are relative
and subjective and are not absolute standards of quality. Although these ratings
are an initial criterion for selection of portfolio investments, the Adviser
also makes its own evaluation of these securities, subject to review by the
Board of Trustees. After purchase by a Portfolio, an obligation may cease to be
rated or its rating may be reduced below the minimum required for purchase by
the Portfolio. Neither event would require a Portfolio to eliminate the
obligation from its portfolio, but the Adviser will consider such an event in
its determination of whether a Portfolio should continue to hold the obligation.
A description of the ratings categories of Moody's and S&P is set forth in the
Appendix to this SAI.

Investment Restrictions

Fundamental Policies. The following investment restrictions have been
adopted by the Trust with respect to each of the Funds and by the Portfolios as
fundamental policies. Under the 1940 Act, a "fundamental" policy may not be
changed without the vote of a majority of the outstanding voting securities of
the Fund or Portfolio, respectively, to which it relates, which is defined in
the 1940 Act as the lesser of (a) 67% or more of the shares present at a
shareholder meeting if the holders of more than 50% of the outstanding shares
are present or represented by proxy, or (b) more than 50% of the outstanding
shares. Whenever a Fund is requested to vote on a change in the investment
restrictions of a Portfolio, the Trust will hold a meeting of Fund shareholders
and will cast its votes as instructed by the shareholders. Fund shareholders who
do not vote will not affect the Trust's votes at the Portfolio meeting. The
percentage of the Trust's votes representing Fund shareholders not voting will
be voted by the Trustees of the Trust in the same proportion as the Fund
shareholders who do, in fact, vote.

ALL FUNDS AND PORTFOLIOS

Under investment policies adopted by the Trust, on behalf of each Fund, and by
the Portfolios, each Fund and each Portfolio may not:

1. Borrow money, except for temporary or emergency (not
leveraging) purposes in an amount not exceeding 5% of the
value of the Fund's or the Portfolio's total assets (including
the amount borrowed), as the case may be, calculated in each
case at the lower of cost or market.

2. Pledge, hypothecate, mortgage or otherwise encumber more than
5% of the total assets of the Fund or the Portfolio, as the
case may be, and only to secure borrowings for temporary or
emergency purposes.

3. Invest more than 5% of the total assets of the Fund or

8
<PAGE>

the Portfolio, as the case may be, in any one issuer (other
than U.S. Government Obligations) or purchase more than 10% of
any class of securities of any one issuer; provided, however,
that (i) up to 25% of the assets of the Cash Management Fund,
the Treasury Money Fund and the Tax Free Money Fund (and Cash
Management Portfolio, Treasury Money Portfolio and Tax Free
Money Portfolio), and all of the assets of the NY Tax Free
Money Fund (and NY Tax Free Money Portfolio), may be invested
without regard to this restriction, and (ii) this restriction
shall not preclude the purchase by the Tax Free Money Fund (or
Tax Free Money Portfolio) of issues guaranteed by the U.S.
government, its agencies or instrumentalities or backed by
letters of credit or guarantees of one or more commercial
banks or other financial institutions, even though any one
such commercial bank or financial institution provides a
letter of credit or guarantee with respect to securities which
in the aggregate represent more than 5%, but not more than
10%, of the total assets of the Fund or the Portfolio, as the
case may be; provided, however, that nothing in this
investment restriction shall prevent the Trust from investing
all or part of a Fund's assets in an open-end management
investment company with the same investment objectives as such
Fund.

4. Invest more than 25% of the total assets of the Fund or the
Portfolio, as the case may be, in the securities of issuers in
any single industry; provided that (i) this limitation shall
not apply to the purchase of U.S. Government Obligations, (ii)
under normal market conditions more than 25% of the total
assets of the Cash Management Fund (or Cash Management
Portfolio) will be invested in obligations of U.S. and
foreign banks and other financial institutions, and (iii) with
respect to the Tax Free Money Fund and the NY Tax Free Money
Fund (or Tax Free Money Portfolio or NY Tax Free Money
Portfolio), this limitation shall not apply to the purchase of
Municipal Obligations or letters of credit or guarantees of
banks that support Municipal Obligations; provided, however,
that nothing in this investment restriction shall prevent the
Trust from investing all or part of a Fund's assets in an
open-end management investment company with the same
investment objectives as such Fund.

5. Make short sales of securities, maintain a short position or
purchase any securities on margin, except for such short-term
credits as are necessary for the clearance of transactions.

6. Underwrite the securities issued by others (except to the
extent the Fund or Portfolio may be deemed to be an
underwriter under the Federal securities laws in connection
with the disposition of its portfolio securities) or knowingly
purchase restricted securities, except that the Tax Free Money
Fund and the NY Tax Free Money Fund (and Tax Free Money
Portfolio and NY Tax Free Money Portfolio) each may bid,
separately or as part of a group, for the purchase of
Municipal Obligations directly from an issuer for its own
portfolio in order to take advantage of any lower purchase
price available. To the extent these securities are illiquid,
they will be subject to the Fund's or the Portfolio's 10%
limitation on investments in illiquid securities; provided,
however, that nothing in this investment restriction shall
prevent the Trust from investing all or part of a Fund's
assets in an open-end management investment company with the
same investment objectives as such Fund.

7. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil, gas or
mineral interests, but this shall not prevent the Fund or the
Portfolio from investing in obligations secured by real estate
or interests therein.

8. Make loans to others, except through the purchase of qualified
debt obligations, the entry into repurchase agreements and,
with respect to the Cash Management Fund, the Treasury Money
Fund (or Cash Management Portfolio and Treasury Money
Portfolio), the lending of portfolio securities.

9. Invest more than an aggregate of 10% of the net assets of the
Fund or the Portfolio, respectively, (taken, in each case, at
current value) in (i) securities that cannot be readily resold
to the public because of legal or contractual restrictions or
because there are no market quotations readily available or
(ii) other "illiquid" securities (including time deposits and
repurchase agreements maturing in more than seven calendar
days); provided, however, that nothing in this investment
restriction shall prevent the Trust from investing all or part
of a Fund's assets in an open-end management investment
company with the same investment objectives as such Fund.

9
<PAGE>

10. Purchase more than 10% of the voting securities of any issuer
or invest in companies for the purpose of exercising control
or management; provided, however, that nothing in this
investment restriction shall prevent the Trust from investing
all or part of a Fund's assets in an open-end management
investment company with the same investment objectives as such
Fund.

11. Purchase securities of other investment companies, except to
the extent permitted under the 1940 Act or in connection with
a merger, consolidation, reorganization, acquisition of assets
or an offer of exchange; provided, however, that nothing in
this investment restriction shall prevent the Trust from
investing all or part of a Fund's assets in an open-end
management investment company with the same investment
objectives as such Fund.

12. Issue any senior securities, except insofar as it may be
deemed to have issued a senior security by reason of (i)
entering into a repurchase agreement or (ii) borrowing in
accordance with terms described in the Prospectus and this
SAI.

13. Purchase or retain the securities of any issuer if any of the
officers or trustees of the Fund or the Portfolio or its
investment adviser owns individually more than 1/2 of 1% of
the securities of such issuer, and together such officers and
directors own more than 5% of the securities of such issuer.

14. Invest in warrants, except that the Fund or the Portfolio may
invest in warrants if, as a result, the investments (valued in
each case at the lower of cost or market) would not exceed 5%
of the value of the net assets of the Fund or the Portfolio,
as the case may be, of which not more than 2% of the net
assets of the Fund or the Portfolio, as the case may be, may
be invested in warrants not listed on a recognized domestic
stock exchange. Warrants acquired by the Fund or the Portfolio
as part of a unit or attached to securities at the time of
acquisition are not subject to this limitation.

15. As to the Tax Free Money Fund and the NY Tax Free Money Fund
(or Tax Free Money Portfolio and NY Tax Free Money Portfolio),
neither the Fund (nor the Portfolio as the case may be) will
invest less than 80% of its net assets in Municipal
Obligations under normal market conditions; provided, however,
that nothing in this restriction shall prevent the Trust from
investing all or part of a Fund's assets in an open-end
management investment company with the same investment
objectives as such Fund.

16. Except for NY Tax Free Money Fund, with respect to 75% of the
Fund's (Portfolio's) total assets, invest more than 5% of its
total assets in the securities of any one issuer (excluding
cash and cash-equivalents, U.S. government securities and the
securities of other investment companies) or own more than 10%
of the voting securities of any issuer.

Additional Restrictions. In order to comply with certain statutes and policies
each Portfolio (or Trust, on behalf of the Fund) will not as a matter of
operating policy (except that no operating policy shall prevent a Fund from
investing all of its assets in an open-end investment company with
substantially the same investment objectives):

(i) borrow money (including through dollar roll transactions) for
any purpose in excess of 10% of the Portfolio's (Fund's) total
assets (taken at cost), except that the Portfolio (Fund) may
borrow for temporary or emergency purposes up to 1/3 of its
total assets;

(ii) pledge, mortgage or hypothecate for any purpose in excess of
10% of the Portfolio's (Fund's) total assets (taken at market
value), provided that collateral arrangements with respect to
options and futures, including deposits of initial deposit and
variation margin, are not considered a pledge of assets for
purposes of this restriction;

(iii) purchase any security or evidence of interest therein on
margin, except that such short-term credit as may be necessary
for the clearance of purchases and sales of securities may be
obtained and except that deposits of initial deposit and
variation margin may be made in connection with the purchase,
ownership, holding or sale of futures;

(iv) sell any security which it does not own unless by virtue of
its ownership of other securities it has at the time of sale a
right to obtain securities, without payment of further
consideration, equivalent in kind and amount to the securities
sold and provided that if such right is conditional the sale
is made upon the same conditions;

10
<PAGE>

(v) invest for the purpose of exercising control or management;

(vi) purchase securities issued by any investment company except by
purchase in the open market where no commission or profit to a
sponsor or dealer results from such purchase other than the
customary broker's commission, or except when such purchase,
though not made in the open market, is part of a plan of
merger or consolidation; provided, however, that securities of
any investment company will not be purchased for the Portfolio
(Fund) if such purchase at the time thereof would cause (a)
more than 10% of the Portfolio's (Fund's) total assets (taken
at the greater of cost or market value) to be invested in the
securities of such issuers; (b) more than 5% of the
Portfolio's (Fund's) total assets (taken at the greater of
cost or market value) to be invested in any one investment
company; or (c) more than 3% of the outstanding voting
securities of any such issuer to be held for the Portfolio
(Fund); and, provided further, that the Portfolio shall not
invest in any other open-end investment company unless the
Portfolio (Fund) (1) waives the investment advisory fee with
respect to assets invested in other open-end investment
companies and (2) incurs no sales charge in connection with
the investment (as an operating policy, each Portfolio will
not invest in another open-end registered investment company);

(vii) make short sales of securities or maintain a short position,
unless at all times when a short position is open it owns an
equal amount of such securities or securities convertible into
or exchangeable, without payment of any further consideration,
for securities of the same issue and equal in amount to, the
securities sold short, and unless not more than 10% of the
Portfolio's (Fund's) net assets (taken at market value) is
represented by such securities, or securities convertible into
or exchangeable for such securities, at any one time (the
Portfolio (Fund) has no current intention to engage in short
selling);

There will be no violation of any investment restrictions or policies (except
with respect to fundamental investment restriction (1) above) if that
restriction is complied with at the time the relevant action is taken,
notwithstanding a later change in the market value of an investment, in net or
total assets, or in the change of securities rating of the investment, or any
other later change.

Each Fund will comply with the state securities laws and regulations of all
states in which it is registered. Each Portfolio will comply with the permitted
investments and investment limitations in the securities laws and regulations of
all states in which the corresponding Fund, or any other registered investment
company investing in the Portfolio, is registered.

For purposes of diversification under the 1940 Act, identification of the
"issuer" of a Municipal Obligation depends on the terms and conditions of the
obligation. If the assets and revenues of an agency, authority, instrumentality
or other political subdivision are separate from those of the government
creating the subdivision, and the obligation is backed only by the assets and
revenues of the subdivision, the subdivision will be regarded as the sole
issuer. Similarly, if a private activity bond is backed only by the assets and
revenues of the nongovernmental user, the nongovernmental user will be deemed to
be the sole issuer. If in either case the creating government or another entity
guarantees an obligation or issues a letter of credit to secure the obligation,
the guarantee or letter of credit will be considered a separate security issued
by the government or entity and would be separately valued.

Portfolio Turnover

Each of the Portfolios may attempt to increase yields by trading to take
advantage of short-term market variations, which results in higher portfolio
turnover. This policy does not result in higher brokerage commissions to the
Portfolios, however, as the purchases and sales of portfolio securities are
usually effected as principal transactions. The Portfolios' turnover rates are
not expected to have a material effect on their income and have been and are
expected to be zero for regulatory reporting purposes.

Portfolio Transactions

Decisions to buy and sell securities and other financial instruments for a
Portfolio are made by Bankers Trust, which also is responsible for placing these
transactions, subject to the overall review of the Board of Trustees. Although
investment requirements for each Portfolio are reviewed independently from those
of the other accounts managed by Bankers Trust and those of the other
Portfolios, investments of the type the Portfolios may make may also be made by
these other accounts or Portfolios. When a Portfolio and one or more other
Portfolios or accounts managed by Bankers Trust are prepared to invest in, or
desire to dispose of, the same security or other financial instrument, available
investments or opportunities for sales will be allocated in a manner believed by
Bankers Trust to be equitable to each. In some cases, this

11
<PAGE>

procedure may affect adversely the price paid or received by a Portfolio or the
size of the position obtained or disposed of by a Portfolio.

Purchases and sales of securities on behalf of the Portfolios usually are
principal transactions. These securities are normally purchased directly from
the issuer or from an underwriter or market maker for the securities. The cost
of securities purchased from underwriters includes an underwriting commission or
concession and the prices at which securities are purchased from and sold to
dealers include a dealer's mark-up or mark-down. U.S. Government Obligations are
generally purchased from underwriters or dealers, although certain newly issued
U.S. Government Obligations may be purchased directly from the U.S. Treasury or
from the issuing agency or instrumentality.

Over-the-counter purchases and sales are transacted directly with principal
market makers except in those cases in which better prices and executions may be
obtained elsewhere and principal transactions are not entered into with persons
affiliated with the Portfolios except pursuant to exemptive rules or orders
adopted by the Securities and Exchange Commission. Under rules adopted by the
SEC, broker-dealers may not execute transactions on the floor of any national
securities exchange for the accounts of affiliated persons, but may effect
transactions by transmitting orders for execution.

In selecting brokers or dealers to execute portfolio transactions on behalf of a
Portfolio, Bankers Trust seeks the best overall terms available. In assessing
the best overall terms available for any transaction, Bankers Trust will
consider the factors it deems relevant, including the breadth of the market in
the investment, the price of the investment, the financial condition and
execution capability of the broker or dealer and the reasonableness of the
commission, if any, for the specific transaction and on a continuing basis. In
addition, Bankers Trust is authorized, in selecting parties to execute a
particular transaction and in evaluating the best overall terms available, to
consider the brokerage, but not research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934, as amended) provided to
the Portfolio involved, the other Portfolios and/or other accounts over which
Bankers Trust or its affiliates exercise investment discretion. Bankers Trust's
fees under its agreements with the Portfolios are not reduced by reason of its
receiving brokerage services.

NET ASSET VALUE

The net asset value ("NAV") per share of each Fund is calculated on each day
on which the Fund is open (each such day being a "Valuation Day"). The Funds are
currently open on each day, Monday through Friday, except (a) January 1st,
Martin Luther King, Jr.'s Birthday (the third Monday in January), Presidents'
Day (the third Monday in February), Good Friday, Memorial Day (the last Monday
in May), July 4th, Labor Day (the first Monday in September), Columbus Day (the
second Monday in October), Veteran's Day (November 11th), Thanksgiving Day (the
last Thursday in November) and December 25th; and (b) the preceding Friday or
the subsequent Monday when one of the calendar-determined holidays falls on a
Saturday or Sunday, respectively.

The NAV per share of each Fund (except the Institutional Cash Management Fund
and Institutional Treasury Money Fund) is calculated twice on each Valuation Day
as of 12:00 noon, Eastern time, and as of the close of regular trading on the
NYSE, which is currently 4:00 p.m., Eastern time or in the event that the NYSE
closes early, at the time of such early closing. The NAV of the Institutional
Cash Management Fund and Institutional Treasury Money Fund is calculated on each
Valuation Day as of the close of regular trading on the NYSE, which is currently
4:00 p.m., Eastern time or in the event that the NYSE closes early, at the time
of such early closing (each time at which the NAV of a Fund is calculated is
referred to herein as the "Valuation Time"). The NAV per share of each Fund is
computed by dividing the value of the Fund's assets (i.e., the value of its
investment in the corresponding Portfolio and other assets), less all
liabilities, by the total number of its shares outstanding. Each Fund's NAV per
share will normally be $1.00.

The valuation of each Portfolio's securities is based on their amortized cost,
which does not take into account unrealized capital gains or losses. Amortized
cost valuation involves initially valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium, generally without regard to the impact of fluctuating interest rates on
the market value of the instrument. Although this method provides certainty in
valuation, it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price a Portfolio would receive if
it sold the instrument.

The Portfolios' use of the amortized cost method of valuing their securities is
permitted by a rule adopted by the SEC. Each Portfolio will also maintain a
dollar-weighted average portfolio maturity of 90 days or less, purchase only

12
<PAGE>

instruments having remaining maturities of two years or less and invest only in
securities determined by or under the supervision of the Board of Trustees to be
of high quality with minimal credit risks.

Pursuant to the rule, the Board of Trustees of each Portfolio also has
established procedures designed to allow investors in the Portfolio, such as the
Trust, to stabilize, to the extent reasonably possible, the investors' price per
share as computed for the purpose of sales and redemptions at $1.00. These
procedures include review of each Portfolio's holdings by the Portfolio's Board
of Trustees, at such intervals as it deems appropriate, to determine whether the
value of the Portfolio's assets calculated by using available market quotations
or market equivalents deviates from such valuation based on amortized cost.

The rule also provides that the extent of any deviation between the value of
each Portfolio's assets based on available market quotations or market
equivalents and such valuation based on amortized cost must be examined by the
Portfolio's Board of Trustees. In the event the Portfolio's Board of Trustees
determines that a deviation exists that may result in material dilution or other
unfair results to investors or existing shareholders, pursuant to the rule, the
respective Portfolio's Board of Trustees must cause the Portfolio to take such
corrective action as such Board of Trustees regards as necessary and
appropriate, including: selling portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio maturity;
withholding dividends or paying distributions from capital or capital gains;
redeeming shares in kind; or valuing the Portfolio's assets by using available
market quotations.

Each investor in a Portfolio, including the corresponding Fund, may add to or
reduce its investment in the Portfolio on each day the Portfolio determines its
net asset value. At the close of each such business day, the value of each
investor's beneficial interest in the Portfolio will be determined by
multiplying the net asset value of the Portfolio by the percentage, effective
for that day, which represents that investor's share of the aggregate beneficial
interests in the Portfolio. Any additions or withdrawals, which are to be
effected as of the close of business on that day, will then be effected. The
investor's percentage of the aggregate beneficial interests in the Portfolio
will then be recomputed as the percentage equal to the fraction (i) the
numerator of which is the value of such investor's investment in the Portfolio
as of the close of business on such day plus or minus, as the case may be, the
amount of net additions to or withdrawals from the investor's investment in the
Portfolio effected as of the close of business on such day, and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of the
close of business on such day plus or minus, as the case may be, the amount of
net additions to or withdrawals from the aggregate investments in the Portfolio
by all investors in the Portfolio. The percentage so determined will then be
applied to determine the value of the investor's interest in the Portfolio as of
the close of the following business day.

PURCHASE AND REDEMPTION INFORMATION

Purchase of Shares

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

Purchase orders for shares (including those purchased through a Service Agent)
that are transmitted to the Trust's Transfer Agent (the "Transfer Agent"), prior
to the Valuation Time on any Valuation Day will be effective at that day's
Valuation Time. If the purchase order is received by the Service Agent and
transmitted to the Transfer Agent after 12:00 noon (Eastern time) and prior to
the close of the NYSE, the shareholder will receive the dividend declared on the
following day even if Bankers Trust, as the BT Investment Funds' custodian (the
"Custodian"), receives federal funds on that day. If the purchase order is
received prior to 12:00 noon, the shareholder will receive that Valuation Day's
dividend. BT Investment Funds and Transfer Agent reserve the right to reject any
purchase order. If the market for the primary investments in a Fund closes
early, the Fund will cease taking purchase orders at that time.

Another mutual fund investing in the corresponding Portfolio may accept purchase
orders up until a time later than 12:00 noon, Eastern time. Such orders, when
transmitted to and executed by the Portfolio, may have an impact on the Fund's
performance.

13
<PAGE>

Minimum Investments (BT Investment Funds)

To Open an Account $2,500
For retirement accounts 500
Through automatic investment plans 1,000

To Add to an Account $ 250
For retirement accounts 100
Through automatic investment plan 100

Minimum Balance $1,000
For retirement accounts None

BT Institutional Funds accepts purchase orders for shares of each Fund at the
NAV per share next determined on each Valuation Day. There is no sales charge on
the purchase of shares, but costs of distributing shares of each Fund may be
reimbursed from its assets, as described herein. The minimum initial and
subsequent investment amounts are set forth below. The minimum initial
investment in each Fund may be allocated in amounts not less than $100,000 per
fund in certain funds in the BT Family of Funds. Service Agents may impose
initial and subsequent investment minimums that differ from these amounts.
Shares of the Fund may be purchased in only those states where they may be
lawfully sold.

Purchase orders for shares of each Fund will receive, on any Valuation Day, the
NAV next determined following receipt by the Service Agent and transmission to
Bankers Trust, as BT Institutional Funds' Transfer Agent (the "Transfer Agent")
of such order. If the purchase order for shares of the Institutional Treasury
Money Fund is received by the Service Agent and transmitted to the Transfer
Agent prior to 2:00 p.m. (Eastern time), and if payment in the form of federal
funds is received on that day by Bankers Trust, as BT Institutional Funds's
custodian (the "Custodian"), the shareholder will receive the dividend declared
on that day. If the purchase order is received by the Service Agent and
transmitted to the Transfer Agent after 2:00 p.m. (Eastern time), the
shareholder will receive the dividend declared on the following day even if the
Custodian receives federal funds on that day. If the purchase order for shares
of the Institutional Cash Management Fund is received by the Service Agent and
transmitted to the Transfer Agent prior to 4:00 p.m. (Eastern time), and if
payment in the form of federal funds is received on that day by the Custodian,
the shareholder will receive the dividend declared on that day. BT Institutional
Funds and the Transfer Agent reserve the right to reject any purchase order. If
the market for the primary investments in a Fund closes early, the Fund will
cease taking purchase orders at that time.

AUTOMATIC INVESTMENT PLAN. The Fund may offer shareholders an automatic
investment plan, under which shareholders may authorize some Service Agents to
place a purchase order each month or quarter for Fund shares.

Minimum Investments (BT Institutional Funds)

To Open an Account $1 million

To Add to an Account $100,000

Minimum Balance $ 1,000

Shares must be purchased in accordance with procedures established by the
Transfer Agent and each Service Agent. It is the responsibility of each Service
Agent to transmit to the Transfer Agent purchase and redemption orders and to
transmit to the Custodian purchase payments by the following business day (trade
date + 1) after an order for shares is placed. A shareholder must settle with
the Service Agent for his or her entitlement to an effective purchase or
redemption order as of a particular time. Because Bankers Trust is the Custodian
and Transfer Agent of the Trust, funds may be transferred directly from or to a
customer's account held with Bankers Trust to settle

14
<PAGE>

transactions with the Fund without incurring the additional costs or delays
associated with the wiring of federal funds.

If orders are placed through an Investment Professional, it is the
responsibility of the Investment Professional to transmit the order to buy
shares to the Transfer Agent before the applicable Valuation time.

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

If you are new to BT Investment Funds, complete and sign an account application
and mail it along with your check to the address listed below. For an account
application, call the BT Service Center at 1-800-730-1313.

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

Overnight mailings:

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

If you have money invested in a fund in the BT Family of Funds, you can:

o Mail an account application with a check,
o Wire money into your account,
o Open an account by exchanging from another fund in the BT Family of Funds, or
o Contact your Service Agent or Investment Professional.
If you are investing through a tax-sheltered retirement plan, such as an IRA,
for the first time, you will need a special application. Contact your Investment
Professional for more information and a retirement account application.

Additional Information About Buying Shares
<TABLE>
<CAPTION>
<S> <C>
To Open an Account To Add to an Account
------------------ --------------------
By Wire Call the BT Service Center at 1-800-730-1313 to Call your Investment Professional or wire additional
receive wire instructions for account investment to:
establishment.
Routing No.: 021001033
Attn: Bankers Trust/IFTC Deposit
DDA No.: 00-226-296
FBO: (Account name)
(Account Number)
Credit: BT Investment Cash Management
Fund - 472
BT Investment NY Tax Free
Money Fund - 470
BT Investment Tax Free Money
Fund - 469

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

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

15
<PAGE>
To Open an Account To Add to an Account
------------------ --------------------

By Mail Complete and sign the account application. Make your check payable to the complete name
Make your check payable to the complete name of the Fund of your choice. Indicate your Fund
of the Fund of your choice. Mail to the account number on your check and mail to the
appropriate address indicated on the application. address printed on your account statement.

</TABLE>
Redemption of Shares

BT Investment Funds. You can arrange to take money out of your fund account at
any time by selling (redeeming) some or all of your shares. Your shares shall be
sold at the next NAV calculated after an order is received by the Transfer
Agent. Redemption requests should be transmitted by customers in accordance with
procedures established by the Transfer Agent and the shareholder's Service
Agent. Redemption requests for shares of the Fund received by the Service Agent
and transmitted to the Transfer Agent prior to the 12:00 noon (Eastern time) on
a Valuation Day will not receive the dividend declared on the day of redemption;
the redemption proceeds normally will be will be delivered to the shareholder's
account with the Service Agent on that day. Redemption requests received by the
Service Agent and transmitted to the Transfer Agent after 12:00 noon (Eastern
time) on a Valuation Day and prior to the close of the NYSE will receive the
dividend declared on the day of the redemption; the redemption proceeds normally
will be delivered to the shareholder's account with the Service Agent the next
day; but in any event within seven calendar days following receipt of the
request.

BT Institutional Funds. Shareholders may redeem shares at the NAV per share next
determined on each Valuation Day. Redemption requests should be transmitted by
customers in accordance with procedures established by the Transfer Agent and
the shareholder's Service Agent. Redemption requests for shares of the
Institutional Treasury Money Fund received by the Service Agent and transmitted
to the Transfer Agent prior to 2:00 p.m. (Eastern time) on each Valuation Day
will be redeemed at the NAV per share next determined and the redemption
proceeds normally will be delivered to the shareholder's account with the
Service Agent on that day; no dividend will be paid on the day of redemption.
Redemption requests received by the Service Agent and transmitted to the
Transfer Agent after 2:00 p.m. (Eastern time) on each Valuation Day will be
redeemed at the NAV per share next determined and the redemption proceeds
normally will be delivered to the shareholder's account with the Service Agent
the following day; shares redeemed in this manner will receive the dividend
declared on the day of the redemption. Redemption requests for shares of the
Institutional Cash Management Money Fund received by the Service Agent and
transmitted to the Transfer Agent prior to the close of the NYSE (currently 4:00
p.m., Eastern time or earlier should the NYSE close earlier) on each Valuation
Day will be redeemed at the NAV per share next determined for the Fund and the
redemption proceeds normally will be delivered to the shareholder's account with
the Service Agent on that day; no dividend will be paid on the day of
redemption. Redemption requests received by the Service Agent and transmitted to
the Transfer Agent after 4:00 p.m. (Eastern time) or after the close of the NYSE
on each Valuation Day will be redeemed at the NAV per share next determined and
the redemption proceeds normally will be delivered to the shareholder's account
with the Service Agent the following day. Payments for redemptions will in any
event be made within seven calendar days following receipt of the request.

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

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

16
<PAGE>

CHECKWRITING. Shareholders of the Fund may redeem shares by check. Checks may
not be used to close an account. Shareholders will continue to earn dividends on
shares to be redeemed until the check clears. Checks will be returned to
shareholders at the end of the month. There is no charge for redemption of
shares by check. Additional information regarding the checkwriting privilege may
be obtained from a Service Agent.

To sell shares in a retirement account, your request must be made in writing,
except for exchanges to other eligible funds in the BT Family of Funds, which
can be requested by phone or in writing. For information on retirement
distributions, contact your Service Agent or call the BT Service Center at
1-800-730-1313.

If you are selling some but not all of your non-retirement account shares, leave
at least $1,000 worth of shares in the account to keep it open.

To sell shares by bank wire you will need to sign up for these services in
advance when completing your account application.

Certain requests must include a signature guarantee to protect you and Bankers
Trust from fraud. Redemption requests in writing must include a signature
guarantee if any of the following situations apply:

o Your account registration has changed within the last 30 days,

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

o The check is being made payable to someone other than the account
owner,

o The redemption proceeds are being transferred to a BT account with a
different registration, or

o You wish to have redemption proceeds wired to a non-predesignated bank
account.

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

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

Additional Information About Selling Shares

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

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

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

Overnight mailings:

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

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

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

Unless otherwise instructed, the Transfer Agent will send a check to the account
address of record. The Trust reserves the right to close investor accounts via
30 day notice in writing if the Fund account balance falls below the Fund
minimums.

17
<PAGE>

Investor Services

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

Information Services

Statements and reports that your Investment Professional or the Transfer Agent
may send to you include the following:

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

o Account statements (monthly)

o Financial reports (every six months)

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

Exchange Privilege

Shareholders may exchange their shares for shares of certain other funds in the
BT Family of Funds registered in their state. To make an exchange, follow the
procedures indicated in "Purchase of Shares" and "Redemption of Shares" herein.
Before making an exchange, please note the following:

o Call your Service Agent for information and a prospectus. Read the
prospectus for relevant information.

o Complete and sign an application, taking care to register your new
account in the same name, address and taxpayer identification number as
your existing account(s).

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

o Exchanges out of the Fund may be limited to four per calendar year and
any exchange may have tax consequences for you.

o The Fund reserves the right to terminate or modify the exchange
privilege in the future.

Systematic Programs

To move money from your bank account to BT Investment Funds
<TABLE>
<CAPTION>
<S> <C>
Minimum Minimum
Initial Subsequent Frequency Setting up or changing
------- ---------- --------- ----------------------

$1,000 $100 Monthly, bimonthly, For a new account, complete the appropriate section
quarterly or semi-annually on the application.

For existing accounts, call your Investment Professional for
an application. To change the amount or frequency of your
investment, contact your Investment Professional directly or
call 1-800-730-1313. Call at least 10 business days prior to
your next scheduled investment date.
</TABLE>
18
<PAGE>

Systematic Withdrawal Program lets you set up periodic redemptions from your
account.
<TABLE>
<CAPTION>
<S> <C>
Minimum Frequency Setting up or changing
------- --------- ----------------------

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

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

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

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

The Trust may suspend the right of redemption or postpone the date of payment
for shares during any period when: (a) trading on the NYSE is restricted by
applicable rules and regulations of the SEC; (b) the NYSE is closed for other
than customary weekend and holiday closings; (c) the SEC has by order permitted
such suspension; or (d) an emergency exists as determined by the SEC.

MANAGEMENT OF THE TRUST AND PORTFOLIOS

The Trusts and the Portfolios are governed by their respective Boards of
Trustees which are responsible for protecting the interests of investors. By
virtue of the responsibilities assumed by Bankers Trust, the administrator of
the Trusts and the Portfolios, neither the Trusts nor the Portfolios require
employees other than their executive officers. None of the executive officers of
the Trusts or the Portfolios devotes full time to the affairs of the Trusts or
the Portfolios.

A majority of the Trustees who are not "interested persons" (as defined in the
1940 Act) of each Trust or Portfolio, as the case may be, have adopted written
procedures reasonably appropriate to deal with potential conflicts of interest
arising from the fact that some of the same individuals are Trustees of such
Trust and Portfolio, up to and including creating separate boards of trustees.

Each Board of Trustees is composed of persons experienced in financial matters
who meet throughout the year to oversee the activities of the Funds or
Portfolios they represent. In addition, the Trustees review contractual
arrangements with companies that provide services to the Funds/Portfolios and
review the Funds' performance.

The Trustees and officers of the Trusts and the Portfolios, their birthdates,
and their principal occupations during the past five years are set forth below.
Their titles may have varied during that period. Unless otherwise indicated, the
address of each officer is 5800 Corporate Drive, Pittsburgh, Pennsylvania
15237-5829.

Trustees of BT Investment Funds

S. LELAND DILL (birthdate: March 28, 1930) -- Trustee; Retired; Director, Coutts
Group, Coutts (U.S.A.) International; Coutts Trust Holdings Ltd; Director, Zweig
Series Trust; formerly Partner of KPMG Peat Marwick; Director, Vinters
International Company Inc.; General Partner of Pemco (an investment company
registered under the 1940 Act). His address is 5070 North Ocean Drive, Singer
Island, Florida 33404.

KELVIN J. LANCASTER (birthdate: December 10, 1924) -- Trustee; John Bates Clark
Professor of Economics, Columbia University; Distinguished Fellow, American
Economics Association; Fellow, American Academy of Arts and Sciences; Fellow,
Econometric Society; Former Chairman, Columbia University Department of
Economics;

19
<PAGE>

Former Director, National Bureau of Economic Research. His address is 35
Claremont Avenue, New York, New York 10027.

PHILIP SAUNDERS, JR. (birthdate: October 11, 1935) -- Trustee; Principal, Philip
Saunders Associates (Consulting); former Director of Financial Industry
Consulting, Wolf & Company; President, John Hancock Home Mortgage Corporation;
and Senior Vice President of Treasury and Financial Services, John Hancock
Mutual Life Insurance Company, Inc. His address is 445 Glen Road, Weston,
Massachusetts 02193.

Trustees of BT Institutional Funds

CHARLES P. BIGGAR (birthdate: October 13, 1930) -- Trustee; Retired; formerly
Vice President of International Business Machines ("IBM") and President of the
National Services and the Field Engineering Divisions of IBM. His address is 12
Hitching Post Lane, Chappaqua, New York 10514.

RICHARD J. HERRING (birthdate: February 18, 1946) -- Trustee; Vice Dean and
Director, Wharton Undergraduate Division, Professor, Finance Department, The
Wharton School, University of Pennsylvania. His address is The Wharton School,
University of Pennsylvania, Finance Department, 3303 Steinberg Hall/Dietrich
Hall, Philadelphia, Pennsylvania 19104.

BRUCE E. LANGTON (birthdate: May 10, 1931) -- Trustee; Retired; Director, Adela
Investment Co. and University Patents, Inc.; formerly Assistant Treasurer of IBM
Corporation (until 1986). His address is 99 Jordan Lane, Stamford, Connecticut
06903.

Trustees of the Portfolios

CHARLES P. BIGGAR -- Trustee.

S. LELAND DILL-- Trustee.

PHILIP SAUNDERS, JR.-- Trustee.

Officers of the Trusts and the Portfolios

Unless otherwise specified, each officer listed below holds the same position
with each Trust and each Portfolio.

JOHN Y. KEFFER (birthdate: July 14, 1942) -- President and Chief Executive
Officer; President, Forum Financial Group. His address is 2 Portland Square,
Portland, Maine 04101.

JOSEPH A. FINELLI (birthdate: January 24, 1957) -- Treasurer; Vice President,
BT Alex. Brown Incorporated and Vice President, Investment Company Capital
Corp. (registered investment adviser), September 1995 to present; formerly, Vice
President and Treasurer, The Delaware Group of Funds (registered investment
companies) and Vice President, Delaware Management Company Inc. (investments),
1980 to August 1995. His address is One South Street, Baltimore, Maryland 21202.

DANIEL O. HIRSCH (birthdate: March 27, 1954) -- Secretary; Principal, BT Alex.
Brown since July 1998; Assistant General Counsel in the Office of the General
Counsel at the United States Securities and Exchange Commission from 1993 to
1998. His address is 2901 Dorset Avenue, Chevy Chase, Maryland 20815.

Messrs. Keffer, Finelli and Hirsch also hold similar positions for other
investment companies for which ICC Distributors, or an affiliate serves as the
principal underwriter.

No person who is an officer or director of Bankers Trust is an officer or
Trustee of the Trust or the Portfolios. No director, officer or employee of
ICC Distributors or any of its affiliates will receive any compensation from the
Trust or any Portfolio for serving as an officer or Trustee of the Trust or the
Portfolios.

20
<PAGE>
Trustee Compensation Table

<TABLE>
<CAPTION>
<S> <C>
Aggregate Compensation Aggregate Compensation
from BT Investment from BT Institutional Aggregate Compensation
Name of Person, Funds*+ Funds**+ from Portfolios+
Position

S. Leland Dill, Trustee of BT Investment $ N/A $
Funds and the Portfolios

Kelvin Lancaster,Trustee of BT $ N/A N/A
Investment Funds

Philip Saunders, Jr., Trustee of BT $ N/A $
Investment Funds and the Portfolios
- ---------------- ---

Charles Biggar, Trustee of BT N/A $ $
Institutional Funds and the Portfolios

Richard J. Herring, Trustee of BT N/A $ N/A
Institutional Funds

Bruce E. Langton, Trustee of BT N/A $ N/A
Institutional Funds

Total Compensation from
Name of Person, Fund Complex
Position Paid to Trustees***

S. Leland Dill, Trustee of BT Investment $
Funds and the Portfolios

Kelvin Lancaster,Trustee of BT $
Investment Funds

Philip Saunders, Jr., Trustee of BT $
Investment Funds and the Portfolios

Charles Biggar, Trustee of BT $
Institutional Funds and the Portfolios

Richard J. Herring, Trustee of BT $
Institutional Funds

Bruce E. Langton, Trustee of BT $
Institutional Funds
</TABLE>

* The information provided is for the BT Investment Funds which is
comprised of 16 funds.

** The information provided is for the BT Institutional Funds which is
comprised of 10 funds.

+ Information provided is for the year ended December 31, 1998.

*** Aggregated information is furnished for the BT Family of Funds which
consists of the following: BT Investment Funds, BT Institutional Funds,
BT Pyramid Mutual Funds, BT Advisor Funds, BT Investment Portfolios,
Cash Management Portfolio, Treasury Money Portfolio, Tax Free Money
Portfolio, NY Tax Free Money Portfolio, International Equity
Portfolio, Intermediate Tax Free Portfolio, Asset Management
Portfolio, Equity 500 Index Portfolio, and Capital Appreciation
Portfolio. The compensation provided is for the calendar year ended
December 31, 1998.

Bankers Trust reimbursed the Funds and Portfolios for a portion of
their Trustees fees for the period above. See "Investment Adviser" and
"Administrator" below.
- ----------
[As of April 1, 1999, the Trustees and officers of the Trust and the
Portfolios owned in the aggregate less than 1% of the shares of any Fund or of
the Trust (all series taken together).]

As of April 1, 1999, the following shareholders of record owned 5% or more of
the outstanding shares of Cash Management Fund:[TO BE UPDATED]

As of April 1, 1999, the following shareholders of record owned 5% or more of
the outstanding shares of Tax Free Money Fund: [TO BE UPDATED]

As of April 1, 1999, the following shareholder of record owned 5% or more of
the outstanding shares of NY Tax Free Money Fund: [TO BE UPDATED]

As of April 1, 1998, the following shareholders of record owned 5% or more of
the outstanding shares of the Cash Management Fund: [TO BE UPDATED]

As of April 1, 1998, the following shareholder of record owned 5% or more of
the outstanding shares of Treasury Money Fund: [TO BE UPDATED]

Investment Adviser

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

21
<PAGE>

Bankers Trust Company, a New York banking corporation with principal offices at
130 Liberty Street, (One Bankers Trust Plaza), New York, New York 10006, is a
wholly owned subsidiary of Bankers Trust New York Corporation. Bankers Trust
conducts a variety of general banking and trust activities and is a major
wholesale supplier of financial services to the international and domestic
institutional market. [As of March 31, 1998, Bankers Trust New York Corporation
was the seventh largest bank holding company in the United States with total
assets of over $150 billion.] [The scope of Bankers Trust's investment
management capability is unique due to its leadership positions in both active
and passive quantitative management and its presence in major equity and fixed
income markets around the world. Bankers Trust is one of the nation's largest
and most experienced investment managers with over $300 billion in assets under
management globally.]

Under the terms of an investment advisory agreement between each Portfolio and
Bankers Trust (the "Advisory Agreements"), Bankers Trust manages each
Portfolio subject to the supervision and direction of the Board of Trustees.
Bankers Trust will: (i) act in strict conformity with each Portfolio's
Declaration of Trust, the 1940 Act and the Investment Advisors Act of 1940, as
the same may from time to time be amended; (ii) manage each Portfolio in
accordance with the Portfolio's investment objectives, restrictions and policies
as stated in the relevant Prospectus and herein; (iii) make investment decisions
for each Portfolio; and (iv) place purchase and sale orders for securities and
other financial instruments on behalf of each Portfolio.

Bankers Trust bears all expenses in connection with the performance of services
under the Advisory Agreements. The Trust and each Portfolio bears certain
other expenses incurred in its operation, including: taxes, interest, brokerage
fees and commissions, if any; fees of Trustees of the Trust or the Portfolio who
are not officers, directors or employees of Bankers Trust, ICC Distributors or
any of their affiliates; SEC fees and state Blue Sky qualification fees;
administrative and services fees; certain insurance premiums; outside auditing
and legal expenses; costs of maintenance of corporate existence; costs
attributable to investor services, including, without limitation, telephone and
personnel expenses; costs of preparing and printing Prospectus and statements of
additional information for regulatory purposes and for distribution to existing
shareholders; costs of shareholders' reports and meetings of shareholders,
officers and Trustees of the Trust or the Portfolio; and any extraordinary
expenses.

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

The Adviser 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 Company 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 retail and commercial banking, investment banking and
insurance. The transaction is contingent upon various regulatory approvals, as
well as the approval of the Funds' shareholders. If the transaction is approved
and completed, Deutsche Bank AG, as the Adviser's new parent company, will
control the operations of the Adviser. Bankers Trust believes that, under this
new arrangement, the services provided to the Funds will be maintained at their
current level.

The Investment Advisory Agreements provide for each Portfolio to pay Bankers
Trust a fee, accrued daily and paid monthly, equal on an annual basis to 0.15%
of the average daily net assets of each Portfolio for its then-current fiscal
year.

For the fiscal years ended December 31, 1998, 1997 and 1996, Bankers Trust
earned $_________, $6,544,181 and

22
<PAGE>

$4,935,288, respectively, as compensation for investment advisory services
provided to Cash Management Portfolio. During the same periods, Bankers Trust
reimbursed $___________, $940,530 and $761,230, respectively, to Cash Management
Portfolio to cover expenses.

* 4 moved from here; text not shownFor the fiscal years ended December 31, 1998,
1997 and 1996, Bankers Trust earned $_________ $205,614 and $187,326,
respectively, as compensation for investment advisory services provided to Tax
Free Money Portfolio. During the same periods, Bankers Trust reimbursed
$________, $37,359 and $43,832, respectively, to Tax Free Money Portfolio to
cover expenses.

For the fiscal years ended December 31, 1998, 1997 and 1996, Bankers Trust
earned $______, $141,157 and $129,423, respectively, as compensation for
investment advisory services provided to NY Tax Free Money Portfolio. During the
same periods, Bankers Trust reimbursed $______, $29,305 and $41,003,
respectively, to NY Tax Free Money Portfolio to cover expenses.

** 4 For the fiscal years ended December 31, 1998, 1997 and 1996, Bankers
Trust earned $_______, $3,067,422 and $2,787,544, respectively, in
compensation for investment advisory services provided to Treasury Money
Portfolio. During the same periods, Bankers Trust reimbursed $_______, $60,612
and $60,530, respectively, to Treasury Money Portfolio to cover expenses.

Bankers Trust may have deposit, loan and other commercial banking relationships
with the issuers of obligations which may be purchased on behalf of the
Portfolios, including outstanding loans to such issuers which could be repaid in
whole or in part with the proceeds of securities so purchased. Such affiliates
deal, trade and invest for their own accounts in such obligations and are among
the leading dealers of various types of such obligations. Bankers Trust has
informed the Portfolios that, in making its investment decisions, it does not
obtain or use material inside information in its possession or in the possession
of any of its affiliates. In making investment recommendations for the
Portfolios, Bankers Trust will not inquire or take into consideration whether an
issuer of securities proposed for purchase or sale by a Portfolio is a customer
of Bankers Trust, its parent or its subsidiaries or affiliates and, in dealing
with its customers, Bankers Trust, its parent, subsidiaries, and affiliates will
not inquire or take into consideration whether securities of such customers are
held by any fund managed by Bankers Trust or any such affiliate.

Administrator

Under its Administration and Services Agreements with the Trusts, the Adviser
calculates the net asset value of the Fund and generally assists the Board of
Trustees of the Trusts in all aspects of the administration and operation of the
Trusts. The Administration and Services Agreements provides for each Trust to
pay the Adviser a fee, computed daily and paid monthly, equal on an annual basis
to 0.55% of the average daily net assets of Investment Cash Management Fund,
Investment Tax Free Money Fund and Investment NY Tax Free Money Fund, and 0.05%
of the average daily net assets of Institutional Cash Management Fund and
Institutional Treasury Money Fund.

Under Administration and Services Agreements with each Portfolio, the Adviser
calculates the value of the assets of the Portfolio and generally assists the
Board of Trustees of the Portfolio in all aspects of the administration and
operation of the Portfolio. The Administration and Services Agreements provides
for each Portfolio to pay the Adviser a fee, computed daily and paid monthly,
equal on an annual basis to 0.05% of the Portfolio's average daily net assets.
Under the Administration and Services Agreements, the Adviser may delegate one
or more of its responsibilities to others, including affiliates of ICC
Distributors, at the Adviser's expense.

Under the Administration and Services Agreements, Bankers Trust is obligated on
a continuous basis to provide such administrative services as the respective
Board of Trustees of the Trust and each Portfolio reasonably deems necessary for
the proper administration of the Trust and each Portfolio. Bankers Trust will
generally assist in all aspects of the Funds' and Portfolios' operations; supply
and maintain office facilities (which may be in Bankers Trust's own offices),
statistical and research data, data processing services, clerical, accounting,
bookkeeping and recordkeeping services (including without limitation the
maintenance of such books and records as are required under the 1940 Act and the
rules thereunder, except as maintained by other agents of the Trust or the
Portfolios), internal auditing, executive and administrative services, and
stationery and office supplies; prepare reports to shareholders or investors;
prepare and file tax returns; supply financial information and supporting data
for reports to and filings with the SEC and various state Blue Sky authorities;
supply supporting documentation for meetings of the Board of Trustees; provide
monitoring reports and assistance regarding compliance with the Trust's and each
Portfolio's Declaration of Trust, by-laws, investment objectives

23
<PAGE>

and policies and with Federal and state securities laws; arrange for appropriate
insurance coverage; calculate the net asset value, net income and realized
capital gains or losses of the Trust; and negotiate arrangements with, and
supervise and coordinate the activities of, agents and others retained to supply
services.

Pursuant to a sub-administration agreement (the "Sub-Administration Agreement")
FSC performs such sub-administration duties for the Trust and each Portfolio as
from time to time may be agreed upon by Bankers Trust and FSC. The
Sub-Administration Agreement provides that FSC will receive such compensation as
from time to time may be agreed upon by FSC and Bankers Trust. All such
compensation will be paid by Bankers Trust.

Bankers Trust has agreed that if in any fiscal year the aggregate expenses of
any Fund and its respective Portfolio (including fees pursuant to the Advisory
Agreement, but excluding interest, taxes, brokerage and, if permitted by the
relevant state securities commissions, extraordinary expenses) exceed the
expense limitation of any state having jurisdiction over the Fund, Bankers Trust
will reimburse the Fund for the excess expense to the extent required by state
law. As of the date of this SAI, the most restrictive annual expense limitation
applicable to any Fund is 2.5% of the Fund's first $30 million of average annual
net assets, 2.0% of the next $70 million of average annual net assets and 1.5%
of the remaining average annual net assets.

For the fiscal years ended December 31, 1998, 1997 and 1996, Bankers Trust
earned compensation of $_____, $717,130 and $762,676, respectively, for
administrative and other services provided to the Cash Management Fund and
reimbursed $_______, $12,060 and $19,705, respectively, to the Cash
Management Fund to cover expenses.

* 5 moved from here; text not shown * 7 moved from here; text not shownFor the
fiscal years ended December 31, 1998, 1997 and 1996, Bankers Trust earned
$______, $752,445 and $685,637, respectively, for administrative and other
services provided to the Tax Free Money Fund and reimbursed $______, $37,359
and $46,825, respectively, to the Tax Free Money Fund to cover expenses.

* 6 moved from here; text not shownFor the fiscal years ended December 31, 1998,
1997 and 1996, Bankers Trust earned compensation of $______, $516,579 and
$473,735, respectively, for administrative and other services provided to the
NY Tax Free Money Fund and reimbursed $________, $29,632, and $34,578,
respectively, to the NY Tax Free Money Fund to cover expenses.

For the fiscal years ended December 31, 1998, 1997 and 1996, Bankers Trust
earned $______, $931,345, and $622,176, respectively, in compensation for
administrative and other services provided to Institutional Cash Management
Fund. During the same periods, Bankers Trust reimbursed $______, $108,093 and
$280,146, respectively, to the Institutional Cash Management Fund to cover
expenses.

For the fiscal years ended December 31, 1998, 1997 and 1996, Bankers Trust
earned $______, $819,884 and $640,788, respectively, in compensation for
administrative and other services provided to Institutional Treasury Money Fund.
During the same periods, Bankers Trust reimbursed $______, $356,801 and $48,531,
respectively, to Institutional Treasury Money Fund to cover expenses.

** 5 For the fiscal years ended December 31, 1998, 1997 and 1996, Bankers
Trust earned compensation of $______, $2,181,394 and $1,645,096,
respectively, for administrative and other services provided to the Cash
Management Portfolio.

For the fiscal years ended December 31, 1998, 1997 and 1996, Bankers Trust
earned $______, $68,538 and $62,442, respectively, for administrative and
other services provided to Tax Free Money Portfolio.

** 6 For the fiscal years ended December 31, 1998, 1997 and 1996, Bankers
Trust earned $______, $47,052 and $43,141, respectively, for administrative
and other services provided to the NY Tax Free Money Portfolio.

** 7 For the fiscal years ended December 31, 1998, 1997 and 1996, Bankers
Trust earned compensation of $______, $1,022,474 and $929,181, respectively,
for administrative and other services provided to the Treasury Money Portfolio.

Distributor

ICC Distributors is the principal distributor for shares of the Fund. ICC
Distributors is a registered broker/dealer and is unaffiliated with Bankers
Trust. The principal business address of ICC Distributors is Two Portland
Square, Portland, Maine 04101.

24
<PAGE>

Service Agent

All shareholders must be represented by a Service Agent. The Adviser acts as a
Service Agent pursuant to its Administration and Services Agreements with the
Trusts and receives no additional compensation from the Funds for such
shareholder services. The service fees of any other Service Agents, including
broker-dealers, will be paid by the Adviser from its fees. The services provided
by a Service Agent may include establishing and maintaining shareholder
accounts, processing purchase and redemption transactions, arranging for bank
wires, performing shareholder sub-accounting, answering client inquiries
regarding the Trusts, assisting clients in changing dividend options, account
designations and addresses, providing periodic statements showing the client's
account balance, transmitting proxy statements, periodic reports, updated
prospectuses and other communications to shareholders and, with respect to
meetings of shareholders, collecting, tabulating and forwarding to the Trusts
executed proxies and obtaining such other information and performing such other
services as the Administrator or the Service Agent's clients may reasonably
request and agree upon with the Service Agent. Service Agents may separately
charge their clients additional fees only to cover provision of additional or
more comprehensive services not already provided under the Administration and
Services Agreements with the Adviser, or of the type or scope not generally
offered by a mutual fund, such as cash management services or enhanced
retirement or trust reporting. In addition, investors may be charged a
transaction fee if they effect transactions in Fund shares through a broker or
agent. Each Service Agent has agreed to transmit to shareholders, who are its
customers, appropriate disclosures of any fees that it may charge them directly.

Custodian and Transfer Agent

Bankers Trust, 130 Liberty Street, (One Bankers Trust Plaza), New York, New York
10006, serves as custodian and transfer agent for the Trust and as custodian for
each Portfolio pursuant to the Administration and Services Agreements discussed
above. As custodian, Bankers Trust holds the Funds' and each Portfolio's assets.
For such services, Bankers Trust receives monthly fees from each Fund and
Portfolio, which are included in the administrative services fees discussed
above. As transfer agent for the Trust, Bankers Trust maintains the shareholder
account records for each Fund, handles certain communications between
shareholders and the Trust and causes to be distributed any dividends and
distributions payable by the Trust. Bankers Trust is also reimbursed by the
Funds for its out-of-pocket expenses. Bankers Trust will comply with the
self-custodian provisions of Rule 17f-2 under the 1940 Act.

Expenses

Each Fund bears its own expenses. Operating expenses for each Fund generally
consist of all costs not specifically borne by the Adviser or ICC Distributors,
including administration and services fees, fees for necessary professional
services, amortization of organizational expenses and costs associated with
regulatory compliance and maintaining legal existence and shareholder relations.
Each Portfolio bears its own expenses. Operating expenses for each Portfolio
generally consist of all costs not specifically borne by the Adviser or ICC
Distributors, including investment advisory and administration and service fees,
fees for necessary professional services, amortization of organizational
expenses, the costs associated with regulatory compliance and maintaining legal
existence and investor relations.

Use of Name

The Trust and Bankers Trust have agreed that the Trust may use "BT" as part of
its name for so long as Bankers Trust serves as investment adviser. The Trust
has acknowledged that the term "BT" is used by and is a property right of
certain subsidiaries of Bankers Trust and that those subsidiaries and/or Bankers
Trust may at any time permit others to use that term.

The Trust may be required, on 60 days' notice from Bankers Trust at any time, to
abandon use of the acronym "BT" as part of its name. If this were to occur, the
Trustees would select an appropriate new name for the Trust, but there would be
no other material effect on the Trust, its shareholders or activities.

25
<PAGE>
Banking Regulatory Matters

Bankers Trust has been advised by its counsel that in its opinion Bankers Trust
may perform the services for the Portfolios contemplated by the Advisory
Agreements and other activities for the Trust and the Portfolios described in
the Prospectus and this SAI without violation of the Glass-Steagall Act or other
applicable banking laws or regulations. However, counsel has pointed out that
future changes in either Federal or state statutes and regulations concerning
the permissible activities of banks or trust companies, as well as future
judicial or administrative decisions or interpretations of present and future
statutes and regulations, might prevent Bankers Trust from continuing to perform
those services for the Trust or the Portfolios. If the circumstances described
above should change, the Trust's Board of Trustees would review the Trust's
relationship with Bankers Trust and consider taking all actions necessary in the
circumstances.

Counsel and Independent Accountants

Willkie Farr & Gallagher, 787 Seventh Avenue, New York, New York 10019-6099,
serves as Counsel to the Trust and from time to time provides certain legal
services to Bankers Trust. PricewaterhouseCoopers LLP, 1100 Main Street, Suite
900, Kansas City, Missouri 64105 has been selected as Independent Accountants
for the Trust.

ORGANIZATION OF THE TRUST

BT Investment Funds was organized on July 21, 1986 and BT Institutional Funds
was organized on March 26, 1990 under the laws of the Commonwealth of
Massachusetts. Each Fund is a separate series of the respective Trust. Each
Trust offers shares of beneficial interest of separate series, par value $0.001
per share. The shares of the other series of the Trust are offered through
separate prospectuses and statements of additional information. The shares of
each series participate equally in the earnings, dividends and assets of the
particular series. The Trusts may create and issue additional series of shares.
Each Trust's Declaration of Trust permits the Trustees to divide or combine the
shares into a greater or lesser number of shares without thereby changing the
proportionate beneficial interest in a series. Each share represents an equal
proportionate interest in a series with each other share. Shares when issued are
fully paid and non-assessable, except as set forth below. Shareholders are
entitled to one vote for each share held. No series of shares has any preference
over any other series.

Each Trust is an entity commonly known as a "Massachusetts business trust."
Massachusetts law provides that shareholders could under certain circumstances
be held personally liable for the obligations of the Trusts. However, each
Declaration of Trust disclaims shareholder liability for acts or obligations of
the respective Trust and requires that notice of this disclaimer be given in
each agreement, obligation or instrument entered into or executed by a Trust
or a Trustee. Each Declaration of Trust provides for indemnification from
such Trust's property for all losses and expenses of any shareholder held
personally liable for the obligations of the Trust. Thus, the risk of
shareholders incurring financial loss on account of shareholder liability is
limited to circumstances in which both inadequate insurance existed and the
Trust itself was unable to meet its obligations, a possibility that each
Trust believes is remote. Upon payment of any liability incurred by a Trust,
the shareholder paying the liability will be entitled to reimbursement from the
general assets of the Trust. The Trustees intend to conduct the operations of
each Trust in a manner so as to avoid, as far as possible, ultimate liability of
the shareholders for liabilities of the Trust.

The Trusts are not required to hold annual meetings of shareholders but will
hold special meetings of shareholders when in the judgment of the Trustees it is
necessary or desirable to submit matters for a shareholder vote. Shareholders
have under certain circumstances the right to communicate with other
shareholders in connection with requesting a meeting of shareholders for the
purpose of removing one or more Trustees without a meeting. When matters are
submitted for shareholder vote, shareholders of a Fund will have one vote for
each full share held and proportionate, fractional votes for fractional shares
held. A separate vote of the Fund is required on any matter affecting the Fund
on which shareholders are entitled to vote. Shareholders generally vote by Fund,
except with respect to the election of Trustees and the ratification of the
selection of independent accountants. Shareholders of a Fund are not entitled to
vote on Trust matters that do not affect the Fund. There normally will be no
meetings of shareholders for the purpose of electing Trustees unless and until
such time as less than a majority of Trustees holding office have been elected
by shareholders, at which time the Trustees then in office will call a
shareholders' meeting for the election of Trustees. Any Trustee may be removed
from office upon the vote of shareholders holding at least two-thirds of such
Trust's outstanding shares at a meeting called for that purpose. The Trustees
are required to call such

26
<PAGE>

a meeting upon the written request of shareholders holding at least 10% of the
Trust's outstanding shares.

Shares of the Trusts do not have cumulative voting rights, which means that
holders of more than 50% of the shares voting for the election of Trustees can
elect all Trustees. Shares are transferable but have no preemptive, conversion
or subscription rights. Upon liquidation of a Fund, shareholders of that Fund
would be entitled to share pro rata in the net assets of the Fund available for
distribution to shareholders.

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

Whenever a Trust is requested to vote on a matter pertaining to a Portfolio,
the Trust will vote its shares without a meeting of shareholders of the
corresponding Fund if the proposal is one, if which made with respect to the
Fund, would not require the vote of shareholders of the Fund as long as such
action is permissible under applicable statutory and regulatory requirements.
For all other matters requiring a vote, a Trust will hold a meeting of
shareholders of the Fund and, at the meeting of investors in the Portfolio,
the Trust will cast all of its votes in the same proportion as the votes all its
shares at the Portfolio meeting, other investors with a greater pro rata
ownership of the Portfolio could have effective voting control of the operations
of the Portfolio.

The series of BT Investment Portfolios will vote separately or together in the
same manner as the series of the Trust. Under certain circumstances, the
investors in one or more series of BT Investment Portfolios could control the
outcome of these votes.

As of _______ __, 1998, the following shareholders of record owned 25% or more
of the voting securities of the Fund, and, therefore, may, for certain purposes,
be deemed to control the Investment Cash Management Fund and be able to affect
the outcome of certain matters presented for a vote of its shareholders: [TO BE
PROVIDED]

As of _______ __, 1998, the following shareholders of record owned 25% or more
of the voting securities of the Fund, and, therefore, may, for certain purposes,
be deemed to control the Investment Tax Free Money Fund and be able to affect
the outcome of certain matters presented for a vote of its shareholders: [TO BE
PROVIDED]

As of _______ __, 1998, the following shareholders of record owned 25% or more
of the voting securities of the Fund, and, therefore, may, for certain purposes,
be deemed to control the Investment NY Tax Free Money Fund and be able to affect
the outcome of certain matters presented for a vote of its shareholders: [TO BE
PROVIDED]

As of _______ __, 1998, the following shareholders of record owned 25% or more
of the voting securities of the Fund, and, therefore, may, for certain purposes,
be deemed to control the Institutional Cash Management Fund and be able to
affect the outcome of certain matters presented for a vote of its shareholders:
[TO BE PROVIDED]

As of _______ __, 1998, the following shareholders of record owned 25% or more
of the voting securities of the Fund, and, therefore, may, for certain purposes,
be deemed to control the Institutional Treasury Money Fund and be able to affect
the outcome of certain matters presented for a vote of its shareholders: [TO BE
PROVIDED]

BT Investment Funds was organized under the name BT Tax-Free Investment Trust
and assumed its current name on May 16, 1988.

DIVIDENDS AND TAXES

The following is only a summary of certain tax considerations generally
affecting the Funds and their shareholders, and is not intended as a substitute
for careful tax planning. Shareholders are urged to consult their tax advisers
with specific reference to their own tax situations.

27
<PAGE>

Dividends

Each Fund declares dividends from its net income daily and pays the dividends
monthly. Each Fund reserves the right to include realized short-term gains, if
any, in such daily dividends. Distributions of each Fund's pro rata share of the
corresponding Portfolio's net realized long-term capital gains, if any, and any
undistributed net realized short-term capital gains are normally declared and
paid annually at the end of the fiscal year in which they were earned to the
extent they are not offset by any capital loss carryforwards. Unless a
shareholder instructs a Trust to pay dividends or capital gains distributions in
cash, dividends and distributions will automatically be reinvested at NAV in
additional shares of the Fund that paid the dividend or distribution.

Taxation of the Funds and Their Investments

** 8 Each Fund intends to continue to qualify as a separate regulated investment
company under the Internal Revenue Code of 1986, as amended (the "Code").
Provided that each Fund is a regulated investment company, each Fund will not be
liable for Federal income taxes to the extent all of its taxable net investment
income and net realized long-and short-term capital gains, if any, are
distributed to its shareholders. Although the Trusts expect the Funds to be
relieved of all or substantially all Federal income taxes, depending upon the
extent of their activities in states and localities in which their offices are
maintained, in which their agents or independent contractors are located or in
which they are otherwise deemed to be conducting business, that portion of a
Fund's income which is treated as earned in any such state or locality could be
subject to state and local tax. Any such taxes paid by a Fund would reduce the
amount of income and gains available for distribution to its shareholders.

If for any taxable year a Fund does not qualify for the special federal income
tax treatment afforded regulated investment companies, all of its taxable income
will be subject to federal income tax at regular corporate rates (without any
deduction for distributions to its shareholders). In such event, dividend
distributions would be taxable to shareholders to the extent of current
accumulated earnings and profits, and would be eligible for the dividends
received deduction for corporations in the case of corporate shareholders.

The Portfolios are not subject to the Federal income taxation. Instead, the Fund
and other investors investing in a Portfolio must take into account, in
computing their Federal income tax liability, their share of the Portfolio's
income, gains, losses, deductions, credits and tax preference items, without
regard to whether they have received any cash distributions from the Portfolio.
Each Portfolio determines its net income and realized capital gains, if any, on
each Valuation Day and allocates all such income and gain pro rata among the
corresponding Fund and the other investors in that Portfolio at the time of such
determination.

Taxation of Shareholders

As described above: (i) the Cash Management Fund and the Treasury Money Fund
are designed to provide investors with current income; (ii) the Tax Free Money
Fund is designed to provide investors with current income excluded from gross
income for Federal income tax purposes and (iii) the NY Tax Free Money Fund is
designed to provide investors with current income excluded from gross income for
Federal income tax purposes and exempt from New York State and New York City
personal income taxes. The Funds are not intended to constitute balanced
investment programs and are not designed for investors seeking capital gains,
maximum income or maximum tax-exempt income irrespective of fluctuations in
principal. Investment in the Tax Free Money Fund or the NY Tax Free Money Fund
would not be suitable for tax-exempt institutions, qualified retirement plans,
H.R. 10 plans and individual retirement accounts since such investors would not
gain any additional tax benefit from the receipt of tax-exempt income.

* 8 moved from here; text not shown Distributions of net realized long-term
capital gains ("capital gain dividends"), if any, will be taxable to
shareholders as long-term capital gains, regardless of how long a shareholder
has held Fund shares, and will be designated as capital gain dividends in a
written notice mailed by the Fund to shareholders after the close of the Fund's
prior taxable year. Dividends paid by the Fund from its taxable net investment
income and distributions by the Fund of its net realized short-term capital
gains are taxable to shareholders as ordinary income, whether received in cash
or reinvested in additional shares of the Fund. Each Fund's dividends and
distributions will not qualify for the dividends-received deduction for
corporations.

Shareholders should consult their tax advisers to assess the consequences of
investing in a Fund under state

28
<PAGE>

and local laws and to determine whether dividends paid by a Fund that represent
interest derived from U.S. Government Obligations are exempt from any applicable
state or local income taxes.

* 9 moved from here; text not shownExempt-interest dividends may be excluded by
shareholders of a Fund from their gross income for federal income tax purposes.
Because the Tax Free Money Fund and the NY Tax Free Money Fund will distribute
exempt-interest dividends, all or a portion of any interest on indebtedness
incurred by a shareholder to purchase or carry shares of these Funds will not be
deductible for Federal income and New York State and New York City personal
income tax purposes. In addition, the Code may require a shareholder of these
Funds, if he receives exempt-interest dividends, to treat as taxable income a
portion of certain otherwise nontaxable social security and railroad retirement
benefit payments. Furthermore, that portion of any exempt-interest dividend paid
by one of these Funds which represents income from private activity bonds held
by the Fund may not retain its tax-exempt status in the hands of a shareholder
who is a "substantial user" of a facility financed by such bonds, or a "related
person" thereof. Moreover, as noted in the Prospectus for these Funds, some or
all of a Fund's dividends and distributions may be specific preference items, or
a component of an adjustment item, for purposes of the Federal individual and
corporate alternative minimum taxes. In addition, the receipt of Fund
dividends and distributions may affect a foreign corporate shareholder's Federal
"branch profits" tax liability and a Subchapter S corporate shareholder's
Federal "excess net passive income" tax liability. Shareholders should consult
their own tax advisers as to whether they are (i) "substantial users" with
respect to a facility or "related" to such users within the meaning of the Code
and (ii) subject to a Federal alternative minimum tax, the Federal "branch
profits" tax or the Federal "excess net passive income" tax.

** 9 If a shareholder fails to furnish a correct taxpayer identification number,
fails to report fully dividend or interest income or fails to certify that he or
she has provided a correct taxpayer identification number and that he or she is
not subject to "backup withholding," then the shareholder may be subject to a
31% backup withholding tax with respect to any taxable dividends and
distributions. An individual's taxpayer identification number is his or her
social security number. The 31% backup withholding tax is not an additional tax
and may be credited against a taxpayer's regular Federal income tax liability.

Shareholders should consult their tax advisers as to any state and local taxes
that may apply to these dividends and distributions.

Statements as to the tax status of each shareholder's dividends and
distributions, if any, are mailed annually. Each shareholder will also receive,
if appropriate, various written notices after the end of a Fund's prior taxable
year as to the federal income tax status of his or her dividends and
distributions which were received from that Fund during that year. Each Tax
Free Money Fund and NY Tax Free Money Fund shareholder will receive after the
close of the calendar year an annual statement as to the Federal income (and,
in the case of the NY Tax Free Money Fund, New York State and City) personal
income tax status of his dividends and distributions from the Fund for the
prior calendar year. These statements will also designate the amount of
exempt-interest dividends that is a specific preference item for purposes of the
Federal individual and corporate alternative minimum taxes. The dollar amount
of dividends excluded from Federal income taxation or exempt from New York State
and City personal income taxation, and the dollar amount subject to such income
taxation, if any, will vary for each shareholder depending upon the size and
duration of each shareholder's investment in a Fund. To the extent that the
Funds earn taxable net investment income, each of the Funds intends to designate
as taxable dividends the same percentage of each day's dividend as its taxable
net investment income bears to its total net investment income earned on that
day. Therefore, the percentage of each day's dividend designated as taxable, if
any, may vary from day to day.

PERFORMANCE INFORMATION

From time to time, the Trust may advertise "current yield," "effective yield"
and/or "tax equivalent yield" for a Fund. All yield figures are based on
historical earnings and are not intended to indicate future performance. The
"current yield" of a Fund refers to the income generated by an investment in the
Fund over a seven-day period (which period will be stated in the advertisement).
This income is then "annualized;" that is, the amount of income generated by the
investment during that week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the investment. The "effective yield" is
calculated similarly but, when annualized, the income earned by an investment in
a Fund is assumed to be reinvested. The "effective yield" will be slightly
higher than the "current yield" because of the compounding effect of this
assumed reinvestment. The "tax equivalent yield"

29
<PAGE>

demonstrates the yield on a taxable investment necessary to produce an after-tax
yield equal to a Fund's tax free yield. It is calculated by increasing the yield
shown for the Fund to the extent necessary to reflect the payment of specified
tax rates. The Trust may include this information in sales material and
advertisements for a Fund.

Yield is a function of the quality, composition and maturity of the securities
held by the corresponding Portfolio and operating expenses of a Fund and the
corresponding Portfolio. In particular, a Fund's yield will rise and fall with
short-term interest rates, which can change frequently and sharply. In periods
of rising interest rates, the yield of a Fund will tend to be somewhat lower
than the prevailing market rates, and in periods of declining interest rates,
the yield will tend to be somewhat higher. In addition, when interest rates are
rising, the inflow of net new money to a Fund from the continuous sale of its
shares will likely be invested by the corresponding Portfolio in instruments
producing higher yields than the balance of that Portfolio's securities, thereby
increasing the current yield of the Fund. In periods of falling interest rates,
the opposite can be expected to occur. Accordingly, yields will fluctuate and do
not necessarily indicate future results. While yield information may be useful
in reviewing the performance of a Fund, it may not provide a basis for
comparison with bank deposits, other fixed rate investments, or other investment
companies that may use a different method of calculating yield. Any fees charged
by Service Agents for processing purchase and/or redemption transactions will
effectively reduce the yield for those shareholders.

From time to time, advertisements or reports to shareholders may compare the
yield of a Fund to that of other mutual funds with similar investment objectives
or to that of a particular index. The yield of the Cash Management Fund might be
compared with, for example, the IBC First Tier All Taxable Money Fund Average,
that of the Treasury Money Fund might be compared with IBC U.S. Treasury and
Repo All Taxable Money Fund Average, and that of Tax Free Money Fund and the NY
Tax Free Money Fund might be compared with IBC State Specific All Tax Free Money
Fund Average and IBC Stockbroker and General Purpose All Tax Free Money Fund
Average, which are averages compiled by IBC Money Fund Report, a widely
recognized, independent publication that monitors the performance of money
market mutual funds. Similarly, the yield of a Fund might be compared with
rankings prepared by Micropal Limited and/or Lipper Analytical Services, Inc.,
which are widely recognized, independent services that monitor the investment
performance of mutual funds. The yield of a Fund might also be compared without
the average yield reported by the Bank Rate Monitor for money market deposit
accounts offered by the 50 leading banks and thrift institutions in the top five
standard metropolitan areas. Shareholders may make inquiries regarding the
Funds, including current yield quotations and performance information, by
contacting any Service Agent.

Shareholders will receive financial reports semi-annually that include listings
of investment securities held by a Fund's corresponding Portfolio at those
dates. Annual reports are audited by independent accountants.

From time to time a Fund may quote its performance in terms of "current yield,"
"effective yield" or "tax equivalent yield" in reports or other communications
to shareholders or in advertising material.

The effective yield is an annualized yield based on a compounding of the
unannualized base period return. These yields are each computed in accordance
with a standard method prescribed by the rules of the SEC, by first determining
the "net change in account value" for a hypothetical account having a share
balance of one share at the beginning of a seven-day period (the "beginning
account value"). The net change in account value equals the value of additional
shares purchased with dividends from the original share and dividends declared
on both the original share and any such additional shares. The unannualized
"base period return" equals the net change in account value divided by the
beginning account value. Realized gains or losses or changes in unrealized
appreciation or depreciation are not taken into account in determining the net
change in account value. The tax equivalent yields of the Tax Free Money Fund
and the NY Tax Free Money Fund are computed by dividing the portion of a Fund's
yield which is tax exempt by one minus a stated income tax rate and adding the
product to that portion, if any, of the Fund's yield that is not tax exempt.

The yields are then calculated as follows:

Base Period Return = Net Change in Account Value
Current Yield = Base Period Return x 365/7

Effective Yield = [(1 + Base Period Return)365/7] - 1

Tax Equivalent Yield = Current Yield
(1 - Tax Rate)

30
<PAGE>

The following table sets forth various measures of the performance for each of
the Funds for the seven days ended December 31, 1998.
<TABLE>
<CAPTION>
<S> <C>
Investment Cash Investment Tax Investment NY Tax Institutional Institutional
Management Fund Free Money Fund Free Money Fund Cash Management Treasury
Fund Money Fund
Current Yield
Effective Yield
Tax Equivalent Yield N/A N/A N/A

</TABLE>
- ---------------------------
* Assumes a maximum Federal rate of 31%.
** Assumes a maximum combined Federal, New York State and New York City
tax rate of 39%

FINANCIAL STATEMENTS

The financial statements for the Funds and the Portfolios for the fiscal year
ended December 31, 1998, are incorporated herein by reference to the Funds'
Annual Report dated December 31, 1998. A copy of the Funds' Annual Report may
be obtained without charge by contacting the respective Fund.

31
<PAGE>

APPENDIX:
DESCRIPTION OF RATINGS

DESCRIPTION OF S&P CORPORATE BOND RATINGS:

AAA - Bonds rated AAA have the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.

AA - Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small degree.

S&P's letter ratings may be modified by the addition of a plus or a
minus sign, which is used to show relative standing within the major categories,
except in the AAA rating category.

DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS:

Aaa - Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.

Moody's applies the numerical modifiers 1, 2 and 3 to each generic
rating classification from Aa through B. The modifier 1 indicates that the
security ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks
in the lower end of its generic rating category.

DESCRIPTION OF FITCH IBCA, INC. ("FITCH") CORPORATE BOND RATINGS:

AAA--Securities of this rating are regarded as strictly high-grade,
broadly marketable, suitable for investment by trustees and fiduciary
institutions, and liable to but slight market fluctuation other than through
changes in the money rate. The factor last named is of importance varying with
the length of maturity. Such securities are mainly senior issues of strong
companies, and are most numerous in the railway and public utility fields,
though some industrial obligations have this rating. The prime feature of an AAA
rating is showing of earnings several times or many times interest requirements
with such stability of applicable earnings that safety is beyond reasonable
question whatever changes occur in conditions. Other features may enter in, such
as a wide margin of protection through collateral security or direct lien on
specific property as in the case of high class equipment certificates or bonds
that are first mortgages on valuable real estate. Sinking funds or voluntary
reduction of the debt by call or purchase are often factors, while guarantee or
assumption by parties other than the original debtor may also influence the
rating.

AA--Securities in this group are of safety virtually beyond question,
and as a class are readily salable while many are highly active. Their merits
are not greatly unlike those of the AAA class, but a security so rated may be of
junior though strong lien f in many cases directly following an AAA security f
or the margin of safety is less strikingly broad. The issue may be the
obligation of a small company, strongly secured but influenced as to ratings by
the lesser financial power of the enterprise and more local type of market.

32
<PAGE>

DESCRIPTION OF DUFF & PHELPS' CORPORATE BOND RATINGS:

AAA--Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury Funds.

AA+, AA, AA--High credit quality. Protection factors are strong. Risk
is modest but may vary slightly from time to time because of economic
conditions.

DESCRIPTION OF S&P'S MUNICIPAL BOND RATINGS:

AAA--Prime--These are obligations of the highest quality. They have the
strongest capacity for timely payment of debt service.

General Obligation Bonds--In a period of economic stress, the issuers
will suffer the smallest declines in income and will be least susceptible to
autonomous decline. Debt burden is moderate. A strong revenue structure appears
more than adequate to meet future expenditure requirements. Quality of
management appears superior.

Revenue Bonds--Debt service coverage has been, and is expected to
remain, substantial; stability of the pledged revenues is also exceptionally
strong due to the competitive position of the municipal enterprise or to the
nature of the revenues. Basic security provisions (including rate covenant,
earnings test for issuance of additional bonds and debt service reserve
requirements) are rigorous. There is evidence of superior management.

AA--High Grade--The investment characteristics of bonds in this group
are only slightly less marked than those of the prime quality issues. Bonds
rated AA have the second strongest capacity for payment of debt service.

S&P's letter ratings may be modified by the addition of a plus or a
minus sign, which is used to show relative standing within the major rating
categories, except in the AAA rating category.

DESCRIPTION OF MOODY'S MUNICIPAL BOND RATINGS:

Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.

Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.

Moody's may apply the numerical modifier 1 in each generic rating
classification from Aa through B. The modifier 1 indicates that the security
within its generic rating classification possesses the strongest investment
attributes.

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<PAGE>

DESCRIPTION OF S&P MUNICIPAL NOTE RATINGS:

Municipal notes with maturities of three years or less are usually
given note ratings (designated SP-1 or SP-2) to distinguish more clearly the
credit quality of notes as compared to bonds. Notes rated SP-1 have a very
strong or strong capacity to pay principal and interest. Those issues determined
to possess overwhelming safety characteristics are given the designation of
SP-1+. Notes rated SP-2 have a satisfactory capacity to pay principal and
interest.

DESCRIPTION OF MOODY'S MUNICIPAL NOTE RATINGS:

Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG) and for variable rate demand
obligations are designated Variable Moody's Investment Grade (VMIG). This
distinction recognizes the differences between short-term credit risk and
long-term risk. Loans bearing the designation MIG-1/VMIG-1 are of the best
quality, enjoying strong protection from established cash flows of funds for
their servicing or from established and broad-based access to the market for
refinancing, or both. Loans bearing the designation MIG-1/VMIG-2 are of high
quality, with ample margins of protection, although not as large as the
preceding group.

DESCRIPTION OF S&P COMMERCIAL PAPER RATINGS:

Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics are denoted A-1+.

DESCRIPTION OF MOODY'S COMMERCIAL PAPER RATINGS:

The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Issuers rated Prime-1 (or related supporting institutions) are
considered to have a superior capacity for repayment of short-term promissory
obligations.

DESCRIPTION OF FITCH COMMERCIAL PAPER RATINGS:

F1+--Exceptionally Strong Credit Quality. Issues assigned this rating
are regarded as having the strongest degree of assurance for timely payment.

F1--Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than the strongest
issue.

DESCRIPTION OF DUFF & PHELPS' COMMERCIAL PAPER RATINGS:

Duff 1+--Highest certainty of timely payment. Short term liquidity,
including internal operating factors and/or access to alternative sources of
funds, is outstanding, and safety is just below risk free U.S. Treasury short
term obligations.

Duff 1--Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk factors are
minor.

DESCRIPTION OF THOMPSON BANK WATCH SHORT-TERM RATINGS:

T-1--The highest category; indicates a very high likelihood that
principal and interest will be paid on a timely basis.

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<PAGE>

T-2--The second-highest category; while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1".

T-3--The lowest investment-grade category; indicates that while the
obligation is more susceptible to adverse developments (both internal and
external) than those with higher ratings, the capacity to service principal and
interest in a timely fashion is considered adequate.

T-4--The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.

DESCRIPTION OF THOMPSON BANKWATCH LONG-TERM RATINGS:

AAA--The highest category; indicates that the ability to repay
principal and interest on a timely basis is extremely high.

AA--The second-highest category; indicates a very strong ability to
repay principal and interest on a timely basis, with limited incremental risk
compared to issues rated in the highest category.

A--The third-highest category; indicates the ability to repay principal
and interest is strong. Issues rated "a" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.

BBB--The lowest investment-grade category; indicates an acceptable
capacity to repay principal and interest. Issues rated "BBB" are, however, more
vulnerable to adverse developments (both internal and external) than obligations
with higher ratings.

NON-INVESTMENT GRADE

(ISSUES REGARDED AS HAVING SPECULATIVE CHARACTERISTICS IN THE LIKELIHOOD OF
TIMELY REPAYMENT OF PRINCIPAL AND INTEREST.)
BB--While not investment grade, the "BB" rating suggests that the
likelihood of default is considerably less than for lower-rated issues. However,
there are significant uncertainties that could affect the ability to adequately
service debt obligations.

B--Issues rated "B" show a higher degree of uncertainty and therefore
greater likelihood of default than higher-rated issues. Adverse development
could well negatively affect the payment of interest and principal on a timely
basis.

CCC--Issues rated "CCC" clearly have a high likelihood of default, with
little capacity to address further adverse changes in financial circumstances.

CC--"CC" is applied to issues that are subordinate to other obligations
rated "CCC" and are afforded less protection in the event of bankruptcy or
reorganization.

D--Default

These long-term debt ratings can also be applied to local currency
debt. In such cases the ratings defined above will be preceded by the
designation "local currency".

RATINGS IN THE LONG-TERM DEBT CATEGORIES MAY INCLUDE A PLUS (+) OR MINUS (-)
DESIGNATION, WHICH INDICATES WHERE WITHIN THE RESPECTIVE CATEGORY THE ISSUE IS
PLACED.

35
<PAGE>

Investment Adviser of the Portfolios and Administrator
BANKERS TRUST COMPANY
Distributor
ICC DISTRIBUTORS, INC.
Custodian and Transfer Agent
BANKERS TRUST COMPANY
Independent Accountants
PRICEWATERHOUSECOOPERS LLP
Counsel
WILLKIE FARR & GALLAGHER

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

No person has been authorized to give any information or to make any
representations other than those contained in the Trust's Prospectus, its
Statements of Additional Information or the Trust's official sales literature in
connection with the offering of the Trust's shares and, if given or made, such
other information or representations must not be relied on as having been
authorized by the Trust. Neither the Prospectus nor this SAI constitutes an
offer in any state in which, or to any person to whom, such offer may not
lawfully be made.

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

Cusip #055922108
Cusip #055922405
Cusip #055922306
Cusip #055922207
COMBMMKT400 (4/98)

<PAGE>

[REDHERRING APPEARS ON LEFT SIDE OF PAGE WITH THE FOLLOWING INFORMATION:]
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may any
offers to buy be accepted prior to the time the registration statement becomes
effective. This Statement of Additional Information does not constitute a
prospectus.

STATEMENT OF ADDITIONAL INFORMATION

April 30, 1999

BT Investment Funds

o Treasury Money Fund

BT Investment Funds (the "Trust") is an open-end management investment company
that offers investors a selection of investment portfolios, each having distinct
investment objectives and policies. This Statement of Additional Information
relates to the Treasury Money Fund (the "Fund"). The Fund is a separate series
of the Trust.

The Fund's investment objective is to seek a high level of current income
consistent with liquidity and the preservation of capital. The Trust seeks to
achieve the investment objective of the Fund by investing all the investable
assets of the Fund in the Treasury Money Portfolio (the "Portfolio"), a
diversified open-end management investment company having the same investment
objective as the Fund. The Portfolio is a series of BT Investment Portfolios.

Shares of the Fund are sold by ICC Distributors, Inc. ("ICC Distributors"),
the Trust's distributor (the "Distributor"), to clients and customers (including
affiliates and correspondents) of Bankers Trust Company ("Bankers Trust"), the
Portfolio's investment adviser ("Adviser"), and to clients and customers of
other organizations.

The Fund's Prospectus, dated April 30, 1999, provides the basic
information investors should know before investing. This Statement of Additional
Information ("SAI"), which is not a Prospectus, is intended to provide
additional information regarding the activities and operations of the Trust and
should be read in conjunction with the Fund's Prospectus. You may request a copy
of the Prospectus or a paper copy of this SAI, if you have received it
electronically, free of charge by calling the Trust at the telephone number
listed below or by contacting any Bankers Trust service agent ("Service
Agent"). This SAI is not an offer of any Fund for which an investor has not
received a Prospectus. Capitalized terms not otherwise defined in this SAI
have the meanings accorded to them in the Fund's Prospectus. The financial
statements for the Fund and the Portfolio for the fiscal year ended December 31,
1998, are incorporated herein by reference to the Annual Report to shareholders
for the Fund and Portfolio dated December 31, 1998. A copy of the Fund's and the
Portfolio's Annual Report may be obtained without charge by calling the Fund at
the telephone number listed below.

Investment Adviser of the Portfolio and Administrator
BANKERS TRUST COMPANY
Distributor
ICC DISTRIBUTORS, INC.

Two Portland Square Portland, Maine 04101 1-800-730-1313

<PAGE>

TABLE OF CONTENTS

INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS..............................1
Investment Objective...................................................1
Additional Risk Factors................................................2
Investment Restrictions................................................4
NET ASSET VALUE...............................................................8
PURCHASE AND REDEMPTION INFORMATION...........................................8
Purchase of Shares.....................................................9
Redemption of Shares..................................................11
MANAGEMENT OF THE TRUST AND PORTFOLIOS.......................................14
Trustees of the Trust.................................................14
Trustees of the Portfolio.............................................15
Officers of the Trust and the Portfolio...............................15
Investment Adviser....................................................16
Administrator.........................................................18
Distributor...........................................................19
Custodian and Transfer Agent..........................................20
Use of Name...........................................................20
Banking Regulatory Matters............................................20
Counsel and Independent Accountants...................................20
ORGANIZATION OF THE TRUST....................................................20
TAXES........................................................................22
PERFORMANCE INFORMATION......................................................23
FINANCIAL STATEMENTS.........................................................24
APPENDIX: DESCRIPTION OF RATINGS............................................25

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INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS

Investment Objective

The Fund seeks a high level of current income consistent with liquidity and the
preservation of capital through investment in a portfolio of direct obligations
of the U.S. Treasury and repurchase agreements collateralized by such
obligations. There can, of course, be no assurance that the Fund will achieve
its investment objective.

Investment Policies

Since the investment characteristics of the Fund will correspond directly to
those of the Portfolio, the following is a discussion of the various investments
of and techniques employed by the Portfolio.

U.S. Government Obligations. The Portfolio may invest in direct obligations
issued by the U.S. Treasury including Treasury bills, notes and bonds ("U.S.
Government Obligations"). Such U.S. Government Obligations are supported by the
"full faith and credit" of the U.S. government. While U.S. Government
Obligations are guaranteed by the U.S. government as to the timely payment of
principal and interest, the market value of such obligations is not guaranteed
and may rise and fall in response to changes in interest rates. The shares of
the Fund and the interests in the Portfolio are not guaranteed or insured by the
U.S. government.

Lending of Portfolio Securities. The Portfolio has the authority to lend
portfolio securities to brokers, dealers and other financial organizations. By
lending its securities, the Portfolio may increase its income by continuing to
receive payments in respect of dividends and interest on the loaned securities
as well as by either investing the cash collateral in short-term securities or
obtaining yield in the form of a fee paid by the borrower when irrevocable
letters of credit and U.S. Government Obligations are used as collateral. The
Portfolio will adhere to the following conditions whenever its securities are
loaned: (i) the Portfolio must receive at least 100% collateral from the
borrower; (ii) the borrower must increase this collateral whenever the market
value of the securities including accrued interest rises above the level of the
collateral; (iii) the Portfolio must be able to terminate the loan at any time;
(iv) the Portfolio must receive substitute payments in respect of all dividends,
interest or other distributions on the loaned securities; and (v) voting rights
on the loaned securities may pass to the borrower; provided, however, that if a
material event adversely affecting the investment occurs, the Board of Trustees
must retain the right to terminate the loan and recall and vote the securities.
Cash collateral may be invested in a money market fund managed by Bankers Trust
(or its affiliates) and Bankers Trust may serve as the Portfolio's lending agent
and may share in revenue received from securities lending transactions as
compensation for this service.

Repurchase Agreements. The Portfolio may engage in repurchase agreement
transactions with banks and governmental securities dealers approved by the
Portfolio's Board of Trustees. Under the terms of a typical repurchase
agreement, the Portfolio would acquire U.S. Government Obligations (or any other
securities permitted by Rule 2a-7) regardless of maturity any remaining maturity
for a relatively short period (usually not more than one week), subject to an
obligation of the seller to repurchase, and the Portfolio to resell, the
obligation at an agreed price and time, thereby determining the yield during the
Portfolio's holding period. This arrangement results in a fixed rate of return
that is not subject to market fluctuations during the Portfolio's holding
period. The value of the underlying securities will be at least equal at all
times to the total amount of the repurchase obligations, including interest. The
Portfolio bears a risk of loss in the event that the other party to a repurchase
agreement defaults on its obligations and the Portfolio is delayed in or
prevented from exercising its rights to dispose of the collateralized
securities, including the risk of a possible decline in the value of the
underlying securities during the period in which the Portfolio seeks to assert
these rights. Bankers Trust, acting under the supervision of the Board of
Trustees of the Portfolio, reviews the creditworthiness of those banks and
dealers with which the Portfolio enters into repurchase agreements and monitors
on an ongoing basis the value of the securities subject to repurchase agreements
to ensure that it is maintained at the required level.

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<PAGE>

Reverse Repurchase Agreements. The Portfolio may borrow funds for temporary or
emergency purposes, such as meeting larger than anticipated redemption requests,
and not for leverage, by among other things, agreeing to sell portfolio
securities to financial institutions such as banks and broker-dealers and to
repurchase them at a mutually agreed date and price (a "reverse repurchase
agreement"). At the time the Portfolio enters into a reverse repurchase
agreement it will place in a segregated custodial account cash, U.S. Government
Obligations or high-grade debt obligations having a value equal to the
repurchase price, including accrued interest. Reverse repurchase agreements
involve the risk that the market value of the securities sold by the Portfolio
may decline below the repurchase price of those securities. Reverse repurchase
agreements are considered to be borrowings by the Portfolio.

When-Issued and Delayed-Delivery Securities. To secure prices deemed
advantageous at a particular time, the Portfolio may purchase securities on a
when-issued or delayed-delivery basis, in which case delivery of the securities
occurs beyond the normal settlement period; payment for or delivery of the
securities would be made prior to the reciprocal delivery or payment by the
other party to the transaction. The Portfolio will enter into when-issued or
delayed-delivery transactions for the purpose of acquiring securities and not
for the purpose of leverage. When-issued securities purchased by the Portfolio
may include securities purchased on a "when, as, and if issued" basis under
which the issuance of the securities depends on the occurrence of a subsequent
event.

Securities purchased on a when-issued or delayed-delivery basis may expose the
Portfolio to risk because the securities may experience fluctuations in value
prior to their actual delivery. The Portfolio does not accrue income with
respect to a when-issued or delayed-delivery security prior to its stated
delivery date. Purchasing securities on a when-issued or delayed-delivery basis
can involve the additional risk that the yield available in the market when the
delivery takes place may be higher than that obtained in the transaction itself.
Upon purchasing a security on a when-issued or delayed-delivery basis, the
Portfolio will identify, as part of a segregated account, cash or liquid
securities in an amount at least equal to the when-issued or delayed-delivery
commitment.

Quality and Maturity of the Portfolio's Securities. The Portfolio will maintain
a dollar-weighted average maturity of 90 days or less. All securities in which
the Portfolio invests will have, or be deemed to have, remaining maturities of
397 days or less on the date of their purchase, will be denominated in U.S.
dollars and will have been granted the required ratings established herein by
two nationally recognized statistical rating organizations ("NRSROs") (or one
such NRSRO if that NRSRO is the only such NRSRO which rates the security), or if
unrated, are believed by Bankers Trust, under the supervision of the Portfolio's
Board of Trustees, to be of comparable quality. Currently, there are five rating
agencies which have been designated by the Securities and Exchange Commission
(the "SEC") as a NRSRO. These organizations and their highest short-term rating
category (which may also be modified by a "+") are: Duff and Phelps Credit
Rating Co., D-1; Fitch IBCA, Inc. F1; Moody's Investors Service Inc.
("Moody's"), Prime-1; Standard & Poor's, A-1; and Thomson BankWatch, Inc., T-1.
A description of such ratings is provided in the Appendix. Bankers Trust, acting
under the supervision of and procedures adopted by the Board of Trustees of the
Portfolio, will also determine that all securities purchased by the Portfolio
present minimal credit risks. Bankers Trust will cause the Portfolio to dispose
of any security as soon as practicable if the security is no longer of the
requisite quality, unless such action would not be in the best interest of the
Portfolio. High-quality, short-term instruments may result in a lower yield than
instruments with a lower quality or longer term.

Additional Risk Factors

In addition to the risks discussed above, the Portfolio's investments may be
subject to the following risk factors:

Year 2000 Matters. Like other mutual funds, financial and business organizations
and individuals around the world, the Fund could be adversely affected if the
computer systems used by Bankers Trust and other service providers do not
properly process and calculate date-related information and data from and after
January 1, 2000. This is commonly known as the "Year 2000 Problem." Bankers
Trust is taking steps that it believes are reasonably designed to address the
Year 2000 Problem with respect to computer systems that it uses and to obtain
reasonable

2
<PAGE>

assurances that comparable steps are being taken by the Fund's other major
service providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact to the Fund nor can there
be any assurance that the Year 2000 Problem will not have an adverse effect on
the companies whose securities are held by the Fund or on global markets or
economies, generally.

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

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

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

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

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

3
<PAGE>

Rating Services. The ratings of Moody's and Standard & Poor's Ratings Group
("S&P") represent their opinions as to the quality of the Municipal Obligations
and other securities that they undertake to rate. It should be emphasized,
however, that ratings are relative and subjective and are not absolute standards
of quality. Although these ratings are an initial criterion for selection of
portfolio investments, the Adviser also makes its own evaluation of these
securities, subject to review by the Board of Trustees. After purchase by the
Portfolio, an obligation may cease to be rated or its rating may be reduced
below the minimum required for purchase by the Portfolio. Neither event would
require the Portfolio to eliminate the obligation from its portfolio, but
the Adviser will consider such an event in its determination of whether the
Portfolio should continue to hold the obligation. A description of the ratings
categories of Moody's and S&P is set forth in the Appendix to this SAI.

Investment Restrictions

Fundamental Policies. The following investment restrictions have been adopted by
the Trust with respect to the Fund and by the Portfolio as fundamental policies.
Under the Investment Company Act of 1940 (the "1940 Act"), a "fundamental"
policy may not be changed without the vote of a majority of the outstanding
voting securities of the Fund or Portfolio, respectively, which is defined in
the 1940 Act as the lesser of (a) 67% or more of the shares present at a
shareholder meeting if the holders of more than 50% of the outstanding shares
are present or represented by proxy, or (b) more than 50% of the outstanding
shares. Whenever the Fund is requested to vote on a change in the investment
restrictions of the Portfolio, the Trust will hold a meeting of Fund
shareholders and will cast its votes as instructed by the shareholders. Fund
shareholders who do not vote will not affect the Trust's votes at the Portfolio
meeting. The percentage of the Trust's votes representing Fund shareholders not
voting will be voted by the Trustees of the Trust in the same proportion as the
Fund shareholders who do, in fact, vote.

Under investment policies adopted by the Trust, on behalf of the Fund, and by
the Portfolio, the Fund and the Portfolio may not:

1. Borrow money, except for temporary or emergency (not leveraging)
purposes in an amount not exceeding 5% of the value of the Fund's or
the Portfolio's total assets (including the amount borrowed), as the
case may be, calculated in each case at the lower of cost or market.

2. Pledge, hypothecate, mortgage or otherwise encumber more than 5% of the
total assets of the Fund or the Portfolio, as the case may be, and only
to secure borrowings for temporary or emergency purposes.

3. Invest more than 5% of the total assets of the Fund or the Portfolio,
as the case may be, in any one issuer (other than U.S. Government
Obligations) or purchase more than 10% of any class of securities of
any one issuer; provided, however, that up to 25% of the assets of
the Fund (and the Portfolio) may be invested without regard to this
restriction.

4. Invest more than 25% of the total assets of the Fund or the Portfolio,
as the case may be, in the securities of issuers in any single
industry; provided that this limitation shall not apply to the
purchase of direct obligations issued by the U.S. Treasury; provided,
however, that nothing in this investment restriction shall prevent the
Trust from investing all or part of the Fund's assets in an
open-end management investment company with the same investment
objectives as the Fund.

5. Make short sales of securities, maintain a short position or purchase
any securities on margin, except for such short-term credits as are
necessary for the clearance of transactions.

4
<PAGE>

7. Purchase or sell real estate, real estate investment trust securities,
commodities or commodity contracts, or oil, gas or mineral interests,
but this shall not prevent the Fund or the Portfolio from investing in
obligations secured by real estate or interests therein.

8. Make loans to others, except through the purchase of qualified debt
obligations, the entry into repurchase agreements and the lending of
portfolio securities.

9. Invest more than an aggregate of 10% of the net assets of the Fund or
the Portfolio, respectively, (taken, in each case, at current value) in
(i) securities that cannot be readily resold to the public because of
legal or contractual restrictions or because there are no market
quotations readily available or (ii) other "illiquid" securities
(including time deposits and repurchase agreements maturing in more
than seven calendar days); provided, however, that nothing in this
investment restriction shall prevent the Trust from investing all or
part of the Fund's assets in an open-end management investment
company with the same investment objectives as the Fund.

10. Purchase more than 10% of the voting securities of any issuer or invest
in companies for the purpose of exercising control or management;
provided, however, that nothing in this investment restriction shall
prevent the Trust from investing all or part of the Fund's assets
in an open-end management investment company with the same investment
objectives as the Fund.

11. Purchase securities of other investment companies, except to the extent
permitted under the 1940 Act or in connection with a merger,
consolidation, reorganization, acquisition of assets or an offer of
exchange; provided, however, that nothing in this investment
restriction shall prevent the Trust from investing all or part of the
Fund's assets in an open-end management investment company with the
same investment objectives as the Fund.

12. Issue any senior securities, except insofar as it may be deemed to have
issued a senior security by reason of (i) entering into a repurchase
agreement or (ii) borrowing in accordance with terms described in the
Prospectus and this SAI.

13. Purchase or retain the securities of any issuer if any of the officers
or trustees of the Fund or the Portfolio or its investment adviser owns
individually more than 1/2 of 1% of the securities of such issuer, and
together such officers and directors own more than 5% of the securities
of such issuer.

14. Invest in warrants, except that the Fund or the Portfolio may invest in
warrants if, as a result, the investments (valued in each case at the
lower of cost or market) would not exceed 5% of the value of the net
assets of the Fund or the Portfolio, as the case may be, of which not
more than 2% of the net assets of the Fund or the Portfolio, as the
case may be, may be invested in warrants not listed on a recognized
domestic stock exchange. Warrants acquired by the Fund or the Portfolio
as part of a unit or attached to securities at the time of acquisition
are not subject to this limitation.

15. with respect to 75% of the Fund's (Portfolio's) total assets, invest
more than 5% of its total assets in the securities of any one issuer
(excluding cash and cash-equivalents, U.S. government securities and
the securities of other investment companies) or own more than 10% of
the voting securities of any issuer.

Additional Restrictions. The following are nonfundamental policies of the Fund
and the Portfolio. In order to comply with certain statutes and policies the
Portfolio (or Trust, on behalf of the Fund) will not as a matter of operating
policy (except that no operating policy shall prevent the Fund from investing
all of its assets in an open-end investment company with substantially the
same investment objectives):

(i) borrow money (including through dollar roll transactions) for any
purpose in excess of 10% of the Portfolio's (Fund's) total assets
(taken at cost), except that the Portfolio (Fund) may borrow for
temporary or emergency purposes up to 1/3 of its total assets;

(ii) pledge, mortgage or hypothecate for any purpose in excess of 10% of the
Portfolio's

5
<PAGE>

(Fund's) total assets (taken at market value), provided that collateral
arrangements with respect to options and futures, including deposits of
initial deposit and variation margin, are not considered a pledge of
assets for purposes of this restriction;

(iii) purchase any security or evidence of interest therein on margin, except
that such short-term credit as may be necessary for the clearance of
purchases and sales of securities may be obtained and except that
deposits of initial deposit and variation margin may be made in
connection with the purchase, ownership, holding or sale of futures;

(iv) sell any security which it does not own unless by virtue of its
ownership of other securities it has at the time of sale a right to
obtain securities, without payment of further consideration, equivalent
in kind and amount to the securities sold and provided that if such
right is conditional the sale is made upon the same conditions;

(v) invest for the purpose of exercising control or management;

(vi) purchase securities issued by any investment company except by purchase
in the open market where no commission or profit to a sponsor or dealer
results from such purchase other than the customary broker's
commission, or except when such purchase, though not made in the open
market, is part of a plan of merger or consolidation; provided,
however, that securities of any investment company will not be
purchased for the Portfolio (Fund) if such purchase at the time thereof
would cause (a) more than 10% of the Portfolio's (Fund's) total assets
(taken at the greater of cost or market value) to be invested in the
securities of such issuers; (b) more than 5% of the Portfolio's
(Fund's) total assets (taken at the greater of cost or market value) to
be invested in any one investment company; or (c) more than 3% of the
outstanding voting securities of any such issuer to be held for the
Portfolio (Fund); and, provided further, that the Portfolio shall not
invest in any other open-end investment company unless the Portfolio
(Fund) (1) waives the investment advisory fee with respect to assets
invested in other open-end investment companies and (2) incurs no sales
charge in connection with the investment (as an operating policy, the
Portfolio will not invest in another open-end registered investment
company);

(vii) make short sales of securities or maintain a short position, unless at
all times when a short position is open it owns an equal amount of such
securities or securities convertible into or exchangeable, without
payment of any further consideration, for securities of the same issue
and equal in amount to, the securities sold short, and unless not more
than 10% of the Portfolio's (Fund's) net assets (taken at market value)
is represented by such securities, or securities convertible into or
exchangeable for such securities, at any one time (the Portfolio (Fund)
has no current intention to engage in short selling);

The Fund will comply with the state securities laws and regulations of all
states in which it is registered. The Portfolio will comply with the permitted
investments and investment limitations in the securities laws and regulations of
all states in which the Fund, or any other registered investment company
investing in the Portfolio, is registered.

Portfolio Turnover

The Portfolio may attempt to increase yields by trading to take advantage of
short-term market variations, which results in higher portfolio turnover. This
policy does not result in higher brokerage commissions to the Portfolio,
however, as the purchases and sales of portfolio securities are usually effected
as principal transactions. The Portfolio's turnover rate is not expected to
have a material effect on its income and has been and is expected to be
zero for regulatory reporting purposes.

6
<PAGE>

Portfolio Transactions

Decisions to buy and sell securities and other financial instruments for the
Portfolio are made by Bankers Trust, which also is responsible for placing these
transactions, subject to the overall review of the Board of Trustees. Although
investment requirements for the Portfolio are reviewed independently from
those of the other accounts managed by Bankers Trust , investments of the type
the Portfolio may make may also be made by these other accounts . When the
Portfolio and one or more other accounts managed by Bankers Trust are prepared
to invest in, or desire to dispose of, the same security or other financial
instrument, available investments or opportunities for sales will be allocated
in a manner believed by Bankers Trust to be equitable to each. In some cases,
this procedure may affect adversely the price paid or received by the
Portfolio or the size of the position obtained or disposed of by the
Portfolio.

Purchases and sales of securities on behalf of the Portfolio usually are
principal transactions. These securities are normally purchased directly from
the issuer or from an underwriter or market maker for the securities. The cost
of securities purchased from underwriters includes an underwriting commission or
concession and the prices at which securities are purchased from and sold to
dealers include a dealer's mark-up or mark-down. U.S. Government Obligations are
generally purchased from underwriters or dealers, although certain newly issued
U.S. Government Obligations may be purchased directly from the U.S. Treasury or
from the issuing agency or instrumentality.

Over-the-counter purchases and sales are transacted directly with principal
market makers except in those cases in which better prices and executions may be
obtained elsewhere and principal transactions are not entered into with persons
affiliated with the Portfolio except pursuant to exemptive rules or orders
adopted by the Securities and Exchange Commission. Under rules adopted by the
SEC, broker-dealers may not execute transactions on the floor of any national
securities exchange for the accounts of affiliated persons, but may effect
transactions by transmitting orders for execution.

In selecting brokers or dealers to execute portfolio transactions on behalf of
the Portfolio, Bankers Trust seeks the best overall terms available. In
assessing the best overall terms available for any transaction, Bankers Trust
will consider the factors it deems relevant, including the breadth of the market
in the investment, the price of the investment, the financial condition and
execution capability of the broker or dealer and the reasonableness of the
commission, if any, for the specific transaction and on a continuing basis. In
addition, Bankers Trust is authorized, in selecting parties to execute a
particular transaction and in evaluating the best overall terms available, to
consider the brokerage, but not research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934, as amended) provided to
the Portfolio and/or other accounts over which Bankers Trust or its affiliates
exercise investment discretion. Bankers Trust's fees under its agreements with
the Portfolio are not reduced by reason of its receiving brokerage services.

7
<PAGE>

NET ASSET VALUE

The net asset value ("NAV") per share is calculated on each day on which the
Fund is open (each such day being a "Valuation Day"). The Fund is currently open
on each day, Monday through Friday, except (a) January 1st, Martin Luther King,
Jr.'s Birthday (the third Monday in January), Presidents' Day (the third Monday
in February), Good Friday, Memorial Day (the last Monday in May), July 4th,
Labor Day (the first Monday in September), Columbus Day (the second Monday in
October), Veteran's Day (November 11th), Thanksgiving Day (the last Thursday in
November) and December 25th; and (b) the preceding Friday or the subsequent
Monday when one of the calendar-determined holidays falls on a Saturday or
Sunday, respectively.

The NAV per share of the Fund is calculated twice on each Valuation Day as of
12:00 noon, Eastern time, and as of the close of regular trading on the NYSE,
which is currently 4:00 p.m., Eastern time or in the event that the NYSE closes
early, at the time of such early closing (the "Valuation Time"). The NAV per
share is computed by dividing the value of the Fund's assets (i.e., the value of
its investment in the Portfolio and other assets), less all liabilities, by the
total number of shares outstanding. The Fund's NAV per share will normally be
$1.00.

The valuation of the Portfolio's securities is based on their amortized cost,
which does not take into account unrealized capital gains or losses. Amortized
cost valuation involves initially valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium, generally without regard to the impact of fluctuating interest rates on
the market value of the instrument. Although this method provides certainty in
valuation, it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price the Portfolio would receive
if it sold the instrument.

The Portfolio's use of the amortized cost method of valuing its securities
is permitted by a rule adopted by the SEC. The Portfolio will also maintain a
dollar-weighted average portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of two years or less and invest only in
securities determined by or under the supervision of the Board of Trustees to be
of high quality with minimal credit risks.

Pursuant to the rule, the Board of Trustees of the Portfolio also has
established procedures designed to allow investors in the Portfolio, such as the
Trust, to stabilize, to the extent reasonably possible, the investors' price per
share as computed for the purpose of sales and redemptions at $1.00. These
procedures include review of the Portfolio's holdings by the Portfolio's Board
of Trustees, at such intervals as it deems appropriate, to determine whether the
value of the Portfolio's assets calculated by using available market quotations
or market equivalents deviates from such valuation based on amortized cost.

The rule also provides that the extent of any deviation between the value of the
Portfolio's assets based on available market quotations or market equivalents
and such valuation based on amortized cost must be examined by the Portfolio's
Board of Trustees. In the event the Portfolio's Board of Trustees determines
that a deviation exists that may result in material dilution or other unfair
results to investors or existing shareholders, pursuant to the rule, the
Portfolio's Board of Trustees must cause the Portfolio to take such corrective
action as such Board of Trustees regards as necessary and appropriate,
including: selling portfolio instruments prior to maturity to realize capital
gains or losses or to shorten average portfolio maturity; withholding dividends
or paying distributions from capital or capital gains; redeeming shares in kind;
or valuing the Portfolio's assets by using available market quotations.

8
<PAGE>

Each investor in the Portfolio, including the Fund, may add to or reduce its
investment in the Portfolio on each day the Portfolio determines its net asset
value. At the close of each such business day, the value of each investor's
beneficial interest in the Portfolio will be determined by multiplying the net
asset value of the Portfolio by the percentage, effective for that day, which
represents that investor's share of the aggregate beneficial interests in the
Portfolio. Any additions or withdrawals, which are to be effected as of the
close of business on that day, will then be effected. The investor's percentage
of the aggregate beneficial interests in the Portfolio will then be recomputed
as the percentage equal to the fraction (i) the numerator of which is the value
of such investor's investment in the Portfolio as of the close of business on
such day plus or minus, as the case may be, the amount of net additions to or
withdrawals from the investor's investment in the Portfolio effected as of the
close of business on such day, and (ii) the denominator of which is the
aggregate net asset value of the Portfolio as of the close of business on such
day plus or minus, as the case may be, the amount of net additions to or
withdrawals from the aggregate investments in the Portfolio by all investors in
the Portfolio. The percentage so determined will then be applied to determine
the value of the investor's interest in the Portfolio as of the close of the
following business day.

PURCHASE AND REDEMPTION INFORMATION

Purchase of Shares

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

Purchase orders for shares (including those purchased through a Service Agent)
that are transmitted to the Trust's Transfer Agent (the "Transfer Agent"), prior
to the Valuation Time on any Valuation Day will be effective at that day's
Valuation Time. If the purchase order is received by the Service Agent and
transmitted to the Transfer Agent after 12:00 noon (Eastern time) and prior to
the close of the NYSE, the shareholder will receive the dividend declared on the
following day even if Bankers Trust, as the Trust's custodian (the "Custodian"),
receives federal funds on that day. If the purchase order is received prior to
12:00 noon, the shareholder will receive that Valuation Day's dividend. The
Trust and Transfer Agent reserve the right to reject any purchase order. If the
market for the primary investments in the Fund closes early, the Fund will cease
taking purchase orders at that time.

Another mutual fund investing in the Portfolio may accept purchase orders up
until a time later than 12:00 noon, Eastern time. Such orders, when transmitted
to and executed by the Portfolio, may have an impact on the Fund's performance.

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

Minimum Investments

To Open an Account $2,500
For retirement accounts 500

9
<PAGE>

Through automatic investment plans 1,000

To Add to an Account $ 250
- -------------------- --------------
For retirement accounts 100
Through automatic investment plan 100

Minimum Balance $1,000
For retirement accounts None

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

Overnight mailings:

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

If you have money invested in a fund in the BT Family of Funds, you can:

o Mail an account application with a check,

o Wire money into your account,

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

o Contact your Service Agent or Investment Professional.

If you are investing through a tax-sheltered retirement plan, such as an IRA,
for the first time, you will need a special application. Contact your Investment
Professional for more information and a retirement account application.

Additional Information About Buying Shares

<TABLE>
<CAPTION>
To Open an Account To Add to an Account
By Wire Call the BT Service Center at 1-800-730-1313 to Call your Investment Professional or wire additional
- -------
<S> <C> <C>
receive wire instructions for account establishment. investment to:

Routing No.: 021001033
Attn: Bankers Trust/IFTC Deposit
DDA No.: 00-226-296
FBO: (Account name)
(Account Number)
Credit: BT Investment Treasury
Money Fund - 472

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

10
<PAGE>

By Mail Complete and sign the account application. Make your Make your check payable to the complete name of
check payable to the complete name of the Fund of the Fund of your choice. Indicate your Fund
your choice. Mail to the appropriate address account number on your check and mail to the
indicated on the application. address printed on your account statement.

</TABLE>
Redemption of Shares

You can arrange to take money out of your fund account at any time by selling
(redeeming) some or all of your shares. Your shares shall be sold at the next
NAV calculated after an order is received by the Transfer Agent. Redemption
requests should be transmitted by customers in accordance with procedures
established by the Transfer Agent and the shareholder's Service Agent.
Redemption requests for shares of the Fund received by the Service Agent and
transmitted to the Transfer Agent prior to the 12:00 noon (Eastern time) on a
Valuation Day will not receive the dividend declared on the day of redemption;
the redemption proceeds normally will be will be delivered to the shareholder's
account with the Service Agent on that day. Redemption requests received by the
Service Agent and transmitted to the Transfer Agent after 12:00 noon (Eastern
time) on a Valuation Day and prior to the close of the NYSE will receive the
dividend declared on the day of the redemption; the redemption proceeds normally
will be delivered to the shareholder's account with the Service Agent the next
day; but in any event within seven calendar days following receipt of the
request.

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

Checkwriting. Shareholders of the Fund may redeem shares by check. Checks may
not be used to close an account. Shareholders will continue to earn dividends on
shares to be redeemed until the check clears. Checks will be returned to
shareholders at the end of the month. There is no charge for redemption of
shares by check. Additional information regarding the checkwriting privilege may
be obtained from a Service Agent.

To sell Shares in a retirement account, your request must be made in writing,
except for exchanges to other eligible funds in the BT Family of Funds, which
can be requested by phone or in writing. For information on retirement
distributions, contact your Service Agent or call the BT Service Center at
1-800-730-1313.

If you are selling some but not all of your non-retirement account shares, leave
at least $1,000 worth of shares in the account to keep it open.

To sell shares by bank wire you will need to sign up for these services in
advance when completing your account application.

11
<PAGE>

o Your account registration has changed within the last 30 days,

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

o The check is being made payable to someone other than the account
owner,

o The redemption proceeds are being transferred to a BT account with a
different registration, or

o You wish to have redemption proceeds wired to a non-predesignated bank
account.

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

Additional Information About Selling Shares

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

Overnight mailings:

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

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

Investor Services

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

12
<PAGE>

Information Services

Statements and reports that your Investment Professional or the Transfer Agent
may send to you include the following:

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

o Account statements (monthly)

o Financial reports (every six months)

Exchange Privilege

o Call your Service Agent for information and a prospectus. Read the
prospectus for relevant information.

o Complete and sign an application, taking care to register your new
account in the same name, address and taxpayer identification number as
your existing account(s).

o Exchanges out of the Fund may be limited to four per calendar year and
any exchange may have tax consequences for you.

o The Fund reserves the right to terminate or modify the exchange
privilege in the future.

Systematic Programs

To move money from your bank account to BT Investment Funds

<TABLE>
<CAPTION>
Minimum Minimum
Initial Subsequent Frequency Setting up or changing
------- ---------- --------- ----------------------
<S> <C> <C> <C>
$1,000 $100 Monthly, bimonthly, For a new account, complete the appropriate section
quarterly or semi-annually on the application.

For existing accounts, call your Investment
Professional for an application. To change the
amount or frequency of your investment, contact your
Investment Professional directly or call
1-800-730-1313. Call at least 10 business days prior
to your next scheduled investment date.
</TABLE>

13
<PAGE>

Systematic Withdrawal Program lets you set up periodic redemptions from your
account.

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

Tax-Saving Retirement Plans

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

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

Redemptions

The Trust may suspend the right of redemption or postpone the date of
payment for shares during any period when: (a) trading on the NYSE is restricted
by applicable rules and regulations of the SEC; (b) the NYSE is closed for other
than customary weekend and holiday closings; (c) the SEC has by order permitted
such suspension; or (d) an emergency exists as determined by the SEC.

MANAGEMENT OF THE TRUST AND PORTFOLIO

The Trust and the Portfolio are governed by a Board of Trustees which is
responsible for protecting the interests of investors. By virtue of the
responsibilities assumed by Bankers Trust, the administrator of the Trust and
the Portfolio, neither the Trust nor the Portfolio require employees other than
its executive officers. None of the executive officers of the Trust or the
Portfolio devotes full time to the affairs of the Trust or the Portfolio.

A majority of the Trustees who are not "interested persons" (as defined in the
1940 Act) of the Trust or the Portfolio, as the case may be, have adopted
written procedures reasonably appropriate to deal with potential conflicts of
interest arising from the fact that some of the same individuals are Trustees of
the Trust and the Portfolio, up to and including creating separate boards of
trustees.

Each Board of Trustees is composed of persons experienced in financial matters
who meet throughout the year to oversee the activities of the Fund or
Portfolio they represent. In addition, the Trustees review contractual
arrangements with companies that provide services to the Fund/Portfolio and
review the Fund's performance.

The Trustees and officers of the Trust and the Portfolio, their birthdates,
and their principal occupations during the past five years are set forth below.
Their titles may have varied during that period. Unless otherwise indicated, the
address of each officer is Clearing Operations, P.O. Box 897, Pittsburgh,
Pennsylvania 05230-0897.

Trustees of the Trust
S. LELAND DILL (birthdate: March 28, 1930) -- Trustee; Retired; Director, Coutts
Group, Coutts (U.S.A.) International; Coutts Trust Holdings Ltd; Director, Zweig
Series Trust; formerly Partner of KPMG Peat Marwick;

14
<PAGE>

Director, Vinters International Company Inc.; General Partner of Pemco (an
investment company registered under the 1940 Act). His address is 5070 North
Ocean Drive, Singer Island, Florida 33404.

Trustees of the Portfolio

S. LELAND DILL -- Trustee.

PHILIP SAUNDERS, JR.-- Trustee.

Officers of the Trust and the Portfolio

Unless otherwise specified, each officer listed below holds the same position
with the Trust and the Portfolio.

JOHN Y. KEFFER (birthdate: July 14, 1942) -- President and Chief Executive
Officer; President, Forum Financial Group. His address is 2 Portland Square,
Portland, Maine 04101.

JOSEPH A. FINELLI (birthdate: January 24, 1957) -- Treasurer; Vice President, BT
Alex. Brown Incorporated and Vice President, Investment Company Capital Corp.
(registered investment adviser), September 1995 to present; formerly, Vice
President and Treasurer, The Delaware Group of Funds (registered investment
companies) and Vice President, Delaware Management Company Inc. (investments),
1980 to August 1995. His address is One South Street, Baltimore, Maryland 21202.

Messrs. Keffer, Finelli and Hirsch also hold similar positions for other
investment companies for which ICC Distributors, or an affiliate serves as the
principal underwriter.

No person who is an officer or director of Bankers Trust is an officer or
Trustee of the Trust or the Portfolio. No director, officer or employee of
ICC Distributors or any of its affiliates will receive any compensation from the
Trust or the Portfolio for serving as an officer or Trustee of the Trust or
the Portfolio.

15
<PAGE>

Trustee Compensation Table

Aggregate Aggregate Total Compensation
Name of Person, Compensation Compensation from Fund Complex
Position from Trust*+ from Portfolio+ Paid to Trustees**
- -------- ------------ ---- ---------- ------------------

Kelvin Lancaster,
Trustee of Trust $______ N/A $______

Philip Saunders, Jr.,
Trustee of Trust and
Portfolio $______ $______ $______

Charles Biggar,
Trustee of Portfolio N/A $______ $______

S. Leland Dill,
Trustee of Trust
and Portfolio $______ $______ $______

* The information provided is for the BT Investment Funds which is comprised
of 16 funds.

+ Information provided is for the year ended December 31, 1998.

** Aggregated information is furnished for the BT Family of Funds which
consists of the following: BT Investment Funds, BT Institutional Funds, BT
Pyramid Mutual Funds, BT Advisor Funds, BT Investment Portfolios, Cash
Management Portfolio, Treasury Money Portfolio, Tax Free Money Portfolio,
NY Tax Free Money Portfolio, International Equity Portfolio, Intermediate
Tax Free Portfolio, Asset Management Portfolio, Equity 500 Index Portfolio,
and Capital Appreciation Portfolio. The compensation provided is for the
calendar year ended December 31, 1998.

Bankers Trust reimbursed the Fund and Portfolio for a portion of their
Trustees fees for the period above. See "Investment Adviser" and "Administrator"
below.

As of _______ __, 1999, the Trustees and officers of the Trust and the
Portfolio owned in the aggregate less than 1% of the shares of the Fund or of
the Trust (all series taken together).

As of ______ __, 1999, the following shareholders of record owned 5% or more of
the outstanding shares of the Fund: [TO BE UPDATED]

Investment Adviser

The Trust has not retained the services of an investment adviser since the Trust
seeks to achieve the investment objective of the Fund by investing all the
assets of the Fund in the Portfolio. The Portfolio has retained the services of
Bankers Trust as Adviser.

16
<PAGE>

with total assets of over $150 billion.] [The scope of Bankers Trust's
investment management capability is unique due to its leadership positions in
both active and passive quantitative management and its presence in major equity
and fixed income markets around the world. Bankers Trust is one of the nation's
largest and most experienced investment managers with over $300 billion in
assets under management globally.]

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

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

The Adviser 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 Company 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 retail and commercial banking, investment banking and
insurance. The transaction is contingent upon various regulatory approvals, as
well as the approval of the Fund's shareholders. If the transaction is approved
and completed, Deutsche Bank AG, as the Adviser's new parent company, will
control the operations of the Adviser. Bankers Trust believes that, under this
new arrangement, the services provided to the Fund will be maintained at their
current level.

Under the terms of an investment advisory agreement between the Portfolio and
Bankers Trust (the "Advisory Agreement"), Bankers Trust manages the Portfolio
subject to the supervision and direction of the Board of Trustees. Bankers Trust
will: (i) act in strict conformity with the Portfolio's Declaration of Trust,
the 1940 Act and the Investment Advisors Act of 1940, as the same may from time
to time be amended; (ii) manage the Portfolio in accordance with the
Portfolio's investment objectives, restrictions and policies as stated in the
Prospectus and herein; (iii) make investment decisions for the Portfolio; and
(iv) place purchase and sale orders for securities and other financial
instruments on behalf of the Portfolio.

Bankers Trust bears all expenses in connection with the performance of services
under the Advisory Agreement. The Trust and the Portfolio bears certain other
expenses incurred in its operation, including: taxes, interest, brokerage fees
and commissions, if any; fees of Trustees of the Trust or the Portfolio who are
not officers, directors or employees of Bankers Trust, ICC Distributors or any
of their affiliates; SEC fees and state Blue Sky qualification fees;
administrative and services fees; certain insurance premiums; outside auditing
and legal expenses; costs of maintenance of corporate existence; costs
attributable to investor services, including, without limitation, telephone and
personnel expenses; costs of preparing and printing Prospectuses and
statements of additional information for regulatory purposes and for
distribution to existing shareholders; costs of shareholders' reports and
meetings of shareholders, officers and Trustees of the Trust or the Portfolio;
and any extraordinary expenses.

17
<PAGE>

Under the Advisory Agreement, Bankers Trust receives a fee from the Portfolio,
computed daily and paid monthly, at the annual rate of 0.15 of the average daily
net assets of the Portfolio. For the fiscal years ended December 31, 1998, 1997,
and 1996, Bankers Trust earned $_____, $3,067,422 and $2,787,544,
respectively, as compensation for investment advisory services provided to the
Portfolio. During the same periods, Bankers Trust reimbursed $_____, $60,612 and
$60,530, respectively, to the Portfolio to cover expenses.

Bankers Trust may have deposit, loan and other commercial banking relationships
with the issuers of obligations which may be purchased on behalf of the
Portfolio, including outstanding loans to such issuers which could be repaid in
whole or in part with the proceeds of securities so purchased. Such affiliates
deal, trade and invest for their own accounts in such obligations and are among
the leading dealers of various types of such obligations. Bankers Trust has
informed the Portfolio that, in making its investment decisions, it does not
obtain or use material inside information in its possession or in the possession
of any of its affiliates. In making investment recommendations for the
Portfolio, Bankers Trust will not inquire or take into consideration whether an
issuer of securities proposed for purchase or sale by the Portfolio is a
customer of Bankers Trust, its parent or its subsidiaries or affiliates and, in
dealing with its customers, Bankers Trust, its parent, subsidiaries, and
affiliates will not inquire or take into consideration whether securities of
such customers are held by any fund managed by Bankers Trust or any such
affiliate.

Administrator

Under its Administration and Services Agreement with the Trust, the Adviser
calculates the net asset value of the Fund and generally assists the Board of
Trustees of the Trust in all aspects of the administration and operation of the
Trust. The Administration and Services Agreement provides for the Trust to pay
the Adviser a fee, computed daily and paid monthly, equal on an annual basis to
0.55% of the average daily net assets of the Fund.

Under Administration and Services Agreement with the Portfolio, the Adviser
calculates the value of the assets of the Portfolio and generally assists the
Board of Trustees of the Portfolio in all aspects of the administration and
operation of the Portfolio. The Administration and Services Agreement provide
for the Portfolio to pay the Adviser a fee, computed daily and paid monthly,
equal on an annual basis to 0.05% of the Portfolio's average daily net assets.
Under the Administration and Services Agreement, the Adviser may delegate one or
more of its responsibilities to others, including affiliates of ICC
Distributors, at the Adviser's expense.

Under the Administration and Services Agreements, Bankers Trust is obligated on
a continuous basis to provide such administrative services as the Board of
Trustees of the Trust and the Portfolio reasonably deems necessary for the
proper administration of the Trust and the Portfolio. Bankers Trust will
generally assist in all aspects of the Fund's and Portfolio's operations;
supply and maintain office facilities (which may be in Bankers Trust's own
offices), statistical and research data, data processing services, clerical,
accounting, bookkeeping and recordkeeping services (including without limitation
the maintenance of such books and records as are required under the 1940 Act and
the rules thereunder, except as maintained by other agents of the Trust or the
Portfolio), internal auditing, executive and administrative services, and
stationery and office supplies; prepare reports to shareholders or investors;
prepare and file tax returns; supply financial information and supporting data
for reports to and filings with the SEC and various state Blue Sky authorities;
supply supporting documentation for meetings of the Board of Trustees; provide
monitoring reports and assistance regarding compliance with the Trust's and
the Portfolio's Declaration of Trust, by-laws, investment objectives and
policies and with Federal and state securities laws; arrange for appropriate
insurance coverage; calculate the net asset value, net income and realized
capital gains or losses of the Trust; and negotiate arrangements with, and
supervise and coordinate the activities of, agents and others retained to supply
services.

Pursuant to a sub-administration agreement (the "Sub-Administration Agreement")
FSC performs such sub-administration duties for the Trust and the Portfolio as
from time to time may be agreed upon by Bankers Trust and FSC. The
Sub-Administration Agreement provides that FSC will receive such compensation as
from time to time may be agreed upon by FSC and Bankers Trust. All such
compensation will be paid by Bankers Trust.

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<PAGE>

Bankers Trust has agreed that if in any fiscal year the aggregate expenses of
any Fund and the Portfolio (including fees pursuant to the Advisory Agreement,
but excluding interest, taxes, brokerage and, if permitted by the relevant state
securities commissions, extraordinary expenses) exceed the expense limitation of
any state having jurisdiction over the Fund, Bankers Trust will reimburse the
Fund for the excess expense to the extent required by state law. As of the date
of this SAI, the most restrictive annual expense limitation applicable to any
Fund is 2.5% of the Fund's first $30 million of average annual net assets, 2.0%
of the next $70 million of average annual net assets and 1.5% of the remaining
average annual net assets.

For the fiscal years ended December 31, 1998, 1997, and 1996, Bankers Trust
earned compensation of $________, $2,204,379 and $3,152,044, respectively,
for administrative and other services provided to the Fund and reimbursed
$______, $51,565 and $56,587, respectively, to the Fund to cover expenses.

For the fiscal years ended December 31, 1998, 1997, and 1996, Bankers Trust
earned compensation of $_______, $1,022,474 and $929,181, respectively, for
administrative and other services provided to the Portfolio.

Distributor

ICC Distributors is the principal Distributor for shares of the Fund. ICC
Distributors is a registered broker/dealer and is unaffiliated with Bankers
Trust. The principal business address of ICC Distributors is Two Portland
Square, Portland, Maine 04101. In addition to ICC Distributors's duties as
Distributor, ICC Distributors and its affiliates may, in their discretion,
perform additional functions in connection with transactions in the shares of
the Fund.

Service Agent

All shareholders must be represented by a Service Agent. The Adviser acts as a
Service Agent pursuant to its Administration and Services Agreement with the
Trust and receives no additional compensation from the Fund for such shareholder
services. The service fees of any other Service Agents, including
broker-dealers, will be paid by the Adviser from its fees. The services provided
by a Service Agent may include establishing and maintaining shareholder
accounts, processing purchase and redemption transactions, performing
shareholder sub-accounting, answering client inquiries regarding the Trust,
investing client cash account balances automatically in Fund shares and
processing redemption transactions at the request of clients, assisting clients
in changing dividend options, account designations and addresses, providing
periodic statements showing the client's account balance and integrating these
statements with those of other transactions and balances in the client's other
accounts serviced by the Service Agent, transmitting proxy statements, periodic
reports, updated prospectuses and other communications to shareholders and, with
respect to meetings of shareholders, collecting, tabulating and forwarding to
the Trust executed proxies, arranging for bank wires and obtaining such other
information and performing such other services as the Administrator or the
Service Agent's clients may reasonably request and agree upon with the Service
Agent. Service Agents may separately charge their clients additional fees only
to cover provision of additional or more comprehensive services not already
provided under the Administration and Services Agreement with the Adviser, or of
the type or scope not generally offered by a mutual fund, such as cash
management services or enhanced retirement or trust reporting. In addition,
investors may be charged a transaction fee if they effect transactions in Fund
shares through a broker or agent. Each Service Agent has agreed to transmit to
shareholders, who are its customers, appropriate disclosures of any fees that it
may charge them directly.

19
<PAGE>

Custodian and Transfer Agent

Bankers Trust, 130 Liberty Street, (One Bankers Trust Plaza), New York, New York
10006, serves as custodian and transfer agent for the Trust and as custodian for
the Portfolio pursuant to the Administration and Services Agreements discussed
above. As custodian, Bankers Trust holds the Fund's and the Portfolio's
assets. For such services, Bankers Trust receives monthly fees from the Fund
and Portfolio, which are included in the administrative services fees discussed
above. As transfer agent for the Trust, Bankers Trust maintains the shareholder
account records for the Fund, handles certain communications between
shareholders and the Trust and causes to be distributed any dividends and
distributions payable by the Trust. Bankers Trust is also reimbursed by the
Fund for its out-of-pocket expenses. Bankers Trust will comply with the
self-custodian provisions of Rule 17f-2 under the 1940 Act.

Expenses

The Fund bears its own expenses. Operating expenses for the Fund generally
consist of all costs not specifically borne by the Adviser or ICC Distributors,
including administration and services fees, fees for necessary professional
services, amortization of organizational expenses and costs associated with
regulatory compliance and maintaining legal existence and shareholder relations.
The Portfolio bears its own expenses. Operating expenses for the Portfolio
generally consist of all costs not specifically borne by the Adviser or ICC
Distributors, including investment advisory and administration and service fees,
fees for necessary professional services, amortization of organizational
expenses, the costs associated with regulatory compliance and maintaining legal
existence and investor relations.

Use of Name

Banking Regulatory Matters

Bankers Trust has been advised by its counsel that in its opinion Bankers Trust
may perform the services for the Portfolio contemplated by the Advisory
Agreement and other activities for the Trust and the Portfolio described in
the Prospectus and this SAI without violation of the Glass-Steagall Act or other
applicable banking laws or regulations. However, counsel has pointed out that
future changes in either Federal or state statutes and regulations concerning
the permissible activities of banks or trust companies, as well as future
judicial or administrative decisions or interpretations of present and future
statutes and regulations, might prevent Bankers Trust from continuing to perform
those services for the Trust or the Portfolio. If the circumstances described
above should change, the Trust's Board of Trustees would review the Trust's
relationship with Bankers Trust and consider taking all actions necessary in the
circumstances.

Counsel and Independent Accountants

ORGANIZATION OF THE TRUST

The Trust was organized on July 21, 1986 under the laws of the Commonwealth of
Massachusetts. The Fund is a separate series of the Trust. The Trust offers
shares of beneficial interest of separate series, par value

20
<PAGE>

$0.001 per share. The shares of the other series of the Trust are offered
through separate prospectuses and statements of additional information. No
series of shares has any preference over any other series.

** 1 The Trust is an entity commonly known as a "Massachusetts business trust."
Massachusetts law provides that shareholders could under certain circumstances
be held personally liable for the obligations of the Trust. However, the
Declaration of Trust disclaims shareholder liability for acts or obligations of
the Trust and requires that notice of this disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Trust or a
Trustee. The Declaration of Trust provides for indemnification from the Trust's
property for all losses and expenses of any shareholder held personally liable
for the obligations of the Trust. Thus, the risk of shareholders incurring
financial loss on account of shareholder liability is limited to circumstances
in which both inadequate insurance existed and the Trust itself was unable to
meet its obligations, a possibility that the Trust believes is remote. Upon
payment of any liability incurred by the Trust, the shareholder paying the
liability will be entitled to reimbursement from the general assets of the
Trust. The Trustees intend to conduct the operations of the Trust in a manner so
as to avoid, as far as possible, ultimate liability of the shareholders for
liabilities of the Trust.

The Portfolio, in which all the assets of the Fund will be invested, is
organized as a trust under the laws of the State of New York. The Portfolio's
Declaration of Trust provides that the Fund and other entities investing in the
Portfolio (e.g., other investment companies, insurance company separate accounts
and common and commingled trust funds) will each be liable for all obligations
of the Portfolio. However, the risk of the Fund incurring financial loss on
account of such liability is limited to circumstances in which both inadequate
insurance existed and the Portfolio itself was unable to meet its obligations.
Accordingly, the Trustees of the Trust believe that neither the Fund nor its
shareholders will be adversely affected by reason of the Fund's investing in the
Portfolio. In addition, whenever the Trust is requested to vote on matters
pertaining to the fundamental policies of the Portfolio, the Trust will hold a
meeting of the Fund's shareholders and will cast its vote as instructed by the
Fund's shareholders.

Shares of the Trust do not have cumulative voting rights, which means that
holders of more than 50% of the shares voting for the election of Trustees can
elect all Trustees. Shares are transferable but have no preemptive, conversion
or subscription rights. Shareholders generally vote by Fund, except with respect
to the election of Trustees and the ratification of the selection of independent
accountants.

The Trust is not required to hold annual meetings of shareholders but will hold
special meetings of shareholders when in the judgment of the Trustees it is
necessary or desirable to submit matters for a shareholder vote. Shareholders
have under certain circumstances the right to communicate with other
shareholders in connection with requesting a meeting of shareholders for the
purpose of removing one or more Trustees without a meeting. Upon liquidation of
the Fund, shareholders would be entitled to share pro rata in the net assets
of the Fund available for distribution to shareholders.

* 1 moved from here; text not shownWhenever the Trust is requested to vote on a
matter pertaining to the Portfolio, the Trust will vote its shares without a
meeting of shareholders of the Fund if the proposal is one, if which made with
respect to the Fund, would not require the vote of shareholders of the Fund
as long as such action is permissible under applicable statutory and regulatory
requirements. For all other matters requiring a vote, the Trust will hold a
meeting of shareholders of the Fund and, at the meeting of investors in the
Portfolio, the Trust will cast all of its votes in the same proportion as the
votes all its shares at the Portfolio meeting, other investors with a greater
pro rata ownership of the Portfolio could have effective voting control of the
operations of the Portfolio.

The Trust was organized under the name BT Tax-Free Investment Trust and assumed
its current name of BT Investment Funds on May 16, 1988.

As of December 31, 1998, the following shareholders of record owned 25% or more
of the voting securities of the Fund, and, therefore, may, for certain purposes,
be deemed to control the Fund and be able to affect the outcome of certain
matters presented for a vote of its shareholders: [TO BE PROVIDED]

21
<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

The following is only a summary of certain tax considerations generally
affecting the Fund and its shareholders, and is not intended as a substitute
for careful tax planning. Shareholders are urged to consult their tax advisers
with specific reference to their own tax situations.

The Fund is designed to provide investors with current income. The Fund is
not intended to constitute a balanced investment program and is not designed
for investors seeking capital gains or maximum income irrespective of
fluctuations in principal.

The Fund intends to continue to qualify as a separate regulated investment
company under the Internal Revenue Code of 1986, as amended (the "Code").
Provided that the Fund is a regulated investment company, the Fund will not
be liable for Federal income taxes to the extent all of its taxable net
investment income and net realized long-and short-term capital gains, if any,
are distributed to its shareholders. Although the Trust expects the Fund to be
relieved of all or substantially all Federal income taxes, depending upon the
extent of its activities in states and localities in which its offices are
maintained, in which its agents or independent contractors are located or in
which it is otherwise deemed to be conducting business, that portion of the
Fund's income which is treated as earned in any such state or locality could be
subject to state and local tax. Any such taxes paid by the Fund would reduce
the amount of income and gains available for distribution to its shareholders.

If for any taxable year the Fund does not qualify for the special federal income
tax treatment afforded regulated investment companies, all of its taxable income
will be subject to federal income tax at regular corporate rates (without any
deduction for distributions to its shareholders). In such event, dividend
distributions would be taxable to shareholders to the extent of current
accumulated earnings and profits, and would be eligible for the dividends
received deduction for corporations in the case of corporate shareholders.

The Portfolio is not subject to the Federal income taxation. Instead, the Fund
and other investors investing in the Portfolio must take into account, in
computing their Federal income tax liability, their share of the Portfolio's
income, gains, losses, deductions, credits and tax preference items, without
regard to whether they have received any cash distributions from the Portfolio.
The Portfolio determines its net income and realized capital gains, if any, on
each Valuation Day and allocates all such income and gain pro rata among the
Fund and the other investors in the Portfolio at the time of such determination.

The Fund declares dividends from its net income daily and pays the dividends
monthly. The Fund reserves the right to include realized short-term gains, if
any, in such daily dividends. Distributions of the Fund's pro rata share of the
Portfolio's net realized long-term capital gains, if any, and any
undistributed net realized short-term capital gains are normally declared and
paid annually at the end of the fiscal year in which they were earned to the
extent they are not offset by any capital loss carryforwards. Unless a
shareholder instructs the Trust to pay dividends or capital gains distributions
in cash, dividends and distributions will automatically be reinvested at NAV in
additional shares of the Fund.

Distributions of net realized long-term capital gains ("capital gain
dividends"), if any, will be taxable to shareholders as long-term capital gains,
regardless of how long a shareholder has held Fund shares, and will be
designated as capital gain dividends in a written notice mailed by the Fund to
shareholders after the close of the Fund's prior taxable year. Dividends paid by
the Fund from its taxable net investment income and distributions by the Fund of
its net realized short-term capital gains are taxable to shareholders as
ordinary income, whether received in cash or reinvested in additional shares of
that Fund. The Fund's dividends and distributions will not qualify for the
dividends-received deduction for corporations.

22
<PAGE>

represent interest derived from U.S. Government Obligations are exempt from any
applicable state or local income taxes.

If a shareholder fails to furnish a correct taxpayer identification number,
fails to report fully dividend or interest income or fails to certify that he or
she has provided a correct taxpayer identification number and that he or she is
not subject to "backup withholding," then the shareholder may be subject to a
31% backup withholding tax with respect to any taxable dividends and
distributions . An individual's taxpayer identification number is his or her
social security number. The 31% backup withholding tax is not an additional tax
and may be credited against a taxpayer's regular Federal income tax liability.

PERFORMANCE INFORMATION

From time to time , the Trust may advertise "current yield," and/or "effective
yield" for the Fund. All yield figures are based on historical earnings and are
not intended to indicate future performance. The "current yield" of the Fund
refers to the income generated by an investment in the Fund over a seven-day
period (which period will be stated in the advertisement). This income is then
"annualized;" that is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the Fund
is assumed to be reinvested. The "effective yield" will be slightly higher than
the "current yield" because of the compounding effect of this assumed
reinvestment. The Trust may include this information in sales material and
advertisements for the Fund.

Yield is a function of the quality, composition and maturity of the securities
held by the Portfolio and operating expenses of the Fund and the Portfolio. In
particular, the Fund's yield will rise and fall with short-term interest rates,
which can change frequently and sharply. In periods of rising interest rates,
the yield of the Fund will tend to be somewhat lower than the prevailing market
rates, and in periods of declining interest rates, the yield will tend to be
somewhat higher. In addition, when interest rates are rising, the inflow of net
new money to the Fund from the continuous sale of its shares will likely be
invested by the Portfolio in instruments producing higher yields than the
balance of the Portfolio's securities, thereby increasing the current yield of
the Fund. In periods of falling interest rates, the opposite can be expected to
occur. Accordingly, yields will fluctuate and do not necessarily indicate future
results. While yield information may be useful in reviewing the performance of
the Fund, it may not provide a basis for comparison with bank deposits, other
fixed rate investments, or other investment companies that may use a different
method of calculating yield. Any fees charged by Service Agents for processing
purchase and/or redemption transactions will effectively reduce the yield for
those shareholders.

From time to time, advertisements or reports to shareholders may compare the
yield of the Fund to that of other mutual funds with similar investment
objectives or to that of a particular index. The yield of the Fund might be
compared with, for example, the IBC U.S. Treasury and Repo All Taxable Money
Fund Average, which is an average compiled by IBC Money Fund Report, a widely
recognized, independent publication that monitors the performance of money
market mutual funds. Similarly, the yield of the Fund might be compared with
rankings prepared by Micropal Limited and/or Lipper Analytical Services, Inc.,
which are widely recognized, independent services that monitor the investment
performance of mutual funds. The yield of the Fund might also be compared
without the average yield reported by the Bank Rate Monitor for money market
deposit accounts offered by the 50 leading banks and thrift institutions in the
top five standard metropolitan areas. Shareholders may make inquiries regarding
the Fund, including current yield quotations and performance information, by
contacting any Service Agent.

Shareholders will receive financial reports semi-annually that include listings
of investment securities held by the Portfolio at those dates. Annual reports
are audited by independent accountants.

23
<PAGE>

value of additional shares purchased with dividends from the original share and
dividends declared on both the original share and any such additional shares.
The unannualized "base period return" equals the net change in account value
divided by the beginning account value. Realized gains or losses or changes in
unrealized appreciation or depreciation are not taken into account in
determining the net change in account value.

The yields are then calculated as follows:

Base Period Return = Net Change in Account Value
Beginning Account Value

Current Yield = Base Period Return x 365/7

Effective Yield = [(1 + Base Period Return)365/7] - 1

For the seven days ended December 31, 1998, the Fund's Current Yield was ____%
and the Fund's Effective Yield was ___%.

FINANCIAL STATEMENTS

The financial statements for the Fund and the Portfolio for the fiscal year
ended December 31, 1998, are incorporated herein by reference to the Fund's
Annual Report dated December 31, 1998. A copy of the Fund's Annual Report
may be obtained without charge by contacting the Fund.

24
<PAGE>

APPENDIX
DESCRIPTION OF RATINGS

Description of S&P corporate bond ratings:

AAA - Bonds rated AAA have the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.

AA - Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small degree.

S&P's letter ratings may be modified by the addition of a plus or a
minus sign, which is used to show relative standing within the major categories,
except in the AAA rating category.

Description of Moody's corporate bond ratings:

Description of Fitch IBCA, Inc. ("Fitch") corporate bond ratings:

25
<PAGE>

ratings by the lesser financial power of the enterprise and more local type of
market.

26
<PAGE>

Description of Duff & Phelps' corporate bond ratings:

AAA--Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury Funds.

AA+, AA, AA--High credit quality. Protection factors are strong. Risk
is modest but may vary slightly from time to time because of economic
conditions.

Description of S&P's municipal bond ratings:

AAA--Prime--These are obligations of the highest quality. They have the
strongest capacity for timely payment of debt service.

S&P's letter ratings may be modified by the addition of a plus or a
minus sign, which is used to show relative standing within the major rating
categories, except in the AAA rating category.

Description of Moody's municipal bond ratings:

Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.

27
<PAGE>

Description of S&P municipal note ratings:

Description of Moody's municipal note ratings:

Description of S&P commercial paper ratings:

Description of Moody's commercial paper ratings:

Description of Fitch commercial paper ratings:

F1+--Exceptionally Strong Credit Quality. Issues assigned this rating
are regarded as having the strongest degree of assurance for timely payment.

F1--Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than the strongest
issue.

Description of Duff & Phelps' commercial paper ratings:

Duff 1--Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk factors are
minor.

Description of Thompson Bank Watch Short-Term Ratings:

T-1--The highest category; indicates a very high likelihood that
principal and interest will be paid on a timely basis.

28
<PAGE>

T-2--The second-highest category; while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1".

T-4--The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.

Description of Thompson BankWatch Long-Term Ratings:

AAA--The highest category; indicates that the ability to repay
principal and interest on a timely basis is extremely high.

AA--The second-highest category; indicates a very strong ability to
repay principal and interest on a timely basis, with limited incremental risk
compared to issues rated in the highest category.

Non-Investment Grade
(Issues regarded as having speculative characteristics in the likelihood of
timely repayment of principal and interest.)

BB--While not investment grade, the "BB" rating suggests that the
likelihood of default is considerably less than for lower-rated issues. However,
there are significant uncertainties that could affect the ability to adequately
service debt obligations.

CCC--Issues rated "CCC" clearly have a high likelihood of default, with
little capacity to address further adverse changes in financial circumstances.

CC--"CC" is applied to issues that are subordinate to other obligations
rated "CCC" and are afforded less protection in the event of bankruptcy or
reorganization.

D--Default

These long-term debt ratings can also be applied to local currency
debt. In such cases the ratings defined above will be preceded by the
designation "local currency".

Ratings in the Long-Term Debt categories may include a plus (+) or
Minus (-) designation, which indicates where within the respective category the
issue is placed.

29
<PAGE>

Investment Adviser of the Portfolio and Administrator
BANKERS TRUST COMPANY

Distributor
ICC DISTRIBUTORS, INC.

Custodian and Transfer Agent
BANKERS TRUST COMPANY

Independent Accountants
PRICEWATERHOUSECOOPERS LLP

Counsel
WILLKIE FARR & GALLAGHER

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

No person has been authorized to give any information or to make any
representations other than those contained in the Trust's Prospectus, its
Statement of Additional Information or the Trust's official sales literature in
connection with the offering of the Trust's shares and, if given or made, such
other information or representations must not be relied on as having been
authorized by the Trust. Neither the Prospectus nor this SAI constitutes an
offer in any state in which, or to any person to whom, such offer may not
lawfully be made.
--------------------

Cusip #055922108
Cusip #055922405
Cusip #055922306
Cusip #055922207
COMBMMKT400 (4/98)

<PAGE>

PART C OTHER INFORMATION

ITEM 23.

(a) (i) Declaration of Trust dated July 21, 1986; 1
(ii) Supplement to Declaration of Trust dated October 20, 1986; 1
(iii) Second Supplement to Declaration of Trust dated May 16, 1988; 1
(b) By-Laws; 1
(c) Incorporated by reference to Exhibit (b) above;
(d) Investment Advisory Contracts -- Not applicable;
(e) Distribution Agreement dated August 11, 1998; 5
(f) Bonus or Profit Sharing Contracts -- Not applicable;
(g) Custodian Agreement dated July 1, 1996; 2
(i) Amendment No. 2 to Exhibit A of the Custodian Agreement dated
October 8, 1997; 3
(ii) Amendment No. 3 to Exhibit A of the Custodian Agreement dated
June 10, 1998; 7
(iii) Amendment No. 4 to Exhibit A of the Custodian Agreement dated
December 9, 1998; 7
(iv) Cash Services Addendum to Custodian Agreement dated December 18,
1997; 4
(h) (i) Administration and Services Agreement dated October 28, 1992; 8
(ii) Exhibit D to the Administration and Services Agreement as of
October 28, 1992, as revised December 9, 1998; 7
(iii) Agreement to Provide Shareholder Services for BT
PreservationPlus Income Fund as of June 10, 1998; 5
(iv) Shareholder Services Plan for BT PreservationPlus Income Fund as
of June 10, 1998; 5
(vi) Expense Limitation Agreement dated September 30, 1998 on behalf
of Intermediate Tax Free Fund, International Equity Fund, Capital
Appreciation Fund, Pacific Basin Equity Fund, Latin American
Equity Fund, Small Cap Fund, International Small Company Equity
Fund and Global Emerging Markets Equity Fund; 6
(i) Legal Opinion - Not applicable;
(j) Other Opinions -- Not applicable;
(k) Omitted Financial Statements -- Not applicable;
(l) Initial Capital Agreements -- Not applicable;
(m) Rule 12b-1 Plans -- Not applicable;
(n) Financial Data Schedule -- Not applicable;
(o) Rule 18f-3 Plan -- Not applicable.

- -----------------------------------
1. Incorporated by reference to Post-Effective Amendment No. 34 to
Registrant's Registration Statement on Form N-1A ("Registration
Statement") as filed with the Securities and Exchange Commission
("Commission") on July 31, 1995.
2. Incorporated by reference to Post-Effective Amendment No. 44 to
Registrant's Registration Statement as filed with the Commission on
July 1, 1997.

<PAGE>

3. Incorporated by reference to Post-Effective Amendment No. 46 to
Registrant's Registration Statement as filed with the Commission on
January 28, 1998.
4. Incorporated by reference to Post-Effective Amendment No. 50 to
Registrant's Registration Statement as filed with the Commission on
June 30, 1998.
5. Incorporated by reference to Post-Effective Amendment No. 55 to
Registrant's Registration Statement as filed with the Commission on
November 25, 1998.
6. Incorporated by reference to Post-Effective Amendment No. 56 to
Registrant's Registration Statement as filed with the Commission on
January 28, 1999.
7. Incorporated by reference to Post-Effective Amendment No. 57 to
Registrant's Registration Statement as filed with the Commission on
February 8, 1999.
8. Incorporated by reference to Post-Effective Amendment No. 29 to
Registrant's Registration Statement as filed with the Commission on
November 8, 1993.

ITEM 24. Persons Controlled by or Under Common Control with Registrant:

Not applicable.

ITEM 25. Indemnification:

Incorporated by reference to Post-Effective Amendment No. 38 to Registrant's
Registration Statement as filed with the Commission on April 29, 1996.

ITEM 26. Business and Other Connections of Investment Adviser:

Bankers Trust Company ("Bankers Trust") serves as investment adviser to the
Fund's Portfolio. Bankers Trust, a New York banking corporation, is a wholly
owned subsidiary of Bankers Trust Corporation. Bankers Trust conducts a variety
of commercial banking and trust activities and is a major wholesale supplier of
financial services to the international institutional market. To the knowledge
of the Trust, none of the directors or officers of Bankers Trust, except those
set forth below, is or has been at anytime during the past two fiscal years
engaged in any other business, profession, vocation or employment of a
substantial nature, except that certain directors and officers also hold various
positions with and engage in business for Bankers Trust Corporation. Set forth
below are the names and principal businesses of the directors and officers of
Bankers Trust who are or during the past two fiscal years have been engaged in
any other business, profession, vocation or employment of a substantial nature.
These persons may be contacted c/o Bankers Trust, 130 Liberty Street, New York,
New York 10006.

George B. Beitzel, International Business Machines Corporation ("IBM"), Old
Orchard Road, Armonk, NY 10504. Director, Bankers Trust; Retired Senior Vice
President and Director, IBM; Director, Computer Task Group; Director, Phillips
Petroleum Company; Director, Caliber Systems, Inc. (formerly, Roadway Services
Inc.); Director, Rohm and Haas Company; Director, TIG Holdings; Chairman
Emeritus, Amherst College; and Chairman, Colonial Williamsburg Foundation.

<PAGE>

Richard H. Daniel, Bankers Trust, 130 Liberty Street, New York, New York 10006.
Vice Chairman and Chief Financial Officer, Bankers Trust and Bankers Trust
Corporation; Beneficial owner, General Partner, Daniel Brothers, Daniel Lingo &
Assoc., Daniel Pelt & Assoc.; and beneficial owner, Rhea C. Daniel Trust.

Philip A. Griffiths, Bankers Trust, 130 Liberty Street, New York, New York
10006. Director, Institute for Advanced Study; Director, Bankers Trust;
Chairman, Committee on Science, Engineering and Public Policy of the National
Academies of Sciences and Engineering & the Institute of Medicine; Chairman and
member, Nominations Committee and Committee on Science and Engineering
Indicators, National Science Board; and Trustee, North Carolina School of
Science and Mathematics and the Woodward Academy.

William R. Howell, J.C. Penney Company, Inc., P.O. Box 10001, Plano, TX
75301-0001. Chairman Emeritus, J.C. Penney Company, Inc.; Director, Bankers
Trust; Director, Exxon Corporation; Director, Halliburton Company; Director,
Warner-Lambert Corporation; Director, The Williams Companies, Inc.; and
Director, National Retail Federation.

Vernon E. Jordan, Jr., Akin, Gump, Strauss, Hauer & Feld, LLP, 1333 New
Hampshire Ave., N.W., Washington, DC 20036. Senior Partner, Akin, Gump, Strauss,
Hauer & Feld, LLP; Director, Bankers Trust; Director, American Express Company;
Director, Dow-Jones, Inc.; Director, J.C. Penney Company, Inc.; Director, Revlon
Group Incorporated; Director, Ryder System, Inc.; Director, Sara Lee
Corporation; Director, Union Carbide Corporation; Director, Xerox Corporation;
Trustee, Brookings Institution; Trustee, The Ford Foundation; and Trustee,
Howard University.

David Marshall, Bankers Trust, 130 Liberty Street, New York, New York 10006.
Chief Information Officer and Executive Vice President, Bankers Trust
Corporation; Senior Managing Director, Bankers Trust.

Hamish Maxwell, Philip Morris Companies Inc., 120 Park Avenue, New York, NY
10006. Retired Chairman and Chief Executive Officer, Philip Morris Companies
Inc.; Director, Bankers Trust; Director, The News Corporation Limited; Director,
Sola International Inc.; and Chairman, WWP Group plc.

Frank N. Newman, Bankers Trust, 130 Liberty Street, New York, New York 10006.
Chairman of the Board, Chief Executive Officer and President, Bankers Trust
Corporation and Bankers Trust; Director, Bankers Trust; Director, Dow-Jones,
Inc.; and Director, Carnegie Hall.

N.J. Nicholas Jr., 745 Fifth Avenue, New York, NY 10020. Director, Bankers
Trust; Director, Boston Scientific Corporation; and Director, Xerox Corporation.

Russell E. Palmer, The Palmer Group, 3600 Market Street, Suite 530,
Philadelphia, PA 19104. Chairman and Chief Executive Officer, The Palmer Group;
Director, Bankers Trust; Director, Allied-Signal Inc.; Director, Federal Home
Loan Mortgage Corporation; Director, GTE

<PAGE>

Corporation; Director, The May Department Stores Company; Director, Safeguard
Scientifics, Inc.; and Trustee, University of Pennsylvania.

Donald L. Staheli, Bankers Trust, 130 Liberty Street, New York, New York 10006.
Chairman of the Board and Chief Executive Officer, Continental Grain Company;
Director, Bankers Trust; Director, ContiFinancial Corporation; Director,
Prudential Life Insurance Company of America; Director, Fresenius Medical Care,
A.g.; Director, America-China Society; Director, National Committee on United
States-China Relations; Director, New York City Partnership; Chairman,
U.S.-China Business Council; Chairman, Council on Foreign Relations; Chairman,
National Advisor Council of Brigham Young University's Marriott School of
Management; Vice Chairman, The Points of Light Foundation; and Trustee, American
Graduate School of International Management.

Patricia Carry Stewart, Bankers Trust, Office of the Secretary, 130 Liberty
Street, New York, NY 10006. Director, Bankers Trust; Director, CVS Corporation;
Director, Community Foundation for Palm Beach and Martin Counties; Trustee
Emeritus, Cornell University.

George J. Vojta, Bankers Trust, 130 Liberty Street, New York, NY 10006. Vice
Chairman, Bankers Trust Corporation and Bankers Trust; Director, Bankers Trust;
Director, Alicorp S.A.; Director; Northwest Airlines; Director, Private Export
Funding Corp.; Director, New York State Banking Board; Director, St.
Lukes-Roosevelt Hospital Center; Partner, New York City Partnership; and
Chairman, Wharton Financial Services Center.

Paul A. Volcker, Bankers Trust, 130 Liberty Street, New York, New York 10006.
Director, Bankers Trust; Director, American Stock Exchange; Director, Nestle
S.A.; Director, Prudential Insurance Company; Director, UAL Corporation;
Chairman, Group of 30; North American Chairman, Trilateral Commission;
Co-Chairman, Bretton Woods Committee; Co-Chairman, U.S./Hong Kong Economic
Cooperation Committee; Director, American Council on Germany; Director, Aspen
Institute; Director, Council on Foreign Relations; Director, The Japan Society;
and Trustee, The American Assembly.

Melvin A. Yellin, Bankers Trust, 130 Liberty Street, New York, New York 10006.
Senior Managing Director and General Counsel, Bankers Trust Corporation and
Bankers Trust; Director, 1136 Tenants Corporation; and Director, ABA Securities
Association.

Item 27. Principal Underwriters:

(a) ICC Distributors, Inc., the Distributor for shares of the Registrant, also
acts as principal underwriter for the following open-end investment companies:
BT Advisor Funds, BT Institutional Funds, and BT Pyramid Mutual Funds.

<PAGE>

(b) Unless otherwise stated, the principal business address for the following
persons is Two Portland Square, Portland, Maine 04101.

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
---------------- ---------------- ---------------

John Y. Keffer President None

Sara M. Morris Treasurer None

David I. Goldstein Secretary None

Benjamin L. Niles Vice President None

Margaret J. Fenderson Assistant Treasurer None

Dana L. Lukens Assistant Secretary None

Nanette K. Chern Chief Compliance Officer None

ITEM 28. Location of Accounts and Records:

BT Investment Funds (Registrant): One South Street, Baltimore, MD 21202

Bankers Trust (Investment Adviser, Administrator, Custodian and Transfer Agent):
130 Liberty Street, New York, NY 10006

ICC Distributors, Inc. (Distributor): Two Portland Square, Portland, Maine 04101

ITEM 29. Management Services:

Not applicable.

ITEM 30. Undertakings:

The Registrant undertakes to comply with Section 16(c) of the 1940 Act as though
such provisions of the Act were applicable to the Registrant except that the
request referred to in the third full paragraph thereof may only be made by
shareholders who hold in the aggregate at least

<PAGE>

10% of the outstanding shares of the Registrant, regardless of the net asset
value or values of shares held by such requesting shareholders.

Registrant hereby undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to shareholders,
upon request and without charge.

<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, BT INVESTMENT FUNDS, has duly
caused this Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereto duly authorized, in the City of Baltimore and the
State of Maryland on the 26th day of February, 1999.

BT INVESTMENT FUNDS

By: /s/ Daniel O. Hirsch
Daniel O. Hirsch, Secretary
February 26, 1999

Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by the following
persons in the capacity and on the date indicated:

NAME TITLE DATE
- ---- ----- ----

By: /s/ Daniel O. Hirsch Secretary February 26, 1999
Daniel O. Hirsch (Attorney in Fact
For the Persons
Listed Below)

/s/ John Y. Keffer* President and
John Y. Keffer Chief Executive Officer

/s/ Joseph A. Finelli* Treasurer (Principal
Joseph A. Finelli Financial and
Accounting Officer)

/s/ S. LELAND DILL** Trustee
S. Leland Dill

<PAGE>

/s/ KELVIN J. LANCASTER** Trustee
Kelvin J. Lancaster

/s/ PHILIP SAUNDERS, JR.** Trustee
Philip Saunders, Jr.

* By Power of Attorney - Incorporated by reference to Post-Effective Amendment
No. 57 to Registrant's Registration Statement as filed with the Commission on
February 8, 1999.
** By Power of Attorney - Incorporated by reference to Post-Effective Amendment
No. 45 to Registrant's Registration Statement as filed with the Commission on
September 10, 1997.

<PAGE>

SIGNATURES

CASH MANAGEMENT PORTFOLIO has duly caused this Post Effective Amendment
No. 59 to the Registration Statement on Form N-1A of BT Investment Funds to be
signed on its behalf by the undersigned, thereto duly authorized, in the City of
Baltimore and the State of Maryland on the 26th day of February, 1999.

CASH MANAGEMENT PORTFOLIO

By: /s/ Daniel O. Hirsch
Daniel O. Hirsch, Secretary
February 26, 1999

NAME TITLE DATE
- ---- ----- ----
By: /s/ Daniel O. Hirsch Secretary February 26, 1999
Daniel O. Hirsch (Attorney in Fact
For the Persons
Listed Below)

/s/ John Y. Keffer* President and
John Y. Keffer Chief Executive Officer

/s/ Joseph A. Finelli* Treasurer (Principal
Joseph A. Finelli Financial and
Accounting Officer)

/s/ CHARLES P. BIGGAR** Trustee
Charles P. Biggar

/s/ S. LELAND DILL** Trustee
S. Leland Dill

/s/ PHILIP SAUNDERS, JR.** Trustee
Philip Saunders, Jr.

<PAGE>

SIGNATURES

TAX FREE MONEY PORTFOLIO has duly caused this Post Effective Amendment
No. 59 to the Registration Statement on Form N-1A of BT Investment Funds to be
signed on its behalf by the undersigned, thereto duly authorized, in the City of
Baltimore and the State of Maryland on the 26th day of February, 1999.

TAX FREE MONEY PORTFOLIO

By: /s/ Daniel O. Hirsch
Daniel O. Hirsch, Secretary
February 26, 1999

NAME TITLE DATE
- ---- ----- ----

By: /s/ Daniel O. Hirsch Secretary February 26, 1999
Daniel O. Hirsch (Attorney in Fact
For the Persons
Listed Below)

/s/ John Y. Keffer* President and
John Y. Keffer Chief Executive Officer

/s/ Joseph A. Finelli* Treasurer (Principal
Joseph A. Finelli Financial and
Accounting Officer)

/s/ CHARLES P. BIGGAR** Trustee
Charles P. Biggar

/s/ S. LELAND DILL** Trustee
S. Leland Dill

/s/ PHILIP SAUNDERS, JR.** Trustee
Philip Saunders, Jr.

<PAGE>
SIGNATURES

NY TAX FREE MONEY PORTFOLIO has duly caused this Post Effective
Amendment No. 59 to the Registration Statement on Form N-1A of BT Investment
Funds to be signed on its behalf by the undersigned, thereto duly authorized, in
the City of Baltimore and the State of Maryland on the 26th day of February,
1999.

NY TAX FREE MONEY PORTFOLIO

By: /s/ Daniel O. Hirsch
Daniel O. Hirsch, Secretary
February 26, 1999

NAME TITLE DATE
- ---- ----- ----

By: /s/ Daniel O. Hirsch Secretary February 26, 1999
Daniel O. Hirsch (Attorney in Fact
For the Persons
Listed Below)

/s/ John Y. Keffer* President and
John Y. Keffer Chief Executive Officer

/s/ Joseph A. Finelli* Treasurer (Principal
Joseph A. Finelli Financial and
Accounting Officer)

/s/ CHARLES P. BIGGAR** Trustee
Charles P. Biggar

/s/ S. LELAND DILL** Trustee
S. Leland Dill

/s/ PHILIP SAUNDERS, JR.** Trustee
Philip Saunders, Jr.

<PAGE>
SIGNATURES

TREASURY MONEY PORTFOLIO has duly caused this Post Effective Amendment
No. 59 to the Registration Statement on Form N-1A of BT Investment Funds to be
signed on its behalf by the undersigned, thereto duly authorized, in the City of
Baltimore and the State of Maryland on the 26th day of February, 1999.

TREASURY MONEY PORTFOLIO

By: /s/ Daniel O. Hirsch
Daniel O. Hirsch, Secretary
February 26, 1999

NAME TITLE DATE
- ---- ----- ----

By: /s/ Daniel O. Hirsch Secretary February 26, 1999
Daniel O. Hirsch (Attorney in Fact
For the Persons
Listed Below)

/s/ John Y. Keffer* President and
John Y. Keffer Chief Executive Officer

/s/ Joseph A. Finelli* Treasurer (Principal
Joseph A. Finelli Financial and
Accounting Officer)

/s/ CHARLES P. BIGGAR** Trustee
Charles P. Biggar

/s/ S. LELAND DILL** Trustee
S. Leland Dill

/s/ PHILIP SAUNDERS, JR.** Trustee
Philip Saunders, Jr.

<PAGE>

BT INVESTMENT FUNDS
One South Street
Baltimore, Maryland 21202

February 26, 1999

EDGAR Operations Branch
Securities and Exchange Commission
Division of Investment Management
450 Fifth Street, Northwest
Washington, DC 20549

Re: BT INVESTMENT FUNDS (the "Trust")
1933 Act File No. 33-07404
1940 Act File No. 811-4760

Dear Sir or Madam:

Post-Effective No. 58 under the Securities Act of 1933, as amended (the
"1933 Act") and Amendment No. 58 under the Investment Company Act of 1940 to the
Registration Statement of the above-referenced Trust is hereby electronically
transmitted. This filing is being made pursuant to paragraph (a) of Rule 485
under the 1933 Act.

Pursuant to Securities Act release No. 6510 and Investment Company
Release No. 13768 (February 15, 1984), we request selective review of the above
referenced Post-Effective Amendment.

The disclosure, design and format contained in this Post-Effective
Amendment is substantially similar to disclosure provided pursuant to new Form
N-1A for Institutional International Equity Fund in the BT Mutual Funds family
previously reviewed by the Staff (BT Institutional Funds (File no. 33-34079)
filed on November 24, 1998).

The following sections of the Funds' prospectuses and statement of
additional information differ from those of the Institutional International
Equity Fund only so far as necessary to include Fund-specific disclosure:

The Prospectuses:
1. Cover page
2. Overview
3. Who Should Consider Investing in the Fund
4. Annual Fund Operating Expenses
5. Objective
6. Strategy

<PAGE>

7. Principal Investments
8. Investment Process
9. Portfolio Managers

If you have any questions regarding this filing, please call me at
(410) 895-3776.

Very truly yours,

Daniel O. Hirsch
Secretary

Enclosures