(GRAPHIC APPEARS HERE)
Mutual Fund
Annual Report
December 31, 1999
Investment Class
BT Quantitative Equity Fund
(GRAPHIC APPEARS HERE)
<PAGE>
BT Quantitative Equity Fund
Table of Contents
Letter to Shareholders 3
BT Quantitative Equity Fund
Schedule of Investments 6
Statement of Assets and Liabilities 7
Statement of Operations 8
Statement of Changes in Net Assets 9
Financial Highlights 10
Notes to Financial Statements 11
Report of Independent Auditors 14
Tax Information 14
Proxy Results 15
---------------
The Fund is not insured by the FDIC and is not a
deposit, obligation of or guaranteed by Bankers Trust
Company. The Fund is subject to investment risks,
including possible loss of principal amount invested.
---------------
2
<PAGE>
BT Quantitative Equity Fund
Letter to Shareholders
We are pleased to present you with this first annual report for the BT
Quantitative Equity Fund (the "Fund"), providing a review of the markets, the
portfolio, and our outlook. Included are a complete financial summary of the
Fund's operations and a listing of the portfolio's holdings. Since the Fund has
not been in operation for a full twelve months, performance is being reported
for the life of the Fund as of December 31, 1999.
MARKET ACTIVITY
The S&P 500 Index appreciated in excess of 20% for a record 5th consecutive year
in 1999. Never before in recorded history have U.S. stocks achieved this total
return level more than twice in a row. A combination of strong domestic economic
growth and impressive corporate earnings gains--with minimal
inflation--positively influenced the market and also combined to drive equity
valuations to historically high levels despite a rising interest rate
environment. The S&P 500 Index was bolstered primarily by a technology
sector-driven rally in the fourth quarter of 1999. Still, volatility within the
U.S. equity market remained high, and the Russell 2000 Index, which measures
small cap equities, outperformed the S&P 500 Index on an annual basis for the
first time in five years, as investors sought the lower valuations of small cap
growth stocks.
As has been the case for the past several years, large-capitalization
growth-oriented stocks outperformed their value counterparts for the twelve
months, led in 1999 by the technology sector. Other stronger performing sectors
for the year included capital goods and basic materials. Weaker performing
sectors included health care, utilities, and transportation. Interestingly, more
stocks in the S&P 500 Index actually declined in value in 1999 rather than
appreciated, rendering performance in the U.S. stock market very narrow indeed.
There were 41 changes to the Index for the twelve month period, due primarily to
mergers and acquisitions.
The merger market experienced a banner year with one of the most active markets
since the late 1980s. While headlines in the financial press were dominated by
concerns over rising interest rates and Internet-dominated Initial Public
Offering activity, the volume of announced U.S. merger and acquisition
transactions during 1999 reached another record with more than $1.7 trillion in
deals, as compared to $1.63 trillion in 1998. Nearly half of this 1999 merger
volume was comprised of media, telecommunications, and natural resources
transactions. The commercial banking industry also experienced significant
activity. The current value of domestic merger and acquisition activity marks
the seventh consecutive record year.
INVESTMENT REVIEW
The Fund seeks a total return greater than that of the S&P 500 Index by
following a quantitative strategy that integrates an exposure to the S&P 500
Index with investments in the stocks of acquisition targets(4). To track the
S&P 500 Index, the Fund invests in derivatives
CUMULATIVE TOTAL RETURNS
Period ended Past Since
December 31, 1999 6 months inception
- ------------------------------------------------------------------------
BT Quantitative Equity Fund(1) 8.86% 23.99%
(inception 3/31/99)
S&P 500 Index(2) 7.69% 15.29%
Lipper Multi Cap
Core Average(3) 10.97% 19.15%
(1) PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
(2) The S&P 500 is an index of common stocks in industry, transportation, and
financial and public utility companies. This index is unmanaged, and
investments cannot be made in an index.
(3) Lipper figures represent the average of the total returns, reported by all
of the mutual funds designated by Lipper, Inc. as falling into the
respective categories indicated. These figures do not reflect sales charges.
During the year ended December 31, 1999, Lipper changed the way it
classifies mutual funds. As a result of this reclassification, the BT
Quantitative Equity Fund is now part of the Lipper Multi Cap Core Index.
Previously, the fund was part of the Lipper Growth & Income Index.
(4) The Fund invests in stocks of acquisition targets. Mergers and acquisition
transactions may be renegotiated, terminated or delayed, and in the event
that these transactions fail to close or close at a less-than-expected price
per share, the Fund may realize losses or a lower return than expected.
Additionally, options and futures can be volatile investments, and may not
perform as expected.
3
<PAGE>
BT Quantitative Equity Fund
Letter to Shareholders
or common stocks of S&P 500 companies. To seek returns in excess of the S&P 500
Index, the Fund buys shares of companies that are acquisition targets based on
specific events that trigger a merger arbitrage opportunity. The goal is to
capture the difference between the target's post-bid share price and the
target's expected fixed payout. These investments are made based on our own
proprietary quantitative models. These shares are sold when the acquisition is
consummated or the transaction is abandoned.
The Fund has had an exciting initial period, marking its first nine months by
outperforming the S&P 500 Index by a margin of 8.70%. The Fund's strong returns
relative to the Index were primarily fueled by the numerous deals closed. Having
listed the Fund's second quarter merger deal investments in our last report, the
following is a list of merger deals that the Fund invested in during the six
months ended December 31, 1999, all of which were completed successfully.
Closed Deals from
July 1, 1999 - December 31, 1999
Avondale Industries Corp.
Browning Ferris Industries
Case Corp.
DSP Communications
Lone Star Industries Inc.
Nalco Chemical Co.
Nielsen Media Research
Promus Hotel Corp.
St. John Knits Inc.
Sequent Computer Systems
Unisource Worldwide
VWR Science Products Corp.
Wyman Gordon Co.
The Fund has established strict criteria in its disciplined merger arbitrage
investment approach. For example, the Fund:
o purchases only the stock of an announced target company
o invests only in merger deals that are generally made with financing of at
least 50% cash
o usually invests in acquisition targets with a minimum market capitalization of
$500 million, although shares of smaller companies may be purchased.
MANAGER OUTLOOK
Looking ahead for the near term, we believe the U.S. economy still has
substantial momentum, and the financial fundamentals for both households and
businesses remain strong. We anticipate GDP growth of about 4% through the first
half of the year 2000. While inflation has remained benign primarily because
growth in labor compensation has failed to outstrip productivity growth despite
drum-tight labor markets, inflation risks remain tilted to the upside, as labor
markets continue to tighten and as overseas growth continues to gather steam.
Thus, the Federal Reserve Board could, in our view, continue to nudge interest
rates higher through mid-2000, as it seeks to slow real economic growth to a
more sustainable pace.
Since the economy's ability to grow quickly and generate strong profits without
inflation has been the driving force behind the bull market of recent years,
what our outlook means is that economic fundamentals may be comparatively less
supportive of equities in the next year or so. However, even with a gradual
slowdown in economic growth, a modest pickup in inflation, and pressure on
profit margins from rising labor costs and higher interest rates, we do not see
a sharp correction in equities, because we expect a reasonably "soft landing"
for the economy. We also believe the economy will likely retain many of its
structural improvements, such as faster productivity growth and less volatile
economic cycles. The major risk to the equity markets, in our view, is if the
economy really overheats, provoking aggressive Fed tightening and imperiling the
economic expansion the U.S. has enjoyed for nearly nine years.
4
<PAGE>
BT Quantitative Equity Fund
Letter to Shareholders
As of December 31, 1999, the Fund had invested in five still-open merger deals.
These are Hannaford Brothers Co., Pittway Corp., Jostens Inc., TJ International
and United Water Resources. We believe that the environment for mergers remains
strong and that the Fund's opportunities to generate outstanding risk-adjusted
returns will continue.
We appreciate your support of the BT Quantitative Equity Fund and look forward
to serving your investment needs in the years ahead.
/s/ Manish Keshive
Manish Keshive
Portfolio Manager of the
BT Quantitative Equity Fund
December 31, 1999
Performance Comparison
BT QUANTITATIVE EQUITY FUND AND S&P 500 INDEX
GROWTH OF A $10,000 INVESTMENT (SINCE MARCH 31, 1999)
(GRAPHIC APPEARS HERE)
Quantitative Equity Fund $12,398 S&P 500 Index $11,529
Mar-99 10,000 10,000
Dec-99 12,399 11,529
Total Return for the Period March 31, 1999(1) through December 31, 1999
Since Inception 23.99%.
- ----------
(1) The Fund's inception date.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.The S&P 500 Index is unmanaged and investments
may not be made in an index. Performance figures assume the reinvestment of
dividends and capital gain distributions.
5
<PAGE>
BT Quantitative Equity Fund
Schedule of Investments December 31, 1999
Shares Security Value
- ------ -------- -----
Common Stocks - 10.1%
Building &
Construction - 0.6%
500 TJ International, Inc. $ 21,000
--------------
Electronic Security - 0.1%
100 Pittway Corp. 4,506
--------------
Retail - Food - 7.8%
3,000 Hannaford Brothers, Co. 207,938
2,100 Jostens, Inc. 51,056
--------------
258,994
--------------
Utility - 1.6%
1,500 United Water Resources, Inc. 51,281
--------------
Total Common Stocks
(Cost $339,391) 335,781
--------------
Unit Investment Trusts - 2.0%
450 S&P 500 Depository Receipt 66,094
--------------
Total Unit Investment Trusts
(Cost $58,668) 66,094
--------------
Principal/
Share
Amount Security Value
------ -------- -----
U.S. Treasury Bills - 74.3%
$2,300,000 5.09%, 2/24/00(1) $ 2,283,562
180,000 4.89%, 3/23/00(1) 177,984
--------------
Total U.S. Treasury Bills
(Cost $2,461,536) 2,461,546
--------------
Short-Term
Instrument - 12.9%
425,666 Institutional Cash
Management Fund 425,666
--------------
Total Short -Term Instrument
(Cost $425,666) 425,666
--------------
Total Investments
(Cost $3,285,261) 99.3% $ 3,289,087
Other Assets in Excess
of Liabilities 0.7 24,351
----- --------------
Net Assets 100.0% $ 3,313,438
===== ==============
- ----------
(1) Held as collateral for futures contracts.
See Notes to Financial Statements.
6
<PAGE>
BT Quantitative Equity Fund
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
As of
December 31, 1999
-----------------
<S><C>
Assets
Investments at Value (Cost $3,285,261) $ 3,289,087
Receivable for Fund Shares Sold 12,142
Receivable for Variation Margin 7,480
Dividends Receivable 1,832
Due from Bankers Trust 29,797
Prepaid Expenses and Other 11,842
---------------
Total Assets 3,352,180
---------------
Liabilities
Accrued Expenses and Other 38,742
---------------
Total Liabilities 38,742
---------------
Net Assets $ 3,313,438
===============
Composition of Net Assets
Paid-in Capital $ 3,048,058
Undistributed Net Investment Income 1,529
Accumulated Net Realized Gain from Investment and Futures Transactions 142,419
Net Unrealized Appreciation on Investments and Futures Contracts 121,432
---------------
Net Assets $ 3,313,438
===============
Net Asset Value, Offering and Redemption Price Per Share (net assets divided
by shares outstanding)
Investment Class(1) $ 12.12
===============
Institutional Class(2) $ 12.12
===============
</TABLE>
- ----------
(1) Net asset value, redemption price and offering price per share based on net
assets of $3,303,438 and 272,475 shares of beneficial interest outstanding;
$0.001 par value, unlimited number of shares of beneficial interest
authorized.
(2) Net asset value, redemption price and offering price per share based on net
assets of $10,000 and 825 shares of beneficial interest outstanding; $0.001
par value, unlimited number of shares of beneficial interest authorized. The
Institutional Class began operations on December 31, 1999.
See Notes to Financial Statements.
7
<PAGE>
BT Quantitative Equity Fund
Statement of Operations
<TABLE>
<CAPTION>
For the Period March 31, 1999(1)
through December 31, 1999
<S><C>
Investment Income
Dividends $ 11,812
Interest 31,226
----------------
Total Investment Income 43,038
----------------
Expenses
Amortization of Offering Costs 45,000
Registration Fees 41,379
Professional Fees 25,522
Printing and Shareholder Reports 21,325
Administration and Services Fees 7,201
Advisory Fees 6,366
Trustees Fees 3,860
Miscellaneous 3,950
----------------
Total Expenses 154,603
Less: Fee Waivers or Expense Reimbursements (142,798)
----------------
Net Expenses 11,805
----------------
Net Investment Income 31,233
----------------
Realized and Unrealized Gain on Investments and Futures Contracts
Net Realized Gain from Investment Transactions 110,044
Net Realized Gain from Futures Contracts 76,315
Net Change in Unrealized Appreciation/Depreciation on Investments
and Futures Contracts 121,432
----------------
Net Realized and Unrealized Gain on Investments and Futures Contracts 307,791
----------------
Net Increase in Net Assets from Operations $ 339,024
================
</TABLE>
- ----------
(1) Commencement of operations.
See Notes to Financial Statements.
8
<PAGE>
BT Quantitative Equity Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Period March 31, 1999(1)
through December 31, 1999
<S><C>
Increase in Net Assets from:
Operations
Net Investment Income $ 31,233
Net Realized Gain from Investments and Futures Contracts 186,359
Net Change in Unrealized Appreciation/Depreciation on
Investments and Futures Contracts 121,432
-----------------
Net Increase in Net Assets from Operations 339,024
-----------------
Distributions to Shareholders
Net Investment Income (29,704)
Net Realized Gain from Investments and Futures Transactions (43,940)
-----------------
Total Distributions (73,644)
-----------------
Capital Transactions
Net Increase Resulting from Investment ClassShares 3,038,058
Net Increase Resulting from Institutional Class Shares(2) 10,000
-----------------
Net Increase in Net Assets from Capital Transactions 3,048,058
-----------------
Total Increase in Net Assets 3,313,438
Net Assets
Beginning of Period --
-----------------
End of Period (including undistributed net investment income of $1,529) $ 3,313,438
=================
</TABLE>
- ----------
(1) Commencement of operations.
(2) The Institutional Class began operations on December 31, 1999.
See Notes to Financial Statements.
9
<PAGE>
BT Quantitative Equity Fund
Financial Highlights
Contained below are selected data for a share outstanding, total investment
return, ratios to average net assets and other supplemental data for the periods
indicated.
<TABLE>
<CAPTION>
Investment Class For the Period March 31, 1999(1)
through December 31, 1999
<S><C>
Per Share Operating Performance:
Net Asset Value, Beginning of Period $ 10.00
--------------------
Income from Investment Operations
Net Investment Income 0.11
Net Realized and Unrealized Gain on Investment and Futures Transactions 2.29
--------------------
Total from Investment Operations 2.40
Distributions to Shareholders
Net Investment Income (0.11)
Net Realized Gain from Investment and Futures Transactions (0.17)
--------------------
Total Distributions (0.28)
--------------------
Net Asset Value, End of Period $ 12.12
====================
Total Investment Return 23.99%
Supplemental Data and Ratios:
Net Assets, End of Period (000s omitted) $3,303
Ratios to Average Net Assets:
Net Investment Income 2.39%(2)
Expenses After Waivers 0.90%(2)
Expenses Before Waivers 11.84%(2)
Decrease Reflected in Above Expense Ratios Due to Fee Waivers
or Expense Reimbursements 10.94%(2)
Portfolio Turnover Rate 409%
</TABLE>
- ----------
(1) Commencement of operations.
(2) Annualized.
The Institutional Class commenced selling shares on December 31, 1999 and
therefore no financial highlights are presented.
See Notes to Financial Statements.
10
<PAGE>
BT Quantitative Equity Fund
Notes to Financial Statements
Note 1--Organization and Significant
Accounting Policies
A. Organization
BT Investment Funds (the "Trust") is registered under the Investment Company Act
of 1940 (the "Act"), as amended, as an open-end management investment company.
The Trust was organized on February 28, 1992, as a business trust under the laws
of the Commonwealth of Massachusetts. The BT Quantitative Equity Fund (the
"Fund") is one of the funds offered to investors by the Trust. The Fund began
operations and offering shares of beneficial interest on March 31, 1999.
The BT Quantitative Equity Fund offers two classes of shares to investors: the
Investment Class and the Institutional Class. The Investment Class began
operations and offering shares of beneficial interest on March 31, 1999. The
Institutional Class began operations and offering shares of beneficial interest
on December 31, 1999. Both classes of shares have identical rights to earnings,
assets, and voting privileges, except that each class has its own expenses and
exclusive voting rights with respect to matters affecting it.
B. Security Valuation
The Fund's investments listed or traded on National Stock Exchanges or other
domestic or foreign exchanges are valued based on their closing price.
Short-term debt securities are valued at market value until such time as they
reach a remaining maturity of 60 days, whereupon they are valued at amortized
cost using their value on the 61st day. All other securities and other assets
are valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Trustees.
C. Futures Contracts
The Fund enters into financial futures contracts, which are contracts to buy a
standard quantity of securities at a specified price on a future date. The Fund
is required to deposit either in cash or securities an amount equal to a certain
percentage of the contract amount. Variation margin payments are made or
received by the Fund each day, depending on the daily fluctuations in the value
of the underlying security, and are recorded for financial statement purposes as
unrealized gains or losses by the Fund. The Fund's investment in financial
futures contracts is designed to closely replicate the benchmark index used by
the Fund.
Futures contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are traded.
D. Security Transactions and Interest Income
Security transactions are accounted for on a trade date basis. Dividend income
is recorded on the ex-dividend date. Interest income is recorded on the accrual
basis and includes amortization of premium and discount on investments. Realized
gains and losses from securities transactions are recorded on the identified
cost basis.
E. Distributions
It is the Fund's policy to declare and distribute dividends annually to
shareholders from net investment income. Distributions of net realized
short-term and long-term capital gains, if any, are made annually to the extent
they exceed capital loss carryforwards. Dividends and distributions payable to
shareholders are recorded by the Fund on the ex-dividend date.
F. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders. Therefore, no federal income tax provision is
required.
The Fund may periodically make reclassifications among certain of its capital
accounts as a result of the differences in the characterization and allocation
of certain income and capital gain distributions determined annually in
accordance with federal tax regulations which may differ from generally accepted
accounting principles.
G. Other
The Trust accounts separately for the assets, liabilities, and operations of
each of its funds. Expenses directly attributable to a fund are charged to that
fund, while expenses which are attributable to all of the Trust's funds are
allocated among them. Costs incurred in connection with the initial offering of
the Fund have been capitalized and are being amortized over a one year period.
11
<PAGE>
BT Quantitative Equity Fund
Notes to Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts in the financial statements. Actual results
could differ from those estimates.
Note 2--Fees and Transactions with Affiliates
The Fund has entered into an Administration and Services Agreement with Bankers
Trust Company ("Bankers Trust"), an indirect wholly owned subsidiary of Deutsche
Bank AG. Under this agreement, Bankers Trust provides administrative, custody,
transfer agency and shareholder services to the Fund in return for a fee
computed daily and paid monthly at an annual rate of .55% of the Fund's average
daily net assets.
The Fund has entered into an Advisory Agreement with Bankers Trust. Under this
agreement, the Fund pays Bankers Trust a fee computed daily and paid monthly at
an annual rate of .50% of the Fund's average daily net assets.
Bankers Trust has contractually agreed through April 30, 2000 to waive its fees
and reimburse expenses of the Fund, to the extent necessary, to limit all
expenses to .90% of the average daily net assets of the Fund.
The Fund may invest in the Institutional Cash Management Fund (the "Cash
Management Fund"), an open-end management investment company managed by Bankers
Trust. The Cash Management Fund is offered as a cash management option to the
Fund and other accounts managed by Bankers Trust. Distributions from the Cash
Management Fund to the Fund for the period ended December 31, 1999, amounted to
$9,605 and are included in dividend income.
ICC Distributors, Inc. provides distribution services to the Fund.
Note 3--Shares of Beneficial Interest
At December 31, 1999, there were an unlimited number of shares of beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
For the Period
March 31, 1999(1)
Through
December 31, 1999
----------------------------------------------------------
Investment Institutional
Class Class(2)
Shares Amount Shares Amount
------------ -------------- ----------- -------------
Sold 289,284 $ 3,223,188 825 $ 10,000
Reinvested 6,140 73,644 -- --
Redeemed (22,949) (258,774) -- --
------------ -------------- ----------- -------------
Net Increase 272,475 $ 3,038,058 825 $ 10,000
============ ============== =========== =============
- ----------
(1) Commencement of operations.
(2) The Institutional Class began operations on December 31, 1999.
Note 4--Purchases and Sales of Investment
Securities
The aggregate cost of purchases and proceeds from sales of investments, other
than short-term obligations, for the period ended December 31, 1999 were
$2,725,321 and $2,437,298, respectively. For federal income tax purposes, the
tax basis of investments held at December 31, 1999 was $3,285,261. The aggregate
gross unrealized appreciation was $9,495, and the aggregate gross unrealized
depreciation for all investments was $5,669 as of December 31, 1999.
Note 5--Futures Contracts
A summary of obligations under these financial instruments at December 31, 1999
is as follows:
Market Unrealized
Type of Future Expiration Contracts Position Value Appreciation
- ------------- ---------- --------- ------- ------- ------------
S&P 500 Index
Futures March 2000 8 Long $2,968,400 $106,900
S&P 500 Index
Mini Futures March 2000 4 Long 296,840 10,706
12
<PAGE>
BT Quantitative Equity Fund
Notes to Financial Statements
The use of futures contracts involves elements of market risk and risks in
excess of the amount recognized in the Statement of Assets and Liabilities. The
"market value" presented above represents the Fund's total exposure in such
contracts whereas only the net unrealized appreciation is reflected in the
Fund's net assets. Risks inherent in the use of futures contracts include 1)
adverse changes in the value of such instruments, 2) an imperfect correlation
between the price of the contracts and the underlying index and 3) the
possibility of an illiquid secondary market.
Note 6--Fund Name Change
On April 30, 2000, the Fund will change its name from BT Quantitative Equity
Fund to Quantitative Equity Fund.
13
<PAGE>
BT Quantitative Equity Fund
Report of Independent Auditors
To the Shareholders and Board of Trustees
BT Investment Funds - BT Quantitative Equity Fund
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of BT Quantitative Equity Fund (the "Fund") as of
December 31, 1999, and the related statement of operations, statement of changes
in net assets, and financial highlights for the period March 31, 1999
(commencement of operations) through December 31, 1999. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 1999, by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly in all material respects, the financial position of BT
Quantitative Equity Fund at December 31, 1999, and the results of its
operations, the changes in its net assets, and its financial highlights for the
period March 31, 1999 (commencement of operations) through December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
Ernst & Young LLP
Philadelphia, Pennsylvania
January 26, 2000
Tax Information (Unaudited) For the Year Ended December 31, 1999
We are providing this information as required by the Internal Revenue Code. The
amounts may differ from those elsewhere in this report because of differences
between tax and financial reporting requirements.
Of the ordinary distributions made during the fiscal year ended December 31,
1999, 7.29% qualifies for the dividends received deduction available to
corporate shareholders.
Of the ordinary distributions made during the fiscal year ended December 31,
1999, 79.80% has been derived from investments in U.S. Government and Agency
Obligations. All or a portion of the distributions from this income may be
exempt from taxation at the state level. Consult your tax advisor for state
specific information.
14
<PAGE>
BT Quantitative Equity Fund
Proxy Results (unaudited)
During the year ended December 31, 1999, the Bankers Trust Investment Funds
shareholders voted on the following proposals at the annual meeting of
shareholders on October 8, 1999, or as adjourned. The description of each
proposal and number of shares voted are as follows:
1. To elect the Bankers Trust Investment Funds Board of Trustees.
Shares Shares Voted
Voted Withheld
For Authority
---------- ------------
Mr. Charles P. Biggar 76,032 --
Mr. S. Leland Dill 76,032 --
Mr. Richard T. Hale 76,032 --
Mr. Bruce E. Langton 76,032 --
Mr. Philip Saunders, Jr. 76,032 --
Mr. Harry Van Benschoten 76,032 --
Dr. Martin J. Gruber 76,032 --
Dr. Richard J. Herring 76,032 --
2. To approve the New Investment Advisory Agreement with Bankers Trust Company.
For Against Abstain
-------- ------- --------
74,309 -- 1,723
3. To approve the New Investment Advisory Agreement with Morgan Grenfell, Inc.
For Against Abstain
-------- ------- --------
73,399 911 1,722
4. To approve the New Investment Sub-advisory Agreement with Bankers Trust
Company.
For Against Abstain
-------- ------- --------
74,309 -- 1,723
5. To ratify the conversion of the Fund's structure from a stand-alone fund
structure to a master-feeder fund structure.
For Against Abstain Broker Non-Vote
-------- ------- -------- ---------------
59,362 8,411 1,723 6,536
6. To ratify the selection of Ernst & Young as the independent accountants of
the Fund.
For Against Abstain
-------- ------- --------
73,309 1,000 1,723
15
<PAGE>
For information on how to invest, shareholder account information and current
price and yield information, please contact your relationship manager or write
to us at:
Deutsche Asset Management Service Center
P.O. Box 219210
Kansas City, MO 64121-9210
or call our toll-free number: 1-800-730-1313
This report must be preceded or accompanied by a current prospectus for the
Fund.
BT Quantitative Equity Fund CUSIP #055922652
BT Investment Funds 812ANN (12/99)
Distributed by:
ICC Distributors, Inc.
