Deutsche Asset Management
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Mutual Fund
Semi-Annual Report
March 31, 2000
Intermediate Tax Free
Formerly BT Investment Intermediate Tax Free Fund
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Deutsche Bank Group
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Intermediate Tax Free
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TABLE OF CONTENTS
LETTER TO SHAREHOLDERS 3
INTERMEDIATE TAX FREE
Statement of Assets and Liabilities 7
Statement of Operations 8
Statements of Changes in Net Assets 9
Financial Highlights 10
Notes to Financial Statements 11
Intermediate Tax Free Portfolio
Schedule of Portfolio Investments 13
Statement of Assets and Liabilities 15
Statement of Operations 16
Statements of Changes in Net Assets 17
Financial Highlights 18
Notes to Financial Statements 19
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The Fund is not insured by the FDIC and is not a deposit, obligation of
or guaranteed byDeutsche Bank. The Fund is subject to investment risks,
including possible loss of principal amount invested.
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2
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Intermediate Tax Free
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LETTER TO SHAREHOLDERS
We are pleased to present you with this semi-annual report for Intermediate Tax
Free (the "Fund"), providing a review of the markets, the Portfolio, and our
outlook as well as a complete financial summary of the Fund's operations and a
listing of the Portfolio's holdings.
The name of the Fund has changed to Deutsche IntermediateTax Free, to reflect
the acquisition of BankersTrust by DeutscheBank. TheFund's investment
objectives, policies and strategies, as well as its portfolio managers,
remain the same.
MARKET ACTIVITY
THE FEDERAL RESERVE BOARD RAISED INTEREST RATES THREE TIMES DURING THE
SEMI-ANNUAL PERIOD.
o The U.S. economy remained vibrant with GDP growth in excess of 5% throughout
the six months, reaching an annual rate of 7.3% in the fourth quarter of 1999,
its fastest pace in almost sixteen years.
o Inflation overall remained benign. Crude oil prices reached a high of
$35/barrel, but following an agreement by OPEC, declined to $27/barrel by the
end of the semi-annual period.
o Still, inflation fears persisted, and thus following its June 30th and August
24th rate hikes, the Federal Reserve Board raised interest rates again by
0.25% each on November 16th, February 2nd, and March 21st.
MUNICIPAL BONDS WERE LESS VOLATILE THAN U.S. TREASURIES.
o During the fourth quarter of 1999, municipal bond yields did not rise as much
as Treasuries, nor did they fall as much as Treasuries in the first quarter of
2000.
o Specifically, yields on Treasuries rose 0.50% to 0.75% across the yield curve
during the fourth quarter of 1999, while yields on municipals across the yield
curve moved within a narrower band, increasing by 0.15% to 0.20%. The increase
in yields was primarily due to the Fed rate hikes and expectations of further
tightening, the ongoing strong economy, and rising oil prices.
o During the first quarter of 2000, yields on both Treasuries and municipals
were mixed, rising at the short-term end of the yield curve as the Fed
tightened twice, but falling at the longer-term end of the yield curve based
on conditions within the government market. This caused the municipal yield
curve to flatten, and the Treasury yield curve to invert. o The Treasury
market benefited from several unexpected changes during the first quarter.
First, it benefited from a flight to quality based on high volatility within
the equity markets and on credit concerns within the U.S. agency sector of the
fixed income market. Second, during the quarter the U.S. Treasury announced
its decision to reduce the number of auctions held and to institute a buyback
program, whereby the U.S. Treasury would buy back its own issues with budget
surplus monies. The result was a perceived scarcity value-and a rally-for U.S.
Treasuries. Municipals overall rallied as well.
<TABLE>
<CAPTION>
CUMULATIVE AVERAGE ANNUAL
TOTAL RETURNS TOTAL RETURNS
Periods ended Past 6 Past 1 Past 3 Past 5 Since Past 1 Past 3 Past 5 Since
March 31, 2000 months year years years inception year years years inception
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Intermediate Tax Free(1)
(inception 7/20/92) 1.70% -0.23% 14.03% 26.61% 43.44% -0.23% 4.47% 4.83% 4.80%
Lehman 7 Year General
Obligations Index(2)
(since 7/31/92) 1.42% 0.56% 16.25% 31.91% 55.66% 0.56% 5.15% 5.70% 5.51%
Lipper Intermediate
Municipal Debt
Average(3) (since 7/31/92) 1.32% -0.46% 13.30% 26.60% 44.97% -0.46% 4.25% 4.82% 4.96%
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<FN>
(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. Performance figures
assume the reinvestment of dividends and capital gain distributions. During
the period the Fund waived certain fees and expenses. Had these fees and
expenses not been waived, the Fund's return would have been lower.
(2) Indices are unmanaged, and investments cannot be made in an index. The index
represents general obligation bonds with maturities of 7 to 8 years.
(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.
</FN>
</TABLE>
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3
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LETTER TO SHAREHOLDERS
PORTFOLIO DIVERSIFICATION
By Sector as of March 31, 2000
(percentages are based on market value of total investments)
General Obligations 25.8%
Transportation 12.3
Property & Development 10.5
Building 10.2
Environment 9.2
Refunding 7.6
University 6.9
Turnpike/Highway 5.8
Hospital 3.1
Lease 2.6
Electric 1.6
Miscellaneous 4.4
o Although municipal yields rose 0.05% to 0.10% at the short-term end of the
curve and remained relatively flat at the 7-year maturity mark, they fell
0.05% to 0.25% at the longer-term end of the curve. More dramatically, U.S.
Treasury yields rose 0.25% to 0.50% at the short-term end of the curve,
remained relatively flat at the 5-year maturity mark and fell 0.40% to 0.65%
at the longer end of the curve.
MUNICIPAL SUPPLY CONTINUED TO DECLINE, BUT ENTRY INTO THE 10TH YEAR OF ECONOMIC
EXPANSION LED TO AN IMPROVED CREDIT QUALITY PICTURE AND HISTORICALLY ATTRACTIVE
YIELD LEVELS.
o There was $220 billion of municipal supply in 1999, down approximately 20%
from 1998. This declining trend continued into the first quarter of 2000,
with municipal supply down 32% for the first three months over the same three
month period one year ago.
o This low supply caused a narrowing of credit spreads across virtually all
municipal sectors.
o The number of rating upgrades exceeded the number of downgrades in all
municipal sectors except health care, representing the 18th consecutive
quarter of this positive credit quality trend.
o Yields on intermediate tax free bonds at the end of the semi-annual period
were approximately 83% of the yields of same-duration U.S. Treasuries.
On a taxable equivalent basis, this made municipal bond yields
particularly attractive for investment.
INVESTMENT REVIEW
The Fund outperformed both its category average and its benchmark for the six
months ended March 31, 2000. This can be attributed to several factors. First
was yield curve positioning. Even within the Fund's shorter than benchmark
duration positioning, the portfolio was somewhat overweighted in bonds with 15
year maturities. Yields at this portion of the yield curve rallied, while yields
of those bonds with shorter maturities either remained flat or rose.
The Fund also benefited from its diversified portfolio of municipal bonds
purchased from across the sector spectrum. As sector yield spreads narrowed as
supply declined, the Fund's holdings became more attractive.
Finally, the Fund benefited from strong sector and specific issue selection. For
example:
o The Fund was overweight in securities exempt from New York, Illinois and
Connecticut taxes, as these states' issues have high credit quality.
o We sold certain Connecticut, Florida, Washington and North Carolina securities
based on narrower yield spreads.
o We also sold all of our remaining California securities, as volume declined,
quality spreads narrowed, and yields became comparatively less attractive.
o We bought some Wisconsin and Illinois securities for attractive issue-specific
reasons.
The Fund was more fully invested by the end of the semi-annual period than it
was six months earlier, reducing its assets in cash from 20% on September 30,
1999 to 8% on March 31, 2000.
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4
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Intermediate Tax Free
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LETTER TO SHAREHOLDERS
Duration positioning had a mixed impact on Fund performance. Since the Federal
Reserve Board remained in a tightening mode, the Fund maintained a shorter than
benchmark duration for most of the semi-annual period. This positioning helped
performance in the fourth quarter of 1999 as intermediate municipal yields rose,
but hurt performance in the first quarter of 2000 when intermediate yields
declined. On March 31, 2000, the Fund's duration stood at 5.2 years and its
average maturity at 6.7 years.
Importantly, the Fund maintained a higher credit quality than its benchmark and
maintained a conservative credit posture, as mandated by the Fund's prospectus.
The average credit quality of investments in the Fund was Aa1 as of March 31,
2000, as rated by Moody's.
MANAGER OUTLOOK
Looking ahead, we are cautious within our near-term outlook for the municipal
bond market and more positive within our longer-term outlook. The reason--we
anticipate that the Federal Reserve Board will continue to tighten monetary
policy using a gradualist approach until the economy slows down to the 3%-4% GDP
growth range. For the near term then, we believe the first quarter of 2000 bond
rally may reverse and yields begin to rise again. Should this be the scenario,
we intend to renew our more defensive posture, maintaining our shorter than
benchmark duration and reducing our yield curve position to a more intermediate
range, locking in some of the profits and positive performance we earned from
the slightly longer maturities in which we invested.
Later in the year, should the U.S. economy in fact cool somewhat and inflation
remain benign, we believe municipal yields may start to rally again against a
positive backdrop of low supply, positive credit quality trends, and
attractive yields relative to other fixed income sectors.
We will, of course, continue monitoring economic conditions and how they
affect the financial markets, as we seek to produce a yield greater than a tax
free money market fund with lower risk to principal than a longer term or lower
credit quality tax free bond fund.
/s/ GARY POLLACK
Gary Pollack
Portfolio Manager of the
INTERMEDIATE TAX FREE PORTFOLIO
March 31, 2000
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5
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Intermediate Tax Free
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PERFORMANCE COMPARISON
[GRAPHIC OMITTED]
PLOT POINTS AS FOLLOWS:
INTERMEDIATE TAX FREE AND LEHMAN 7-YEAR G.O. BOND INDEX
GROWTH OF A $10,000 INVESTMENT (SINCE JULY 20, 1992)
Intermediate Lehman 7-Year
Tax Free General Oblgation Bond
Fund - $14,344 Index - $15,566
Jul-92 10,000 10,000
Sep-92 9,937 9,972
Mar-93 10,377 10,463
Sep-93 10,960 11,076
Mar-94 10,667 10,741
Sep-94 10,787 10,973
Mar-95 11,255 11,452
Sep-95 11,779 12,147
Mar-96 12,018 12,419
Sep-96 12,261 12,691
Mar-97 12,499 12,997
Sep-97 13,172 13,715
Mar-98 13,658 14,176
Sep-98 14,278 14,816
Mar-99 14,403 15,024
Sep-99 14,105 14,897
Mar-00 14,344 15,566
Average Annual Total Return for the Periods Ended March 31, 2000(2)
One Year -0.23% Five Years 4.83% Since 7/20/92(1) 4.80%
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(1) The Fund's inception date.
(2) Unaudited.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Performance figures assume the reinvestment of
dividends and capital gain distributions. During the period the Fund waived
certain fees and expenses.
Benchmark return is for the period beginning July 31, 1992.
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6
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STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
<TABLE>
<CAPTION>
AS OF
MARCH 31, 2000
--------------
<S> <C>
ASSETS
Investment in Intermediate Tax Free Portfolio, at Value $19,304,561
Prepaid Expenses and Other 21,476
Due from Bankers Trust 7,653
-----------
Total Assets 19,333,690
-----------
LIABILITIES
Payable for Shares of Beneficial Interest Redeemed 143,387
Distributions Payable 39,993
Accrued Expenses and Other 14,074
-----------
Total Liabilities 197,454
-----------
NET ASSETS $19,136,236
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COMPOSITION OF NET ASSETS
Paid-in Capital $19,132,729
Accumulated Net Realized Loss from Investment Transactions (32,482)
Net Unrealized Appreciation on Investment 35,989
-----------
NET ASSETS $19,136,236
-----------
SHARES OUTSTANDING ($0.001 par value per share, unlimited number of shares of
beneficial interest authorized) 1,851,527
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(net assets divided by shares outstanding) $ 10.34
===========
</TABLE>
See Notes to Financial Statements.
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7
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Intermediate Tax Free
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STATEMENT OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
MARCH 31, 2000
--------------
<S> <C>
INVESTMENT INCOME
Income Allocated from Intermediate Tax Free Portfolio, net $437,264
--------
EXPENSES
Administration and Services Fees 39,475
Trustees Fees 11,995
Printing and Shareholder Reports 8,835
Professional Fees 6,881
Registration Fees 2,505
Miscellaneous 1,771
--------
Total Expenses 71,462
Less: Fee Waivers or Expense Reimbursements (31,987)
--------
Net Expenses 39,475
--------
NET INVESTMENT INCOME 397,789
--------
REALIZED AND UNREALIZED LOSS ON INVESTMENT
Net Realized Loss from Investment Transactions (24,978)
Net Change in Unrealized Appreciation/Depreciation on Investment (58,170)
--------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENT (83,148)
--------
NET INCREASE IN NET ASSETS FROM OPERATIONS $314,641
========
</TABLE>
See Notes to Financial Statements.
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8
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Intermediate Tax Free
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STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
2000(1) 1999
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net Investment Income $ 397,789 $ 822,980
Net Realized Gain (Loss) from Investment Transactions (24,978) 49,667
Net Change in Unrealized Appreciation/Depreciation
on Investment (58,170) (1,154,450)
------------ -----------
Net Increase (Decrease) in Net Assets from Operations 314,641 (281,803)
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (397,789) (822,980)
Net Realized Gain from Investment Transactions (47,684) (153,783)
------------ -----------
Total Distributions (445,473) (976,763)
------------ -----------
CAPITAL TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Proceeds from Sales of Shares 9,911,366 5,657,450
Dividend Reinvestments 211,068 390,166
Cost of Shares Redeemed (10,814,952) (8,901,450)
------------ -----------
Net Decrease from Capital Transactions in
Shares of Beneficial Interest (692,518) (2,853,834)
------------ -----------
TOTAL DECREASE IN NET ASSETS (823,350) (4,112,400)
------------ -----------
NET ASSETS
Beginning of Period 19,959,586 24,071,986
------------ -----------
End of Period $ 19,136,236 $19,959,586
============ ===========
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<FN>
(1) Unaudited.
</FN>
</TABLE>
See Notes to Financial Statements.
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FINANCIAL HIGHLIGHTS
Contained below are selected data for a share outstanding, total investment
return, ratios to average net assets and other supplemental data for the periods
indicated for Intermediate Tax Free.
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD FOR THE
MONTHS ENDED FOR THE YEARS JAN. 1, 1996 YEAR ENDED
MARCH 31, ENDED SEPT. 30, TO SEPT. 30, DEC. 31,
2000(3) 1999 1998 1997 1996(2) 1995
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $10.40 $11.02 $10.65 $10.34 $10.56 $ 9.72
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.21 0.41 0.42 0.44 0.33 0.47
Net Realized and Unrealized Gain (Loss)
on Investment (0.03) (0.53) 0.38 0.31 (0.22) 0.84
------ ------ ------ ------ ------ ------
Total from Investment Operations 0.18 (0.12) 0.80 0.75 0.11 1.31
------ ------ ------ ------ ------ ------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (0.21) (0.41) (0.42) (0.44) (0.33) (0.47)
Net Realized Gains (0.03) (0.09) (0.01) -- -- --
------ ------ ------ ------ ------ ------
Total Distributions (0.24) (0.50) (0.43) (0.44) (0.33) (0.47)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.34 $10.40 $11.02 $10.65 $10.34 $10.56
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN 1.70% (1.21)% 7.71% 7.43% 4.09% 13.71%
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Period (000s omitted) $19,136 $19,960 $24,072 $18,732 $22,008 $22,213
Ratios to Average Net Assets:
Net Investment Income 4.02%(1) 3.83% 3.91% 4.23% 4.25%(1) 4.58%
Expenses After Waivers, Including Expenses
of the Intermediate Tax Free Portfolio 0.85%(1) 0.85% 0.85% 0.85% 0.85%(1) 0.85%
Expenses Before Waivers, Including Expenses
of the Intermediate Tax Free Portfolio 1.34%(1) 1.41% 1.22% 1.15% 1.23%(1) 1.13%
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<FN>
(1) Annualized.
(2) The Board of Trustees approved the change of the fiscal year end from
December 31 to September 30.
(3) Unaudited.
</FN>
</TABLE>
See Notes to Financial Statements.
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NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--ORGANIZATION AND SIGNIFICANT
ACCOUNTING POLICIES
A. ORGANIZATION
BT Investment Funds (the "Trust") is registered under the Investment Company Act
of 1940 (the "Act"), as amended, as an open-end management investment company.
The Trust was organized on July 21, 1986, as a business trust under the laws of
the Commonwealth of Massachusetts. Intermediate Tax Free (the "Fund") is one of
the funds offered to investors by the Trust. The Fund began operations on July
20, 1992. The Fund seeks to achieve its investment objective by investing
substantially all of its assets in the Intermediate Tax Free Portfolio (the
"Portfolio"). The Portfolio is an open-end management investment company
registered under the Act. The value of the Fund's investment in the Portfolio
reflects its proportionate interest in the net assets of the Portfolio. At March
31, 2000, the Fund's investment was approximately 100% of the Portfolio.
The financial statements of the Portfolio, including a list of assets held, are
contained elsewhere in this report and should be read in conjunction with the
Fund's financial statements.
B. INVESTMENT VALUATION
Valuation of securities by the Portfolio is discussed in Note 1B of the
Portfolio's Notes to Financial Statements, which are included elsewhere in this
report.
C. INVESTMENT INCOME
The Fund earns income, net of expenses, on its investment in the Portfolio.
All of the net investment income and realized and unrealized gains and losses
from the security transactions of the Portfolio are allocated pro rata among
the investors in the Portfolio at the time of such determination.
D. DISTRIBUTIONS
It is the Fund's policy to declare dividends daily and distribute them monthly
to shareholders from net investment income. Dividends and distributions payable
to shareholders are recorded by the Fund on the ex-dividend date. Distributions
of net realized short-term and long-term capital gains, if any, earned by the
Fund are made annually to the extent they exceed capital loss carryforwards.
E. FEDERAL INCOME TAXES
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially 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
differences in the characterization and allocation of certain income and capital
gains distributions determined annually in accordance with federal tax
regulations which may differ from generally accepted accounting principles.
F. 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 that are attributable to the Trust are allocated among the
funds in the Trust.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 A.G. 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 .40% of the Fund's average
daily net assets.
Bankers Trust has contractually agreed to waive its fees through January 31,
2001 and reimburse expenses of the Fund, to the extent necessary, to limit
all expenses to .40% of the average daily net assets of the Fund, excluding
expenses of the Portfolio and .85% of the average daily net assets of the Fund,
including expenses of the Portfolio.
ICC Distributors, Inc. provides distribution services to the Fund.
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Intermediate Tax Free
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NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 3--SHARES OF BENEFICIAL INTEREST
At March 31, 2000, there were an unlimited number of shares of beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 20001 SEPTEMBER 30, 1999
------------------------------ ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ -------- -----------
<S> <C> <C> <C> <C>
Sold 1,016,070 $ 9,911,366 521,268 $ 5,657,450
Reinvested 20,475 211,068 36,150 390,166
Redeemed (1,103,482) (10,814,952) (823,289) (8,901,450)
----------- ------------ -------- -----------
Net (Decrease) (66,937) $ (692,518) (265,871) $(2,853,834)
=========== ============ ======== ===========
--------------------------------------------------------------------------------
<FN>
(1) Unaudited.
</FN>
</TABLE>
NOTE 4--FUND MERGER
On September 8, 1999, the Board of Trustees voted to recommend the
reorganization of the Fund into the Deutsche Asset Management Municipal
Bond Fund. The Board has determined that this proposal is in the best
interests of shareholders. The merger will take place on August 31, 2000.
NOTE 5--FUND NAME CHANGE
On January 31, 2000, the Fund changed its name from BTInvestment Intermediate
Tax FreeFund to Intermediate Tax Free.
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12
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Intermediate Tax Free Portfolio
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SCHEDULE OF PORTFOLIO INVESTMENTS MARCH 31, 2000 (Unaudited)
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
LONG-TERM MUNICIPAL BONDS - 91.4%
ARIZONA - 2.3%
$ 440,000 Arizona State, Transportation Board
Excise Tax, (AMBACInsured),
5.60%, 7/1/03 $ 451,840
-----------
CONNECTICUT - 2.6%
500,000 Connecticut State, Resource Recovery,
(MBIAInsured), 5.00%, 1/1/07 499,255
-----------
DELAWARE - 2.8%
520,000 Delaware Transportation Authority,
6.10%, 7/1/02 535,272
-----------
FLORIDA - 3.2%
575,000 Boca Plaza Association, Florida Revenue,
(LOC: Credit Suisse First Boston),
4.65%, 2/1/04 564,081
50,000 Dade County, Florida, Aviation Authority,
(AMBACInsured), 5.40%, 10/1/07 51,379
-----------
615,460
-----------
ILLINOIS - 10.6%
440,000 Chicago, Illinois, G.O., (FGIC Insured),
5.00%, 1/1/07 438,346
1,000,000 Chicago, Illinois, Sales Tax Revenue,
(FGICInsured), 5.00%, 1/1/09 988,420
625,000 Illinois State Sales Tax Revenue,
5.00%, 6/15/08 623,500
-----------
2,050,266
-----------
INDIANA - 4.3%
300,000 Indiana University Revenue,
6.60%, 8/1/01 307,974
500,000 Purdue University of Indiana, University
Revenue, Series N, 5.50%, 7/1/12 511,370
-----------
819,344
-----------
MAINE - 5.0%
500,000 Maine Municipal Bond Bank, Series B,
(MBIA Insured), 5.375%, 11/1/05 511,580
445,000 Maine State Turnpike Authority Revenue,
(FGICInsured), 5.25%, 7/1/11 447,781
-----------
959,361
-----------
MASSACHUSETTS - 4.8%
1,000,000 Massachusetts State, Series B,
(MBIA Insured), 5.00%, 5/1/17 926,730
-----------
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
MICHIGAN - 6.3%
$ 500,000 Michigan Hospital Finance Authority,
5.05%, 11/15/33 $ 494,965
500,000 Michigan State, Building Authority,
(AMBAC Insured), 6.00%, 10/1/02 515,345
200,000 Michigan State, Housing Development
Authority, 6.30%, 12/1/03 205,704
-----------
1,216,014
-----------
NEBRASKA - 1.6%
300,000 Nebraska Public Power District Revenue,
5.70%, 1/1/05 312,474
-----------
NEVADA - 2.7%
500,000 Clark County, Nevada Highway
Improvement Revenue,
(AMBAC Insured), 5.70%, 7/1/03 513,730
-----------
NEW YORK - 27.7%
245,000 Metropolitan Transit Authority,
5.30%, 7/1/09 243,866
450,000 Municipal Assistance Corp for New York,
NY Series N, 5.25%, 7/1/07 456,327
700,000 New York City, New York, G.O., Series E,
(FGICInsured), 6.00%, 8/1/07 741,377
500,000 New York State, Dormitory Authority
Revenue, Consolidated City University
System, (FGIC Insured), 5.75%, 7/1/13 526,785
500,000 New York State, Dormitory Authority
Revenue, New York University,
(MBIA Insured), 6.00%, 7/1/06 527,195
300,000 New York State, Dormitory Authority
Revenue, State University Educational
Facility, (AMBAC Insured),
5.00%, 5/15/10 290,151
500,000 New York State, Environment Facilities
Corporation, 5.75%, 6/15/10 523,335
500,000 New York State, Local Government
Assistance Corporation, Series E,
5.25%, 4/1/16 491,245
755,000 New York State Mortgage Agency,
5.40%, 10/1/08 768,379
400,000 New York State, Refunding - Series F,
5.25%, 9/15/09 402,804
400,000 New York State, Thruway Authority
Revenue, Series E, 5.00%, 1/1/16 374,468
-----------
5,345,932
-----------
See Notes to Financial Statements.
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Intermediate Tax Free Portfolio
--------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS MARCH 31, 2000 (Unaudited)
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
TENNESSEE - 2.2%
Shelby County, Tennessee, Public
Improvement, Series B,
$ 10,000 5.25%, 11/1/06 $ 10,175
405,000 5.50%, 8/1/07 417,903
-----------
428,078
-----------
TEXAS - 5.4%
500,000 Texas State, Series A, 6.00%, 10/1/06 528,735
500,000 University of Texas, Series A,
6.50%, 8/15/01 513,095
-----------
1,041,830
-----------
VIRGINIA - 2.1%
400,000 Arlington County, Virginia,
5.50%, 8/1/05 412,724
-----------
WISCONSIN - 7.8%
700,000 Wisconsin State Petroleum, Inspection Fee
Revenue, Series A, 5.40%, 7/1/08 711,816
200,000 Wisconsin State Transportation,
6.00%, 7/1/00 200,912
600,000 Wisconsin State, Series C,
5.00%, 5/1/08 598,596
-----------
1,511,324
-----------
TOTAL LONG-TERM MUNICIPAL BONDS
(Cost $17,603,647) $17,639,634
-----------
VARIABLE FLOATING RATE DEMAND
NOTES - 9.3%
FLORIDA - 3.1%
600,000 Pinellas County, Florida, Health Facility
Authority Revenue, Pooled Hospital
Loan Program, (LOC: Chase Manhattan
Bank), 4.00%, 12/1/15 600,000
-----------
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
MISSISSIPPI - 0.5%
$ 100,000 Perry County, Mississippi, Leaf River
State Project, (LOC: Wachovia Bank),
4.00%, 3/1/02 100,000
-----------
NEW YORK - 5.7%
100,000 New York City, New York, Sub Series
A-10, (LOC: Morgan Guaranty Trust),
4.10%, 8/1/16 100,000
1,000,000 New York City, New York, Sub Series
A-4, (LOC: Chase Manhattan Bank),
4.00%, 8/1/21 1,000,000
-----------
1,100,000
-----------
TOTAL VARIABLE FLOATING RATE DEMAND NOTES
(Cost $1,800,000) 1,800,000
-----------
TOTAL INVESTMENTS
(COST $19,403,647)(1) 100.7% $19,439,634
LIABILITIES IN EXCESS OF OTHER ASSETS (0.7) (134,915)
----- -----------
NET ASSETS 100.0% $19,304,719
===== ===========
--------------------------------------------------------------------------------
(1) Tax Cost of Investments.
The following abbreviations are used in portfolio descriptions:
AMBAC -- American Municipal Bond Assurance Corporation
FGIC -- Financial Guaranty Insurance Corporation
GO -- General Obligations
LOC -- Line of Credit
MBIA -- Municipal BondInvestors Assurance
See Notes to Financial Statements.
--------------------------------------------------------------------------------
14
<PAGE>
Intermediate Tax Free Portfolio
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
AS OF
MARCH 31, 2000
--------------
ASSETS
Investments at Value (Cost of $19,403,647) $19,439,634
Cash 78,366
Interest Receivable 257,798
-----------
Total Assets 19,775,798
-----------
LIABILITIES
Payable for Securities Purchased 445,510
Due to Bankers Trust 5,250
Accrued Expenses and Other 20,319
-----------
Total Liabilities 471,079
-----------
NET ASSETS $19,304,719
===========
COMPOSITION OF NET ASSETS
Paid-in Capital $19,268,731
Net Unrealized Appreciation on Investments 35,988
-----------
NET ASSETS $19,304,719
===========
See Notes to Financial Statements.
--------------------------------------------------------------------------------
15
<PAGE>
Intermediate Tax Free Portfolio
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
MARCH 31, 2000
--------------
<S> <C>
INVESTMENT INCOME
Interest Income $481,752
--------
EXPENSES
Advisory Fees 39,541
Professional Fees 13,637
Administration and Services Fees 4,943
Trustees Fees 1,631
Miscellaneous 823
--------
Total Expenses 60,575
Less: Fee Waivers or Expense Reimbursements (16,091)
--------
Net Expenses 44,484
--------
NET INVESTMENT INCOME 437,268
--------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net Realized Loss from Investment Transactions (24,978)
Net Change in Unrealized Appreciation/Depreciation on Investments (58,170)
--------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS (83,148)
--------
NET INCREASE IN NET ASSETS FROM OPERATIONS $354,120
========
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
16
<PAGE>
Intermediate Tax Free Portfolio
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
2000(1) 1999
------------ -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net Investment Income $ 437,268 $ 908,816
Net Realized Gain (Loss) from Investment Transactions (24,978) 49,666
Net Change in Unrealized Appreciation/Depreciation
on Investments (58,170) (1,154,872)
------------ -----------
Net Increase (Decrease) in Net Assets from Operations 354,120 (196,390)
------------ -----------
CAPITAL TRANSACTIONS
Proceeds from Capital Invested 9,929,924 6,084,725
Value of Capital Withdrawn (11,013,292) (9,766,076)
------------ -----------
Net Decrease in Net Assets from
Capital Transactions (1,083,368) (3,681,351)
------------ -----------
TOTAL DECREASE IN NET ASSETS (729,248) (3,877,741)
NET ASSETS
Beginning of Period 20,033,967 23,911,708
------------ -----------
End of Period $ 19,304,719 $20,033,967
============ ===========
--------------------------------------------------------------------------------
<FN>
(1) Unaudited.
</FN>
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
17
<PAGE>
Intermediate Tax Free Portfolio
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Contained below are selected supplemental data and ratios to average net assets
for the periods indicated for the Intermediate Tax Free Portfolio.
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE
FOR THE SIX JAN. 1, 1996 YEAR ENDED
MONTHS ENDED FOR THE YEARS ENDED SEPTEMBER 30, TO SEPT. 30, DEC. 31,
MARCH 31, 2000(3) 1999 1998 1997 1996(2) 1995
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Period (000s omitted) $19,305 $20,034 $23,912 $18,383 $22,019 $22,253
Ratios to Average Net Assets:
Net Investment Income 4.41%(1) 4.22% 4.30% 4.62% 4.64%(1) 4.97%
Expenses After Waivers 0.45%(1) 0.45% 0.45% 0.45% 0.45%(1) 0.45%
Expenses Before Waivers 0.61%(1) 0.66% 0.61% 0.56% 0.59%(1) 0.53%
Portfolio Turnover Rate 23% 74% 64% 171% 130% 95%
--------------------------------------------------------------------------------
<FN>
(1) Annualized.
(2) The Board of Trustees approved the change of the fiscal year end from
December 31 to September 30.
(3) Unaudited.
</FN>
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
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Intermediate Tax Free Portfolio
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--ORGANIZATION AND SIGNIFICANT
ACCOUNTING POLICIES
A. ORGANIZATION
The Intermediate Tax Free Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940 (the "Act"), as amended, as an open-end
management investment company. The Portfolio was organized on December 11, 1991
as an unincorporated trust under the laws of New York and began operations on
July 20, 1992. The Declaration of Trust permits the Board of Trustees (the
"Trustees") to issue beneficial interests in the Portfolio.
B. SECURITY VALUATION
The Portfolio's investments are carried at market value as determined by an
independent pricing service at the end of each business day. 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. Securities for which quotations are not available are
stated at their fair value as determined in good faith under procedures
established by and under the general supervision of the Trustees.
C. SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on a trade date basis. Interest income
is recorded on the accrual basis and includes amortization of premium and
accretion of discount on investments. Expenses are recorded as incurred.
Realized gains and losses from securities transactions are recorded on the
identified cost basis.
All of the net investment income and realized and unrealized gains and losses
from the securities transactions of the Portfolio are allocated pro rata among
the investors in the Portfolio at the time of such determination.
D. FEDERAL INCOME TAXES
The portfolio is considered to be a partnership under the Internal Revenue Code.
Therefore, no federal income tax provision is necessary.
E. OTHER
The preparation of financial statements in conformity with accounting principles
generally accepted in the UnitedStates requires management to make estimates and
assumptions that affect the reported amounts in the financial statements. Actual
results could differ from those estimates.
NOTE 2--FEES AND TRANSACTIONS WITH
AFFILIATES
The Portfolio has entered into an Administration and Services Agreement with
Bankers Trust Company ("Bankers Trust"), an indirect wholly owned subsidiary
ofDeutsche Bank A.G. Under this agreement, Bankers Trust provides
administrative, custody, transfer agency and shareholder services to the
Portfolio in return for a fee computed daily and paid monthly at an annual rate
of .05% of the Portfolio's average daily net assets.
The Portfolio has entered into an Advisory Agreement with Bankers Trust. Under
this agreement, the Portfolio pays Bankers Trust a fee computed daily and paid
monthly at an annual rate of .40% of the Portfolio's average daily net assets.
Bankers Trust has contractually agreed to waive its fees through January 31,
2001 and reimburse expenses of the Portfolio, to the extent necessary, to limit
all expenses to .45% of the average daily net assets of the Portfolio.
At March 31, 2000, the Portfolio was a participant with other affiliated
entities in a revolving credit facility in the amount of $150,000,000, which
expires April 29, 2000. A commitment fee on the average daily amount of the
available commitment is payable on a quarterly basis and apportioned among all
participants, based on net assets. No amounts were drawn down or outstanding for
this Portfolio under the credit facility for the six month period ended March
31, 2000. Subsequent to March 31, 2000, the revolving credit facility was
renewed and increased to $200,000,000, which expires April 27, 2001.
NOTE 3--PURCHASES AND SALES OF INVESTMENT
SECURITIES
The aggregate cost of purchases and proceeds from sales of investments, other
than short-term obligations, for the six months ended March 31, 2000 were
$5,798,293 and $3,787,340 respectively.
For federal income tax purposes, the tax basis of investments held at March 31,
2000 was $19,403,647. The aggregate gross unrealized appreciation for all
investments was $250,198 and the aggregate gross unrealized depreciation for
all investments was $214,210.
--------------------------------------------------------------------------------
19
<PAGE>
Intermediate Tax Free Portfolio
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 4--FUND MERGER
On September 8, 1999, the Board of Trustees voted to recommend the
reorganization of the Portfolio into the Deutsche Asset Management Municipal
Bond Fund. The Intermediate Tax Free Fund will then merge with the Deutsche
Asset Management Municipal Bond Fund. The Board has determined that this
proposal is in the best interests of shareholders. The merger will take place on
August 31, 2000.
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20
<PAGE>
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<PAGE>
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<PAGE>
<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.
Intermediate Tax Free CUSIP#055922801
BT INVESTMENT FUNDS 1667SA (3/00)
Distributed by:
ICC Distributors, Inc.
