BT INVESTMENT FUNDS, 485APOS, 2000-10-20

BT INVESTMENT FUNDS
485APOS, 2000-10-20

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<PAGE>

As filed with the Commission on September 29, 2000
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

Post-Effective Amendment No. 75 X

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No. 75 X

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

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

(410) 895-3433
(Registrant's Telephone Number)

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

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

[_] Immediately upon filing pursuant to paragraph (b)
[_] On August 31, 2000 pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[X] On December 29, 2000 pursuant to paragraph (a)(1)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] 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.
<PAGE>

Deutsche Asset Management

Mutual Fund
Prospectus
[December 29, 2000]
Investment Class

Global Equity

[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.]

(Deutsche Bank Group logo)
<PAGE>

OVERVIEW
of Global Equity - Investment Class

Goal: The Fund invests for long-term capital appreciation.

Core Strategy: The Fund invests primarily in the stocks and other equity
securities of companies in developed countries, both inside and outside the
United States.

Investment Policies and Strategies

The Fund invests all of its assets in a master portfolio with the same
investment goal as the Fund. The Fund, through the master portfolio, seeks to
achieve its investment objective by investing primarily in companies in
developed countries, both inside and outside the United States. In managing the
Fund, we look for global investments that may not be appropriately priced by the
market. In selecting investments, we attempt to identify investment trends or
major social developments that are likely to have a positive impact on a
company's technologies, products and services.

Global Equity - Investment Class

Overview of Global Equity
Goal
Core Strategy
Investment Policies and Strategies
Principal Risks of Investing in the Fund
Who Should Consider Investing in the Fund
Total Returns, After Fees and Expenses
Annual Fund Operating Expenses

A Detailed Look at Global Equity
Objective
Strategy
Principal Investments
Investment Process
Risks
Management of the Fund
Portfolio Managers
Calculating the Fund's Share Price
Performance Information
Dividends and Distributions
Tax Considerations
Buying and Selling Fund Shares
Financial Highlights

2
<PAGE>

Overview of Global Equity

Principal Risks of Investing in the Fund

An investment in the Fund could lose money, or the Fund's performance could
trail that of other investments. For example:

. Stocks that we have selected could perform poorly; or

. The stock market could perform poorly in one or more of the countries in which
the Fund has invested.

Beyond the risks common to all stock investing, an investment in the Fund could
also lose money or underperform alternative investments as a result of risks in
the foreign countries in which the Fund invests:

. Adverse political, economic or social developments could undermine the value
of the Fund's investments or prevent the Fund from realizing its full value;

. Accounting and financial reporting standards differ from those in the U.S. and
could convey incomplete information when compared to information typically
provided by U.S. companies; or

. The currency of a country in which the Fund invests may decrease in value
relative to the U.S. dollar, which could affect the value of the investment to
U.S. investors.

Who Should Consider Investing in the Fund

You should consider investing in the Fund if you are seeking long-term capital
appreciation. There is, of course, no guarantee that the Fund will realize its
goal. Moreover, you should be willing to accept greater short-term fluctuation
in the value of your investment than you would typically experience investing in
bond or money market funds.

You should not consider investing in the Fund if you are pursuing a short-term
financial goal, if you seek regular income or if you cannot tolerate
fluctuations in the value of your investments.

The Fund by itself does not constitute a balanced investment program. It can,
however, afford you exposure to investment opportunities not available to
someone who invests in U.S. securities alone. Diversifying your investments may
improve your long-run investment return and lower the volatility of your overall
investment portfolio.

An investment in Global Equity is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

3
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Overview of Global Equity

Total Returns, After Fees and Expenses

Because the Fund shares are newly offered, the Fund does not have a full
calendar year of annual operating performance to report. However, the Fund has
an investment objective and policies that are substantially similar to those of
a model of portfolio securities which has been actively managed by the Advisor.
See "Prior Performance of a Model Portfolio."

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 Investment Class of Global
Equity.

Expense Example. This example 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, the Fund's operating expenses remained the
same and you sold your shares at the end of the period.

You may use this hypothetical example to compare the Fund's expense history with
other funds. Your actual costs may be higher or lower.

/1/ Information is based on estimated amounts for the current fiscal year.

/2/ The investment adviser and administrator have agreed, for the 14-month
period from the effective date of December 29, 2000, to waive their fees and
reimburse expenses so that total expenses will not exceed 1.40%.

/3/ For the first year, the expense example takes into account fee waivers and
reimbursements.

ANNUAL FEES AND EXPENSES/1/

--------------------------------------------------------------------------------
Percentage of Average
Daily Net Assets
--------------------------------------------------------------------------------
Management Fees 0.60%
--------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees None
--------------------------------------------------------------------------------
Other Expenses [xxx]
--------------------------------------------------------------------------------
Total Fund Operating Expenses [xxx]
--------------------------------------------------------------------------------
Less: Fee Waivers or Expense Reimbursements (0.xx%)/2/
--------------------------------------------------------------------------------
Net Expenses 1.40%
--------------------------------------------------------------------------------

Expense Example

---------------------------------------
1 year/3/ 3 years
---------------------------------------
$xxx $xxx
---------------------------------------
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A Detailed Look at Global Equity

Objective

The Fund seeks long-term capital appreciation. Under normal circumstances, the
Fund invests at least 65% of its total assets in the stocks and other equity
securities of companies in developed countries, both inside and outside the
United States.

The Fund invests for capital appreciation, not income; any dividend or interest
income is incidental to the pursuit of that goal. While we give priority to
capital appreciation, we cannot offer any assurance of achieving this goal. The
Fund's goal is not a fundamental policy. We must notify shareholders before we
change it, but we do not require their approval to do so.

Strategy

The Fund invests for the long term. We employ a strategy of growth at a
reasonable price. We seek to identify companies both within and outside the
United States that combine strong potential for earnings growth with reasonable
investment value. Such companies typically exhibit increasing rates of
profitability and cash flow, yet their share prices compare favorably to other
stocks in a given market and to their global peers. In evaluating stocks, we
consider factors such as earnings per share and replacement value - the cost of
replacing their physical assets at current prices. We further consider the
relationship between these and other quantitative factors. Together, we believe
these indicators of growth and value identify companies with improving prospects
before the market in general has taken notice.

Principal Investments

The Fund will invest in stocks and equity securities issued primarily in the
United States, the United Kingdom, Germany, France, Switzerland, Netherlands,
Sweden, Hong Kong, Italy, Norway, Denmark, Finland, Spain, Canada, Ireland,
Japan, Portugal and Singapore.

Other Investments

The Fund may also invest a portion of its assets in companies based in the
emerging markets of Latin America, the Middle East, Europe, Asia and Africa if
we believe that their return potential more than compensates for the extra risks
associated with these markets. Under normal market conditions we do not consider
this a central element of the Fund's strategy.

Investment Process

Company research lies at the heart of our investment process, as it does with
many stock mutual funds. But our process brings an added dimension to this
fundamental research. It draws on the insight of experts from a range of
financial disciplines--regional stock market specialists, global industry
specialists, economists and quantitative analysts, who challenge, refine and
amplify each other's ideas. Their close collaboration is a critical element of
our investment process.

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A Detailed Look at Global Equity

We believe strongly in fundamental analysis as a starting point to valuing a
company. Emphasis is placed on visiting companies and in-depth research of
industries and regions. This involves identifying investment trends or major
social developments that are likely to have a significant positive impact on
certain technologies, products and services. Our analysis of trends and possible
breaks with traditional patterns allows for the identification of investments
that may not be appropriately priced by the market due to changes in
legislation, technological developments, industry rationalization or other
structural shifts that have created potential opportunities that the market has
not yet discovered.

In choosing the stocks, we consider a number of factors, including:

. stock price relative to the company's rate of earnings growth;

. valuation relative to other U.S. and international companies and market
averages;

. the stock's currency denomination;

. merger and acquisition trends; and

. trends related to the impact of the European currency, the "Euro," on the
financial, marketing and distribution strategies of European companies.

Temporary Defensive Position. We may from time to time adopt a temporary
defensive position in response to extraordinary adverse political, economic or
stock market events. We may invest up to 100% of the Fund's assets in U.S. or
foreign government money market investments, or other bonds that offer
comparable safety, if the situation warranted. To the extent we might adopt such
a position and over the course of its duration, the Fund may not meet its goal
of long-term capital appreciation.

Though the Fund intends to diversify its investments across different countries,
the Fund may invest a significant part of its assets in a single country. The
Fund may invest in companies of any size, although many of its investments will
be in large- and mid-capitalization companies. This Fund intends to have a low
Portfolio Turnover rate.

FOOTNOTE: Portfolio Turnover. The portfolio turnover rate measures the frequency
that the master portfolio sells and replaces the securities it holds within a
given period.

Prior Performance of a Model Portfolio

This information presents the performance of global portfolio management
("GPM"), a model portfolio of securities. GPM has been actively managed by the
portfolio manager since 1993. Our decision to establish the Fund was supported
by the results of this model strategy over the 1993-2000 period. In managing the
Fund, we will employ substantially the same investment objectives, policies and
strategies that we employed in managing GPM. However, there will be some
differences:

. Investments in emerging markets are not currently part of GPM's core strategy,
however, they will make up between 0-10% of the Fund's strategy.

. GPM uses a top-down approach to determine U.S. and non-U.S. allocations if the
allocations are determined prior to stock selection. The Fund will use a
combination of top-down and bottom-up analysis where stock selection will be
an important driver of the U.S. and non-U.S. allocations. While different
approaches, we expect each to derive similar U.S./non-U.S. allocation
percentages.

. The Fund is subject to certain rules (e.g., limits on the percentage of assets
invested in securities of issuers in a single industry and requirements on
distributing income to shareholders) that do not apply to GPM.

6
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A Detailed Look at Global Equity

. The continuous offering of the Fund's shares and the Fund's obligation to
redeem its shares will likely cause the Fund to experience cash flows that may
be different from those of GPM.

All of these factors may affect the performance of the Fund and cause its
performance to differ from that of GPM. Certain of these factors may positively
affect the Fund's performance while other factors may adversely affect the
Fund's performance.

A model does not incur management fees and expenses. Accordingly, we have
adjusted the performance results of GPM to reflect an overall expense ratio of
1.40%, which is the same as the expected expense ratio of the Fund. Returns of
GPM are compared to the MSCI World Index. Unlike GPM's performance, which we
have adjusted for expected expenses, the MSCI World Index does not reflect the
deduction of fees and expenses. The returns of both GPM and the MSCI World Index
reflect the reinvestment of dividends and distributions. The GPM Model Global
Portfolio price returns are converted into total returns by adding the MSCI
World Index dividend yield. The performance data represents the prior
performance of GPM, not the prior performance of the Fund, and should not be
considered an indication of future performance of the Fund.

--------------------------------------------------------------------------------
GPM Global MSCI World
Year Total Returns Total Returns Difference
--------------------------------------------------------------------------------
1994 3.31% 5.08% (1.77%)
--------------------------------------------------------------------------------
1995 18.63% 20.72% (2.09%)
--------------------------------------------------------------------------------
1996 19.10% 13.48% 5.62%
--------------------------------------------------------------------------------
1997 25.14% 15.76% 9.38%
--------------------------------------------------------------------------------
1998 30.19% 24.34% 5.85%
--------------------------------------------------------------------------------
1999 38.84% 24.93% 13.91%
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
For the Period Ended September
30, 2000 GPM Global MSCI World
Returns Total Returns Difference
--------------------------------------------------------------------------------
1 Year 28.26% 8.16% 20.10%
--------------------------------------------------------------------------------
3 Year 18.78% 11.93% 6.85%
--------------------------------------------------------------------------------
5 Year 20.87% 14.62% 6.25%
--------------------------------------------------------------------------------
Since Inception (7/31/1993) 19.50% 13.77% 5.73%
--------------------------------------------------------------------------------

Risks

Below we set forth some of the prominent risks associated with international
investing, as well as investing in general. Although we attempt to assess the
likelihood that these risks may actually occur and to limit them, we make no
guarantee that we will succeed.

Primary Risks

Market Risk. Although individual stocks can outperform their local markets,
deteriorating market conditions

7
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A Detailed Look at Global Equity

might cause an overall weakness in the stock prices of the entire market.

Stock Selection Risk. A risk that pervades all investing is the risk that the
securities an investor has selected will not perform to expectations. To
minimize this risk, we monitor each of the stocks in the Fund according to three
basic quantitative criteria. We subject a stock to intensive review if:

. its rate of price appreciation begins to trail that of its national stock
index;

. the financial analysts who follow the stock reduce their estimates of the
stock's future earnings; or

. the stock's price approaches the downside target, which is adjusted to keep
pace with changes in company, industry and market circumstances.

In our review, we seek to determine if the deteriorating performance accurately
reflects deteriorating prospects or if, in our view, it merely reflects investor
overreaction to temporary circumstances.

Foreign Stock Market Risk. From time to time, foreign capital markets have
exhibited more volatility than those in the United States. Trading stocks on
some foreign exchanges is inherently more difficult than trading in the United
States for reasons, including:

. Political Risk. Some foreign governments have limited the outflow of profits
to investors abroad, extended diplomatic disputes to include trade and
financial relations and imposed high taxes on corporate profits. While these
political risks have not occurred recently in the major countries in which the
Fund invests, we analyze countries and regions to try to anticipate these
risks.

. Information Risk. Financial reporting standards for companies based in foreign
markets differ from those in the United States. Since the "numbers" themselves
sometimes mean different things, we devote much of our research effort to
understanding and assessing the impact of these differences upon a company's
financial conditions and prospects.

. Liquidity Risk. Stocks that trade infrequently can be more difficult or more
costly to buy or to sell than more liquid or active stocks. This liquidity
risk is a factor of the trading volume of a particular stock, as well as the
size and liquidity of the entire local market. On the whole, foreign exchanges
are smaller and less liquid than the U.S. market. This can make buying and
selling certain shares more difficult and costly. Relatively small
transactions, in some instances, can have a disproportionately large effect on
the price and supply of shares. In certain situations, it may become virtually
impossible to sell a stock in an orderly fashion at a price that approaches
our estimate of its value.

. Regulatory Risk. Some foreign governments regulate their exchanges less
stringently, and the rights of shareholders may not be as firmly established.

In an effort to reduce these foreign stock market risks, the Fund diversifies
its investments, just as you may spread your investments among a range of
securities so that a setback in one need not overwhelm your entire strategy. In
this way, a reversal in one market or stock need not undermine the pursuit of
long-term capital appreciation.

8
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A Detailed Look at Global Equity

Currency Risk. The Fund invests in foreign securities denominated in foreign
currencies. This creates the possibility that changes in foreign exchange rates
will affect the value of foreign securities or the U.S. dollar amount of income
or gain received on these securities. We seek to minimize this risk through
Currency Management activities that limit Fund exposure by the use of hedging
strategies for currencies that are likely to decline.

FOOTNOTE: Currency Management is used to offset investment risks ("hedging")
and, where possible, to add to investment returns. Currency management
activities include the use of forward contracts and may include the use of other
instruments. There is no guarantee that these currency management activities
will work and they could cause losses to the Fund.

Emerging Market Risk. To the extent that the Fund does invest in emerging
markets to enhance overall returns, it may face higher political, information
and stock market risks. In addition, profound social changes and business
practices that depart from norms in developed countries' economies have hindered
the orderly growth of emerging economies and their stock markets in the past.
High levels of debt tend to make emerging economies heavily reliant on foreign
capital and vulnerable to capital flight. For all these reasons, the Fund
carefully limits and balances its commitment to these markets.

Secondary Risks

Small Company Risk. Although the Fund generally invests in the shares of larger,
well-established companies, it may occasionally take advantage of exceptional
opportunities presented by smaller companies. Such opportunities pose unique
risks, which we take into account in considering an investment. Small company
stocks tend to experience steeper price fluctuations -- down as well as up --
than the stocks of larger companies. A shortage of reliable information -- the
same information gap that creates opportunity in small company investing -- can
also pose additional risk. Industrywide reversals have had a greater impact on
small companies, since they lack a large company's financial resources. Finally,
small company stocks are typically less liquid than large company stocks. When
circumstances adversely change, it is harder to find a buyer for a small
company's shares.

Pricing Risk. When price quotations for securities are not readily available, we
determine their value by the method that most accurately reflects their current
worth in the judgment of the Board of Trustees. This procedure implies an
unavoidable risk, the risk that our prices are higher or lower than the prices
that the securities might actually command if we sold them. If we overestimate
the value of the securities, you may end up paying too much when you purchase
Fund shares. If we underestimate their price, you may not receive the full
market value for your Fund shares when you sell.

Futures and Options Risk. Although not one of its principal investment
strategies, the Fund may invest in futures contracts, options and options on
futures contracts. These investments, when made, are for hedging purposes. If
the Fund invests in futures contracts, options and options on futures contracts
for non-hedging purposes, the margin and premiums required to make those
investments will not exceed 5% of the Fund's net asset value after taking into
account unrealized profits and losses on the contracts. Futures contracts,
options and options on futures contracts used for non-hedging purposes involve
greater risks than stock investments.

FOOTNOTE: Futures contracts, options and options on futures contracts are used
as a low cost method of gaining exposure to a particular securities market
without investing directly in those securities.

9
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A Detailed Look at Global Equity

Euro Risk. On January 1, 1999, eleven countries of the European Economic and
Monetary Union (EMU) began implementing a plan to replace their national
currencies with a new currency, the euro. Full conversion to the euro is slated
to occur by July 1, 2002.

Although it is impossible to predict the impact of the conversion to the euro on
the Fund, the risks may include:

. Changes in the relative strength and value of the U.S. dollar or other major
currencies;

. Adverse effects on the business or other financial condition of European
issuers that the Fund holds in its portfolio; and

. Unpredictable effects on trade and commerce generally.

These and other factors could increase volatility in financial markets worldwide
and could adversely affect the value of securities held by the Fund.

Management of the Fund

Deutsche Asset Management is the marketing name for the asset management
activities of Deutsche Bank AG, Deutsche Fund Management, Inc., Bankers Trust
Company, DB Alex. Brown LLC, Deutsche Asset Management, Inc., and Deutsche Asset
Management Investment Services Limited.

Board of Trustees. A Board of Trustees supervises all of the Fund's activities
on behalf of the Fund's shareholders.

Investment Adviser. Under the supervision of the Board of Trustees, Deutsche
Asset Management, Inc. ("DeAM, Inc.") with headquarters at 885 Third Avenue, New
York, New York, acts as the investment adviser for the Fund. As investment
adviser, DeAM, Inc. makes the Fund's investment decisions. It buys and sells
securities for the Fund and conducts the research that leads to purchase and
sale decisions. The Fund's investment adviser is also responsible for selecting
brokers and dealers and for negotiating brokerage commissions and dealer
charges. The investment adviser will receive 0.60% of the Fund's average daily
net assets for its services in a fiscal year. The investment adviser may
reimburse a portion of its fee during the period.

DeAM, Inc. provides a full range of international investment advisory services
to institutional clients, and as of __________, 2000, managed approximately $xx
billion in assets. It serves as investment adviser to eleven other investment
companies and as sub-adviser to five other investment companies.

DeAM, Inc. is an indirect wholly owned subsidiary of Deutsche Bank AG. Deutsche
Bank AG is a major global banking institution that is engaged in a wide range of
financial services, including investment management, mutual funds, retail and
commercial banking, investment banking and insurance.

Portfolio Managers. The following portfolio managers are responsible for the
day-to-day management of the master portfolio's investments:

Robert Reiner, Managing Director of DeAM, Inc. and Lead Manager of the master
portfolio.

. Joined Bankers Trust and the master portfolio in 1994.

. Specializes in Japanese and European stock and market analysis.

. Served as a Senior Financial Analyst at Scudder, Stevens & Clark from 1993
to 1994.

. 18 years of investment industry experience.

. Degrees from the University of Southern California and Harvard University.

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A Detailed Look at Global Equity

Michael Levy, Managing Director of DeAM, Inc. and Co-Manager of the master
portfolio.

. Joined the investment adviser in 1993.

. Head of international equities, New York, responsible for overseeing the
management of more than $7 billion of international and global equities.

. 29 years of business experience, 18 as an investment professional.

. Degrees in mathematics and geophysics from the University of Michigan.

Claire Brody, CFA, Director of DeAM, Inc. and Co-Manager of the master
portfolio.

. Joined the investment adviser in 1993.

. 9 years of investment industry experience.

. Global telecommunications services/equipment and pulp and paper analyst.

Vijay Kumar Chopra, CFA, Director of DeAM, Inc. and Co-Manager of the master
portfolio.

. Joined the investment adviser in 1994.

. Quantitative portfolio manager focusing on valuation models and top-down
analysis.

. 10 years of investment industry experience.

. Prior experience as portfolio manager at State Street Global Advisors and
senior research analyst at Frank Russell Company.

. BTech from Indian Institute of Technology; MBA and PhD in finance from
Vanderbilt University.

Organizational Structure. The Fund is a "feeder fund" that invests all of its
assets in a "Master Portfolio," the Global Equity Portfolio. The Fund and the
Master Portfolio have the same investment objective. The Master Portfolio is
advised by Deutsche Asset Management, Inc. Both the Fund and the Portfolio are
organized as a series of open-end investment companies and both are organized as
New York business trusts.

The Master Portfolio may accept investments from other feeder funds. The feeders
bear the Master Portfolio's expenses in proportion to their assets. Each feeder
can set its own transaction minimums, fund-specific expenses and other
conditions. This arrangement allows the Fund's Trustees to withdraw the Fund's
assets from the Master Portfolio if they believe doing so is in the
shareholder's best interests. If the Trustees withdraw the Fund's assets, they
would then consider whether the Fund should hire its own investment adviser,
invest in a different Master Portfolio or take other action.

Other Services. Bankers Trust provides administrative services for the Fund. In
addition, either Bankers Trust or your broker or financial advisor performs the
functions necessary to establish and maintain your account. In addition to
setting up the account and processing your purchase and sale orders, these
functions include:

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

. implementing any changes you wish to make in your account information;

. processing your requests for cash dividends and distributions from the Fund;

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

. sending proxy reports and updated prospectus information to you; and

. collecting your executed proxies.

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A Detailed Look at Global Equity

Brokers and financial advisors may charge additional fees to investors for those
services not otherwise included in their respective servicing agreements. These
services include cash management or special trust or retirement-investment
reporting.

Calculating the Fund's Share Price

We calculate the daily price of the Fund's shares (also known as the "Net Asset
Value" or "NAV") in accordance with the standard formula for valuing mutual fund
shares at the close of regular trading on the New York Stock Exchange every day
the New York Stock Exchange is open for business.

The formula calls for deducting all of the Fund's liabilities from the total
value of its assets -- the market value of the securities it holds, plus its
cash reserves -- and dividing the result by the number of shares outstanding.
(Note that prices for securities that trade on foreign exchanges can change
significantly on days when the New York Stock Exchange is closed and you cannot
buy or sell Fund shares. Price changes in the securities the Fund owns may
ultimately affect the price of Fund shares the next time the NAV is calculated.)

We value the securities in the Fund at their stated market value if price
quotations are available. When price quotations for a particular security are
not readily available, we determine their value by the method that most
accurately reflects their current worth in the judgment of the Board of
Trustees. You can find the Fund's daily share price in the mutual fund listings
of most major newspapers.

FOOTNOTE: The New York Stock Exchange is open every week, Monday through Friday,
except when the following holidays are celebrated: New Year's Day, Martin Luther
King, Jr. Day (the third Monday in January), Presidents' Day (the third Monday
in February), Good Friday, Memorial Day (the last Monday in May), Independence
Day (July 4/th/), Labor Day (the first Monday in September), Thanksgiving Day
(the fourth Thursday in November) and Christmas Day.

Performance Information

The Fund's performance can be used in advertisements that appear in various
publications. It may be compared to the performance of various indexes and
investments for which reliable performance data is available. The Fund's
performance may also be compared to averages, performance rankings or other
information prepared by recognized mutual fund statistical services.

Dividends and Distributions

Dividends and capital gains distributions, if any, are paid at least annually.
We automatically reinvest all dividends and any capital gains, unless you elect
to receive your distributions in cash.

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A Detailed Look at Global Equity

Tax Considerations

The Fund does not ordinarily pay income taxes. You and other shareholders pay
taxes on the income or capital gains from the Fund's holdings. Your taxes will
vary from year to year, based on the amount of capital gains distributions and
dividends paid out by the Fund. You owe the taxes whether you receive cash or
choose to have distributions and dividends reinvested. Distributions and
dividends usually create the following tax liability:

--------------------------------------------------------------------------------
Transaction Tax Status
--------------------------------------------------------------------------------
Income dividends Ordinary income
--------------------------------------------------------------------------------
Short-term capital gains distributions Ordinary income
--------------------------------------------------------------------------------
Long-term capital gains distributions Capital gains
--------------------------------------------------------------------------------

Every year the Fund will send you information on the distributions for the
previous year. In addition, if you sell your Fund shares you may have a capital
gain or loss.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
Transaction Tax Status
<S> <C>
-----------------------------------------------------------------------------------------------------------------------
Your sale of shares owned more than one year Capital gains or losses
-----------------------------------------------------------------------------------------------------------------------
Your sale of shares owned for one year or less Ordinary income
-----------------------------------------------------------------------------------------------------------------------
Long-term capital gains distributions Gains treated as ordinary income; losses subject to
special rules
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

The tax considerations for tax - deferred accounts or non-taxable entities will
be different.

Because each investor's tax circumstances are unique and because tax laws are
subject to change, we recommend that you consult with your tax advisor about
your investment.

Buying and Selling Fund Shares

Contacting the Mutual Fund Service Center of Deutsche Asset Management

By phone 1-800-730-1313

By mail P.O. Box 219210
Kansas City, MO 64121-9210

By overnight mail 210 West 10th Street, 8th floor
Kansas City, MO 64105-1716

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A Detailed Look at Global Equity

Retirement Service Center

By phone 1-800-730-1313

By mail P.O. Box 219210
Kansas City, MO 64121-9210

By 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 7:00 p.m., Eastern time, each day the New York Stock
Exchange is open for business. You can reach the Service Center's automated
assistance line 24 hours a day, 7 days a week.

Minimum Account Investments

Initial purchase: Minimum amount:
A standard account $2,500
A retirement account $ 500
An automatic investment plan account $1,000
Subsequent purchase:
A standard account $ 250
A retirement account $ 100
An automatic investment plan account $ 100
Account balance:
Non-retirement account $1,000
Retirement account None

The Fund and its service providers reserve the right to waive or reduce the
investment minimums from time to time at their discretion.

How to Open Your Fund Account

By mail Complete and sign the account application that
accompanies this prospectus. (You may obtain
additional applications by calling the Service
Center.) Mail the completed application along with
a check payable to Global Equity - [xxx] to the
Service Center. The addresses are shown under
"Contacting the Mutual Fund Service Center of
Deutsche Asset Management"

14
<PAGE>

A Detailed Look at Global Equity

By wire Call the Service Center to set up a wire
account.

Please note that your account cannot become activated until we receive a
completed application via mail or fax.

If this is your first investment through a tax-sheltered retirement plan, such
as an IRA, you will need a special application form. This form is available from
your broker or financial advisor, or by calling the Retirement Service Center at
1-800-730-1313.

Two Ways to Buy and Sell Shares in Your Account

MAIL:
Buying: Send your check, payable to the Fund you have selected, to the Service
Center. The addresses are shown under "Contacting the Mutual Fund Service Center
of Deutsche Asset Management." Be sure to include the fund number and your
account number (see your account statement) on your check. Please note that we
cannot accept starter checks or third-party checks. If you are investing in more
than one fund, make your check payable to "Deutsche Asset Management (Mutual
Funds)" and include your account number, the names and numbers of the funds you
have selected, and the dollar amount or percentage you would like invested in
each fund.

Selling: Send a signed letter to the 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
Deutsche Asset Management mutual 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.
Please note that you or your service agent must call the Service Center at
1-800-730-1313 to notify us in advance of a wire transfer purchase. Inform the
Service Center 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: Deutsche Asset Management/ Mutual Funds
DDA No: 00-226-296
FBO: (Account name)
(Account number)
Credit: (Global Equity - Fund #)

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 service agent or the Service Center at
1-800-730-1313. Inform the Service Center representative of the amount of your
redemption and receive a trade confirmation number. The minimum redemption by
wire is $1,000. We must receive your

15
<PAGE>

A Detailed Look at Global Equity

order by 4:00 p.m. Eastern time to wire your account the next business day.

Important Information about Buying and Selling Shares

. You may buy and sell shares of a fund through authorized service agents as
well as directly from us. The same terms and conditions apply. Specifically,
once you place your order with a service agent, it is considered received by
the Service Center. It is then your service agent's responsibility to
transmit the order to the Service Center by the next business day. You should
contact your service agent if you have a dispute as to when your order was
placed with the fund. Your service agent may charge a fee for buying and
selling shares for you.
. You may place orders to buy and sell over the phone by calling your service
agent or the 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 a fund or its agents may have incurred. To sell shares, you
must state whether you would like to receive the proceeds by wire or check.
. After we or your service agent receives your order, we buy or sell your
shares at the next price calculated on a day the New York Stock Exchange is
open for business.
. We accept payment for shares only in U.S. dollars by check, bank or Federal
Funds wire transfer, or by electronic bank transfer. Please note that we
cannot accept starter checks or third-party checks.
. The payment of redemption proceeds (including exchanges) for shares of a fund
recently purchased by check may be delayed for up to 15 calendar days while
we wait for your check to clear.
. We process all sales orders free of charge.
. 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 but
always within seven days.
. We reserve the right to close your account on 30 days' notice if it fails to
meet minimum balance requirements for any reason other than a change in
market value.
. If you sell shares by mail or wire, you may be required to obtain a signature
guarantee. Please contact your service agent or the Service Center for more
information.
. We remit proceeds from the sale of shares in U.S. dollars (unless the
redemption is so large it is made "in-kind").
. We do not issue share certificates.
. Selling shares of trust accounts and business or organization accounts may
require additional documentation. Please contact your service agent or the
Service Center for more information.
. During periods of heavy market activity, you may have trouble reaching the
Service Center by telephone. If this occurs, you should make your request by
mail.
. We reserve the right to reject purchases of Fund shares (including exchanges)
for any reason. We will reject purchases if we conclude that the purchaser
may be investing only for the short-term or for the purpose of profiting from
day-to-day fluctuations in the Fund's share price.
. We reserve the right to reject purchases of Fund shares (including exchanges)
or to suspend or postpone redemptions at times when both the New York Stock
Exchange and the Fund's custodian are closed.

Exchange Privilege: You can exchange all or part of your shares for shares in
another Deutsche Asset Management mutual fund up to four times a year (from the
date of the first exchange). When you exchange shares, you are selling shares in
one fund to purchase shares in another. Before buying shares through an
exchange, you should obtain a copy of that fund's prospectus and read it
carefully. You may order exchanges over the phone only if your account is
authorized to do so.

16
<PAGE>

Please note the following conditions:

. The accounts between which the exchange is taking place must have the same
name, address and taxpayer ID number.
. You may make the exchange by phone if your account has the exchange-by-phone
feature, letter or wire.
. If you are maintaining a taxable account, you may have to pay taxes on the
exchange.
. You will receive a written confirmation of each transaction from the Service
Center or your service agent.

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 Service Center at 1-800-730-
1313.

. Regular Investments: You can make regular investments of $100 or more
automatically from your checking account on a bi-weekly, monthly, quarterly
or semi-annual basis.
. Regular Withdrawals: You can arrange regular monthly, quarterly, semi-annual
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.
. Account Statements and Fund Reports: We or your service agent 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. We will send you a report every six months on your
fund's overall performance, its current holdings and its investing
strategies.

Financial Highlights

The Fund does not have a full calendar year of annual operating performance to
report.

17
<PAGE>

[BACK COVER]

Additional information about the Fund's investments and performance will be
available in the Fund's annual and semi-annual reports to shareholders. In the
Fund's annual report, you will find a discussion of the market conditions and
investment strategies that significantly affected the Fund's performance during
its last fiscal year.

You can find more detailed information about each Fund in the current Statement
of Additional Information, dated December 29, 2000, 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, or if you have questions about investing in the Fund,
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

You can find reports and other information about the Fund on the EDGAR Database
on the SEC's website (http://www.sec.gov), or you can get copies of this
information, after payment of a duplicating fee, by electronic request at
[email protected] or by writing to the Public Reference Section of the SEC,
------------------
Washington, D.C. 20549-0102. Information about the 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 202-942-8090.

Global Equity - Investment Class
BT Investment Funds

Distributed by: CUSIP #[xxx]
ICC Distributors, Inc. [xxxPRO (12/00)]
Two Portland Square [811-4760]
Portland, ME 04101

18
<PAGE>

Deutsche Asset Management

Mutual Fund
Prospectus
[December 29, 2000]
Institutional Class

Global Equity

(Deutsche Bank Group logo)
<PAGE>

OVERVIEW
of Global Equity - Institutional Class

Goal: The Fund invests for long-term capital appreciation.

Core Strategy: The Fund invests primarily in the stocks and other equity
securities of companies in developed countries, both inside and outside the
United States.

Investment Policies and Strategies

Global Equity - Institutional Class

Overview of Global Equity - Institutional Class
Goal
Core Strategy
Investment Policies and Strategies
Principal Risks of Investing in the Fund
Who Should Consider Investing in the Fund
Total Returns, After Fees and Expenses
Annual Fund Operating Expenses

A Detailed Look at Global Equity - Institutional Class
Objective
Strategy
Principal Investments
Investment Process
Risks
Management of the Fund
Portfolio Managers
Calculating the Fund's Share Price
Performance Information
Dividends and Distributions
Tax Considerations
Buying and Selling Fund Shares
Financial Highlights

2
<PAGE>

Overview of Global Equity

Principal Risks of Investing in the Fund

An investment in the Fund could lose money, or the Fund's performance could
trail that of other investments. For example:

. Stocks that we have selected could perform poorly; or
. The stock market could perform poorly in one or more of the countries in which
the Fund has invested.

. Adverse political, economic or social developments could undermine the value
of the Fund's investments or prevent the Fund from realizing its full value;
. Accounting and financial reporting standards differ from those in the U.S. and
could convey incomplete information when compared to information typically
provided by U.S. companies; or
. The currency of a country in which the Fund invests may decrease in value
relative to the U.S. dollar, which could affect the value of the investment to
U.S. investors.

Who Should Consider Investing in the Fund

Global Equity Institutional Class requires a minimum investment of $250,000. You
should consider investing in the Fund if you are seeking long-term capital
appreciation. There is, of course, no guarantee that the Fund will realize its
goal. Moreover, you should be willing to accept greater short-term fluctuation
in the value of your investment than you would typically experience investing in
bond or money market funds.

You should not consider investing in the Fund if you are pursuing a short-term
financial goal, if you seek regular income or if you cannot tolerate
fluctuations in the value of your investments.

An investment in Global Equity is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

3
<PAGE>

Overview of Global Equity

Total Returns, After Fees and Expenses

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 Institutional Class of Global
Equity.

You may use this hypothetical example to compare the Fund's expense history with
other funds. Your actual costs may be higher or lower.

/1/ Information is based on estimated amounts for the current fiscal year.

/2 /The investment adviser and administrator have agreed, for the 14-month
period from the effective date of December 29, 2000, to waive their fees and
reimburse expenses so that total expenses will not exceed 1.15%.

/3/ For the first year, the expense example takes into account fee waivers and
reimbursements.

ANNUAL FEES AND EXPENSES/1/

-----------------------------------------------------------------------
Percentage of Average
Daily Net Assets
-----------------------------------------------------------------------
Management Fees 0.60%
-----------------------------------------------------------------------
Distribution and Service (12b-1) Fees None
-----------------------------------------------------------------------
Other Expenses [xxx]
-----------------------------------------------------------------------
Total Fund Operating Expenses [xxx]
-----------------------------------------------------------------------
Less: Fee Waivers or Expense Reimbursements (0.xx%)/2/
-----------------------------------------------------------------------
Net Expenses 1.15%
-----------------------------------------------------------------------

Expense Example

-------------------------------------
1 year/3/ 3 years
-------------------------------------
$xxx $xxx
-------------------------------------

4
<PAGE>

A Detailed Look at Global Equity

Objective

Strategy

Principal Investments

Other Investments

Investment Process

5
<PAGE>

A Detailed Look at Global Equity

In choosing the stocks, we consider a number of factors, including:

. stock price relative to the company's rate of earnings growth;
. valuation relative to other U.S. and international companies and market
averages;
. the stock's currency denomination;
. merger and acquisition trends; and
. trends related to the impact of the European currency, the "Euro," on the
financial, marketing and distribution strategies of European companies.

FOOTNOTE: Portfolio Turnover. The portfolio turnover rate measures the frequency
that the master portfolio sells and replaces the securities it holds within a
given period.

Prior Performance of a Model Portfolio

The information provided here presents the performance of global portfolio
management ("GPM"), a model portfolio of securities. GPM has been actively
managed by the portfolio manager since 1993. Our decision to establish the Fund
was supported by the results of this model strategy over the 1993-2000 period.
In managing the Fund, we will employ substantially the same investment
objectives, policies and strategies that we employed in managing GPM. However,
there will be some differences:

. Investments in emerging markets are not currently part of GPM's core strategy,
however, they will make up between 0-10% of the Fund's strategy.
. GPM uses a top-down approach to determine U.S. and non-U.S. allocations if the
allocations are determined prior to stock selection. The Fund will use a
combination of top-down and bottom-up analysis where stock selection will be
an important driver of the U.S. and non-U.S. allocations. While different
approaches, we expect each to derive similar U.S./non-U.S. allocation
percentages.
. The Fund is subject to certain rules (e.g., limits on the percentage of assets
invested in securities of issuers in a single industry and requirements on
distributing income to shareholders) that do not apply to GPM.

6
<PAGE>

A Detailed Look at Global Equity

. The continuous offering of the Fund's shares and the Fund's obligation to
redeem its shares will likely cause the Fund to experience cash flows that may
be different from those of GPM.

A model does not incur management fees and expenses. Accordingly, we have
adjusted the performance results of GPM to reflect an overall expense ratio of
1.15%, which is the same as the expected expense ratio of the Fund. Returns of
GPM are compared to the MSCI World Index. Unlike GPM's performance, which we
have adjusted for expected expenses, the MSCI World Index does not reflect the
deduction of fees and expenses. The returns of both GPM and the MSCI World Index
reflect the reinvestment of dividends and distributions. The GPM Model Global
Portfolio price returns are converted into total returns by adding the MSCI
World Index dividend yield. The performance data represents the prior
performance of GPM, not the prior performance of the Fund, and should not be
considered an indication of future performance of the Fund.

-----------------------------------------------------------------------
GPM Global MSCI World
Year Total Returns Total Returns Difference
-----------------------------------------------------------------------
1994 3.56% 5.08% (1.52%)
-----------------------------------------------------------------------
1995 18.88% 20.72% (1.84%)
-----------------------------------------------------------------------
1996 19.35% 13.48% 5.87%
-----------------------------------------------------------------------
1997 25.39% 15.76% 9.63%
-----------------------------------------------------------------------
1998 30.44% 24.34% 6.10%
-----------------------------------------------------------------------
1999 39.09% 24.93% 14.16%
-----------------------------------------------------------------------

-----------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
For the Period Ended September
30, 2000 GPM Global MSCI World
Returns Total Returns Difference
-----------------------------------------------------------------------
1 Year 28.51% 8.16% 20.35%
-----------------------------------------------------------------------
3 Year 19.03% 11.93% 7.10%
-----------------------------------------------------------------------
5 Year 21.12% 14.62% 6.50%
-----------------------------------------------------------------------
Since Inception (7/31/1993) 19.75% 13.77% 5.98%
-----------------------------------------------------------------------

Risks

Primary Risks

Market Risk. Although individual stocks can outperform their local markets,
deteriorating market conditions

7
<PAGE>

A Detailed Look at Global Equity

might cause an overall weakness in the stock prices of the entire market.

. its rate of price appreciation begins to trail that of its national stock
index;
. the financial analysts who follow the stock reduce their estimates of the
stock's future earnings; or
. the stock's price approaches the downside target, which is adjusted to keep
pace with changes in company, industry and market circumstances.

. Regulatory Risk. Some foreign governments regulate their exchanges less
stringently, and the rights of shareholders may not be as firmly established.

8
<PAGE>

A Detailed Look at Global Equity

Secondary Risks

9
<PAGE>

A Detailed Look at Global Equity

Although it is impossible to predict the impact of the conversion to the euro on
the Fund, the risks may include:
. Changes in the relative strength and value of the U.S. dollar or other major
currencies;
. Adverse effects on the business or other financial condition of European
issuers that the Fund holds in its portfolio; and
. Unpredictable effects on trade and commerce generally.

These and other factors could increase volatility in financial markets worldwide
and could adversely affect the value of securities held by the Fund.

Management of the Fund

Board of Trustees. A Board of Trustees supervises all of the Fund's activities
on behalf of the Fund's shareholders.

Portfolio Managers. The following portfolio managers are responsible for the
day-to-day management of the master portfolio's investments:

Robert Reiner, Managing Director of DeAM, Inc. and Lead Manager of the master
portfolio.
. Joined Bankers Trust and the master portfolio in 1994.
. Specializes in Japanese and European stock and market analysis.
. Served as a Senior Financial Analyst at Scudder, Stevens & Clark from 1993
to 1994.
. 18 years of investment industry experience.
. Degrees from the University of Southern California and Harvard University.

10
<PAGE>

A Detailed Look at Global Equity

Michael Levy, Managing Director of DeAM, Inc. and Co-Manager of the master
portfolio.
. Joined the investment adviser in 1993.
. Head of international equities, New York, responsible for overseeing the
management of more than $7 billion of international and global equities. 29
years of business experience, 18 as an investment professional.
. Degrees in mathematics and geophysics from the University of Michigan.

Claire Brody, CFA, Director of DeAM, Inc. and Co-Manager of the master
portfolio.
. Joined the investment adviser in 1993.
. 9 years of investment industry experience.
. Global telecommunications services/equipment and pulp and paper analyst.

Vijay Kumar Chopra, CFA, Director of DeAM, Inc. and Co-Manager of the master
portfolio.
. Joined the investment adviser in 1994.
. Quantitative portfolio manager focusing on valuation models and top-down
analysis.
. 10 years of investment industry experience.
. Prior experience as portfolio manager at State Street Global Advisors and
senior research analyst at Frank Russell Company.
. BTech from Indian Institute of Technology; MBA and PhD in finance from
Vanderbilt University.

. keeping accurate, up-to-date records for your individual Fund account;
. implementing any changes you wish to make in your account information;
. processing your requests for cash dividends and distributions from the Fund;
. answering your questions on the Fund's investment performance or
administration;
. sending proxy reports and updated prospectus information to you; and
. collecting your executed proxies.

11
<PAGE>

A Detailed Look at Global Equity

Calculating the Fund's Share Price

Performance Information

Dividends and Distributions

Dividends and capital gains distributions, if any, are paid at least annually.
We automatically reinvest all dividends and any capital gains, unless you elect
to receive your distributions in cash.

12
<PAGE>

A Detailed Look at Global Equity

Tax Considerations

Every year the Fund will send you information on the distributions for the
previous year. In addition, if you sell your Fund shares you may have a capital
gain or loss.

--------------------------------------------------------------------------------
Transaction Tax Status
--------------------------------------------------------------------------------
Your sale of shares owned more than one year Capital gains or losses
--------------------------------------------------------------------------------
Your sale of shares owned for one year or less Ordinary income
--------------------------------------------------------------------------------
Long-term capital gains distributions Gains treated as ordinary
income; losses subject to
special rules
--------------------------------------------------------------------------------

The tax considerations for tax - deferred accounts or non-taxable entities will
be different.

Because each investor's tax circumstances are unique and because tax laws are
subject to change, we recommend that you consult with your tax advisor about
your investment.

Buying and Selling Fund Shares

Contacting the Mutual Fund Service Center of Deutsche Asset Management

By phone 1-800-730-1313

By mail P.O. Box 219210
Kansas City, MO 64121-9210

By overnight mail 210 West 10th Street, 8th floor
Kansas City, MO 64105-1716

13
<PAGE>

line 24 hours a day, 7 days a week.

A Detailed Look at Global Equity

Minimum Account Investments

To open an account $250,000
To add to an account $25,000
Minimum account balance $50,000

The Fund and its service providers reserve the right to waive or reduce the
investment minimums from time to time at their discretion. Shares of the Fund
may be offered to directors and trustees, of any mutual fund advised or
administered by Deutsche Asset Management, Inc. or its affiliates, or employees
of Deutsche Bank AG, their spouses and minor children, without regard to the
minimum investment required.

How to Open Your Fund Account

By mail Complete and sign the account application
that accompanies this prospectus. (You may
obtain additional applications by calling the
Service Center.) Mail the completed
application along with a check payable to
Global Equity Institutional Class - [xxx] to
the Service Center. The addresses are shown
under "Contacting the Mutual Fund Service
Center of Deutsche Asset Management."

By wire Call the Service Center to set up a wire
account.

Please note that your account cannot become activated until we receive a
completed application via mail or fax.

Two Ways to Buy and Sell Shares in Your Account

MAIL:
Buying: Send your check, payable to the Fund you have selected, to the Service
Center. The addresses are shown under "Contacting the Mutual Fund Service Center
of Deutsche Asset Management." Be sure to include the Fund number and your
account number (see your account statement) on your check. Please note that we
cannot accept starter checks or third-party checks. If you are investing in more
than one fund, make your check payable to "Deutsche Asset Management (Mutual
Funds)" and include your account number, the names and numbers of the funds you
have selected, and the dollar amount or percentage you would like invested in
each fund.

Selling: Send a signed letter to the 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

14
<PAGE>

A Detailed Look at Global Equity

must leave at least $50,000 invested in your account to keep it open. Unless
exchanging into another Deutsche Asset Management mutual fund, you must submit a
written authorization to sell shares in a retirement account.

Routing No: 021001033
Attn: Deutsche Asset Management/ Mutual Funds
DDA No: 00-226-296
FBO: (Account name)
(Account number)
Credit: (Global Equity Institutional Class - Fund #)

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

Important Information about Buying and Selling Shares

. You may place orders to buy and sell over the phone by calling your service
agent or the 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 a fund or its agents may have incurred. To sell shares, you
must state whether you would like to receive the proceeds by wire or check.

. After we or your service agent receives your order, we buy or sell your shares
at the next price calculated on a day the New York Stock Exchange is open for
business.

. We accept payment for shares only in U.S. dollars by check, bank or Federal
Funds wire transfer, or by electronic bank transfer. Please note that we
cannot accept starter checks or third-party checks.

. The payment of redemption proceeds (including exchanges) for shares of a fund
recently purchased by check may be delayed for up to 15 calendar days while we
wait for your check to clear.

. We process all sales orders free of charge.

15
<PAGE>

. 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 but
always within seven days.

A Detailed Look at Global Equity

. We reserve the right to close your account on 30 days' notice if it fails to
meet minimum balance requirements for any reason other than a change in market
value.

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

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

. We do not issue share certificates.

. Selling shares of trust accounts and business or organization accounts may
require additional documentation. Please contact your service agent or the
Service Center for more information.

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

. We reserve the right to reject purchases of Fund shares (including exchanges)
for any reason. We will reject purchases if we conclude that the purchaser may
be investing only for the short-term or for the purpose of profiting from day-
to-day fluctuations in the Fund's share price.

. We reserve the right to reject purchases of Fund shares (including exchanges)
or to suspend or postpone redemptions at times when both the New York Stock
Exchange and the Fund's custodian are closed.

. Account Statements and Fund Reports: We or your service agent 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. We will send you a report every six months on your fund's
overall performance, its current holdings and its investing strategies.

Exchange Privilege: You can exchange all or part of your shares for shares of
another Deutsche Asset Management mutual fund up to four times a year (from the
date of the first exchange). 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 the following conditions:

. The accounts between which the exchange is taking place must have the same
name, address, and taxpayer ID number.

. You may make the exchange by phone if your account has the exchange by phone
feature, letter or wire.

. If you are maintaining a taxable account, you may have to pay taxes on the
exchange.

. You will receive a written confirmation of each transaction from the Service
Center or your service agent.

Financial Highlights

The Fund does not have a full calendar year of annual operating performance to
report.

16
<PAGE>

[BACK COVER]

Deutsche Asset Management Service Center
P.O. Box 219210
Kansas City, MO 64121-9210
or call our toll-free number: 1-800-730-1313

Global Equity - Institutional Class
BT Investment Funds

Distributed by: CUSIP #[xxx]
ICC Distributors, Inc. [xxxPRO (12/00)]
Two Portland Square [811-4760]
Portland, ME 04101

17
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

December 29, 2000

BT Investment Funds

Global Equity - Investment Class
Global Equity - Institutional Class

BT Investment Funds (the "Trust") is an open-end management investment company
(mutual fund) which consists of a number of separate investment funds. The
Global Equity (the "Fund") is described herein.

Unlike other mutual funds, the Trust seeks to achieve the investment objective
of the Fund by investing all the investable assets ("Assets") of the Fund in a
diversified open-end management investment company having the same investment
objectives as the Fund. The investment company (or a series thereof) is the
Global Equity Portfolio (the "Portfolio").

Shares of the Fund are sold by ICC Distributors, Inc. ("ICC Distributors"), the
Trust's Distributor, to clients and customers (including affiliates and
correspondents) of Deutsche Asset Management, Inc. ("DeAM, Inc."), the
Portfolio's investment adviser ("Adviser"), and to clients and customers of
other organizations. As appropriate, references to the Adviser herein apply to
any sub-adviser which may have day-to-day investment management responsibility
for the Portfolio.

The Trust's Prospectus for the Fund is dated December 29, 2000. The Prospectus
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 a 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 Service Agent (which is
any broker, financial advisor, bank, dealer or other institution or financial
intermediary that has a sub-shareholder servicing agreement with the Fund's
transfer agent). This SAI is not an offer of the Fund for any investor who has
not received a Prospectus. Capitalized terms not otherwise defined in this SAI
have the meanings accorded to them in the Fund's Prospectus. A copy of the
Fund's and the Portfolio's Annual Report may be obtained without charge by
calling the Fund at 1-800-730 1313.

DEUTSCHE ASSET MANAGEMENT, INC.
Investment Adviser of the Portfolio

ICC DISTRIBUTORS, INC.
Distributor
Two Portland Square
Portland, Maine 04101
<PAGE>

TABLE OF CONTENTS

<TABLE>
<S> <C>
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS..................... 4
Investment Objectives............................................... 4
Investment Policies................................................. 4
Futures Contracts and Options on Futures Contracts.................. 17
Additional Risk Factors............................................. 21
Investment Restrictions............................................. 26
Portfolio Transactions and Brokerage Commissions.................... 29
PERFORMANCE INFORMATION.............................................. 31
Standard Performance Information.................................... 31
Comparison of Fund Performance...................................... 31
Economic and Market Information..................................... 32
VALUATION OF SECURITIES; REDEMPTIONS AND PURCHASES IN-KIND........... 32
Valuation of Securities............................................. 32
Purchases of Shares................................................. 33
Additional Information about Buying Shares.......................... 31
Redemption of Shares................................................ 34
Additional Information about Selling Shares......................... 32
Investor Services................................................... 32
Information Services................................................ 32
Exchange Privilege.................................................. 33
Systematic Programs................................................. 33
Redemptions and Purchases In-Kind................................... 35
Trading in Foreign Securities....................................... 37
MANAGEMENT OF THE TRUST AND THE PORTFOLIO............................ 37
Trustees of the Trust and Portfolio................................. 37
Officers of the Trusts and Portfolio................................ 39
Trustee Compensation Table.......................................... 39
Code of Ethics...................................................... 40
Investment Adviser.................................................. 41
Administrator....................................................... 42
Distributor......................................................... 42
Service Agent....................................................... 42
Custodian and Transfer Agent........................................ 43
Banking Regulatory Matters.......................................... 43
Counsel and Independent Auditors.................................... 44
ORGANIZATION OF THE TRUST............................................ 44
TAXATION............................................................. 46
Dividends and Distributions......................................... 46
Taxation of the Funds............................................... 46
Foreign Securities.................................................. 47
Taxation of the Portfolio........................................... 48
Sale of Shares...................................................... 48
Foreign Withholding Taxes........................................... 49
</TABLE>

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<TABLE>
<S> <C>
Backup Withholding................................................... 49
Foreign Shareholders................................................. 49
Other Taxation....................................................... 49
FINANCIAL STATEMENTS.................................................. 49
APPENDIX.............................................................. 50
</TABLE>

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<PAGE>

INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS

Investment Objectives

Global Equity's investment objective is long-term capital appreciation. Under
normal circumstances, the Fund invests at least 65% of its total assets in the
stocks and other securities with equity characteristics of companies based
primarily in developed countries, both inside and outside the United States.
There can, of course, be no assurance that the Fund will achieve its investment
objective.

Investment Policies

The Fund seeks to achieve its investment objective by investing all of its
assets in the corresponding Portfolio, which has the same investment objective
as the Fund. The Trust may withdraw the 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. Since the investment
characteristics of the Fund will correspond directly to those of the
corresponding Portfolio, the following is a discussion of the various
investments of and techniques employed by the Portfolio.

Under normal circumstances, the Portfolio invests at least 65% of the value of
its total assets in stocks and other securities with equity characteristics of
companies primarily based in developed countries, both inside and outside the
United States. However, the Portfolio may also invest in emerging market
securities and securities of issuers in underdeveloped countries. Investments in
these countries will be based on what the Adviser believes to be an acceptable
degree of risk in anticipation of superior returns.

The Portfolio's investments will generally be diversified among several
geographic regions and countries. Criteria for determining the appropriate
distribution of investments among various countries and regions include the
prospects for relative growth among foreign countries, expected levels of
inflation, government policies influencing business conditions, the outlook for
currency relationships and the range of alternative opportunities available to
international investors.

In countries and regions with well-developed capital markets where more
information is available, the Adviser will seek to select individual investments
for the Portfolio. Criteria for selection of individual securities include the
issuer's competitive position, prospects for growth, managerial strength,
earnings quality, underlying asset value, relative market value and overall
marketability. The Portfolio may invest in securities of companies having
various levels of net worth, including smaller companies whose securities may be
more volatile than securities offered by larger companies with higher levels of
net worth.

In other countries and regions where capital markets are underdeveloped or not
easily accessed and information is difficult to obtain, the Portfolio may choose
to invest only at the market level.

4
<PAGE>

Here, the Portfolio may seek to achieve country exposure through use of options
or futures based on an established local index. Similarly, country exposure may
also be achieved through investments in other registered investment companies.

The remainder of the Portfolio's assets will be invested in dollar and non-
dollar denominated short-term instruments. These investments are subject to the
conditions described in "Short-Term Instruments" below.

Equity Investments. The Portfolio invests primarily in common stocks and other
securities with equity characteristics. For purposes of the Portfolio's policy
of investing at least 65% of the value of its total assets in the equity
securities of foreign issuers, "equity securities" are defined as common stock,
preferred stock, trust or limited partnership interests, rights and warrants,
and convertible securities (consisting of debt securities or preferred stock
that may be converted into common stock or that carry the right to purchase
common stock). The Portfolio invests in securities listed on foreign or domestic
securities exchanges and securities traded in foreign or domestic over-the-
counter markets, in addition to investment in restricted or unlisted securities.

Warrants. Warrants are instruments which entitle the holder to buy underlying
equity securities at a specific price for a specific period of time. A warrant
tends to be more volatile than its underlying securities and ceases to have
value if it is not exercised prior to its expiration date. In addition, changes
in the value of a warrant do not necessarily correspond to changes in the value
of its underlying securities.

ADRs, GDRs and EDRs. American Depositary Receipts ("ADRs"), Global Depositary
Receipts ("GDRs"), and European Depositary Receipts ("EDRs") are certificates
evidencing ownership of shares of a foreign-based issuer held in trust by a bank
or similar financial institution. Designed for use in U.S., international and
European securities markets, respectively, ADRs, GDRs and EDRs are alternatives
to the purchase of the underlying securities in their national markets and
currencies. ADRs, GDRs and EDRs are subject to the same risks as the foreign
securities to which they relate.

Certificates of Deposit and Bankers' Acceptances. Certificates of deposit are
receipts issued by a depository institution in exchange for the deposit of
funds. The issuer agrees to pay the amount deposited plus interest to the bearer
of the receipt on the date specified on the certificate. The certificate usually
can be traded in the secondary market prior to maturity. Bankers' acceptances
typically arise from short-term credit arrangements designed to enable
businesses to obtain funds to finance commercial transactions. Generally, an
acceptance is a time draft drawn on a bank by an exporter or an importer to
obtain a stated amount of funds to pay for specific merchandise. The draft is
then "accepted" by a bank that, in effect, unconditionally guarantees to pay the
face value of the instrument on its maturity date. The acceptance may then be
held by the accepting bank as an earning asset or it may be sold in the
secondary market at the going rate of discount for a specific maturity. Although
maturities for acceptances can be as long as 270 days, most acceptances have
maturities of six months or less.

Commercial Paper. Commercial paper consists of short-term (usually from 1 to 270
days)

5
<PAGE>

unsecured promissory notes issued by corporations in order to finance their
current operations. A variable amount master demand note (which is a type of
commercial paper) represents a direct borrowing arrangement involving
periodically fluctuating rates of interest under a letter agreement between a
commercial paper issuer and an institutional lender pursuant to which the lender
may determine to invest varying amounts.

For a description of commercial paper ratings, see the Appendix.

Short-Term Instruments. The Portfolio intends to stay invested in equity
securities to the extent practical in light of its objective and long-term
investment perspective. However, up to 35% of the Portfolio's assets may be
invested in short-term instruments with remaining maturities of 397 days or less
or in money market mutual funds: to meet anticipated redemptions and expenses;
for day-to-day operating purposes; and when the Portfolio experiences large cash
inflows through the sale of securities and desirable equity securities that are
consistent with the Portfolio's investment objective are unavailable in
sufficient quantities or at attractive prices, the Portfolio may hold short-term
investments for a limited time pending availability of such equity securities.
In addition, when in the Adviser's opinion, it is advisable to adopt a temporary
defensive position because of unusual and adverse conditions affecting the
equity markets, up to 100% of the Portfolio's assets may be invested in such
short-term instruments. Short-term instruments consist of U.S. and non U.S.: (i)
short-term obligations of sovereign governments, their agencies,
instrumentalities, authorities or political subdivisions; (ii) other short-term
debt securities rated AA or higher by Standard & Poor's Ratings Group ("S&P") or
Aa or higher by Moody's Investors Service, Inc. ("Moody's") or, if unrated, are
of comparable quality in the opinion of the Adviser; (iii) commercial paper;
(iv) bank obligations, including negotiable certificates of deposit, time
deposits and bankers' acceptances; and (v) repurchase agreements. At the time
the Portfolio invests in commercial paper, bank obligations or repurchase
agreements, the issuer or the issuer's parent must have outstanding debt rated
AA or higher by S&P or Aa or higher by Moody's or outstanding commercial paper
or bank obligations rated A-1 by S&P or Prime-1 by Moody's; or, if no such
ratings are available, the instrument must be of comparable quality in the
opinion of the Adviser. These instruments may be denominated in U.S. dollars or
in foreign currencies.

Derivatives. The Portfolio may invest in various instruments that are commonly
known as "derivatives." Generally, a derivative is a financial arrangement, the
value of which is based on, or "derived" from, a traditional security, asset or
market index. Some derivatives such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities. There are,
in fact, many different types of derivatives and many different ways to use
them. There is also a range of risks associated with those uses. Futures and
options are commonly used for traditional hedging purposes to attempt to protect
the Fund from exposure to changing interest rates, securities prices or currency
exchange rates and for cash management purposes as a low cost method of gaining
exposure to a particular securities market without investing directly in those
securities. However, some derivatives are used for leverage, which tends to
magnify the effects of an instrument's price changes as market conditions
change. Leverage involves the use of a small amount of money to control a large
amount of financial

6
<PAGE>

assets and can, in some circumstances, lead to significant losses. DeAM, Inc.,
as the Portfolio's Adviser will use derivatives only in circumstances where the
Adviser believes they offer the most economic means of improving the risk/reward
profile of the Portfolio. Derivatives will not be used to increase portfolio
risk above the level that could be achieved using only traditional investment
securities or to acquire exposure to changes in the value of assets or indices
that by themselves would not be purchased for the Portfolio. The use of
derivatives for non-hedging purposes may be considered speculative.

Convertible Securities and Preferred Stock. Subject to its investment policies,
the Fund may invest in convertible securities, which may include corporate notes
or preferred stock but are ordinarily long-term debt obligations of the issuer
convertible at a stated exchange rate into common stock of the issuer. As with
all fixed income securities, the market value of convertible securities tends to
decline as interest rates increase and, conversely, to increase as interest
rates decline. Convertible securities generally offer lower interest or dividend
yields than non-convertible securities of similar quality. However, when the
market price of the common stock underlying a convertible security exceeds the
conversion price, the price of the convertible security tends to reflect the
value of the underlying common stock. As the market price of the underlying
common stock declines, the convertible security tends to trade increasingly on a
yield basis, and thus may not depreciate to the same extent as the underlying
common stock. Convertible securities generally rank senior to common stocks in
an issuer's capital structure and are consequently of higher quality and entail
less risk than the issuer's common stock. However, the extent to which such risk
is reduced depends in large measure upon the degree to which the convertible
security sells above its value as a fixed income security. In evaluating a
convertible security, the Adviser will give primary emphasis to the
attractiveness of the underlying common stock. The convertible debt securities
in which the Fund may invest are subject to the same rating criteria as the
Fund's investments in non-convertible securities.

The Fund, subject to its investment objectives, may purchase preferred stock.
Preferred stocks are equity securities, but possess certain attributes of debt
securities and are generally considered fixed income securities. Holders of
preferred stocks normally have the right to receive dividends at a fixed rate
when and as declared by the issuer's board of directors, but do not participate
in other amounts available for distribution by the issuing corporation.
Dividends on the preferred stock may be cumulative, and in such cases all
cumulative dividends usually must be paid prior to dividend payments to common
stockholders. Because of this preference, preferred stocks generally entail less
risk than common stocks. Upon liquidation, preferred stocks are entitled to a
specified liquidation preference, which is generally the same as the par or
stated value, and are senior in right of payment to common stocks. However,
preferred stocks are equity securities in that they do not represent a liability
of the issuer and therefore do not offer as great a degree of protection of
capital or assurance of continued income as investments in corporate debt
securities. In addition, preferred stocks are subordinated in right of payment
to all debt obligations and creditors of the issuer, and convertible preferred
stocks may be subordinated to other preferred stock of the same issuer.

Illiquid Securities. Historically, illiquid securities have included securities
subject to contractual or legal restrictions on resale because they have not
been registered under the Securities Act of

7
<PAGE>

1933, as amended (the "1933 Act"), securities which are otherwise not readily
marketable and repurchase agreements having a remaining maturity of longer than
seven days. Securities which have not been registered under the 1933 Act are
referred to as private placements or restricted securities and are purchased
directly from the issuer or in the secondary market. Mutual funds do not
typically hold a significant amount of these restricted or other illiquid
securities because of the potential for delays on resale and uncertainty in
valuation. Limitations on resale may have an adverse effect on the marketability
of portfolio securities and a mutual fund might be unable to dispose of
restricted or other illiquid securities promptly or at reasonable prices and
might thereby experience difficulty satisfying redemptions within seven days. A
mutual fund might also have to register such restricted securities in order to
dispose of them resulting in additional expense and delay. Adverse market
conditions could impede such a public offering of securities. In recent years,
however, a large institutional market has developed for certain securities that
are not registered under the 1933 Act, including repurchase agreements,
commercial paper, foreign securities, municipal securities and corporate bonds
and notes. Institutional investors depend on an efficient institutional market
in which the unregistered security can be readily resold or on an issuer's
ability to honor a demand for repayment. The fact that there are contractual or
legal restrictions on resale of such investments to the general public or to
certain institutions may not be indicative of their liquidity.

The Securities and Exchange Commission (the "SEC") has adopted Rule 144A, which
allows a broader institutional trading market for securities otherwise subject
to restriction on their resale to the general public. Rule 144A establishes a
"safe harbor" from the registration requirements of the 1933 Act of resales of
certain securities to qualified institutional buyers. The Adviser anticipates
that the market for certain restricted securities such as institutional
commercial paper will expand further as a result of this regulation and the
development of automated systems for the trading, clearance and settlement of
unregistered securities of domestic and foreign issuers, such as the PORTAL
System sponsored by the National Association of Securities Dealers, Inc.

The Portfolio may purchase securities in the United States that are not
registered for sale under federal securities laws but which can be resold to
institutions under the SEC Rule 144A. Provided that a dealer or institutional
trading market in such securities exists, these restricted securities are
treated as exempt from the Portfolio's 15% limit on illiquid securities.

The Adviser will monitor the liquidity of Rule 144A securities in the
Portfolio's holdings under the supervision of the Portfolio's Board of Trustees.
In reaching liquidity decisions, the Adviser will consider, among other things,
the following factors: (1) the frequency of trades and quotes for the security;
(2) the number of dealers and other potential purchasers or sellers of the
security; (3) dealer undertakings to make a market in the security and (4) the
nature of the security and of the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers and the mechanics of
the transfer). If institutional trading in restricted securities were to
decline, the liquidity of the Portfolio could be adversely affected.

When-Issued and Delayed Delivery Securities. The Portfolio may purchase
securities on a when-issued or delayed delivery basis. Delivery of and payment
for these securities may take place as long as a month or more after the date of
the purchase commitment. The value of these

8
<PAGE>

securities is subject to market fluctuation during this period and no income
accrues to the Portfolio until settlement takes place. The Portfolio identifies,
as part of a segregated account, cash or liquid securities in an amount at least
equal to these commitments. When entering into a when-issued or delayed delivery
transaction, the Portfolio will rely on the other party to consummate the
transaction; if the other party fails to do so, the Portfolio may be
disadvantaged.

Lending of Portfolio Securities. The Portfolio has the authority to lend up to
30% of the total value of its portfolio securities to brokers, dealers and other
financial organizations. These loans must be secured continuously by cash or
securities issued or guaranteed by the United States government, its agencies or
instrumentalities or by a letter of credit at least equal to the market value of
the securities loaned plus accrued income. The Portfolio will not lend
securities to the Adviser, ICC Distributors or their affiliates. By lending its
securities, the Portfolio can increase its income by continuing to receive
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 interest
paid by the borrower when U.S. government obligations are used as collateral.
During the term of the loan, the Portfolio continues to bear the risk of
fluctuations in the price of the loaned securities. There may be risks of delay
in receiving additional collateral or risks of delay in recovery of the
securities or even loss of rights in the collateral should the borrower of the
securities fail financially. The Portfolio will adhere to the following
conditions whenever its securities are loaned: (i) the Portfolio must receive at
least 100 % cash collateral or equivalent securities 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 reasonable interest on the loan, as well as any
dividends, interest or other distributions on the loaned securities, and any
increase in market value; (v) the Portfolio may pay only reasonable custodian
fees in connection with the loan; and (vi) 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 terminate
the loan and regain the right to 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.

U.S. Government Securities. The Fund may invest in obligations issued or
guaranteed as to both principal and interest by the U.S. Government, its
agencies, instrumentalities or sponsored enterprises ("U.S. Government
securities"). Some U.S. Government securities, such as U.S. Treasury bills,
notes and bonds, are supported by the full faith and credit of the United
States. Others, such as obligations issued or guaranteed by U.S. Government
agencies or instrumentalities are supported either by (i) the full faith and
credit of the U.S. Government (such as securities of the Small Business
Administration), (ii) the right of the issuer to borrow from the U.S. Treasury
(such as securities of the Federal Home Loan Banks), (iii) the discretionary
authority of the U.S. Government to purchase the agency's obligations (such as
securities of the Federal National Mortgage Association ("FNMA")), or (iv) only
the credit of the issuer. No assurance can be given that the U.S. Government
will provide financial support to U.S. Government agencies or instrumentalities
in the future.

9
<PAGE>

The Fund may also invest in separately traded principal and interest components
of U.S. Government securities if such components are traded independently under
the Separate Trading of Registered Interest and Principal of Securities program
("STRIPS") or any similar program sponsored by the U.S. Government.

Repurchase Agreements. In a repurchase agreement the Portfolio buys a security
and simultaneously agrees to sell it back at a higher price at a future date. In
the event of the bankruptcy of the other party to either a repurchase agreement
or a securities loan, the Portfolio could experience delays in recovering either
its cash or the securities it lent. To the extent that, in the meantime, the
value of the securities repurchased or lent had changed, the Portfolio could
experience a loss. In all cases, the Adviser must find the creditworthiness of
the other party to the transaction satisfactory. A repurchase agreement is
considered a collateralized loan under the Investment Company Act of 1940, as
amended ("1940 Act").

Investment Companies. With respect to certain countries in which capital markets
are either less developed or not easily accessed, investments by the Portfolio
may be made through investment in other investment companies that in turn are
authorized to invest in the securities of such countries. Investment in other
investment companies may also be made for other purposes, such as noted herein
under "Short-Term Instruments", and are limited in amount by the 1940 Act,
(unless permitted to exceed these limitations by an exemptive order of the SEC,
will involve the indirect payment of a portion of the expenses, including
advisory fees, of such other investment companies and may result in a
duplication of fees and expenses.

Options on Securities. The Portfolio may write (sell) covered call and put
options to a limited extent on its portfolio securities ("covered options") in
an attempt to increase income. However, the Portfolio may forgo the benefits of
appreciation on securities sold or may pay more than the market price on
securities acquired pursuant to call and put options written by the Portfolio.

When the Portfolio writes a covered call option, it gives the purchaser of the
option the right to buy the security at the price specified in the option (the
"exercise price") by exercising the option at any time during the option period.
If the option expires unexercised, the Portfolio will realize income in an
amount equal to the premium received for writing the option. If the option is
exercised, a decision over which the Portfolio has no control, the Portfolio
must sell the security to the option holder at the exercise price. By writing a
covered call option, the Portfolio forgoes, in exchange for the premium less the
commission ("net premium"), the opportunity to profit during the option period
from an increase in the market value of the underlying security above the
exercise price. In addition the Portfolio may continue to hold a stock which
might otherwise have been sold to protect against depreciation in the market
price of the stock.

A put option sold by the Portfolio is covered when, among other things, cash or
securities acceptable to the broker are placed in a segregated account to
fulfill the obligations undertaken. When the Portfolio writes a covered put
option, it gives the purchaser of the option the right to sell the underlying
security to the Portfolio at the specified exercise price at any time during the
option period. If the option expires unexercised, the Portfolio will realize
income in the amount of the premium received for writing the option. If the put
option is exercised, a decision over

10
<PAGE>

which the Portfolio has no control, the Portfolio must purchase the underlying
security from the option holder at the exercise price. By writing a covered put
option, the Portfolio, in exchange for the net premium received, accepts the
risk of a decline in the market value of the underlying security below the
exercise price. The Portfolio will only write put options involving securities
for which a determination is made at the time the option is written that the
Portfolio wishes to acquire the securities at the exercise price.

The Portfolio may terminate its obligation as the writer of a call or put option
by purchasing an option with the same exercise price and expiration date as the
option previously written. This transaction is called a "closing purchase
transaction." The Portfolio will realize a profit or loss from a closing
purchase transaction if the amount paid to purchase an option is less or more,
as the case may be, than the amount received from the sale thereof. To close out
a position as a purchaser of an option, the Portfolio, may make a "closing sale
transaction" which involves liquidating the Portfolio's position by selling the
option previously purchased. Where the Portfolio cannot effect a closing
purchase transaction, it may be forced to incur brokerage commissions or dealer
spreads in selling securities it receives or it may be forced to hold underlying
securities until an option is exercised or expires.

When the Portfolio writes an option, an amount equal to the net premium received
by the Portfolio is included in the liability section of the Portfolio's
Statement of Assets and Liabilities as a deferred credit. The amount of the
deferred credit will be subsequently marked to market to reflect the current
market value of the option written. The current market value of a traded option
is the last sale price or, in the absence of a sale, the mean between the
closing bid and asked price. If an option expires on its stipulated expiration
date or if the Portfolio enters into a closing purchase transaction, the
Portfolio will realize a gain (or loss if the cost of a closing purchase
transaction exceeds the premium received when the option was sold), and the
deferred credit related to such option will be eliminated. If a call option is
exercised, the Portfolio will realize a gain or loss from the sale of the
underlying security and the proceeds of the sale will be increased by the
premium originally received. The writing of covered call options may be deemed
to involve the pledge of the securities against which the option is being
written. Securities against which call options are written will be segregated on
the books of the custodian for the Portfolio.

The Portfolio may purchase call and put options on any securities in which it
may invest. The Portfolio would normally purchase a call option in anticipation
of an increase in the market value of such securities. The purchase of a call
option would entitle the Portfolio, in exchange for the premium paid, to
purchase a security at a specified price during the option period. The Portfolio
would ordinarily have a gain if the value of the securities increased above the
exercise price sufficiently to cover the premium and would have a loss if the
value of the securities remained at or below the exercise price during the
option period.

The Portfolio would normally purchase put options in anticipation of a decline
in the market value of securities in its portfolio ("protective puts") or
securities of the type in which it is permitted to invest. The purchase of a put
option would entitle the Portfolio, in exchange for the premium paid, to sell a
security, which may or may not be held in the Portfolio's holdings, at a
specified price during the option period. The purchase of protective puts is
designed merely to

11
<PAGE>

offset or hedge against a decline in the market value of the Portfolio's
holdings. Put options also may be purchased by the Portfolio for the purpose of
affirmatively benefiting from a decline in the price of securities, which the
Portfolio does not own. The Portfolio would ordinarily recognize a gain if the
value of the securities decreased below the exercise price sufficiently to cover
the premium and would recognize a loss if the value of the securities remained
at or above the exercise price. Gains and losses on the purchase of protective
put options would tend to be offset by countervailing changes in the value of
underlying portfolio securities.

The hours of trading for options on securities may not conform to the hours
during which the underlying securities are traded. To the extent that the option
markets close before the markets for the underlying securities, significant
price and rate movements can take place in the underlying securities markets
that cannot be reflected in the option markets. It is impossible to predict the
volume of trading that may exist in such options, and there can be no assurance
that viable exchange markets will develop or continue.

The Portfolio may engage in over-the-counter options transactions with broker-
dealers who make markets in these options. The ability to terminate over-the-
counter option positions is more limited than with exchange-traded option
positions because the predominant market is the issuing broker rather than an
exchange, and may involve the risk that broker-dealers participating in such
transactions will not fulfill their obligations. To reduce this risk, the
Portfolio will purchase such options only from broker-dealers who are primary
government securities dealers recognized by the Federal Reserve Bank of New York
and who agree to (and are expected to be capable of) entering into closing
transactions, although there can be no guarantee that any such option will be
liquidated at a favorable price prior to expiration. The Adviser will monitor
the creditworthiness of dealers with which the Portfolio enters into such
options transactions under the general supervision of the Portfolio's Trustees.
The Portfolio intends to treat OTC Options purchased and the assets used to
"cover" OTC Options written as not readily marketable and therefore subject to
the limitations described in "Investment Restrictions." Unless the Trustees
conclude otherwise, the Portfolio intends to treat OTC options as not readily
marketable and therefore subject to the Portfolio's 15% limitation on investment
in illiquid securities.

Options on Securities Indices. In addition to options on securities, the
Portfolio may also purchase and write (sell) call and put options on securities
indices. Such options give the holder the right to receive a cash settlement
during the term of the option based upon the difference between the exercise
price and the value of the index. Such options will be used for the purposes
described above under "Options on Securities."

The Portfolio may, to the extent allowed by Federal and state securities laws,
invest in securities indices instead of investing directly in individual foreign
securities.

Options on securities indices entail risks in addition to the risks of options
on securities. The absence of a liquid secondary market to close out options
positions on securities indices is more likely to occur, although the Portfolio
generally will only purchase or write such an option if the Adviser believes the
option can be closed out.

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<PAGE>

Use of options on securities indices also entails the risk that trading in such
options may be interrupted if trading in certain securities included in the
index is interrupted. The Portfolio will not purchase such options unless the
Adviser believes the market is sufficiently developed such that the risk of
trading in such options is no greater than the risk of trading in options on
securities.

Price movements in the Portfolio's holdings may not correlate precisely with
movements in the level of an index and, therefore, the use of options on indices
cannot serve as a complete hedge. Because options on securities indices require
settlement in cash, the Adviser may be forced to liquidate portfolio securities
to meet settlement obligations.

Options on Foreign Securities Indices. The Portfolio may purchase and write put
and call options on foreign stock indices listed on domestic and foreign stock
exchanges. The Portfolio may also purchase and write OTC Options on foreign
stock indices. These OTC Options would be subject to the same liquidity and
credit risks noted above with respect to OTC Options on foreign currencies. A
stock index fluctuates with changes in the market values of the stocks included
in the index.

OTC Options are purchased from or sold to securities dealers, financial
institutions or other parties (collectively referred to as "Counterparties" and
individually referred to as a "Counterparty") through direct bilateral agreement
with the Counterparty. In contrast to exchange listed options, which generally
have standardized terms and performance mechanics, all of the terms of an OTC
Option, including such terms as method of settlement, term, exercise price,
premium, guaranties and security, are set by negotiation of the parties.

Unless the parties provide for it, no central clearing or guaranty function is
involved in an OTC Option. As a result, if a Counterparty fails to make or take
delivery of the security, currency or other instrument underlying an OTC Option
it has entered into with the Portfolio or fails to make a cash settlement
payment due in accordance with the terms of that option, the Portfolio will lose
any premium it paid for the option as well as any anticipated benefit of the
transaction. Thus, the Adviser must assess the creditworthiness of each such
Counterparty or any guarantor or credit enhancement of the Counterparty's credit
to determine the likelihood that the terms of the OTC Option will be met.

Options on stock indices are generally similar to options on stock except that
the delivery requirements are different. Instead of giving the right to take or
make delivery of stock at a specified price, an option on a stock index gives
the holder the right to receive a cash "exercise settlement amount" equal to (a)
the amount, if any, by which the fixed exercise price of the option exceeds (in
the case of a put) or is less than (in the case of a call) the closing value of
the underlying index on the date of exercise, multiplied by (b) a fixed "index
multiplier." Receipt of this cash amount will depend upon the closing level of
the stock index upon which the option is based being greater than, in the case
of a call, or less than, in the case of a put, the exercise price of the option.
The amount of cash received will be equal to such difference between the closing
price of the index and the exercise price of the option expressed in dollars or
a foreign currency, as the case may be, times a specified multiple. The writer
of the option is obligated, in return for

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<PAGE>

the premium received, to make delivery of this amount. The writer may offset its
position in stock index options prior to expiration by entering into a closing
transaction on an exchange or the option may expire unexercised.

To the extent permitted by U.S. federal or state securities laws, the Portfolio
may invest in options on foreign stock indices in lieu of direct investment in
foreign securities. The Portfolio may also use foreign stock index options for
hedging purposes.

Because the value of an index option depends upon movements in the level of the
index rather than the price of a particular stock, whether the Portfolio will
realize a gain or loss from the purchase or writing of options on an index
depends upon movements in the level of stock prices in the stock market
generally or, in the case of certain indices, in an industry or market segment,
rather than movements in the price of a particular stock. Accordingly,
successful use by the Portfolio of options on stock indices will be subject to
the Adviser's ability to predict correctly movements in the direction of the
stock market generally or of a particular industry. This requires different
skills and techniques than predicting changes in the price of individual stocks.

Currency Exchange Transactions. Because the Portfolio buys and sells securities
denominated in currencies other than the U.S. dollar and receives interest,
dividends and sale proceeds in currencies other than the U.S. dollar, the
Portfolio from time to time may enter into currency exchange transactions to
convert to and from different foreign currencies and to convert foreign
currencies to and from the U.S. dollar. The Portfolio either enters into these
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market or uses forward contracts to purchase or sell
foreign currencies.

Forward Currency Exchange Contracts. A forward currency exchange contract is an
obligation by the Portfolio to purchase or sell a specific currency at a future
date, which may be any fixed number of days from the date of the contract.
Forward foreign currency exchange contracts establish an exchange rate at a
future date. These contracts are transferable in the interbank market conducted
directly between currency traders (usually large commercial banks and
brokerages) and their customers. A forward currency exchange contract may not
have a deposit requirement and may be traded at a net price without commission.
The Portfolio maintains with its custodian a segregated account of cash or
liquid securities in an amount at least equal to its obligations under each
forward foreign currency exchange contract. Neither spot transactions nor
forward foreign currency exchange contracts eliminate fluctuations in the prices
of the Portfolio's securities or in foreign exchange rates, or prevent loss if
the prices of these securities should decline.

The Portfolio may enter into currency hedging transactions in an attempt to
protect against changes in currency exchange rates between the trade and
settlement dates of specific securities transactions or changes in currency
exchange rates that would adversely affect the Portfolio position or an
anticipated investment position. Since consideration of the prospect for
currency parities will be incorporated into the Adviser's long-term investment
decisions, the Portfolio will not routinely enter into currency hedging
transactions with respect to security transactions; however, the Adviser
believes that it is important to have the flexibility to enter into currency

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<PAGE>

hedging transactions when it determines that the transactions would be in the
Portfolio's best interest. Although these transactions tend to minimize the risk
of loss due to a decline in the value of the hedged currency, at the same time
they tend to limit any potential gain that might be realized should the value of
the hedged currency increase. The precise matching of the forward contract
amounts and the value of the securities involved will not generally be possible
because the future value of such securities in foreign currencies will change as
a consequence of market movements in the value of such securities between the
date the forward contract is entered into and the date it matures. The
projection of currency market movements is extremely difficult, and the
successful execution of a hedging strategy is highly uncertain.

While these contracts are not presently regulated by the Commodity Futures
Trading Commission ("CFTC,") the CFTC may in the future assert authority to
regulate forward contracts. In such event the Portfolio's ability to utilize
forward contracts may be restricted. Forward contracts may reduce the potential
gain from a positive change in the relationship between the U.S. dollar and
foreign currencies. Unanticipated changes in currency prices may result in
poorer overall performance for the Portfolio than if it had not entered into
such contracts. The use of foreign currency forward contracts may not eliminate
fluctuations in the underlying U.S. dollar equivalent value of the prices of or
rates of return on the Portfolio's foreign currency denominated portfolio
securities and the use of such techniques will subject the Portfolio to certain
risks.

The matching of the increase in value of a forward contract and the decline in
the U.S. dollar equivalent value of the foreign currency denominated asset that
is the subject of the hedge generally will not be precise. In addition, the
Portfolio may not always be able to enter into foreign currency forward
contracts at attractive prices and this will limit the Portfolio's ability to
use such contracts to hedge or cross-hedge its assets. Also, with regard to the
Portfolio's use of cross-hedges, there can be no assurance that historical
correlations between the movement of certain foreign currencies relative to the
U.S. dollar will continue. Thus, at any time a poor correlation may exist
between movements in the exchange rates of the foreign currencies underlying the
Portfolio's cross-hedges and the movements in the exchange rates of the foreign
currencies in which the Portfolio's assets that are the subject of such cross-
hedges are denominated.

Options on Foreign Currencies. The Portfolio may purchase and write options on
foreign currencies for hedging purposes in a manner similar to that in which
futures contracts on foreign currencies, or forward contracts, will be utilized.
For example, a decline in the dollar value of a foreign currency in which
portfolio securities are denominated will reduce the dollar value of such
securities, even if their value in the foreign currency remains constant. In
order to protect against such diminutions in the value of portfolio securities,
the Portfolio may purchase put options on the foreign currency. If the value of
the currency does decline, the Portfolio will have the right to sell such
currency for a fixed amount in dollars and will thereby offset, in whole or in
part, the adverse effect on its portfolio which otherwise would have resulted.

Conversely, where a rise in the dollar value of a currency in which securities
to be acquired are denominated is projected, thereby increasing the cost of such
securities, the Portfolio may

15
<PAGE>

purchase call options thereon. The purchase of such options could offset, at
least partially, the effects of the adverse movements in exchange rates. As in
the case of other types of options, however, the benefit to the Portfolio
deriving from purchases of foreign currency options will be reduced by the
amount of the premium and related transaction costs. In addition, where currency
exchange rates do not move in the direction or to the extent anticipated, the
Portfolio could sustain losses on transactions in foreign currency options which
would require it to forego a portion or all of the benefits of advantageous
changes in such rates.

The purchase of an option on foreign currency may be used to hedge against
fluctuations in exchange rates although, in the event of exchange rate movements
adverse to the Portfolio's position, it may forfeit the entire amount of the
premium plus related transaction costs. In addition, the Portfolio may purchase
call options on a foreign currency when the Adviser anticipates that the
currency will appreciate in value.

The Portfolio may write options on foreign currencies for the same types of
hedging purposes. For example, where the Portfolio anticipates a decline in the
dollar value of foreign currency denominated securities due to adverse
fluctuations in exchange rates it could, instead of purchasing a put option,
write a call option on the relevant currency. If the expected decline occurs,
the options will most likely not be exercised, and the diminution in value of
portfolio securities will be offset by the amount of the premium received.

Similarly, instead of purchasing a call option to hedge against an anticipated
increase in the dollar cost of securities to be acquired, the Portfolio could
write a put option on the relevant currency which, if rates move in the manner
projected, will expire unexercised and allow the Portfolio to hedge such
increased cost up to the amount of the premium. As in the case of other types of
options, however, the writing of a foreign currency option will constitute only
a partial hedge up to the amount of the premium, and only if rates move in the
expected direction. If this does not occur, the option may be exercised and the
Portfolio would be required to purchase or sell the underlying currency at a
loss which may not be offset by the amount of the premium. Through the writing
of options on foreign currencies, the Portfolio also may be required to forego
all or a portion of the benefits which might otherwise have been obtained from
favorable movements in exchange rates.

The Portfolio may write covered call options on foreign currencies. A call
option written on a foreign currency by the Portfolio is "covered" if the
Portfolio owns the underlying foreign currency covered by the call or has an
absolute and immediate right to acquire that foreign currency without additional
cash consideration (or for additional cash consideration held in a segregated
account by its Custodian) upon conversion or exchange of other foreign currency
held in its portfolio. A call option is also covered if the Portfolio has a call
on the same foreign currency and in the same principal amount as the call
written where the exercise price of the call held (a) is equal to or less than
the exercise price of the call written or (b) is greater than the exercise price
of the call written if the difference is maintained by the Portfolio in cash or
liquid securities in a segregated account with its custodian.

The Portfolio also may write call options on foreign currencies that are not
covered for cross-

16
<PAGE>

hedging purposes. A call option on a foreign currency is for cross-hedging
purposes if it is not covered, but is designed to provide a hedge against a
decline in the U.S. dollar value of a security which the Portfolio owns or has
the right to acquire and which is denominated in the currency underlying the
option due to an adverse change in the exchange rate. In such circumstances, the
Portfolio collateralizes the option by maintaining in a segregated account with
its custodian, cash or liquid securities in an amount not less than the value of
the underlying foreign currency in U.S. dollars marked to market daily.

There is no assurance that a liquid secondary market will exist for any
particular option, or at any particular time. If the Portfolio is unable to
effect a closing purchase transaction with respect to covered options it has
written, the Portfolio will not be able to sell the underlying currency or
dispose of assets held in a segregated account until the options expire or are
exercised. Similarly, if the Portfolio is unable to effect a closing sale
transaction with respect to options it has purchased, it would have to exercise
the options in order to realize any profit and will incur transaction costs upon
the purchase or sale of underlying currency. The Portfolio pays brokerage
commissions or spreads in connection with its options transactions.

As in the case of forward contracts, certain options on foreign currencies are
traded over-the-counter and involve liquidity and credit risks which may not be
present in the case of exchange-traded currency options. In some circumstances,
the Portfolio's ability to terminate over-the-counter options ("OTC Options")
may be more limited than with exchange-traded options. It is also possible that
broker-dealers participating in OTC Options transactions will not fulfill their
obligations. The Portfolio intends to treat OTC Options as not readily
marketable and therefore subject to the Portfolio's 15% limit on illiquid
securities.

Futures Contracts and Options on Futures Contracts

General. The successful use of futures contracts and options thereon draws upon
the Adviser's skill and experience with respect to such instruments and usually
depends on the Adviser's ability to forecast interest rate and currency exchange
rate movements correctly. Should interest or exchange rates move in an
unexpected manner, the Portfolio may not achieve the anticipated benefits of
futures contracts or options on futures contracts or may realize losses and thus
will be in a worse position than if such strategies had not been used. In
addition, the correlation between movements in the price of futures contracts or
options on futures contracts and movements in the price of the securities and
currencies hedged or used for cover will not be perfect and could produce
unanticipated losses.

Futures Contracts. Futures contracts are contracts to purchase or sell a fixed
amount of an underlying instrument, commodity or index at a fixed time and place
in the future. U.S. futures contracts have been designed by exchanges which
have been designated "contracts markets" by the CFTC, and must be executed
through a futures commission merchant, or brokerage firm, which is a member of
the relevant contract market. Futures contracts trade on a number of exchanges,
and clear through their clearing corporations. The Portfolio may enter into
contracts for the purchase or sale for future delivery of fixed-income
securities, foreign currencies, or financial indices including any index of U.S.
government securities, foreign government

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<PAGE>

securities or corporate debt securities. The Portfolio may enter into futures
contracts which are based on debt securities that are backed by the full faith
and credit of the U.S. government, such as long-term U.S. Treasury Bonds,
Treasury Notes, Government National Mortgage Association modified pass-through
mortgage-backed securities and three-month U.S. Treasury Bills. The Portfolio
may also enter into futures contracts which are based on bonds issued by
governments other than the U.S. government. Futures contracts on foreign
currencies may be used to hedge against securities that are denominated in
foreign currencies.

At the same time a futures contract is entered into, the Portfolio must allocate
cash or securities as a deposit payment. Daily thereafter, the futures contract
is valued and the payment of "variation margin" may be required, since each day
the Portfolio would provide or receive cash that reflects any decline or
increase in the contract's value.

Although futures contracts (other than those that settle in cash such as index
futures) by their terms call for the actual delivery or acquisition of the
instrument underlying the contract, in most cases the contractual obligation is
fulfilled by offset before the date of the contract without having to make or
take delivery of the instrument underlying the contract. The offsetting of a
contractual obligation is accomplished by entering into an opposite position in
the identical futures contract on the commodities exchange on which the futures
contract was entered into (or a linked exchange). Such a transaction, which is
effected through a member of an exchange, cancels the obligation to make or take
delivery of the instrument underlying the contract. Since all transactions in
the futures market are made, offset or fulfilled through a clearinghouse
associated with the exchange on which the contracts are traded, the Portfolio
will incur brokerage fees when it enters into futures contracts.

The assets in the segregated asset account maintained to cover the Portfolio's
obligations with respect to such futures contracts will consist of cash or
securities acceptable to the broker from its portfolio in an amount equal to the
difference between the fluctuating market value of such futures contracts and
the aggregate value of the initial and variation margin payments made by the
Portfolio with respect to such futures contracts.

The ordinary spreads between prices in the cash and futures market, due to
differences in the nature of those markets, are subject to distortions. First,
all participants in the futures market are subject to initial and variation
margin requirements. Rather than meeting additional variation margin
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures market depends on most
participants entering into offsetting transactions rather than making or taking
delivery. To the extent that many participants decide to make or take delivery,
liquidity in the futures market could be reduced, thus producing distortion.
Third, from the point of view of speculators, the margin deposit requirements in
the futures market are less onerous than margin lending requirements in the
securities market. Therefore, increased participation by speculators in the
futures market may cause temporary price distortions. Due to the possibility of
distortion, a correct forecast of general interest rate or currency exchange
rate trends by the Adviser may still not result in a successful transaction.

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<PAGE>

In addition, futures contracts entail risks. Although the Adviser believes that
use of such contracts will benefit the Portfolio, if the Adviser's investment
judgment about the general direction of interest rates is incorrect, the
Portfolio's overall performance would be poorer than if it had not entered into
any such contract. For example, if the Portfolio has hedged against the
possibility of an increase in interest rates which would adversely affect the
price of debt securities held in its portfolio and interest rates decrease
instead, the Portfolio will lose part or all of the benefit of the increased
value of its debt securities which it has hedged because it will have offsetting
losses in its futures positions. In addition, in such situations, if the
Portfolio has insufficient cash, it may have to sell debt securities from its
portfolio to meet daily variation margin requirements. Such sales of bonds may
be, but will not necessarily be, at increased prices which reflect the rising
market. The Portfolio may have to sell securities at a time when it may be
disadvantageous to do so.

Options on Futures Contracts. The Portfolio may purchase and write options on
futures contracts for hedging purposes. The purchase of a call option on a
futures contract is similar in some respects to the purchase of a call option on
an individual security. For example, when the Portfolio is not fully invested it
may purchase a call option on an interest rate sensitive futures contract to
hedge against a potential price increase on debt securities due to declining
interest rates. The purchase of a put option on a futures contract is similar in
some respects to the purchase of protective put options on portfolio securities.
For example, the Portfolio may purchase a put option on an interest rate
sensitive futures contract to hedge its portfolio against the risk of a decline
in the prices of debt securities due to rising interest rates.

The writing of a call option on a futures contract may constitute a partial
hedge against declining prices of portfolio securities which are the same as or
correlate with the security or currency which is deliverable upon exercise of
the futures contract. If the futures price at expiration of the option is below
the exercise price, the Portfolio will retain the full amount of the option
premium which provides a partial hedge against any decline that may have
occurred in the Portfolio's portfolio holdings. The writing of a put option on a
futures contract may constitute a partial hedge against increasing prices of the
security or foreign currency which is deliverable upon exercise of the futures
contract. If the futures price at expiration of the option is higher than the
exercise price, the Portfolio will retain the full amount of the option premium
which provides a partial hedge against any increase in the price of securities
which the Portfolio intends to purchase. If a put or call option the Portfolio
has written is exercised, the Portfolio will incur a loss which will be reduced
by the amount of the premium it receives. Depending on the degree of correlation
between changes in the value of its portfolio securities and changes in the
value of its futures positions, the Portfolio's losses from existing options on
futures may to some extent be reduced or increased by changes in the value of
portfolio securities.

The amount of risk the Portfolio assumes when it purchases an option on a
futures contract is the premium paid for the option plus related transaction
costs. In addition to the correlation risks discussed above, the purchase of an
option also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the option purchased.

Futures Contracts on Domestic and Foreign Securities Indices. The Portfolio may
enter into

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<PAGE>

futures contracts providing for cash settlement based upon changes in the value
of an index of domestic or foreign securities. This investment technique may be
used as a low-cost method of gaining exposure to a particular securities market
without investing directly in those securities or to hedge against anticipated
future change in general market prices which otherwise might either adversely
affect the value of securities held by the Portfolio or adversely affect the
prices of securities which are intended to be purchased at a later date for the
Portfolio.

When used for hedging purposes, each transaction in futures contracts on a
securities index involves the establishment of a position which the Adviser
believes will move in a direction opposite to that of the investment being
hedged. If these hedging transactions are successful, the futures positions
taken for the Portfolio will rise in value by an amount which approximately
offsets the decline in value of the portion of the Portfolio's investments that
are being hedged. Should general market prices move in an unexpected manner, the
full anticipated benefits of Futures Contracts may not be achieved or a loss may
be realized.

Although futures contracts on securities indices would be entered into for
hedging purposes only, such transactions do involve certain risks. These risks
include a lack of correlation between the futures contract and the foreign
equity market being hedged, and incorrect assessments of market trends which may
result in poorer overall performance than if a futures contract had not been
entered into.

Asset Coverage. To assure that the Portfolio's use of futures and related
options, as well as when-issued and delayed-delivery securities and foreign
currency exchange transactions, are not used to achieve investment leverage, the
Portfolio will cover such transactions, as required under applicable
interpretations of the SEC, either by owning the underlying securities or by
segregating with the Portfolio's Custodian or futures commission merchant liquid
securities in an amount at all times equal to or exceeding the Portfolio's
commitment with respect to these instruments or contracts.

Investment Restrictions on Futures Transactions. The Portfolio will not enter
into any futures contracts or options on futures contracts if immediately
thereafter the amount of margin deposits on all the futures contracts of the
Portfolio and premiums paid on outstanding options on futures contracts owned by
the Portfolio (other than those entered into for bona fide hedging purposes)
would exceed 5% of the Portfolio's net asset value, after taking into account
unrealized profits and unrealized losses on any such contracts.

Fixed Income Securities

General. In order to achieve their respective investment objectives, the Funds
may invest in a broad range of U.S. and non-U.S. fixed income securities. In
periods of declining interest rates, a Fund's yield (its income from portfolio
investments over a stated period of time) may tend to be higher than prevailing
market rates, and in periods of rising interest rates, the yield of the Fund may
tend to be lower. Also, when interest rates are falling, the inflow of net new
money to each Fund from the continuous sale of its shares will likely be
invested in portfolio instruments producing lower yields than the balance of the
Fund's portfolio, thereby reducing the yield of the

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<PAGE>

Fund. In periods of rising interest rates, the opposite can be true. To the
extent a Fund invests in fixed income securities, its net asset value can
generally be expected to change as general levels of interest rates fluctuate.
The value of fixed income securities in a Fund's portfolio generally varies
inversely with changes in interest rates. Prices of fixed income securities with
longer effective maturities are more sensitive to interest rate changes than
those with shorter effective maturities. The Fixed Income Funds may invest up to
5% of their net assets in inverse floating rate securities, which have greater
volatility risk than ordinary fixed income securities.

Foreign Government Securities. The foreign government securities in which the
Funds may invest generally consist of debt obligations issued or guaranteed by
national, state or provincial governments or similar political subdivisions.
Foreign government securities also include debt obligations of supranational or
quasi-governmental entities. Quasi-governmental and supranational entities
include international organizations designated or supported by governmental
entities to promote economic reconstruction or development and international
banking institutions and related government agencies. Examples include the
International Bank for Reconstruction and Development (the "World Bank"), the
Japanese Development Bank, the Asian Development Bank and the InterAmerican
Development Bank. Foreign government securities also include mortgage-related
securities issued or guaranteed by national, state or provincial governmental
instrumentalities, including quasi-governmental agencies.

Additional Risk Factors

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

Foreign Securities. The Portfolio will, under normal market conditions, invest a
significant portion of its assets in foreign securities. Although the Portfolio
intends to invest primarily in securities of established companies based in
developed countries, investors should realize that the value of the Portfolio's
investments may be adversely affected by changes in political or social
conditions, diplomatic relations, confiscatory taxation, expropriation,
nationalization, limitation on the removal of funds or assets, or imposition of
(or change in) exchange control or tax regulations in those foreign countries.
In addition, changes in government administrations or economic or monetary
policies in the United States or abroad could result in appreciation or
depreciation of portfolio securities and could favorably or unfavorably affect
the Portfolio's operations. Furthermore, the economies of individual foreign
nations may differ from the U.S. economy, whether favorably or unfavorably, in
areas such as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments position; it may
also be more difficult to obtain and enforce a judgment against a foreign
issuer. In general, less information is publicly available with respect to
foreign issuers than is available with respect to U.S. companies. Most foreign
companies are also not subject to the uniform accounting and financial reporting
requirements applicable to issuers in the United States. Any foreign investments
made by the Portfolio must be made in compliance with U.S. and foreign currency
restrictions and tax laws restricting the amounts and types of foreign
investments.

Because foreign securities generally are denominated and pay dividends or
interest in foreign

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<PAGE>

currencies, and the Portfolio holds various foreign currencies from time to
time, the value of the net assets of the Portfolio as measured in U.S. dollars
will be affected favorably or unfavorably by changes in exchange rates.
Generally, the Portfolio's currency exchange transactions will be conducted on a
spot (i.e., cash) basis at the spot rate prevailing in the currency exchange
market. The cost of the Portfolio's currency exchange transactions will
generally be the difference between the bid and offer spot rate of the currency
being purchased or sold. In order to protect against uncertainty in the level of
future foreign currency exchange, the Portfolio is authorized to enter into
certain foreign currency exchange transactions.

In addition, while the volume of transactions effected on foreign stock
exchanges has increased in recent years, in most cases it remains appreciably
below that of the New York Stock Exchange, Inc. (the "NYSE"). Accordingly, the
Portfolio's foreign investments may be less liquid and their prices may be more
volatile than comparable investments in securities of U.S. companies. Moreover,
the settlement periods for foreign securities, which are often longer than those
for securities of U.S. issuers, may affect portfolio liquidity. In buying and
selling securities on foreign exchanges, the Portfolio normally pays fixed
commissions that are generally higher than the negotiated commissions charged in
the United States. In addition, there is generally less government supervision
and regulation of securities exchanges, brokers and issuers in foreign countries
than in the United States.

Emerging Markets. The world's industrialized markets generally include but are
not limited to the following: Australia, Austria, Belgium, Canada, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Luxembourg,
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland, the United Kingdom, and the United States; the world's emerging
markets generally include but are not limited to the following: Argentina,
Botswana, Bolivia, Brazil, Bulgaria, Chile, China, Colombia, Costa Rica, the
Czech Republic, Ecuador, Egypt, Greece, Hungary, India, Indonesia, Israel, the
Ivory Coast, Jordan, Korea, Malaysia, Mexico, Morocco, Nicaragua, Nigeria,
Pakistan, Peru, Philippines, Poland, Romania, Russia, Slovakia, Slovenia, South
Africa, South Korea, Sri Lanka, Taiwan, Thailand, Turkey, Uruguay, Venezuela,
Vietnam and Zimbabwe.

Investment in securities of issuers based in underdeveloped emerging markets
entails all of the risks of investing in securities of foreign issuers outlined
in the above section to a heightened degree. These heightened risks include: (i)
greater risks of expropriation, confiscatory taxation, nationalization, and less
social, political and economic stability; (ii) the smaller size of the market
for such securities and a low or nonexistent volume of trading, resulting in
lack of liquidity and in price volatility; and (iii) certain national policies
which may restrict the Portfolio's investment opportunities including
restrictions on investing in issuers or industries deemed sensitive to relevant
national interests.

In addition to brokerage commissions, custodial services and other costs
relating to investment in emerging markets are generally more expensive than in
the United States. Such markets have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Portfolio to make intended securities purchases due to
settlement problems could cause the Portfolio to miss attractive investment
opportunities.

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<PAGE>

Inability to dispose of a security due to settlement problems could result
either in losses to the Portfolio due to subsequent declines in the value of the
security or, if the Portfolio has entered into a contract to sell the security,
could result in possible liability to the purchaser.

Region and Country Investing. The Fund may focus its investments in a particular
region and/or in one or more foreign countries. Focusing a Fund's investments in
a particular region or country will subject the Fund, to a greater extent than
if its investments in such region or country were more limited, to the risks of
adverse securities markets, exchange rates and social, political or economic
developments which may occur in that region or country.

Options on Futures Contracts, Forward Contracts and Options on Foreign
Currencies. Unlike transactions entered into by the Portfolio in futures
contracts, options on foreign currencies and forward contracts are not traded on
contract markets regulated by the CFTC or (with the exception of certain foreign
currency options) by the SEC. To the contrary, such instruments are traded
through financial institutions acting as principals, although foreign currency
options are also traded on certain national securities exchanges, such as the
Philadelphia Stock Exchange and the Chicago Board Options Exchange, subject to
SEC regulation. In an over-the-counter trading environment, many of the
protections afforded to exchange participants will not be available. For
example, there are no daily price fluctuation limits, and adverse market
movements could therefore continue to an unlimited extent over a period of time.
Although the purchaser of an option cannot lose more than the amount of the
premium plus related transaction costs, this entire amount could be lost.
Moreover, the option writer and a trader of forward contracts could lose amounts
substantially in excess of their initial investments.

Forward Contracts and options on foreign currencies traded over-the-counter
involve liquidity and credit risks which may not be present in the case of
exchange-traded currency options. The Portfolio's ability to terminate over-the-
counter options will be more limited than with exchange-traded options. It is
also possible that broker-dealers participating in over-the-counter options
transactions will not fulfill their obligations. Until such time as the staff of
the SEC changes its position, the Portfolio will treat purchased over-the-
counter options and assets used to cover written over-the-counter options as
illiquid securities.

Options on foreign currencies traded on national securities exchanges are within
the jurisdiction of the SEC, as are other securities traded on such exchanges.
As a result, many of the protections provided to traders on organized exchanges
will be available with respect to such transactions. In particular, all foreign
currency option positions entered into on a national securities exchange are
cleared and guaranteed by the Options Clearing Corporation (the "OCC"), thereby
reducing the risk of counterparty default. Further, a liquid secondary market in
options traded on a national securities exchange may be more readily available
than in the over-the-counter market, potentially permitting the Portfolio to
liquidate open positions at a profit prior to exercise or expiration, or to
limit losses in the event of adverse market movements.

The purchase and sale of exchange-traded foreign currency options, however, is
subject to the risks of the availability of a liquid secondary market described
above, as well as the risks regarding adverse market movements, margining of
options written, the nature of the foreign

23
<PAGE>

currency market, possible intervention by governmental authorities and the
effects of other political and economic events. In addition, exchange-traded
options on foreign currencies involve certain risks not presented by the over-
the-counter market. For example, exercise and settlement of such options must be
made exclusively through the OCC, which has established banking relationships in
applicable foreign countries for this purpose. As a result, the OCC may, if it
determines that foreign governmental restrictions or taxes would prevent the
orderly settlement of foreign currency option exercises, or would result in
undue burdens on the OCC or its clearing member, impose special procedures on
exercise and settlement, such as technical changes in the mechanics of delivery
of currency, the fixing of dollar settlement prices or prohibitions on exercise.

In addition, futures contracts, options on futures contracts, forward contracts
and options on foreign currencies may be traded on foreign exchanges. Such
transactions are subject to the risk of governmental actions affecting trading
in or the prices of foreign currencies or securities. The value of such
positions also could be adversely affected by: (i) other complex foreign
political and economic factors; (ii) lesser availability than in the United
States of data on which to make trading decisions; (iii) delays in the
Portfolio's ability to act upon economic events occurring in foreign markets
during non-business hours in the United States; (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States; and (v) lesser trading volume.

Risks of Investing in Medium- and Small-Capitalization Stocks. Historically,
medium- and small-capitalization stocks have been more volatile in price than
larger-capitalization stocks. Among the reasons for the greater price volatility
of these securities are the less certain growth prospects of smaller firms, the
lower degree of liquidity in the markets for such stocks, and the greater
sensitivity of medium- and small-size companies to changing economic conditions.
In addition to exhibiting greater volatility, medium- and small-size company
stocks may fluctuate independently of larger company stocks. Medium- and small-
size company stocks may decline in price as large company stocks rise, or rise
in prices as large company stocks decline.

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 the Service Center at 1-800-730-1313.

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<PAGE>

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 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 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.

Rating Services. The ratings of rating services represent their opinions as to
the quality of the 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 Fund to eliminate the obligation from

25
<PAGE>

its portfolio, but the Adviser will consider such an event in its determination
of whether the Fund should continue to hold the obligation. A description of the
ratings used herein and in the Fund's Prospectuses is set forth in the Appendix
to this SAI.

Investment Restrictions

Fundamental Policies. The following investment restrictions are "fundamental
policies" of the Fund and the Portfolio and may not be changed with respect to
the Fund or the Portfolio without the approval of a "majority of the outstanding
voting securities" of the Fund or the Portfolio, as the case may be. "Majority
of the outstanding voting securities" under the 1940 Act, and as used in this
SAI, means, with respect to the Fund (or the Portfolio), the lesser of (i) 67%
or more of the outstanding voting securities of the Fund (or of the total
beneficial interests of the Portfolio) present at a meeting, if the holders of
more than 50% of the outstanding voting securities of the Fund or of the total
beneficial interests of the Portfolio) are present or represented by proxy or
(ii) more than 50% of the outstanding voting securities of the Fund (or of the
total beneficial interests of the Portfolio). Whenever the Trust is requested to
vote on a fundamental policy of the Portfolio, the Trust will hold a meeting of
the Fund's shareholders and will cast its vote as instructed by that 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
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.

As a matter of fundamental policy, the Portfolio (or Fund) may not (except that
no investment restriction of the Fund shall prevent the Fund from investing all
of its Assets in an open-end investment company with substantially the same
investment objective):

(1) borrow money or mortgage or hypothecate assets of the Portfolio (Fund),
except that in an amount not to exceed 1/3 of the current value of the
Portfolio's (Fund's) net assets, it may borrow money as a temporary measure for
extraordinary or emergency purposes and enter into reverse repurchase agreements
or dollar roll transactions, and except that it may pledge, mortgage or
hypothecate not more than 1/3 of such assets to secure such borrowings (it is
intended that money would be borrowed only from banks and only either to
accommodate requests for the withdrawal of beneficial interests (redemption of
shares) while effecting an orderly liquidation of portfolio securities or to
maintain liquidity in the event of an unanticipated failure to complete the
portfolio security transaction or other similar situations) or reverse
repurchase agreements, 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 and
except that assets may be pledged to secure letters of credit solely for the
purpose of participating in a captive insurance company sponsored by the
Investment Company Institute; for additional related restrictions, see clause
(i) under the caption "Additional Restrictions" below (as an operating policy,
the Portfolio may not engage in dollar-roll transactions);

(2) underwrite securities issued by other persons except insofar as the
Portfolio (Trust or the Fund) may technically be deemed an underwriter under the
1933 Act in selling the Portfolio security;

26
<PAGE>

(3) make loans to other persons except: (a) through the lending of the
Portfolio's (Fund's) portfolio securities and provided that any such loans not
exceed 30% of the Portfolio's (Fund's) total assets (taken at market value); (b)
through the use of repurchase agreements or the purchase of short-term
obligations; or (c) by purchasing a portion of an issue of debt securities of
types distributed publicly or privately;

(4) purchase or sell real estate (including limited partnership interests but
excluding securities secured by real estate or interests therein), interests in
oil, gas or mineral leases, commodities or commodity contracts (except futures
and option contracts) in the ordinary course of business (except that the
Portfolio (Fund) may hold and sell, for the Portfolio's (Fund's) portfolio, real
estate acquired as a result of the Portfolio's (Fund's) ownership of
securities);

(5) concentrate its investments in any particular industry (excluding U.S.
government securities), but if it is deemed appropriate for the achievement of
the Portfolio's (Fund's) investment objective(s), up to 25% of its total assets
may be invested in any one industry; and

(6) issue any senior security (as that term is defined in the 1940 Act) if such
issuance is specifically prohibited by the 1940 Act or the rules and regulations
promulgated thereunder, provided that collateral arrangements with respect to
options and futures, including deposits of initial deposit and variation margin,
are not considered to be the issuance of a senior security for purposes of this
restriction.

(7) with respect to 75% of the Portfolio's (Fund'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
investments companies) or own more than 10% of the voting securities of any
issuer.

Additional Restrictions. These are non-fundamental policies. In order to comply
with certain statutes and policies, the Portfolio (or the 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 objective):

(i) borrow money (including through reverse repurchase or forward roll
transactions) for any purpose in excess of 5% 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, and reverse repurchase agreements 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

27
<PAGE>

the purchase, ownership, holding or sale of futures;

(iv) invest for the purpose of exercising control or management of another
company;

(v) 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) unless permitted to exceed
these limitations by an exemptive order of the SEC; provided further that,
except in the case of a merger or consolidation, the Portfolio (Fund) shall not
purchase any securities of any open-end investment company unless (1) the
Portfolio's investment adviser waives the investment advisory fee with respect
to assets invested in other open-end investment companies and (2) the Portfolio
incurs no sales charge in connection with the investment;

(vi) invest more than 15% of the Portfolio's (Fund's) net assets (taken at the
greater of cost or market value) in securities that are illiquid or are not
readily marketable (excluding Rule 144A securities deemed by the Board of
Trustees of the Portfolio (Trust) to be liquid).

(vii) write puts and calls on securities unless each of the following conditions
are met: (a) the security underlying the put or call is within the investment
practices of the Portfolio (Fund) and the option is issued by the OCC, except
for put and call options issued by non-U.S. entities or listed on non-U.S.
securities or commodities exchanges; (b) the aggregate value of the obligations
underlying the puts determined as of the date the options are sold shall not
exceed 5% of the Portfolio's (Fund's) net assets; (c) the securities subject to
the exercise of the call written by the Portfolio (Fund) must be owned by the
Portfolio (Fund) at the time the call is sold and must continue to be owned by
the Portfolio (Fund) until the call has been exercised, has lapsed, or the
Portfolio (Fund) has purchased a closing call, and such purchase has been
confirmed, thereby extinguishing the Portfolio's (Fund's) obligation to deliver
securities pursuant to the call it has sold; and (d) at the time a put is
written, the Portfolio (Fund) establishes a segregated account with its
custodian consisting of cash or liquid securities equal in value to the amount
the Portfolio (Fund) will be obligated to pay upon exercise of the put (this
account must be maintained until the put is exercised, has expired, or the
Portfolio (Fund) has purchased a closing put, which is a put of the same series
as the one previously written); and

(viii) buy and sell puts and calls on securities, stock index futures or options
on stock index futures, or financial futures or options on financial futures
unless such options are written by other persons and: (a) the options or futures
are offered through the facilities of a national securities association or are
listed on a national securities or commodities exchange, except for put and call
options issued by non-U.S. entities or listed on non-U.S. securities or
commodities

28
<PAGE>

exchanges; (b) the aggregate premiums paid on all such options which are held at
any time do not exceed 20% of the Portfolio's (Fund's) total net assets; and (c)
the aggregate margin deposits required on all such futures or options thereon
held at any time do not exceed 5% of the Portfolio's (Fund's) total assets.

There will be no violation of any investment restriction (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.

Portfolio Transactions and Brokerage Commissions

The Adviser is responsible for decisions to buy and sell securities, futures
contracts and options on such securities and futures for the Portfolio, the
selection of brokers, dealers and futures commission merchants to effect
transactions and the negotiation of brokerage commissions, if any. Broker-
dealers may receive brokerage commissions on portfolio transactions, including
options, futures and options on futures transactions and the purchase and sale
of underlying securities upon the exercise of options. Orders may be directed to
any broker-dealer or futures commission merchant, including to the extent and in
the manner permitted by applicable law, Bankers Trust or its subsidiaries or
affiliates. Purchases and sales of certain portfolio securities on behalf of the
Portfolio are frequently placed by the Adviser with the issuer or a primary or
secondary market-maker for these securities on a net basis, without any
brokerage commission being paid by the Portfolio. Trading does, however, involve
transaction costs. Transactions with dealers serving as market-makers reflect
the spread between the bid and asked prices. Transaction costs may also include
fees paid to third parties for information as to potential purchasers or sellers
of securities. Purchases of underwritten issues may be made which will include
an underwriting fee paid to the underwriter.

The Adviser seeks to evaluate the overall reasonableness of the brokerage
commissions paid (to the extent applicable) in placing orders for the purchase
and sale of securities for the Portfolio taking into account such factors as
price, commission (negotiable in the case of national securities exchange
transactions), if any, size of order, difficulty of execution and skill required
of the executing broker-dealer through familiarity with commissions charged on
comparable transactions, as well as by comparing commissions paid by the
Portfolio to reported commissions paid by others. The Adviser reviews on a
routine basis commission rates, execution and settlement services performed,
making internal and external comparisons.

The Adviser is authorized, consistent with Section 28(e) of the Securities
Exchange Act of 1934, when placing portfolio transactions for the Portfolio with
a broker to pay a brokerage commission (to the extent applicable) in excess of
that which another broker might have charged for effecting the same transaction
on account of the receipt of research, market or statistical information. The
term "research, market or statistical information" includes advice as to the
value of securities; the advisability of investing in, purchasing or selling
securities; the availability of securities or purchasers or sellers of
securities; and furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and the performance

29
<PAGE>

of accounts.

Consistent with the policy stated above, the Conduct Rules of the National
Association of Securities Dealers, Inc. and such other policies as the Trustees
of the Portfolio may determine, the Adviser may consider sales of shares of the
Trust and of other investment company clients of DeAM, Inc. or its affiliates as
a factor in the selection of broker-dealers to execute portfolio transactions.
The Adviser will make such allocations if commissions are comparable to those
charged by nonaffiliated, qualified broker-dealers for similar services.

Higher commissions may be paid to firms that provide research services to the
extent permitted by law. The Adviser may use this research information in
managing the Portfolio's assets, as well as the assets of other clients.

Except for implementing the policies stated above, there is no intention to
place portfolio transactions with particular brokers or dealers or groups
thereof. In effecting transactions in over-the-counter securities, orders are
placed with the principal market-makers for the security being traded unless,
after exercising care, it appears that more favorable results are available
otherwise.

Although certain research, market and statistical information from brokers and
dealers can be useful to the Portfolio and to the Adviser, it is the opinion of
the management of the Portfolio that such information is only supplementary to
the Adviser's own research effort, since the information must still be analyzed,
weighed and reviewed by the Adviser's staff. Such information may be useful to
the Adviser in providing services to clients other than the Portfolio, and not
all such information is used by the Adviser in connection with the Portfolio.
Conversely, such information provided to the Adviser by brokers and dealers
through whom other clients of the Adviser effect securities transactions may be
useful to the Adviser in providing services to the Portfolio.

In certain instances there may be securities that are suitable for the Portfolio
as well as for one or more of the Adviser's other clients. Investment decisions
for the Portfolio and for the Adviser's other clients are made with a view to
achieving their respective investment objectives. It may develop that a
particular security is bought or sold for only one client even though it might
be held by, or bought or sold for, other clients. Likewise, a particular
security may be bought for one or more clients when one or more clients are
selling that same security. Some simultaneous transactions are inevitable when
several clients receive investment advice from the same investment adviser,
particularly when the same security is suitable for the investment objectives of
more than one client. When two or more clients are simultaneously engaged in the
purchase or sale of the same security, the securities are allocated among
clients in a manner believed to be equitable to each. It is recognized that in
some cases this system could have a detrimental effect on the price or volume of
the security as far as the Portfolio is concerned. However, it is believed that
the ability of the Portfolio to participate in volume transactions will produce
better executions for the Portfolio.

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<PAGE>

PERFORMANCE INFORMATION

Standard Performance Information

From time to time, quotations of the Fund's performance may be included in
advertisements, sales literature or shareholder reports. For mutual funds,
performance is commonly measured as total return. The Fund's performance is
affected by its expenses. These performance figures are calculated in the
following manner:

Total return: Total return is the change in value of an investment in the Fund
over a given period, assuming reinvestment of any dividends and capital gains. A
cumulative total return reflects actual performance over a stated period of
time. An average annual total return is a hypothetical rate of return that, if
achieved annually, would have produced the same cumulative total return if
performance had been constant over the entire period. Average annual total
return calculations smooth out variations in performance; they are not the same
as actual year-by-year results. Average annual total returns covering periods of
less than one year assume that performance will remain constant for the rest of
the year. The Fund's average annual total return is calculated for certain
periods by determining the average annual compounded rates of return over those
periods that would cause an investment of $1,000 (made at the maximum public
offering price with all distributions reinvested) to reach the value of that
investment at the end of the periods. The Fund may also calculate total return
figures which represent aggregate performance over a period or year-by-year
performance.

Performance Results: Total returns are based on past results and are not an
indication of future performance. Any total return quotation provided for the
Fund should not be considered as representative of the performance of the Fund
in the future since the net asset value and public offering price of shares of
the Fund will vary based not only on the type, quality and maturities of the
securities held in the corresponding Portfolio, but also on changes in the
current value of such securities and on changes in the expenses of the Fund and
the corresponding Portfolio. These factors and possible differences in the
methods used to calculate total return should be considered when comparing the
total return of the Fund to total returns published for other investment
companies or other investment vehicles. Total return reflects the performance of
both principal and income.

Comparison of Fund Performance

Comparison of the quoted nonstandardized performance of various investments is
valid only if performance is calculated in the same manner. Since there are
different methods of calculating performance, investors should consider the
effect of the methods used to calculate performance when comparing performance
of the Fund with performance quoted with respect to other investment companies
or types of investments.

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<PAGE>

In connection with communicating its performance to current or prospective
shareholders, the Fund also may compare these figures to the performance of
other mutual funds tracked by mutual fund rating services or to unmanaged
indices which may assume reinvestment of dividends but generally do not reflect
deductions for administrative and management costs. The Fund's performance may
be compared to the performance of various indices and investments for which
reliable data is available. The Fund's performance may also be compared to
averages, performance rankings, or other information prepared by recognized
mutual fund statistical services. Evaluations of the Fund's performance made by
independent sources may also be used in advertisements concerning the Fund.
Sources for the Fund's performance information could include the following:
Asian Wall Street Journal, Barron's, Business Week, Changing Times, The
------------------------- -------- ------------- -------------------
Kiplinger Magazine, Consumer Digest, Financial Times, Financial World, Forbes,
------------------ --------------- --------------- --------------- ------
Fortune, Global Investor, Investor's Daily, Lipper Analytical Services, Inc.'s
------- --------------- ---------------- ----------------------------------
Mutual Fund Performance Analysis, Money, Morningstar Inc., New York Times,
-------------------------------- ----- ---------------- --------------
Personal Investing News, Personal Investor, Success, U.S. News and World Report,
----------------------- ----------------- ------- --------------------------
ValueLine, Wall Street Journal, Weisenberger Investment Companies Services,
--------- ------------------- ------------------------------------------
Working Women and Worth.
------------- -----

Economic and Market Information

Advertising and sales literature of the Fund may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on these
developments by Fund portfolio managers and their views and analysis on how such
developments could affect the Funds. In addition, advertising and sales
literature may quote statistics and give general information about the mutual
fund industry, including the growth of the industry, from sources such as the
Investment Company Institute ("ICI").

VALUATION OF SECURITIES; REDEMPTIONS AND PURCHASES IN-KIND

Valuation of Securities

The net asset value ("NAV") per share is calculated once on each day the NYSE is
open ("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 ("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 corresponding Portfolio and other assets), less all liabilities attributable
to the shares, by the total number of shares outstanding as of the Valuation
Time. The Portfolio's securities and other assets are valued primarily on the
basis of market quotations or, if quotations are not readily available, by a
method that the Portfolio's Board of Trustees believes accurately reflects fair
value.

Equity and debt securities (other than short-term debt obligations maturing in
60 days or less), including listed securities and securities for which price
quotations are available, will normally be valued on the basis of market
valuations furnished by a pricing service. Such market valuations may represent
the last quoted price on the securities major trading exchange or may be

32
<PAGE>

determined through use of matrix pricing. In matrix pricing, pricing services
may use various pricing models, involving comparable securities, historic
relative price movements, economic factors and dealer quotations. Over-the-
counter securities will normally be valued at the bid price. Short-term debt
obligations and money market securities maturing in 60 days or less are valued
at amortized cost, which approximates market.

Securities for which market quotations are not readily available are valued by
Bankers Trust pursuant to procedures adopted by the Portfolio's Board of
Trustees. It is generally agreed that securities for which market quotations are
not readily available should not be valued at the same value as that carried by
an equivalent security which is readily marketable.

The problems inherent in making a good faith determination of value are
recognized in the codification effected by SEC Financial Reporting Release No. 1
("FRR 1" (formerly Accounting Series Release No. 113)) which concludes that
there is "no automatic formula" for calculating the value of restricted
securities. It recommends that the best method simply is to consider all
relevant factors before making any calculation. According to FRR 1 such factors
would include consideration of the: type of security involved, financial
statements, cost at date of purchase, size of holding, discount from market
value of unrestricted securities of the same class at the time of purchase,
special reports prepared by analysts, information as to any transactions or
offers with respect to the security, existence of merger proposals or tender
offers affecting the security, price and extent of public trading in similar
securities of the issuer or comparable companies, and other relevant matters.

To the extent that the Portfolio purchases securities which are restricted as to
resale or for which current market quotations are not readily available, the
Adviser of the Portfolio will value such securities based upon all relevant
factors as outlined in FRR 1.

Purchases 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 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. The Trust and Transfer Agent reserve the right to reject any
purchase order.

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 Bankers Trust as the Trust's custodian (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, as the Custodian and Investment Company Capital
Corp. ("ICCC") as Transfer Agent of

33
<PAGE>

the Trust, are affiliates, funds may be transferred directly from or to a
customer's account held with Bankers Trust to settle transactions with the Fund
without incurring the additional costs or delays associated with the wiring of
federal funds.

The Trust and ICCC have authorized one or more financial intermediaries to
accept on the Trust's behalf purchase and redemption orders. Such financial
intermediaries are authorized to designate other intermediaries to accept
purchase and redemption orders on the Trust's behalf. The Transfer Agent will be
deemed to have received a purchase or redemption order when an authorized
Service Agent or, if applicable, a Service Agent's authorized designee, accepts
the order. Customer orders will be priced at the Fund's NAV next computed after
they are accepted by an authorized Service Agent or the Service Agent's
authorized designee.

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

If orders are placed through a financial intermediary, it is the responsibility
of the financial intermediary to transmit the order to buy shares to the
Transfer Agent before 4:00 p.m. Eastern time.

The Transfer Agent must receive payment within one business day after an order
for shares is placed; otherwise, the purchase order may be canceled and the
investor could be held liable for resulting fees and/or losses.

The Fund and its service providers reserve the right to, from time to time in
their discretion, waive or reduce the investment minimums.

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 received by the Service Agent and transmitted to
the Transfer Agent prior to the Valuation Time on each Valuation Day will be
effective at that day's Valuation Time and the redemption proceeds normally will
be delivered to the shareholder's account the next day, but in any event 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

34
<PAGE>

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. A Service Agent or
the Trust 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 a change in market value.

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

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:

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

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

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

. The redemption proceeds are being transferred to the Fund account with a
different registration, or

. 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.

Redemptions and Purchases In-Kind

The Trust, on behalf of the Fund, and the Portfolio reserve the right, if
conditions exist which make cash payments undesirable, to honor any request for
redemption or withdrawal by making

35
<PAGE>

payment in whole or in part in readily marketable securities chosen by the
Trust, or the Portfolio, as the case may be, and valued as they are for purposes
of computing the Fund's or the Portfolio's net asset value, as the case may be
(a redemption in-kind). If payment is made to the Fund shareholder in
securities, an investor, including the Fund, may incur transaction expenses in
converting these securities into cash. The Trust, on behalf of the Fund, and the
Portfolio have elected, however, to be governed by Rule 18f-1 under the 1940 Act
as a result of which the Fund and the Portfolio are obligated to redeem shares
or beneficial interests, as the case may be, with respect to any one investor
during any 90-day period, solely in cash up to the lesser of $250,000 or 1% of
the net asset value of the Fund or Portfolio, as the case may be, at the
beginning of the period.

The Portfolio has agreed to make a redemption in-kind to the corresponding Fund
whenever the Fund wishes to make a redemption in-kind and therefore shareholders
of the Fund that receive redemptions in-kind will receive portfolio securities
of the corresponding Portfolio and in no case will they receive a security
issued by the Portfolio. The Portfolio has advised the Trust that the Portfolio
will not redeem in-kind except in circumstances in which the Fund is permitted
to redeem In-Kind or unless requested by the Fund.

Each investor in the 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
the close of business on the following business day.

The Fund may, at its own option, accept securities in payment for shares. The
securities delivered in payment for shares are valued by the method described
under "Valuation of Securities" as of the day the Fund receives the securities.
This may be a taxable transaction to the shareholder. (Consult your tax adviser
for future tax guidance.) Securities may be accepted in payment for shares only
if they are, in the judgment of Bankers Trust, appropriate investments for the
Fund's corresponding Portfolio. In addition, securities accepted in payment for
shares must: (i) meet the investment objective and policies of the acquiring
Fund's corresponding Portfolio; (ii) be acquired by the applicable Fund for
investment and not for resale (other than for resale to the Fund's corresponding
Portfolio); (iii) be liquid securities which are not restricted as to transfer
either by law or liquidity of the market; and (iv) if stock, have a value which
is readily ascertainable as evidenced by a listing on a stock exchange, over-
the-counter market or by

36
<PAGE>

readily available market quotations from a dealer in such securities. The Fund
reserves the right to accept or reject at its own option any and all securities
offered in payment for its shares.

The Fund and the Portfolio each reserve the right to redeem all of its shares,
if the Board of Trustees votes to liquidate the Fund and/or Portfolio.

Trading in Foreign Securities

Trading in foreign cities may be completed at times which vary from the closing
of the NYSE. In computing the net asset values, the Funds value foreign
securities at the latest closing price on the exchange on which they are traded
immediately prior to the closing of the NYSE. Similarly, foreign securities
quoted in foreign currencies are translated into U.S. dollars at the foreign
exchange rates.

Occasionally, events that affect values and exchange rates may occur between the
times at which they are determined and the closing of the NYSE. If such events
materially affect the value of portfolio securities, these securities may be
valued at their fair value as determined in good faith by the Trustees, although
the actual calculation may be done by others.

MANAGEMENT OF THE TRUST AND THE PORTFOLIO

The Trust and the Portfolio are governed by a Board of Trustees which is
responsible for protecting the interests of investors. 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 Funds or Portfolio
they represent. In addition, the Trustees review contractual arrangements with
companies that provide services to the Funds/Portfolio and review the Funds'
performance.

The Trustees and officers of the Trust and Portfolio, their birthdate and their
principal occupations during the past five years are set forth below. Their
titles may have varied during that period.

Trustees of the Trust and Portfolio

CHARLES P. BIGGAR (birth date: October 13, 1930) -- Trustee of the Trusts and
Portfolio; Trustee of each of the other investment companies in the Fund
Complex/1/; Retired; former Vice President, International Business Machines
("IBM") and President, National Services and the Field Engineering Divisions of
IBM. His address is 12 Hitching Post Lane, Chappaqua, New York 10514.

________________________
/1/ The "Fund Complex" consists of BT Investment Funds, BT Institutional Funds,
BT Pyramid Mutual Funds, BT Advisor Funds, Cash Management Portfolio,
Intermediate Tax Free Portfolio, Tax Free Money Portfolio, NY Tax Free Money
Portfolio, Treasury Money Portfolio, Global

37
<PAGE>

President, International Business Machines ("IBM") and President, National
Services and the Field Engineering Divisions of IBM. His address is 12 Hitching
Post Lane, Chappaqua, New York 10514.

S. LELAND DILL (birth date: March 28, 1930) -- Trustee of the Trusts and
Portfolio; Trustee of each of the other investment companies in the Fund
Complex; Retired; Director, Coutts (U.S.A.) International; Trustee,
Phoenix-Zweig Trust/2/ and Phoenix-Euclid Market Neutral Fund/2/; former
Partner, KPMG Peat Marwick; Director, Vintners International Company Inc.;
Director, Coutts Trust Holdings Ltd., Director, Coutts Group; General Partner,
Pemco/2/. His address is 5070 North Ocean Drive, Singer Island, Florida 33404.

MARTIN J. GRUBER (birth date: July 15, 1937) -- Trustee of the Trusts and
Portfolio; Trustee of each of the other investment companies in the Fund
Complex; Nomura Professor of Finance, Leonard N. Stern School of Business, New
York University (since 1964); Trustee, TIAA/2/; Trustee, SG Cowen Mutual
Funds/2/; Trustee, Japan Equity Fund/2/; Trustee, Taiwan Equity Fund/2/. His
address is 229 South Irving Street, Ridgewood, New Jersey 07450.

RICHARD HALE* (birth date: July 17, 1945) -- President and Trustee of the Trusts
and Portfolio; Trustee of each of the other investment companies in the Fund
Complex; Managing Director, Deutsche Asset Management; Director, Flag Investors
Funds/2/; Managing Director, Deutsche Banc Alex. Brown Incorporated; Director
and President, Investment Company Capital Corp. His address is 205 Woodbrook
Lane, Baltimore, Maryland 21212.

RICHARD J. HERRING (birth date: February 18, 1946) -- Trustee of the Trusts and
Portfolio; Trustee of each of the other investment companies in the Fund
Complex; Jacob Safra Professor of International Banking, Professor of Finance
and Vice Dean, The Wharton School, University of Pennsylvania (since 1972). His
address is 325 South Roberts Road, Bryn Mawr, Pennsylvania 19010.

BRUCE E. LANGTON (birth date: May 10, 1931) -- Trustee of the Trusts and
Portfolio; Trustee of each of the other investment companies in the Fund
Complex; Retired; Trustee, Allmerica Financial Mutual Funds (1992-present);
Member, Pension and Thrift Plans and Investment Committee, Unilever U.S.
Corporation (1989 to present)/3/; Director, TWA Pilots Directed Account Plan and
401(k) Plan (1988 to present)/2/. His address is 99 Jordan Lane, Stamford,
Connecticut 06903.

________________________________________________________________________________

Equity Portfolio, Equity 500 Index Portfolio, Capital Appreciation Portfolio,
Asset Management Portfolio and BT Investment Portfolios.

/2/ An investment company registered under the Investment Company Act of 1940,
as amended (the "Act").

/3/ A publicly held company with securities registered pursuant to Section 12 of
the Securities Exchange Act of 1934, as amended.

38
<PAGE>

PHILIP SAUNDERS, JR. (birth date: October 11, 1935) -- Trustee of the Trusts and
Portfolio; Trustee of each of the other investment companies in the Fund
Complex; Principal, Philip Saunders Associates (Economic and Financial
Analysis); former Director, Financial Industry Consulting, Wolf & Company;
President, John Hancock Home Mortgage Corporation; Senior Vice President of
Treasury and Financial Services, John Hancock Mutual Life Insurance Company,
Inc. His address is 445 Glen Road, Weston, Massachusetts 02193.

HARRY VAN BENSCHOTEN (birth date: February 18, 1928) -- Trustee of the Trusts
and Portfolio; Trustee of each of the other investment companies in the Fund
Complex; Retired; Director, Canada Life Insurance Corporation of New York. His
address is 6581 Ridgewood Drive, Naples, Florida 34108.

* "Interested Person" within the meaning of Section 2(a)(19) of the Act. Mr.
Hale is a Managing Director of Deutsche Asset Management, the U.S. asset
management unit of Deutsche Bank and its affiliates.

The Board has an Audit Committee that meets with the Trusts' and Portfolio's
independent accountants to review the financial statements of the Trust, the
adequacy of internal controls and the accounting procedures and policies of the
Trust. Each member of the Board except Mr. Hale also is a member of the Audit
Committee.

Officers of the Trusts and Portfolio

DANIEL O. HIRSCH (birth date: March 27, 1954) --Director, Deutsche Asset
Management since 1999; Director, Deutsche Banc Alex.Brown LLC since July 1998;
Secretary of the Trusts and Portfolio since 1998; Associate General Counsel,
Office of the General Counsel, United States Securities and Exchange Commission,
1993 to 1998. His address is One South Street, Baltimore, Maryland 21202.

CHARLES A. RIZZO (birth date: August 5, 1958) Treasurer of the Trusts and
Portfolio; Vice President and Department Head, Deutsche Asset Management since
1998; Senior Manager, PricewaterhouseCoopers LLP from 1993 to 1998. His address
is One South Street, Baltimore, MD 21202.

Messrs. Hirsch and Rizzo 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. No director, officer or employee of ICC Distributors, Inc.
or any of its affiliates will receive any compensation from the Trust for
serving as an officer or Trustee of the Trust.

Trustee Compensation Table

39
<PAGE>

================================================================================
Aggregate Aggregate Total Compensation
Compensation Compensation from
Trustee from Trust* from Portfolio** Fund Complex***
--------------------------------------------------------------------------------
Charles P. Biggar N/A $1,288 $43,750
--------------------------------------------------------------------------------
S. Leland Dill $17,104 $1,086 $43,750
--------------------------------------------------------------------------------
Martin Gruber N/A N/A $45,000
--------------------------------------------------------------------------------
Richard J. Herring N/A N/A $43,750
--------------------------------------------------------------------------------
Kelvin Lancaster $18,567 N/A $27,500
--------------------------------------------------------------------------------
Bruce E. Langton N/A N/A $43,750
--------------------------------------------------------------------------------
Philip Saunders, Jr. $17,645 $1,120 $45,000
--------------------------------------------------------------------------------
Harry Van
Benschoten N/A N/A $45,000
================================================================================

*The information provided is for the BT Investment Funds, which is comprised of
17 funds, for the year ended October 31, 1999.

**The information provided is for Global Equity Portfolio and BT Investment
Portfolios, which is comprised of 13 funds, for the year ended October 31, 1999.

***Aggregated information is furnished for the Fund Complex 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,
Global Equity Portfolio, Intermediate Tax Free Portfolio, Asset Management
Portfolio, Equity 500 Index Portfolio and Capital Appreciation Portfolio for the
year ended December 31, 1999.

DeAM, Inc. and Bankers Trust as applicable, reimbursed the Funds and Portfolio
for a portion of their Trustees fees for the period above. See "Investment
Adviser" and "Administrator" below.

As of December 31, 1999, the Trustees and Officers of the Trust and the
Portfolio owned in the aggregate less than 1% of the shares of any Fund or the
Trust (all series taken together).

The Fund has not commenced operations as of the date of this SAI and therefore
does not have any shareholders of record.

Code of Ethics

The Board of Trustees of the Fund has adopted a Code of Ethics pursuant to Rule
17j-1 under the 1940 Act. The Fund's Code of Ethics permits Fund personnel to
invest in securities for their own accounts, but requires compliance with the
Code's pre-clearance requirements (with certain exceptions). In addition, the
Fund's Code of Ethics provides for trading "blackout periods" that prohibit
trading by personnel within periods of trading by the Fund in the same security.
The Fund's Code of Ethics also prohibits short term trading profits and personal
investment in initial public offerings. The Code requires prior approval with
respect to purchases of securities in private placements.

40
<PAGE>

The Fund's adviser, DeAM, Inc., has also adopted a Code of Ethics. The Code of
Ethics allows personnel to invest in securities for their own accounts, but
require compliance with the Code's pre-clearance requirements and other
restrictions including "blackout periods" and minimum holding periods, subject
to limited exceptions. The Code prohibits purchases of securities in initial
public offerings (the prohibition is limited to U.S. public offerings) and
requires prior approval for purchases of securities in private placements.

The Fund's principal underwriter, ICC Distributors, Inc., ("ICCD") has adopted a
Code of Ethics applicable to ICCD's distribution services to registered
investment companies such as the Fund. The ICCD Code of Ethics prohibits
directors and officers of ICCD from executing trades on a day during which the
individual knows or should have known that the Fund in the individual's complex
has a pending "buy" or "sell" order in the same security, subject to certain
exceptions. The ICCD Code of Ethics also requires pre-clearance for purchases of
securities in an initial public offering or private placement.

Investment Adviser

Deutsche Asset Management, Inc. ("DeAM, Inc.") is the Portfolio's investment
adviser. DeAM, Inc. is a wholly owned subsidiary of Deutsche Bank AG. Deutsche
Bank is a banking company with limited liability organized under the laws of the
Federal Republic of Germany. Deutsche Bank is the parent company of a group of a
group consisting of banks, capital markets companies, fund management companies,
mortgage banks, a property finance company, installments financing and leasing
companies, insurance companies, research and consultancy companies and other
domestic and foreign companies.

DeAM, Inc., 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. DeAM, Inc. 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, DeAM, Inc. will not inquire or take into consideration whether an
issuer of securities proposed for purchase of sale by the Portfolio is a
customer of DeAM, Inc., its parent or its subsidiaries or affiliates. Also, in
dealing with its customers, DeAM, Inc., its parent , subsidiaries, and
affiliates will not inquire or take into consideration whether securities of
such customers are held by any fund managed by DeAM, Inc. or any such affiliate

The Fund's Prospectus contains disclosure as to the amount of DeAM, Inc's
investment advisory and administration and services fees, including waivers
thereof. DeAM, Inc. may not recoup any of its waived investment advisory or
administration and services fees.

41
<PAGE>

Administrator

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 deem necessary for the proper
administration of the Trust or the Portfolio. Bankers Trust will generally
assist in all aspects of the Funds' and Portfolio' 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), 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 Declarations of Trust, by-laws, investment objectives and
policies and with Federal and state securities laws; arrange for appropriate
insurance coverage; calculate net asset values, net income and realized capital
gains or losses; and negotiate arrangements with, and supervise and coordinate
the activities of, agents and others to supply services.

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

Distributor

ICC Distributors is the principal distributor for shares of the Funds. 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.

Service Agent

All shareholders must be represented by a Service Agent. Bankers Trust acts as a
Service Agent pursuant to its Administration and Services Agreement with the
Trust 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 Bankers Trust from its fees. The services
provided by a Service Agent may include establishing and maintaining shareholder

42
<PAGE>

accounts, processing purchase and redemption transactions, arranging for bank
wires, performing shareholder sub-accounting, answering client inquiries
regarding the Trust, 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 Trust
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 Agreement with Bankers Trust, 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 Service
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, New York, New York 10006, serves as Custodian
for the Trust and the Portfolio pursuant to an administration and services
agreement. As Custodian, it holds the Fund's and Portfolio's assets. Bankers
Trust will comply with the self-custodian provisions of Rule 17f-2 under the
1940 Act.

Investment Company Capital Corp. ("ICCC"), One South Street, Baltimore,
Maryland, 21202, serves as transfer agent of the Trust and of the Portfolio
pursuant to a transfer agency agreement. Under its transfer agency agreement
with the Trust, ICCC 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. ICCC may be
reimbursed by the Fund or the Portfolio for its out-of-pocket expenses.

Banking Regulatory Matters

DeAM, Inc. has been advised by its counsel that in its opinion, DeAM, Inc. may
perform the services for the Portfolio contemplated by the Advisory Agreements
and other activities for the Funds and the Portfolio described in the
Prospectuses 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 and the Portfolio. State laws on this issue may
differ from the interpretations of relevant Federal law and banks and financial
institutions may be required to register as dealers pursuant to state securities
law. If the circumstances described above should change, the Boards of Trustees
would review the relationships with Bankers Trust and consider taking all
actions necessary in the circumstances.

43
<PAGE>

Counsel and Independent Accountants

Willkie Farr & Gallagher, 787 Seventh Avenue, New York, New York 10019, serves
as Counsel to the Trust and the Portfolio. PricewaterhouseCoopers LLP, 250 West
Pratt Street, Baltimore, Maryland 21201, acts as Independent Accountants of the
Trust and the Portfolio.

ORGANIZATION OF THE TRUST

The Trust was organized on July 21, 1986 under the laws of the Commonwealth of
Massachusetts. The Trust is an entity commonly known as a "Massachusetts
business trust." The Fund is a mutual fund: an investment that pools
shareholders' money and invests it toward a specified goal. BT Investment
Portfolios is a New York master trust fund. The Global Equity Portfolio is a
series of the BT Investment Portfolios. The Trust offers shares of beneficial
interest of separate series, par value $0.001 per share. The Trust currently
consists of 20 separate series, including the Funds, and BT Investment
Portfolios currently consist of 16 separate subtrusts, including the Portfolio
other than the Global Equity Portfolio. The shares of the other series of the
Trust are offered through separate prospectuses and SAIs. No series of shares
has any preference over any other series. The Trust and BT Investment Portfolios
reserve the right to add additional series in the future. The Trust also
reserves the right to issue more than one class of shares of the Fund.

The Trust or the Portfolio may hold special meetings and mail proxy materials.
These meetings may be called to elect or remove trustees, change fundamental
policies, approve the Portfolio's investment advisory agreement, or for other
purposes. Shareholders not attending these meetings are encouraged to vote by
proxy. The Trust's Transfer Agent will mail proxy materials in advance,
including a voting card and information about the proposals to be voted on.

When matters are submitted for shareholder vote, shareholders of the 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 of
the Fund are not entitled to vote on trust matters that do not affect the Fund.
All series of the Trust will vote together on certain matters, such as electing
trustees. 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 the Trust's outstanding shares at a meeting called for that
purpose. The Trustees are required to call such a meeting upon the written
request of shareholders holding at least 10% of the Trust's outstanding shares.
The Trust will also assist shareholders in communicating with one another as
provided for in the 1940 Act.

Declarations of Trust of BT Investment Portfolios and the Global Equity
Portfolio provide 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

44
<PAGE>

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 corresponding Portfolio.

Each series in the Trust will not be involved in any vote involving the
Portfolio in which it does not invest its Assets. Shareholders of all of the
series of the Trust will, however, vote together to elect Trustees of the Trust
and for certain other matters. Under certain circumstances, the shareholders of
one or more series could control the outcome of these votes.

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.

Massachusetts law provides that shareholders could under certain circumstances
be held personally liable for the obligations of the Trust. However, the Trust's
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 a shareholder's incurring
financial loss on account of shareholder liability is limited to circumstances
in which both inadequate insurance existed and the Trust itself would be 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 Trust was organized under the name BT Tax-Free Investment Trust and assumed
its current name of BT Investment Funds on May 16, 1988.

Except as described below, whenever the Trust is requested to vote on a
fundamental policy 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.
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.

Except as described below, whenever the Fund is requested to vote on matters
pertaining to the Portfolio, the Fund will hold a meeting of its shareholders
and will cast its votes proportionately as instructed by Fund shareholders.
However, subject to applicable statutory and regulatory requirements, the Fund
would not request a vote of its shareholders with respect to (a) any proposal
relating to the Portfolio, which proposal, if made with respect to the Fund,
would not

45
<PAGE>

require the vote of the shareholders of the Fund, or (b) any proposal with
respect to the Portfolio that is identical in all material respects to a
proposal that has previously been approved by shareholders of the Fund. Any
proposal submitted to holders in the Portfolio, and that is not required to be
voted on by shareholders of the Fund, would nonetheless be voted on by the
Trustees of the Trust.

TAXATION

Dividends and Distributions

The Fund distributes substantially all of its net income and capital gains to
shareholders each year. The Fund distributes capital gains annually. Unless a
shareholder instructs the Trust to pay such dividends and distributions in cash,
they will be automatically reinvested in additional shares of the Fund.

The Fund intends to qualify as a regulated investment company, as defined in the
Code. Provided the Fund meets the requirements imposed by the Code and
distributes all of its income and gains, the Fund will not pay any federal
income or excise taxes.

Distributions from the Fund's income and short-term capital gains are taxed as
dividends, and long-term capital gain distributions are taxed as long-term
capital gains. The Fund's capital gain distributions are taxable when they are
paid, whether you take them in cash or reinvest them in additional shares.
Distributions declared to shareholders of record in October, November or
December and paid as if paid in January are taxable on December 31. The Fund
will send each shareholder a tax statement by January 31 showing the tax status
of the distributions received during the past year.

On the ex-date for a distribution from capital gains, the Fund's share value is
reduced by the amount of the distribution. If you buy shares just before the ex-
date ("buying a dividend"), you will pay the full price for the shares and then
receive a portion of the price back as a taxable distribution.

Taxation of the Funds

As a regulated investment company, the Fund will not be subject to U.S. Federal
income tax on its investment company taxable income and net capital gains (the
excess of net long-term capital gains over net short-term capital losses), if
any, that it distributes to shareholders. The Funds intend to distribute to
their shareholders, at least annually, substantially all of their investment
company taxable income and net capital gains, and therefore do not anticipate
incurring Federal income tax liability.

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

46
<PAGE>

accumulated earnings and profits, and would be eligible for the dividends
received deduction for corporations in the case of corporate shareholders.

The Fund's investment in Section 1256 contracts, such as regulated futures
contracts, most forward currency forward contracts traded in the interbank
market and options on most stock indices, are subject to special tax rules. All
section 1256 contracts held by the Fund at the end of its taxable year are
required to be marked to their market value, and any unrealized gain or loss on
those positions will be included in the Fund's income as if each position had
been sold for its fair market value at the end of the taxable year. The
resulting gain or loss will be combined with any gain or loss realized by the
Fund from positions in section 1256 contracts closed during the taxable year.
Provided such positions were held as capital assets and were not part of a
"hedging transaction" nor part of a "straddle," 60% of the resulting net gain or
loss will be treated as long-term capital gain or loss, and 40% of such net gain
or loss will be treated as short-term capital gain or loss, regardless of the
period of time the positions were actually held by the Fund.

The Fund's shareholder will also receive, if appropriate, various written
notices after the close of the Fund's prior taxable year as to the Federal
income status of his dividends and distributions which were received from the
Fund during the Fund's prior taxable year. Shareholders should consult their tax
advisers as to any state and local taxes that may apply to these dividends and
distributions.

Foreign Securities

Income from investments in foreign stocks or securities may be subject to
foreign taxes. Tax conventions between certain countries and the United States
may reduce or eliminate such taxes. It is impossible to determine the effective
rate of foreign tax in advance since the amount of the Portfolio's assets to be
invested in various countries will vary.

If the Portfolio is liable for foreign taxes, and if more than 50% of the value
of the Portfolio's total assets at the close of its taxable year consists of
stocks or securities of foreign corporations (including foreign governments),
the corresponding Fund may make an election pursuant to which certain foreign
taxes paid by the Portfolio would be treated as having been paid directly by
shareholders of the corresponding Fund. Pursuant to such election, the amount of
foreign taxes paid will be included in the income of the corresponding Fund's
shareholders, and such Fund shareholders (except tax-exempt shareholders) may,
subject to certain limitations, claim either a credit or deduction for the
taxes. Each such Fund shareholder will be notified after the close of the
Portfolio's taxable year whether the foreign taxes paid will "pass through" for
that year and, if so, such notification will designate (a) the shareholder's
portion of the foreign taxes paid to each such country and (b) the amount which
represents income derived from sources within each such country.

The amount of foreign taxes for which a shareholder may claim a credit in any
year will generally be subject to a separate limitation for "passive income,"
which includes, among other items of income, dividends, interest and certain
foreign currency gains. Because capital gains realized by the Portfolio on the
sale of foreign securities will be treated as U.S. source income,

47
<PAGE>

the available credit of foreign taxes paid with respect to such gains may be
restricted by this limitation.

Taxation of the Portfolio

The Portfolio is not subject to 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.

Distributions received by the Fund from the corresponding Portfolio generally
will not result in the Fund recognizing any gain or loss for Federal income tax
purposes, except that: (1) gain will be recognized to the extent that any cash
distributed exceeds the Fund's basis in its interest in the Portfolio prior to
the distribution; (2) income or gain may be realized if the distribution is made
in liquidation of the Fund's entire interest in the Portfolio and includes a
disproportionate share of any unrealized receivables held by the Portfolio; and
(3) loss may be recognized if the distribution is made in liquidation of the
Fund's entire interest in the Portfolio and consists solely of cash and/or
unrealized receivables. The Fund's basis in its interest in the corresponding
Portfolio generally will equal the amount of cash and the basis of any property
which the Fund invests in the Portfolio, increased by the Fund's share of income
from the Portfolio, and decreased by the amount of any cash distributions and
the basis of any property distributed from the Portfolio.

Sale of Shares

Any gain or loss realized by a shareholder upon the sale or other disposition of
shares of the Fund, or upon receipt of a distribution in complete liquidation of
the Fund, generally will be a capital gain or loss which will be long-term or
short-term, generally depending upon the shareholder's holding period for the
shares. Any loss realized on a sale or exchange will be disallowed to the extent
the shares disposed of are replaced (including shares acquired pursuant to a
dividend reinvestment plan) within a period of 61 days beginning 30 days before
and ending 30 days after disposition of the shares. In such case, the basis of
the shares acquired will be adjusted to reflect the disallowed loss. Any loss
realized by a shareholder on disposition of the Fund shares held by the
shareholders for six months or less will be treated as a long-term capital loss
to the extent of any distributions of net capital gains received by the
shareholder with respect to such shares.

Because the tax treatment also depends on your purchase price and your personal
tax position, you should keep your regular account statements to use in
determining your tax.

48
<PAGE>

Foreign Withholding Taxes

Income received by the Portfolio from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries.

Backup Withholding

The Fund may be required to withhold U.S. Federal income tax at the rate of 31%
of all taxable distributions payable to shareholders who fail to provide the
Fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the Internal Revenue Service that
they are subject to backup withholding. Corporate shareholders and certain other
shareholders specified in the Code generally are exempt from such backup
withholding. Backup withholding is not an additional tax. Any amounts withheld
may be credited against the shareholder's U.S. Federal income tax liability.

Foreign Shareholders

The tax consequences to a foreign shareholder of an investment in the Fund may
be different from those described herein. Foreign shareholders are advised to
consult their own tax advisers with respect to the particular tax consequences
to them of an investment in the Fund.

Other Taxation

The Trust is organized as a Massachusetts business trust and, under current law,
neither the Trust nor any Fund is liable for any income or franchise tax in the
Commonwealth of Massachusetts, provided that the Fund continues to qualify as a
regulated investment company under Subchapter M of the Code. The investment by
the Fund in the corresponding Portfolio does not cause the Fund to be liable for
any income or franchise tax in the State of New York.

The Global Equity Portfolio is organized as a New York trust. The Portfolio is
not subject to any income or franchise tax in the State of New York or the
Commonwealth of Massachusetts.

Fund shareholders may be subject to state and local taxes on their Fund
distributions. Shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the Fund.

FINANCIAL STATEMENTS

The Fund does not have a full calendar year of annual operating performance to
report.

49
<PAGE>

APPENDIX A
Description Of Ratings Categories of
Moody's Investors Service, Inc. and
Standard & Poor's Ratings Group

Moody's Investors Service, Inc. ("Moody's") describes classifications of fixed
income securities (not including commercial paper) as follows:

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.

A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

Baa--Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

50
<PAGE>

B--Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C--Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

Standard & Poor's Ratings Group ("Standard & Poor's") describes classifications
of fixed income securities (not including commercial paper) as follows:

AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.

AA--Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from the AAA issues only in small degree.

A--Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.

BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.

Debt rated BB, B, CCC or CC is regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligations. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.

D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

51
<PAGE>

APPENDIX B

Commercial Paper Ratings

S&P's Commercial Paper Ratings

A is the highest commercial paper rating category utilized by S&P, which uses
the numbers 1+, 1, 2 and 3 to denote relative strength within its A
classification. Commercial paper issues rated A by S&P have the following
characteristics: Liquidity ratios are better than industry average. Long-term
debt rating is A or better. The issuer has access to at least two additional
channels of borrowing. Basic earnings and cash flow are in an upward trend.
Typically, the issuer is a strong company in a well-established industry and has
superior management.

Moody's Commercial Paper Ratings

Issuers rated Prime-1 (or related supporting institutions) have superior
capacities for repayment of short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics: leading
market positions in well-established industries; high rates of return on funds
employed; conservative capitalization structures with moderate reliance on debt
and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; well-established access to
a range of financial markets and assured sources of alternate liquidity.

Issuers rated Prime-2 (or related supporting institutions) have strong
capacities for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.

Issuers rated Prime-3 (or related supporting institutions) have acceptable
capacities for repayment of short-term promissory obligations. The effect of
industry characteristics and market composition may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and the requirement for relatively high financial
leverage. Adequate alternate liquidity is maintained.

Fitch Investors Service and Duff & Phelps Commercial Paper Ratings

Commercial paper rated "Fitch- 1" is considered to be the highest grade paper
and is regarded as having the strongest degree of assurance for timely payment.
"Fitch-2" is considered very good grade paper and reflects an assurance of
timely payment only slightly less in degree than the strongest issue.

Commercial paper issues rated "Duff 1" by Duff & Phelps, Inc. have the following
characteristics: very high certainty of timely payment, excellent liquidity
factors supported by strong fundamental protection factors, and risk factors
which are very small. Issues rated "Duff 2" have a good certainty of timely
payment, sound liquidity factors and company fundamentals, small risk factors,
and good access to capital markets.

52
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

DECEMBER 29, 2000

Investment Adviser of the Portfolio
DEUTSCHE ASSET MANAGEMENT, INC.
885 Third Avenue
New York, NY 10022

Distributor
ICC DISTRIBUTORS, INC.
Two Portland Square
Portland, ME 04101

Custodian
BANKERS TRUST COMPANY
130 Liberty Street
(One Bankers Trust Plaza)
New York, NY 10006

Transfer Agent
INVESTMENT COMPANY CAPITAL CORP.
One South Street,
Baltimore, Maryland, 21202

Independent Accountants
PRICEWATERHOUSECOOPERS LLP
250 West Pratt Street
Baltimore, MD 21201

Counsel
WILLKIE FARR & GALLAGHER LLP
787 Seventh Avenue
New York, NY 10019

No person has been authorized to give any information or to make any
representations other than those contained in the Trust's Prospectuses, 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 Prospectuses nor this Statement of
Additional Information constitutes an offer in any state in which, or to any
person to whom, such offer may not lawfully be made.

CUSIP# ___________
___SAI (12/00)

53
<PAGE>

PART C - OTHER INFORMATION

ITEM 23. Exhibits.

(a) Declaration of Trust dated July 21, 1986; 1
(i) Supplement to Declaration of Trust dated October 20, 1986; 1
(ii) Second Supplement to Declaration of Trust dated May 16, 1988; 1
(b) By-Laws; 1
(c) Incorporated by reference to Exhibit (b) above;
(d) Not applicable
(e) Distribution Agreement dated August 11, 1998; 5
(i) Appendix A dated September 29, 2000, to Distribution
Agreement - filed September 29, 2000; 18
(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) Amendment No. 5 to Exhibit A of the Custodian Agreement dated
December 23, 1999; 12
(v) Amendment No. 6 to Exhibit A of the Custodian Agreement dated
September 29, 2000 - filed September 29, 2000; 18
(vi) Cash Services Addendum to Custodian Agreement dated December 18,
1997; 4
(vii) Amendment No.7 to be filed.
(h) Administration and Services Agreement dated October 28, 1992; 8
(i) Exhibit D to the Administration and Services Agreement as of October
28, 1992, as revised September 29, 2000 - filed September 29, 2000;
18
(ii) Agreement to Provide Shareholder Services for BT Preservation Plus
Income Fund as of June 10, 1998; 5
(iii) Shareholder Services Plan for BT Preservation Plus Income Fund as of
June 10, 1998; 5
(iv) Expense Limitation Agreement dated September 30, 1999 on behalf of
Intermediate Tax Free Fund, Capital Appreciation Fund, Small Cap
Fund; 13
(v) Expense Limitation Agreement dated October 31, 1999 on behalf of
International Equity Fund, Latin American Equity Fund and Pacific
Basin Equity Fund; 13
(vi) Expense Limitation Agreement dated March 31, 2000, on behalf of BT
Investment Lifecycle Long Range Fund, BT
<PAGE>

Investment Lifecycle Mid Range Fund, and BT Investment Lifecycle
Short Range Fund; 15
(vii) Expense Limitation Agreement dated December 31, 1999 on behalf of
Cash Management Fund, Tax Free Money Fund, NY Tax Free Money Fund,
Treasury Money Fund and Quantitative Equity Fund; 14
(viii) Expense Limitation Agreement dated September 30, 1999 on behalf of
Preservation Plus Income Fund; 13
(ix) Expense Limitation Agreement on behalf of Mid Cap for the period
August 31, 2000 through January 31, 2001; 17
(x) Expense Limitation Agreement on behalf of Communications for the
period September 29, 2000 through December 31, 2001 - filed
September 29, 2000; 18
(xi) Expense Limitation Agreement on behalf of Global Equity for the
period December 29, 2000 through February 28, 2002 - to be filed;
(xii) Transfer Agency Agreement dated October 1, 2000 with Investment
Company Capital Corp. - filed herewith;
(i) Legal Opinion - Not applicable;
(j) Consent of Independent Accountants - to be filed;
(k) Omitted Financial Statements - Not applicable;
(l) Initial Capital Agreements - Not applicable;
(m) Rule 12b-1 Plans - Not applicable;
(n) Not applicable.
(o) Rule 18f-3 Plan; 13
(p) Codes of Ethics for Funds, Adviser and Distributor; 16
___________________________________
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.
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.
<PAGE>

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.
9. Incorporated by reference to Post-Effective Amendment No. 60 to
Registrant's Registration Statement as filed with the Commission on March
15, 1999.
10. Incorporated by reference to Post-Effective Amendment No. 63 to
Registrant's Registration Statement as filed with the Commission on July
29, 1999.
11. Incorporated by reference to Post-Effective Amendment No. 64 to
Registrant's Registration Statement as filed with the Commission on October
22, 1999.
12. Incorporated by reference to Post-Effective Amendment to No. 66 to
Registrant's Registration Statement as filed with the Commission on
December 23, 1999.
13. Incorporated by reference to Post-Effective Amendment to No. 67 to
Registrant's Registration Statement as filed with the Commission on January
28, 2000.
14. Incorporated by reference to Post-Effective Amendment to No. 68 to
Registrant's Registration Statement as filed with the Commission on April
28, 2000.
15. Incorporated by reference to Post-Effective Amendment to No. 69 to
Registrant's Registration Statement as filed with the Commission on May 1,
2000.
16. Incorporated by reference to Post-Effective Amendment No. 70 to
Registrant's Registration Statement as filed with the Commission on June
26, 2000.
17. Incorporated by reference to Post-Effective Amendment No. 73 to
Registrant's Registration Statement as filed with the Commission on August
31, 2000.
18. Incorporated by reference to Post-Effective Amendment No. 74 to
Registrant's Registration Statement as filed with the Commission on
September 29, 2000.

ITEM 24. Persons Controlled by or Under Common Control with Registrant.

Not applicable.

ITEM 25. Indemnification.
<PAGE>

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.

All of the information required by this item is set forth in the Form ADV, as
amended, of Deutsche Asset Management, Inc. (formerly Morgan Grenfell Inc.)
(File No. 801-27291). The following sections of each such Form ADV are
incorporated herein by reference:

(a) Items 1 and 2 of Part II

(b) Section 6, Business Background, of each Schedule D.

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, BT Pyramid Mutual Funds, Cash
Management Portfolio, Intermediate Tax Free Portfolio, NY Tax Free Money
Portfolio, Treasury Money Portfolio, International Equity Portfolio, Equity 500
Index Portfolio, Capital Appreciation Portfolio, Asset Management Portfolio, BT
Investment Portfolios, Deutsche Banc Alex. Brown Cash Reserve Fund, Inc., Flag
Investors Communications Fund, Inc., Flag Investors Emerging Growth Fund, Inc.,
the Flag Investors Total Return U.S. Treasury Fund Shares of Total Return U.S.
Treasury Fund, Inc., the Flag Investors Managed Municipal Fund Shares of Managed
Municipal Fund, Inc., Flag Investors Short-Intermediate Income Fund, Inc., Flag
Investors Value Builder Fund, Inc., Flag Investors Real Estate Securities Fund,
Inc., Flag (formerly known as Deutsche Funds, Inc.), Flag Investors Portfolios
Trust (formerly known as Deutsche Portfolios), Morgan Grenfell Investment Trust,
DP Trust, The Glenmede Funds, Inc. and The Glenmede Portfolios.

(b) Unless otherwise stated, the principal business address for the following
persons is Two Portland Square, Portland, Maine 04101.

Name and Positions and Positions and
Principal Business Offices with Offices with
Address Distributor Registrant
<PAGE>

John A. Keffer President None
Ronald H. Hirsch Treasurer None
Nanette K. Chern Chief Compliance Officer None
David I. Goldstein Secretary None
Benjamin L. Niles Vice President None
Frederick Skillin Assistant Treasurer None
Marc D. Keffer Assistant Secretary None

ITEM 28. Location of Accounts and Records.

BT Investment Funds: Deutsche Asset Management
(Registrant) One South Street
Baltimore, MD 21202

Bankers Trust Company: 130 Liberty Street
(Custodian, Investment Adviser New York, NY 10006
and Administrator)

DST: 210 West 10/th/ Street
Kansas City, MO 64105.

ICC Distributors, Inc.: Two Portland Square
(Distributor) Portland, ME 04101

ITEM 29. Management Services.

Not Applicable

ITEM 30. Undertakings.

Not Applicable
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant, BT INVESTMENT
FUNDS, certifies that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(a) under the
Securities Act of 1933, as amended, and has duly caused this Post-Effective
Amendment No. 75 to its Registration Statement to be signed on its behalf by the
undersigned, duly authorized, in the City of Baltimore and the State of Maryland
on this 20th day of October, 2000.

BT INVESTMENT FUNDS

By: ________________________
Daniel O. Hirsch, Secretary

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: ______________________ Secretary September 29, 2000
Daniel O. Hirsch (Attorney in Fact
For the Persons Listed Below)

/s/ RICHARD T. HALE* President, Chief Executive
Richard T. Hale Officer and Trustee

/s/ CHARLES A. RIZZO* Treasurer (Principal
Charles A. Rizzo Financial and Accounting Officer)

/s/ CHARLES P. BIGGAR* Trustee
Charles P. Biggar

/s/ S. LELAND DILL* Trustee
S. Leland Dill

/s/ MARTIN J. GRUBER* Trustee
Martin J. Gruber

/s/ RICHARD J. HERRING* Trustee
Richard J. Herring

/s/ BRUCE T. LANGTON* Trustee
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Bruce T. Langton

/s/ PHILIP SAUNDERS, JR.* Trustee
Philip Saunders, Jr.

/s/ HARRY VAN BENSCHOTEN* Trustee
Harry Van Benschoten

* By Power of Attorney. Incorporated by reference to Post-Effective Amendment
No. 64 of BT Investment Funds as filed with the Commission on October 22, 1999.
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RESOLUTION RELATING TO THE ORGANIZATION OF
GLOBAL EQUITY

RESOLVED, That the officers of the Trust are hereby authorized and
directed to prepare and file with the appropriate regulatory bodies
the appropriate amendments to the registration statement of the BT
Investment Funds, with respect to Global Equity and its Classes, on
Form N-1A.