(bullet) BT INSTITUTIONAL FUNDS (bullet)
Institutional
Daily Assets Fund
SEMI-ANNUAL REPORT
DECEMBER (bullet) 1997
<PAGE>
- --------------------------------------------------------------------------------
Institutional Daily Assets Fund
Table of Contents
- --------------------------------------------------------------------------------
Letter to Shareholders 3
Institutional Daily Assets Fund
Schedule of Portfolio Investments 4
Statement of Assets and Liabilities 8
Statement of Operations 8
Statement of Changes in Net Assets 9
Financial Highlights 10
Notes to Financial Statements 11
2
<PAGE>
- --------------------------------------------------------------------------------
Institutional Daily Assets Fund
Letter to Shareholders
- --------------------------------------------------------------------------------
By staying disciplined to the purchase of high quality instruments and actively
adjusting duration and sector allocation as market conditions changed, the
manager of the Institutional Daily Assets Fund (the "Fund") was able to produce
competitive yields. In fact, the Fund's annualized 7-day effective yield of
5.80% as of December 31, 1997 was notably higher than the 5.56% yield of the IBC
First Tier-Institutional Only Money Funds average.* The 7-day current net yield
was 5.64% for the Fund as of December 31, 1997.
MARKET ACTIVITY
For the semi-annual period, the pace of economic growth remained above-trend and
inflation was low. Unemployment continued to fall, putting pressure on labor
costs, but productivity improvement was strong enough to more than offset the
rising costs. Against this exceptional backdrop, the money markets were rather
quiet, with yields remaining relatively stable and the money market yield curve
reasonably flat.
Investment Instruments
Commercial paper, certificates of deposit, floating rate notes and repurchase
agreements.
Once the Federal Reserve Board increased the Fed Funds rate from 5.25% to 5.50%
on March 25, 1997, inflationary pressures did not increase, signs pointed to a
slowing economy, and the Federal Reserve Board remained on hold throughout the
rest of the year. A high level of consumer confidence, strong employment gains
and rising incomes further helped support the low price volatility within the
money markets. During the fourth calendar quarter, developments in the Far East
overshadowed the ongoing favorable performance of the U.S. economy. However, to
date, there has been little evidence of any meaningful impact of the turmoil
abroad on domestic activity.
INVESTMENT REVIEW
After moving from a somewhat defensive, shorter-than-benchmark average maturity
position in the first calendar quarter to a more neutral stance in the portfolio
in the second quarter, we then maintained a neutral to shorter-than-benchmark
maturity throughout most of the Fund's semi-annual period. The Federal Reserve
Board was seemingly on hold, and we saw no benefit in extending maturity along a
flat yield curve. We did extend slightly at the end of the year to take
advantage of the higher year-end rates generated by the financial turmoil in
Asia. This strategy proved to be effective in producing highly competitive Fund
returns.
Objective
Seeks high levels of current income consistent with liquidity and preservation
of capital.
MANAGER OUTLOOK
As we enter 1998, the underlying fundamentals impacting the consumer--a tight
labor market, low inflation, low interest rates and strong economic growth--are
similar to those of most of 1997. Current data also supports the notion that the
Federal Reserve Board is on hold. However, the Asian crisis still looms, as the
delayed effect of the retrenchment in the region may still filter into the U.S.
Given this scenario, we expect the money market yield curve to remain flat.
Seeing no reason to extend at this time, we intend to maintain a
short-to-neutral average maturity for the near term.
Status at December 31, 1997
Seven day effective yield: 5.80%
Average maturity: 37 days
Net assets: $3,553 million
Diversification of Portfolio Investments
By Asset Type as of December 31, 1997
(percentages are based on amortized cost)
[pie chart here]
Other 1%
Floating Rate Notes 16%
Eurodollar Time Deposits 15%
European Certificates of Deposit 15%
Repurchase Agreements 2%
Yankee Certificates of Deposit 15%
Commercial Paper 36%
We will, of course, continue to closely observe economic conditions and how they
affect the financial markets, as we seek to provide high current income
consistent with liquidity and capital preservation.
We appreciate your support of the BT Institutional Daily Assets Fund and look
forward to continuing to serve your investment needs for many years ahead.
/s/ Darlene M. Rasel
--------------------
Darlene M. Rasel
Portfolio Manager of the
Daily Assets Portfolio
December 31, 1997
- ----------
* Past performance is not indicative of future results. Yields will vary.
Yields quoted for money market funds most closely reflect the fund's current
earnings. Although money market funds seek to maintain a share value of
$1.00, there is no guarantee that they will be able to do so. Mutual funds
are not bank deposits or obligations of any bank, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
3
<PAGE>
- --------------------------------------------------------------------------------
Institutional Daily Assets Fund
Schedule of Portfolio Investments December 31, 1997 (unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Description Value
- --------- ----------- -----
CERTIFICATES OF DEPOSIT - 0.85%
$30,000,000 J.P. Morgan, 5.80%, 6/22/98
(Amortized Cost $30,000,000) $ 30,000,000
--------------
COMMERCIAL PAPER - 36.47%*
Abbey National, PLC:
24,000,000 5.495%, 3/31/98 23,673,963
11,000,000 5.55%, 4/27/98 10,803,283
Asset Securitization Cooperative Corp.:
10,000,000 5.62%, 1/15/98 9,978,144
25,000,000 5.72%, 1/28/98 24,892,750
20,000,000 5.61%, 1/29/98 19,912,733
7,000,000 5.88%, 1/29/98 6,967,987
5,000,000 5.74%, 2/13/98 4,965,719
12,000,000 5.705%, 2/25/98 11,895,408
35,000,000 5.69%, 2/26/98 34,690,211
35,000,000 Bank of Austria, 5.72%, 3/17/98 34,582,917
Bank of Nova Scotia:
10,000,000 5.667%, 2/17/98 9,926,014
25,000,000 5.727%, 3/2/98 24,761,375
25,000,000 Bayer Corp., 5.78%, 2/18/98 24,807,333
BTR Dunlop:
27,000,000 5.71%, 1/30/98 26,875,808
5,000,000 5.52%, 2/3/98 4,974,700
10,000,000 5.69%, 2/17/98 9,925,714
20,000,000 5.68%, 2/26/98 19,823,289
13,000,000 Cafco, 5.75%, 2/13/98 12,910,715
17,000,000 Caisse Des Depot, 5.71%, 1/16/98 16,959,554
8,000,000 Caterpillar Financial, 5.52%, 1/21/98 7,975,467
10,000,000 Commonwealth Bank of Australia,
5.54%, 4/30/98 9,816,872
Daimler Benz North America Corp.:
30,000,000 5.51%, 1/20/98 29,912,758
20,000,000 5.54%, 2/23/98 19,836,878
15,000,000 5.72%, 3/24/98 14,804,567
Delaware Funding Corp.:
15,000,000 5.52%, 1/12/98 14,974,700
7,000,000 5.95%, 1/16/98 6,982,646
10,000,000 5.72%, 1/28/98 9,957,100
8,000,000 5.85%, 2/12/98 7,945,400
45,000,000 Ford Motor Credit Corp.,
5.60%, 1/16/98 44,895,000
Principal
Amount Description Value
- --------- ----------- -----
General Electric Capital Corp.:
$15,000,000 5.57%, 1/23/98 $ 14,948,942
15,000,000 5.54%, 1/30/98 14,933,058
20,000,000 5.61%, 2/6/98 19,887,800
23,000,000 5.70%, 2/18/98 22,825,200
5,000,000 5.73%, 2/27/98 4,954,638
15,000,000 5.71%, 4/17/98 14,747,808
5,000,000 5.57%, 5/5/98 4,904,072
12,000,000 Goldman Sachs, 5.72%, 3/16/98 11,858,907
10,000,000 Grand Metropolitan,
5.60%, 1/20/98 9,970,444
11,000,000 Hitachi America, 5.57%, 4/10/98 10,831,508
8,600,000 Kingdom of Sweden,
5.52%, 3/16/98 8,502,419
15,000,000 Kreditbank, 5.53%, 1/22/98 14,951,613
13,000,000 MCI Communications,
5.54%, 1/23/98 12,955,988
Merrill Lynch & Co., Inc.:
18,000,000 5.57%, 1/14/98 17,963,795
20,000,000 5.52%, 1/15/98 19,957,067
27,000,000 5.57%, 1/16/98 26,937,338
20,000,000 5.62%, 1/21/98 19,937,556
15,000,000 5.62%, 2/6/98 14,915,700
15,000,000 5.71%, 2/25/98 14,869,146
20,000,000 5.75%, 3/13/98 19,773,194
10,000,000 5.57%, 5/5/98 9,808,144
20,000,000 Morgan Guaranty, 5.69%, 4/15/98 19,671,244
Morgan Stanley Group, Inc.:
22,000,000 5.75%, 2/18/98 21,831,333
34,000,000 5.70%, 2/23/98 33,714,683
10,000,000 National Rural Utility Corp.,
5.692%, 4/21/98 9,826,078
18,000,000 Norwest, 5.72%, 2/27/98 17,836,980
10,500,000 National Australia, 5.71%, 1/21/98 10,466,692
Province of Quebec:
11,200,000 5.78%, 2/24/98 11,102,896
15,000,000 5.57%, 3/5/98 14,853,788
Rabobank:
10,000,000 5.56%,1/29/98 9,956,756
See Notes to Financial Statements on Page 11
4
<PAGE>
- --------------------------------------------------------------------------------
Institutional Daily Assets Fund
Schedule of Portfolio Investments December 31, 1997 (unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Description Value
- --------- ----------- -----
$16,000,000 5.54%, 4/30/98 $ 15,706,995
Receivables Capital Corp.:
5,000,000 5.92%, 1/5/98 4,996,711
17,000,000 5.98%, 1/23/98 16,937,874
18,000,000 5.93%,1/30/98 17,914,015
9,000,000 5.795%, 2/6/98 8,947,845
10,000,000 5.74%, 2/18/98 9,923,467
20,000,000 5.76%, 2/20/98 19,840,000
10,000,000 5.922%, 2/20/98 9,917,750
25,000,000 5.813%, 2/25/98 24,777,976
21,000,000 Repsol International Finance,
5.50%, 1/26/98 20,919,792
Riverwoods Funding:
13,000,000 5.55%, 1/14/98 12,973,946
19,000,000 5.56%, 1/14/98 18,961,852
22,000,000 SBC Comm, Inc., 6.70%, 1/2/98 21,995,905
20,000,000 Schering Plough, 5.70%, 4/21/98 19,651,667
50,000,000 Smith Barney, 5.62%, 2/17/98 49,633,139
Sony Capital Corp.:
10,000,000 5.88%, 1/30/98 9,952,633
8,000,000 5.85%, 2/4/98 7,955,800
17,000,000 5.90%, 2/12/98 16,882,983
4,000,000 5.93%, 2/23/98 3,965,079
9,000,000 Svenska Handelsbanke,
5.54%, 2/4/98 8,952,910
15,000,000 Westpac, 5.73%, 3/9/98 14,840,038
--------------
Total Commercial Paper
(Amortized Cost $1,295,772,169) 1,295,772,169
--------------
EURODOLLAR CERTIFICATES OF
DEPOSIT - 15.03%
Abbey National Bank:
50,000,000 5.76%, 2/17/98 49,999,918
33,000,000 5.77%, 2/27/98 32,996,828
ABN Amro:
23,000,000 5.88%, 1/9/98 22,999,893
25,000,000 5.78%, 1/21/98 25,000,137
Principal
Amount Description Value
- --------- ----------- -----
Banco Bilbao Vizcaya:
$30,000,000 5.80%, 1/14/98 $ 30,000,282
9,000,000 5.65%, 1/20/98 9,000,047
10,000,000 5.80%, 2/17/98 10,000,386
10,000,000 5.81%, 3/16/98 10,000,203
35,000,000 Banque National de Paris,
5.82%, 3/5/98 35,000,604
50,000,000 Bank of Nova Scotia, 7.00%, 1/2/98 50,000,000
14,000,000 Bank of Tokyo-Mitsubishi,
5.80%, 1/26/98 14,000,025
25,000,000 Barclays Bank, 5.66%, 2/12/98 25,000,000
5,000,000 Bayerische Hypotheker,
6.12%, 1/16/98 5,000,717
10,000,000 Bayerische Landesbank,
5.66%, 1/29/98 9,998,251
14,000,000 Bayerische Vereinbank,
5.67%, 2/23/98 13,999,982
Creditanstalt Bankverein:
5,000,000 5.67%, 1/5/98 5,000,006
31,000,000 5.64%, 1/7/98 31,000,019
35,000,000 5.66%, 1/7/98 35,000,254
International Nederlander Funding:
8,000,000 5.64%, 1/14/98 7,999,971
14,000,000 5.65%, 1/16/98 14,000,029
30,000,000 5.78%, 1/20/98 30,000,157
20,000,000 J.P. Morgan, 5.80%, 6/17/98 20,007,287
8,000,000 Kreditbank, 5.72%, 1/16/98 8,000,017
40,000,000 Rabobank, 5.675%, 2/12/98 39,995,623
--------------
Total Eurodollar Certificates of Deposit
(Amortized Cost $534,000,636) 534,000,636
--------------
EURODOLLAR TIME DEPOSIT - 15.62%
40,000,000 ABN Amro, 5.687%, 1/6/98 40,000,000
70,000,000 Banco Santander, 5.70%, 1/29/98 70,000,000
Bank Of Tokyo-Mitsubishi:
25,000,000 5.75%, 1/5/98 25,000,000
25,000,000 5.75%, 1/16/98 25,000,000
See Notes to Financial Statements on Page 11
5
<PAGE>
- --------------------------------------------------------------------------------
Institutional Daily Assets Fund
Schedule of Portfolio Investments December 31, 1997 (unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Description Value
- --------- ----------- -----
$25,000,000 Banque Indosuez, 5.63%, 1/7/98 $ 25,000,000
25,000,000 Banque National de Paris,
5.70%, 1/2/98 25,000,000
22,777,500 Canadian Imperial Bank,
6.75%, 1/2/98 22,777,500
25,000,000 Den Danske Bank, 5.73%, 1/27/98 25,000,000
International Nederlander Funding:
20,000,000 5.72%, 1/26/98 20,000,000
25,000,000 5.71%, 1/30/98 25,000,000
25,000,000 Nordeutsche, 5.781%, 3/27/98 25,000,000
102,227,326 Suntrust Bank Atlanta,
4.00%, 1/2/98 102,227,326
25,000,000 Svenska Handelsbanken,
5.687%, 1/30/98 25,000,000
100,000,000 Wachovia Bank, 5.50%, 1/2/98 100,000,000
--------------
Total Eurodollar Time Deposits
(Amortized Cost $555,004,826) 555,004,826
--------------
FLOATING RATE NOTES - 15.67%
ABN Amro:
15,000,000 Variable Rate Daily,
6.165%, 5/13/98 14,998,683
American Express:
Variable Rate Monthly,
10,000,000 5.97%, 5/12/98 10,000,000
25,000,000 5.94%, 9/15/98 25,000,000
Associates Corp.:
30,000,000 Variable Rate Daily,
5.55%, 1/4/99 29,985,355
Banc One Columbus:
25,000,000 Variable Rate Daily,
6.255%, 1/09/98 25,000,322
Bank One Dayton:
35,000,000 Variable Rate Weekly,
5.51%, 2/05/98 34,997,929
Bayerische Landesbank:
25,000,000 Variable Rate Monthly,
5.839%, 6/26/98 24,990,597
Principal
Amount Description Value
- --------- ----------- -----
Bear Stearns Co.:
$9,000,000 Variable Rate Monthly,
6.119%, 4/28/98 $ 9,004,521
Chase Manhattan:
5,000,000 Variable Rate Quarterly,
5.877%, 11/10/98 5,007,561
Comerica:
50,000,000 Variable Rate Daily,
6.125%, 3/06/98 49,994,068
Corestates Bank:
25,000,000 Variable Rate Monthly,
5.94%, 9/10/98 25,000,000
FNMA:
5,000,000 Variable Rate Daily,
5.59%, 1/15/98 4,999,906
General Electric Capital Corp.:
Variable Rate Quarterly,
10,000,000 5.649%, 1/05/98 10,000,000
18,000,000 5.82%, 1/23/98 18,000,000
Key Bank:
Variable Rate Daily,
15,000,000 6.14%, 1/21/98 14,999,526
25,000,000 6.15%, 3/05/98 24,997,913
20,000,000 Variable Rate Monthly,
5.855%, 3/19/98 19,996,901
Mellon Bank:
Variable Rate Quarterly,
15,000,000 5.846%, 6/16/98 15,000,000
20,000,000 5.795%, 11/17/98 20,000,000
Merrill Lynch & Co., Inc.:
25,000,000 Variable Rate Daily,
6.19%, 10/30/98 24,997,937
Morgan Guaranty:
35,000,000 Variable Rate Daily,
5.625%, 2/19/98 34,997,727
Morgan Stanley Group, Inc.:
20,000,000 Variable Rate Monthly,
5.96%, 1/30/98 20,000,000
10,000,000 Variable Rate Quarterly,
5.825%, 5/18/98 10,000,000
See Notes to Financial Statements on Page 11
6
<PAGE>
- --------------------------------------------------------------------------------
Institutional Daily Assets Fund
Schedule of Portfolio Investments December 31, 1997 (unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Description Value
- --------- ----------- -----
PNC Bank Corp.:
Variable Rate Monthly,
$15,000,000 5.869%, 5/27/98 $ 14,996,498
25,000,000 5.855%, 6/16/98 24,992,279
Societe Generale:
45,000,000 Variable Rate Daily,
6.16%, 1/15/98 44,999,319
--------------
Total Floating Rate Notes
(Amortized Cost $556,957,042) 556,957,042
--------------
MEDIUM-TERM NOTES - 0.42%
15,000,000 Bank of Scotland, 5.618%, 9/22/98
(Amortized Cost $14,995,798) 14,995,798
--------------
REPURCHASE AGREEMENTS - 2.11%
75,000,000 Tri-Party Repurchase Agreement
with Goldman Sachs, Dated
12/31/97, 6.80%, Principal &
Interest in the amount of
$75,028,333.33, Due 1/2/98,
(Collateralized by FGLMC, Par
Value of $75,812,682, Coupon
rates of 7.00% to 7.50%, Due
from 8/01/27 to 12/01/27,
Value of $76,500,000)
(Amortized Cost $75,000,000) 75,000,000
--------------
YANKEE CERTIFICATES OF DEPOSIT - 14.80%
20,000,000 ABN Amro Bank, 5.68%, 2/2/98 20,000,289
10,000,000 Bank National of Paris,
5.82%, 6/15/98 10,001,336
25,000,000 Bank of Scotland, 5.77%, 2/23/98 25,000,000
15,000,000 Bank of Tokyo-Mitsubishi,
6.23%, 4/2/98 15,000,000
10,000,000 Banque National de Paris,
5.65%, 1/16/98 10,000,092
Principal
Amount Description Value
- --------- ----------- -----
$40,000,000 Bayerische Hypotheker,
5.77%, 2/20/98 $ 40,000,000
25,000,000 Canadian Imperial, 5.79%, 4/22/98 25,000,000
Commerz Bank:
27,000,000 5.59%, 1/7/98 27,000,000
15,000,000 5.63%, 1/14/98 15,000,000
8,000,000 J.P. Morgan, 5.92%, 3/19/98 8,001,056
20,000,000 National Westminster,
5.76%, 1/20/98 20,000,000
15,000,000 Rabo Bank, 5.97%, 3/20/98 14,995,873
35,000,000 Sanwa Bank, 5.755%, 1/22/98 35,000,101
Societe Generale:
20,000,000 5.78%, 2/27/98 20,000,000
10,000,000 5.97%, 3/18/98 10,002,866
15,000,000 6.10%, 3/26/98 15,001,049
25,000,000 5.81%, 6/16/98 25,001,120
31,000,000 Svenska Handelsbanken,
5.81%, 3/2/98 31,000,462
Swiss Bank:
50,000,000 5.64%, 1/14/98 50,000,000
10,000,000 5.76%, 2/20/98 10,000,000
50,000,000 5.76%, 2/25/98 50,000,000
20,000,000 Westdeutsche Bank, 5.67%, 2/6/98 20,000,000
30,000,000 Westdeutsche Landbank,
6.25%, 1/9/98 30,000,000
--------------
Total Yankee Certificates of Deposit
(Amortized Cost $526,004,244) 526,004,244
--------------
Total Investments
(Amortized Cost $3,587,734,715) 100.97% $3,587,734,715
Liabilities in Excess of Other Assets (0.97)% (34,360,153)
------ --------------
Net Assets 100.00% $3,553,374,562
------ --------------
------ --------------
- ----------
*Interest rates represent discount rates at the time of purchase.
See Notes to Financial Statements on Page 11
7
<PAGE>
- --------------------------------------------------------------------------------
Institutional Daily Assets Fund
Statement of Assets and Liabilities December 31, 1997 (unaudited)
- --------------------------------------------------------------------------------
Assets
Investments, at Value $ 3,587,734,715
Cash (789)
Interest Receivable 18,375,290
Deferred Organizational Expenses 102,130
Prepaid Expenses 129,388
---------------
Total Assets 3,606,340,734
---------------
Liabilities
Payable for Securities Purchased 35,068,510
Due to Bankers Trust 367,118
Dividends Payable 17,456,174
Accrued Expenses 74,370
---------------
Total Liabilities 52,966,172
---------------
Net Assets $ 3,553,374,562
---------------
---------------
Shares Outstanding ($0.001 par value per share, unlimited
number of shares of beneficial interest authorized) 3,553,360,610
---------------
---------------
Net Asset Value, Offering and Redemption Price Per Share
(net assets divided by shares outstanding) $ 1.00
---------------
---------------
Composition of Net Assets
Paid-in Capital $ 3,553,360,610
Underdistributed Net Investment Income 6,781
Accumulated Net Realized Gain from Investment
Transactions 7,171
---------------
Net Assets, December 31, 1997 $ 3,553,374,562
---------------
---------------
- --------------------------------------------------------------------------------
Statement of Operations For the period ended December 31, 1997 (unaudited)
- --------------------------------------------------------------------------------
Investment Income
Interest Income $ 99,046,459
---------------
Expenses
Advisory Fees 1,735,303
Administration and Services Fees 347,061
Amortization of Organizational Expenses 13,309
Professional Fees 12,603
Printing and Shareholder Reports 5,192
Miscellaneous 4,801
Insurance 3,088
Trustees Fees 2,770
---------------
Total Expenses 2,124,127
Less: Expenses Absorbed by Bankers Trust (41,764)
---------------
Net Expenses 2,082,363
---------------
Net Investment Income 96,964,096
Realized Gain from Investment Transactions 7,171
---------------
Net Increase in Net Assets from Operations $ 96,971,267
---------------
---------------
See Notes to Financial Statements on Page 11
8
<PAGE>
- --------------------------------------------------------------------------------
Institutional Daily Assets Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
November 13, 1996
For the six (Commencement of
months ended Operations) to
December 31, 1997** June 30, 1997
------------------- -----------------
<S> <C>
Increase (Decrease) in Net Assets from:
Operations
Net Investment Income $ 96,964,096 $ 70,228,383
Net Realized Gain from Investment Transactions 7,171 6,780
-------------- ---------------
Net Increase in Net Assets from Operations 96,971,267 70,235,163
-------------- ---------------
Distributions to Shareholders
Net Investment Income (96,956,506) (70,235,972)
-------------- ---------------
Capital Transactions in Shares of Beneficial Interest (at net asset value of
$1.00 per share)
Proceeds from Sales of Shares 5,213,866,775 6,414,724,407
Cost of Shares Redeemed (4,408,563,245) (3,666,667,337)
-------------- ---------------
Net Increase from Capital Transactions in Shares of Beneficial Interest 805,303,530 2,748,057,070
-------------- ---------------
Total Increase in Net Assets 805,318,291 2,748,056,261
Net Assets
Beginning of Period 2,748,056,271 10
-------------- ---------------
End of Period (includes undistributed net investment income of $6,781 and
overdistributed net investment income of $809 for the periods ended
December 31, 1997 and June 30, 1997, respectively) $3,553,374,562 $ 2,748,057,080
-------------- ---------------
-------------- ---------------
</TABLE>
- ----------
**Unaudited.
See Notes to Financial Statements on Page 11
9
<PAGE>
- --------------------------------------------------------------------------------
Institutional Daily Assets Fund
Financial Highlights
- --------------------------------------------------------------------------------
Contained below are selected data for a share of beneficial interest
outstanding, total investment return, ratios to average net assets and other
supplemental data for the periods indicated for the Institutional Daily Assets
Fund.
<TABLE>
<CAPTION>
For the period
November 13, 1996
For the six (Commencement of
months ended Operations) to
December 31, 1997** June 30, 1997
------------------- -----------------
<S> <C>
Per Share Operating Performance:
Net Asset Value, Beginning of Period $ 1.00 $ 1.00
----------- -----------
Income from Investment Operations
Net Investment Income 0.06 0.03
Net Realized Gain from Investment Transactions 0.00+ 0.00+
----------- -----------
Total from Investment Operations 0.06 0.03
----------- -----------
Distributions to Shareholders
Net Investment Income (0.06) (0.03)
----------- -----------
Net Asset Value, End of Period $ 1.00 $ 1.00
----------- -----------
----------- -----------
Total Investment Return 2.85% 3.46%
Supplemental Data and Ratios:
Net Assets, End of Period (000s omitted) $ 3,553,375 $ 2,748,056
Ratios to Average Net Assets:
Net Investment Income* 5.59% 5.43%
Expenses* 0.12% 0.12%
Decrease Reflected in Above Expense Ratio Due
to Absorption of Expenses by Bankers Trust* 0.00++ 0.01%
</TABLE>
- ----------
* Annualized.
** Unaudited.
+ Less than $0.01 per share.
++ Less than 0.01% per share.
See Notes to Financial Statements on Page 11
10
<PAGE>
- --------------------------------------------------------------------------------
Institutional Daily Assets Fund
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
Note 1--Organization and Significant Accounting Policies
A. Organization
BT Institutional Funds (the "Trust") is registered under the Investment Company
Act of 1940 (the "Act"), as amended, as an open-end management investment
company. The Trust was organized on March 26, 1990, as an unincorporated
business trust under the laws of the Commonwealth of Massachusetts. The
Institutional Daily Assets Fund (the "Fund") is one of the institutional funds
offered to "accredited investors" as defined under the Securities Act of 1933
and institutional investors by the Trust. The Fund commenced operations and
began offering shares of beneficial interest on November 13, 1996. The
Declaration of Trust permits the Board of Trustees (the "Trustees") to issue
beneficial interests in the Fund. The following summarizes the significant
accounting policies of the Fund:
B. Security Valuation
Investments are valued at amortized cost, which is in accordance to rule 2A-7 of
the Investment Company Act of 1940 and represents the fair value of the Fund's
investments.
C. Security Transactions and Interest Income
Security transactions are accounted for on a trade date basis. Interest income
is recorded on the accrual basis and includes amortization of premium and
discount on investments. Realized gains and losses from securities transactions
are recorded on the indentified cost basis.
D. Organizational Expenses
Costs incurred by the Fund in connection with its organization and initial
registration are being amortized evenly over a five year period.
E. Dividends
It is the Fund's policy to declare dividends daily and pay monthly to
shareholders from net investment income. Dividends payable to shareholders are
recorded by the Fund on the ex-dividend date. Distributions of net realized
short-term and long-term capital gains, if any, earned by the Fund will be made
annually.
F. Repurchase Agreements
The Fund may enter into repurchase agreements with financial institutions deemed
to be creditworthy by the Fund's Investment Adviser, subject to the seller's
agreement to repurchase such securities at a mutually agreed upon price.
Securities purchased subject to repurchase agreements are deposited with the
Fund's custodian, and pursuant to the terms of the repurchase agreement must
have an aggregate market value greater than or equal to the repurchase price
plus all accrued interest at all times. If the value of the underlying
securities falls below the value of the repurchase price plus accrued interest,
the Fund will require the seller to deposit additional collateral by the next
business day. If the request for additional collateral is not met, or the seller
defaults on its repurchase obligation, the Fund maintains the right to sell the
underlying securities at market value and may claim any resulting loss against
the seller. However, in the event of default or bankruptcy by the seller,
realization and/or retention of the collateral may be subject to legal
proceedings.
G. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code and distribute its income to shareholders. Therefore, no federal income tax
provision is required.
H. Other
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts in the financial statements. Actual results could
differ from those estimates.
Note 2--Fees and Transactions with Affiliates
The Fund has entered into an Administration and Services Agreement with Bankers
Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Fund in return for a fee computed daily and paid
monthly at an annual rate of 0.02 of 1% of the Fund's average daily net assets.
For the period ended December 31, 1997, this fee aggregated $347,061.
The Fund has entered into an Advisory Agreement with Bankers Trust. Under this
Advisory Agreement, the Fund pays Bankers Trust an advisory fee computed daily
and paid monthly at an annual rate of 0.10 of 1% of average daily net assets.
For the period ended December 31, 1997, this fee aggregated $1,735,303.
The Trust has entered into a Distribution Agreement with Edgewood Services, Inc.
("Edgewood"). Under the Distribution Agreement with the Trust, pursuant to Rule
12b-1 of the 1940 Act, Edgewood may seek reimbursement at an annual rate not
exceeding 0.10 of 1% of the Fund's average daily net assets, for expenses
incurred in connection with any activities primarily intended to result in the
sale of the Fund's shares. For the year ended December 31, 1997, there were no
reimbursable expenses incurred under this agreement.
Bankers Trust has voluntarily undertaken to waive and reimburse expenses of the
Fund, to the extent necessary, to limit all expenses to 0.12 of 1% of the
average daily net assets of the Fund. For the year ended December 31, 1997,
expenses of the Fund have been reduced by $41,764.
Certain trustees and officers of the Fund are also directors, officers and
employees of Edgewood. None of the trustees so affiliated received compensation
for services as trustees of the Fund. Similarly, none of the Fund's officers
received compensation from the Fund.
11
<PAGE>
BT INSTITUTIONAL FUNDS
INSTITUTIONAL DAILY ASSETS FUND
Investment Advisor and Administrator of the Fund
BANKERS TRUST COMPANY
130 Liberty Street
New York, NY 10006
Distributor
EDGEWOOD SERVICES, INC.
Clearing Operations
P.O. Box 897
Pittsburgh, PA 15230-0897
Custodian and Transfer Agent
BANKERS TRUST COMPANY
130 Liberty Street
New York, NY 10006
Independent Accountants
COOPERS & LYBRAND L.L.P.
1100 Main Street, Suite 900
Kansas City, MO 64105
Counsel
WILLKIE FARR & GALLAGHER
153 East 53rd Street
New York, NY 10022
------------------
For information on how to invest, shareholder account
information and current price and yield information,
please contact your relationship manager or the BT
Mutual Fund Service Center at (800) 368-4031. This
report must be preceded or accompanied by the Fund's
current prospectus.
------------------
