o BT INSTITUTIONAL FUNDS o
INSTITUTIONAL
LIQUID ASSETS FUND
SEMI-ANNUAL REPORT
JUNE o 1998
<PAGE>
Institutional Liquid Assets Fund
Table of Contents
Letter to Shareholders 3
Institutional Liquid Assets Fund
Statement of Assets and Liabilities 4
Statement of Operations 4
Statements of Changes in Net Assets 5
Financial Highlights 6
Notes to Financial Statements 7
Liquid Assets Portfolio
Statement of Net Assets 8
Statement of Operations 13
Statements of Changes in Net Assets 14
Financial Highlights 14
Notes to Financial Statements 15
--------------
The Fund is not insured by the FDIC and is not a deposit,
obligation of or guaranteed by Bankers Trust Company. The
Fund is subject to investment risks, including possible
loss of principal amount invested.
--------------
2
<PAGE>
Institutional Liquid Assets Fund
Letter to Shareholders
We are pleased to present you with this semi-annual report for the Institutional
Liquid Assets Fund (the "Fund"), providing a detailed review of the market, the
Portfolio, and our outlook. Included are a complete financial summary of the
Fund's operations and a listing of the Portfolio's holdings.
MARKET ACTIVITY
Money markets were dominated by foreign activity rather than U.S. economic
factors or Federal Reserve Board policy in the first six months of 1998.
--------------
Objective
Seeks high level of current income to the extent consistent with liquidity and
preservation of capital.
--------------
o The hangover effects of the Asian financial crises, which began in Korea,
Indonesia, and Thailand, spread to China and Japan. This both focused the U.S.
markets on that region and also continued to support a flight to quality and,
in turn, a U.S. Treasury rally.
o Domestically, the manufacturing sector of the U.S. economy weakened due to the
impact of the Asian turmoil. However, the service sector, which currently
constitutes approximately two-thirds of the U.S. economy, was extremely
strong. The service sector was supported by a 21 year low in unemployment, by
the wealth effect of the stock market, by an improving real estate market, and
by a low interest rate environment. The bottom line--more disposable income
for consumers.
Overall, the money markets were rather quiet, with the yield curve reasonably
flat. A strong dollar, propelled by a deepening Asian crisis, served as a
positive backdrop for continued low inflation. A combination of low inflation
plus first quarter GDP growth of over 5% supported the markets' perception that
the Federal Reserve Board was on hold. It was. In turn, interest rates remained
relatively stable throughout the period, and price volatility within the money
markets was at an all-time low.
--------------
Investment Instruments
Bank obligations, commercial paper, U.S. treasury obligations and repurchase
agreements.
--------------
INVESTMENT REVIEW
By staying disciplined to the purchase of high quality instruments and actively
adjusting sector allocation as market conditions changed, we were able to
produce competitive yields in the Institutional Liquid Assets Fund.
ANNUALIZED 7 DAY ANNUALIZED 7 DAY
Periods ended June 30, 1998 CURRENT YIELD EFFECTIVE YIELD
- --------------------------------------------------------------------------------
Institutional Liquid
Assets Fund(1) 5.52% 5.67%
- --------------------------------------------------------------------------------
IBC First Tier-Institutional Only
Money Funds Average 5.31% 5.45%
We maintained a neutral, close-to-the benchmark weighted average maturity
position throughout most of the semi-annual period. This strategy was based on
the uncertainty surrounding the impact of the Asian financial turmoil on the
U.S. financial markets as well as on the Federal Reserve Board's decision to
keep interest rates on hold. Also, the flat yield curve gave us few
opportunities to extend maturities to increase yield. Instead, we sought to add
value by increasing the Fund's holdings in floating rate securities, which
proved to be effective in producing competitive Fund returns.
Diversification of Portfolio Investments
By Asset Type as of June 30, 1998
(percentages are based on market value)
[PIE CHART APPEARS HERE - PERCENTAGES BELOW]
Floating Rate Notes 14% Medium Term Notes 1%
Eurodollar Time Deposits 18% Repurchase Agreements 5%
Eurodollar Certificates of Deposit 13% Certificates of
Deposit 1%
Commercial Paper 42%
Yankee Certificates of Deposit 6%
MANAGER OUTLOOK
We believe the money markets should remain fairly positive throughout the second
half of the year for several reasons:
o The Asian crisis continues to loom and the U.S. dollar remains strong-a
positive backdrop for inflation to stay low.
o U.S. economic growth remains solid, the labor market tight, interest rates
stable and volatility low.
o While the Federal Reserve Board reinstituted its tightening bias earlier in
the year, it still seems likely that it will be on hold for a while.
o Japan is facing serious financial troubles, which could impact China and Latin
America in turn. Thus, we expect a continued flight to quality, with U.S.
Treasuries the major beneficiary.
--------------
Status at June 30, 1998
Seven day effective yield: 5.67%
Average maturity: 45 days
Net Assets: $3,786.5 million
--------------
We intend to maintain a relatively neutral average maturity for the near term.
At the same time, we will look to take advantage of any spike in yields or any
issue-specific attractive value opportunities to extend duration, given our
view of slower but still positive economic growth in the future.
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.
As always, we appreciate your ongoing support of the Institutional Liquid Assets
Fund, and we look forward to continuing to serve your investment needs for many
years ahead.
/s/ Darlene M. Rasel
____________________
Darlene M. Rasel
Portfolio Manager of the Liquid Assets Portfolio
June 30, 1998
- --------------
(1) Past performance is not indicative of future results. Yields will vary.
Yields quote 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 Liquid Assets Fund
Statement of Assets and Liabilities June 30, 1998 (unaudited)
<TABLE>
<S><C>
Assets
Investment in Liquid Assets Portfolio, at Value $ 3,801,440,255
Deferred Organizational Expenses 9,988
Prepaid Expenses 9,060
Due from Bankers Trust 390,411
---------------
Total Assets 3,801,849,714
---------------
Liabilities
Dividends Payable 15,247,358
Accrued Expenses 140,559
---------------
Total Liabilities 15,387,917
---------------
Net Assets $ 3,786,461,797
===============
Shares Outstanding ($0.001 par value per share, unlimited number of shares of beneficial interest authorized) 3,786,343,364
===============
Net Asset Value, Offering and Redemption Price Per Share (net assets divided by shares outstanding) $ 1.00
===============
Composition of Net Assets
Paid-in Capital $ 3,786,343,364
Undistributed Net Realized Gain from Investment Transactions 118,433
---------------
Net Assets, June 30, 1998 $ 3,786,461,797
===============
</TABLE>
Statement of Operations For the six month period ended June 30, 1998 (unaudited)
<TABLE>
<S><C>
Investment Income
Income Allocated from Liquid Assets Portfolio, net $ 88,020,263
-------------
Expenses
Administration and Services Fees 790,304
Registration Fees 538,090
Miscellaneous 5,390
Printing and Shareholder Reports 4,254
Professional Fees 2,278
Trustees Fees 493
-------------
Total Expenses 1,340,809
Less: Expenses Absorbed by Bankers Trust (550,730)
-------------
Net Expenses 790,079
-------------
Net Investment Income 87,230,184
-------------
Net Realized Gain from Investment Transactions 71,690
-------------
Net Increase in Net Assets from Operations $ 87,301,874
=============
</TABLE>
See Notes to Financial Statements on Page 7
4
<PAGE>
Institutional Liquid Assets Fund
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the For the
six months ended year ended
June 30, 1998(1) December 31, 1997
--------------- ---------------
<S><C>
Increase (Decrease) in Net Assets from:
Operations
Net Investment Income $ 87,230,184 $ 131,781,988
Net Realized Gain (Loss) from Investment Transactions 71,690 (11,644)
--------------- ---------------
Net Increase in Net Assets from Operations 87,301,874 131,770,344
--------------- ---------------
Distributions to Shareholders
Net Investment Income (87,230,184) (131,781,988)
--------------- ---------------
Capital Transactions in Shares of Beneficial Interest (at Net Asset Value of
$1.00 per share)
Proceeds from Sales of Shares 6,564,199,744 6,124,315,086
Cost of Shares Redeemed (6,094,624,319) (4,750,512,402)
--------------- ---------------
Net Increase from Capital Transactions in Shares of Beneficial Interest 469,575,425 1,373,802,684
--------------- ---------------
Total Increase in Net Assets 469,647,115 1,373,791,040
Net Assets
Beginning of Period 3,316,814,682 1,943,023,642
--------------- ---------------
End of Period $ 3,786,461,797 $ 3,316,814,682
=============== ===============
</TABLE>
- --------------
(1) Unaudited
See Notes to Financial Statements on Page 7
5
<PAGE>
Institutional Liquid Assets Fund
Financial Highlights
Contained below are selected data for a share outstanding, total investment
return, ratios to average net assets and other supplemental data for each of the
periods indicated for the Institutional Liquid Assets Fund.
<TABLE>
<CAPTION>
For the period
For the December 11, 1995
six months For the For the (Commencement of
ended year ended year ended Operations) to
June 30, 1998(1) December 31, 1997 December 31, 1996 December 31, 1995
---------------- ----------------- ----------------- -----------------
<S><C>
Per Share Operating Performance:
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ------------ ------------ ------------
Income from Investment Operations
Net Investment Income 0.03 0.05 0.05 0.00(2)
Net Realized Gain (Loss) from
Investment Transactions (0.00)(2) (0.00)(2) 0.00(2) 0.00(2)
----------- ------------ ------------ ------------
Total from Investment Operations 0.03 0.05 0.05 0.00(2)
----------- ------------ ------------ ------------
Distributions to Shareholders
Net Investment Income (0.03) (0.05) (0.05) (0.00)(2)
----------- ------------ ------------ ------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== ============ ============ ============
Total Investment Return 2.77% 5.63% 5.45% 5.88%
Supplemental Data and Ratios:
Net Assets, End of Period (000s omitted) $3,786,462 $ 3,316,815 $ 1,943,024 $ 1,477,401
Ratios to Average Net Assets:
Net Investment Income 5.51%(3) 5.48% 5.32% 5.50%(3)
Expenses, Including Expenses of
the Liquid Assets Portfolio 0.16%(3) 0.16% 0.04% 0.01%(3)
Decrease Reflected in Above
Expense Ratio Due to Absorption
of Expenses by Bankers Trust 0.13%(3) 0.09% 0.22% 0.97%(3)
</TABLE>
- --------------
(1) Unaudited
(2) Less than $0.01 per share
(3) Annualized
See Notes to Financial Statements on Page 7
6
<PAGE>
Institutional Liquid 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 Liquid Assets Fund (the "Fund") is one of the institutional funds
offered to investors by the Trust. The Fund commenced operations and began
offering shares of beneficial interest on December 11, 1995. The Fund invests
substantially all of its assets in the Liquid Assets Portfolio (the
"Portfolio"). The Portfolio is an open-end management investment company
registered under the Act. The Fund seeks to achieve its investment objective by
investing all of its investable assets in the Portfolio. The value of such
investment in the Portfolio reflects the Fund's proportionate interest in the
net assets of the Portfolio. At June 30, 1998, the Fund's investment was
approximately 100% of the Portfolio.
The financial statements of the Portfolio, including the Statement of Net
Assets, are contained elsewhere in this report.
B. Investment Income
The Fund earns income, net of expenses, daily on its investment in the
Portfolio. All of the net investment income and realized and unrealized gains
and losses from the security transactions of the portfolio are allocated pro
rata among the investors in the Portfolio at the time of such determination.
C. Organizational Expenses
Costs incurred by the Fund in connection with its organization and initial
registration are being amortized evenly over a five-year period.
D. 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.
E. 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.
F. Other
The Trust accounts separately for the assets, liabilities, and operations of the
Fund. Expenses directly attributable to the fund are charged to that Fund, while
expenses that are attributable to all of the Trust's funds are allocated among
them.
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 .05% of the Fund's average daily net assets. The
Fund was owed $390,411 in relation to waived fees and reimbursed expenses at
June 30, 1998, net of Administration and Service fees of $141,211.
On September 30, 1996, the Trust entered into a Distribution Agreement with
Edgewood Services ("Edgewood"). Under the Distribution Agreement with the Trust,
pursuant to Rule 12b-1 of the 1940 Act, Edgewood, and previously Signature, may
seek reimbursement at an annual rate not exceeding .10% 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 six-month
period ended June 30, 1998, there were no reimbursable expenses incurred under
this agreement. The fund does not intend to charge 12b-1 fees in the future.
Certain officers of the fund are also directors, officers and/or employees of
Edgewood. None of the officers so affiliated received compensation for services
as officers of the Fund.
Effective August 11, 1998, ICCDistributors, Inc. will replace Edgewood as
distributor of the Trust.
From January 1, 1996 to September 26, 1996, Bankers Trust had voluntarily
undertaken to waive all of its fees and reimburse all expenses of the Fund, and
of the Portfolio.
Bankers Trust has voluntarily undertaken to waive its fees and reimburse
expenses of the Fund, to the extent necessary, to limit all expenses to .05% of
the average daily net assets of the Fund, excluding expenses of the Portfolio
and .16 % of the average daily net assets of the Fund, including expenses of the
Portfolio. For the six-month period ended June 30, 1998, expenses of the Fund
have been reduced by $550,730.
The Institutional Liquid Assets Fund is a participant with other affiliated
entities in a revolving credit facility ("the revolver") and a discretionary
demand line of credit facility ("collectively the credit facilities") in the
amounts of $50,000,000 and $100,000,000, respectively. A commitment fee of .07%
per annum on the average daily amount of the available commitment is payable on
a quarterly basis and apportioned equally among all participants. Amounts
borrowed under the credit facilities will bear interest at a rate per annum
equal to the Federal Funds Rate plus .45%. No amounts were drawn down or
outstanding under the credit facilities as of and for the period ended June 30,
1998.
Note 3--Capital Loss Carryforward
At June 30, 1998, accumulated net realized capital loss carry-forward available
as a reduction against future net realized capital gains aggregated $461,081,
which will expire in 2002 and $17,779, which will expire in 2005.
7
<PAGE>
Liquid Assets Portfolio
Statement of Net Assets June 30, 1998 (unaudited)
Principal
Amount Security Value
------ -------- -----
CERTIFICATES OF DEPOSIT - .66%
NationsBank Corp.
$ 25,000,000 5.58%, 9/8/98
(Amortized Cost $25,000,254) $ 25,000,254
--------------
COMMERCIAL PAPER - 43.00% *
Asset Securitization Cooperative Corp.:
25,000,000 5.52%, 8/12/98 24,839,000
13,000,000 5.53%, 8/25/98 12,890,168
33,000,000 5.53%, 8/28/98 32,705,988
15,000,000 5.54%, 9/22/98 14,808,408
Bass Finance,
10,000,000 5.58%, 7/06/98 9,992,250
18,000,000 5.60%, 7/29/98 17,921,600
CAFCO:
25,000,000 5.53%, 7/9/98 24,969,278
14,000,000 5.53%, 7/24/98 13,950,537
10,000,000 5.61%, 7/30/98 9,954,808
7,000,000 5.51%, 8/07/98 6,960,359
11,000,000 5.50%, 8/12/98 10,929,417
20,000,000 5.52%, 8/14/98 19,865,067
27,000,000 5.52%, 9/9/98 26,710,200
20,000,000 5.52%, 9/25/98 19,736,267
4,000,000 Caterpillar Financial,
5.48%, 12/7/98 3,903,187
15,000,000 CIT Group,
5.51%, 9/22/98 14,809,446
15,000,000 Clorox,
5.50%, 9/11/98 14,835,000
Commonwealth Bank of Australia:
10,000,000 5.50%, 8/5/98 9,946,528
20,000,000 5.515%, 10/19/98 19,662,972
16,000,000 5.49%, 11/23/98 15,646,200
Credit Suisse:
10,000,000 5.51%, 9/17/98 9,880,617
Credito Italiano,
20,000,000 5.51%, 8/27/98 19,825,517
Daimler Benz North American:
25,000,000 5.5%, 7/15/98 24,946,528
14,000,000 5.5%, 8/28/98 13,875,944
Delaware Funding Corp.:
35,000,000 5.61%, 7/30/98 34,841,829
Principal
Amount Security Value
------ -------- -----
Diageo Capital:
$ 25,000,000 5.51%, 7/15/98 $ 24,946,431
5,000,000 5.47%, 9/02/98 4,952,138
20,000,000 5.5%, 9/14/98 19,770,833
10,000,000 5.51%, 9/29/98 9,862,250
Eksportfinans:
20,000,000 5.52%, 7/27/98 19,920,267
Finnish Export,
15,000,000 5.40%, 9/08/1998 14,844,750
Ford Motor Credit:
20,000,000 5.48%, 7/8/98 19,978,689
19,000,000 5.47%, 7/10/98 18,974,018
40,000,000 5.52%, 7/24/98 39,858,933
General Electric Capital Corp.:
16,000,000 5.51%, 7/24/98 15,943,676
25,000,000 5.43%, 9/4/98 24,754,896
8,000,000 5.51%, 9/11/98 7,911,840
27,000,000 5.51%, 10/07/98 26,595,750
12,000,000 5.5%, 10/8/98 11,818,500
7,000,000 5.5%, 10/19/98 6,882,361
15,000,000 5.49%, 11/20/98 14,675,175
General Motors Accept. Corp.,
4,500,000 5.80%, 7/9/98 4,494,200
20,000,000 5.51%, 8/24/98 19,834,700
15,000,000 Generale Bank,
5.49%, 12/3/98 14,645,438
9,900,000 Glaxo Wellcome,
5.48%, 7/8/98 9,889,451
Goldman Sachs:
30,000,000 5.52%, 8/26/98 29,742,400
8,000,000 5.5%, 10/14/98 7,871,667
5,000,000 H.J. Heinz,
5.75%, 7/13/98 4,990,417
Hitachi America Ltd.:
17,500,000 5.59%, 7/28/98 17,426,631
10,000,000 5.51%, 12/16/98 9,742,867
30,000,000 International Lease Finance,
5.51%, 09/25/98 29,605,117
6,700,000 KFW International Finance,
5.64%, 07/14/98 6,686,354
25,000,000 Lehman Brothers Inc.,
5.53%, 8/25/98 24,788,785
See Notes to Financial Statements on Page 15
8
<PAGE>
Liquid Assets Portfolio
Statement of Net Assets June 30, 1998 (unaudited)
Principal
Amount Security Value
------ -------- -----
Manitoba Hydro Electric:
$ 30,000,000 5.51%, 8/20/98 $ 29,770,417
9,255,000 5.506%, 8/27/98 9,174,316
Merrill Lynch & Co.:
25,000,000 5.52%, 7/15/98 24,946,333
10,000,000 5.5%, 7/27/98 9,960,278
10,000,000 5.51%, 8/3/98 9,949,492
20,000,000 5.53%, 9/11/98 19,778,800
7,000,000 5.52%, 10/16/98 6,885,153
40,000,000 Metropolitan Life,
5.54%, 9/9/98 39,569,111
Monsanto Co.:
6,000,000 5.505%, 9/16/98 5,929,353
10,000,000 5.505%, 9/18/98 9,879,196
Morgan Stanley Group, Inc.:
50,000,000 5.5%, 7/1/98 50,000,000
13,000,000 6.25%, 7/10/98 12,982,125
24,000,000 5.53%, 8/12/98 23,845,160
35,000,000 5.52%, 8/27/98 34,694,100
6,000,000 5.50%, 11/10/98 5,879,000
30,000,000 National Australia Funding,
5.5%, 8/3/98 29,848,750
35,000,000 Norwest,
5.55%, 8/14/98 34,762,583
Panasonic Finance:
11,216,000 5.54%, 9/4/98 11,103,809
15,000,000 5.51%, 10/20/98 14,745,163
5,000,000 5.52%, 11/03/98 4,904,167
23,000,000 Paribas Finance,
5.51%, 7/21/98 22,929,594
Province Of Quebec:
25,000,000 5.51%, 8/21/98 24,804,854
15,850,000 5.53%, 9/24/98 15,643,047
22,000,000 5.52%, 10/27/98 21,601,947
8,200,000 5.51%, 1/15/99 7,951,499
Receivables Capital Corporation:
20,000,000 5.61%, 7/10/98 19,971,950
15,716,000 5.531%, 7/17/98 15,677,367
25,000,000 5.59%, 7/29/98 24,891,306
10,000,000 5.55%, 8/21/98 9,921,375
25,000,000 5.53%, 8/26/98 24,784,944
Principal
Amount Security Value
------ -------- -----
Salomon Smith Barney:
$ 25,000,000 5.51%, 7/7/98 $ 24,977,042
12,000,000 5.355%, 7/8/98 11,987,505
25,000,000 5.50%, 7/9/98 24,969,444
10,000,000 5.54%, 8/20/98 9,923,050
17,000,000 5.53%, 9/15/98 16,801,534
10,000,000 5.52%, 10/7/98 9,849,733
22,000,000 Scotiabanc Inc.,
5.53%, 09/30/98 21,692,471
Smith Barney Shearson:
16,000,000 5.40%, 8/7/98 15,911,200
24,000,000 5.40%, 8/10/98 23,856,000
8,000,000 Westpac Capitol Corp.,
5.49%, 10/1/98 7,887,760
--------------
Total Commercial Paper
(Amortized Cost $1,634,456,577) 1,634,456,577
--------------
EURODOLLAR CERTIFICATE
OF DEPOSIT - 12.84%
Abbey National North American Corp.,
20,000,000 5.55%, 7/9/98 20,000,000
15,000,000 5.59%, 9/8/98 14,999,951
15,000,000 5.63%, 10/27/98 14,999,057
10,000,000 5.58%, 8/21/98 9,999,915
11,000,000 5.59%, 8/14/98 11,000,000
Bank Of Austria:
25,000,000 5.7813%, 8/27/98 25,000,000
23,000,000 5.78%, 11/18/98 23,000,000
Bank of Scotland:
31,000,000 5.64%, 12/29/98 31,001,109
50,000,000 5.59%, 09/25/98 50,000,000
25,000,000 Bank Of Tokyo-Mitsubishi,
5.7%, 7/6/98 25,000,000
9,000,000 Banque Bruxelles,
5.59%, 8/24/98 8,999,942
25,000,000 Banque Nationale de Paris,
5.61%, 7/31/98 25,000,510
10,000,000 Bayerische Vereinbank,
5.595%, 9/24/98 10,000,233
25,000,000 Canadian Imperial Bank of Commerce,
5.64%, 11/22/98 25,000,829
See Notes to Financial Statements on Page 15
9
<PAGE>
Liquid Assets Portfolio
Statement of Net Assets June 30, 1998 (unaudited)
Principal
Amount Security Value
------ -------- -----
$ 30,000,000 Creditanstalt Bankverein,
5.59%, 7/6/98 $ 30,000,041
15,000,000 Credito Italiano,
5.59%, 9/1/98 14,999,911
5,000,000 Creditanstalt Bankverein,
5.62%, 9/22/98 5,000,157
20,000,000 Halifax,
5.59%, 9/22/98 19,999,842
20,000,000 Kreditbank,
5.58%, 8/26/98 19,999,920
10,000,000 Mellon Bank,
5.59%, 9/30/98 10,000,000
10,000,000 NationsBank,
5.58%, 9/8/98 10,000,000
20,000,000 Nordeutsche Landesbank:
5.66%, 11/16/98 20,000,558
21,000,000 Rabobank,
5.57%, 7/16/98 21,000,042
6,000,000 Swiss Bank,
5.56%, 7/1/98 5,999,969
West Deutsche Landesbank
25,000,000 5.58%, 8/3/98 25,000,000
12,000,000 5.82%, 8/3/98 11,999,632
--------------
Total Eurodollar Certificate of Deposit
(Amortized Cost $488,001,618) 488,001,618
--------------
EURODOLLAR TIME DEPOSIT - 18.03%
25,000,000 Abbey National,
5.55%, 7/14/98 25,000,000
11,000,000 Bank Of America,
5.5312%, 7/13/98 11,000,000
163,854,811 Bank Of Montreal,
5.625%, 7/1/98 163,854,811
Bank Of Nova Scotia:
20,000,000 5.625%, 9/4/98 20,000,000
20,000,000 6.125%, 7/1/98 20,000,000
50,000,000 Bank Of Tokyo-Mitsubishi,
5.9375%, 7/14/98 50,000,000
Principal
Amount Security Value
------ -------- -----
$ 20,000,000 CC de France,
5.75%, 7/6/98 $ 20,000,000
30,000,000 Credit Agricole,
5.650%, 7/9/98 30,000,000
250,000,000 Deutsche Bank,
6.50%, 7/1/98 250,000,000
International Nederlander Funding:
30,000,000 5.75%, 7/1/98 30,000,000
40,000,000 5.625%, 7/6/98 40,000,000
10,000,000 Societe Generale,
5.57%, 7/1/98 10,000,000
15,544,680 Toronto Dominion Bank,
6.25%, 7/1/98 15,544,680
--------------
Total Eurodollar Time Deposit
(Amortized Cost $685,399,491) 685,399,491
--------------
FLOATING RATE NOTES - 14.25%
20,000,000 American Express Centurion Bank:
Monthly Variable Rate,
5.616%, 9/25/98 20,000,000
Associates Corp.:
Daily Variable Rate,
20,000,000 5.79%, 1/4/99 19,995,038
20,000,000 Bayonsche Hypotheka,
Monthly Variable Rate,
5.5045%, 5/28/99 19,985,705
25,000,000 Bear Stearns Companies, Inc.
Monthly Variable Rate,
5.627%, 6/4/99 25,000,000
20,000,000 Bayerische Landesbank:
Monthly Variable Rate,
5.526%, 2/25/99 19,992,414
5,000,000 Chase Manhattan Bank:
Quarterly Variable Rate,
5.7875%, 11/10/98 5,003,189
25,000,000 Comerica:
Monthly Variable Rate,
5.552%, 11/10/98 24,982,661
See Notes to Financial Statements on Page 15
10
<PAGE>
Liquid Assets Portfolio
Statement of Net Assets June 30, 1998 (unaudited)
Principal
Amount Security Value
------ -------- -----
$ 50,000,000 J.P. Morgan:
Monthly Variable Rate,
5.527%, 2/24/99 $ 49,976,112
30,000,000 Deutsche Bank,
Quarterly Variable Rate,
5.527%, 6/1/99 29,978,386
General Electric Capital Corp.:
Quarterly Variable Rate,
15,000,000 5.607%, 11/06/98 15,000,000
5,000,000 5.556%, 11/16/98 4,999,587
15,000,000 5.607%, 1/15/99 15,000,000
Nordeutsche Landesbank:
Monthly Variable Rate,
13,000,000 5.5562%, 2/2/99 12,996,287
20,000,000 5.5362%, 2/25/99 19,993,596
25,000,000 International Business Machines,
Monthly Variable Rate,
5.487%, 6/1/99 24,973,154
8,000,000 Dean Witter Discover
Monthly Variable Rate,
5.937%, 7/6/98 8,000,381
30,000,000 Morgan Stanley Group Inc.:
Monthly Variable Rate,
5.6162%, 11/6/98 30,000,000
Merrill Lynch & Co.:
Monthly Variable Rate,
5,000,000 5.606%, 4/13/99 4,999,608
30,000,000 5.606%, 2/16/99 30,000,000
25,000,000 KreditBank:
Quarterly Variable Rate,
5.537%, 6/1/99 24,984,239
10,000,000 Mellon Bank:
Quarterly Variable Rate,
5.7792%, 11/17/98 10,000,000
Societe Generale:
Monthly Variable Rate,
10,000,000 5.554%, 6/1/99 9,992,878
45,000,000 5.571%, 5/7/99 44,975,508
1,000,000 Student Loan Marketing Association:
Weekly Variable Rate,
5.321%, 8/28/98 999,929
Principal
Amount Security Value
------ -------- -----
$ 15,000,000 National City of Cleveland:
Monthly Variable Rate,
5.5462%, 3/5/99 $ 14,996,031
25,000,000 Svenska Handelsbanke:
Monthly Variable Rate,
5.547%, 6/1/99 24,984,239
15,000,000 Walt Disney Co.:
Quarterly Variable Rate,
5.5175%, 2/26/99 14,991,618
15,000,000 Westpac Capitol Corp.:
Quarterly Variable Rate,
5.544%, 4/9/99 14,994,321
--------------
Total Floating Rate Notes
(Amortized Cost $541,794,881) 541,794,881
--------------
MEDIUM-TERM NOTE - .39%
15,000,000 Bank of Scotland,
5.587%, 09/22/98
(Amortized Cost $14,998,679) 14,998,679
--------------
REPURCHASE AGREEMENTS - 5.26%
100,000,000 Tri-Party Repurchase
Agreement with
Goldman Sachs & Co.,
Dated 6/30/98, 6.25%,
Principal & Interest in the
amount of $100,017,361,
Due 7/1/98, (Collateralized
by Fannie Mae Bonds, Par
Value of $480,142,355,
Coupon rates of 7%,
Due 8/1/26,
Value of $103,000,000) 100,000,000
100,000,000 Tri-Party Repurchase
Agreement with
Morgan Stanley & Co.,
Dated 6/30/98, 6.20%,
Principal & Interest in the
amount of $100,017,222,
Due 7/1/98, (Collateralized
by Freddie Mac Bonds, Par
Value of $264,180,192,
Coupon rates of 6.167% to 7.8150%,
Due from 10/1/23 to 6/1/30,
Value of $102,687,801) 100,000,000
--------------
Total Repurchase Agreements
(Amortized Cost $200,000,000) 200,000,000
--------------
See Notes to Financial Statements on Page 15
11
<PAGE>
Liquid Assets Portfolio
Statement of Net Assets June 30, 1998 (unaudited)
Principal
Amount Security Value
------ -------- -----
YANKEE CERTIFICATES OF
DEPOSIT - 6.73%
$ 11,000,000 Bank Of Montreal,
5.59%, 8/4/98 $ 10,999,976
Banque Nationale de Paris:
10,000,000 5.59%, 9/23/98 10,000,000
19,000,000 5.58%, 10/5/98 19,001,149
14,000,000 5.58%, 9/11/98 13,999,436
10,000,000 5.65%, 02/26/99 9,988,426
Bank of Scotland,
7,000,000 5.59%, 8/4/98 6,999,975
Bank of Tokyo-Mitsubishi,
32,000,000 5.73%, 8/10/98 32,000,000
Deutsche Bank,
35,000,000 5.58%, 7/28/98 35,000,000
Banque Paribas:
25,000,000 5.59%, 9/24/98 25,000,000
10,000,000 Royal Bank Of Canada,
5.56%, 2/26/99 9,996,846
25,000,000 Societe Generale Bank,
5.89%, 7/16/98 25,000,260
30,000,000 Svenska Handels,
5.59%, 9/24/98 30,000,000
10,000,000 Swiss Bank,
5.75%, 5/7/99 9,998,351
18,000,000 Toronto Dominion Bank,
5.58%, 9/25/98 17,998,967
--------------
Total Yankee Certificates of Deposit
(Amortized Cost $255,983,386) 255,983,386
--------------
Principal
Amount Security Value
------ -------- -----
Total Investments
(Amortized Cost $3,845,634,886) 101.16% $3,845,634,886
Liabililties in Excess of Other Assets (1.16)% (44,194,514)
------- --------------
Net Assets 100.00% $3,801,440,372
======= ==============
- --------------
* Interest rates for Commercial paper represent discount rates at the time of
purchase.
See Notes to Financial Statements on Page 15
12
<PAGE>
Liquid Assets Portfolio
Statement of Operations For the six month period ended June 30, 1998 (unaudited)
<TABLE>
<S><C>
Investment Income
Interest $ 89,769,534
-------------
Expenses
Advisory Fees 2,385,768
Administration and Services Fees 795,318
Professional Fees 12,355
Miscellaneous 1,464
Trustees Fees 994
-------------
Total Expenses 3,195,899
Less: Expenses Absorbed by Bankers Trust (1,446,581)
-------------
Net Expenses 1,749,318
-------------
Net Investment Income 88,020,216
Net Realized Gain from Investment Transactions 71,690
-------------
Net Increase in Net Assets from Operations $ 88,091,906
=============
</TABLE>
See Notes to Financial Statements on Page 15
13
<PAGE>
Liquid Assets Portfolio
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the For the
six months ended year ended
June 30, 1998* December 31, 1997
--------------- ---------------
<S><C>
Increase (Decrease) in Net Assets from:
Operations
Net Investment Income $ 88,020,216 $ 132,984,270
Net Realized Gain (Loss) from Investment Transactions 71,690 (11,644)
--------------- ---------------
Net Increase in Net Assets from Operations 88,091,906 132,972,626
--------------- ---------------
Capital Transactions
Proceeds from Capital Invested 6,564,199,744 5,800,519,569
Value of Capital Withdrawn (6,182,210,960) (4,554,217,994)
--------------- ---------------
Net Increase in Net Assets from Capital Transactions 381,988,784 1,246,301,575
--------------- ---------------
Total Increase in Net Assets 470,080,690 1,379,274,201
Net Assets
Beginning of Period 3,331,359,682 1,952,085,481
--------------- ---------------
End of Period $ 3,801,440,372 $ 3,331,359,682
=============== ===============
</TABLE>
- --------------
*Unaudited
Financial Highlights
Contained below are selected ratios and supplemental data for each of the
periods indicated for the Liquid Assets Portfolio.
<TABLE>
<CAPTION>
For the period
For the six For the years ended June 7, 1993
months ended December 31, (Commencement of
June 30, ---------------------------------------------------- Operations) to
1998(1) 1997 1996 1995(2) 1994 December 31, 1993
-------------- ----------- ----------- ---------- ------- -----------------
<S><C>
Supplemental Data and Ratios:
Net Assets, End of Period
(000s omitted) $3,801,440 $ 3,331,360 $ 1,952,085 $ 1,481,589 $ 13,404 $ 8,137
Ratios to Average Net Assets:
Net Investment Income 5.55%(3) 5.52% 5.32% 7.28%(3) 4.28% 3.12%(3)
Expenses 0.11%(3) 0.11% 0.03% 0.01%(3) 0.10% 0.10%(3)
Decrease Reflected in Above
Expense Ratio Due to
Absorption of Expenses by
Bankers Trust 0.09%(3) 0.09% 0.17% 0.28%(3) 0.30% 0.57%(3)
</TABLE>
- --------------
(1) Unaudited
(2) For the periods January 1, 1995 to September 14, 1995 and December 11, 1995
to December 31, 1995 (see Note 1A).
(3) Annualized.
See Notes to Financial Statements on Page 15
14
<PAGE>
Liquid Assets Portfolio
Notes to Financial Statements (unaudited)
Note 1--Organization and Significant Accounting Policies
A. Organization
The Liquid Assets Portfolio (the "Portfolio") is registered under the investment
Company Act of 1940 (the "Act"), as amended, as an open-end management
investment company. The Portfolio commenced operations on June 7, 1993, as an
unincorporated trust under the laws of New York. The Declaration of Trust
permits the Board of Trustees (the "Trustees") to issue beneficial interests in
the Portfolio.
On September 15, 1995, the Portfolio temporarily suspended its operations due
to a withdrawal of investments by BT Investment Liquid Assets Fund. On
December 11, 1995, the Portfolio resumed its operations as a result of an
investment made by the Institutional Liquid Assets Fund.
B. Security Valuation
Investments are valued at amortized cost, which is in accordance with Rule 2a-7
of the Investment Company Act of 1940 and represents fair value of the
Portfolio's investments.
C. Security Transactions and Interest Income
Security transactions are accounted for on a trade data 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 identified cost basis.
All of the net investment income and realized and unrealized gains and losses
from the security transactions of the Portfolio are allocated pro rata among the
investors in the Portfolio at the time of such determination.
D. Repurchase Agreements
The Portfolio may enter into repurchase agreements with financial institutions
deemed to be creditworthy by the Portfolio's Investment Advisor, subject to the
seller's agreement to repurchase and the Portfolio's agreement to resell such
securities at a mutually agreed upon price. Securities purchased subject to
repurchase agreements are deposited with the Portfolio'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 request for additional collateral is not met, or the seller
defaults on its repurchase obligation, the Portfolio 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.
E. Federal Income Taxes
It is the Portfolio's policy to comply with the requirements of the Internal
Revenue Code. Therefore, no federal income tax provision is required.
F. 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 Portfolio 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 Portfolio in return for a fee computed daily and
paid monthly at an annual rate of .05% of the Portfolio's average daily net
assets. At June 30, 1998, amounts owed under the Administration and Services
Agreement amounted to $77,072, net of waived fees of $64,159.
The Portfolio has entered into an Advisory Agreement with Bankers Trust. Under
this Advisory Agreement, the Portfolio pays Bankers Trust an advisory fee
computed daily and paid monthly at an annual rate of .15% of the Portfolio's
average daily net assets. Amounts owed under the Advisory Agreement amounted to
$231,216 at June 30, 1998, net of waived fees of $192,477.
From January 1, 1996 to September 26, 1996, Bankers Trust had voluntarily
undertook to waive all of its fees and reimburse all expenses of the Fund, and
the Portfolio.
Bankers Trust has voluntarily undertaken to waive its fees and reimburse
expenses of the Portfolio, to the extent necessary, to limit all expenses to
.11% of the average daily net assets. For the six-month period ended June 30,
1998, expenses of the Fund have been reduced by $1,446,581.
The Liquid Assets Portfolio is a participant with other affiliated entities in a
revolving credit facility ("the revolver") and a discretionary demand line of
credit facility ("collectively the credit facilities") in the amounts of
$50,000,000 and $100,000,000, respectively. A commitment fee of .07% per annum
on the average daily amount of the available commitment is payable on a
quarterly basis and apportioned equally among all participants. Amounts borrowed
under the credit facilities will bear interest at a rate per annum equal to the
Federal Funds Rate plus .45%. No amounts were drawn down or outstanding under
the credit facilities as of and for the period ended June 30, 1998.
Certain officers of the Portfolio are also directors, officers and/or employees
of Edgewood Services, Inc., distributor of BT Institutional Funds. None of the
officers so affiliated received compensation for services as officers of the
Portfolio.
Effective August 11, 1998, ICCDistributors, Inc. will replace Edgewood as
distributor of the Trust.
Note 3--Net Assets
At June 30, 1998 net assets consisted of:
Paid-in-Capital $3,801,440,372
==============
In addition, the amount owed for securities purchased at June 30, 1998 amounted
to $658,185,177.
15
<PAGE>
BT INSTITUTIONAL FUNDS
INSTITUTIONAL LIQUID ASSETS FUND
Investment Advisor and Administrator of the Fund
BANKERS TRUST COMPANY
130 Liberty Street
New York, NY 10006
Distributor
ICC DISTRIBUTORS, INC.
P.O. Box 7558
Portland, ME 04112-9892
Custodian and Transfer Agent
BANKERS TRUST COMPANY
130 Liberty Street
New York, NY 10006
Independent Accountants
PRICEWATERHOUSECOOPERS LLP
250 West Pratt Street
Baltimore, MD 21201
Counsel
WILLKIE FARR & GALLAGHER
787 7th Avenue
New York, NY 10019
--------------
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 a current prospectus for the Fund.
--------------
Cusip #055924864
STA492100 (6/98)
