BT INSTITUTIONAL FUNDS, POS AMI, 1999-10-28

BT INSTITUTIONAL FUNDS
POS AMI, 1999-10-28

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<PAGE>

1940 Act File No. 811-6071

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Post-Effective Amendment No.------- ........................

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
-

Amendment No. 38 ................................... X
------- -

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

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

(410) 895-5000
(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)

EXPLANATORY NOTE: This Registration Statement has been filed by BT Institutional
Funds (the "Registrant") pursuant to Section 8(b) of the Investment Company Act
of 1940, as amended. However, shares of beneficial interest of Daily Assets Fund
(the "Fund"), a series of the Registrant, are not being registered under the
Securities Act of 1933 (the "1933 Act") since such shares will be issued by the
Registrant solely in private placement transactions which do not involve any
"public offering" within the meaning of Section 4(2) of the 1933 Act. Shares of
the Fund may only be purchased by "accredited investors," as that term is
defined in Rule 501(a) of Regulation D under the Securities Act. This
Registration Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any shares of beneficial interest of the Fund.
<PAGE>

CONFIDENTIAL PRIVATE OFFERING MEMORANDUM: OCTOBER 28, 1999
Do Not Copy or Circulate

Prospective
Investor____________ Copy #_________

[LOGO OF BT Mutual Funds]

Institutional
Daily Assets Fund

With the goal of achieving
a high level of current
income consistent with
liquidity and the
preservation of capital

TRUST: BT INSTITUTIONAL FUNDS

INVESTMENT ADVISER: BANKERS TRUST COMPANY

[The securities described in this memorandum are offered
pursuant to an exemption from the registration
requirements of the Securities Act of 1933, as amended,
and have not been registered with the Securities and
Exchange Commission. 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 memorandum. Any
representation to the contrary is a criminal offense.]

NO RESALE OF SHARES MAY BE MADE UNLESS THE SHARES ARE
SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OR AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS
CONFIDENTIAL PRIVATE OFFERING MEMORANDUM HAS BEEN PREPARED
ON A CONFIDENTIAL BASIS SOLELY FOR THE INFORMATION OF THE
RECIPIENT AND MAY NOT BE REPRODUCED, PROVIDED TO OTHERS OR
USED FOR ANY OTHER PURPOSE.

NO PERSON HAS BEEN AUTHORIZED TO MAKE REPRESENTATIONS OR
GIVE ANY INFORMATION WITH RESPECT TO THE SHARES, EXCEPT
THE INFORMATION CONTAINED HEREIN OR IN THE TRUST'S
REGISTRATION STATEMENT FILED UNDER THE INVESTMENT COMPANY
ACT.

FOR FLORIDA INVESTORS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
FLORIDA SECURITIES AND INVESTOR PROTECTION ACT. IF SALES
ARE MADE TO FIVE (5) OR MORE INVESTORS IN FLORIDA, ANY
FLORIDA INVESTOR MAY, AT THE INVESTOR'S OPTION, VOID ANY
PURCHASE HEREUNDER WITHIN A PERIOD OF THREE (3) DAYS AFTER
THE INVESTOR (A) FIRST TENDERS OR PAYS TO THE ISSUER, AN
AGENT OF THE ISSUER OR AN ESCROW AGENT THE
<PAGE>

CONSIDERATION REQUIRED HEREUNDER OR (B) DELIVERS ITS EXECUTED SUBSCRIPTION
AGREEMENT, WHICHEVER OCCURS LATER. TO ACCOMPLISH THIS, IT IS SUFFICIENT FOR A
FLORIDA INVESTOR TO SEND A LETTER OR TELEGRAM TO THE ISSUER WITHIN SUCH THREE
(3) DAY PERIOD, STATING THAT THE INVESTOR IS VOIDING AND RESCINDING THE
PURCHASE. IF AN INVESTOR SENDS A LETTER, IT IS PRUDENT TO DO SO BY CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO INSURE THAT THE LETTER IS RECEIVED AND TO
EVIDENCE THE TIME OF MAILING.

FOR GEORGIA INVESTORS
THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13) OF
CODE SECTION 10-5-9 OF THE GEORGIA SECURITIES ACT OF 1973, AND MAY NOT BE SOLD
OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR
PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT.

FOR NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE
HAS BEEN FILED WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS
EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE
CONSTITUTES A FINDING BY THE ATTORNEY GENERAL OR THE SECRETARY OF STATE THAT
ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING.
NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE
FOR A SECURITY OR TRANSACTION MEANS THAT THE ATTORNEY GENERAL HAS PASSED IN
ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL
TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO
BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT, ANY REPRESENTATION
INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

2
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<PAGE>

Overview

of the Institutional Daily Assets Fund

-- --
Goal: The Fund seeks a high level of current income
consistent with liquidity and the preservation of capital.

Core Strategy: The Fund invests in high quality money
market instruments.

-- --

INVESTMENT POLICIES AND STRATEGIES
The Fund seeks its objective by investing in high quality money market
instruments, maintaining a dollar-weighted average maturity of 90 days or
less. The Fund attempts to maintain a stable share price by investing in
securities that are valued in U.S. dollars, have remaining maturities of 397
days or less and are of the highest quality. The Fund invests more than 25% of
its total assets in banks and other financial institutions.

Institutional Daily Assets Fund

Overview of the Institutional Daily Assets Fund

<TABLE>
<S> <C>
3 Goal

3 Core Strategy

3 Investment Policies and Strategies

4 Principal Risks of Investing in the Fund

4 Who Should Consider Investing in the Fund

5 Annual Fund Operating Expenses

A Detailed Look at the Institutional
Daily Assets Fund

6 Objective

6 Strategy

6 Principal Investments

6 Risks

7 Management of the Fund

8 Calculating the Fund's Share Price

9 Dividends and Distributions

9 Tax Considerations

9 Buying and Selling Fund Shares

10 Financial Highlights
</TABLE>

3
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<PAGE>

Overview of the Institutional Daily Assets Fund

PRINCIPAL RISKS OF INVESTING IN THE FUND
Although the Fund seeks to preserve the value of your investment at $1.00 a
share, there are risks associated with investing in the Fund. For example:
. A rise in interest rates could cause the bond market and individual
securities in the Fund's portfolio to decline in value.
. An issuer's creditworthiness could decline, which in turn may cause the value
of a security in the Fund's portfolio to decline.
. Changes in interest rates or economic downturns could have a negative effect
on issuers in the financial services industry.

WHO SHOULD CONSIDER INVESTING IN THE FUND
Shares of the Fund are being offered for investment only to investors who
qualify as both:
. Accredited investors as defined under Regulation D of the Securities Act of
1933, as amended, and
. institutional investors.

Shares of the Fund are not being offered to individuals or to entities
organized for the purpose of investing on behalf of individuals. Investors
will be required to represent that they meet certain financial requirements
and that they are familiar with and understand the terms, risks and merits of
an investment in the Fund.

You should consider investing in the Fund if you are looking for a cash
management vehicle that offers income approximating money market rates and
preserves the value of your capital. A majority of the Fund's investors use
the Fund to invest cash collateral received in connection with securities
lending transactions as part of their participation in Bankers Trust's
securities lending program.

You should not consider investing in the Institutional Daily Assets Fund if
you seek long-term capital growth. Although it provides a convenient means of
diversifying short-term investments, the Fund by itself does not constitute a
balanced investment program.

An investment in the Institutional Daily Assets Fund is not a deposit of
Bankers Trust Company or any other bank, and is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.

4
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<PAGE>

Overview of the Institutional Daily Assets Fund

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 Daily Assets
Fund.

Expense Example. The example below illustrates the expenses you would have
incurred on a $10,000 investment in the Fund. The numbers assume that the Fund
earned an annual return of 5% over the periods shown, that the Fund's operating
expenses remained the same, and that you redeem 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/ Bankers Trust Company has agreed, for the 16-month period from the Fund's
fiscal year end of June 30, 1999, to waive its fees and reimburse expenses
so that total expenses will not exceed 0.12%.
/2/ For the first 16 months, the expense example takes into account fee waivers
and reimbursements.
Annual Fees and Expenses

<TABLE>
<CAPTION>
Percentage of Average
Daily Net Assets
- -----------------------------------------------------------------
<S> <C>
Management Fees 0.10%
- -----------------------------------------------------------------
Distribution and Service (12b-1) Fees None
- -----------------------------------------------------------------
Other Fund Operating Expenses 0.022%
- -----------------------------------------------------------------
Total Fund Operating Expenses 0.122%
- -----------------------------------------------------------------
Less: Fee Waivers or Expense Reimbursement (0.002)%/1/
- -----------------------------------------------------------------
Net Expenses 0.12%
- -----------------------------------------------------------------
</TABLE>

- -- --

Expense Example/2/

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
---------------------------------------------------------------
<S> <C> <C> <C>
$12 $39 $69 $156
</TABLE>

- -- --

5
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<PAGE>

A detailed look

at the Institutional Daily Assets Fund

OBJECTIVE
The Institutional Daily Assets Fund seeks a high level of current income
consistent with liquidity and the preservation of capital by investing in high
quality short-term money market instruments.

While we give priority to earning income and maintaining the value of the
Fund's principal at $1.00 per share, all money market instruments, including
U.S. government obligations, can change in value when interest rates change or
an issuer's creditworthiness changes.

The Fund's objective is not a fundamental policy. We must notify shareholders
before we can change it, but we do not require their approval to do so.

STRATEGY
The Fund seeks current income by investing in high quality money market
securities and maintains a dollar-weighted average maturity of 90 days or
less. The Fund follows two policies designed to maintain a stable share price.

Generally, Fund securities are valued in U.S. dollars and have remaining
maturities of 397 days (about 13 months) or less at the time of purchase. The
Fund may also invest in securities that have features that reduce their
maturities to 397 days or less at the time of purchase.

The Fund buys U.S. government debt obligations, money market instruments and
other debt obligations that at the time of purchase:
. have received the highest short-term rating from two nationally recognized
statistical rating organizations;
. have received the highest short-term rating from one rating organization (if
only one organization rates the security);
. are unrated, but are determined to be of similar quality by the Fund's
Investment Adviser; or
. have no short-term rating, but are rated in one of the top three highest
long-term rating categories, or are determined to be of similar quality by the
Fund's Investment Adviser.

PRINCIPAL INVESTMENTS
The Fund may invest in high-quality, short-term, dollar-denominated money
market instruments paying a fixed, variable or floating interest rate. These
include:
. Debt obligations issued by U.S. and foreign banks, financial institutions,
corporations or other entities, including certificates of deposit, euro-time
deposits, commercial paper (including asset-backed commercial paper), notes,
funding agreements and U.S. government securities. Securities that do not
satisfy the maturity restrictions for a money market fund may be specifically
structured so that they are eligible investments for money market funds. For
example, some securities have features, which have the effect of shortening
the security's maturity.
. U.S. government securities that are issued or guaranteed by the U.S.
Treasury, or by agencies or instrumentalities of the U.S. Government.
. Repurchase agreements, which are agreements to buy securities at one price,
with a simultaneous agreement to sell back the securities at a future date at
an agreed-upon price.
. Asset-backed securities, which are generally participations in a pool of
assets whose payment is derived from the payments generated by the underlying
assets. Payments on the asset-backed security generally consist of interest
and/or principal.

Because many of the Fund's principal investments are issued or credit-enhanced
by banks or other financial institutions, the Fund may invest more that 25% of
its total assets in the financial services industry.

RISKS
Below we set forth some of the prominent risks associated with money market
mutual funds. 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. If a security no longer meets the Fund's requirements, we will
attempt to sell that security within a reasonable time, unless selling the
security would not be in the Fund's best interest.

Primary Risks

Interest Rate Risk. Money market instruments, like all debt securities, face
the risk that the securities will decline in value because of changes in
interest rates. Generally, investments subject to interest rate risk will
decrease in value when interest rates rise and increase when interest rates
decline. To minimize such price fluctuations, the Fund adheres to the
following practices:

6
--
<PAGE>

A Detailed Look at the Institutional Daily Assets Fund

. We limit the dollar-weighted average maturity of the securities held by the
Fund to 90 days or less. Generally, rates of short-term investments fluctuate
less than longer-term bonds.
. We primarily buy securities with remaining maturities of 13 months or less.
This reduces the risk that the issuer's creditworthiness will change, or that
the issuer will default on the principal and interest payments of the
obligation.

Credit Risk. A money market instrument's credit quality depends on the
issuer's ability to pay interest on the security and repay the debt: the lower
the credit rating, the greater the risk that the security's issuer will
default, or fail to meet its payment obligations. The credit risk of a
security may also depend on the credit quality of any bank or financial
institution that provides credit enhancement for it. The Fund only buys high
quality securities with minimal credit risk.

Market Risk. Although individual securities may outperform their market, the
entire market may decline as a result of rising interest rates, regulatory
developments or deteriorating economic conditions.

Security Selection Risk. While the Fund invests in short-term securities,
which by nature are relatively stable investments, the risk remains that the
securities we have selected will not perform as expected. This, in turn, could
cause the Fund's returns to lag behind those of similar money market funds.

Repurchase Agreement Risk. A repurchase agreement exposes the Fund to the risk
that the party that sells the securities defaults on its obligation to
repurchase them. In this circumstance, the Fund can lose money because:
. it cannot sell the securities at the agreed-upon time and price; or
. the securities lose value before they can be sold.

The Fund seeks to reduce this risk by monitoring, under the supervision of its
Investment Adviser, the creditworthiness of the sellers with whom it enters
into repurchase agreements. The Fund also monitors the value of the securities
to ensure that they are at least equal to the total amount of the repurchase
obligations, including interest and accrued interest.

Concentration Risk. Because the Fund may invest more than 25% of its total
assets in the financial services industry, it may be vulnerable to setbacks in
that industry. Banks and other financial service companies are highly
dependent on short-term interest rates and can be adversely affected by
downturns in the U.S. and foreign economies or changes in banking regulations.

Prepayment Risk. When a bond issuer, such as an issuer of asset-backed
securities, retains the right to pay off a high yielding bond before it comes
due, the Fund may have no choice but to reinvest the proceeds at lower
interest rates. Thus, prepayment may reduce the Fund's income. It may also
create a capital gains tax liability, because bond issuers usually pay a
premium for the right to pay off bonds early.

Secondary Risk

Year 2000 Risk. As with most businesses, the Fund faces the risk that the
computer systems of its Investment Adviser and other companies on which it
relies for service or issuers in which it invests will not accommodate the
changeover necessary from dates in the year 1999 to dates in the year 2000.
These risks could adversely affect:
. the issuers in which the Fund invests, which could impact the value of the
Fund's investments;
. our ability to service your Fund account, including our ability to meet your
requests to buy and sell Fund shares; and
. our ability to trade securities held by the Fund or to accurately price
securities held by the Fund.

We are working both internally and with our business partners and service
providers to address this problem. If we-- or our business partners, service
providers, government agencies or other market participants--do not succeed,
it could materially affect shareholder services or the value of the Fund's
shares.

MANAGEMENT OF THE FUND
Board of Trustees. The Fund's shareholders, voting in proportion to the number
of shares each owns, elect a Board of Trustees, and the Trustees supervise all
of the Fund's activities on their behalf.

Investment Adviser. Under the supervision of the Board of Trustees, Bankers
Trust Company, referred to throughout as Bankers Trust, with headquarters at
130 Liberty Street, New York, NY 10006, acts as the Fund's Investment Adviser.
As Investment Adviser, Bankers Trust makes the Fund's investment decisions and
assumes responsibility for the securities the Fund owns. It buys and sells
securities for the Fund and conducts the research that leads to the purchase
and sale decisions. Bankers Trust received a fee of 0.10% of the Fund's
average daily net assets for its services in the last fiscal year.

As of June 30, 1999, Bankers Trust had total assets under management of
approximately $287 billion. Bankers Trust is dedicated to servicing the needs
of corporations, governments, financial institutions, and private clients and
has invested retirement assets on behalf of the nation's largest

7
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<PAGE>

A Detailed Look at the Institutional Daily Assets Fund

corporations and institutions for more than 50 years. The scope of the firm's
capability is broad: it is a leader in both the active and passive
quantitative investment disciplines and maintains a major presence in stock
and bond markets worldwide.

At a Special Meeting of Shareholders held on October 8, 1999, shareholders of
the Fund approved a new investment advisory agreement with Morgan Grenfell,
Inc. As of October 6, 1999, Morgan Grenfell, Inc. has been renamed Deutsche
Asset Management Inc. (DAMI). The new investment advisory agreement with DAMI
may be implemented within two years of the date of the Special Meeting upon
approval of a majority of the members of the Board of Trustees who are not
"interested persons," generally referred to as Independent Trustees.
Shareholders of the Fund also approved a new sub-investment advisory agreement
among the Trust, DAMI and Bankers Trust under which Bankers Trust may perform
certain of DAMI's responsibilities, at DAMI's expense, upon approval of the
Independent Trustees, within two years of the date of the Special Meeting.
Under the new investment advisory agreement and new sub-advisory agreement,
the compensation paid and the services provided would be the same as those
under the existing advisory agreement with Bankers Trust.

About DAMI. DAMI is located at 885 Third Avenue, 32nd Floor, New York, New
York 10022. DAMI provides a full range of investment advisory services to
institutional clients. DAMI serves as investment adviser to ten other
investment companies and as sub-adviser to five other investment companies.

On March 11, 1999, Bankers Trust announced that it had reached an agreement
with the United States Attorney's Office in the Southern District of New York
to resolve an investigation concerning inappropriate transfers of unclaimed
funds and related record-keeping problems that occurred between 1994 and early
1996. Bankers Trust pleaded guilty to misstating entries in the bank's books and
records and agreed to pay a $63.5 million fine to state and federal authorities.
On July 26, 1999, the federal criminal proceedings were concluded with Bankers
Trust's formal sentencing. The events leading up to the guilty pleas did not
arise out of the investment advisory or mutual fund management activities of
Bankers Trust or its affiliates.

As a result of the plea, absent an order from the SEC, Bankers Trust would not
be able to continue to provide investment advisory services to the Fund. The
SEC has granted a temporary order to permit Bankers Trust and its affiliates
to continue to provide investment advisory services to registered investment
companies. There is no assurance that the SEC will grant a permanent order.

Other Services. Bankers Trust provides administrative services--such as
portfolio accounting, legal services and others--for the Fund. In addition,
Bankers Trust, or your broker or financial advisor, performs the functions
necessary to establish and maintain your account. Besides 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 information about the Fund to you; and
. collecting your executed proxies.

Brokers and financial advisors may charge additional fees to investors only
for those services not otherwise included in the Bankers Trust servicing
agreement, such as cash management, or special trust or retirement-investment
reporting.

CALCULATING THE FUND'S SHARE PRICE
We calculate the price of the Fund's shares (also known as the "Net Asset
Value" or "NAV") at 5:30 p.m. Eastern time each day that the Fund is open for
business. If the markets for the Fund's primary investments close early, the
Fund will cease taking purchase and redemption orders at that time. In
accordance with the standard formula for valuing mutual fund shares, we deduct
all of the Fund's liabilities from the total value of its assets and divide
the result by the number of shares outstanding.

The Fund uses the amortized cost method to account for any premiums or
discounts above or below the face value of any securities it buys. This method
writes down the premium or marks up the discount at a constant rate until
maturity. It does not reflect daily fluctuations in market value. All cash
receivables and current payments are valued at face value.

- -------------------------------------------------------------------------------
The Fund 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, Labor Day
(the first Monday in September), Columbus Day (the second Monday in October),
Veterans' Day (November 11), Thanksgiving Day (the fourth Thursday in
November) and Christmas Day. The markets for the Fund's primary investments
may close early on the business day before each of these holidays, on the day
after Thanksgiving and the day before Christmas Eve, and on other days for
other unforeseeable reasons.

8
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<PAGE>

A Detailed Look at the Institutional Daily Assets Fund

Other assets are valued at fair value as determined in good faith by the Fund's
Board. The Fund's Net Asset Value will normally be $1.00 a share.

DIVIDENDS AND DISTRIBUTIONS
The Fund declares dividends from its net income daily and pays the dividends on
a monthly basis.

The Fund reserves the right to include in the daily dividend any short-term
capital gains on securities that it sells. Also, the Fund will normally declare
and pay annually any long-term capital gains as well as any short-term capital
gains that it did not distribute during the year.

We automatically reinvest all dividends and capital gains, if any, unless you
tell us otherwise.

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 gain 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:

<TABLE>
<CAPTION>
Transaction Tax Status
- --------------------------------------------------------------------------------
<S> <C>
Income dividends Ordinary income
Short-term capital gain distributions Ordinary income
Long-term capital gain distributions Capital gains
</TABLE>

Every year the Fund will send you information on the distributions for the
previous year.

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

BUYING AND SELLING FUND SHARES
It is expected that the majority of investors in the Fund will issue standing
orders, effective on or before 5:30 p.m., Eastern time each day, on which the
Fund is open, to invest in the Fund cash collateral received in connection with
securities lending transactions.

Three copies of a Subscription Agreement for use in subscribing to purchase
shares of the Fund accompany delivery of this Memorandum to prospective
investors. In order to purchase shares of the Fund, a prospective investor must
satisfactorily complete, execute and deliver each copy of the Subscription
Agreement to Bankers Trust Company, 130 Liberty Street, New York, New York
10006, and the purchase must be accepted by the Fund's Placement Agent, ICC
Distributors, Inc.

Important Information About Buying and Selling Shares

. After your order is executed, we buy or sell your shares at the next price
calculated on a day the Fund is open for business.
. We do not pay dividends on shares the day they are sold.
. We remit proceeds from the sale of shares in U.S. dollars (unless the
redemption is so large that it is made "in-kind").
. We do not issue share certificates.
. If your redemption exceeds $250,000, we reserve the right to redeem it
"in-kind" with a pro-rata distribution of securities actually held by a Fund,
rather than in cash.
. We reserve the right to reject any purchase order.

9
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<PAGE>

A Detailed Look at the Institutional Daily Assets Fund

The table below provides a picture of the Fund's financial performance since
inception. The information selected reflects financial results for a single
Fund share. The total returns in the table represent the rates of return that
an investor would have earned on an investment in the Fund, assuming
reinvestment of all dividends and distributions. This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with the Fund's
financial statements, is included in the Fund's annual report. The annual
report is available free of charge by calling us collect at 1-800-730-1313.

Financial Highlights

<TABLE>
<CAPTION>
For the years ended June 30, For the period
------------------------------ November 13, 1996/1/
1999 1998 to June 30, 1997
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value,
Beginning of Period $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------
Income from Investment
Operations
Net Investment Income 0.05 0.06 0.03
- ---------------------------------------------------------------------------------
Net Realized Gain from
Investment Transactions 0.00/2/ 0.00/2/ 0.00/2/
- ---------------------------------------------------------------------------------
Total from Investment
Operations 0.05 0.06 0.03
- ---------------------------------------------------------------------------------
Distributions to
Shareholders
Net Investment Income (0.05) (0.06) (0.03)
- ---------------------------------------------------------------------------------
Net Asset Value, End of
Period $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------
Total Investment Return 5.25% 5.71% 3.46%
- ---------------------------------------------------------------------------------
Supplemental Data and
Ratios:
Net Assets, End of
Period (000s omitted) $7,804,575 $5,729,267 $2,748,056
- ---------------------------------------------------------------------------------
Ratios to Average Net
Assets:
Net Investment Income 5.11% 5.55% 5.43%/3/
- ---------------------------------------------------------------------------------
Expenses 0.12% 0.12% 0.12%/3/
Decrease Reflected in
Above Expense Ratio Due
to Reimbursed Expenses
and/or Fees Waived by
Bankers Trust 0.002% 0.002% 0.01%
- ---------------------------------------------------------------------------------
</TABLE>

/1/Commencement of operations.
/2/Less than $0.01 per share.
/3/Annualized.

10
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<PAGE>

(THIS PAGE INTENTIONALLY LEFT BLANK)

<PAGE>

[LOGO OF BANKERS TRUST APPEARS HERE]

- -- --

Additional information about the Fund's investments is available in the
Fund's annual and semi-annual reports to shareholders.

You can find more detailed information about the Fund in the current
Confidential Statement of Additional Information, dated October 28, 1999,
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 Confidential Statement of Additional Information, the
annual or semi-annual report, or if you have questions about investing in
the Fund, write to us at:

BT Service Center
P.O. Box 219210
Kansas City, MO 64121-9210
or call us collect at: 1-800-730-1313

You can find reports and other information about the Fund on the SEC
website (http://www.sec.gov), or you can get copies of this information,
after payment of a duplicating fee, by writing to the Public Reference
Section of the SEC, Washington, D.C. 20549-6009. Information about the
Fund, including its Confidential 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 1-800-
SEC-0330.

-- --

Institutional Daily Assets Fund
BT Institutional Funds 814PRO (10/99)

Placement Agent: 811-6071
ICC Distributors, Inc.
Two Portland Square
Portland, ME 04101
<PAGE>

DO NOT COPY OR CIRCULATE

Investor __________________________________________ Copy #_____

CONFIDENTIAL STATEMENT OF ADDITIONAL INFORMATION

OCTOBER 28, 1999

BT Institutional Funds

. Institutional Daily Assets Fund

BT Institutional Funds (the "Trust") is an open-end management investment
company that offers investors a selection of investment portfolios, each having
distinct investment objectives and policies. The Trust was organized on March
26, 1990, as a Massachusetts Business Trust under the laws of the Commonwealth
of Massachusetts. This Confidential Statement of Additional Information ("SAI")
relates to the Institutional Daily Assets Fund (the "Fund"), a series of the
Trust.

Shares of the Fund are sold by ICC Distributors, Inc. ("ICC Distributors"), the
Trust's Distributor (and the Fund's Placement Agent), primarily to clients and
customers of Bankers Trust Company ("Bankers Trust") that participate in Bankers
Trust's securities lending program. Bankers Trust serves as the Fund's
investment adviser (the "Adviser").

THE SECURITIES DESCRIBED IN THIS SAI ARE OFFERED PURSUANT TO AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND HAVE NOT BEEN REGISTERED WITH OR APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY AUTHORITY OF
ANY JURISDICTION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS CONFIDENTIAL
SAI. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

SHARES OF THE FUND ARE BEING OFFERED ONLY TO INVESTORS WHO QUALIFY AS BOTH (1)
ACCREDITED INVESTORS AS DEFINED UNDER REGULATION D
<PAGE>

UNDER THE SECURITIES ACT AND (2) INSTITUTIONAL INVESTORS. SHARES OF THE FUND ARE
NOT BEING OFFERED TO INDIVIDUALS OR TO ENTITIES ORGANIZED FOR THE PURPOSE OF
INVESTING ON BEHALF OF INDIVIDUALS. NO RESALE OF SHARES MAY BE MADE UNLESS THE
SHARES ARE SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE.

THIS SAI HAS BEEN PREPARED ON A CONFIDENTIAL BASIS SOLELY FOR THE INFORMATION OF
THE RECIPIENT AND MAY NOT BE REPRODUCED, PROVIDED TO OTHERS OR USED FOR ANY
OTHER PURPOSE.

NO PERSON HAS BEEN AUTHORIZED TO MAKE REPRESENTATIONS ON ANY INFORMATION WITH
RESPECT TO THE SHARES, EXCEPT THE INFORMATION CONTAINED HEREIN OR IN THE TRUST'S
REGISTRATION STATEMENT.

INVESTORS WILL BE REQUIRED TO REPRESENT THAT THEY MEET CERTAIN FINANCIAL
REQUIREMENTS AND THAT THEY ARE FAMILIAR WITH AND UNDERSTAND THE TERMS, RISKS AND
MERITS OF AN INVESTMENT IN THE FUND.

The Fund's Confidential Private Offering Memorandum, which may be amended from
time to time, is dated October 28, 1999. The Confidential Private Offering
Memorandum provides the basic information investors should know before
investing, and may be obtained without charge by calling the Fund collect at
1-800-730-1313. This SAI, which is not a Confidential Private Offering
Memorandum, is intended to provide additional information regarding the
activities and operations of the Trust and should be read in conjunction with
the Confidential Private Offering Memorandum. Capitalized terms not otherwise
defined in this Confidential Statement of Additional Information have the
meanings accorded to them in the Fund's Confidential Private Offering
Memorandum.

The Fund's audited Annual Report dated June 30, 1999, which either accompanies
this SAI or has previously been provided to the investor to whom this SAI is
being sent, is incorporated herein by reference.

2
<PAGE>

Copies of the Annual Report and information regarding the Fund's current
performance may be obtained by writing or telephoning: BT Service
Center, P.O. Box 219210, Kansas City, Missouri 64121-9210, 1-800-730-1313.

Investment Adviser and Administrator

BANKERS TRUST COMPANY

Placement Agent

ICC DISTRIBUTORS, INC.

Two Portland Square

Portland, Maine 04101

3
<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Investment Objective, Policies and Restrictions and Risks................................. 5
Investment Objective................................................................... 5
Investment Policies.................................................................... 5
Additional Risk Factors................................................................ 10
Investment Restrictions................................................................ 11
Additional Investment Limitations...................................................... 13
Portfolio Turnover..................................................................... 13
Portfolio Transactions................................................................. 14
Net Asset Value........................................................................... 15
Purchase and Redemption Information....................................................... 16
Management of the Trust .................................................................. 16
Trustees of the Trust.................................................................. 17
Officers of the Trust.................................................................. 19
Investment Adviser .................................................................... 21
Administrator.......................................................................... 22
Custodian and Transfer Agent........................................................... 23
Use of Name............................................................................ 24
Banking Regulatory Matters............................................................. 24
Counsel and Independent Accountants.................................................... 24
Organization of the Trust................................................................. 25
Taxes..................................................................................... 26
Performance Information................................................................... 26
Financial Statements...................................................................... 27
Appendix.................................................................................. 28
Description of Securities Ratings......................................................... 28
</TABLE>

4
<PAGE>

INVESTMENT OBJECTIVE, POLICIES, RESTRICTIONS AND RISKS

Investment Objective

The Fund seeks a high level of current income consistent with liquidity and the
preservation of capital. There can, of course, be no assurance that any Fund
will achieve its investment objective.

Investment Policies

The following is a discussion of the various investments of and techniques
employed by the Fund.

Quality and Maturity of the Fund's Securities. The Fund will maintain a dollar-
weighted average maturity of 90 days or less. All securities in which the Fund
invests will have, or be deemed to have, remaining maturities of 397 days or
less on the date of their purchase and will be denominated in U.S. dollars.
Bankers Trust, acting under the supervision of and procedures adopted by the
Board of Trustees of the Trust, will also determine that all securities
purchased by the Fund present minimal credit risks. Bankers Trust will cause
the Fund to dispose of any security as soon as practicable if the security is no
longer of the requisite quality, unless such action would not be in the best
interest of the Fund. High-quality, short-term instruments may result in a
lower yield than instruments with a lower quality or longer term.

Obligations of Banks and Other Financial Institutions. For purposes of the
Fund's investment policies with respect to bank obligations, the assets of a
bank will be deemed to include the assets of its domestic and foreign branches.
Obligations of foreign branches of U.S. banks and foreign banks may be general
obligations of the parent bank in addition to the issuing bank or may be limited
by the terms of a specific obligation and by government regulation. If Bankers
Trust, acting under the supervision of the Board of Trustees, deems the
instruments to present minimal credit risk, the Fund may invest in U.S. dollar-
denominated obligations of foreign banks or foreign branches of U.S. banks,
which include banks located in the United Kingdom, Grand Cayman Island, Nassau,
Japan and Canada. Investments in these obligations may entail risks that are
different from those of investments in obligations of U.S. domestic banks
because of differences in political, regulatory and economic systems and
conditions. These risks include future political and economic developments,
currency blockage, the possible imposition of

5
<PAGE>

withholding taxes on interest payments, differing reserve requirements,
reporting and record keeping requirements and accounting standards, possible
seizure or nationalization of foreign deposits, difficulty or inability of
pursuing legal remedies and obtaining judgments in foreign courts, possible
establishment of exchange controls or the adoption of other foreign governmental
restrictions that might affect adversely the payment of principal and interest
on bank obligations. Foreign branches of U.S. banks and foreign banks may also
be subject to less stringent reserve requirements and to different accounting,
auditing, reporting and record keeping standards than those applicable to
domestic branches of U.S. banks.

Commercial Paper. Commercial paper obligations in which the Fund may invest are
short-term, unsecured negotiable promissory notes of U.S. or foreign
corporations that at the time of purchase meet the rating criteria described in
the Confidential Private Offering Memorandum. Investments in foreign commercial
paper generally involve risks similar to those described above relating to
obligations of foreign banks or foreign branches of U.S. banks.

Variable Rate Master Demand Notes. Variable rate master demand notes are
unsecured instruments that permit the indebtedness thereunder to vary and
provide for periodic adjustments in the interest rate. Because variable rate
master demand notes are direct lending arrangements between the Fund and the
issuer, they are not ordinarily traded. Although no active secondary market may
exist for these notes, the Fund will purchase only those notes under which it
may demand and receive payment of principal and accrued interest daily or may
resell the note to a third party. While the notes are not typically rated by
credit rating agencies, issuers of variable rate master demand notes must
satisfy Bankers Trust, acting under the supervision of the Board of Trustees of
the Fund, that the same criteria as set forth above for issuers of commercial
paper are met. In the event an issuer of a variable rate master demand note
defaulted on its payment obligation, the Fund might be unable to dispose of the
note because of the absence of a secondary market and could, for this or other
reasons, suffer a loss to the extent of the default. The face maturities of
variable rate notes subject to a demand feature may exceed 397 days in certain
circumstances. (See "Quality and Maturity of the Fund's Securities" herein.)

U.S. Government Obligations. The Fund may invest in direct obligations issued
by the U.S. Treasury or in obligations issued or guaranteed by the U.S. Treasury
or by agencies or instrumentalities of the U.S. government ("U.S. Government
Obligations"). Certain short-term

6
<PAGE>

U.S. Government Obligations, such as those issued by the Government National
Mortgage Association ("GNMA"), are supported by the "full faith and credit" of
the U.S. government; others, such as those of the Export-Import Bank of the
United States, are supported by the right of the issuer to borrow from the U.S.
Treasury; others, such as those of the Federal National Mortgage Association are
solely the obligations of the issuing entity but are supported by the
discretionary authority of the U.S. government to purchase the agency's
obligations; and still others, such as those of the Student Loan Marketing
Association, are supported by the credit of the instrumentality. No assurance
can be given that the U.S. government would provide financial support to U.S.
government-sponsored instrumentalities if it is not obligated to do so by law.

Examples of the types of U.S. Government Obligations that the Fund may hold
include, but are not limited to, in addition to those described above and direct
U.S. Treasury obligations, the obligations of the Federal Housing Administration
("FHA"), Farmers Home Administration, Small Business Administration, General
Services Administration, Central Bank for Cooperatives, Federal Farm Credit
Banks, Federal Farm Credit Banks Funding Corp., Federal Home Loan Banks, Federal
Home Loan Mortgage Corporation, Federal Intermediate Credit Banks, Federal Land
Banks and Maritime Administration.

Other Debt Obligations. The Fund may invest in deposits, bonds, notes and
debentures and other debt obligations that at the time of purchase have, or are
comparable in priority and security to other securities of such issuer which
have, outstanding short-term obligations meeting the above short-term rating
requirements, or if there are no such short-term ratings, are determined by
Bankers Trust, acting under the supervision of the Board of Trustees of the
Trust, to be of comparable quality and are rated in the top three highest long-
term rating categories by the NRSROs rating such security.

Asset-Backed Securities. The Fund may also invest in securities generally
referred to as asset-backed securities, which directly or indirectly represent a
participation interest in, or are secured by and payable from, a stream of
payments generated by particular assets such as motor vehicle or credit card
receivables. Asset-backed securities may provide periodic payments that consist
of interest and/or principal payments. Consequently, the life of an asset-backed
security varies with the prepayment and loss experience of the underlying
assets."

7
<PAGE>

Repurchase Agreements. The Fund may engage in repurchase agreement transactions
with banks and governmental securities dealers approved by the Trust's Board of
Trustees. Under the terms of a typical repurchase agreement, the Fund would
acquire U.S. Government Obligations regardless of maturity, subject to an
obligation of the seller to repurchase, and the Fund to resell, the obligation
at an agreed price and time, thereby determining the yield during the Fund's
holding period. This arrangement results in a fixed rate of return that is not
subject to market fluctuations during the Fund's holding period. The value of
the underlying securities will be at least equal at all times to the total
amount of the repurchase obligations, including interest. The Fund bears a risk
of loss in the event that the other party to a repurchase agreement defaults on
its obligations and the Fund is delayed in or prevented from exercising its
rights to dispose of the collateralized securities, including the risk of a
possible decline in the value of the underlying securities during the period in
which the Fund seeks to assert these rights. Bankers Trust, acting under the
supervision of the Board of Trustees of the Trust, reviews the creditworthiness
of those banks and dealers with which the Fund enters into repurchase agreements
and monitors on an ongoing basis the value of the securities subject to
repurchase agreements to ensure that it is maintained at the required level.

Reverse Repurchase Agreements. The Fund may borrow funds for temporary or
emergency purposes, such as meeting larger than anticipated redemption requests,
and not for leverage, by among other things, agreeing to sell portfolio
securities to financial institutions such as banks and broker-dealers and to
repurchase them at a mutually agreed date and price (a "reverse repurchase
agreement"). At the time the Fund enters into a reverse repurchase agreement it
segregates cash, U.S. Government Obligations or high-grade debt obligations
having a value equal to the repurchase price, including accrued interest.
Reverse repurchase agreements involve the risk that the market value of the
securities sold by the Fund may decline below the repurchase price of those
securities. Reverse repurchase agreements are considered to be borrowings by
the Fund.

When-Issued and Delayed-Delivery Securities. To secure prices deemed
advantageous at a particular time, the Fund may purchase securities on a when-
issued or delayed-delivery basis, in which case delivery of the securities
occurs beyond the normal settlement period; payment for or delivery of the
securities would be made prior to the reciprocal delivery or payment by the
other

8
<PAGE>

party to the transaction. The Fund will enter into when-issued or delayed-
delivery transactions for the purpose of acquiring securities and not for the
purpose of leverage. When-issued securities purchased by the Fund may include
securities purchased on a "when, as, and if issued" basis under which the
issuance of the securities depends on the occurrence of a subsequent event.
Securities purchased on a when-issued or delayed-delivery basis may expose the
Fund to risk because the securities may experience fluctuations in value prior
to their actual delivery. The Fund does not accrue income with respect to a
when-issued or delayed-delivery security prior to its stated delivery date.
Purchasing securities on a when-issued or delayed-delivery basis can involve the
additional risk that the yield available in the market when the delivery takes
place may be higher than that obtained in the transaction itself. Upon
purchasing a security on a when-issued or delayed-delivery basis, the Fund will
segregate cash or liquid securities in an amount at least equal to the when-
issued or delayed-delivery commitment.

Investment in Other Investment Companies. In accordance with applicable law,
the Fund may invest its assets in other money market funds with comparable
investment objectives. In general, the Fund may not (1) purchase more than 3%
of any other money market fund's voting stock; (2) invest more than 5% of its
assets in any single money market fund; and (3) invest more than 10% of its
assets in other money market funds (unless permitted by an exemptive order of
the SEC).

Illiquid Securities. The Fund may not invest more than 10% of its net assets in
securities which are illiquid or otherwise not readily marketable (such
securities may include securities which are subject to legal or contractual
restrictions on resale and repurchase agreements with maturities over seven
days). If a security becomes illiquid after purchase by a Fund, the Fund will
normally sell the security as soon as is reasonably practicable unless if to do
so would not be in the best interests of shareholders.

Credit Enhancement. Certain of the Fund's acceptable investments may be credit-
enhanced by a guaranty, letter of credit, or insurance from a third party. Any
bankruptcy, receivership, default, or change in the credit quality of the third
party providing the credit enhancement could adversely affect the quality and
marketability of the underlying security and could cause losses to the Fund and
affect the Fund's share price. Subject to the diversification limits contained
in Rule 2a-7, the Fund may have more than 25% of its total assets invested in
securities issued by or credit-enhanced by banks or other financial
institutions.

9
<PAGE>

Additional Risk Factors

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

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

It is expected that money used to purchase Fund shares will be comprised of cash
collateral which the Fund's institutional investors receive in connection with
their participation in Bankers Trust's securities lending program. The amount
of such collateral is subject to periodic fluctuation, and accordingly the Fund
may experience large purchases and redemptions over a relatively short time
period which may impact the Fund's ability to optimize cash management. To
assist the Fund in remaining fully invested, pursuant to its request, the Fund
has received an order from the SEC granting the Fund and Bankers Trust
permission to jointly enter into repurchase agreements and other investments
with non-affiliated banks, broker-dealers or other issuers with respect to
amounts to be received on any day. Such investments will be apportioned between
the Fund and Bankers Trust in such a manner as to maximize the investment of
cash by the Fund.

Rating Services. The ratings of Moody's and S&P 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 Fund, an obligation may cease to be rated or its rating
may be reduced below the minimum required for purchase by the Fund. Neither
event would require the Fund to eliminate the obligation from 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 categories
of Moody's and S&P is set forth in the Appendix to this SAI.

10
<PAGE>

Investment Restrictions

Fundamental Policies. The investment restrictions below have been adopted by
the Trust with respect to the Fund as fundamental policies. Under the Investment
Company Act of 1940, as amended (the "1940 Act"), a "fundamental" policy may not
be changed without the "vote of a majority of the outstanding voting securities"
of the Fund, which is defined in the 1940 Act as the lesser of (a) 67% or more
of the shares of the Fund present at a shareholder meeting of the Fund if the
holders of more than 50% of the outstanding shares of the Fund are present or
represented by proxy, or (b) more than 50% of the outstanding shares of the
Fund. The percentage limitations contained in the restrictions listed below
apply at the time of the purchase of the securities.

As a matter of fundamental policy, the Fund may not:

1. Borrow money or mortgage or hypothecate assets of the Fund, except that
in an amount not to exceed 10% of the current value of the Fund's total
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 10% of such assets to secure such borrowings
(it is intended that money would be borrowed only from banks or through
reverse repurchase agreements and only either to accommodate redemption
requests while effecting an orderly liquidation of portfolio securities
or to maintain liquidity in the event of an unanticipated failure to
complete a portfolio security transaction or other similar situations),
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. (As an operating policy, the Fund may
not engage in dollar roll transactions or options and futures);

11
<PAGE>

2. Underwrite securities issued by other persons except insofar as the
Trust or the Fund may technically be deemed an underwriter under the
Securities Act of 1933, as amended (the "1933 Act"), in selling a
portfolio security;

3. Make loans to other persons except (a) through the use of repurchase
agreements or the purchase of short-term obligations or (b) 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 Fund may hold and sell, for the Fund's
portfolio, real estate acquired as a result of the Fund's ownership of
securities);

5. Concentrate its investments in any particular industry (excluding U.S.
Government Obligations), except that the Fund will invest more than 25%
of its total assets in the obligations of banks and other financial
institutions, and if it is deemed appropriate for the achievement of the
Fund's investment objective, up to 25% of its total assets may be
invested in any other 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 of the 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
investment companies) or own more than 10% of the voting securities of
any issuer.

Notwithstanding the foregoing policies, the Fund has no present intention of
engaging in transactions involving dollar rolls, futures and options contracts
or loans of portfolio securities.

12
<PAGE>

The Fund will only engage in such transactions upon approval of the Board of
Trustees and appropriate disclosure to investors.

Additional Investment Limitations

The Fund may not invest more than 25% of its total assets in the securities of
issuers in any single industry (excluding U.S. Government Obligations and
repurchase agreements collateralized by U.S. Government Obligations), except
that, under normal market conditions, more than 25% of the total assets of the
Fund will be invested in obligations of banks and other financial institutions.
As an operating policy, the Fund may not invest more than 5% of its total assets
in the obligations of any one issuer except: (1) as may be permitted by Rule 2a-
7 and (2) for U.S. Government Obligations and repurchase agreements
collateralized fully thereby, which may be purchased without limitation. The
Fund is also authorized to borrow for temporary purposes to meet redemptions,
including entering into reverse repurchase transactions, in an amount up to 10%
of its total assets and to pledge its assets to the same extent in connection
with these borrowings. At the time of an investment, the Fund's aggregate
holdings of repurchase agreements having a remaining maturity of more than seven
calendar days (or which may not be terminated within seven calendar days upon
notice by the Fund), time deposits having remaining maturities of more than
seven calendar days and other illiquid securities will not exceed 10% of the
Fund's net assets. If changes in the liquidity of certain securities cause the
Fund to exceed such 10% limit, the Fund will take steps to bring the aggregate
amount of its illiquid securities back below 10% of its net assets as soon as
practicable, unless such action would not be in the best interest of the Fund.
The Fund's limitations on investment in a single industry and on borrowing may
not be changed without the approval of the shareholders of the Fund.

Portfolio Turnover

The Fund may attempt to increase yield by trading to take advantage of short-
term market variations, which results in higher portfolio turnover. However,
this policy does not result in higher brokerage commissions to the Fund as the
purchases and sales of portfolio securities are usually effected as principal
transactions. The Fund's turnover rate is not expected to have a material effect
on their income and has been and is expected to be zero for regulatory reporting
purposes.

13
<PAGE>

Portfolio Transactions

Decisions to buy and sell securities and other financial instruments for the
Fund are made by Bankers Trust, which also is responsible for placing these
transactions, subject to the overall review of the Trust's Board of Trustees.
Although investment requirements for the Fund are reviewed independently from
those of the other accounts managed by Bankers Trust, investments of the type
the Fund may make may also be made by these other accounts. When the Fund and
one or more other accounts managed by Bankers Trust are prepared to invest in,
or desire to dispose of the same security or other financial instrument,
available investments or opportunities for sales will be allocated in a manner
believed by Bankers Trust to be equitable to each. In some cases, this procedure
may affect adversely the price paid or received by the Fund or the size of the
position obtained or disposed of by the Fund.

Purchases and sales of securities on behalf of the Fund will be principal
transactions. These securities are normally purchased directly from the issuer
or from an underwriter or market maker for the securities. The cost of
securities purchased from underwriters includes an underwriting commission or
concession and the prices at which securities are purchased from and sold to
dealers include a dealer's mark-up or mark-down. U.S. Government Obligations are
generally purchased from underwriters or dealers, although certain newly issued
U.S. Government Obligations may be purchased directly from the U.S. Treasury or
from the issuing agency or instrumentality.

Over-the-counter purchases and sales are transacted directly with principal
market makers except in those cases in which better prices and executions may be
obtained elsewhere. Principal transactions are not entered into with persons
affiliated with the Fund except pursuant to exemptive rules or orders adopted by
the SEC. Under rules adopted by the SEC, broker-dealers may not execute
transactions on the floor of any national securities exchange for the accounts
of affiliated persons, but may effect transactions by transmitting orders for
execution.

In selecting dealers to execute portfolio transactions on behalf of the Fund,
Bankers Trust seeks the best overall terms available. In assessing the best
overall terms available for any transaction, Bankers Trust will consider the
factors it deems relevant, including the breadth of the market in

14
<PAGE>

the investment, the price of the investment and the financial condition and
execution capability of the dealer for the specific transaction and on a
continuing basis. In addition, Bankers Trust is authorized, in selecting parties
to execute a particular transaction and in evaluating the best overall terms
available, to consider the "brokerage services," but not "research services" (as
those terms are defined in Section 28(e) of the Securities Exchange Act of 1934)
provided to the Fund.

NET ASSET VALUE

The Confidential Private Offering Memorandum discusses the time at which the NAV
per share of the Fund is determined for purposes of sales and redemptions.

The valuation of the Fund's securities is based on their amortized cost, which
does not take into account unrealized capital gains or losses. Amortized cost
valuation involves initially valuing an instrument at its cost and thereafter
assuming a constant amortization to maturity of any discount or premium,
generally without regard to the impact of fluctuating interest rates on the
market value of the instrument. Although this method provides certainty in
valuation, it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price the Fund would receive if it
sold the instrument.

The Fund's use of the amortized cost method of valuing its securities is
permitted by a rule adopted by the SEC. Under this rule, the Fund must maintain
a dollar-weighted average portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of 397 days or less (as determined under
the rule), and invest only in securities determined by or under the supervision
of the Trust's Board of Trustees to present minimal credit risks.

Pursuant to the rule, the Trust's Board of Trustees also has established
procedures designed to allow investors in the Fund to establish, to the extent
reasonably possible, the investors' price per share as computed for the purpose
of sales and redemptions at $1.00. These procedures include review of the Fund's
holdings by the Trust's Board of Trustees, at such intervals as it deems
appropriate, to determine whether the value of the Fund's assets calculated by
using available market quotations or market equivalents deviates from such
valuation based on amortized cost.

15
<PAGE>

The rule also provides that the extent of any deviation between the value of the
Fund's assets based on available market quotations or market equivalents and
such valuation based on amortized cost must be examined by the Trust's Board of
Trustees. In the event the Trust's Board of Trustees determines that a deviation
exists that may result in material dilution or other unfair results to investors
or existing shareholders, pursuant to the rule, the Trust's Board of Trustees
must cause the Fund to take such corrective action as the Board of Trustees
regards as necessary and appropriate, including: selling portfolio instruments
prior to maturity to realize capital gains or losses or to shorten average
portfolio maturity; withholding dividends or paying distributions from capital
or capital gains; redeeming shares in kind; or valuing the Fund's assets by
using available market quotations.

PURCHASE AND REDEMPTION INFORMATION

The Trust may suspend the right of redemption or postpone the date of payment
for shares of the Fund during any period when: (a) trading in the Fund's primary
markets is restricted by applicable rules and regulations of the SEC; (b) the
Fund's primary markets are closed for other than customary weekend and holiday
closings; (c) the SEC has by order permitted such suspension; or (d) an
emergency exists as determined by the SEC.

Under the terms of a Placement Agent Agreement, ICC Distributors acts as
Placement Agent on a '"best efforts" basis with respect to the sale of shares of
the Fund. In addition to ICC Distributors' duties as Placement Agent, ICC
Distributors may, in its discretion, perform additional functions in connection
with transactions in the shares of the Fund.

MANAGEMENT OF THE TRUST

The Trust's Board of Trustees is composed of persons experienced in financial
matters who meet throughout the year to oversee the activities of the Trust. In
addition, the Trustees review contractual arrangements with companies that
provide services to the Fund/Trust and review the Fund's performance.

16
<PAGE>

The Trustees and officers of the Trust, their birthdates, 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

CHARLES P. BIGGAR (birth date: October 13, 1930) -- Trustee of the Trust;
Trustee of each of the other investment companies in the BT 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.

S. LELAND DILL (birth date: March 28, 1930) -- Trustee of the Trust; Trustee of
each of the other investment companies in the BT 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 Trust; Trustee of
each of the other investment companies in the BT 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) -- Trustee of the Trust; Trustee of
each of the other investment companies in the BT 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.
_________________

/1/ The "BT 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, International Equity 500 Index Portfolio,
Capital Appreciation Portfolio, Aset Management Portfolio and BT Investment
Portfolios.

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

17
<PAGE>

RICHARD J. HERRING (birth date: February 18, 1946) -- Trustee of the Trust;
Trustee of each of the other investment companies in the BT 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 Trust; Trustee of
each of the other investment companies in the BT 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.

PHILIP SAUNDERS, JR. (birth date: October 11, 1935) -- Trustee of the Trust;
Trustee of each of the other investment companies in the BT 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 Trust;
Trustee of each of the other investment companies in the BT 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 Trust's independent
accountants to
_________________

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

18
<PAGE>

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 Trust

DANIEL O. HIRSCH (birth date: March 27, 1954) -- Secretary of the Trust;
Director, Deutsche Banc Alex. Brown Incorporated and Investment Company Capital
Corp. since July 1998; Assistant General Counsel, Office of the General Counsel,
United States Securities and Exchange Commission from 1993 to 1998. His address
is One South Street, Baltimore, Maryland 21202.

JOHN A. KEFFER (birth date: July 14, 1942) -- President and Chief Executive
Officer of the Trust; President, Forum Financial Group L.L.C. and its
affiliates; President, ICC Distributors, Inc./4/ His address is ICC
Distributors, Inc., Two Portland Square, Portland, Maine 041011.

CHARLES A. RIZZO (birth date: August 5, 1958) Treasurer of the Trust; 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, Keffer 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.

________________________________________________________________________________

/4/ Underwriter/distributor for the Trust, Mr. Keffer owns 100% of the shares of
ICC Distributors, Inc.

19
<PAGE>

<TABLE>
<CAPTION>
Compensation Table*
<S> <C> <C>
Aggregate Total Compensation
Name of Person, Compensation from Fund Complex
Position from Trust** Paid to Trustees***

Charles P. Biggar, Trustee $1,154.40 $36,250.00

Richard J. Herring, Trustee $3,205.14 $35,000.00

Bruce E. Langton, Trustee $3,108.99 $35,000.00
</TABLE>

* Mssrs. Dill, Gruber, Hale, Saunders and Van Benschoten were elected to the
Board of Trustees on October 8, 1999; therefore, they did not receive any
compensation from the Trust in the last fiscal year.

** Information is furnished for the Trust's most recent fiscal year ended June
30, 1999.

*** Aggregated information is furnished for the BT Family of Funds, which
consists of the following: 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, International Equity Portfolio, Equity
500 Index Portfolio, Capital Appreciation Portfolio, Asset Management
Portfolio and BT Investment Portfolios. The compensation provided is for
the calendar year ended December 31, 1998.

As of October 1, 1999, the Trustees and officers of the Trust owned in the
aggregate less than 1% of the shares of the Fund or the Trust (all series taken
together).

As of October 1, 1999, the following shareholders of record owned 5% or more of
the outstanding shares of the Fund: Fidelity Concord Trust: Spartan U.S. Equity
Index (500) Fund, 82 Devonshire Street, Boston, Massachusetts 02109, was the
owner of record of approximately

20
<PAGE>

18% of the Fund's outstanding shares; Los Angeles Fire and Police Pension
Systems, 360 East Second Street, Suite 600, Department of Pensions, Los Angeles,
CA 90012, was the owner of record of approximately 10% of the Fund's outstanding
shares; Lockheed Martin Investment Management Company, 6705 Rockledge Drive,
Suite 550, Bethesda, Maryland 20817, was the owner of record of approximately 7%
of the Fund's outstanding shares; Fidelity Concord Street Trust: Spartan Market
Index (500) Fund, 82 Devonshire Street, Boston, Massachusetts 02109, was the
owner of record of approximately 6% of the Fund's outstanding shares; State of
Oklahoma Teachers Retirement System, State Capital, 2801 North Lincoln Blvd.,
P.O. Box 53524, Oklahoma City, OK 73152, was the owner of record of
approximately 5% of the Fund's outstanding shares.

Investment Adviser

Bankers Trust is the Fund's investment adviser. Bankers Trust is the principal
banking subsidiary of Bankers Trust Corporation. Bankers Trust Corporation is a
wholly owned subsidiary of Deutsche Bank. 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 consisting of banks,
capital markets companies, fund management companies, mortgage banks, a property
finance company, installment financing and leasing companies, insurance
companies, research and consultancy companies and other domestic and foreign
companies.

Bankers Trust may have deposit, loan and other commercial banking relationships
with the issuers of obligations which may be purchased on behalf of the Fund,
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. Bankers Trust has informed the
Fund 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 Fund, Bankers Trust
will not inquire or take into consideration whether an issuer of securities
proposed for purchase or sale by the Fund is a customer of Bankers Trust, its
parent or its subsidiaries or affiliates. Also, in dealing with its customers,
Bankers Trust, its

21
<PAGE>

parent, subsidiaries, and affiliates will not inquire or take into consideration
whether securities of such customers are held by any fund managed by Bankers
Trust or any such affiliate.

Under the Advisory Agreement, Bankers Trust receives a fee from the Fund,
computed daily and paid monthly, at the annual rate of 0.10% the average daily
net assets of the Fund. For the fiscal years ended June 30, 1999 ending June 30,
1999 and, and 1998, and for the period from November 13, 1996 (commencement of
operations) to June 30, 1997, Bankers Trust earned $6,368,995, and $4,260,363,
and $1,293,002, respectively, as compensation for investment advisory services
provided to the Fund. During the same periods, Bankers Trust reimbursed
$115,594, and $75,882 and $79,812, respectively, to the Fund to cover expenses.

At a Special Meeting held on October 8, 1999, shareholders of the Fund also
approved a new investment advisory agreement with Morgan Grenfell, Inc. As of
October 5, 1999, Morgan Grenfell, Inc. has been renamed Deutsche Asset
Management Inc. ("DAMI"). The new investment advisory agreement with DAMI may
be implemented within two years of the date of the Special Meeting upon approval
of a majority of the members of the Board of Trustees who are not "interested
persons" ("Independent Trustees"). Shareholders of the Fund also approved a new
sub-investment advisory agreement among each Fund or its portfolio, DAMI and
Bankers Trust under which Bankers Trust may perform certain of DAMI's
responsibilities, at DAMI's expense, upon approval of the Independent Trustees,
within two years of the date of the Special Meeting. DAMI is a subsidiary of
Deutsche Asset Management Ltd., a wholly owned subsidiary of Deutsche Morgan
Grenfell Group PLC, an investment holding company which is, in turn, a wholly
owned subsidiary of Deutsche Bank.

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 reasonably deems necessary for the proper administration
of the Trust. Bankers Trust will generally assist in all aspects of the Fund's
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 record keeping services (including without
limitation the maintenance of such books and records as are required under the
1940 Act and the rules

22
<PAGE>

thereunder, except as maintained by other agents of the Trust), internal
auditing, 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, if applicable;
supply supporting documentation for meetings of the Board of Trustees; provide
monitoring reports and assistance regarding compliance with the Trust's
Declaration of Trust, by-laws, investment objectives and policies and with
applicable federal and state securities laws; arrange for appropriate insurance
coverage; calculate the NAV, net income and realized capital gains or losses of
the Trust; and negotiate arrangements with, and supervise and coordinate the
activities of, agents and others retained to supply services.

For the fiscal periods years ending June 30, 1999 and June 30, 1998 and for the
period November 13, 1996 (commencement of operations) to June 30, 1997,
Bankers Trust earned $1,273,799, and $852,019 and $258,600, respectively, in
compensation for administrative and other services provided to the Fund.

Custodian and Transfer Agent

Bankers Trust, 130 Liberty Street (One Bankers Trust Plaza), New York, New York
10006, serves as custodian and transfer agent for the Trust and as custodian for
the Fund pursuant to the Administration and Services Agreements discussed above.
As custodian, Bankers Trust holds the Fund's assets. For such services,
Bankers Trust receives monthly fees from the Fund, which are included in the
administrative services fees discussed above. As transfer agent for the Trust,
Bankers Trust maintains the shareholder account records for the Fund, handles
certain communications between shareholders and the Fund and causes to be
distributed any dividends and distributions payable by the Fund. Bankers Trust
is also reimbursed by the Fund for its out-of-pocket expenses. Bankers Trust
will comply with the self-custodian provisions of Rule 17f-2 under the 1940 Act.

23
<PAGE>

Use of Name

The Trust and Bankers Trust have agreed that the Trust may use "BT" as part of
its name for so long as Bankers Trust serves as investment adviser. The Trust
has acknowledged that the term "BT" is used by and is a property right of
certain subsidiaries of Bankers Trust and that those subsidiaries and/or Bankers
Trust may at any time permit others to use that term.

The Trust may be required, on 60 days' notice from Bankers Trust at any time, to
abandon use of the acronym "BT" as part of its name. If this were to occur, the
Trustees would select an appropriate new name for the Trust, but there would be
no other material effect on the Trust, its shareholders or activities.

Banking Regulatory Matters

Bankers Trust has been advised by its counsel that in its opinion Bankers Trust
may perform the services for the Fund contemplated by the Advisory Agreement and
other activities for the Trust described in the Confidential Private Offering
Memorandum 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. If the circumstances described above should
change, the Trust's Board of Trustees would review the Trust's relationship with
Bankers Trust and consider taking all actions necessary in the circumstances.

Counsel and Independent Accountants

Willkie Farr & Gallagher, 787 Seventh Avenue, New York, New York 10019-6099,
serves as Counsel to the Trust and from time to time provides certain legal
services to Bankers Trust. PricewaterhouseCoopers LLP, 250 W. Pratt Street,
Baltimore, Maryland 21201 has been selected as Independent Accountants for the
Trust.

24
<PAGE>

ORGANIZATION OF THE TRUST

BT Institutional Funds was organized on March 26, 1990 under the laws of the
Commonwealth of Massachusetts. The Fund is a separate series of the Trust. The
Trust offers shares of beneficial interest of separate series, par value $0.001
per share. The shares of the other series of the Trust are offered through
separate prospectuses and statements of additional information. The shares of
each series participate equally in the earnings, dividends and assets of the
particular series. The Trust may create and issue additional series of shares.
Each Trust's Declaration of Trust permits the Trustees to divide or combine the
shares into a greater or lesser number of shares without thereby changing the
proportionate beneficial interest in a series. Each share represents an equal
proportionate interest in a series with each other share. Shares when issued
are fully paid and non-assessable, except as set forth below. Shareholders are
entitled to one vote for each share held. No series of shares has any
preference over any other series.

The Trust is an entity commonly known as a "Massachusetts business trust."
Massachusetts law provides that shareholders could under certain circumstances
be held personally liable for the obligations of the Trust. However, the
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 shareholders incurring
financial loss on account of shareholder liability is limited to circumstances
in which both inadequate insurance existed and the Trust itself was 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 is not required to hold annual meetings of shareholders but will hold
special meetings of shareholders when in the judgment of the Trustees it is
necessary or desirable to submit matters for a shareholder vote. Shareholders
have under certain circumstances the right to communicate with other
shareholders in connection with requesting a meeting of shareholders for the
purpose of removing one or more Trustees without a meeting. When matters are

25
<PAGE>

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 generally vote by
Fund, except with respect to the election of Trustees and the ratification of
the selection of independent accountants. Shareholders of the Fund are not
entitled to vote on Trust matters that do not affect the Fund. 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.

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. Upon liquidation of the Fund, shareholders of that Fund
would be entitled to share pro rata in the net assets of the Fund available for
distribution to shareholders.

TAXES

The following is only a summary of certain tax considerations generally
affecting the Fund and its shareholders, and is not intended as a substitute for
careful tax planning. Shareholders are urged to consult their tax advisers with
specific reference to their own tax situations.

The Trust intends that the Fund qualify as a separate regulated investment
company under the Internal Revenue Code of 1986, as amended (the "Code").
Provided that the Fund is a regulated investment company, the Fund will not be
liable for Federal income taxes to the extent all of its taxable net investment
income and net realized long and short-term capital gains, if any, are
distributed to its shareholders. Although the Trust expects the Fund to be
relieved of all or substantially all Federal income taxes, depending upon the
extent of its activities in states and

26
<PAGE>

localities in which its offices are maintained, in which its agents or
independent contractors are located or in which they are otherwise deemed to be
conducting business, that portion of the Fund's income which is treated as
earned in any such state or locality could be subject to state and local tax.
Any such taxes paid by the Fund would reduce the amount of income and gains
available for distribution to its shareholders.

While the Fund does not expect to realize net long-term capital gains, any such
gains realized will be distributed annually. Such distributions ("capital gain
dividends"), if any, will be taxable to non tax-exempt shareholders as long-term
capital gains, regardless of how long a shareholder has held Fund shares.

The Fund is designed to provide investors with liquidity and current income. The
Fund is not intended to constitute a balanced investment program and is not
designed for investors seeking capital gains, maximum income or maximum tax-
exempt income irrespective of fluctuations in principal

PERFORMANCE INFORMATION

The "effective yield" of the Fund is an annualized "yield" based on a
compounding of the unannualized base period return. These yields are each
computed in accordance with a standard method prescribed by the rules of the
SEC, by first determining the "net change in account value" for a hypothetical
account having a share balance of one share at the beginning of a seven-day
period (the "beginning account value"). The net change in account value equals
the value of additional shares purchased with dividends from the original share
and dividends declared on both the original share and any such additional
shares. The unannualized "base period return" equals the net change in account
value divided by the beginning account value. Realized gains or losses or
changes in unrealized appreciation or depreciation are not taken into account in
determining the net change in account value.

27
<PAGE>

The yields are then calculated as follows:

Base Period Return = Net Change in Account Value
---------------------------
Beginning Account Value

Current Yield = Base Period Return x 365/7

Effective Yield = [(1 + Base Period Return)/365/7/] - 1

The Fund's current yield for the seven days ended June 30, 1999 was 4.93% and
the effective yield was 5.05%.

FINANCIAL STATEMENTS

The financial statements for the Fund for the year ended June 30, 1999 are
incorporated herein by reference to the Annual Report to shareholders for the
Fund dated June 30, 1999. A copy of the Fund's Annual Report may be obtained
without charge by contacting the Fund.

28
<PAGE>

APPENDIX

Description of Securities Ratings

Description of S&P commercial paper ratings:

Commercial paper rated A-1 by S&P indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues determined
to possess overwhelming safety characteristics are denoted A-1+.

Description of Moody's commercial paper ratings:

The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Issuers rated Prime-1 (or related supporting institutions) are considered to
have a superior capacity for repayment of short-term promissory obligations.

Description of Fitch Investors Service's commercial paper ratings:

F1+--Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.

F1--Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than the strongest
issue.

Description of Duff & Phelps' commercial paper ratings:

Duff 1+--Highest certainty of timely payment. Short term liquidity, including
internal operating factors and/or access to alternative sources of funds, is
outstanding, and safety is just below risk free U.S. Treasury short term
obligations.

Duff 1--Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are minor.

Description of Thomson Bank Watch Short-Term Ratings:

T-1--The highest category; indicates a very high likelihood that principal and
interest will be paid on a timely basis.

29
<PAGE>

T-2--The second-highest category; while the degree of safety regarding timely
repayment of principal and interest is strong, the relative degree of safety is
not as high as for issues rated "TBW-1".

T-3--The lowest investment-grade category; indicates that while the obligation
is more susceptible to adverse developments (both internal and external) than
those with higher ratings, the capacity to service principal and interest in a
timely fashion is considered adequate.

T-4--The lowest rating category; this rating is regarded as non-investment grade
and therefore speculative.

30
<PAGE>

Investment Adviser and Administrator

BANKERS TRUST COMPANY

Distributor and Placement Agent

ICC DISTRIBUTORS, INC.

Custodian and Transfer Agent

BANKERS TRUST COMPANY

Independent Accountants

PRICEWATERHOUSECOOPERS LLP

Counsel

WILLKIE FARR & GALLAGHER

____________________

No person has been authorized to give any information or to make any
representations other than those contained in the Fund's Confidential Private
Offering Memorandum or its Confidential Statement of Additional Information in
connection with the offering of the Fund'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 Fund's Confidential Private Offering
Memorandum nor its Confidential 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.

_____________________

31
<PAGE>

PART C OTHER INFORMATION

Item 23. Exhibits.
---------

(a) Amended and Restated Declaration of Trust dated March 29, 1990; 1
(i) Fifteenth Amended and Restated Establishment and Designation of
Series dated December 9, 1998; 9
(b) By-Laws; 1
(c) Incorporated by reference to (b) above;
(d) Investment Advisory Agreement dated August 6, 1996; 2
(i) Exhibit A to Investment Advisory Agreement dated August 6, 1996, as
revised October 31, 1997; 3
(e) Distribution Agreement dated August 11, 1998; 3
(i) Appendix A to Distribution Agreement dated August 11, 1998, as
revised December 9, 1998; 9
(ii) Exclusive Placement Agent Agreement dated September 30, 1996 on
behalf of Institutional Daily Assets Fund; 10
(iii) Exclusive Placement Agent Agreement dated October 31, 1997 on behalf
of Institutional Treasury Assets Fund; 5
(f) Bonus or Profit Sharing Contracts -- Not applicable;
(g) Custodian Agreement dated July 1, 1996; 4
(i) Amendment #1 to Exhibit A dated March 26, 1997 of the Custodian
Agreement; 4
(ii) Amendment #2 to Exhibit A dated October 8, 1997 of Custodian
Agreement; 5
(iii) Amendment #3 to Exhibit A dated October 31, 1997 of Custodian
Agreement; 5
(iv) Cash Services Addendum dated December 18, 1998 to Custodian
Agreement; 6
(v) Amendment #4 to Exhibit A dated December 9, 1998 of Custodian
Agreement; 9
(vi) Custodian Agreement dated September 10, 1996 on behalf of
Institutional Daily Assets Fund; 4
(h) Administration and Services Agreement dated October 28, 1992; 1
(i) Exhibit D dated December 9, 1998 to the Administration and Services
Agreement; 9
(ii) Expense Limitation Agreement dated September 30, 1998 on behalf of
International Equity Fund, International Small Company Equity Fund
and Global Emerging Markets Equity Fund; 8
(iii) Expense Limitation Agreement dated December 31, 1998, on behalf of
Institutional Cash Management Fund, Institutional Cash Reserves,
Institutional Treasury Money Fund, Equity 500 Index Fund,
Institutional Liquid Assets Fund, and Institutional Treasury Assets
Fund; 11
(iv) Expense Limitation Agreement dated June 30, 1999, on behalf of
Institutional Daily Assets Fund - filed herewith;
(v) Expense Limitation Agreement dated June 4, 1999, on behalf of
International Equity Fund -- filed herewith;
(vi) Expense Limitation Agreement dated June 4, 1999, on behalf of
Institutional Cash Management Fund, Institutional Cash Reserves Fund,
Institutional Treasury Money Fund, Equity 500 Index Fund,
Institutional Liquid Assets Fund, and Institutional Treasury Assets
Fund -- filed herewith;

<PAGE>

(i) Legal Opinion - Not Applicable;
(j) Consent of Independent Accountants - filed herewith
(k) Omitted Financial Statements - Not Applicable;

(l) (i) Investment representation letter of initial shareholder of Equity
500 Index Fund; 7
(ii) Investment representation letter of initial shareholder of
Institutional Liquid Assets Fund; 1
(iii) Investment representation letter of initial shareholder of
Institutional Daily Assets Fund; 2
(m) Rule 12b-1 Plans - Not Applicable;
(n) Financial Data Schedules - filed herewith;
(o) Multiple Class Expense Allocation Plan Adopted Pursuant to Rule 18f-3 dated
March 26, 1997; 4
____________________

1. Incorporated by reference to Post-Effective Amendment No. 14 to the
Registration Statement as filed with the Commission on July 5, 1995.
2. Incorporated by reference to Amendment No. 21 to the Registration Statement
as filed with the Commission on September 24, 1996.
3. Incorporated by reference to Post-Effective Amendment No. 24 to the
Registration Statement as filed with the Commission on November 24, 1998.
4. Incorporated by reference to Post-Effective Amendment No. 20 to the
Registration Statement as filed with the Commission on September 10, 1997.
5. Incorporated by reference to Post-Effective Amendment No. 21 to the
Registration Statement as filed with the Commission on January 28, 1998.
6. Incorporated by reference to Amendment No. 31 to the Registration Statement
as filed with the Commission on October 27, 1998.
7. Incorporated by reference to Post-Effective Amendment No. 4 to the
Registration Statement as filed with the Commission on April 30, 1992.
8. Incorporated by reference to Post-Effective Amendment No. 26 to the
Registration Statement as filed with the Commission on January 28, 1999.
9. Incorporated by reference to Post-Effective Amendment No. 27 to the
Registration Statement as filed with the Commission on February 8, 1999.
10. Incorporated by reference to Post-Effective Amendment No. 19 to the
Registration Statement as filed with the Commission on March 17, 1997.
11. Incorporated by reference to Post-Effective Amendment No. 29 to the
Registration Statement as filed with the Commission on April 30, 1999.

Item 24. Persons Controlled by or under Common Control with Registrant.
--------------------------------------------------------------
<PAGE>

None

Item 25. Indemnification.
----------------

Incorporated by reference to Post-Effective Amendment No. 17 to the Registration
Statement as filed with the Commission on April 30, 1996.

Item 26. Business and Other Connections of Investment Adviser.
-----------------------------------------------------

Bankers Trust serves as investment adviser to the Fund. Bankers Trust, a New
York banking corporation, is a wholly owned subsidiary of Deutsche Bank AG.
Bankers Trust conducts a variety of commercial banking and trust activities and
is a major wholesale supplier of financial services to the international
institutional market.

To the knowledge of the Trust, none of the directors or officers of Bankers
Trust, except those set forth below, is engaged in any other business,
profession, vocation or employment of a substantial nature, except that certain
directors and officers also hold various positions with and engage in business
for Bankers Trust Corporation. Set forth below are the names and principal
businesses of the directors and officers of Bankers Trust who to our knowledge
as of July 28, 1999, are engaged in any other business, profession, vocation or
employment of a substantial nature.

Josef Ackermann
Chairman of the Board, Chief Executive Officer and President, Bankers Trust;
Member, Board of Managing Directors, Deutsche Bank AG. Address: Deutsche Bank
AG, Taunusanlage 12, D-60262 Frankfurt am Main, Federal Republic of Germany.

Hans Angermueller
Director, Bankers Trust; Director of various corporations; Shearman and
Sterling, of counsel. Address: Shearman & Sterling, 599 Lexington Avenue, New
York, New York 10022

George B. Beitzel
Director, Bankers Trust and Bankers Trust Corporation since 1977; Director of
various corporations. Address: 29 King Street, Chappaqua, New York 10514-3432.

William R. Howell
<PAGE>

Director, Bankers Trust; Chairman Emeritus, J.C. Penney Company, Inc.; Director
of various corporations. Address: J.C. Penney Company, Inc., P.O. Box 10001,
Dallas, Texas 74301-1109.

Hermann-Josef Lamberti
Director, Bankers Trust; Member, Board of Managing Directors, Deutsche Bank AG.
Address: Deutsche Bank AG, Taunusanlage 12, D-60262 Frankfurt am Main, Federal
Republic of Germany.

John A. Ross
Director, Bankers Trust; Regional Chief Executive Officer, Deutsche Bank
Americas Holding Corp. Address: Deutsche Bank, 31 West 52/nd/ Street, New York,
New York 10019.

Ronaldo H. Schmitz
Director, Bankers Trust; Member, Board of Managing Directors, Deutsche Bank AG.
Address: Deutsche Bank AG, Taunusanlage 12, D-60262 Frankfurt am Main, Federal
Republic of Germany.

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 Pyramid Mutual Funds, BT Investment 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 and BT Investment Portfolio.

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

Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
- ------------------ ---------------- ---------------

John Y. Keffer President None
Sara M. Morris Treasurer None
David I. Goldstein Secretary None
Benjamin L. Niles Vice President None
Margaret J. Fenderson Assistant Treasurer None
Dana L. Lukens Assistant Secretary None
Nanette K. Chern Chief Compliance Officer None

ITEM 28. Location of Accounts and Records.
---------------------------------
<PAGE>

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

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

Investors Fiduciary 127 West 10th Street,
Trust Company: 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 Investment Company Act of 1940, the
Registrant, BT INSTITUTIONAL FUNDS on behalf of one of its series, Institutional
Daily Fund, has duly caused this Amendment 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 28th day of October, 1999.

BT INSTITUTIONAL FUNDS

By: /s/ Daniel O. Hirsch

Daniel O. Hirsch, Secretary
April 26, 1999

<PAGE>

EXHIBIT 23

[PricewaterhouseCoopers letterhead]

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to inclusion in the Confidential Private Offering Memorandum
dated October 28, 1999 of our report dated July 30, 1999 relating to the
financial statements and financial highlights appearing in the June 30, 1999
Annual Report to Shareholders of Institutional Treasury Assets Fund.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Baltimore, Maryland
October 28, 1999

<PAGE>
<ARTICLE> 6
<CIK> 0000862157
<NAME> INSTITUTIONAL DAILY ASSET FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> JUN-30-1999
<INVESTMENTS-AT-COST> 7,932,218,562
<INVESTMENTS-AT-VALUE> 7,932,218,562
<RECEIVABLES> 26,919,820
<ASSETS-OTHER> (3,807)
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,959,134,575
<PAYABLE-FOR-SECURITIES> 124,994,012
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 29,565,582
<TOTAL-LIABILITIES> 154,559,694
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,804,431,950
<SHARES-COMMON-STOCK> 7,804,431,950
<SHARES-COMMON-PRIOR> 5,571,775,829
<ACCUMULATED-NII-CURRENT> 83,474
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 7,804,574,882
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 332,802,620
<OTHER-INCOME> 0
<EXPENSES-NET> 7,642,794
<NET-INVESTMENT-INCOME> 325,159,826
<REALIZED-GAINS-CURRENT> 59,458
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 325,219,284
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (325,115,954)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17,445,099,092
<NUMBER-OF-SHARES-REDEEMED> (15,369,894,813)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,075,307,609
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,368,995
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,758,388
<AVERAGE-NET-ASSETS> 6,368,994,904
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.05)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.12

</TABLE>

<PAGE>

EXPENSE LIMITATION AGREEMENT

THIS EXPENSE LIMITATION AGREEMENT is made as of the 30/th/ day of June,
1999 by and between BT INSTITUTIONAL FUNDS, a Massachusetts Business trust (the
"Trust"), and BANKERS TRUST, a New York corporation (the "Adviser"), with
respect to the following:

WHEREAS, the Adviser serves as BT Institutional Funds' Investment Adviser
pursuant to an Investment Advisory Agreement dated June 4, 1999, and the Adviser
serves as the Trust's Administrator pursuant to an Administration and Services
Agreement dated October 28, 1992, as amended, (collectively, the "Agreements");
and

WHEREAS, the Adviser has voluntarily agreed, under the Agreements, to waive
its fees and reimburse expenses so that the total operating expenses for the
Trust will not exceed the percentage of average daily net assets as set forth on
Exhibit A; and

WHEREAS, the Trust and the Adviser desire to formalize this voluntary fee
waiver and expense reimbursement arrangement for the 16-month period beginning
on June 30, 1999 and ending on October 28, 2000.

NOW, in consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt whereof is hereby acknowledged, the
parties hereto agree as follows:

1. The Adviser agrees to waive its fees and reimburse expenses for a 16-month
period from June 30, 1999 to October 28, 2000 to the extent necessary so
that each Fund's total annual operating expenses do not exceed the
percentage of average daily net assets set forth on Exhibit A.

2. Upon the termination of the Investment Advisory Agreement or the
Administration Agreement, this Agreement shall automatically terminate.

where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is revised by rule, regulation or order of the
SEC, such provision shall be deemed to incorporate the effect of such rule,
regulation or order. Otherwise the provisions of this Agreement shall be
interpreted in accordance with the laws of Massachusetts.
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers as of the day and year first
above written.

BT INSTITUTIONAL FUNDS

Attest: /s/ Amy M. Olmert By: /s/Daniel O. Hirsch
Name: Amy M. Olmert Name: Daniel O. Hirsch
Title: Secretary

BANKERS TRUST COMPANY

Attest: /s/ Amy M. Olmert By: /s/ Ross Youngman
Name: Amy M. Olmert Name: Ross Youngman
Title: Managing Director
<PAGE>

Exhibit A

Total Fund Operating Expenses
Fund (as a percentage of average daily
net assets) ---------------------------------
- ----------

Institutional Daily Assets Fund 0.12%

<PAGE>

EXPENSE LIMITATION AGREEMENT

THIS EXPENSE LIMITATION AGREEMENT is made as of the 4/th/ day of June, 1999
by and between BT INSTITUTIONAL FUNDS, a Massachusetts Business trust (the
"Trust"), INTERNATIONAL EQUITY PORTFOLIO, a New York Trust ( a "Portfolio
Trust") and BANKERS TRUST, a New York corporation (the "Adviser"), with respect
to the following:

WHEREAS, the Adviser serves as each Portfolio Trust's Investment Adviser
pursuant to Investment Advisory Agreements dated June 4, 1999 and the Adviser
serves as the Trust's Administrator pursuant to an Administration and Services
Agreement dated October 28, 1992 (collectively, the "Agreements"); and

WHEREAS, the Adviser has voluntarily agreed, under the Agreements, to waive
its fees and reimburse expenses so that the total operating expenses for each of
the Trust's series (each a "Fund," collectively the "Funds") and each of the
Portfolio Trust's series will not exceed the percentage of average daily net
assets as set forth on Exhibit A; and

WHEREAS, the Trust and the Adviser desire to formalize this voluntary fee
waiver and expense reimbursement arrangement for the period beginning on June 4,
1999 and ending on January 31, 2000.

NOW, in consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt whereof is hereby acknowledged, the
parties hereto agree as follows:

1. The Adviser agrees to waive its fees and reimburse expenses for the
period from June 4, 1999 to January 31, 2000 to the extent necessary
so that each Fund's total annual operating expenses do not exceed the
percentage of average daily net assets set forth on Exhibit A.

2. Upon the termination of the Investment Advisory Agreement or the
Administration Agreement, this Agreement shall automatically
terminate.

3. Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or
provision of the Investment Company Act of 1940 (the "1940 Act") shall
be resolved by reference to such term or provision of the 1940 Act and
to interpretations thereof, if any, by the United States Courts or in
the absence of any controlling decision of any such court, by rules,
regulations or orders of the Securities and Exchange Commission
("SEC") issued pursuant to said Act. In addition, where the effect of
a requirement of the 1940 Act reflected in any provision of this
Agreement is revised by rule, regulation or order of the SEC, such
provision shall be deemed to
<PAGE>

incorporate the effect of such rule, regulation or order. Otherwise
the provisions of this Agreement shall be interpreted in accordance
with the laws of Massachusetts.
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers as of the day and year first
above written.

INTERNATIONAL EQUITY PORTFOLIO

Attest: /s/ Amy M. Olmert By: /s/ Daniel O. Hirsch
Name: Amy M. Olmert Name: Daniel O. Hirsch
Title: Secretary

BT INSTITUTIONAL FUNDS

Attest: /s/ Amy M. Olmert By: /s/ Daniel O. Hirsch
Name: Amy M. Olmert Name: Daniel O. Hirsch
Title: Secretary

BANKERS TRUST

Attest: /s/ Amy M. Olmert By: /s/ Ross Youngman
Name: Amy M. Olmert Name: Ross Youngman
Title: Managing Director
<PAGE>

Exhibit A

<TABLE>
<CAPTION>
Total Fund Operating Expenses
Fund (as a percentage of average daily net assets)
- ---- ---------------------------------------------
<S> <C>
International Equity Fund - Class I 0.95
International Equity Fund - Class II 1.25
</TABLE>
<PAGE>

EXPENSE LIMITATION AGREEMENT

THIS EXPENSE LIMITATION AGREEMENT is made as of the 4/th/ day of June, 1999
by and between BT INSTITUTIONAL FUNDS, a Massachusetts Business trust (the
"Trust"), CASH MANAGEMENT PORTFOLIO, TREASURY MONEY PORTFOLIO, EQUITY 500 INDEX
PORTFOLIO and BT INVESTMENT PORTFOLIOS, each a New York trust (each a "Portfolio
Trust"), and BANKERS TRUST, a New York corporation (the "Adviser"), with respect
to the following:

WHEREAS, the Adviser serves as BT Institutional Funds' Investment Adviser
pursuant to an Investment Advisory Agreement dated June 4, 1999, the Adviser
serves as Investment Adviser to Cash Management Portfolio and Treasury Money
Portfolio pursuant to Investment Advisory Agreements dated June 4, 1999; the
Adviser serves as Investment Adviser to Equity 500 Index Portfolio pursuant to
an Investment Advisory Agreement dated June 4, 1999, the Adviser serves as BT
Investment Portfolio's Investment Adviser pursuant to an Investment Advisory
Agreement dated June 4, 1999, and each as re-approved thereafter, and the
Adviser serves as the Trust's Administrator pursuant to an Administration and
Services Agreement dated October 28, 1992, as amended, (collectively, the
"Agreements"); and

WHEREAS, the Adviser has voluntarily agreed, under the Agreements, to waive
its fees and reimburse expenses so that the total operating expenses for each of
the Trust's series (each a "Fund," collectively the "Funds") and each Portfolio
Trust's series (each a "Portfolio," collectively the "Portfolios") will not
exceed the percentage of average daily net assets as set forth on Exhibit A; and

WHEREAS, the Trust and the Adviser desire to formalize this voluntary fee
waiver and expense reimbursement arrangement for the period beginning on June 4,
1999 and ending on April 30, 2000.

NOW, in consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt whereof is hereby acknowledged, the
parties hereto agree as follows:

1. The Adviser agrees to waive its fees and reimburse expenses for a period
from June 4, 1999 to April 30, 2000 to the extent necessary so that each
Fund's total annual operating expenses do not exceed the percentage of
average daily net assets set forth on Exhibit A.

2. Upon the termination of the Investment Advisory Agreement or the
Administration Agreement, this Agreement shall automatically terminate.

3. Any question of interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of
the Investment Company Act of 1940 (the "1940 Act") shall be resolved by
reference to such term or provision of the 1940 Act and to interpretations
thereof, if any, by the United States Courts or in the absence of any
controlling decision of any such court, by rules, regulations or orders of
the Securities and Exchange Commission ("SEC") issued pursuant to said Act.
In addition, where the effect of a requirement of the 1940 Act reflected in
any provision of this Agreement is revised by rule, regulation or order of
the SEC, such provision shall be deemed to incorporate the effect of such
rule, regulation or order. Otherwise the provisions of this Agreement shall
be interpreted in accordance with the laws of Massachusetts.
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers as of the day and year first
above written.

BT INSTITUTIONAL FUNDS

Attest: /s/ Amy M. Olmert By: /s/ Daniel O. Hirsch
Name: Amy M. Olmert Name: Daniel O. Hirsch
Title: Secretary

CASH MANAGEMENT PORTFOLIO

Attest: /s/ Amy M. Olmert By: /s/ Daniel O. Hirsch
Name: Amy M. Olmert Name: Daniel O. Hirsch
Title: Secretary

TREASURY MONEY PORTFOLIO

Attest: /s/ Amy M. Olmert By: /s/ Daniel O. Hirsch
Name: Amy M. Olmert Name: Daniel O. Hirsch
Title: Secretary

EQUITY 500 INDEX PORTFOLIO

Attest: /s/ Amy M. Olmert By: /s/ Daniel O. Hirsch
Name: Amy M. Olmert Name: Daniel O. Hirsch
Title: Secretary

BT INVESTMENT PORTFOLIO

Attest: /s/ Amy M. Olmert By: /s/ Daniel O. Hirsch
Name: Amy M. Olmert Name: Daniel O. Hirsch
Title: Secretary

BANKERS TRUST COMPANY

Attest: /s/ Amy M. Olmert By: /s/ Ross Youngman
Name: Amy M. Olmert Name: Ross Youngman
Title: Managing Director
<PAGE>

EXHIBIT A

<TABLE>
<CAPTION>
Total Fund Operating Expenses
Fund (as a percentage of average daily net assets)
- ---- ---------------------------------------------
<S> <C>
Institutional Cash Management Fund 0.23%
Institutional Cash Reserves Fund 0.18%
Institutional Treasury Money Fund 0.75%
Institutional Liquid Assets Fund 0.16%
Institutional Treasury Assets Fund 0.25%
Institutional Equity 500 Index Fund 0.10%
</TABLE>