o BT INSTITUTIONAL FUNDS o
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INSTITUTIONAL LIQUID ASSETS FUND
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A money market fund that seeks high current income to the extent consistent with
liquidity and the preservation of capital.
PROSPECTUS
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APRIL 30, 1998
AS REVISED APRIL 14, 1999
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BT Institutional Funds (the "Trust") is an open-end management investment
company (mutual fund) which consists of a number of separate investment funds.
Please read this Prospectus carefully before investing and retain it for future
reference. It contains important information about the Institutional Liquid
Assets Fund (the "Fund") that you should know and can refer to in deciding
whether the Fund's goals match your own.
A Statement of Additional Information ("SAI") with the same date has been filed
with the Securities and Exchange Commission ("SEC"), and is incorporated herein
by reference. You may request a free copy of the SAI or a paper copy of this
prospectus, if you have received your prospectus electronically, free of charge
by calling the Fund's Service Agent at 1-800-368-4031. The SAI material
incorporated by reference into this document, and other information regarding
the Trust is maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).
UNLIKE MOST OTHER MUTUAL FUNDS, THE FUND SEEKS TO ACHIEVE ITS INVESTMENT
OBJECTIVE BY INVESTING ALL OF ITS INVESTABLE ASSETS ("ASSETS") IN THE LIQUID
ASSETS PORTFOLIO (THE "PORTFOLIO"), A SEPARATE INVESTMENT COMPANY WITH AN
IDENTICAL INVESTMENT OBJECTIVE. THE INVESTMENT PERFORMANCE OF THE FUND WILL
CORRESPOND DIRECTLY TO THE INVESTMENT PERFORMANCE OF THE PORTFOLIO. SEE "SPECIAL
INFORMATION CONCERNING MASTER-FEEDER FUND STRUCTURE" HEREIN.
BANKERS TRUST COMPANY ("BANKERS TRUST") IS THE INVESTMENT ADVISER (THE
"ADVISER") OF THE PORTFOLIO. SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED OR ENDORSED BY, BANKERS TRUST OR ANY OTHER BANKING OR
DEPOSITORY INSTITUTION. SHARES ARE NOT FEDERALLY GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE U.S. GOVERNMENT, THE FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. THE FUND INTENDS TO MAINTAIN A
CONSTANT $1.00 PER SHARE NET ASSET VALUE, ("NAV") ALTHOUGH THERE CAN BE NO
ASSURANCE THAT IT WILL BE ABLE TO DO SO.
LIKE SHARES OF ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
ICC DISTRIBUTORS, INC.
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Two Portland Square o Portland, Maine o 04101
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TABLE OF CONTENTS
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PAGE
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The Fund...................................................................... 3
Who May Invest................................................................ 3
Summary of Fund Expenses...................................................... 4
Financial Highlights.......................................................... 5
Investment Objective and Policies............................................. 6
Risk Factors: Matching the Fund to Your Investment Needs......................10
Net Asset Value...............................................................11
Purchase and Redemption of Shares.............................................12
Dividends, Distributions and Taxes............................................13
Performance Information and Reports...........................................13
Management of the Trust and Portfolio.........................................14
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2
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THE FUND
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The Fund seeks a high level of current income consistent with liquidity and the
preservation of capital through investment in high quality money market
instruments. See "Risk Factors: Matching the Fund to Your Investment Needs"
herein.
The Trust seeks to achieve the investment objective of the Fund by investing all
the Assets of the Fund in the Portfolio, which has the same investment objective
as the Fund.
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WHO MAY INVEST
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The Fund is designed as a cash management vehicle for institutional investors
seeking high current income approximating money market rates while remaining
conveniently liquid with a stable NAV.
The Fund is not in itself a balanced investment plan. Investors should consider
their investment objective and tolerance for risk when making an investment
decision. When investors sell their Fund shares, they may be worth more or less
than what they originally paid for them. See "Risk Factors: Matching the Fund to
Your Investment Needs" herein.
3
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SUMMARY OF FUND EXPENSES
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The following table provides (i) a summary of expenses relating to purchases and
sales of shares of the Fund and the aggregate annual operating expenses of the
Fund and the expenses of the Portfolio as a percentage of average net assets of
the Fund and (ii) an example illustrating the dollar cost of such expenses on a
$1,000 investment in the Fund. THE TRUSTEES OF BT INSTITUTIONAL FUNDS BELIEVE
THAT THE AGGREGATE PER SHARE EXPENSES OF THE FUND AND THE PORTFOLIO WILL BE LESS
THAN OR APPROXIMATELY EQUAL TO THE EXPENSES WHICH THE FUND WOULD INCUR IF THE
TRUST RETAINED THE SERVICES OF AN INVESTMENT ADVISER AND THE ASSETS OF THE FUND
WERE INVESTED DIRECTLY IN THE TYPE OF SECURITIES BEING HELD BY THE PORTFOLIO.
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<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES
(as a percentage of the average daily net assets of the Fund)
<S> <C> <C> <C> <C> <C>
Investment advisory fee (after reimbursements or waivers)................................................... 0.10%
----
12b-1 fees.................................................................................................. None
Other expenses (after reimbursements or waivers)............................................................ 0.06%
----
Total operating expenses (after reimbursements or waivers).................................................. 0.16%
----
EXAMPLE: 1 year 3 years 5 years 10 years
------- -------- -------- --------
You would pay the following expenses on a $1,000
investment, assuming: (1) 5% annual return and (2) redemption
at the end of each time period.......................................... $2 $5 $9 $20
</TABLE>
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The expense table and the example above show the costs and expenses that an
investor will bear directly or indirectly as a shareholder of the Fund. Bankers
Trust has voluntarily agreed to waive a portion of its investment advisory fee.
Without such waiver, the Portfolio's investment advisory fee would be equal to
0.15%. The expense table and the example reflect a voluntary undertaking by
Bankers Trust to waive or reimburse expenses such that the total operating
expenses will not exceed 0.16% of the Fund's average net assets annually. In the
absence of these undertakings, for the fiscal year ended December 31, 1997 the
total operating expenses would have been equal to approximately 0.25% of the
Fund's average net assets annually. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. Moreover, while each example assumes a 5% annual return,
actual performance will vary and may result in a return greater or less than 5%.
The Fund is distributed by ICC Distributors, Inc. ("ICC" or the "Distributor")
to customers of Bankers Trust or to customers of another bank or a dealer or
other institution that has a sub-shareholder servicing agreement with Bankers
Trust (along with Bankers Trust, a "Service Agent"). Some Service Agents may
impose certain conditions on their customers in addition to or different from
those imposed by the Fund and may charge their customers a direct fee for their
services. Each Service Agent has agreed to transmit to shareholders who are its
customers appropriate disclosures of any fees that it may charge them directly.
For more information with respect to the expenses of the Fund and the Portfolio
see "Management of the Trust and Portfolio" herein.
4
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FINANCIAL HIGHLIGHTS
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The following table shows selected data for a share outstanding, total
investment return, ratios to average net assets and other supplemental data for
the Fund for the period indicated and has been audited by PricewaterhouseCoopers
LLP, the Fund's independent accountants, whose report thereon appears in the
Fund's Annual Report which is incorporated by reference.
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<TABLE>
<CAPTION>
FOR THE PERIOD
DECEMBER 11,
1995
(COMMENCEMENT OF
FOR THE FOR THE OPERATIONS) TO
YEAR ENDED YEAR ENDED DECEMBER 31,
DECEMBER 31, 1997 DECEMBER 31, 1996 1995
<S> <C> <C> <C>
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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 0.05 0.00+
Net Realized Gain (Loss) from Investment Transactions....... (0.00)+ 0.00+ 0.00+
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Total from Investment Operations.............................. 0.05 0.05 0.00+
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DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income....................................... (0.05) (0.05) (0.00)+
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NET ASSET VALUE, END OF PERIOD................................ $ 1.00 $ 1.00 $ 1.00
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TOTAL INVESTMENT RETURN....................................... 5.63% 5.45% 5.88%*
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Period (000s omitted).................... $ 3,316,815 $ 1,943,024 $1,477,401
Ratios to Average Net Assets:
Net Investment Income..................................... 5.48% 5.32% 5.50%*
Expenses, Including Expenses of the Liquid Assets
Portfolio............................................... 0.16% 0.04% 0.01%*
Decrease Reflected in Above Expense Ratio Due to
Absorption of Expenses by Bankers Trust................. 0.09% 0.22% 0.97%*
</TABLE>
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* Annualized.
+ Less than $0.01 per share.
Further information about the Fund's performance is contained in the Fund's
Annual Report dated December 31, 1997, which can be obtained free of charge.
5
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INVESTMENT OBJECTIVE AND POLICIES
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The Fund seeks a high level of current income consistent with liquidity and the
preservation of capital through investment in high quality money market
instruments.
The Trust seeks to achieve the investment objective of the Fund by investing all
the Assets of the Fund in the Portfolio, which has the same investment objective
as the Fund. The Portfolio is a series of BT Investment Portfolios (the
"Portfolio Trust"), an open-end management investment company. There can be no
assurance that the investment objective of either the Fund or the Portfolio will
be achieved. The Fund's investment objective is not a fundamental policy and may
be changed upon 30 days written notice to, but without the approval of, the
Fund's shareholders. The investment objective of the Portfolio is a fundamental
policy which may only be changed by a majority vote of the investors in the
Portfolio. See "Special Information Concerning Master-Feeder Fund Structure"
herein.
Since the investment characteristics of the Fund will correspond directly to
those of the Portfolio, the following is a discussion of the various investments
and investment policies of the Portfolio. Additional information about the
investment policies of the Portfolio appears in the SAI.
LIQUID ASSETS PORTFOLIO
The Portfolio, in pursuing its investment objective, will comply with Rule 2a-7
under the 1940 Act ("Rule 2a-7"). Thus, descriptions of investment techniques
and portfolio instruments are qualified by the provisions and limitations of
Rule 2a-7.
The Portfolio will attempt to achieve its investment objective by investing in
the following money market instruments:
OBLIGATIONS OF BANKS AND OTHER FINANCIAL INSTITUTIONS. The Portfolio may invest
in U.S. dollar-denominated fixed rate or variable rate obligations of U.S. or
foreign financial institutions which are rated in the highest short-term rating
category by any two nationally recognized statistical rating organizations
("NRSROs") (or one NRSRO if that NRSRO is the only such NRSRO which rates such
obligations) or, if not so rated, are believed by Bankers Trust, acting under
the supervision of the Board of Trustees of the Portfolio Trust, to be of
comparable quality. Obligations of domestic and foreign financial institutions
in which the Portfolio may invest include, but are not limited to, certificates
of deposit, bankers' acceptances, bank time deposits, commercial paper, and
other U.S. dollar-denominated instruments issued or supported by the credit of
U.S. or foreign financial institutions including banks.
If Bankers Trust, acting under the supervision of the Board of Trustees of the
Portfolio Trust, deems the instruments to present minimal credit risk, the
Portfolio may invest in obligations of foreign banks or foreign branches and
subsidiaries of U.S. and foreign banks. 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 withholding taxes on
interest payments, differing reserve requirements, reporting and recordkeeping
requirements and accounting standards, possible seizure or nationalization of
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. Under normal market
conditions, the Portfolio will invest more than 25% of its assets in the bank
and other financial institution obligations described above. The Portfolio's
concentration of its investments in bank obligations will cause the Portfolio to
be subject to the risks peculiar to the domestic and foreign banking industries
to a greater extent than if its investments were not so concentrated.
COMMERCIAL PAPER. The Portfolio may invest in fixed rate or variable rate
commercial paper issued by U.S. or foreign entities. Commercial paper when
purchased by the Portfolio must be rated in the highest short-term rating
category by any two NRSROs (or one NRSRO if that NRSRO is the only such NRSRO
which rates such security) or, if not so rated, must be believed by Bankers
Trust, acting under the supervision of the Board of Trustees of the Portfolio
Trust, to be of comparable quality. Any commercial paper issued by a foreign
corporation and purchased by the Portfolio must be U.S. dollar-denominated and
must not be subject to foreign withholding tax at the time of purchase.
Investing in foreign commercial paper generally involves risks similar to those
described above relating to obligations of foreign banks or foreign branches and
subsidiaries of U.S. and foreign banks.
VARIABLE RATE MASTER DEMAND NOTES. Variable rate master demand notes are
unsecured instruments that permit the indebtedness thereunder to vary and
provide for
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periodic adjustments in the interest rate. Because variable rate master demand
notes are direct lending arrangements between the Portfolio and the issuer, they
are not normally traded. Although no active secondary market may exist for these
notes, the Portfolio 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 Portfolio
Trust, 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 Portfolio 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 Portfolio's Securities"
herein.)
U.S. GOVERNMENT OBLIGATIONS. The Portfolio may invest in fixed or variable rate
obligations issued or guaranteed by the U.S. Treasury or by agencies or
instrumentalities of the U.S. government ("U.S. Government Obligations").
Obligations of certain agencies and instrumentalities of the U.S. government,
such as short-term obligations of the Government National Mortgage Association,
are supported by the "full faith and credit" of the U.S. government; others,
such as those of the Export-Import Bank of the U.S., 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 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
only 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.
OTHER DEBT OBLIGATIONS. The Portfolio 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 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 Portfolio 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 provide periodic payments that generally
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.
REPURCHASE AGREEMENTS. The Portfolio may engage in repurchase agreement
transactions with banks and governmental securities dealers approved by the
Board of Trustees of the Portfolio. Under the terms of a typical repurchase
agreement, the Portfolio would acquire U.S. Government Obligations (or any other
securities permitted by Rule 2a-7) regardless of maturity subject to an
obligation of the seller to repurchase, and the Portfolio to resell, the
obligation at an agreed price and time, thereby determining the yield during the
Portfolio's holding period. This arrangement results in a fixed rate of return
that is not subject to market fluctuations during the Portfolio'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
Portfolio bears a risk of loss in the event that the other party to a repurchase
agreement defaults on its obligations and the Portfolio is delayed in or
prevented from exercising its rights to dispose of the collateral securities,
including the risk of a possible decline in the value of the underlying
securities during the period in which the Portfolio seeks to assert these
rights. Bankers Trust, acting under the supervision of the Board of Trustees of
the Portfolio Trust, reviews the creditworthiness of those banks and dealers
with which the Portfolio 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 Portfolio may enter into reverse repurchase
agreements. In a reverse repurchase agreement the Portfolio agrees to sell
portfolio securities to financial institutions such as banks and broker-dealers
and to repurchase them at a mutually agreed date and price. At the time the
Portfolio enters into a reverse repurchase agreement it will place in a
segregated custodial account cash, U.S. Government Obligations or other high
grade, liquid debt instruments
7
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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 Portfolio may decline below the repurchase price of the
securities. Reverse repurchase agreements are considered to be borrowings by the
Portfolio for purposes of the limitations described below and in "Additional
Investment Limitations" below and in the SAI. The Portfolio may only enter into
reverse repurchase agreements for temporary purposes and not for leverage.
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES. To secure prices deemed
advantageous at a particular time, the Portfolio 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 party to the transaction. The Portfolio 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 Portfolio
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
Portfolio to risk because the securities may experience fluctuations in value
prior to their actual delivery. The Portfolio 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
Portfolio will segregate at the Portfolio's custodian liquid instruments 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
Portfolio may invest its assets in other money market funds with comparable
investment objectives. In general, the Portfolio 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 that 10% of its
assets in other money market funds unless permitted to exceed these limitations
by an exemptive order of the SEC.
ILLIQUID SECURITIES. The Portfolio 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 or repurchase agreements with maturities over seven
days). If a security becomes illiquid after purchase by the Portfolio, the
Portfolio will normally sell the security unless to do so would not be in the
best interests of shareholders.
CREDIT ENHANCEMENT. Certain of the Portfolio's acceptable investments may be
credit-enhanced by a guaranty, letter of credit, or insurance. Any bankruptcy,
receivership, default, or change in the credit quality of the party providing
the credit enhancement will adversely affect the quality and marketability of
the underlying security and could cause losses to the Portfolio and affect the
Fund's share price. Subject to the diversification limits contained in Rule 2a-7
the Portfolio may have more than 25% of its total assets invested in securities
credit-enhanced by banks or other financial institutions.
SECURITIES LENDING. The Portfolio is permitted to lend up to 20% of the total
value of its securities. These loans must be secured continuously by cash or
securities issued or guaranteed by the United States government, its agencies or
instrumentalities or by a letter of credit at least equal to the market value of
the securities loaned plus accrued income. By lending its securities, the
Portfolio may increase its income by continuing to receive income on the loaned
securities as well as by the opportunity to receive interest on the collateral.
During the term of the loan, a Portfolio continues to bear the risk of
fluctuations in the price of the loaned securities. In lending securities to
brokers, dealers and other organizations, the Portfolio is subject to risks
which, like those associated with other extensions of credit, include delays in
receiving additional collateral, in recovery should the borrower fail
financially and possible loss of the collateral. Upon receipt of appropriate
regulatory approval, cash collateral may be invested in a money market fund
managed by Bankers Trust (or its affiliate) and Bankers Trust may serve as the
Portfolio's lending agent and may share in revenue received from securities
lending transactions as compensation for this service.
QUALITY AND MATURITY OF THE PORTFOLIO'S SECURITIES
The Portfolio will maintain a dollar-weighted average maturity of 90 days or
less. All securities in which the Portfolio invests will have, or be deemed to
have, remaining maturities of 397 days or less on the date of their purchase,
will be denominated in U.S. dollars and
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will have been granted the required ratings established herein by two NRSROs (or
one NRSRO if that NRSRO is the only such NRSRO which provides such ratings), or
if not so rated, are believed by Bankers Trust, under the supervision of the
Portfolio Trust's Board of Trustees, to be of comparable quality. Currently,
there are five rating agencies which have been designated by the SEC as an
NRSRO. These organizations and their highest short-term rating category (which
also may be modified by a "+") are: Duff and Phelps, Inc., D-1; Fitch IBCA,
Inc., F-1; Moody's Investors Service Inc., Prime-1; Standard & Poor's, A-1; and
Thomson Bank Watch, Inc., T-1. A description of all short and long term ratings
is provided in the Appendix to the SAI. Bankers Trust, acting under the
supervision of and procedures adopted by the Board of Trustees of the Portfolio
Trust, will also determine that all securities purchased by the Portfolio
present minimal credit risks. Bankers Trust will cause the Portfolio 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
Portfolio. High quality short-term instruments may result in a lower yield than
instruments with a lower quality or longer term.
ADDITIONAL INVESTMENT LIMITATIONS
The Fund has the same investment restrictions as the Portfolio, except that the
Fund may invest all of its Assets in another open-end investment company with
substantially the same investment objectives, such as the Portfolio. The
Portfolio 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
Portfolio will be invested in obligations of banks and other financial
institutions. As an operating policy, the Portfolio 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) U.S. Government Obligations and repurchase
agreements collateralized fully thereby, which may be purchased without
limitation. The Portfolio 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
Portfolio'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 Portfolio), time deposits having
remaining maturities of more than seven calendar days and other illiquid
securities will not exceed 10% of the Portfolio's net assets. If changes in the
liquidity of certain securities cause the Portfolio to exceed such 10% limit,
the Portfolio 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 Portfolio. The Fund's and the
Portfolio's limitations on investment in a single industry and on borrowing may
not be changed without the approval of the shareholders of the Fund or the
investors in the Portfolio, as the case may be. All other investment policies
and limitations described in this prospectus may be changed by a vote of the
Trustees of the Trust or the Portfolio Trust, as applicable.
The SAI contains further information on the Fund's and the Portfolio's
investment restrictions.
9
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RISK FACTORS: MATCHING THE FUND TO YOUR INVESTMENT NEEDS
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The Fund is designed as a cash management vehicle for institutional investors
seeking high current income approximating money market rates while remaining
conveniently liquid with a stable share price. The Portfolio adheres to the
following practices which enable the Fund to attempt to maintain a $1.00 share
price: limiting average dollar-weighted maturity of the securities held by the
Portfolio to 90 days or less; buying securities which mature, or are deemed to
mature in 397 days or less; and buying only high quality securities with minimal
credit risks. The Fund cannot guarantee a $1.00 share price, but these practices
help to minimize any price fluctuations that might result from rising or
declining interest rates. While the Portfolio invests in high quality money
market securities, investors should be aware that an investment in the Fund is
not without risk. All money market instruments, including U.S. Government
Obligations, can change in value when interest rates or an issuer's
creditworthiness changes.
It is expected that the majority of investors in the Fund will issue standing
orders, effective in the late afternoon of each day on which the Fund is open
(each such day, a "Valuation Day"), to "sweep" into the Fund cash balances
remaining in accounts at Bankers Trust. The Fund's receipt of significant
purchase orders late in a Valuation Day may impact the Portfolio's ability to
optimize cash management. To assist the Portfolio in remaining fully invested,
pursuant to its request, the Portfolio has received an order from the SEC
granting the Portfolio 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 estimated to be received
on any day through the operation of the sweep program. Such investments will be
apportioned between the Portfolio and Bankers Trust in such a manner as to
maximize the investment of cash by the Portfolio.
SPECIAL INFORMATION CONCERNING MASTER-FEEDER FUND STRUCTURE
Unlike other open-end management investment companies (mutual funds) which
directly acquire and manage their own portfolio securities, the Fund seeks to
achieve its investment objective by investing all of its Assets in the
Portfolio, a series of a separate registered investment company with the same
investment objective as the Fund. Therefore, an investor's interest in the
Portfolio's securities is indirect. In addition to selling a beneficial interest
to the Fund, the Portfolio may sell beneficial interests to other mutual funds
or institutional investors. Such investors will invest in the Portfolio on the
same terms and conditions and will pay a proportionate share of the Portfolio's
expenses. However, the other investors investing in the Portfolio are not
required to sell their shares at the same public offering price as the Fund due
to variations in sales commissions and other operating expenses. Therefore,
investors in the Fund should be aware that these differences may result in
differences in returns experienced by investors in the different funds that
invest in the Portfolio. Such differences in returns are also present in other
mutual fund structures. Information concerning other holders of interests in the
Portfolio is available from Bankers Trust at 1-800-368-4031.
The master-feeder fund structure is relatively complex, so shareholders should
carefully consider this investment approach.
Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the Portfolio, the remaining funds may experience higher pro rata
operating expenses, thereby producing lower returns (however, this possibility
exists as well for traditionally structured funds which have large institutional
investors). Additionally, the Portfolio may become less diverse, resulting in
increased portfolio risk. Also, funds with a greater pro rata ownership in the
Portfolio could have effective voting control of the operations of the
Portfolio. Except as permitted by the SEC, whenever the Trust is requested to
vote on matters pertaining to the Portfolio, the Trust will hold a meeting of
shareholders of the Fund and will cast all of its votes in the same proportion
as the votes of the Fund's shareholders. Fund shareholders who do not vote will
not affect the Trust's votes at the Portfolio meeting. The percentage of the
Trust's votes representing Fund shareholders not voting will be voted by the
Trustees or officers of the Trust in the same proportion as the Fund
shareholders who do, in fact, vote.
Certain changes in the Portfolio's investment objective, policies or
restrictions may require the Fund to withdraw its interest in the Portfolio. Any
such withdrawal could result in a distribution "in kind" of portfolio securities
(as opposed to a cash distribution from the Portfolio). If
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securities are distributed, the Fund could incur brokerage, tax or other charges
in converting the securities to cash. In addition, the distribution in kind may
result in a less diversified portfolio of investments or adversely affect the
liquidity of the Fund. Notwithstanding the above, there are other means for
meeting redemption requests, such as borrowing.
The Fund may withdraw its investment from the Portfolio at any time, if the
Board of Trustees of the Trust determines that it is in the best interests of
the shareholders of the Fund to do so. Upon any such withdrawal, the Board of
Trustees of the Trust would consider what action might be taken, including the
investment of all the Assets of the Fund in another pooled investment entity
having the same investment objective as the Fund or the retaining of an
investment adviser to manage the Fund's assets in accordance with the investment
policies described below with respect to the Portfolio.
The Fund's investment objective is not a fundamental policy and may be changed
upon notice to but without the approval of the Fund's shareholders. If there is
a change in the Fund's investment objective, the Fund's shareholders should
consider whether the Fund remains an appropriate investment in light of their
then-current needs. The investment objective of the Portfolio is a fundamental
policy. Shareholders of the Fund will receive 30 days prior written notice with
respect to any change in the investment objective of the Fund or the Portfolio.
For descriptions of the investment objective, policies and restrictions of the
Portfolio, see "Investment Objective and Policies" herein and in the SAI. For
descriptions of the management and expenses of the Portfolio, see "Management of
the Trust and Portfolio(s)" herein and in the SAI.
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NET ASSET VALUE
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The NAV per share of the Fund is calculated on each Valuation Day, currently
each Monday through Friday, except (a) January 1st, Martin Luther King, Jr.'s
Birthday (the third Monday in January), Presidents' Day (the third Monday in
February), Good Friday, Memorial Day (the last Monday in May), July 4th, Labor
Day (the first Monday in September), Columbus Day (the second Monday in
October), Veteran's Day (November 11th), Thanksgiving Day (the last Thursday in
November) and December 25th; and (b) the preceding Friday or the subsequent
Monday when one of the calendar determined holidays falls on a Saturday or
Sunday, respectively.
The NAV per share of the Fund is calculated on each Valuation Day as of the
close of regular trading on the New York Stock Exchange Inc. (the "NYSE"), which
is currently 4:00 p.m., Eastern time or in the event that the NYSE closes early,
at the time of such early closing. The NAV per share of the Fund is computed by
dividing the value of the Fund's assets (i.e., the value of its investment in
the Portfolio and other assets), less all liabilities, by the total number of
its shares outstanding. The NAV per share will normally be $1.00.
The assets of the Portfolio are valued by using the amortized cost method of
valuation. This method involves valuing each security held by the Portfolio at
its cost at the time of its purchase and thereafter assuming a constant
amortization to maturity of any discount or premium. Accordingly, immaterial
fluctuations in the market value of the securities held by the Portfolio will
not be reflected in the Fund's NAV. The Board of Trustees of the Portfolio Trust
will monitor the valuation of assets by this method and will make such changes
as it deems necessary to assure that the assets are valued fairly and in good
faith.
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PURCHASE AND REDEMPTION OF SHARES
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PURCHASE OF SHARES
The Trust accepts purchase orders for shares of the Fund at the NAV per share of
the Fund next determined on each Valuation Day. See "Net Asset Value" above.
There is no sales charge on the purchase of shares, but costs of distributing
shares of the Fund may be reimbursed from its assets, as described herein. There
is no minimum required initial investment amount. The subsequent minimum
investment in the Fund is $500,000. Service Agents may impose initial and
subsequent investment minimums that differ from these amounts. Shares of the
Fund may be purchased in only those states where they may be lawfully sold.
Purchase orders for shares of the Fund will receive, on any Valuation Day, the
NAV next determined following receipt by the Service Agent and transmission to
Bankers Trust, as the Trust's transfer agent (the "Transfer Agent") of such
order. If the purchase order is received by the Service Agent and transmitted to
the Transfer Agent prior to 4:00 p.m. (Eastern time or earlier, should the NYSE
close earlier) and if payment in the form of federal funds is received on that
day by Bankers Trust, as the Trust's custodian (the "Custodian"), the
shareholder will receive the dividend declared on that day. If the purchase
order is received by the Service Agent and transmitted to the Transfer Agent
after 4:00 p.m. (Eastern time), the shareholder will receive the dividend
declared on the following day even if the Custodian receives federal funds on
that day. The Trust and Transfer Agent reserve the right to reject any purchase
order.
Shares must be purchased in accordance with procedures established by the
Transfer Agent and Service Agents, including Bankers Trust, in connection with
customers' accounts. It is the responsibility of each Service Agent to transmit
to the Transfer Agent purchase and redemption orders and to transmit to the
Custodian purchase payments on behalf of its customers in a timely manner, and a
shareholder must settle with the Service Agent his or her entitlement to an
effective purchase or redemption order as of a particular time. Because Bankers
Trust is the Custodian and Transfer Agent of the Trust, funds may be transferred
directly from or to a customer's account with Bankers Trust to or from the Fund
without incurring the additional costs or delays associated with the wiring of
federal funds.
Certificates for shares will not be issued. Each shareholder's account will be
maintained by a Service Agent or the Transfer Agent.
AUTOMATIC INVESTMENT PLAN. The Fund may offer shareholders an automatic
investment plan under which shareholders may authorize some Service Agents to
place a purchase order each month or quarter for Fund shares. For further
information regarding the automatic investment plan, shareholders should contact
their Service Agent.
REDEMPTION OF SHARES
Shareholders may redeem shares at the NAV per share next determined on each
Valuation Day. Redemption requests should be transmitted by customers in
accordance with procedures established by the Transfer Agent and the
shareholder's Service Agent. Redemption requests for shares of the Fund received
by the Service Agent and transmitted to the Transfer Agent prior to the close of
the NYSE (currently 4:00 p.m., Eastern New York time or earlier should the NYSE
close earlier) on each Valuation Day will be redeemed at the NAV per share next
determined and the redemption proceeds normally will be delivered to the
shareholder's account with the Service Agent on that day; no dividend will be
paid on the day of redemption. Redemption requests received by the Service Agent
and transmitted to the Transfer Agent after 4:00 p.m. (Eastern time) or after
the close of the NYSE on each Valuation Day will be redeemed at the NAV per
share next determined and redemption proceeds normally will be delivered to the
shareholder's account with the Service Agent the following day; shares redeemed
in this manner will receive the dividend declared on the day of the redemption.
Payments for redemptions will in any event be made within seven calendar days
following receipt of the request.
Service Agents may allow redemptions by telephone and may disclaim liability for
following instructions communicated by telephone that the Service Agent
reasonably believes to be genuine. The Service Agent must provide the investor
with an opportunity to choose whether or not to utilize the telephone redemption
privilege. The Service Agent must employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. If the Service Agent does
not do so, it may be liable for any losses due to unauthorized or fraudulent
instructions. Such procedures may include, among others, requiring some form of
personal identification prior to acting upon instructions received by telephone,
providing written confirmation of such transactions and/or tape recording of
telephone instructions.
Redemption orders are processed without charge by the Trust. A Service Agent may
on at least 30 days' notice involuntarily redeem a shareholder's account with
the Fund having a current value of less than $100,000.
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DIVIDENDS, DISTRIBUTIONS AND TAXES
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The Portfolio determines its net income and realized capital gains, if any, on
each Valuation Day and allocates all such income and gain pro rata among the
Fund and the other investors in the Portfolio at the time of such determination.
The Fund declares dividends from its net income daily and pays dividends
monthly. The Fund reserves the right to include realized short-term gains, if
any, in such daily dividends. Distributions of the Fund's pro rata share of the
Portfolio's net realized long-term capital gains, if any, and any undistributed
net realized short-term capital gains are normally declared and paid annually at
the end of the fiscal year in which they were earned to the extent they are not
offset by any capital loss carryforwards. Unless a shareholder instructs the
Fund to pay dividends or capital gains distributions in cash, dividends and
distributions will automatically be reinvested at NAV in additional shares of
the Fund.
The Fund intends to qualify as a regulated investment company, as defined in the
Internal Revenue Code of 1986, as amended (the "Code"). Provided the Fund meets
the requirements imposed by the Code, the Fund will not pay any Federal income
or excise taxes. The Portfolio will also not be required to pay any Federal
income or excise taxes. Dividends paid by the Fund from its taxable net
investment income and distributions by the Fund of its net realized short-term
capital gains are taxable to shareholders as ordinary income, whether received
in cash or reinvested in additional shares of the Fund. The Fund's dividends and
distributions will not qualify for the dividends-received deduction for
corporations.
Statements as to the tax status of each shareholder's dividends and
distributions, if any, are mailed annually. Each shareholder will also receive,
if appropriate, various written notices after the end of the Fund's prior
taxable year as to the Federal income tax status of his or her dividends and
distributions which were received from the Fund during that year. Shareholders
should consult their tax advisers to assess the consequences of investing in the
Fund under state and local laws and to determine whether dividends paid by the
Fund that represent interest derived from U.S. Government Obligations are exempt
from any applicable state or local income taxes.
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PERFORMANCE INFORMATION AND REPORTS
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From time to time, the Trust may advertise "current yield" and/or "effective
yield" for the Fund. All yield figures are based on historical earnings and are
not intended to indicate future performance. The "current yield" of the Fund
refers to the income generated by an investment in the Fund over a seven- day
period (which period will be stated in the advertisement). This income is then
"annualized;" that is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the Fund
is assumed to be reinvested. The "effective yield" will be slightly higher than
the "current yield" because of the compounding effect of this assumed
reinvestment. The Trust may include this information in sales material and
advertisements for the Fund.
Yield is a function of the quality, composition and maturity of the securities
held by the Portfolio and operating expenses of the Fund and the Portfolio. In
particular, the Fund's yield will rise and fall with short-term interest rates,
which can change frequently and sharply. In periods of rising interest rates,
the yield of the Fund will tend to be somewhat lower than prevailing market
rates, and in periods of declining interest rates, the yield will tend to be
somewhat higher. In addition, when interest rates are rising, the inflow of net
new money to the Fund from the continuous sale of its shares will likely be
invested by the Portfolio in instruments producing higher yields than the
balance of the Portfolio's securities, thereby increasing the current yield of
the Fund. In periods of falling interest rates, the opposite can be expected to
occur. Accordingly, yields will fluctuate and do not necessarily indicate future
results. While yield information may be useful in reviewing the performance of
the Fund, it may not provide a basis for comparison with bank deposits, other
fixed rate investments, or other investment companies that may use a different
method of calculating yield. Any fees charged by Service Agents for processing
purchase and/or redemption transactions will effectively reduce the yield for
those shareholders.
From time to time, advertisements or reports to shareholders may compare the
yield of the Fund to that of other mutual funds with similar investment
objectives or to that of a particular index. The yield of the Fund might
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be compared with, for example, the IBC First Tier Institutions Only All Taxable
Money Fund Average, which is an average compiled by IBC Money Fund Report, a
widely recognized, independent publication that monitors the performance of
money market mutual funds. Similarly, the yield of the Fund might be compared
with rankings prepared by Micropal Limited and/or Lipper Analytical Services,
Inc., which are widely recognized, independent services that monitor the
investment performance of mutual funds. The yield of the Fund might also be
compared with the average yield reported by the Bank Rate Monitor for money
market deposit accounts offered by the 50 leading banks and thrift institutions
in the top five standard metropolitan areas. Shareholders may make inquiries
regarding the Fund, including current yield quotations and performance
information, by contacting any Service Agent.
Shareholders will receive financial reports semi-annually that include the
Portfolio's financial statements, including a listing of investment securities
held by the Portfolio at those dates. Annual reports are audited by independent
accountants.
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MANAGEMENT OF THE TRUST AND PORTFOLIO
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The affairs of the Trust and BT Investment Portfolios are managed under the
supervision of their respective Board of Trustees. By virtue of the
responsibilities assumed by Bankers Trust, the administrator of the Trust and BT
Investment Portfolios, neither the Trust nor BT Investment Portfolios require
employees other than its executive officers. None of the executive officers of
the Trust or BT Investment Portfolios devotes full time to the affairs of the
Trust or BT Investment Portfolios.
The Trustees of the Trust who are not "interested persons" (as defined in the
1940 Act) (the "Independent Trustees") of the Trust or of the Portfolio, as the
case may be, have adopted written procedures reasonably appropriate to deal with
potential conflicts of interest, up to and including creating separate boards of
trustees, arising from the fact that several of the same individuals are
Trustees of the Trust and the Portfolio. For more information with respect to
the Trustees of both the Trust and BT Investment Portfolios, see "Management of
the Trust and Portfolios" in the SAI.
INVESTMENT ADVISER
The Trust has not retained the services of an investment adviser since the Trust
seeks to achieve the investment objective of the Fund by investing all the
Assets of the Fund in the Portfolio. BT Investment Portfolios has retained the
services of Bankers Trust as investment adviser.
BANKERS TRUST COMPANY AND ITS AFFILIATES
Bankers Trust Company, a New York banking corporation with principal offices at
130 Liberty Street, (One Bankers Trust Plaza), New York, New York 10006, is a
wholly-owned subsidiary of Bankers Trust Corporation. Bankers Trust conducts a
variety of general banking and trust activities and is a major wholesale
supplier of financial services to the international and domestic institutional
markets. As of December 31, 1997, Bankers Trust Corporation was the seventh
largest bank holding company in the United States with total assets of over $100
billion. Bankers Trust is dedicated to servicing the needs of corporations,
governments, financial institutions and private clients through a global network
of over 90 offices in more than 50 countries. Investment management is a core
business of Bankers Trust, built on a tradition of excellence from its roots as
a trust bank founded in 1903. The scope of Bankers Trust's investment management
capability is unique due to its leadership positions in both active and passive
quantitative management and its presence in major equity and fixed income
markets around the world. Bankers Trust is one of the nation's largest and most
experienced investment managers, with over $300 billion in assets under
management. Of that total, approximately $69.3 billion are in cash assets alone.
This makes Bankers Trust one of the nation's leading managers of cash funds.
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.
Pursuant to its agreement with the U.S. Attorney's Office, Bankers Trust pleaded
guilty to misstating entries in the bank's books and records and agreed to pay a
$60 million fine to federal authorities. Separately, Bankers Trust agreed to pay
a $3.5 million fine to the State of New York. The events leading up to the
guilty pleas did not arise out of
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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.
Bankers Trust has more than 50 years of experience managing retirement assets
for the nation's largest corporations and institutions. In the past, these
clients have been serviced through separate account and commingled fund
structures. Bankers Trust's officers have had extensive experience in managing
investment portfolios having objectives similar to those of the Portfolio.
On November 30, 1998, Bankers Trust Corporation entered into an Agreement and
Plan of Merger with Deutsche Bank AG under which Bankers Trust Corporation would
merge with and into a subsidiary of Deutsche Bank AG. Deutsche Bank AG is a
major global banking institution that is engaged in a wide range of financial
services, including investment management, mutual funds, retail and commercial
banking, investment banking and insurance. The transaction is contingent upon
various regulatory approvals, and continuation of the Fund's advisory
relationship with Bankers Trust thereafter is subject to the approval of Fund
shareholders. If the transaction is approved and completed, Deutsche Bank AG, as
Bankers Trust's new parent company, will control its operations as investment
adviser. Bankers Trust believes that, under this new arrangement, the services
provided to the Fund will be maintained at their current level.
Bankers Trust, subject to the supervision and direction of the Board of Trustees
of BT Investment Portfolios, manages the Portfolio in accordance with the
Portfolio's investment objective and stated investment policies, makes
investment decisions for the Portfolio, places orders to purchase and sell
securities and other financial instruments on behalf of the Portfolio and
employs professional investment managers and securities analysts who provide
research services to the Portfolio.
All orders for investment transactions on behalf of the Portfolio are placed by
Bankers Trust with broker-dealers and other financial intermediaries that it
selects, including those affiliated with Bankers Trust. A Bankers Trust
affiliate will be used in connection with a purchase or sale of an investment
for the Portfolio only if Bankers Trust believes that the affiliate's charge for
the transaction does not exceed usual and customary levels. The Portfolio will
not invest in obligations for which Bankers Trust or any of its affiliates is
the ultimate obligor or accepting bank. The Portfolio may, however, invest in
the obligations of correspondents and customers of Bankers Trust.
Under its Investment Advisory Agreement, Bankers Trust receives a fee from the
Portfolio, computed daily and paid monthly, at the annual rate of 0.15% of the
average daily net assets of the Portfolio.
Bankers Trust has been advised by its counsel that, in counsel's opinion,
Bankers Trust currently may perform the services for the Trust and the
Portfolios described in this Prospectus and the SAI without violation of the
Glass-Steagall Act or other applicable banking laws or regulations.
ADMINISTRATOR
Under its Administration and Services Agreement with the Trust, Bankers Trust
calculates the NAV of the Fund and generally assists the Board of Trustees of
the Trust in all aspects of the administration and operation of the Trust. The
Administration and Services Agreement provides for the Trust to pay Bankers
Trust a fee, computed daily and paid monthly, at the annual rate of 0.05% of the
average daily net assets of the Fund.
Under an Administration and Services Agreement with BT Investment Portfolios,
Bankers Trust calculates the value of the assets of the Portfolio and generally
assists the Board of Trustees of BT Investment Portfolios in all aspects of the
administration and operation of BT Investment Portfolios. The Administration and
Services Agreement provides for the Portfolio Trust to pay Bankers Trust a fee,
computed daily and paid monthly, at the annual rate of 0.05% of the average
daily net assets of the Portfolio. Under each Administration and Services
Agreement, Bankers Trust may delegate one or more of its responsibilities to
others at Bankers Trust's expense. For more information, see the SAI.
DISTRIBUTOR
ICC Distributors, Inc. is the principal distributor for shares of the Fund. In
addition, ICC provides distribution services for other registered investment
companies. The principal business address of ICC and its affiliates is Two
Portland Square, Portland, Maine 04101.
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SERVICE AGENT
All shareholders must be represented by a Service Agent. Bankers Trust acts as a
Service Agent pursuant to its Administration and Services Agreement with the
Trust and receives no additional compensation from the Fund for such shareholder
services. The service fees of any other Service Agents, including
broker-dealers, will be paid by Bankers Trust from its fees. The services
provided by a Service Agent may include establishing and maintaining shareholder
accounts, processing purchase and redemption transactions, performing
shareholder sub- accounting, answering client inquiries regarding the Trust,
investing client cash account balances automatically in Fund shares and
processing redemption transactions at the request of clients, assisting clients
in changing dividend options, account designations and addresses, providing
periodic statements showing the client's account balance and integrating these
statements with those of other transactions and balances in the client's other
accounts serviced by the Service Agent, transmitting proxy statements, periodic
reports, updated prospectuses and other communications to shareholders and, with
respect to meetings of shareholders, collecting, tabulating and forwarding to
the Trust executed proxies, arranging for bank wires and obtaining such other
information and performing such other services as the Administrator or the
Service Agent's clients may reasonably request and agree upon with the Service
Agent. Service Agents may separately charge their clients additional fees only
to cover provision of additional or more comprehensive services not already
provided under the Administration and Services Agreement with Bankers Trust, or
of the type or scope not generally offered by a mutual fund, such as cash
management services or enhanced retirement or trust reporting. In addition,
investors may be charged a transaction fee if they effect transactions in Fund
shares through a broker or agent. Each Service Agent has agreed to transmit to
shareholders, who are its customers, appropriate disclosures of any fees that it
may charge them directly.
CUSTODIAN AND TRANSFER AGENT
Bankers Trust acts as Custodian of the Assets of the Trust and BT Investment
Portfolios and serves as the Transfer Agent for the Trust and BT Investment
Portfolios under the respective Administration and Services Agreement with the
Trust and BT Investment Portfolios.
ORGANIZATION OF THE TRUST
The Trust 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. No series of shares has any preference over any other series.
The Trust is an entity commonly known as a "Massachusetts business trust." Under
Massachusetts law, shareholders of such a business trust may, under certain
circumstances, be held personally liable as partners for its obligations.
However, the risk of a shareholder 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.
When matters are submitted for shareholder vote, shareholders of the Fund will
have one vote for each full share held and proportionate, fractional votes for
fractional shares held. A separate vote of the Fund is required on any matter
affecting the Fund on which shareholders are entitled to vote. Shareholders of
the Fund are not entitled to vote on Trust matters that do not affect the Fund.
There normally will be no meetings of shareholders for the purpose of electing
Trustees unless and until such time as less than a majority of Trustees holding
office have been elected by shareholders, at which time the Trustees then in
office will call a shareholders' meeting for the election of Trustees. Any
Trustee may be removed from office upon the vote of shareholders holding at
least two-thirds of the Trust's outstanding shares at a meeting called for that
purpose. The Trustees are required to call such a meeting upon the written
request of shareholders holding at least 10% of the Trust's outstanding shares.
The Portfolio is a subtrust (or "series") of BT Investment Portfolios, an
open-end management investment company. BT Investment Portfolios was organized
as a master trust fund under the laws of the State of New York. BT Investment
Portfolios' Declaration of Trust provides that the Fund and other entities
investing in the Portfolio (e.g., other investment companies, insurance company
separate accounts and common and commingled trust funds) will each be liable for
all obligations of the Portfolio. However, the risk of the Fund incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance existed and the Portfolio itself was unable to meet
its obligations. Accordingly, the Trustees of the Trust believe that neither the
Fund nor its shareholders will be adversely affected by reason of the Fund's
investing in the Portfolio. The interest in BT Investment Portfolios are divided
into separate series, such as the Portfolio. No
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series of BT Investment Portfolios has any preference over any other series.
Each series in the Trust will not be involved in any vote involving a Portfolio
in which it does not invest its Assets. Shareholders of all the series of the
Trust will, however, vote together to elect Trustees of the Trust and for
certain other matters. Under certain circumstances, the shareholders of one or
more series could control the outcome of these votes.
The series of the BT Investment Portfolios will vote separately or together in
the same manner as the series of the Trust. Under certain circumstances, the
investors in one or more series of BT Investment Portfolios could control the
outcome of these votes.
EXPENSES OF THE FUND AND PORTFOLIO
The Fund bears its own expenses. Operating expenses for the Fund generally
consist of all costs not specifically borne by Bankers Trust or ICC, including
administration and services fees, fees for necessary professional services,
amortization of organizational expenses, the costs of regulatory compliance and
costs associated with maintaining legal existence and shareholder relations.
Bankers Trust has agreed to reimburse the Fund to the extent required by
applicable state law for certain expenses that are described in the SAI. The
Portfolio bears its own expenses. Operating expenses for the Portfolio generally
consist of all costs not specifically borne by Bankers Trust or ICC, including
investment advisory and administration and services fees, fees for necessary
professional services, amortization of organizational expenses, the costs
associated with regulatory compliance and maintaining legal existence and
investor relations.
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BT INSTITUTIONAL FUNDS
INSTITUTIONAL LIQUID ASSETS FUND
INVESTMENT ADVISER OF THE PORTFOLIO AND ADMINISTRATOR
BANKERS TRUST COMPANY
130 Liberty Street
(One Bankers Trust Plaza)
New York, NY 10006
DISTRIBUTOR
ICC DISTRIBUTORS, INC.
Two Portland Square
Portland, Maine 04101
CUSTODIAN AND TRANSFER AGENT
BANKERS TRUST COMPANY
130 Liberty Street
(One Bankers Trust Plaza)
New York, NY 10006
INDEPENDENT ACCOUNTANTS
PRICEWATERHOUSECOOPERS LLP
250 West Pratt Street
Baltimore, Maryland 21201
COUNSEL
WILLKIE FARR & GALLAGHER
787 7th Avenue
New York, NY 10019
................................................................................
No person has been authorized to give any information or to make any
representations other than those contained in the Fund's Prospectuses, its
Statement of Additional Information or the Fund's official sales literature 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. This Prospectus does not constitute an offer in any
state in which, or to any person to whom, such offer may not lawfully be made.
................................................................................
Cusip #055924864
STA492300 (4/99)
