BT INSTITUTIONAL FUNDS, 485BPOS, 2000-01-31

BT INSTITUTIONAL FUNDS
485BPOS, 2000-01-31

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<PAGE>

As filed with the Commission on January 31, 2000

1933 Act File No. 33-34079
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 X
---

Post-Effective Amendment No. 30....................... X
-- ---

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
---

Amendment No. 39...................................... 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)

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

[ ] Immediately upon filing pursuant to paragraph (b)
[X] On January 28, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] On (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] On (date) pursuant to paragraph (a)(2) of rule 485.

If appropriate, check the following box:

[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

International Equity Portfolio has also executed this Registration Statement.
<PAGE>

Deutsche Asset Management

- --------------------------------------------------------------------------------
Mutual Fund

Prospectus

January 31, 2000

Institutional Class I
- --------------------------------------------------------------------------------

International Equity
formerly Institutional International Equity Fund -- Class I, a BT Mutual Fund

[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.]

A Member of the
Deutsche Bank Group [LOGO]

<PAGE>

Overview
- --------------------------------------------------------------------------------
of International Equity Institutional Class I

Goal: The Fund invests for long-term capital appreciation.
Core Strategy: The Fund invests primarily in the stocks and other equity
securities of companies in developed countries outside the United States.

INVESTMENT POLICIES AND STRATEGIES
The Fund invests all of its assets in a master portfolio with the same
investment goal as the Fund. The Fund, through the master portfolio, seeks to
achieve that goal by investing primarily in companies in developed foreign
countries. The Fund may also invest a portion of its assets in companies based
in emerging markets. The companies are selected by an extensive tracking system
plus the input of experts from variousfinancial disciplines.

- --------------------------------------------------------------------------------

International Equity Institutional Class I

Overview of International Equity Institutional Class I

<TABLE>
<S> <C>
Goal........................................................................ 3
Core Strategy............................................................... 3
Investment Policies and Strategies.......................................... 3
Principal Risks of Investing in the Fund.................................... 4
Who Should Consider Investing in the Fund................................... 4
Total Returns, After Fees and Expenses...................................... 5
Annual Fund Operating Expenses.............................................. 6
</TABLE>

A Detailed Look at International Equity Institutional Class I

<TABLE>
<S> <C>
Objective.................................................................. 7
Strategy................................................................... 7
Principal Investments...................................................... 7
Investment Process......................................................... 7
Risks...................................................................... 7
Management of the Fund..................................................... 9
</TABLE>
<TABLE>
<S> <C>
Calculating the Fund's Share Price.......................................... 11
Performance Information..................................................... 11
Dividends and Distributions................................................. 11
Tax Considerations.......................................................... 11
Buying and Selling Fund Shares.............................................. 11
Financial Highlights........................................................ 14
</TABLE>
- --------------------------------------------------------------------------------

3
<PAGE>

Overview of International Equity Institutional Class I

PRINCIPAL RISKS OF INVESTING IN THE FUND

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

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

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

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

WHO SHOULD CONSIDER INVESTING IN THE FUND

International Equity Institutional Class I requires a minimum investment of $5
million. You should consider investing in the Fund if you are seeking long-term
capital appreciation. There is, of course, no guarantee that the Fund will
realize its goal. Moreover, you should be willing to accept greater short-term
fluctuation in the value of your investment than you would typically experience
investing in bond or money market funds.

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

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

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

4
<PAGE>

Overview of International Equity Institutional Class I

TOTAL RETURNS, AFTER FEES AND EXPENSES

The bar chart and table on this page can help you evaluate the potential risks
and rewards of investing in the Institutional Class I shares of the Fund by
showing changes in performance year to year. The bar chart shows the
Institutional Class I's actual return for each full calendar year since the
Fund began selling those shares on April 1, 1997 (its inception date). The
table compares the Institutional Class I's average annual return with the
Morgan Stanley Capital International (MSCI) EAFE Index over the last year and
since its inception. The Index is a passive measure of combined national stock
market returns. It does not factor in the costs of buying, selling and holding
stock--costs that are reflected in the Fund's results.

- --------------------------------------------------------------------------------
The MSCI EAFE Index of major markets in Europe, Australia and the Far East is a
widely accepted benchmark of international stock performance. It is a model,
not an actual portfolio. It tracks stocks in Australia, Austria, Belgium,
Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland and the United Kingdom.

Year-by-Year Returns (each full calendar year since inception)

[BAR CHART]

1998 1999
----- -----
21.91% 32.95%

Since inception, the Institutional Class I's highest return in any calendar
quarter was 32.28% (fourth quarter 1999) and its lowest quarterly return was
- -16.21% (third quarter 1998). Past performance offers no indication of how the
Fund will perform in the future.
PERFORMANCE FOR PERIOD ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
Average Annual Returns
1 year Since Inception
(April 1, 1997)/1/
<S> <C> <C>
International
Equity
Institutional Class
I 32.95% 25.22%
-----------------------------------------------
MSCI EAFE Index 26.96% 17.97%
-----------------------------------------------
Lipper
International Funds
Average 40.81% 19.59%
-----------------------------------------------
</TABLE>

/1/ The MSCI EAFE Index and Lipper International Funds Average are calculated
from March 31, 1997.
/2/ Unweighted average return, net of fees and expenses, of all mutual funds
that invested primarily in stocks and other equity securities of companies
outside the United States during the periods covered.
- --------------------------------------------------------------------------------

5
<PAGE>

Overview of International Equity Institutional Class I

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 International Equity
Institutional Class I.

Expense Example. The example below illustrates the expenses you would have
incurred on a $10,000 investment in the Fund. It assumes that the Fund earned
an annual return of 5% over the periods shown, the Fund's operating expenses
remained the same and you sold your shares at the end of the period.

You may use this hypothetical example to compare the Fund's expense history
with other funds./1/ Your actual costs may be higher or lower.
- --------------------------------------------------------------------------------

/1/Information on the annual operating expenses reflects the expenses of both
the Fund and the International Equity Portfolio, the master portfolio into
which International Equity invests all of its assets. (A further discussion of
the relationship between the Fund and the portfolio appears in the
"Organizational Structure" section of this prospectus.)

/2/The investment adviser and administrator have agreed, for the 16-month
period from the Fund's fiscal year end of October 31, 1999, to waive their fees
and reimburse expenses so that total expenses will not exceed 0.95%.

/3/For the first 16 months, the expense example takes into account fee waivers
and reimbursements.
FEES AND EXPENSES

<TABLE>
<CAPTION>
Percentage of Average
Daily Net Assets/1/
<S> <C>
Management Fees 0.65%
--------------------------------------------------
Distribution and
Service (12b-1) Fees None
--------------------------------------------------
Other Expenses 0.55%
--------------------------------------------------
Total Fund Operating
Expenses 1.20%
--------------------------------------------------
Less: Fee Waivers or
Expense
Reimbursements (0.25%)/2/
--------------------------------------------------
Net Expenses 0.95%
--------------------------------------------------
</TABLE>

Expense Example/3/

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C>
$97 $348 $627 $1,425
-------------------------------------
</TABLE>

- --------------------------------------------------------------------------------

6
<PAGE>

A detailed look
- --------------------------------------------------------------------------------
at International Equity Institutional Class I

OBJECTIVE

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

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

STRATEGY

The Fund invests for the long term. We employ a strategy of growth at a
reasonable price. We seek to identify companies outside the United States that
combine strong potential for earnings growth with reasonable investment value.
Such companies typically exhibit increasing rates of profitability and cash
flow, yet their share prices compare favorably to other stocks in a given
market and to their global peers. In evaluating stocks, we consider factors
such as sales, earnings, cash flow and enterprise value. Enterprise value is a
company's market capitalization plus the value of its net debt. We further
consider the relationship between these and other quantitative factors.
Together, these indicators of growth and value may identify companies with
improving prospects before the market in general has taken notice.

PRINCIPAL INVESTMENTS

Almost all the companies in which the Fund invests are based in the developed
foreign countries that make up the MSCI EAFE Index, plus Canada. The Fund may
also invest a portion of its assets in companies based in the emerging markets
of Latin America, the Middle East, Europe, Asia and Africa if we believe that
their return potential more than compensates for the extra risks associated
with these markets. While we have invested in emerging markets in the past,
under normal market conditions we do not consider this a central element of the
Fund's strategy. Typically, we would not hold more than 15% of the Fund's net
assets in emerging markets.

INVESTMENT PROCESS

Company research lies at the heart of our investment process, as it does with
many stock mutual funds. We track several thousand companies to arrive at the
approximately 100 stocks the Fund normally holds. But our process brings an
added dimension to this fundamental research. It draws on the insight of
experts from a range of financial disciplines--regional stock market
specialists, global industry specialists, economists and quantitative analysts.
They challenge, refine and amplify each other's ideas. Their close
collaboration is a critical element of our investment process.

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

RISKS

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

Primary Risks

Market Risk. Although individual stocks can outperform their local markets,
deteriorating market conditions might cause an overall weakness in the stock
prices of the entire market.

Stock Selection Risk. A risk that pervades all investing is the risk that the
securities an investor has selected will not perform to expectations. To
minimize this risk, we monitor each of the

- --------------------------------------------------------------------------------
Portfolio Turnover. The portfolio turnover rate measures the frequency that the
master portfolio sells and replaces the securities it holds within a given
period. Historically, this Fund has had a low portfolio turnover rate.
- --------------------------------------------------------------------------------

7
<PAGE>

A Detailed Look at International Equity Institutional Class I

stocks in the Fund according to three basic quantitative criteria. We subject a
stock to intensive review if:

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

. the financial analysts who follow the stock, both within Bankers Trust and
outside, cut their estimates of the stock's future earnings; or

. the stock's price approaches the downside target we set when we first bought
the stock (and may since have modified to reflect changes in market and
economic conditions).

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

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

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

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

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

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

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

Currency Risk. The Fund invests in foreign securities denominated in foreign
currencies. This creates the possibility that changes in foreign exchange rates
will affect the value of foreign securities or the U.S. dollar amount of income
or gain received on these securities. We seek to minimize this risk by actively
managing the currency exposure of the Fund.

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

Secondary Risks

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

Pricing Risk. When price quotations for securities are not readily available,
we determine their value by the method that most accurately reflects their
current worth in the judgment of the Board of Trustees. This procedure implies
an unavoidable

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

- --------------------------------------------------------------------------------

8
<PAGE>

A Detailed Look at International Equity Institutional Class I

risk, the risk that our prices are higher or lower than the prices that the
securities might actually command if we sold them. If we have valued the
securities too highly, you may end up paying too much for Fund shares when you
buy. If we underestimate their price, you may not receive the full market value
for your Fund shares when you sell.

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

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

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

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

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

. Unpredictable effects on trade and commerce generally.

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

MANAGEMENT OF THE FUND

Deutsche Asset Management is the marketing name for the asset management activ-
ities of Deutsche Bank A.G., Deutsche Funds Management, Bankers Trust Company,
DB Alex. Brown LLC, Deutsche Asset Management, Inc., and Deutsche Asset Manage-
ment Investment Services Limited.

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.
- --------------------------------------------------------------------------------
Futures contracts, options and options on futures contracts are used as a low
cost method of gaining exposure to a particular securities market without
investing directly in those securities.
Investment Adviser. Under the supervision of the Board of Trustees, Bankers
Trust Company, with headquarters at 130 Liberty Street, New York, NY 10006,
acts as the Fund's
investment adviser. Bankers Trust is an indirect wholly-owned subsidiary of
Deutsche Bank A.G. As investment adviser, Bankers Trust makes the Fund's
investment decisions. It buys and sells securities for the Fund and conducts
the research that leads to the purchase and sale decisions. The investment
adviser received a fee of 0.65% of the Fund's average daily net assets for its
services in the last fiscal year. The investment adviser reimbursed a portion
of its fee during the period.

As of September 30, 1999, Bankers Trust had total assets under management of
approximately $285 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 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 in 1999, shareholders of the Fund
approved a new investment advisory agreement with Deutsche Asset Management,
Inc. (formerly Morgan Grenfell Inc.). The new investment advisory agreement 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, Deutsche Asset Management, Inc. and Bankers Trust under which
Bankers Trust may perform certain of Deutsche Asset Management, Inc.'s
responsibilities, at Deutsche Asset Management, Inc.'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.

Deutsche Asset Management, Inc. is located at 885 Third Avenue, 32nd Floor, New
York, New York 10022. The firm provides a full range of investment advisory
services to institutional clients. It serves as investment adviser to 11 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 aninvestigation concerning inappropriate transfers of unclaimed
- --------------------------------------------------------------------------------

9
<PAGE>

A Detailed Look at International Equity Institutional Class I

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.

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

Michael Levy

. Co-Lead Portfolio Manager of the master portfolio since its inception.

. International equity strategist, overseeing the design and implementation of
the firm's proprietary stock selection process.

. 28 years of business experience, 18 of them as an investment professional.

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

Robert Reiner

. Co-Lead Portfolio Manager of the master portfolio since its inception.

. Specializes in Japanese and European stock andmarket analysis.

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

. 18 years of investment industry experience.

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

Julie Wang

. Co-Portfolio Manager of the master portfolio since its inception.

. Focuses on the master portfolio's Asia-Pacific investments and its emerging
markets exposure.

. Served as Investment Manager for American International Group's Southeast
Asia portfolio from 1991 to 1994.

. 11 years of investment management experience.

. BS in economics from Yale University, MBA from The Wharton School, University
of Pennsylvania.

Other Services. Bankers Trust provides administrative services--such as
portfolio accounting, legal services and others--for the Fund. In addition,
Bankers Trust--or your service agent--performs the functions necessary to
establish and maintain your account. In addition to setting up the account and
processing your purchase and sale orders, these functions include:

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

. implementing any changes you wish to make in youraccount information;

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

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

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

. collecting your executed proxies.

Service agents include brokers, financial advisors or any other bank, dealer or
other institution that has a sub-shareholder servicing agreement with Bankers
Trust. Service agents 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.

Organizational Structure. The Fund is a "feeder fund" that invests all of its
assets in a "master portfolio," the International Equity Portfolio. The Fund
and its master portfolio have the same investment objective. The master
portfolio is advised by Bankers Trust, an indirect wholly-owned subsidiary of
Deutsche Bank A.G.

10
<PAGE>

A Detailed Look at International Equity Institutional Class I

believe doing so is in the shareholder's best interests. If the Trustees
withdraw the Fund's assets, they would then consider whether the Fund should
hire its own investment adviser, invest in a different master portfolio, or
take other action.

CALCULATING THE FUND'S SHARE PRICE

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

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

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

PERFORMANCE INFORMATION

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

DIVIDENDS AND DISTRIBUTIONS

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

- --------------------------------------------------------------------------------

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

TAX CONSIDERATIONS

<TABLE>
<S> <C>
Transaction Tax Status

Income dividends Ordinary income
------------------------------------------
Short-term capital gains
distributions Ordinary income
------------------------------------------
Long-term capital gains
distributions Capital gains
------------------------------------------
</TABLE>

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

<TABLE>
<S> <C>
Transaction Tax Status

Your sale of shares Capital gains or
owned more than one year losses
--------------------------------------------
Your sale of shares Ordinary income
owned for one year or
less
--------------------------------------------
Long-term capital gains Gains treated as
distribution ordinary income,
losses subject to
special rules.
--------------------------------------------
</TABLE>

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

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

BUYING AND SELLING FUND SHARES

Contacting the Mutual Fund Service Center of Deutsche Asset Management

<TABLE>
<S> <C>
By phone 1-800-368-4031
By mail Service Center
P.O. Box 219210
Kansas City, MO 64141-9210
By overnight Service Center
mail
210 West 10th Street, 8th floor
Kansas City, MO 64105-1716
</TABLE>
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11
<PAGE>

A Detailed Look at International Equity Institutional Class I

Our representatives are available to assist you personally Monday through
Friday, 9:00 a.m. to 7:00 p.m., Eastern time each day the New York Stock
Exchange is open for business. You can reach the Service Center's automated
assistance line 24 hours a day, 7 days a week.

Minimum Account Investments

<TABLE>
<S> <C>
To open an account $5 million
To add to an account $1 million
Minimum account
balance $1 million
</TABLE>

Class I shares of the Fund may be purchased without regard to the investment
minimums by: 1) employees of Deutsche Bank A.G., any of its affiliates or
subsidiaries, their spouses and minor children, and 2) Directors or Trustees of
any investment company advised or administered by Deutsche Bank A.G. or any of
its affiliates or subsidiaries, their spouses and minor children. The Fund and
its service providers reserve the right to, from time to time and in their
discretion, waive or reduce the minimum account investments.

How to Open Your Fund Account

<TABLE>
<S> <C>
By mail Complete and sign the account
application that accompanies this
prospectus. (You may obtain
additional applications by calling
the Service Center.) Mail the
completed application along with a
check payable to International
Equity Fund Institutional Class
I--499.
By wire Call the Service Center to set up
a wire account.
</TABLE>

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

Two Ways to Buy and Sell Shares in Your Account

MAIL:

Buying: Send your check, payable to the "International Equity Institutional
Class I--499," to the Service Center. The addresses are shown above under
"Contacting the Mutual Fund Service Center of Deutsche Asset Management." Be
sure to include the fund number and your account number (see your account
statement) on your check. Please note that we cannot accept starter checks or
third-party checks. If you are investing in more than one fund, make your check
payable to "Deutsche Asset Management (Mutual Funds)," include your account
number and the names and numbers of the funds you have selected, and the dollar
amount or percentage you would like invested in each Fund.

Selling: Send a signed letter to the Service Center with your name, your fund
number and account number, the fund's name, and either the number of shares you
wish to sell or the dollar amount you wish to receive. You must leave at least
$1 million worth of shares in your account to keep it open. Unless exchanging
into another Deutsche Asset Management mutual fund, you must submit a written
authorization to sell shares in a retirement account.

WIRE:

Buying: You may only buy shares by wire if your account is authorized to do so.
Please note that you or your service agent must call the Service Center at 1-
800-368-4031 to notify us in advance of a wire transfer purchase. Inform the
Service Center representative of the amount of your purchase and receive a
trade confirmation number. Instruct your bank to send payment by wire using the
wire instructions noted below. All wires must be received by 4:00 p.m. Eastern
time the next business day.

<TABLE>
<S> <C>
Routing No: 021001033
Attn: Deutsche Asset Management/ Mutual Funds
DDA No: 00-226-296
FBO: (Account name)
(Account number)
Credit: International Equity Institutional Class I--499
</TABLE>

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

Selling: You may sell shares by wire only if your account is authorized to do
so. For your protection, you may not change the destination bank account over
the phone. To sell by wire, contact your service agent or the Service Center at
1-800-368-4031. Inform the Service Center representative of the amount of your
redemption and receive a trade confirmation number. The minimum redemption by
wire is $1,000. We must receive your order by 4:00 p.m. Eastern time to wire
your account the next business day.

Important Information about Buying and Selling Shares

. You may buy and sell shares of a fund through authorized service agents as
well as directly from us. The same terms and conditions apply. Specifically,
once you place your order with a service agent, it is considered received by
the Service Center. It is then your service agent's responsibility to
transmit the order to the Service Center by the next business day. You should
contact your service agent if you have a dispute as to when your order was
placed with the fund.
- --------------------------------------------------------------------------------

12
<PAGE>

A Detailed Look at International Equity Institutional Class I

. You may place orders to buy and sell over the phone by calling your service
agent or the Service Center at 1-800-368-4031. If you pay for shares by check
and the check fails to clear, or if you order shares by phone and fail to pay
for them by 4:00 p.m. Eastern time the next business day, we have the right
to cancel your order, hold you liable or charge you or your account for any
losses or fees a fund or its agents have incurred. To sell shares, you must
state whether you would like to receive the proceeds by wire or check.

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

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

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

. We process all sales orders free of charge.

. Unless otherwise instructed, we normally mail a check for the proceeds from
the sale of your shares to your account address the next business day and no
later than seven days.

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

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

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

. We do not issue share certificates.

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

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

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

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

. Account Statements and Fund Reports: We or your service agent will furnish
you with a written confirmation of every transaction that affects your
account balance. You will also receive monthly statements reflecting the
balances in your account. We will send you a report every six months on your
fund's overall performance, its current holdings and its investing
strategies.

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

Please note the following conditions:

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

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

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

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

13
<PAGE>

A Detailed Look at International Equity Institutional Class I

The table below provides a picture of the Institutional Class I shares'
financial performance for the past five years. The information selected
reflects financial results for a single Fund share. The total returns in the
table represent the rate 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
the Service Center at 1-800-368-4031.

Financial Highlights

<TABLE>
<CAPTION>
For the Period For the year For the Period
October 1, 1999 ended September April 1, 1997/2/
through 30, through
October 31, 1999/1/ 1999 1998 September 30, 1997
<S> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value,
Beginning of Period $13.94 $11.89 $12.24 $10.00
------------------------------------------------------------------------------------
Income From Investment
Operations
Net Investment
(Expenses in Excess of)
Income (0.01) 0.09 0.10 0.00/5/
------------------------------------------------------------------------------------
Net Realized and
Unrealized Gain (Loss)
on Investment, Options,
Foreign Currencies,
Forward Foreign Currency
and Foreign Futures
Contracts 0.65 2.06 (0.45) 2.24
------------------------------------------------------------------------------------
Total From Investment
Operations 0.64 2.15 (0.35) 2.24
------------------------------------------------------------------------------------
Distributions to
Shareholders
Net Investment Income -- (0.10) -- --
------------------------------------------------------------------------------------
Net Realized Gains -- -- -- --
------------------------------------------------------------------------------------
Total Distributions -- (0.10) -- --
------------------------------------------------------------------------------------
Net Asset Value, End of
Period $14.58 $13.94 $11.89 $12.24
------------------------------------------------------------------------------------
Total Investment Return 4.67% 17.99% (2.86%) 22.40%
------------------------------------------------------------------------------------
Supplemental Data and
Ratios:
Net Assets, End of
Period (000s omitted) $922,089 $883,855 $556,180 $42,566
------------------------------------------------------------------------------------
Ratios to Average Net
Assets:
Net Investment Income (0.38%)/3/ 0.77% 1.40% 0.20%/3/
------------------------------------------------------------------------------------
Expenses, Including
Expenses of the
International Equity
Portfolio 0.95%/3/ 0.95% 0.95% 0.95%/3/
------------------------------------------------------------------------------------
Decrease Reflected in
Above Expense Ratio Due
to Fees Waived/
Expenses Reimbursed by
Bankers Trust 0.28/3/ 0.25% 0.32% 0.67%/3/
------------------------------------------------------------------------------------
Portfolio Turnover
Rate/4/ 5% 106% 65% 63%/6/
------------------------------------------------------------------------------------
</TABLE>

/1/On September 8, 1999, the Board of Trustees approved the change of the fis-
cal year end from September 30 to October 31.
/2/Commencement of operations.
/3/Annualized.
/4/The portfolio's turnover rate is the rate for the master portfolio into
which the Fund invests all of its assets.
/5/Less than $.01.
/6/For the period October 1, 1996 to September 30, 1997.
- --------------------------------------------------------------------------------

14
<PAGE>

This page intentionally left blank.

<PAGE>

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

You can find more detailed information about each Fund in the current
Statement of Additional Information, dated January 31, 2000, which we have
filed electronically with the Securities and Exchange Commission (SEC) and
which is incorporated by reference. To receive your free copy of the
Statement of Additional Information, the annual or semi-annual report, or
if you have questions about investing in a Fund, write to us at:

Service Center
P.O. Box 219210
Kansas City, MO 64121-9210
or call our toll-free number: 1-800-368-4031

You can find reports and other information about each Fund on the EDGAR
Database on the SEC's website (http://www.sec.gov), or you can get copies
of this information, after payment of a duplicating fee, by electronic
request at [email protected] or by writing to the Public Reference Section
of the SEC, Washington, D.C. 20549-0102. Information about each Fund,
including its Statement of Additional Information, can be reviewed and
copied at the SEC's Public Reference Room in Washington, D.C. For
information on the Public Reference Room, call the SEC at 202.942.8090.

International Equity Institutional Class I
BT Institutional Funds

Distributed by:
ICC Distributors, Inc. CUSIP
Two Portland Square #055924856
Portland, ME 04101 499PRO (1/00)
811-4760
<PAGE>

Deutsche Asset Management

Mutual Fund
Prospectus
January 31, 2000

Institutional Class II

International Equity
formerly Institutional International Equity Fund - Class II, a BT Mutual Fund

<TABLE>

<S> <C>
(Life 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 A Member of the
adequacy of this prospectus. Any representation to the Deutsche Bank Group [LOGO]
contrary is a criminal offense.)
</TABLE>

<PAGE>

Overview
- --------------------------------------------------------------------------------
of International Equity Institutional Class II

International Equity Institutional Class II

Overview of International Equity Institutional
Class II

A Detailed Look at International Equity
Institutional Class II

<TABLE>
<S> <C>
Objective................................................................... 7
Strategy.................................................................... 7
Principal Investments....................................................... 7
Investment Process.......................................................... 7
Risks....................................................................... 7
Management of the Fund...................................................... 9
Calculating the Fund's Share Price.......................................... 11
Performance Information..................................................... 11
Dividends and Distributions................................................. 11
Tax Considerations.......................................................... 11
Buying and Selling Fund Shares.............................................. 11
Financial Highlights........................................................ 14
</TABLE>
- --------------------------------------------------------------------------------

3
<PAGE>

Overview of International Equity Institutional Class II

PRINCIPAL RISKS OF INVESTING IN THE FUND

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

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

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

WHO SHOULD CONSIDER INVESTING
IN THE FUND

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

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

An investment in International Equity is not a bank deposit, and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other govern-
ment agency.
- --------------------------------------------------------------------------------

4
<PAGE>

Overview of International Equity Institutional Class II

TOTAL RETURNS, AFTER FEES AND EXPENSES

The bar chart and table on this page can help you evaluate the potential risks
and rewards of investing in the Institutional Class II shares of the Fund by
showing changes in performance year to year. The bar chart shows the
Institutional Class II's actual return for each full calendar year since the
Fund began selling those shares on April 1, 1997 (its inception date). The
table compares the Institutional Class II's average annual return with the
Morgan Stanley Capital International (MSCI) EAFE Index over the last year and
since its inception. The Index is a passive measure of combined national stock
market returns. It does not factor in the costs of buying, selling and holding
stock--costs that are reflected in the Fund's results.

- --------------------------------------------------------------------------------

The MSCI EAFE Index of major markets in Europe, Australia and the Far East is a
widely accepted benchmark of international stock performance. It is a model,
not an actual portfolio. It tracks stocks in Australia, Austria, Belgium,
Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland and the United Kingdom.

Year-by-Year Returns
(each full calendar year since inception)

[CHART]

1998 22.90
1999 32.58

Since inception, the Institutional Class II's highest return in any calendar
quarter was 32.10% (fourth quarter 1999) and its lowest quarterly return was
-15.54% (third quarter 1998). Past performance offers no indication of how
the Fund will perform in the future.

PERFORMANCE FOR PERIOD ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
Average Annual Returns
1 Year Since Inception
(April 1, 1997)/1/
<S> <C> <C>
International
Equity
Institutional
Class II 32.58% 25.50%
------------------------------------------------
MSCI EAFE Index 26.96% 17.97%
------------------------------------------------
Lipper
International
Funds Average 40.81% 19.59%
------------------------------------------------
</TABLE>

/1/ The MSCI EAFE Index and Lipper International Funds Average are calculated
from March 31, 1997.

/2/ Unweighted average return, net of fees and expenses, of all mutual funds
that invested primarily in stocks and other equity securities of companies
outside the United States during the periods covered.
- --------------------------------------------------------------------------------

5
<PAGE>

Overview of International Equity Institutional Class II

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 International Equity Institu-
tional Class II.

Expense Example. The example below illustrates the expenses you would have in-
curred on a $10,000 investment in the Fund. It assumes that the Fund earned an
annual return of 5% over the periods shown, the Fund's operating expenses re-
mained the same and you sold your shares at the end of the period.

You may use this hypothetical example to compare the Fund's expense history
with other funds.1 Your actual costs may be higher or lower.
- --------------------------------------------------------------------------------

/1/Information on the annual operating expenses reflects the expenses of both
the Fund and the International Equity Portfolio, the master portfolio into
which International Equity invests all of its assets. (A further discussion of
the relationship between the Fund and the master portfolio appears in the
"Organizational Structure" section of this prospectus.)

/3/For the first 16 months, the expense example takes into account fee waivers
and reimbursements.

FEES AND EXPENSES

<TABLE>
<CAPTION>
Percentage of average
daily net assets/1/
<S> <C>
Management fees 0.65%
---------------------------------------------------
Distribution and
service (12b-1) None
---------------------------------------------------
Other fund
operating
expenses 0.91%
---------------------------------------------------
Total fund
operating
expenses 1.56%
---------------------------------------------------
Less: fee waiver
or expense
reimbursement (0.31)%/2/
---------------------------------------------------
Net expenses 1.25%
---------------------------------------------------
</TABLE>

Expense Example/3/

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C>
$127 $452 $811 $1,822
- ----------------------------------------------------------------------------
</TABLE>

- --------------------------------------------------------------------------------

6
<PAGE>

A detailed look
- --------------------------------------------------------------------------------
at International Equity Institutional Class II

OBJECTIVE

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

STRATEGY

PRINCIPAL INVESTMENTS

INVESTMENT PROCESS

RISKS

Primary Risks

Market Risk. Although individual stocks can outperform their local markets,
deteriorating market conditions might cause an overall weakness in the stock
prices of the entire market.

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

7
<PAGE>

A Detailed Look at International Equity Institutional Class II

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

. the financial analysts who follow the stock, both within Bankers Trust and
outside, cut their estimates of the stock's future earnings; or

. the stock's price approaches the downside target we set when we first bought
the stock (and may since have modified to reflect changes in market and eco-
nomic conditions).

In this review, we seek to learn if the deteriorating performance accurately
reflects deteriorating prospects or if, in our view, it merely reflects in-
vestor overreaction to temporary circumstances.

. Regulatory Risk. Some foreign governments regulate theirexchanges less strin-
gently, and the rights of shareholders may not be as firmly established.

Secondary Risks

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

Pricing Risk. Although the Fund generally invests in the shares of large, well-
established companies, it may occasionally take advantage of exceptional
opportunities presented by smaller companies. Such opportunities pose unique
risks, which we take into account in considering an investment. Small company
stocks tend to experience steeper price fluctuations--down as well as up--than
the stocks of larger companies. A shortage of reliable information--the same
information gap that on small companies, since they lack a large company's
financial resources. Finally, small company stocks are typically less
- --------------------------------------------------------------------------------
Currency management is used to offset investment risks ("hedging") and, where
possible, to add to investment returns. Currency management activities include
the use of forward contracts and may include the use of other instruments.
There is no guarantee that these currency management activities will work and
they could cause losses to the Fund.

- --------------------------------------------------------------------------------

8
<PAGE>

A Detailed Look at International Equity Institutional Class II

liquid than large company stocks: when things are going poorly, it is harder to
find a buyer for a small company's shares that the securities might actually
command if we sold them. If we have valued the securities too highly, you may
end up paying too much for Fund shares when you buy. If we underestimate their
price, you may not receive the full market value for your Fund shares when you
sell.

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

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

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

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

. Unpredictable effects on trade and commerce generally.

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

MANAGEMENT OF THE FUND

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

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

Investment Adviser. Under the supervision of the Board of Trustees, Bankers
Trust Company, with headquarters at 130 Liberty Street, New York, NY 10006,
acts as the Fund's investment adviser. Bankers Trust is an indirect wholly-
owned subsidiary of Deutsche Bank A.G. As investment adviser, Bankers Trust
makes the Fund's investment decisions.
It buys and sells securities for the Fund and conducts the research that leads
to the purchase and sale decisions. The investment adviser received a fee of
0.65% of the Fund's average daily net assets for its services in the last
fiscal year. The investment adviser reimbursed a portion of its fee during the
period.

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
- --------------------------------------------------------------------------------

9
<PAGE>

A Detailed Look at International Equity Institutional Class II

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.

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

Michael Levy

. Co-Lead Portfolio Manager of the master portfolio since its inception.

. International equity strategist, overseeing the design and implementation of
the firm's proprietary stock selection process.

. 28 years of business experience, 18 of them as aninvestment professional.

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

Robert Reiner

. Co-Lead Portfolio Manager of the master portfolio since its inception.

. Specializes in Japanese and European stock andmarket analysis.

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

. 18 years of investment industry experience.

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

Julie Wang

. Co-Portfolio Manager of the master portfolio since its inception.

. Focuses on the master portfolio's Asia-Pacific investments and its emerging
markets exposure.

. Served as Investment Manager for American International Group's Southeast
Asia portfolio from 1991 to 1994.

. 11 years of investment management experience.

. BS in economics from Yale University, MBA from The Wharton School, University
of Pennsylvania.

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

. implementing any changes you wish to make in youraccount information;

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

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

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

. collecting your executed proxies.

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

10
<PAGE>

A Detailed Look at International Equity Institutional Class II

CALCULATING THE FUND'S SHARE PRICE

PERFORMANCE INFORMATION

DIVIDENDS AND DISTRIBUTIONS

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

TAX CONSIDERATIONS

The Fund does not ordinarily pay income taxes. You and other shareholders pay
taxes on the income or capital gains from the Fund's holdings. Your taxes will
vary from year to year, based on the amount of capital gains distributions and
dividends paid out by the Fund. You owe the taxes whether you receive cash or
- --------------------------------------------------------------------------------
The Exchange is open every week, Monday through Friday, except when the
following holidays are celebrated: New Year's Day, Martin Luther King, Jr. Day
(the third Monday in January), Presidents' Day (the third Monday in February),
Good Friday, Memorial Day (the last Monday in May), Independence Day (July
4th), Labor Day (the first Monday in September), Thanksgiving Day (the fourth
Thursday in November) and Christmas Day.

choose to have distributions and dividends reinvested. Distributions and
dividends usually create the followingtax liability:

<TABLE>
<S> <C>
Transaction Tax Status

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

<TABLE>
<S> <C>
Transaction Tax Status

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

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

Contacting the Mutual Fund Service Center of
Deutsche Asset Management

<TABLE>
<S> <C>
By phone 1-800-368-4031

By mail Service Center
P.O. Box 219210
Kansas City, MO 64105-9210

By overnight mail Service Center
210 West 10th Street, 8th floor
Kansas City, MO 64105-1716
</TABLE>

Our representatives are available to assist you personally Monday through Fri-
day, 9:00 a.m. to 7:00 p.m., Eastern time each day the New York Stock Exchange
is open for business. You can reach the Service Center's automated assistance
line 24 hours a day, 7 days a week.
- --------------------------------------------------------------------------------

11
<PAGE>

A Detailed Look at International Equity Institutional Class II

Minimum Account Investments

<TABLE>
<S> <C>
To open an account $250,000
To add to an account $ 25,000
Minimum account balance $ 50,000
</TABLE>

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

How to Open Your Fund Account

<TABLE>
<S> <C>
By mail Complete and sign the account
application that accompanies this
prospectus. (You may obtain
additional applications by calling
the Service Center.) Mail the
completed application along with a
check payable to International
Equity Fund Institutional Class
II--500.
By wire Call the Service Center to set up
a wire account.
</TABLE>

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

Two Ways to Buy and Sell Shares in Your Account

MAIL:

Buying: Send your check, payable to "International Equity Institutional Class
II--500," to the Service Center. The addresses are shown above under
"Contacting the Mutual Fund Service Center of Deutsche Asset Management." Be
sure to include the fund number and your account number (see your account
statement) on your check. Please note that we cannot accept starter checks or
third-party checks. If you are investing in more than one fund, make your check
payable to "Deutsche Asset Management (Mutual Funds)," include your account
number and the names and numbers of the funds you have selected, and the dollar
amount or percentage you would like invested in each Fund.

Selling: Send a signed letter to the Service Center with your name, your fund
number and account number, the fund's name, and either the number of shares you
wish to sell or the dollar amount you wish to receive. You must leave at least
$50,000 worth of shares in your account to keep it open. Unless exchanging into
another Deutsche Asset Management mutual fund, you must submit a written
authorization to sell shares in a retirement account.

WIRE:

<TABLE>
<S> <C>
Routing No: 021001033
Attn: Deutsche Asset Management/ Mutual Funds
DDA no: 00-226-296
FBO: (Account name)
(Account number)
Credit: International Equity Institutional Class II--500
</TABLE>

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

Important Information about Buying and Selling Shares

12
<PAGE>

A Detailed Look at International Equity Institutional Class II

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

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

. We process all sales orders free of charge.

. Unless otherwise instructed, we normally mail a check for the proceeds from
the sale of your shares to your account address the next business day and no
later than seven days.

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

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

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

. We do not issue share certificates.

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

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

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

Please note the following conditions:

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

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

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

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

13
<PAGE>

A Detailed Look at International Equity Institutional Class II

The table below provides a picture of the Institutional Class II's financial
performance for the past five years. The information selected reflects
financial results for a single Fund share. The total returns in the table
represent the rate 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
the Service Center at 1-800-368-4031.

Financial Highlights

<TABLE>
<CAPTION>
For the Period For the Period
October 1, 1999 For the year April 1, 1997/2/
through For the year ended through
October 31, September 30, September 30,
1999/1/ 1999 1998 1997
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value, Beginning of Period $14.02 $12.01 $12.25 $10.00
---------------------------------------------------------------------------------------------------------------------
Income From Investment Operations
Net Investment (Expenses in Excess of) Income (0.05) 0.02 0.14 0.04
---------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss) on Investment,
Options, Foreign Currencies, Forward Foreign Currency and
Foreign Futures Contracts 0.70 2.10 (0.38) 2.21
---------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.65 2.12 (0.24) 2.25
---------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders
Net Investment Income -- (0.11) -- --
---------------------------------------------------------------------------------------------------------------------
Net Realized Gains -- -- -- --
---------------------------------------------------------------------------------------------------------------------
Total Distributions -- (0.11) -- --
---------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $14.67 $14.02 $12.01 $12.25
---------------------------------------------------------------------------------------------------------------------
Total Investment Return 4.64% 17.69% (1.96%) 22.50%
---------------------------------------------------------------------------------------------------------------------
Supplemental Data and Ratios:
Net Assets, End of Period (000s omitted) $159,582 $148,803 $8,733 $8,211
---------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Net Investment Income (0.68)%/3/ 0.61% 1.89% 0.85%/3/
---------------------------------------------------------------------------------------------------------------------
Expenses, Including Expenses of the International Equity
Portfolio 1.25%/3/ 1.25% 0.75% 0.80%/3/
---------------------------------------------------------------------------------------------------------------------
Decrease Reflected in Above Expense Ratio Due to Fees
Waived/ Expenses Reimbursed by Bankers Trust 0.31/3/ 0.31% 0.36% 0.64%/3/
---------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate/4/ 5% 106% 65% 63%/5/
---------------------------------------------------------------------------------------------------------------------
</TABLE>

/1/On September 8, 1999, the Board of Trustees approved the change of the fis-
cal year end from September 30 to October 31.
/2/Commencement of operations.
/3/Annualized.
/4/The portfolio turnover rate is the rate for the master portfolio into which
the Fund invests all of its assets.
/5/For the period October 1, 1996 to September 30, 1997.
- --------------------------------------------------------------------------------

14
<PAGE>

This page intentionally left blank

<PAGE>

You can find more detailed information about each Fund in the current
Statement of Additional Information, dated January 31, 2000, which we have
filed electronically with the Securities and Exchange Commission (SEC) and
which is incorporated by reference. To receive your free copy of the State-
ment of Additional Information, the annual or semi-annual report, or if you
have questions about investing in a Fund, write to us at:

Service Center
P.O. Box 219210
Kansas City, MO 64121-9210
or call our toll-free number: 1-800-368-4031

You can find reports and other information about each Fund on the EDGAR Da-
tabase on the SEC's website (http://www.sec.gov), or you can get copies of
this information, after payment of a duplicating fee, by electronic request
at [email protected] or by writing to the Public Reference Section of the
SEC, Washington, D.C. 20549-0102. Information about each Fund, including
its Statement of Additional Information, can be reviewed and copied at the
SEC's Public Reference Room in Washington, D.C. For information on the Pub-
lic Reference Room, call the SEC at 202-942-8090.

International Equity Institutional Class II
BT Institutional Funds

Distributed by:
ICC Distributors, Inc. CUSIP
Two Portland Square #055924849
Portland, ME 04101 500PRO (1/00)
811-4760

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

January 31, 2000

BT Institutional Funds

International Equity Institutional Class I
formerly Institutional International Equity - Class I

International Equity Institutional Class II
formerly Institutional International Equity - Class II

BT Institutional Funds (the "Trust") is an open-end management investment
company comprised of several funds. International Equity Institutional (the
"Fund") is a separate series of the Trust that offers two classes of shares. The
Class I shares and Class II shares (individually and collectively referred to as
"shares" as the context may require) of the Fund are described herein.

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

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

The shares' respective Prospectuses dated January 31, 2000, provide the basic
information investors should know before investing. This Statement of Additional
Information ("SAI"), which is not a Prospectus, is intended to provide
additional information regarding the activities and operations of the Trust and
should be read in conjunction with the shares' respective Prospectuses. You may
request a copy of a prospectus or a paper copy of this SAI, if you have received
it electronically, free of charge by calling the Trust at the telephone number
listed below or by contacting any Bankers Trust Service Agent (which is any
broker, financial advisor, bank, dealer or other institution or financial
intermediary that has a sub-shareholder servicing agreement with Bankers Trust).
Capitalized terms not otherwise defined in this SAI have the meanings accorded
to them in the shares' respective Prospectuses. The financial statements for the
Fund and the Portfolio for the fiscal period ended September 30, 1999, and
fiscal period ended October 31, 1999, are incorporated herein by reference to
the Annual Report to shareholders for the Fund and Portfolio dated September 30,
1999 and October 31, 1999. A copy of a Fund's and the Portfolio's Annual Report
may be obtained without charge by calling the Fund at the telephone number
listed below.

<PAGE>

BANKERS TRUST COMPANY
Investment Adviser of the Portfolio and Administrator

ICC DISTRIBUTORS, INC.
Distributor
Two Portland Square
Portland, Maine 04101
1-800-368-4031

2
<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>

<S> <C>
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS........ 4
Investment Objective.................................. 4
Investment Policies................................... 4
Futures Contracts and Options on Futures Contracts.... 16
Additional Risk Factors............................... 19
Investment Restrictions............................... 23
Portfolio Transactions and Brokerage Commissions...... 26
PERFORMANCE INFORMATION................................ 29
Standard Performance Information...................... 29
Annualized Total Return............................... 30
Comparison of Fund Performance........................ 30
Economic and Market Information....................... 31
VALUATION OF SECURITIES; REDEMPTIONS AND PURCHASES..... 31
Valuation of Securities............................... 31
Purchase of Shares.................................... 32
Additional Information About Buying Shares............ 31
Redemption of Shares.................................. 33
Additional Information About Selling Shares........... 33
Exchange Privilege.................................... 33
Redemptions and Purchases In-Kind..................... 34
Trading in Foreign Securities......................... 35
MANAGEMENT OF THE TRUST AND THE PORTFOLIO.............. 35
Trustees of the Trust and Portfolios.................. 36
Officers of the Trusts and Portfolio.................. 38
Investment Adviser.................................... 40
Administrator......................................... 41
Distributor........................................... 43
Service Agent......................................... 43
Custodian and Transfer Agent.......................... 43
Banking Regulatory Matters............................ 44
Counsel and Independent Accountants................... 44
ORGANIZATION OF THE TRUST.............................. 44
TAXATION............................................... 46
Dividends and Distributions........................... 46
Taxation of the Fund.................................. 46
Foreign Securities.................................... 48
Taxation of the Portfolio............................. 48
Sale of Shares........................................ 49
Foreign Withholding Taxes............................. 49
Backup Withholding.................................... 49
Foreign Shareholders.................................. 49
Other Taxation........................................ 49
FINANCIAL STATEMENTS................................... 50
APPENDIX............................................... 51
</TABLE>

3
<PAGE>

Investment Objective, Policies And Restrictions

Investment Objective

The investment objective of the Fund is long-term capital appreciation. Under
normal circumstances, the Fund invests at least 65% of its assets in stocks and
other securities with equity characteristics of companies primarily based in
developed countries outside the United States. The production of income is
incidental to this objective. There can, of course, be no assurance that the
Fund will achieve its investment objective.

Investment Policies

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

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

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

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

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

4
<PAGE>

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

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

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

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

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

Commercial Paper. Commercial paper consists of short-term (usually from 1 to 270
days) unsecured promissory notes issued by corporations in order to finance
their current operations. A variable amount master demand note (which is a type
of commercial paper) represents a direct borrowing arrangement involving
periodically fluctuating rates of interest under a letter agreement between a
commercial paper issuer and an institutional lender pursuant to which the lender
may determine to invest varying amounts.

5
<PAGE>

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

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

Derivatives. The Portfolio may invest in various instruments that are commonly
known as "derivatives." Generally, a derivative is a financial arrangement, the
value of which is based on, or "derived" from, a traditional security, asset or
market index. Some derivatives such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities. There are,
in fact, many different types of derivatives and many different ways to use
them. There is also a range of risks associated with those uses. Futures and
options are commonly used for traditional hedging purposes to attempt to protect
a fund from exposure to changing interest rates, securities prices or currency
exchange rates and for cash management purposes as a low cost method of gaining
exposure to a particular securities market without investing directly in those
securities. However, some derivatives are used for leverage, which tends to
magnify the effects of an instrument's price changes as market conditions
change. Leverage involves the use of a small amount of money to control a large
amount of financial assets and can, in some circumstances, lead to significant
losses. Bankers Trust, as the Portfolio's Adviser will use derivatives only in
circumstances where the Adviser believes they offer the most economic means of
improving the risk/reward profile of the Portfolio. Derivatives will not be used
to increase portfolio risk above the level that could be achieved using only
traditional investment securities or to acquire exposure to changes in the value
of assets or indices that by themselves would not be purchased for the
Portfolio. The use of derivatives for non-hedging

6
<PAGE>

purposes may be considered speculative.

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

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

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

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

7
<PAGE>

When-Issued and Delayed Delivery Securities. The Portfolio may purchase
securities on a when-issued or delayed delivery basis. Delivery of and payment
for these securities may take place as long as a month or more after the date of
the purchase commitment. The value of these securities is subject to market
fluctuation during this period and no income accrues to the Portfolio until
settlement takes place. The Portfolio identifies, as part of a segregated
account, cash or liquid securities in an amount at least equal to these
commitments. When entering into a when-issued or delayed delivery transaction,
the Portfolio will rely on the other party to consummate the transaction; if the
other party fails to do so, the Portfolio may be disadvantaged.

Lending of Portfolio Securities. The Portfolio has the authority to lend up to
30% of the total value of its portfolio securities to brokers, dealers and other
financial organizations. These loans must be secured continuously by cash or
securities issued or guaranteed by the United States government, its agencies or
instrumentalities or by a letter of credit at least equal to the market value of
the securities loaned plus accrued income. The Portfolio will not lend
securities to Bankers Trust, ICC Distributors or their affiliates. By lending
its securities, the Portfolio can increase its income by continuing to receive
interest on the loaned securities as well as by either investing the cash
collateral in short-term securities or obtaining yield in the form of interest
paid by the borrower when U.S. government obligations are used as collateral.
During the term of the loan, the Portfolio continues to bear the risk of
fluctuations in the price of the loaned securities. There may be risks of delay
in receiving additional collateral or risks of delay in recovery of the
securities or even loss of rights in the collateral should the borrower of the
securities fail financially. The Portfolio will adhere to the following
conditions whenever its securities are loaned: (i) the Portfolio must receive at
least 100 % cash collateral or equivalent securities from the borrower; (ii) the
borrower must increase this collateral whenever the market value of the
securities including accrued interest rises above the level of the collateral;
(iii) the Portfolio must be able to terminate the loan at any time; (iv) the
Portfolio must receive reasonable interest on the loan, as well as any
dividends, interest or other distributions on the loaned securities, and any
increase in market value; (v) the Portfolio may pay only reasonable custodian
fees in connection with the loan; and (vi) voting rights on the loaned
securities may pass to the borrower; provided, however, that if a material event
adversely affecting the investment occurs, the Board of Trustees must terminate
the loan and regain the right to vote the securities. Cash collateral may be
invested in a money market fund managed by Bankers Trust (or its affiliates) and
Bankers Trust may serve as the Portfolio's lending agent and may share in
revenue received from securities lending transactions as compensation for this
service.

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

8
<PAGE>

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

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

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

A put option sold by the Portfolio is covered when, among other things, cash or
securities acceptable to the broker are placed in a segregated account to
fulfill the obligations undertaken. When the Portfolio writes a covered put
option, it gives the purchaser of the option the right to sell the underlying
security to the Portfolio at the specified exercise price at any time during the
option period. If the option expires unexercised, the Portfolio will realize
income in the amount of the premium received for writing the option. If the put
option is exercised, a decision over which the Portfolio has no control, the
Portfolio must purchase the underlying security from the option holder at the
exercise price. By writing a covered put option, the Portfolio, in exchange for
the net premium received, accepts the risk of a decline in the market value of
the underlying security below the exercise price. The Portfolio will only write
put options involving securities for which a determination is made at the time
the option is written that the Portfolio wishes to acquire the securities at the
exercise price.

The Portfolio may terminate its obligation as the writer of a call or put option
by purchasing an option with the same exercise price and expiration date as the
option previously written. This transaction is called a "closing purchase
transaction." The Portfolio will realize a profit or loss from a closing
purchase transaction if the amount paid to purchase an option is less or more,
as the case may be, than the amount received from the sale thereof. To close out
a position as a purchaser of an option, the Portfolio, may make a "closing sale
transaction" which involves liquidating the Portfolio's position by selling the
option previously purchased. Where the

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<PAGE>

Portfolio cannot effect a closing purchase transaction, it may be forced to
incur brokerage commissions or dealer spreads in selling securities it receives
or it may be forced to hold underlying securities until an option is exercised
or expires.

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

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

The Portfolio would normally purchase put options in anticipation of a decline
in the market value of securities in its portfolio ("protective puts") or
securities of the type in which it is permitted to invest. The purchase of a put
option would entitle the Portfolio, in exchange for the premium paid, to sell a
security, which may or may not be held in the Portfolio's holdings, at a
specified price during the option period. The purchase of protective puts is
designed merely to offset or hedge against a decline in the market value of the
Portfolio's holdings. Put options also may be purchased by the Portfolio for the
purpose of affirmatively benefiting from a decline in the price of securities,
which the Portfolio does not own. The Portfolio would ordinarily recognize a
gain if the value of the securities decreased below the exercise price
sufficiently to cover the premium and would recognize a loss if the value of the
securities remained at or above the exercise price. Gains and losses on the
purchase of protective put options would tend to be offset by countervailing
changes in the value of underlying portfolio securities.

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

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<PAGE>

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

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

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

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

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

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

Options on Foreign Securities Indices. The Portfolio may purchase and write put
and call options on foreign stock indices listed on domestic and foreign stock
exchanges. The Portfolio may also purchase and write OTC Options on foreign
stock indices. These OTC Options would

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<PAGE>

be subject to the same liquidity and credit risks noted above with respect to
OTC Options on foreign currencies. A stock index fluctuates with changes in the
market values of the stocks included in the index.

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

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

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

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

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

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<PAGE>

movements in the direction of the stock market generally or of a particular
industry. This requires different skills and techniques than predicting changes
in the price of individual stocks.

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

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

The Portfolio may enter into currency hedging transactions in an attempt to
protect against changes in currency exchange rates between the trade and
settlement dates of specific securities transactions or changes in currency
exchange rates that would adversely affect a portfolio position or an
anticipated investment position. Since consideration of the prospect for
currency parities will be incorporated into Bankers Trust's long-term investment
decisions, the Portfolio will not routinely enter into currency hedging
transactions with respect to security transactions; however, the Adviser
believes that it is important to have the flexibility to enter into currency
hedging transactions when it determines that the transactions would be in the
Portfolio's best interest. Although these transactions tend to minimize the risk
of loss due to a decline in the value of the hedged currency, at the same time
they tend to limit any potential gain that might be realized should the value of
the hedged currency increase. The precise matching of the forward contract
amounts and the value of the securities involved will not generally be possible
because the future value of such securities in foreign currencies will change as
a consequence of market movements in the value of such securities between the
date the forward contract is entered into and the date it matures. The
projection of currency market movements is extremely difficult, and the
successful execution of a hedging strategy is highly uncertain.

While these contracts are not presently regulated by the Commodity Futures
Trading Commission ("CFTC,") the CFTC may in the future assert authority to
regulate forward contracts. In such event the Portfolio's ability to utilize
forward contracts may be restricted. Forward contracts may reduce the potential
gain from a positive change in the relationship

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<PAGE>

between the U.S. dollar and foreign currencies. Unanticipated changes in
currency prices may result in poorer overall performance for the Portfolio than
if it had not entered into such contracts. The use of foreign currency forward
contracts may not eliminate fluctuations in the underlying U.S. dollar
equivalent value of the prices of or rates of return on the Portfolio's foreign
currency denominated portfolio securities and the use of such techniques will
subject the Portfolio to certain risks.

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

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

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

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

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<PAGE>

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

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

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

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

There is no assurance that a liquid secondary market will exist for any
particular option, or at any particular time. If the Portfolio is unable to
effect a closing purchase transaction with respect to covered options it has
written, the Portfolio will not be able to sell the underlying currency or
dispose of assets held in a segregated account until the options expire or are
exercised. Similarly, if the Portfolio is unable to effect a closing sale
transaction with respect to options it has

15
<PAGE>

purchased, it would have to exercise the options in order to realize any profit
and will incur transaction costs upon the purchase or sale of underlying
currency. The Portfolio pays brokerage commissions or spreads in connection with
its options transactions.

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

Futures Contracts and Options on Futures Contracts.

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

Futures Contracts. Futures contracts are contracts to purchase or sell a fixed
amount of an underlying instrument, commodity or index at a fixed time and place
in the future. U.S. futures contracts have been designed by exchanges which
have been designated "contracts markets" by the CFTC, and must be executed
through a futures commission merchant, or brokerage firm, which is a member of
the relevant contract market. Futures contracts trade on a number of exchanges,
and clear through their clearing corporations. The Portfolio may enter into
contracts for the purchase or sale for future delivery of fixed-income
securities, foreign currencies, or financial indices including any index of U.S.
government securities, foreign government securities or corporate debt
securities. The Portfolio may enter into futures contracts which are based on
debt securities that are backed by the full faith and credit of the U.S.
government, such as long-term U.S. Treasury Bonds, Treasury Notes, Government
National Mortgage Association modified pass-through mortgage-backed securities
and three-month U.S. Treasury Bills. The Portfolio may also enter into futures
contracts which are based on bonds issued by governments other than the U.S.
government. Futures contracts on foreign currencies may be used to hedge against
securities that are denominated in foreign currencies.

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

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<PAGE>

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

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

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

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

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<PAGE>

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

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

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

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

When used for hedging purposes, each transaction in futures contracts on a
securities index involves the establishment of a position which the Adviser
believes will move in a direction opposite to that of the investment being
hedged. If these hedging transactions are successful, the futures positions
taken for the Portfolio will rise in value by an amount which approximately
offsets the decline in value of the portion of the Portfolio's investments that
are being hedged. Should general market prices move in an unexpected manner, the
full anticipated benefits of

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<PAGE>

Futures Contracts may not be achieved or a loss may be realized.

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

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

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

Additional Risk Factors

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

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

19
<PAGE>

currency restrictions and tax laws restricting the amounts and types of foreign
investments.

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

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

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

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

In addition to brokerage commissions, custodial services and other costs
relating to investment in emerging markets are generally more expensive than in
the United States. Such markets have

20
<PAGE>

been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. The inability of the Portfolio to make
intended securities purchases due to settlement problems could cause the
Portfolio to miss attractive investment opportunities. Inability to dispose of a
security due to settlement problems could result either in losses to the
Portfolio due to subsequent declines in the value of the security or, if the
Portfolio has entered into a contract to sell the security, could result in
possible liability to the purchaser.

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

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

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

The purchase and sale of exchange-traded foreign currency options, however, is
subject to the risks of the availability of a liquid secondary market described
above, as well as the risks regarding adverse market movements, margining of
options written, the nature of the foreign currency market, possible
intervention by governmental authorities and the effects of other political and
economic events. In addition, exchange-traded options on foreign currencies
involve certain risks not presented by the over-the-counter market. For example,
exercise and

21
<PAGE>

settlement of such options must be made exclusively through the OCC, which has
established banking relationships in applicable foreign countries for this
purpose. As a result, the OCC may, if it determines that foreign governmental
restrictions or taxes would prevent the orderly settlement of foreign currency
option exercises, or would result in undue burdens on the OCC or its clearing
member, impose special procedures on exercise and settlement, such as technical
changes in the mechanics of delivery of currency, the fixing of dollar
settlement prices or prohibitions on exercise.

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

Special Information Concerning Master-Feeder Fund Structure. Unlike other open-
end management investment companies (mutual funds) which directly acquire and
manage their own portfolio securities, the Fund seeks to achieve its investment
objective by investing all of its Assets in the Portfolio, a separate registered
investment company with the same investment objective as the Fund. Therefore, an
investor's interest in the Portfolio's securities is indirect. In addition to
selling a beneficial interest to the Fund, the Portfolio may sell beneficial
interests to other mutual funds, investment vehicles or institutional investors.
Such investors will invest in the Portfolio on the same terms and conditions and
will pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to sell their shares at
the same public offering price as the Fund due to variations in sales
commissions and other operating expenses. Therefore, investors in the Fund
should be aware that these differences may result in differences in returns
experienced by investors in the different funds that invest in the Portfolio.
Such differences in returns are also present in other mutual fund structures.
Information concerning other holders of interests in the Portfolio is available
from Bankers Trust at 1-800-368-4031.

Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the Portfolio, the remaining funds may experience higher pro rata
operating expenses, thereby producing lower returns (however, this possibility
exists as well for traditionally structured funds which have large institutional
investors). Additionally, the Portfolio may become less diverse, resulting in
increased portfolio risk. Also, funds with a greater pro rata ownership in the
Portfolio could have effective voting control of the operations of the
Portfolio. Except as permitted by the SEC, whenever the Trust is requested to
vote on matters pertaining to the Portfolio, the Trust will hold a meeting of
shareholders of the Fund and will cast all of its votes in the same proportion
as the votes of the Fund's shareholders. Fund shareholders who do not vote will
not affect the Trust's votes at the Portfolio meeting. The percentage of the
Trust's votes representing the Fund's

22
<PAGE>

shareholders not voting will be voted by the Trustees or officers of the Trust
in the same proportion as the Fund shareholders who do, in fact, vote.

Certain changes in the Portfolio's investment objectives, policies or
restrictions may require the Fund to withdraw its interest in the Portfolio. Any
such withdrawal could result in a distribution "In-Kind" of portfolio securities
(as opposed to a cash distribution from the Portfolio). If securities are
distributed, the Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, the distrubution In-Kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of
the Fund. Notwithstanding the above, there are other means for meeting
redemption requests, such as borrowing.

The Fund may withdraw its investment from the Portfolio at any time, if the
Board of Trustees of the Trust determines that it is in the best interests of
the shareholders of the Fund to do so. Upon any such withdrawal, the Board of
Trustees of the Trust would consider what action might be taken, including the
investment of all the Assets of the Fund in another pooled investment entity
having the same investment objective as the Fund or the retaining of an
investment adviser to manage the Fund's assets in accordance with the investment
policies described herein with respect to the Portfolio.

The Fund's investment objective is not a fundamental policy and may be changed
upon notice to, but without the approval of, the Fund's shareholders. If there
is a change in the Fund's investment objective, the Fund's shareholders should
consider whether the Fund remains an appropriate investment in light of their
then-current needs. The investment objective of the Portfolio is also not a
fundamental policy. Shareholders of the Fund will receive 30 days prior written
notice with respect to any change in the investment objective of the Fund or the
Portfolio.

Rating Services. The ratings of rating services represent their opinions as to
the quality of the securities that they undertake to rate. It should be
emphasized, however, that ratings are relative and subjective and are not
absolute standards of quality. Although these ratings are an initial criterion
for selection of portfolio investments, the Adviser also makes its own
evaluation of these securities, subject to review by the Board of Trustees.
After purchase by the Portfolio, an obligation may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Portfolio.
Neither event would require a Fund to eliminate the obligation from its
portfolio, but the Adviser will consider such an event in its determination of
whether a Fund should continue to hold the obligation. A description of the
ratings used herein and in the Fund's Prospectuses is set forth in the Appendix
to this SAI.

Investment Restrictions

Fundamental Policies. The following investment restrictions are "fundamental
policies" of the Fund and the Portfolio and may not be changed with respect to
the Fund or the Portfolio without the approval of a "majority of the outstanding
voting securities" of the Fund or the Portfolio, as the case may be. "Majority
of the outstanding voting securities" under the 1940 Act, and as used in this
SAI, means, with respect to the Fund (or the Portfolio), the lesser of (i) 67%
or more of the outstanding voting securities of the Fund (or of the total
beneficial interests of the Portfolio)

23
<PAGE>

present at a meeting, if the holders of more than 50% of the outstanding voting
securities of the Fund or of the total beneficial interests of the Portfolio)
are present or represented by proxy or (ii) more than 50% of the outstanding
voting securities of the Fund (or of the total beneficial interests of the
Portfolio). Whenever the Trust is requested to vote on a fundamental policy of
the Portfolio, the Trust will hold a meeting of the Fund's shareholders and will
cast its vote as instructed by that Fund's shareholders. Fund shareholders who
do not vote will not affect the Trust's votes at the Portfolio meeting. The
percentage of the Trust's votes representing Fund shareholders not voting will
be voted by the Trustees of the Trust in the same proportion as the Fund
shareholders who do, in fact, vote.

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

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

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

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

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

24
<PAGE>

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

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

(7) with respect to 75% of the Portfolio's (Fund's) total assets, invest more
than 5% of its total assets in the securities of any one issuer (excluding cash
and cash equivalents, U.S. government securities and the securities of other
investments companies) or own more than 10% of the voting securities of any
issuer.

Additional Restrictions. These are non-fundamental policies. In order to comply
with certain statutes and policies, the Portfolio (or the Trust, on behalf of
the Fund) will not as a matter of operating policy (except that no operating
policy shall prevent the Fund from investing all of its Assets in an open-end
investment company with substantially the same investment objective):

(i) borrow money (including through reverse repurchase or forward roll
transactions) for any purpose in excess of 5% of the Portfolio's (Fund's)
total assets (taken at cost), except that the Portfolio (Fund) may borrow
for temporary or emergency purposes up to 1/3 of its total assets;

(ii) pledge, mortgage or hypothecate for any purpose in excess of 10% of
the Portfolio's (Fund's) total assets (taken at market value), provided
that collateral arrangements with respect to options and futures, including
deposits of initial deposit and variation margin, and reverse repurchase
agreements are not considered a pledge of assets for purposes of this
restriction;

(iii) purchase any security or evidence of interest therein on margin,
except that such short-term credit as may be necessary for the clearance of
purchases and sales of securities may be obtained and except that deposits
of initial deposit and variation margin may be made in connection with the
purchase, ownership, holding or sale of futures;

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

(v) purchase securities issued by any investment company except by
purchase in the open market where no commission or profit to a sponsor or
dealer results from such purchase other than the customary broker's
commission, or except when such purchase, though not made in the open
market, is part of a plan of merger or consolidation; provided, however,
that securities of any investment company will not be purchased for the
Portfolio (Fund) if such purchase at the time thereof would cause: (a) more
than 10% of the Portfolio's (Fund's) total assets (taken at the greater of
cost or market value) to be invested in the securities of such issuers; (b)
more than 5% of the Portfolio's (Fund's) total assets (taken at the greater
of cost or market value) to

25
<PAGE>

be invested in any one investment company; or (c) more than 3% of
the outstanding voting securities of any such issuer to be held for
the Portfolio (Fund) unless permitted to exceed these limitations by
an exemptive order of the SEC; provided further that, except in the
case of a merger or consolidation, the Portfolio (Fund) shall not
purchase any securities of any open-end investment company unless
(1) the Portfolio's investment adviser waives the investment
advisory fee with respect to assets invested in other open-end
investment companies and (2) the Portfolio incurs no sales charge in
connection with the investment;

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

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

(viii) buy and sell puts and calls on securities, stock index futures or
options on stock index futures, or financial futures or options on
financial futures unless such options are written by other persons
and: (a) the options or futures are offered through the facilities
of a national securities association or are listed on a national
securities or commodities exchange, except for put and call options
issued by non-U.S. entities or listed on non-U.S. securities or
commodities exchanges; (b) the aggregate premiums paid on all such
options which are held at any time do not exceed 20% of the
Portfolio's (Fund's) total net assets; and (c) the aggregate margin
deposits required on all such futures or options thereon held at any
time do not exceed 5% of the Portfolio's (Fund's) total assets.

There will be no violation of any investment restriction (except with respect to
fundamental investment restriction (1) above) if that restriction is complied
with at the time the relevant action is taken, notwithstanding a later change in
the market value of an investment, in net or total assets, or in the change of
securities rating of the investment, or any other later change.

26
<PAGE>

Portfolio Transactions and Brokerage Commissions

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

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

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

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

27
<PAGE>

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

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

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

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

For the period October 1, 1999 to October 31, 1999 and for the fiscal years
ended September 30, 1999, 1998 and 1997, International Equity Portfolio paid
brokerage commissions in the amount of $786,401, $16,407,135, $6,083,270, and
$1,733,727, respectively.

For the fiscal year ended September 30, 1999, International Equity Portfolio
paid brokerage commissions in the amount of $1,095,780 to Deutsche Morgan
Grenfell, an affiliate of the Portfolio. This represents 7% of the aggregate
brokerage commissions paid by the Portfolio in the fiscal year and 0.52% of the
aggregate dollar amount of transactions effected by the Portfolio in the fiscal
year.

28
<PAGE>

For the fiscal year ended September 30, 1999, International Equity Portfolio
paid brokerage commissions in the amount of $174,736 to Deutsche Bank Alex.
Brown, an affiliate of the Portfolio. This represents 1% of the aggregate
brokerage commissions paid by the Portfolio in the fiscal year and 0.06% of the
aggregate dollar amount of transactions effected by the Portfolio in the fiscal
year.

For the fiscal year ended September 30, 1998, International Equity Portfolio
paid brokerage commissions in the amount of $71,066 to Deutsche Bank Alex.
Brown. This represents 1% of the aggregate brokerage commissions paid by the
Portfolio in the fiscal year and 0.02% of the aggregate dollar amount of
transactions effected by the Portfolio in the fiscal year.

For the period October 1, 1999 to October 31, 1999 and for the fiscal year ended
September 30, 1997, the Portfolio did not pay any brokerage commissions to
affiliates.

Performance Information

Standard Performance Information

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

Total return: A Fund's average annual total return is calculated for certain
periods by determining the average annual compounded rates of return over those
periods that would cause an investment of $1,000 (made at the maximum public
offering price with all distributions reinvested) to reach the value of that
investment at the end of the periods. A Fund may also calculate total return
figures which represent aggregate performance over a period or year-by-year
performance.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Annualized Total Annualized Total Annualized Total Cumulative Total
Return for the One Return for the Return from Return from
Year Period ended Five Year Period Commencement of Commencement of
October 31, 1999 ended October 31, Operations through Operations through
1999 October 31, 1999 October 31, 1999
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class I shares(1) 15.99% N/A 16.06% 46.84%
- -------------------------------------------------------------------------------------------------------
Class II shares(1) 15.73% N/A 16.39% 47.90%
- --------------------------------------------------------------------------------------------------------
</TABLE>

(1) Fund commenced operations on April 1, 1997.

29
<PAGE>

Annualized Total Return

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

Performance information may include the Fund's investment results and/or
comparisons of its investment results to the Morgan Stanley Capital
International Europe, Australia, Far East ("MSCI EAFE") Index, the Morgan
Stanley Capital International Gross Domestic Product weighted EAFE Index, the
Lipper International Average, or various other unmanaged indices or results of
other mutual funds or investment or savings vehicles. The Fund's investment
results as used in such communications will be calculated on a total rate of
return basis in the manner set forth herein. From time to time, fund rankings
may be quoted from various sources, such as Lipper Analytical Services, Inc.,
Value Line, and Morningstar, Inc.

The Trust may provide period and average annualized "total return" quotations
for the shares. The shares' "total return" refers to the change in the value of
an investment in the shares over a stated period based on any change in net
asset value per share and including the value of any shares purchased with any
dividends or capital gains distributed during such period. Period total return
may be annualized. An annualized total return is a compounded total return which
assumes that the period total return is generated over a one-year period, and
that all dividends and capital gains distributions are reinvested. An annualized
total return will be higher than a period total return if the period is shorter
than one year, because of the compounding effect.

Unlike some bank deposits or other investments which pay a fixed yield for a
stated period of time, the total return of the Fund will vary depending upon
interest rates, the current market value of the securities held by the Portfolio
and changes in the shares' expenses.

Comparison of Fund Performance

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

In connection with communicating its performance to current or prospective
shareholders, a Fund also may compare these figures to the performance of other
mutual funds tracked by mutual fund rating services or to unmanaged indices
which may assume reinvestment of

30
<PAGE>

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

Economic and Market Information

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

Valuation of Securities; Redemptions And Purchases

Valuation of Securities

The net asset value ("NAV") per share is calculated once on each day the NYSE is
open ("Valuation Day") as of the close of regular trading on the NYSE, which is
currently 4:00 p.m., Eastern time or in the event that the NYSE closes early, at
the time of such early closing (the "Valuation Time"). The NAV per share is
computed by dividing the value of the Fund's assets (i.e., the value of its
investment in the Portfolio and other assets), less all liabilities attributable
to the shares, by the total number of shares outstanding as of the Valuation
Time. The Portfolio's securities and other assets are valued primarily on the
basis of market quotations or, if quotations are not readily available, by a
method which the Portfolio's Board of Trustees believes accurately reflects fair
value.

Equity and debt securities (other than short-term debt obligations maturing in
60 days or less), including listed securities and securities for which price
quotations are available, will normally be valued on the basis of market
valuations furnished by a pricing service. Short-term debt obligations and money
market securities maturing in 60 days or less are valued at amortized cost,
which approximates market.

Securities for which market quotations are not readily available are valued by
Bankers Trust

31
<PAGE>

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

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

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

Purchase of Shares

The Trust accepts purchase orders for shares of the Fund at the NAV per share
next determined after the order is received on each Valuation Day. Shares may be
available Service Agents.

Purchase orders for shares (including those purchased through a Service Agent)
that are transmitted to the Trust's Transfer Agent (the "Transfer Agent"), prior
to the Valuation Time on any Valuation Day will be effective at that day's
Valuation Time. The Trust and Transfer Agent reserve the right to reject any
purchase order.

Shares must be purchased in accordance with procedures established by the
Transfer Agent and each Service Agent. It is the responsibility of each Service
Agent to transmit to the Transfer Agent purchase and redemption orders and to
transmit to Bankers Trust as the Trust's custodian (the "Custodian") purchase
payments by the following business day (trade date + 1) after an order for
shares is placed. A shareholder must settle with the Service Agent for his or
her entitlement to an effective purchase or redemption order as of a particular
time. Because Bankers Trust is the Custodian and Transfer Agent of the Trust,
funds may be transferred directly from or to a customer's account held with
Bankers Trust to settle transactions with the Fund without incurring the
additional costs or delays associated with the wiring of federal funds.

The Trust and Bankers Trust have authorized one or more financial intermediaries
to accept on the Trust's behalf purchase and redemption orders. Such financial
intermediaries are authorized to designate other intermediaries to accept
purchase and redemption orders on the Trust's behalf. The Transfer Agent will be
deemed to have received a purchase or redemption order when an authorized
Service Agent or, if applicable, a Service Agent's authorized designee, accepts
the

32
<PAGE>

order. Customer orders will be priced at the Fund's NAV next computed after they
are accepted by an authorized Service Agent or the Service Agent's authorized
designee.

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

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

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

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

Redemption of Shares

You can arrange to take money out of your fund account at any time by selling
(redeeming) some or all of your shares. Your shares shall be sold at the next
NAV calculated after an order is received by the Transfer Agent. Redemption
requests should be transmitted by customers in accordance with procedures
established by the Transfer Agent and the shareholder's Service Agent.
Redemption requests for shares received by the Service Agent and transmitted to
the Transfer Agent prior to the Valuation Time on each Valuation Day will be
effective at that day's Valuation Time and the redemption proceeds normally will
be delivered to the shareholder's account the next day, but in any event within
seven calendar days following receipt of the request.

Service Agents may allow redemptions or exchanges by telephone and may disclaim
liability for following instructions communicated by telephone that the Service
Agent reasonably believes to be genuine. The Service Agent must provide the
investor with an opportunity to choose whether or not to utilize the telephone
redemption or exchange privilege. The Transfer Agent and the Service Agent must
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. If the Service Agent does not do so, it may be liable for
any losses due to unauthorized or fraudulent instructions. Such procedures may
include, among others, requiring 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. The Trust reserves
the right to close investor accounts via 30 day notice in writing if the Fund
account balance falls below $100,000.

To sell shares in a retirement account, your request must be made in writing,
except for

33
<PAGE>

exchanges to other eligible funds in the Deutsche Asset Management mutual funds,
which can be requested by phone or in writing. For information on retirement
distributions, contact your Service Agent or call the Service Center at 1-800-
368-4031.

To sell shares by bank wire you will need to sign up for these services in
advance when completing your account application.

Certain requests must include a signature guarantee to protect you and Bankers
Trust from fraud. Redemption requests in writing must include a signature
guarantee if any of the following situations apply:

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

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

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

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

. You wish to have redemption proceeds wired to a non-predesignated bank
account.

A signature guarantee is also required if you change the pre-designated bank
information for receiving redemption proceeds on your account.

You should be able to obtain a signature guarantee from a bank, broker, dealer,
credit union (if authorized under state law), securities exchange or
association, clearing agency, or savings association. A notary public cannot
provide a signature guarantee.

Redemptions and Purchases In-Kind

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

34
<PAGE>

or 1% of the net asset value of the Fund or the Portfolio, as the case may be,
at the beginning of the period.

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

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

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

Trading in Foreign Securities

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

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

Management of the Trust and the Portfolio

The affairs of the Trust and the Portfolio are managed under the supervision of
their respective Boards of Trustees. By virtue of the responsibilities assumed
by Bankers Trust, the administrator

35
<PAGE>

of the Trust and Portfolio, neither the Trust nor the Portfolio requires
employees other than its executive officers. None of the executive officers of
the Trust or the Portfolio devotes full time to the affairs of the Trust or the
Portfolio.

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 of the Portfolio.

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

The Trustees and officers of the Trust and Portfolio, their birthdate and their
principal occupations during the past five years are set forth below. Their
titles may have varied during that period. Unless otherwise indicated, the
address of each officer is Two Portland Square, Portland, Maine 04101.

Trustees of the Trust and Portfolios

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

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

- ----------------------
/1/ The "Fund Complex" consists of BT Investment Funds, BT Institutional Funds,
BT Pyramid Mutual Funds, BT Advisor Funds, Cash Management Portfolio,
Intermediate Tax Free Portfolio, Tax Free Money Portfolio, NY Tax Free Money
Portfolio, Treasury Money Portfolio, International Equity Portfolio, Equity 500
Index Portfolio, Capital Appreciation Portfolio, Asset Management Portfolio and
BT Investment Portfolios.

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

36
<PAGE>

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

RICHARD HALE* (birth date: July 17, 1945) -- Trustee of the Trusts and
Portfolio; Trustee of each of the other investment companies in the Fund
Complex; Managing Director, Deutsche Asset Management; Director, Flag Investors
Funds2; Managing Director, Deutsche Banc Alex. Brown Incorporated; Director and
President, Investment Company Capital Corp. His address is 205 Woodbrook Lane,
Baltimore, Maryland 21212.

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

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

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

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

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

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

37
<PAGE>

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

Officers of the Trusts and Portfolio

DANIEL O. HIRSCH (birth date: March 27, 1954) --Director, Deutsche Asset
Management since 1999; Director, Deutsche Banc Alex. Brown LLC and Investment
Company Capital Corporation, 1998-99; Secretary of the Trusts and Portfolio
since 1998; Associate General Counsel, Office of the General Counsel, United
States Securities and Exchange Commission, 1993 to 1998. His address is One
South Street, Baltimore, Maryland 21202.

JOHN A. KEFFER (birth date: July 14, 1942) -- President and Chief Executive
Officer of the Trusts and Portfolio; 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 04101.

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

Messrs. Hirsch, 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

38
<PAGE>

Trustee Compensation Table

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Aggregate Aggregate Total Compensation
Compensation Compensation from
Trustee from Trust* from Portfolio** Fund Complex***
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles P. Biggar $12,428 $1,288 $43,750
- ---------------------------------------------------------------------------------------------------
S. Leland Dill N/A $1,086 $43,750
- ---------------------------------------------------------------------------------------------------
Martin Gruber N/A N/A $45,000
- ---------------------------------------------------------------------------------------------------
Richard J. Herring $33,574 N/A $43,750
- ---------------------------------------------------------------------------------------------------
Kelvin Lancaster N/A N/A $27,500
- ---------------------------------------------------------------------------------------------------
Bruce E. Langton $32,612 N/A $43,750
- ---------------------------------------------------------------------------------------------------
Philip Saunders, Jr. N/A $1,120 $45,000
- ---------------------------------------------------------------------------------------------------
Harry Van Benschoten N/A N/A $45,000
====================================================================================================
</TABLE>

* The information provided is for the BT Institutional Funds, which is comprised
of 10 funds, for the year ended October 31, 1999.

** Information provided is for the Portfolio's most recent fiscal year ended
October 31, 1999.

*** Aggregated information is furnished for the Fund Complex which consists of
the following: BT Investment Funds, BT Institutional Funds, BT Pyramid Funds, BT
Advisor Funds, BT Investment Portfolios, Cash Management Portfolio, Treasury
Money Portfolio, Tax Free Money Portfolio, NY Tax Free Money Portfolio,
International Equity Portfolio, Intermediate Tax Free Portfolio, Asset
Management Portfolio, Equity 500 Index Portfolio, and Capital Appreciation
Portfolio for the year ended December 31, 1999.

Bankers Trust reimbursed the Fund and Portfolio for a portion of their Trustees
fees for the period above. See "Investment Adviser" and "Administrator" below.

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

As of December 31, 1999, the following shareholders of record owned 5% or
more of the outstanding Class I shares of the Fund: Fidelity Investments
Institutional Operations Co. Inc., (FIIOC) as agent for certain employee benefit
plans, 100 Magellan Way (KWIC), Covington, KY 41015-1999 (45%); Citizens Bank,
c/o Trust Operation -332021, 101 N. Washington Avenue, Saginan, WI 48607-1206
(7%); Rochester Institute of Technology, Cindy Podyin, George Eastman Building,
7 Lomb Memorial Drive, Rochester, NY 14623-5603 (6%); Princeton Theological
Seminary, 64 Mercer Street, Princeton, NJ 08540-6819 (6%).

As of December 31, 1999, the following shareholder of record owned 5% or more of
the outstanding Class II shares of the Fund: Charles Schwab & Co., Omnibus
Account Reinvest, Attn: Mutual Fund Account Management Team, 101 Montgomery
Street, 333-8, San Francisco,

39
<PAGE>

CA 94104 (68%).

Code of Ethics

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

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

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

Investment Adviser

Bankers Trust is the Portfolio's investment adviser. Bankers Trust 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 of a group consisting of banks,
capital markets companies, fund management companies, mortgage banks, a property
finance company, installments financing and leasing companies, insurance
companies, research and consultancy companies and other domestic and foreign
companies.

Bankers Trust Company, may have deposit, loan and other commercial banking
relationships with the issuers of obligations which may be purchased on behalf
of the Portfolio, including outstanding loans to such issuers which could be
repaid in whole or in part with the proceeds of securities so purchased, Such
affiliates deal, trade and invest for their own accounts in such obligations and
are among the leading dealers of various types of such obligations. Bankers
Trust has informed the Portfolio that, in making its investment decisions, it
does not obtain or use material inside information in its possession or in the
possession of any of its affiliates, In

40
<PAGE>

making investment recommendations for the Portfolio, Bankers Trust will not
inquire or take into consideration whether an issuer of securities proposed for
purchase of sale by the Portfolio is a customer of Bankers Trust, its parent or
its subsidiaries or affiliates, Also, in dealing with its customers, Bankers
Trust, its 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

For the period October 1, 1999 to October 31, 1999 and for the fiscal years
ended September 30, 1999, 1998 and 1997, Bankers Trust aggregated $1,609,018,
$16,908,174, $8,493,173, $2,060,310, respectively, in compensation for
investment advisory services provided to the Portfolio. During the same periods,
Bankers Trust reimbursed $313,923, $2,574,517, $1,959,180, and $529,390,
respectively, to the Portfolio to cover expenses.

At a special meeting held in 1999, shareholders of the Portfolio also approved a
new investment advisory agreement with Deutsche Asset Management, Inc. (formerly
Morgan Grenfell Inc.). The new investment advisory agreement with Deutsche
Asset Management, Inc. 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 Portfolio also approved a new sub-investment advisory
agreement among the Portfolio, Deutsche Asset Management, Inc. and Bankers Trust
under which Bankers Trust may perform certain of Deutsche Asset Management,
Inc.'s responsibilities, at Deutsche Asset Management, Inc.'s expense, upon
approval of the Independent Trustees, within two years of the date of the
special meeting. Deutsche Asset Management, Inc. 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 its Administration and Services Agreement with the Trust, Bankers Trust
calculates the net asset value 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 based on a percentage of
the average daily net assets of the Class I shares and Class II shares,
respectively.

Under an Administration and Services Agreement with the Portfolio, Bankers Trust
calculates the value of the assets of the Portfolio and generally assists the
Board of Trustees of the Portfolio in all aspects of the administration and
operation of the Portfolio. The Administration and Services Agreement provides
for the Portfolio to pay Bankers Trust a fee, computed daily and paid monthly,
at the annual rate of 0.15% 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, including affiliates of ICC
Distributors, at Bankers Trust's expense.

Under the administration and services agreements, Bankers Trust is obligated on
a continuous basis to provide such administrative services as the Board of
Trustees of the Trust and the Portfolio reasonably deem necessary for the proper
administration of the Trust or Portfolio.

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<PAGE>

Bankers Trust will generally assist in all aspects of the Fund's and Portfolio'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 recordkeeping services (including without
limitation the maintenance of such books and records as are required under the
1940 Act and the rules thereunder, except as maintained by other agents),
executive and administrative services, and stationery and office supplies;
prepare reports to shareholders or investors; prepare and file tax returns;
supply financial information and supporting data for reports to and filings with
the SEC and various state Blue Sky authorities; supply supporting documentation
for meetings of the Board of Trustees; provide monitoring reports and assistance
regarding compliance with Declarations of Trust, by-laws, investment objectives
and policies and with Federal and state securities laws; arrange for appropriate
insurance coverage; calculate net asset values, net income and realized capital
gains or losses; and negotiate arrangements with, and supervise and coordinate
the activities of, agents and others to supply services.

For the period October 1, 1999 to October 31, 1999, for the fiscal years ended
September 30, 1999, 1998, and for the period from April 1, 1997 (commencement of
operations) to September 30, 1997, Bankers Trust received $295,549, $3,108,094,
$1,446,112 and $29,152, respectively, in compensation for administrative and
other services provided to Class I shares of the Fund. For the same period,
Bankers Trust reimbursed $118,463, $1,221,608, $611,813 and $36,426,
respectively, to Class I shares of the Fund to cover expenses.

For the period October 1, 1999 to October 31, 1999, for the fiscal years ended
September 30, 1999, 1998, and for the period from April 1, 1997 (commencement of
operations) to September 30, 1997, Bankers Trust received $90,992, $561,864,
$14,950 and $4,337, respectively, in compensation for administrative and other
services provided to Class II shares of the Fund. For the same period, Bankers
Trust reimbursed $23,254 $172,319, $16,556 and $13,648, respectively, to Class
II shares of the Fund to cover expenses.

For the period October 1, 1999 to October 31, 1999 and for the fiscal years
ended September 30, 1999, 1998 and 1997, Bankers Trust received $373,616,
$3,932,321, $1,959,963, and $475,456, respectively, in compensation for
administrative and other services provided to the Portfolio.

Bankers Trust has agreed that if in any year the aggregate expenses of any Fund
and its respective Portfolio (including fees pursuant to the Advisory Agreement,
but excluding interest, taxes, brokerage and, if permitted by the relevant state
securities commissions, extraordinary expenses) exceed the expense limitation of
any state having jurisdiction over a Fund, Bankers Trust will reimburse the Fund
for the excess expense to the extent required by state law.

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<PAGE>

Distributor

ICC Distributors is the principal distributor for shares of the Fund. ICC
Distributors is a registered broker-dealer and is unaffiliated with Bankers
Trust. The principal business address of ICC Distributors is Two Portland
Square, Portland, Maine 04101.

Service Agent

All shareholders must be represented by a Service Agent. Bankers Trust acts as a
Service Agent pursuant to its Administration and Services Agreement with the
Trust and receives no additional compensation from the 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, arranging for bank wires,
performing shareholder sub-accounting, answering client inquiries regarding the
Trust, assisting clients in changing dividend options, account designations and
addresses, providing periodic statements showing the client's account balance,
transmitting proxy statements, periodic reports, updated prospectuses and other
communications to shareholders and, with respect to meetings of shareholders,
collecting, tabulating and forwarding to the Trust executed proxies and
obtaining such other information and performing such other services as the
Administrator or the Service Agent's clients may reasonably request and agree
upon with the Service Agent. Service Agents may separately charge their clients
additional fees only to cover provision of additional or more comprehensive
services not already provided under the Administration and Services Agreement
with Bankers Trust, or of the type or scope not generally offered by a mutual
fund, such as cash management services or enhanced retirement or trust
reporting. In addition, investors may be charged a transaction fee if they
effect transactions in Fund shares through a financial intermediary. Each
Service Agent has agreed to transmit to shareholders, who are its customers,
appropriate disclosures of any fees that it may charge them directly.

Custodian and Transfer Agent

Bankers Trust, 130 Liberty Street, (One Bankers Trust Plaza), New York, New York
10006, serves as Custodian for the Trust and for the Portfolio pursuant to the
administration and services agreements. As Custodian, it holds the Fund's and
the Portfolio's assets. Bankers Trust also serves as transfer agent of the Trust
and of the Portfolio pursuant to the respective administration and services
agreement. Under its transfer agency agreement with the Trust, Bankers Trust
maintains the shareholder account records for the Fund, handles certain
communications between shareholders and the Trust and causes to be distributed
any dividends and distributions payable by the Trust. Bankers Trust may be
reimbursed by the Fund or the Portfolio for its out-of-pocket expenses. Bankers
Trust will comply with the self-custodian provisions of Rule 17f-2 under the
1940 Act.

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<PAGE>

Banking Regulatory Matters

Bankers Trust has been advised by its counsel that in its opinion Bankers Trust
may perform the services for the Portfolio contemplated by the Advisory
Agreement and other activities for the Fund and the Portfolio described in the
Prospectus and this SAI without violation of the Glass-Steagall Act or other
applicable banking laws or regulations. However, counsel has pointed out that
future changes in either Federal or state statutes and regulations concerning
the permissible activities of banks or trust companies, as well as future
judicial or administrative decisions or interpretations of present and future
statutes and regulations, might prevent Bankers Trust from continuing to perform
those services for the Trust and the Portfolio. State laws on this issue may
differ from the interpretations of relevant Federal law and banks and financial
institutions may be required to register as dealers pursuant to state securities
law. If the circumstances described above should change, the Boards of Trustees
would review the relationships with Bankers Trust and consider taking all
actions necessary in the circumstances.

Counsel and Independent Accountants

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

Organization of The Trust

The Trust was organized on 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 Trust currently consists of 10 series. Trustees of the Trust established
and designated two classes of shares of beneficial interest of the Fund--Class I
shares and Class II shares. The Trust reserves the right to add additional
series in the future. The Trust also reserves the right to issue additional
classes of shares of the Fund. No series of shares has any preference over any
other series.

Each Class represents an identical interest in the Fund's investment portfolio.
As a result, the Classes have the same rights, privileges and preferences,
except with respect to: (1) the designation of each Class; (2) the expenses
allocated exclusively to each Class; and (3) voting rights on matters
exclusively affecting a single Class. The Trustees of the Trust do not
anticipate that there will be any conflicts among the interests of the holders
of the different Classes and will take appropriate action if any such conflict
arises.

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 or Class is required on any
matter affecting the Fund or Class on which shareholders are entitled to vote.
shareholders of the Fund or Class are not entitled to vote on Trust matters that
do not affect the Fund or Class. 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

44
<PAGE>

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 Declaration of Trust of BT Institutional Funds 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 corresponding Portfolio.

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

Shares of the Trust do not have cumulative voting rights, which means that
holders of more than 50% of the shares voting for the election of Trustees can
elect all Trustees. Shares are transferable but have no preemptive, conversion
or subscription rights. Shareholders generally vote by Fund, except with respect
to the election of Trustees.

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 Trust's
Declaration of Trust disclaims shareholder liability for acts or obligations of
the Trust and requires that notice of this disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Trust or a
Trustee. The Declaration of Trust provides for indemnification from the Trust's
property for all losses and expenses of any shareholder held personally liable
for the obligations of the Trust. Thus, the risk of a shareholder's incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Trust itself would be unable to meet its obligations, a possibility
that the Trust believes is remote. Upon payment of any liability incurred by the
Trust, the shareholder paying the liability will be entitled to reimbursement
from the general assets of the Trust. The Trustees intend to conduct the
operations of the Trust in a manner so as to avoid, as far as possible, ultimate
liability of the shareholders for liabilities of the Trust.

Except as described below, whenever the Trust is requested to vote on a
fundamental policy of the Portfolio, the Trust will hold a meeting of the Fund's
shareholders and will cast its vote as instructed by the Fund's shareholders.
Fund shareholders who do not vote will not affect the Trust's votes at the
Portfolio meeting. The percentage of the Trust's votes representing Fund
shareholders not voting will be voted by the Trustees of the Trust in the same
proportion as the Fund shareholders who do, in fact, vote.

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<PAGE>

Except as described below, whenever the Fund is requested to vote on matters
pertaining to the Portfolio, the Fund will hold a meeting of its shareholders
and will cast its votes proportionately as instructed by Fund shareholders.
However, subject to applicable statutory and regulatory requirements, the Fund
would not request a vote of its shareholders with respect to (a) any proposal
relating to the Portfolio, which proposal, if made with respect to the Fund,
would not require the vote of the shareholders of the Fund, or (b) any proposal
with respect to the Portfolio that is identical in all material respects to a
proposal that has previously been approved by shareholders of the Fund. Any
proposal submitted to holders in the Portfolio, and that is not required to be
voted on by shareholders of the Fund, would nonetheless be voted on by the
Trustees of the Trust.

Taxation

Dividends and Distributions

Dividends paid out of the Fund's investment company taxable income will be
taxable to a U.S. shareholder as ordinary income. Distributions of net capital
gains, if any, designated as capital gain dividends are taxable as long-term
capital gains, regardless of how long the shareholder has held the Fund's
shares, and are not eligible for the dividends-received deduction. The
categories of gain and related rates will be passed through to shareholders in
capital gain dividends. Shareholders receiving distributions in the form of
additional shares, rather than cash, generally will have a cost basis in each
such share equal to the net asset value of a share of the Fund on the
reinvestment date. Shareholders will be notified annually as to the U.S. Federal
tax status of distributions.

Taxation of the Fund

The Trust intends to qualify as a regulated investment company under Subchapter
M of the Internal Revenue Code of 1986, as amended (the "Code").

To qualify as a regulated investment company, the Fund must, among other things:
(a) derive in each taxable year at least 90% of its gross income from dividends,
interest, payments with respect to securities loans and gains from the sale or
other disposition of stock, securities or foreign currencies or other income
derived with respect to its business of investing in such stock, securities or
currencies; (b) diversify its holdings so that, at the end of each quarter of
the taxable year, (i) at least 50% of the market value of the Fund's assets is
represented by cash and cash items (including receivables), U.S. government
securities, the securities of other regulated investment companies and other
securities, with such other securities of any one issuer limited for the
purposes of this calculation to an amount not greater than 5% of the value of
the Fund's total assets and not greater than 10% of the outstanding voting
securities of such issuer and (ii) not more than 25% of the value of its total
assets is invested in the securities of any one issuer (other than U.S.
government securities or the securities of other regulated investment
companies); and (c) distribute at least 90% of its investment company taxable
income (which includes, among other items, dividends, interest and net short-
term capital gains in excess of net long-term capital losses) and its net tax-
exempt interest income, if any, each taxable year.

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<PAGE>

As a regulated investment company, the Fund will not be subject to U.S. Federal
income tax on its investment company taxable income and net capital gains (the
excess of net long-term capital gains over net short-term capital losses), if
any, that it distributes to shareholders. The Fund intends to distribute to its
shareholders, at least annually, substantially all of its investment company
taxable income and net capital gains. Amounts not distributed on a timely basis
in accordance with a calendar year distribution requirement are subject to a
nondeductible 4% excise tax. To prevent imposition of the excise tax, the Fund
must distribute during each calendar year an amount equal to the sum of: (1) at
least 98% of its ordinary income (not taking into account any capital gains or
losses) for the calendar year; (2) at least 98% of its capital gains in excess
of its capital losses (adjusted for certain ordinary losses, as prescribed by
the Code) for the one-year period ending on October 31 of the calendar year; and
(3) any ordinary income and capital gains for previous years that was not
distributed during those years. A distribution will be treated as paid on
December 31 of the current calendar year if it is declared by the Fund in
October, November or December with a record date in such a month and paid by the
Fund during January of the following calendar year. Such distributions will be
taxable to shareholders in the calendar year in which the distributions are
declared, rather than the calendar year in which the distributions are received.
To prevent application of the excise tax, the Fund intends to make its
distributions in accordance with the calendar year distribution requirement.

If for any taxable year the Fund does not qualify for the special federal income
tax treatment afforded regulated investment companies, all of its taxable income
will be subject to federal income tax at regular corporate rates (without any
deduction for distributions to its shareholders). In such event, dividend
distributions, including amounts derived from interest on tax-exempt
obligations, would be taxable to shareholders to the extent of current
accumulated earnings and profits, and would be eligible for the dividends
received deduction for corporations in the case of corporate shareholders.

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

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

47
<PAGE>

distributions. The dollar amount of dividends excluded from Federal income
taxation and the dollar amount subject to such income taxation, if any, will
vary for each shareholder depending upon the size and duration of each
shareholder's investment in the Fund.

Foreign Securities

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

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

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

Taxation of the Portfolio

The Portfolio is not subject to Federal income taxation. Instead, the Fund and
other investors investing in the Portfolio must take into account, in computing
their Federal income tax liability, their share of the Portfolio's income,
gains, losses, deductions, credits and tax preference items, without regard to
whether they have received any cash distributions from the Portfolio.

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

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<PAGE>

will equal the amount of cash and the basis of any property which the Fund
invests in the Portfolio, increased by the Fund's share of income from the
Portfolio, and decreased by the amount of any cash distributions and the basis
of any property distributed from the Portfolio.

Sale of Shares

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

Foreign Withholding Taxes

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

Backup Withholding

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

Foreign Shareholders

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

Other Taxation

The Trust is organized as a Massachusetts business trust and, under current law,
neither the Trust nor any Fund is liable for any income or franchise tax in the
Commonwealth of Massachusetts, provided that the Fund continues to qualify as a
regulated investment company under Subchapter M of the Code. The Portfolio is
organized as a New York trust. The investment by the Fund in

49
<PAGE>

the Portfolio does not cause the Fund to be liable for any income or franchise
tax in the State of New York.

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

Financial Statements

The financial statements for the Fund and the Portfolio for the fiscal year
ended September 30, 1999, and the fiscal period ended October 31, 1999, are
incorporated herein by reference to the Annual Report to shareholders for the
Fund and Portfolio dated September 30, 1999 and October 31, 1999. A copy of a
Fund's and the Portfolio's Annual Report may be obtained without charge by
contacting the Fund.

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<PAGE>

APPENDIX

Commercial Paper Ratings

S&P's Commercial Paper Ratings

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

Moody's Commercial Paper Ratings

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

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

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

Fitch Investors Service and Duff & Phelps Commercial Paper Ratings

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

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<PAGE>

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

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<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

JANUARY 31, 2000

Investment Adviser and Administrator of each Portfolio
BANKERS TRUST COMPANY
130 Liberty Street
(One Bankers Trust Plaza)
New York, NY 10006

Distributor
ICC DISTRIBUTORS, INC.
Two Portland Square
Portland, ME 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, MD 21201

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

No person has been authorized to give any information or to make any
representations other than those contained in the Trust's Prospectuses, its
Statements of Additional Information or the Trust's official sales literature in
connection with the offering of the Trust's shares and, if given or made, such
other information or representations must not be relied on as having been
authorized by the Trust. Neither the Prospectuses nor this Statement of
Additional Information constitutes an offer in any state in which, or to any
person to whom, such offer may not lawfully be made.

Cusip# 055924856
Cusip# 055924849

499/500SAI (1/00)

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<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 Exhibit (b) above;
(d) Investment Advisory Agreement dated June 4, 1999; filed herewith
(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 October 31,1999 on behalf of
International Equity Fund; filed herewith
(iii) Expense Limitation Agreement dated June 4,1999,on behalf of
Institutional Cash Management, Institutional Cash Reserves,
Institutional Treasury Money, Equity 500 Index, Institutional Liquid
Assets, and Institutional Treasury Assets Funds; filed herewith
(iv) Expense Limitation Agreement dated June 30, 1999, on behalf of
Institutional Daily Assets Fund;/11/
<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 Amendment No. 38 to the Registration Statement
as filed with the Commission on October 28, 1999.
<PAGE>

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

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 Portfolio. Bankers Trust, a
New York banking corporation, is a wholly owned subsidiary of Deutsche Bank A.G.
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 Deutsche Bank A.G. Set forth below are the names and principal businesses of
the directors and officers of Bankers Trust who, to our knowledge as of December
31,1999, 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.
<PAGE>

William R. Howell
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 52nd 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 Portfolios, Deutsche Banc Alex.
Brown Cash Reserve Fund, Inc., Flag Investors Communications Fund, Inc.,
Flag Investors Emerging Growth Fund, Inc., the Flag Investors Total Return
U.S. Treasury Fund Shares of Total Return U.S. Treasury Fund, Inc., the
Flag Investors Managed Municipal Fund Shares of Managed Municipal Fund,
Inc., Flag Investors Short-Intermediate Income Fund, Inc., Flag Investors
Value Builder Fund, Inc., Flag Investors Real Estate Securities Fund, Inc.,
Flag Investors Equity Partners Fund, Inc., Flag Investors Funds, Inc.
(formerly known as Deutsche Funds, Inc.), Flag Investors Portfolios Trust
(formerly known as Deutsche Portfolios), Morgan Grenfell Investment Trust,
DP Trust, Funds, The Glenmede Funds, Inc. and The Glenmede Portfolios.

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

Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
John Y. Keffer President None
Ronald H. Hirsch Treasurer None
David I. Goldstein Secretary None
Benjamin L. Niles Vice President None
Frederick Skillin Assistant Treasurer None
Marc D. Keffer Assistant Secretary None
Nanette K. Chern Chief Compliance Officer None
</TABLE>

ITEM 28. Location of Accounts and Records.
---------------------------------

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

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

Investors Fiduciary 127 West 10th Street,
Trust Company: Kansas City, MO 64105

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

ITEM 30. Undertakings.
-------------

Not Applicable
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940,as amended, the Registrant, BT INSTITUTIONAL
FUNDS, certifies that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933, as amended, and 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 January, 2000.

BT INSTITUTIONAL FUNDS

By: /s/ DANIEL O. HIRSCH
---------------------------
Daniel O. Hirsch, Secretary
January 28, 2000

Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following persons in
the capacity and on the date indicated:

NAME TITLE DATE
- ---- ----- ----

/s/ DANIEL O. HIRSCH Secretary January 28,2000
- -------------------------- (Attorney in Fact for the Persons
Daniel O. Hirsch Listed Below)

/s/ JOHN Y. KEFFER* President and
- -------------------------- Chief Executive Officer
John Y. Keffer

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

/s/ CHARLES P. BIGGER* Trustee
- --------------------------
Charles P. Bigger

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

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

/s/ RICHARD T. HALE* Trustee
- --------------------------
Richard T. Hale

/s/ RICHARD J. HERRING* Trustee
- --------------------------
Richard J. Herring
<PAGE>

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

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

/s/ HARRY VAN BENSCHOTEN Trustee
- --------------------------
Harry Van Benschoten

* By Power of Attorney - filed herewith.
<PAGE>

SIGNATURES

BT INVESTMENT PORTFOLIOS has duly caused this Post Effective Amendment
No. 29 to the Registration Statement on Form N-1A of BT Institutional Funds to
be signed on their behalf by the undersigned, duly authorized, in the City of
Baltimore and the State of Maryland on the 26th day of April, 1999.

BT INVESTMENT PORTFOLIOS

By: /s/ DANIEL O. HIRSCH
---------------------------
Daniel O. Hirsch, Secretary
April 26, 1999

This Post Effective Amendment No. 29 to the Registration Statement of
BT Institutional Funds has been signed below by the following persons in the
capacities indicated with respect to Liquid Assets Portfolio, a series of BT
INVESTMENT PORTFOLIOS.

NAME TITLE DATE
- ---- ----- ----

/s/ DANIEL O. HIRSCH Secretary April 26, 1999
- -------------------------- (Attorney in Fact for the Persons
Daniel O. Hirsch Listed Below)

/s/ JOHN Y. KEFFER* President and
- -------------------------- Chief Executive Officer
John Y. Keffer

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

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

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

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

/s/ RICHARD T. HALE* Trustee
- --------------------------
Richard T. Hale

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

/s/ BRUCE T. LANGTON* Trustee
- --------------------------
Bruce T. Langton
<PAGE>

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

/s/ HARRY VAN BENSCHOTEN* Trustee
- --------------------------
Harry Van Benschoten

* By Power of Attorney - filed herewith.
<PAGE>

RESOLUTION RELATING TO
RATIFICATION OF REGISTRATION STATEMENTS

(Approved by the Boards of
BT Investment Funds,
BT Pyramid Mutual Funds,
BT Institutional Funds, (the "Trust" or "Trusts")
Quantitative Equity Portfolio,
Capital Appreciation Portfolio,
Pacific Basin Equity Portfolio,
Latin American Equity Portfolio,
Small Cap Portfolio,
BT PreservationPlus Portfolio, and
BT PreservationPlus Income Portfolio
(the "Portfolio Trust" or "Portfolio Trusts"))

RESOLVED, That the proper officers of the Trusts be,and they hereby are,
authorized and directed to execute, in the name and on behalf of the
Trust, a Post-Effective Amendment under the Securities Act of 1933
(the "1933 Act") and an Amendment under the Investment Company Act of
1940, as amended, (the "1940 Act") to the Trust's Registration
Statement on Form N-1A, and all necessary exhibits and other
instruments relating thereto (collectively, the "Registration
Statement"), to procure all other necessary signatures thereon, and to
file the appropriate exhibits thereto, with the Securities and
Exchange Commission in connection with any matter relating to the
Registration Statement; and further

RESOLVED, That any officer of the Trusts be, and he or she hereby is,
authorized and directed in the name and on behalf of the Trust to take
any and all action which the officer so acting may deem necessary or
advisable in order to obtain a permit to register or qualify shares of
common stock of the Trust for issuance and sale or to request an
exemption from registration of shares of common stock of the Trust
under the securities laws of such of the states of the United States
of America or other jurisdictions, including Canada, as such officer
may deem advisable, and in connection with such registration, permits,
licenses, qualifications and exemptions to execute, acknowledge,
verify, deliver, file and publish all such applications, reports,
issuer's covenants,
<PAGE>

resolutions, irrevocable consents to service of process, powers of
attorney and other papers and instruments as may be required under
such laws or may be deemed by such officer to be useful or advisable
to be filed thereunder, and that the form of any and all resolutions
required by any such state authority in connection with such
registration, licensing, permitting, qualification or exemption is
hereby adopted if (1) in the opinion of the officer of the Trust so
acting the adoption of such resolutions is necessary or advisable, and
(2) the Secretary of the Trust evidences such adoption by filing
herewith copies of such resolutions which shall thereupon be deemed to
be adopted by the Board of Directors and incorporated in the minutes
as a part of this resolution and with the same force and effect as if
attached hereto and that the proper officers of the Trust are hereby
authorized to take any and all action that they may deem necessary or
advisable in order to maintain such registration in effect for as long
as they may deem to be in the best interests of the Trust; and further

RESOLVED, That any and all actions heretofore or hereafter taken by such
officer or officers within the terms of the foregoing resolutions be,
and they hereby are, ratified and confirmed as the authorized act and
deed of the Trust; and further

RESOLVED, That the proper officers of the Portfolio Trusts be, and they
hereby are, authorized and directed to execute, in the name and on
behalf of the Portfolio Trust, an Amendment under the 1940 Act to the
Portfolio Trust's Registration Statement, to procure all other
necessary signatures thereon, and to file the appropriate exhibits
thereto, with the Commission, the 1940 Act and to appear, together
with legal counsel, on behalf of the Portfolio Trust before the
Commission in connection with any matter relating to the Registration
Statement; and further

RESOLVED, That any officer of the Portfolio Trusts be, and he or she hereby
is, authorized and directed in the name and on behalf of the Portfolio
Trust to take any and all action which the officer so acting may deem
necessary or advisable in order to obtain a permit to register or
qualify shares of common stock of the Portfolio Trust for issuance and
sale or to request an exemption from
<PAGE>

registration of shares of common stock of the Portfolio Trust under
the securities laws of such of the states of the United States of
America or other jurisdictions, including Canada, as such officer may
deem advisable, and in connection with such registration, permits,
licenses, qualifications and exemptions to execute, acknowledge,
verify, deliver, file and publish all such applications, reports,
issuer's covenants, resolutions, irrevocable consents to service of
process, powers of attorney and other papers and instruments as may be
required under such laws or may be deemed by such officer to be useful
or advisable to be filed thereunder, and that the form of any and all
resolutions required by any such state authority in connection with
such registration, licensing, permitting, qualification or exemption
is hereby adopted if (1) in the opinion of the officer of the
Portfolio Trust so acting the adoption of such resolutions is
necessary or advisable, and (2) the Secretary of the Portfolio Trust
evidences such adoption by filing herewith copies of such resolutions
which shall thereupon be deemed to be adopted by the Board of
Directors and incorporated in the minutes as a part of this resolution
and with the same force and effect as if attached hereto and that the
proper officers of the Portfolio Trust are hereby authorized to take
any and all action that they may deem necessary or advisable in order
to maintain such registration in effect for as long as they may deem
to be in the best interests of the Portfolio Trust; and further

<PAGE>

Exhibit 23

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Post-Effective
Amendment No. 30 to the Registration Statement on Form N-1A of our report dated
November 19, 1999, relating to the financial statements and financial highlights
which appears in the October 31, 1999 Annual Report to Shareholders of the
International Equity Fund, which is also incorporated by reference into the
Registration Statement. We also consent to the references to us under the
headings "Financial Highlights" and "Independent Accountants" in such
Registration Statement.

/s/ PricewaterhouseCoopers LLP
- -------------------------------
PricewaterhouseCoopers LLP
Baltimore, Maryland
January 27, 2000

<PAGE>

Ex 24

Power of Attorney

This Power of Attorney will be contingent upon the election of the
Trustee nominees at the Special Shareholder Meetings to be held in September and
October 1999.

The undersigned Trustees and officers, as indicated respectively
below, of BT Investment Funds, BT Institutional Funds, BT Pyramid Mutual Funds,
and BT Advisor Funds (each, a "Trust") and Cash Management Portfolio, Treasury
Money Portfolio, Tax Free Money Portfolio, NY Tax Free Money Portfolio,
International Equity Portfolio, Equity 500 Index Portfolio, Asset Management
Portfolio, Capital Appreciation Portfolio, Intermediate Tax Free Portfolio, and
BT Investment Portfolios (each, a "Portfolio Trust") each hereby constitutes and
appoints the Secretary, each Assistant Secretary and each authorized signatory
of each Trust and each Portfolio Trust, each of them with full powers of
substitution, as his true and lawful attorney-in-fact and agent to execute in
his name and on his behalf in any and all capacities the Registration Statements
on Form N-1A, and any and all amendments thereto, and all other documents, filed
by a Trust or a Portfolio Trust with the Securities and Exchange Commission (the
"SEC") under the Investment Company Act of 1940, as amended, and (as applicable)
the Securities Act of 1933, as amended, and any and all instruments which such
attorneys and agents, or any of them, deem necessary or advisable to enable the
Trust or Portfolio Trust to comply with such Acts, the rules, regulations and
requirements of the SEC, and the securities or Blue Sky laws of any state or
other jurisdiction and to file the same, with all exhibits thereto and other
documents in connection therewith, with the SEC and such other jurisdictions,
and the undersigned each hereby ratifies and confirms as his own act and deed
any and all acts that such attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents has,
and may exercise, all of the powers hereby conferred. The undersigned each
hereby revokes any Powers of Attorney previously granted with respect to any
Trust or Portfolio Trust concerning the filings and actions described herein.
<PAGE>

IN WITNESS WHEREOF, each of the undersigned has hereunto set his hand
as of the 8th day of September, 1999.

SIGNATURES TITLE

/s/ John Y. Keffer President and Chief Executive Officer
- ----------------------------- of each Trust and Portfolio Trust
John Y. Keffer

/s/ Charles A. Rizzo Treasurer (Principal Financial and
- ----------------------------- Accounting Officer) of each Trust
Charles A. Rizzo and Portfolio Trust

/s/ Charles P. Biggar Trustee of each Trust and Portfolio Trust
- -----------------------------
Charles P. Biggar

/s/ S. Leland Dill Trustee of each Trust and Portfolio Trust
- -----------------------------
S. Leland Dill

/s/ Richard T. Hale Trustee of each Trust and Portfolio Trust
- -----------------------------
Richard T. Hale

/s/ Richard J. Herring Trustee of each Trust and Portfolio Trust
- -----------------------------
Richard J. Herring

/s/ Bruce E. Langton Trustee of each Trust and Portfolio Trust
- -----------------------------
Bruce E. Langton

/s/ Martin J. Gruber Trustee of each Trust and Portfolio Trust
- -----------------------------
Martin J. Gruber

/s/ Philip Saunders, Jr. Trustee of each Trust and Portfolio Trust
- -----------------------------
Philip Saunders, Jr.

/s/ Harry Van Benschoten Trustee of each Trust and Portfolio Trust
- -----------------------------
Harry Van Benschoten
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
<ARTICLE> 6
<CIK> 0000862157
<NAME> BT INSTITUTIONAL INT'L EQUITY FUND CLASS I

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> SEP-30-1999
<INVESTMENTS-AT-COST> 1,063,642,542
<INVESTMENTS-AT-VALUE> 1,063,642,542
<RECEIVABLES> 14,368,946
<ASSETS-OTHER> 27,274
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,078,038,762
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 45,380,380
<TOTAL-LIABILITIES> 45,380,380
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 971,856,646
<SHARES-COMMON-STOCK> 63,422,950
<SHARES-COMMON-PRIOR> 46,776,813
<ACCUMULATED-NII-CURRENT> 2,805,296
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (31,607,648)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 89,604,088
<NET-ASSETS> 883,855,400
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 9,039,363
<EXPENSES-NET> 2,436,222
<NET-INVESTMENT-INCOME> 6,603,141
<REALIZED-GAINS-CURRENT> 3,178,526
<APPREC-INCREASE-CURRENT> 111,701,869
<NET-CHANGE-FROM-OPS> 121,483,536
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,876,459
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 65,226,396
<NUMBER-OF-SHARES-REDEEMED> 48,883,450
<SHARES-REINVESTED> 303,192
<NET-CHANGE-IN-ASSETS> 467,745,572
<ACCUMULATED-NII-PRIOR> 2,805,296
<ACCUMULATED-GAINS-PRIOR> (31,837,489)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,830,149
<AVERAGE-NET-ASSETS> 798,526,066
<PER-SHARE-NAV-BEGIN> 11.89
<PER-SHARE-NII> 0.09
<PER-SHARE-GAIN-APPREC> 2.06
<PER-SHARE-DIVIDEND> (0.10)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.94
<EXPENSE-RATIO> 0.95

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
<ARTICLE> 6
<CIK> 0000862157
<NAME> BT INSTITUTIONAL INT'L EQUITY CLASS I

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> OCT-31-1999
<INVESTMENTS-AT-COST> 1,088,341,874
<INVESTMENTS-AT-VALUE> 1,088,341,874
<RECEIVABLES> 446,870
<ASSETS-OTHER> 20,417
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,088,809,161
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,137,762
<TOTAL-LIABILITIES> 7,137,762
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 972,653,330
<SHARES-COMMON-STOCK> 63,229,548
<SHARES-COMMON-PRIOR> 63,422,950
<ACCUMULATED-NII-CURRENT> 454,055
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (33,199,122)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 141,763,136
<NET-ASSETS> 922,089,511
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> (116,726)
<EXPENSES-NET> 260,729
<NET-INVESTMENT-INCOME> (377,455)
<REALIZED-GAINS-CURRENT> (3,552,486)
<APPREC-INCREASE-CURRENT> 52,159,048
<NET-CHANGE-FROM-OPS> 48,229,107
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,545,236
<NUMBER-OF-SHARES-REDEEMED> 5,738,638
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 49,013,017
<ACCUMULATED-NII-PRIOR> 2,805,296
<ACCUMULATED-GAINS-PRIOR> (31,607,648)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 402,446
<AVERAGE-NET-ASSETS> 931,086,485
<PER-SHARE-NAV-BEGIN> 13.94
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> 0.65
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.58
<EXPENSE-RATIO> 0.95

</TABLE>

<PAGE>
<ARTICLE> 6
<CIK> 0000862157
<NAME> BT INSTITUTIONAL INT'L EQUITY FUND CLASS 2

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> SEP-30-1999
<INVESTMENTS-AT-COST> 1,063,642,542
<INVESTMENTS-AT-VALUE> 1,063,642,542
<RECEIVABLES> 14,368,946
<ASSETS-OTHER> 27,274
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,078,038,762
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 45,380,380
<TOTAL-LIABILITIES> 45,380,380
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 971,856,646
<SHARES-COMMON-STOCK> 10,614,664
<SHARES-COMMON-PRIOR> 727,296
<ACCUMULATED-NII-CURRENT> 2,805,296
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (31,607,648)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 89,604,088
<NET-ASSETS> 148,802,782
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 9,039,363
<EXPENSES-NET> 2,436,222
<NET-INVESTMENT-INCOME> 6,603,141
<REALIZED-GAINS-CURRENT> 3,178,526
<APPREC-INCREASE-CURRENT> 111,701,869
<NET-CHANGE-FROM-OPS> 121,483,536
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 238,402
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,639,313
<NUMBER-OF-SHARES-REDEEMED> 3,028,982
<SHARES-REINVESTED> 277,037
<NET-CHANGE-IN-ASSETS> 467,745,572
<ACCUMULATED-NII-PRIOR> 2,805,296
<ACCUMULATED-GAINS-PRIOR> (31,837,489)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,830,149
<AVERAGE-NET-ASSETS> 80,579,828
<PER-SHARE-NAV-BEGIN> 12.01
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 2.10
<PER-SHARE-DIVIDEND> (0.11)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.02
<EXPENSE-RATIO> 1.25

</TABLE>

<PAGE>
<ARTICLE> 6
<CIK> 0000862157
<NAME> BT INSTITUTIONAL INT'L EQUITY CLASS II

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> OCT-31-1999
<INVESTMENTS-AT-COST> 1,088,341,874
<INVESTMENTS-AT-VALUE> 1,088,341,874
<RECEIVABLES> 446,870
<ASSETS-OTHER> 20,417
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,088,809,161
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,137,762
<TOTAL-LIABILITIES> 7,137,762
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 972,653,330
<SHARES-COMMON-STOCK> 10,880,857
<SHARES-COMMON-PRIOR> 10,614,664
<ACCUMULATED-NII-CURRENT> 454,055
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (33,199,122)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 141,763,136
<NET-ASSETS> 159,581,888
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> (116,726)
<EXPENSES-NET> 260,729
<NET-INVESTMENT-INCOME> (377,455)
<REALIZED-GAINS-CURRENT> (3,552,486)
<APPREC-INCREASE-CURRENT> 52,159,048
<NET-CHANGE-FROM-OPS> 48,229,107
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 383,701
<NUMBER-OF-SHARES-REDEEMED> 117,508
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 49,013,017
<ACCUMULATED-NII-PRIOR> 2,805,296
<ACCUMULATED-GAINS-PRIOR> (31,607,648)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 402,446
<AVERAGE-NET-ASSETS> 147,190,771
<PER-SHARE-NAV-BEGIN> 14.02
<PER-SHARE-NII> (0.05)
<PER-SHARE-GAIN-APPREC> 0.70
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.67
<EXPENSE-RATIO> 1.25

</TABLE>

<PAGE>

EXHIBIT 99.D
INVESTMENT ADVISORY AGREEMENT

AGREEMENT made as of June 4, 1999 by and between BT INSTITUTIONAL FUNDS, a
Massachusetts business trust (herein called the "Trust") and BANKERS TRUST
COMPANY (herein called the "Investment Adviser").

WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940;

WHEREAS, the Trust desires to retain the Investment Adviser to render
investment advisory and other services to the Trust with respect to certain of
its series of shares of beneficial interests as may currently exist or be
created in the future (each, a "Fund") as listed on Exhibit A hereto, and the
Investment Adviser is willing to so render such services on the terms
hereinafter set forth;

NOW, THEREFORE, this Agreement

W I T N E S S E T H:

In consideration of the promises and mutual covenants herein contained, it
is agreed between the parties hereto as follows:

1. Appointment. The Trust hereby appoints the Investment Adviser to act as
-----------
investment adviser to each Fund for the period and on the terms set forth in
this Agreement. The Investment Adviser accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.

2. Management. Subject to the supervision of the Board of Trustees of the
----------
Trust, the Investment Adviser will provide a continuous investment program for
the Fund, including investment research and management with respect to all
securities, investments, cash and cash equivalents in the Fund. The Investment
Adviser will determine from time to time what securities and other investments
will be purchased, retained or sold by each Fund. The Investment Adviser will
provide the services rendered by it hereunder in accordance with the investment
objective(s) and policies of each Fund as stated in the Fund's then-current
prospectus and statement of additional information (or the Fund's then current
registration statement on Form N-1A as filed with the Securities and Exchange
Commission (the "SEC") and the then-current offering memorandum if the Fund is
not registered under the Securities Act of 1933, as amended ("1933 Act"). The
Investment Adviser further agrees that it:

(a) will conform with all applicable rules and regulations of the SEC
(herein called the "Rules") and with all applicable provisions of the 1933 Act;
as amended, the Securities Exchange Act of 1934, as amended (the "1934 Act"),
the Investment Company Act of 1940, as amended (the "1940 Act"); and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and will, in
addition, conduct
<PAGE>

its activities under this Agreement in accordance with regulations of the Board
of Governors of the Federal Reserve System pertaining to the investment advisory
activities of bank holding companies and their subsidiaries;

(b) will place orders pursuant to its investment determinations for each
Fund either directly with the issuer or with any broker or dealer selected by
it. In placing orders with brokers and dealers, the Investment Adviser will use
its reasonable best efforts to obtain the best net price and the most favorable
execution of its orders, after taking into account all factors it deems
relevant, including the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer, and the reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. Consistent with this obligation, the
Investment Adviser may, to the extent permitted by law, purchase and sell
portfolio securities to and from brokers and dealers who provide brokerage and
research services (within the meaning of Section 28(e) of the 1934 Act) to or
for the benefit of any fund and/or other accounts over which the Investment
Adviser or any of its affiliates exercises investment discretion. Subject to the
review of the Trust's Board of Trustees from time to time with respect to the
extent and continuation of the policy, the Investment Adviser is authorized to
pay to a broker or dealer who provides such brokerage and research services a
commission for effecting a securities transaction which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if the Investment Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the Investment Adviser
with respect to the accounts as to which it exercises investment discretion; and

(c) will maintain books and records with respect to the securities
transactions of each Fund and will render to the Trust's Board of Trustees such
periodic and special reports as the Board may request.

3. Services Not Exclusive. The investment advisory services rendered by the
----------------------
Investment Adviser hereunder are not to be deemed exclusive, and the Investment
Adviser shall be free to render similar services to others so long as its
services under this Agreement are not impaired thereby.

4. Books and Records. In compliance with the requirements of Rule 31a-3
-----------------
of the Rules under the 1940 Act, the Investment Adviser hereby agrees that all
records which it maintains for the Trust are the property of the Trust and
further agrees to surrender promptly to the Trust any of such records upon
request of the Trust. The Investment Adviser further agrees to preserve for the
periods prescribed by Rule 31 a-2 under the 1940 Act the records required to be
maintained by Rule 31 a-1 under the 1940 Act and to comply in full with the
requirements of Rule 204-2 under the Advisers Act pertaining to

2
<PAGE>

the maintenance of books and records.

5. Expenses. During the term of this Agreement, the Investment Adviser will
--------
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of purchasing securities (including brokerage
commissions, if any) for the Fund.

6. Compensation. For the services provided and the expenses assumed
------------
pursuant to this Agreement, the Trust will pay the Investment Adviser, and the
Investment Adviser will accept as full compensation therefor, fees, computed
daily and payable monthly, on an annual basis equal to the percentage set forth
on Exhibit A hereto of that Fund's average daily net assets.

7. Limitation of Liability of the Investment Adviser: Indemnification.
------------------------------------------------------------------

(a) The Investment Adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by a Fund in connection with
the matters to which this Agreement relates, except a loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Investment Adviser in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement;

(b) Subject to the exceptions and limitations contained in Section
7(c) below:

(i) the Investment Adviser (hereinafter referred to as a
"Covered Person") shall be indemnified by the respective Fund to the fullest
extent permitted by law, against liability and against all expenses reasonably
incurred or paid by him in connection with any claim, action, suit or proceeding
in which he becomes involved, as a party or otherwise, by virtue of his being or
having been the Investment Adviser of the Fund, and against amounts paid or
incurred by him in the settlement thereof;

(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal or other,
including appeals), actual or threatened while in office or thereafter, and the
words "liability" and "expenses" shall include, without limitation, attorneys'
fees, costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.

(i) who shall have been adjudicated by a court or body before
which

3
<PAGE>

the proceeding was brought (A) to be liable to the Trust or to one or more
Funds' investors by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his office, or
(B) not to have acted in good faith in the reasonable belief that his action
was in the best interest of a Fund; or

(ii) in the event of a settlement, unless there has been a
determination that such Covered Person did not engage in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office;

(A) by the court or other body approving the settlement; or

(B) by at least a majority of those Trustees who are neither
Interested Persons of the Trust nor are parties to the matter based upon a
review of readily available facts (as opposed to a full trial-type inquiry); or

(C) by written opinion of independent legal counsel based
upon a review of readily available facts (as opposed to a full trial-type
inquiry); provided, however, that any investor in a Fund may, by appropriate
legal proceedings, challenge any such determination by the Trustees or by
independent counsel.

(d) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, shall continue as to a person who has ceased to be a
Covered Person and shall inure to the benefit of the successors and assigns of
such person. Nothing contained herein shall affect any rights to indemnification
to which Trust personnel and any other persons, other than a Covered Person, may
be entitled by contract or otherwise under law.

(e) Expenses in connection with the preparation and presentation of a
defense to any claim, suit or proceeding of the character described in
subsection (b) of this Section 7 may be paid by the Trust on behalf of the
respective Fund from time to time prior to final disposition thereto upon
receipt of an undertaking by or on behalf of such Covered Person that such
amount will be paid over by him to the Trust on behalf of the respective Fund if
it is ultimately determined that he is not entitled to indemnification under
this Section 7; provided, however, that either (i) such Covered Person shall
have provided appropriate security for such undertaking or (ii) the Trust shall
be insured against losses arising out of any such advance payments, or (iii)
either a majority of the Trustees who are neither Interested Persons of the
Trust nor parties to the matter, or independent legal counsel in a written
opinion, shall have determined, based upon a review of readily available facts
as opposed to a trial-type inquiry or full investigation, that there is reason
to believe that such Covered Person will be entitled to

4
<PAGE>

indemnification under this Section 7.

8. Duration and Termination. This Agreement shall be effective as to
------------------------
a Fund as of the date the Fund commences investment operations after this
Agreement shall have been approved by the Board of Trustees of the Trust with
respect to that Fund and the Investor(s) in the Fund in the manner contemplated
by Section 15 of the 1940 Act and, unless sooner terminated as provided herein,
shall continue until the second anniversary of such date. Thereafter, if not
terminated, this Agreement shall continue in effect as to such Fund for
successive periods of 12 months each, provided such continuance is specifically
approved at least annually (a) by the vote of a majority of those members of the
Board of Trustees of the Trust who are not parties to this Agreement or
Interested Persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval, or (b) by Vote of a Majority of the
Outstanding Voting Securities of the Trust; provided, however, that this
Agreement may be terminated by the Trust at any time, without the payment of any
penalty, by the Board of Trustees of the Trust, by Vote of a Majority of the
Outstanding Voting Securities of the Trust on 60 days' written notice to the
Investment Adviser, or by the Investment Adviser as to the Trust at any time,
without payment of any penalty, on 90 days' written notice to the Trust. This
Agreement will immediately terminate in the event of its assignment (as used in
this Agreement, the terms "Vote of a Majority of the Outstanding Voting
Securities," "Interested Person" and "Assignment' shall have the same meanings
as such terms have in the 1940 Act and the rules and regulatory constructions
thereunder.)

9. Amendment of this Agreement. No material term of this Agreement may be
---------------------------
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of a material term of this
Agreement shall be effective with respect to a Fund, until approved by Vote of a
Majority of the Outstanding Voting Securities of that Fund.

10. Representations and Warranties. The Investment Adviser hereby
-------------------------------
represents and warrants as follows:

(a) The Investment Adviser is exempt from registration under the 1940
Act:

(b) The Investment Adviser has all requisite authority to enter into,
execute, deliver and perform its obligations under this Agreement;

5
<PAGE>

(d) The performance by the Investment Adviser of its obligations under
this Agreement does not conflict with any law to which it is subject.

11. Covenants. The Investment Adviser hereby covenants and agrees that, so
---------
long as this Agreement shall remain in effect:

(a) The Investment Adviser shall remain either exempt from, or
registered under, the registration provisions of the Advisers Act; and

(b) The performance by the Investment Adviser of its obligations under
this Agreement shall not conflict with any law to which it is then subject.

12. Notices. Any notice required to be given pursuant to this Agreement
-------
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid, (a) to the Investment Adviser, Mutual Funds Services, 130 Liberty
Street (One Bankers Trust Plaza), New York, New York 10006 or (b) to the Trust,
c/o BT Alex. Brown, Inc., One South Street, Baltimore, Maryland 21202.

13. Waiver. With full knowledge of the circumstances and the effect of its
------
action, the Investment Adviser hereby waives any and all rights which it may
acquire in the future against the property of any investor in a Fund, other than
shares in that Fund, which arise out of any action or inaction of the Trust
under this Agreement.

14. Miscellaneous. The captions in this Agreement are included for
--------------
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.

This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and shall be governed by the laws
of the Commonwealth of Massachusetts, without reference to principles of
conflicts of law. The Trust is organized under the laws of the Commonwealth of
Massachusetts pursuant to an Amended and Restated Declaration of Trust dated
March 29, 1990, as amended. No Trustee, officer or employee of the Trust shall
be personally bound by or liable hereunder, nor shall resort be had to their
private property for the satisfaction of any obligation or claim hereunder.

6
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.

BT INSTITUTIONAL FUNDS

By: /s/ Daniel O. Hirsch
---------------------------
Name: Daniel O. Hirsch
Title: Secretary

BANKERS TRUST COMPANY

By: /s/ Ross Youngman
---------------------------
Name: Ross Youngman
Title: Managing Director

7
<PAGE>

EXHIBIT A
---------

TO
INVESTMENT ADVISORY AGREEMENT
MADE AS OF JUNE 4, 1999
BETWEEN
BT INSTITUTIONAL FUNDS AND BANKERS TRUST COMPANY

<TABLE>
<CAPTION>
Fund Investment Advisory Fee
- ---- -----------------------
<S> <C>
Institutional Daily Assets Fund 0.10%
Institutional Treasury Assets Fund 0.15%
</TABLE>

<PAGE>

EXHIBIT 99.h

EXPENSE LIMITATION AGREEMENT

This EXPENSE LIMITATION AGREEMENT is made as of the 31/st/ day of OCTOBER,
1999 by and between BT INSTITUTIONAL FUNDS, a Massachusetts Business trust (the
"Trust"), INTERNATIONAL EQUITY PORTFOLIO, a New York trust (each a "Portfolio
Trust"), and BANKERS TRUST COMPANY, a New York corporation (the "Adviser"), with
respect to the following:

WHEREAS, the Adviser serves as International Equity Portfolio's Investment
Adviser pursuant to an Investment Advisory Agreement dated June 4, 1999, and the
Adviser serves as the Trust's and International Equity Portfolio's Administrator
pursuant to Administration and Services Agreements dated October 28, 1992, as
amended October 8, 1997 and April 8, 1992, respectively (collectively, the
"Agreements").

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 October 31, 1999 to March 1, 2001 to the extent necessary
so that the total annual operating expenses for each of the Trust's
series with fiscal year ends of October 31 (each a "Fund") do not
exceed the percentage of average daily net assets set forth on Exhibit
A.

2. Upon the termination of any of the Agreements, 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, as amended (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

INTERNATIONAL EQUITY 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>
International Equity Fund - Class I 0.95%
International Equity Fund - Class II 1.25%
</TABLE>

<PAGE>

EXHIBIT 99.h.1

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>