BT PYRAMID MUTUAL FUNDS, 485APOS, 1996-02-29

BT PYRAMID MUTUAL FUNDS
485APOS, 1996-02-29

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 29, 1996
File Nos. 33-45973 and 811-06576
BT Investment Limited Term U.S. Government Securities Fund

==============================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

POST-EFFECTIVE AMENDMENT NO. 7

AND
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 10

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

6 ST. JAMES AVENUE, BOSTON, MASSACHUSETTS 02116
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: 617-423-0800

Philip W. Coolidge Copies to: Burton M. Leibert, Esq.
Signature Broker-Dealer Services, Inc. Willkie Farr & Gallagher
6 St. James Avenue One Citicorp Center
Boston, Massachusetts 02116 153 East 53rd Street
(Name and Address of Agent for Service) New York, New York 10022

It is proposed that this filing will become effective (check appropriate box)
- --- ---
- --- immediately upon filing pursuant to --- on (date) pursuant to
paragraph (b) paragraph (b)
- --- ---

x
- --- 60 days after filing pursuant to --- on (date) pursuant to
paragraph (a)(i) paragraph (a)(i)

- --- ---
- --- 75 days after filing pursuant to --- on (date) pursuant to
paragraph (a)(ii) paragraph (a)(ii) 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.

SHORT/INTERMEDIATE U.S. GOVERNMENT SECURITIES PORTFOLIO HAS ALSO EXECUTED THIS
REGISTRATION STATEMENT.

REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES OF BENEFICIAL
INTEREST PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT OF 1940.
REGISTRANT WILL FILE THE NOTICE REQUIRED BY RULE 24F-2 ON FEBRUARY 29, 1996 FOR
REGISTRANT'S FISCAL YEAR ENDING DECEMBER 31, 1995. REGISTRANT FILED THE NOTICE
REQUIRED BY RULE 24F-2 ON MAY 26, 1995 FOR REGISTRANT'S FISCAL YEAR ENDED MARCH
31, 1995. REGISTRANT FILED THE NOTICE REQUIRED BY RULE 24F-2 ON OR ABOUT
NOVEMBER 30, 1995 FOR REGISTRANT'S FISCAL YEAR ENDED SEPTEMBER 30, 1995.

===============================================================================

<PAGE>

EXPLANATORY NOTE

This Post-Effective Amendment No. 7 (the "Amendment") to the
Registrant's registration statement on Form N-1A (the "Registration Statement")
is being filed with respect to the BT Investment Limited Term U.S. Government
Securities Fund (the "Fund"), a series of shares of the Registrant. The
Amendment is being filed solely in order to add a combined prospectus to the
Registration Statement through which the shares of the Fund will be offered. The
Statement of Additional Information with respect to the Fund is hereby
incorporated herein by reference.

Pursuant to section (d) of Rule 485 under the Securities Act of 1933,
the Amendment does not affect the effectiveness of any other amendment to the
Registration Statement.

<PAGE>

BT PYRAMID MUTUAL FUNDS

BT LIMITED TERM U.S. GOVERNMENT SECURITIES FUND

FORM N-1A
CROSS REFERENCE SHEET

Part A
ITEM NO. PROSPECTUS HEADINGS

1. Cover Page . . . . . . . . . . Cover Page

2. Synopsis . . . . . . . . . . . . The Funds -- Expense Summary

3. Condensed Financial
Information . . . . . . . . . . Not applicable

4. General Description of
Registrant . . . . . . . . . . . Cover Page; The Funds--Who May Want
to Invest; The Funds in Detail --
Risk Factors and Certain Securities
and Investment Practices

5. Management of the Fund . . . . . The Funds -- Expense Summary; The
Funds in Detail -- Management of
the Trust and the Portfolios

6. Capital Stock and Other
Securities . . . . . . . . . . . Cover Page; The Funds in Detail --
Performance; Your Account -- Types
of Accounts, How to Buy Shares,
How to Sell Shares; Shareholder
and Account Policies -- Dividends,
Capital Gains and Taxes, Exchange
Restrictions, Sales Charge
Reductions and Waivers, Additional
Information About the Trust and
Portfolios

7. Purchase of Securities Being
Offered . . . . . . . . . . . . Your Account -- How to Buy Shares;
Shareholder and Account Policies --
Valuation Details, Exchange
Restrictions, Sales Charge
Reductions and Waivers

8. Redemption or Repurchase . . . . Your Account -- How to Sell Shares;
Shareholder and Account Policies --
Valuation Details, Exchange
Restrictions

9. Pending Legal Proceedings . . . Not applicable

Part B Headings in Statement of
ITEM NO. ADDITIONAL INFORMATION

10. Cover Page . . . . . . . . . . . Cover Page

11. Table of Contents . . . . . . . Contents

12. General Information and
History . . . . . . . . . . . . Not applicable

13. Investment Objectives and
Policies . . . . . . . . . . . . Investment Objective, Policies and
Restrictions (Investment Objective,
Policies and Risks)

14. Management of the Fund . . . Management of the Trust and
Portfolio

15. Control Persons and Principal
Holders of Securities . . . . . See Prospectus -- "Organization of
the Trust"

16. Investment Advisory and Other
Services . . . . . . . . . . . . Management of the Trust and
Portfolio

17. Brokerage Allocation and Other
Practices . . . . . . . . . . . Investment Objective, Policies and
Restrictions (Investment Objective,
Policies and Risks)

18. Capital Stock and Other
Securities . . . . . . . . . . . Organization of the Trust; see
Prospectus -- "Dividends,
Distributions and Taxes" and
"Organization of the Trust"

19. Purchase, Redemption and Pricing
of Securities Being Offered . . Valuation of Securities; Redemption
in Kind (Purchase and Redemption
Information; Net Asset Value)

20. Tax Status . . . . . . . . . . . Taxation (Taxes); see Prospectus --
"Dividends, Distributions and Taxes"

21. Underwriters . . . . . . . . . . See Prospectus--"Management of the
Trust and Portfolio"

22. Calculations of Yield Quotations
of Money Market Funds . . . . . Performance Information

23. Financial Statements . . . . . . Financial Statements

PART C

Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this registration statement.

<PAGE>

BT INVESTMENT FUNDS

LIMITED TERM U.S. GOVERNMENT SECURITIES FUND
INTERMEDIATE TAX FREE FUND
GLOBAL HIGH YIELD SECURITIES FUND
CAPITAL APPRECIATION FUND
SMALL CAP FUND
INTERNATIONAL EQUITY FUND
PACIFIC BASIN EQUITY FUND
LATIN AMERICAN EQUITY FUND

PROSPECTUS: APRIL 29, 1996

BT Investment Funds (the "Trust") is an open-end, management investment
company (mutual fund) which currently consists of sixteen funds. With the
exception of the Limited Term U.S. Government Securities Fund, each of the
funds listed above (each, a "Fund") is a separate series of BT Investment
Funds. Limited Term U.S. Government Securities Fund is a separate series of BT
Pyramid Mutual Funds. (BT Investment Funds and BT Pyramid Mutual Funds are
each a "Trust.")

UNLIKE OTHER OPEN-END MANAGEMENT INVESTMENT COMPANIES (MUTUAL FUNDS), EACH
FUND SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY INVESTING ALL OF ITS
INVESTABLE ASSETS ("ASSETS") IN A SEPARATE INVESTMENT COMPANY (A "PORTFOLIO")
WITH AN IDENTICAL INVESTMENT OBJECTIVE. The investment performance of each
Fund will correspond directly to the investment performance of the
corresponding Portfolio. SEE "SPECIAL INFORMATION CONCERNING MASTER-FEEDER
FUND STRUCTURE" ON PAGE .

Bankers Trust Company ("Bankers Trust") is the investment adviser (the
"Adviser") of each Portfolio.

Please read this Prospectus before investing, and keep it on file for future
reference. It contains important information, including how each Fund invests
and the services available to shareholders.

To learn more about a Fund and its investments, investors can obtain a copy of
that Fund's Statement of Additional Information (an "SAI"), dated April 28,
1995, or January 29, 1996, which contains the corresponding Portfolio's most
recent financial report and portfolio listing. Each SAI has been filed with
the Securities and Exchange Commission (the "SEC") and is incorporated herein
by reference. For a free copy of this document, call the Trusts' Service Agent
at 1-(800)-730-1313.

MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
BANKERS TRUST OR ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE
FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
The Global High Yield Securities Portfolio and Latin American Equity Portfolio
may invest in lower-quality debt securities, sometimes called "junk bonds."
The Global High Yield Securities Portfolio may invest in these types of
securities without limit. Investors should consider that these securities
carry greater risks, such as the risk of default, than other debt securities.
Refer to "Risk Factors and Certain Securities and Investment Practices --
Risks of Investing in High Yield Securities (Junk Bonds)" on page for
further information.

The Latin American Equity Portfolio and Global High Yield Securities Portfolio
may borrow money for investment in securities. Such leverage will exaggerate
any increase or decrease the value of shares in the Funds. Borrowing also
involves costs to the Portfolio. See "Risk Factors and Certain Securities and
Investment Practices -- Leverage" on page herein. Each of the corresponding
Funds may be considered a speculative investment and is designed for
aggressive investors.

LIKE SHARES OF ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
- ------------------------------------------------------------------------------
PAGE
..........................................................................

THE FUNDS ................................................................
WHO MAY WANT TO INVEST
INVESTMENT PRINCIPLES AND RISKS
Each Fund's overall approach to investing.
EXPENSE SUMMARY
Each Fund's sales charges and annual operating expenses.

FINANCIAL HIGHLIGHTS .....................................................

THE FUNDS IN DETAIL ......................................................
INVESTMENT OBJECTIVES AND POLICIES
RISK FACTORS AND CERTAIN SECURITIES AND INVESTMENT PRACTICES
SPECIAL INFORMATION CONCERNING MASTER-FEEDER FUND STRUCTURE
SECURITIES AND INVESTMENT PRACTICES
PERFORMANCE
How each Fund has done over time.
MANAGEMENT OF THE TRUSTS AND THE PORTFOLIOS
NET ASSET VALUE

PURCHASE AND REDEMPTION OF SHARES ........................................
PURCHASE OF SHARES
REDEMPTION OF SHARES
EXCHANGE PRIVILEGE
TAX-SAVING RETIREMENT PLANS

SHAREHOLDER AND ACCOUNT POLICIES .........................................
DIVIDENDS, CAPITAL GAINS AND TAXES
ADDITIONAL INFORMATION ABOUT THE TRUST AND PORTFOLIOS

APPENDIX .................................................................
- ------------------------------------------------------------------------------
<PAGE>
THE FUNDS

GLOBAL HIGH YIELD SECURITIES FUND'S investment objective is high current income
from investment in a non-diversified portfolio of high yield, non-investment
grade debt securities issued in many of the world's securities markets. Capital
appreciation will be considered when consistent with the primary investment
objective of high current income. See "Risk Factors and Certain Securities and
Investment Practices."

CAPITAL APPRECIATION FUND'S investment objective is long-term capital growth;
the production of any current income is secondary to this objective. The
Portfolio invests primarily in growth-oriented common stocks of medium sized
domestic corporations and, to a lesser extent, foreign corporations. See "Risk
Factors and Certain Securities and Investment Practices."

SMALL CAP FUND'S investment objective is long-term capital growth; the
production of any current income is secondary to this objective. The Portfolio
seeks to provide long-term capital growth by investing primarily in equity
securities of smaller sized growth companies. See "Risk Factors and Certain
Securities and Investment Practices."

INTERNATIONAL EQUITY FUND'S investment objective is long-term capital
appreciation from investment in foreign equity securities (or other securities
with equity characteristics); the production of any current income is incidental
to this objective. The Portfolio invests primarily in established companies
based in developed countries outside the United States, but the Portfolio may
also invest in emerging market securities. See "Risk Factors and Certain
Securities and Investment Practices."

PACIFIC BASIN EQUITY FUND'S investment objective is long-term capital
appreciation from investment primarily in the equity securities (or other
securities with equity characteristics) of companies domiciled in, or doing
business in the Pacific Basin region, other than Japan; the production of any
current income is incidental to this objective. See "Risk Factors and Certain
Securities and Investment Practices."

LATIN AMERICAN EQUITY FUND'S investment objective is long-term capital
appreciation from investment primarily in the equity securities (or other
securities with equity characteristics) of companies domiciled in, or doing
business in, Latin America; the production of any current income is incidental
to this objective. See "Risk Factors and Certain Securities and Investment
Practices."

LIMITED TERM U.S. GOVERNMENT SECURITIES FUND'S investment objective is a high
level of current income consistent with preservation of capital. The Portfolio
invests 100% of its assets in short- and intermediate-term U.S. Government
securities, including repurchase agreements secured by U.S. Government
securities. See "Risk Factors and Certain Securities and Investment
Practices."

INTERMEDIATE TAX FREE FUND'S investment objective is a high level of current
income exempt from federal income tax consistent with moderate risk of capital.
The Portfolio seeks to maintain a current yield that is greater than that
generally obtainable from a portfolio of short-term tax-exempt obligations,
subject to applicable quality restrictions. See "Risk Factors and Certain
Securities and Investment Practices."

WHO MAY WANT TO INVEST
The Trust seeks to achieve the investment objective of each Fund by investing
all the Assets of the Fund in the corresponding Portfolio. The Portfolios are
Global High Yield Securities Portfolio, Capital Appreciation Portfolio, Small
Cap Portfolio, International Equity Portfolio, Pacific Basin Equity Portfolio,
Latin American Equity Portfolio, Short-Intermediate U.S. Government Securities
Portfolio and Intermediate Tax Free Portfolio, respectively.

The Capital Appreciation Fund, Small Cap Fund, International Equity Fund,
Pacific Basin Equity Fund, and Latin American Equity Fund are designed for
investors who are willing to accept short-term domestic and/or foreign stock
market fluctuations in pursuit of potentially high long-term returns. These
Funds invest for growth and do not pursue income.

In addition, the International Equity Fund, Global High Yield Securities Fund,
Latin American Equity Fund and Pacific Basin Equity Fund may also be appropriate
for investors who want to pursue their investment goals in markets outside of
the United States. By including international investments in your portfolio, you
can achieve an extra level of diversification and also participate in
opportunities around the world.

Each Fund is not in itself a balanced investment plan. Investors should consider
their investment objective and tolerance for risk when making an investment
decision. When investors sell their Fund Shares, they may be worth more or less
than what they originally paid for them.

INVESTMENT PRINCIPLES AND RISKS
The value of each Portfolio's investments varies based on many factors. The
value of bonds fluctuates based on changes in domestic or foreign interest
rates, the credit quality of the issuer, market conditions, and other economic
and political news. In general, bond prices rise when interest rates fall, and
vice versa. This effect is usually more pronounced for longer-term securities.
Lower-quality securities offer higher yields, but also carry more risk.

Stock values fluctuate, sometimes dramatically, in response to the activities of
individual companies and general market and economic conditions. Over time,
however, stocks have shown greater long-term growth potential than other types
of securities.

Because many foreign investments are denominated in foreign currencies, changes
in the value of these currencies can significantly affect a Fund's share price.
General economic factors in the various world markets can also impact the value
of an investor's investment, especially for securities in emerging markets. Many
investments in emerging markets can be considered speculative, and therefore may
offer higher income (for debt funds) and total return potential, but
significantly greater risk.

Each of the Global High Yield Securities Fund and Portfolio is classified as a
"non-diversified" investment company under the Investment Company Act of 1940,
as amended (the "1940 Act"), and may invest a greater portion of its assets in a
single issuer than a diversified fund. As a result, this Portfolio may be more
susceptible to any single economic, political or regulatory occurrence than a
diversified fund. See "Risk Factors and Certain Securities and Investment
Practices -- Non-Diversified Fund" for more information. Each other Fund and
Portfolio is classified as "diversified."

Bankers Trust may use various investment techniques to hedge a Portfolio's
risks, but there is no guarantee that these strategies will work as intended.
When an investor sells their Fund shares ("Shares"), they may be worth more or
less than what they originally paid for them. See "Risk Factors and Certain
Securities and Investment Practices" for more information.

EXPENSE SUMMARY
ANNUAL OPERATING EXPENSES are paid out of the assets of each Portfolio and Fund.
Each Portfolio pays an investment advisory fee and an administrative services
fee to Bankers Trust. Each Fund incurs expenses such as maintaining shareholder
records and furnishing shareholder statements. Each Fund must provide financial
reports.

The following table provides: (i) for the last fiscal year of that Fund and the
corresponding Portfolio, the annual operating expenses of the Fund and expenses
of the corresponding Portfolio, in the aggregate, as a percentage of average
daily net assets of each Fund; and (ii) an example illustrating the dollar cost
of such expenses on a $1,000 investment in each Fund. THE TRUSTEES OF THE TRUST
BELIEVE THAT THE AGGREGATE PER SHARE EXPENSES OF EACH FUND AND THE CORRESPONDING
PORTFOLIO WILL BE LESS THAN OR APPROXIMATELY EQUAL TO THE EXPENSES WHICH THE
FUND WOULD INCUR IF THE TRUST RETAINED THE SERVICES OF AN INVESTMENT ADVISER AND
THE ASSETS OF EACH FUND WERE INVESTED DIRECTLY IN THE TYPE OF SECURITIES BEING
HELD BY THE CORRESPONDING PORTFOLIO.
<PAGE>
- ------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSES (as a percentage of the average net assets of each
Fund)

GLOBAL HIGH YIELD SECURITIES FUND
..............................................................................
Investment advisory fee (after reimbursement or waiver) 0.41%
12b-1 fees 0.00
Other expenses (after reimbursements or waivers) 1.09
..............................................................................
Total operating expenses (after reimbursements or waivers) 1.50%
..............................................................................

CAPITAL APPRECIATION FUND
..............................................................................
Investment advisory fee (after reimbursement or waiver) 0.52%
12b-1 fees 0.00
Other expenses (after reimbursements or waivers) 0.73
..............................................................................
Total operating expenses (after reimbursements or waivers) 1.25%
..............................................................................

SMALL CAP FUND
..............................................................................
Investment advisory fee (after reimbursement or waiver) 0.37%
12b-1 fees 0.00
Other expenses (after reimbursements or waivers) 0.88
..............................................................................
Total operating expenses (after reimbursements or waivers) 1.25%
..............................................................................

INTERNATIONAL EQUITY FUND
..............................................................................
Investment advisory fee (after reimbursement or waiver) 0.56%
12b-1 fees 0.00
Other expenses (after reimbursements or waivers) 0.94
..............................................................................
Total operating expenses (after reimbursements or waivers) 1.50%
..............................................................................

PACIFIC BASIN EQUITY FUND
..............................................................................
Investment advisory fee (after reimbursement or waiver) 0.74%
12b-1 fees 0.00
Other expenses (after reimbursements or waivers) 1.01
..............................................................................
Total operating expenses (after reimbursements or waivers) 1.75%
..............................................................................

LATIN AMERICAN EQUITY FUND
..............................................................................
Investment advisory fee (after reimbursement or waiver) 0.41%
12b-1 fees 0.00
Other expenses (after reimbursements or waivers) 1.59
..............................................................................
Total operating expenses (after reimbursements or waivers) 2.00%
..............................................................................

LIMITED TERM U.S. GOVERNMENT SECURITIES FUND
..............................................................................
Investment advisory fee (after reimbursement or waiver) 0.25%
12b-1 fees 0.00
Other expenses (after reimbursements or waivers) 0.35
..............................................................................
Total operating expenses (after reimbursements or waivers) 0.60%
..............................................................................

INTERMEDIATE TAX FREE FUND
..............................................................................
Investment advisory fee (after reimbursement or waiver) 0.37%
12b-1 fees 0.00
Other expenses (after reimbursements or waivers) 0.48
..............................................................................
Total operating expenses (after reimbursements or waivers) 0.85%
..............................................................................

<TABLE>
<CAPTION>
EXPENSE TABLE EXAMPLE:
An investor would pay the following expenses assuming (1) 5% annual return and (2) redemption at the end of each time period:

EXAMPLES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
................................................................................................................................
<S> <C> <C> <C> <C>
Global High Yield Securities Fund $15 $47 $ 82 $179
Capital Appreciation Fund $13 $40 $ 69 $151
Small Cap Fund $13 $40 $ 69 $151
International Equity Fund $15 $47 $ 82 $179
Pacific Basin Equity Fund $18 $55 $ 95 $206
Latin American Equity Fund $20 $63 $108 $233
Limited Term U.S. Government Securities Fund $ 6 $19 $ 33 $ 75
Intermediate Tax Free Fund $ 9 $27 $ 47 $105
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The expense table and the example above show the costs and expenses that an
investor will bear directly or indirectly as a shareholder of a Fund. Bankers
Trust has voluntarily agreed to waive a portion of its investment advisory fee
with respect to each Portfolio. Without such waiver, each Portfolio's investment
advisory fee would be equal to the following: Global High Yield Securities
Portfolio -- 0.80% Capital Appreciation Portfolio -- 0.65%; Small Cap Portfolio
- -- 0.65%; International Equity Portfolio -- 0.65%; Pacific Basin Equity
Portfolio -- 0.75%; Latin American Equity Portfolio -- 1.00%; Limited Term U.S.
Government Securities Portfolio -- 0.25%; and Intermediate Tax Free Portfolio --
0.40%. The expense table and the example reflect a voluntary undertaking by
Bankers Trust or Signature Broker-Dealer Services, Inc. ("SBDS"), as the
distributor (the "Distributor") of the Shares of each Fund, to waive or
reimburse expenses such that the total aggregate operating expenses of each Fund
and the corresponding Portfolio, for the fiscal year of that Fund and the
corresponding Portfolio (as a percentage of the Fund's average daily net assets)
will not exceed the following: Global High Yield Securities Fund -- 1.50%;
Capital Appreciation Fund -- 1.25%; Small Cap Fund -- 1.25%; International
Equity Fund -- 1.50%; Pacific Basin Equity Fund -- 1.75%; Latin American Equity
Fund -- 2.00%. Limited Term U.S. Government Securities Fund -- 0.60%;
Intermediate Tax Free Fund -- 0.85%. In the absence of this undertaking, "Total
Operating Expenses" would have been as follows: Global High Yield Securities
Fund -- 2.61%; Capital Appreciation Fund -- 1.57%; Small Cap Fund -- 1.59%
International Equity Fund -- 1.83%; Pacific Basin Equity Fund -- 2.27%; Latin
American Equity Fund -- 3.17%. Limited Term U.S. Government Securities Fund --
0.84%; and Intermediate Tax Free Fund -- 1.13%. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN THOSE SHOWN. Moreover, while each example assumes a 5%
annual return, actual performance will vary and may result in a return greater
or less than 5%.

While reimbursement of distribution expenses in amounts up to 0.20% of average
net assets are authorized to be made pursuant to the Plan of Distribution under
Rule 12b-1 of the Investment Company Act of 1940, as amended (the "1940 Act") it
is not expected that any payments will actually be made under that plan in the
foreseeable future.

Exclusive of Bankers Trust private clients and retirement services group
clients, this Fund is available for (a) accounts where an investment advisor or
a financial planner has discretion over such account and the account holder pays
such person as compensation for its advice and other services an annual fee of
at least 0.50% on the assets in the account; (b) accounts established under a
"wrap fee" program or formal asset allocation program where the account holder
pays the program sponsor an annual fee of at least 0.50% on the assets in the
account; and (c) accounts established through an automated clearing or similar
system established for the use of investment professionals and through which
purchases and redemptions are transmitted to the Fund on an omnibus basis.

For more information about each Fund's and each Portfolio's expenses see
"Management of the Trust and the Portfolios" and "Valuation Details."
<PAGE>
FUND FINANCIAL HIGHLIGHTS
The following tables show selected data for a share outstanding, total
investment return ratios to average net assets and other supplemental data for
each Fund for each of the periods indicated and has been audited by Coopers &
Lybrand L.L.P., the Funds' independent accountants, whose report thereon appears
in each Fund's Annual Report which is incorporated by reference in that Fund's
SAI.

<TABLE>
<CAPTION>
GLOBAL HIGH YIELD SECURITIES FUND
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
DECEMBER 14, 1993
FOR THE (COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
.................................................................................................................................
<S> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of Period $ 10.29 $ 10.00
.................................................................................................................................
Income from Investment Operations
Net Investment Income 0.77 0.31
Net Realized and Unrealized (Loss) on Securities and Foreign Currency (0.41) (0.02)
.................................................................................................................................
Total from Investment Operations 0.36 0.29
.................................................................................................................................
Less Dividends
Distributions from Net Investment Income (0.87) --
.................................................................................................................................
Net Asset Value, End of Period $ 9.78 $ 10.29
.................................................................................................................................
TOTAL INVESTMENT RETURN 4.28% 3.66%*
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment Income to Average Net Assets 8.68% 5.44%*
Ratio of Expenses to Average Net Assets, Including Expenses of the Global
High Yield Securities Portfolio 1.74% 1.75%*
Decrease Reflected in Above Expense Ratio Due to Absorption of Expenses
by Bankers Trust 0.87% 1.08%*
Net Assets, End of Period (000's omitted) $22,913 $14,738
- ---------------------------------------------------------------------------------------------------------------------------------
*Annualized

<CAPTION>
CAPITAL APPRECIATION FUND
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
MARCH 9, 1993
FOR THE PERIOD (COMMENCEMENT
JANUARY 1, 1995 TO FOR THE YEAR ENDED OF OPERATIONS) TO
SEPTEMBER 30, 1995 DECEMBER 31, 1994 DECEMBER 31, 1993
.................................................................................................................................
<S> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of Period $ 12.10 $ 11.72 $ 10.00
.................................................................................................................................
Income from Investment Operations
Net Investment (Loss) (0.07) (0.04) (0.01)
Net Realized and Unrealized Gain on Securities 4.80 0.42 1.73
.................................................................................................................................
Total from Investment Operations 4.73 0.38 1.72
.................................................................................................................................
Net Asset Value, End of Period $ 16.83 $ 12.10 $ 11.72
.................................................................................................................................
TOTAL INVESTMENT RETURN 39.09% 3.24% 21.54%*
RATIOS AND SUPPLMENTAL DATA
Ratio of Net Investment (Loss) to Average Net Assets (0.65)%* (0.57)% (0.23)%*
Ratio of Expenses to Average Net Assets, Including
Expenses of the Capital Appreciation Portfolio 1.25%* 1.25% 1.25%*
Decrease Reflected in Above Expense Ratio Due to
Absorption of Expenses by Bankers Trust 0.32%* 0.54% 0.74%*
Net Assets, End of Period (000's omitted) $57,380 $42,737 $17,573
- ---------------------------------------------------------------------------------------------------------------------------------
*Annualized

<CAPTION>
SMALL CAP FUND
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
OCTOBER 21, 1993
FOR THE (COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
.................................................................................................................................
<S> <C> <C>
Selected Per Share Data
Net Asset Value, Beginning of Period $ 11.60 $ 10.00
.................................................................................................................................
Income from Investment Operations
Net Investment (Loss) (0.04) (0.03)
Net Realized and Unrealized Gain on Securities 6.94 1.63
.................................................................................................................................
Total from Investment Operations 6.90 1.60
.................................................................................................................................
Net Asset Value, End of Period $ 18.50 $ 11.60
.................................................................................................................................
TOTAL INVESTMENT RETURN 59.48% 17.06%*
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment (Loss) to Average Net Assets (0.46%) (0.58%)*
Ratio of Expenses to Average Net Assets, Including Expenses of the Small Cap
Portfolio 1.25% 1.25%*
Decrease Reflected in Above Expense Ratio Due to Absorption of Expenses by
Bankers Trust 0.34% 0.86%*
Net Assets, End of Period (000's omitted) $122,935 $21,332
- -----------------------------------------------------------------------------------------------------------------------------------
*Annualized

<CAPTION>
INTERNATIONAL EQUITY FUND
- -----------------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
FOR THE YEAR ENDED AUGUST 4, 1992
FOR THE PERIOD DECEMBER 31, (COMMENCEMENT
JANUARY 1, 1995 TO -------------------- OF OPERATIONS) TO
SEPTEMBER 30, 1995 1994 1995 DECEMBER 31, 1993
.................................................................................................................................
<S> <C> <C> <C> <C>
Selected Per Share Data
Net Asset Value, Beginning of Period $ 13.37 $ 13.18 $ 9.75 $10.00
.................................................................................................................................
Income from Investment Operations
Net Investment Income 0.14 0.10 0.05 0.03
Net Realized and Unrealized Gain (Loss) on Securities and
Foreign Currency 1.97 0.44 3.60 (0.28)
.................................................................................................................................
Total from Investment Operations 2.11 0.54 3.65 (0.25)
.................................................................................................................................
Less Dividends and Distributions
Dividends from Net Investment Income (0.00)+ (0.09) (0.15) --
Distributions from Net Realized Gain from Securities
Transactions (0.01) (0.26) (0.07) --
.................................................................................................................................
Total Dividends and Distributions (0.01) (0.35) (0.22) --
.................................................................................................................................
Net Asset Value, End of Period $ 15.47 $ 13.37 $ 13.18 $ 9.75
.................................................................................................................................
TOTAL INVESTMENT RETURN 15.82% 4.12% 37.38% (6.01%)*
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment Income to Average Net Assets 1.55%* 0.84% 0.79% 0.97%*
Ratio of Expenses to Average Net Assets, Including Expenses of the
International Equity Portfolio 1.50%* 1.50% 1.50% 1.50%*
Decrease Reflected in Above Expense Ratio Due to
Absorption of Expenses by Bankers Trust 0.33%* 0.37% 0.62% 1.36%*
Net Assets, End of Period (000's omitted) $82,807 $56,020 $33,869 $8,218
- ---------------------------------------------------------------------------------------------------------------------------------
*Annualized
+Less Than $0.01 Per Share

<CAPTION>
PACIFIC BASIN EQUITY FUND
- -----------------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
NOVEMBER 1, 1993
FOR THE (COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
.................................................................................................................................
<S> <C> <C>
Selected Per Share Data
Net Asset Value, Beginning of Period $ 11.82 $ 10.00
.................................................................................................................................
Income from Investment Operations
Net Investment Income (Loss) 0.01 (0.04)
Net Realized and Unrealized Gain (Loss) on Securities and Foreign Currency (0.49) 1.86
.................................................................................................................................
Total from Investment Operations (0.48) 1.82
.................................................................................................................................
Less Distributions
Distributions from Net Realized Gain from Securities Transactions (0.38) --
.................................................................................................................................
Net Asset Value, End of Period $ 10.96 $ 11.82
.................................................................................................................................
TOTAL INVESTMENT RETURN (3.87%) 20.11%*
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment Income (Loss) to Average Net Assets 0.12% (0.59%)*
Ratio of Expenses to Average Net Assets, Including Expenses of the
Pacific Basin Equity Portfolio 1.75% 1.75%*
Decrease Reflected in Above Expense Ratio Due to Absorption of
Expenses by Bankers Trust 0.52% 0.60%*
Net Assets, End of Period (000's omitted) $24,504 $25,362
- ---------------------------------------------------------------------------------------------------------------------------------
*Annualized

<CAPTION>
LATIN AMERICAN EQUITY FUND
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
OCTOBER 25, 1993
FOR THE (COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
.................................................................................................................................
<S> <C> <C>
Selected Per Share Data
Net Asset Value, Beginning of Period $ 14.59 $ 10.00
.................................................................................................................................
Income from Investment Operations
Net Investment Income 0.03 0.00#
Net Realized and Unrealized Gain (Loss) on Securities and Foreign Currency (5.92) 4.59
.................................................................................................................................
Total from Investment Operations (5.89) 4.59
.................................................................................................................................
Less Distributions
Distributions from Net Realized Gain from Securities Transactions (0.20) --
.................................................................................................................................
Net Asset Value, End of Period $ 8.50 $ 14.59
.................................................................................................................................
TOTAL INVESTMENT RETURN (40.68%) 50.01%*
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment Income to Average Net Assets 0.29% 0.03%*
Ratio of Expenses to Average Net Assets, Including Expenses of
the Latin American Equity Portfolio 2.00% 2.00%*
Decrease Reflected in Above Expense Ratio Due to Absorption of
Expenses by Bankers Trust 1.17% 1.27%*
Net Assets, End of Period (000's omitted) $13,624 $27,489
- ---------------------------------------------------------------------------------------------------------------------------------
*Annualized
#Less than $0.01 per share

<CAPTION>
LIMITED TERM U.S. GOVERNMENT SECURITIES FUND
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
AUGUST 24, 1992
FOR THE YEAR ENDED DECEMBER 31, (COMMENCEMENT
-------------------------------------- OF OPERATIONS) TO
1995 1994 1993 DECEMBER 31, 1992
.................................................................................................................................
<S> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of Period $ 9.61 $ 10.06 $ 9.93 $ 10.00
.................................................................................................................................
Income from Investment Operations
Net Investment Income 0.57 0.44 0.41 0.14
Net Realized and Unrealized Gain (Loss) on Securities 0.35 (0.45) 0.20 (0.07)
.................................................................................................................................
Total from Investment Operations 0.92 (0.01) 0.61 0.07
.................................................................................................................................
Less Dividends and Distributions
Dividends from Net Investment Income (0.57) (0.44) (0.41) (0.14)
Distributions from Net Realized Gain from Security Transactions -- -- (0.07) --
.................................................................................................................................
Total Dividends and Distributions (0.57) (0.44) (0.48) (0.14)
.................................................................................................................................
Net Asset Value, End of Period $ 9.96 $ 9.61 $ 10.06 $ 9.93
.................................................................................................................................
TOTAL INVESTMENT RETURN 9.81% (0.08%) 6.21% 2.02%*
RATIOS AND SUPPLMENTAL DATA
Ratio of Net Investment Income to Average Net Assets 5.81% 4.69% 4.35% 4.08%*
Ratio of Expenses to Average Net Assets, Including Expenses of the
Short/Intermediate U.S. Government Securities Portfolio 0.60% 0.60% 0.60% 0.60%*
Decrease Reflected in Above Expense Ratio Due to Absorption of
Expenses by Bankers Trust 0.24% 0.34% 1.43% 5.60%*
Net Assets, End of Period (000's omitted) $29,870 $31,302 $ 3,462 $ 3,188
- ---------------------------------------------------------------------------------------------------------------------------------
*Annualized

<CAPTION>
INTERMEDIATE TAX FREE FUND
- ------------------------------------------------------------------------------
FOR THE PERIOD
JULY 20, 1992
FOR THE YEAR ENDED DECEMBER 31, (COMMENCEMENT
-------------------------------------- OF OPERATIONS) TO
1995 1994 1993 DECEMBER 31, 1992
.................................................................................................................................
<S> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of Period $ 9.72 $ 10.54 $ 9.99 $ 10.00
.................................................................................................................................
Income from Investment Operations
Net Investment Income 0.47 0.42 0.41 0.16
Net Realized and Unrealized Gain (Loss) on Securities 0.84 (0.82) 0.57 (0.01)
.................................................................................................................................
Total from Investment Operations 1.31 (0.40) 0.98 0.15
.................................................................................................................................
Less Dividends and Distributions
Dividends from Net Investment Income (0.47) (0.42) (0.41) (0.16)
Distributions from Net Realized Gain from Security Transactions -- -- (0.02) --
.................................................................................................................................
Total Dividends and Distributions (0.47) (0.42) (0.43) (0.16)
.................................................................................................................................
Net Asset Value, End of Period $ 10.56 $ 9.72 $ 10.54 $ 9.99
.................................................................................................................................
TOTAL INVESTMENT RETURN 13.71% (3.81%) 9.94% 3.42%*
RATIOS AND SUPPLMENTAL DATA
Ratio of Net Investment to Average Net Assets 4.58% 4.20% 3.88% 3.72%*
Ratio of Expenses to Average Net Assets, Including Expenses of the
Intermediate Tax Free Portfolio 0.85% 0.85% 0.85% 0.85%*
Decrease Reflected in Above Expense Ratio Due to Absorption of
Expenses by Bankers Trust 0.28% 0.36% 0.35% 0.80%*
Net Assets, End of Period (000's omitted) $22,213 $25,303 $31,709 $ 9,992
- ---------------------------------------------------------------------------------------------------------------------------------
*Annualized
</TABLE>
<PAGE>
THE FUNDS IN DETAIL

INVESTMENT OBJECTIVES AND POLICIES
The Trust seeks to achieve the investment objective of each Fund by investing
all of its Assets in the corresponding Portfolio, which has the same investment
objective as the Fund. Since the investment characteristics of each Fund will
correspond directly to those of the corresponding Portfolio, the following is a
discussion of the various investments of and techniques employed by each
Portfolio. Additional information about the investment policies of each
Portfolio appears in "Risk Factors and Certain Securities and Investment
Practices" in this Prospectus and in the Funds' SAI. There can be no assurance
that the investment objective of either a Fund or the corresponding Portfolio
will be achieved.

The GLOBAL HIGH YIELD SECURITIES PORTFOLIO'S investment objective is high
current income from investment in a non-diversified portfolio of high yield
non-investment grade debt securities issued in many of the world's securities
markets. Capital appreciation will be considered when consistent with the
primary investment objective of high current income. The Portfolio intends to
invest in Brady bonds and other sovereign debt and in high risk, lower quality
debt securities commonly referred to as "junk bonds" and regarded as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation as well as in
the debt securities of issuers located in emerging markets, Brady bonds and
other sovereign debt.

Under normal circumstances, at least 65% of the Portfolio's assets will be
invested in high yield, non-investment grade debt securities of both
governmental and corporate issuers in both the major industrialized markets and
the so-called "emerging markets." See "Risk Factors and Certain Securities and
Investment Practices -- Risks of Investing in Foreign Securities" and "-- Risk
of Investing in Emerging Markets."

Although Bankers Trust considers both industrialized and emerging countries
eligible for investment pursuant to the Portfolio's objective, the Portfolio
will not be invested in all such markets at all times. Furthermore, investing in
some emerging markets may be neither feasible nor desirable from time to time,
due to the lack of adequate custodial arrangements for the Portfolio's assets,
exchange controls and overly burdensome repatriation rules, the lack of
organized and liquid securities markets, and unacceptable political risks. Under
normal circumstances, the Portfolio will invest in at least three emerging
markets countries. See "Risk Factors and Certain Securities and Investment
Practices -- Risks of Investing in Foreign Securities" and " -- Risk of
Investing in Emerging Markets."

The Portfolio generally invests in securities which are rated BBB or lower by
Standard & Poor's Corporation ("S&P") or Baa or lower by Moody's Investors
Service, Inc. ("Moody's") or, if unrated, of comparable quality in the opinion
of Bankers Trust. Securities which are rated BBB by S&P or Baa by Moody's
possess some speculative characteristics. A description of the rating categories
is attached to this Prospectus. THERE IS NO LOWER LIMIT WITH RESPECT TO THE
RATING CATEGORIES FOR SECURITIES IN WHICH THE PORTFOLIO MAY INVEST. See "Risk
Factors and Certain Securities and Investment Practices -- Risks of Investing In
High Yield Securities (Junk Bonds)."

The Portfolio is not required to dispose of debt securities whose credit quality
declines at some point after the security is purchased; however, no more than
25% of the Portfolio's assets will be invested at any time in securities rated
less than CCC by S&P or Caa by Moody's or, if unrated, of comparable quality in
the opinion of Bankers Trust. S&P's lowest rating for bonds is CI, which is
reserved for income bonds on which no interest is being paid and D, which is
reserved for debt in default and in respect of which payment of interest or
repayment of principal is in arrears. Moody's lowest rating is C, which is
applied to bonds which have extremely poor prospects for ever attaining any real
investment standing. The Portfolio may, from time to time, purchase defaulted
debt securities if, in the opinion of Bankers Trust, the issuer may resume
interest payments in the near future. The Portfolio will not invest more than
10% of its total assets (at the time of purchase) in defaulted debt securities,
which may be illiquid. Other than as set forth above, there is no restriction on
the percentage of the Portfolio's assets which may be invested in bonds of a
particular rating.

The Portfolio invests in debt obligations allocated among diverse markets and
denominated in various currencies, including multi-currency units such as
European Currency Units ("ECUs"). The Portfolio may purchase securities that are
issued by the government or a company or financial institution of one country
but denominated in the currency (or multi-currency unit) of another country.

The Portfolio is classified as a "non-diversified" fund under the 1940 Act,
which means the Portfolio is not limited by the 1940 Act in the proportion of
its assets that may be invested in a single issuer. The Portfolio may,
therefore, invest in the securities of individual issuers to a greater degree
than a diversified fund and may be more susceptible to any single economic,
political or regulatory occurrence affecting those issuers. However, in order to
enable the Fund (and other registered investment companies which may in the
future invest all their assets in the Portfolio) to qualify as a regulated
investment company (a "RIC") the Portfolio must comply with the diversification
requirement of Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), for U.S. federal income tax purposes. See "Risk Factors and
certain Securities and Investment Practices -- Non-Diversified Fund" herein.

Other Investments and Investment Techniques. The Portfolio may also utilize the
following investments and investment techniques and practices: short-term
investments, floating rate bonds, zero coupon bonds, sovereign and supranational
debt obligations, Brady bonds, loan participations and assignments, convertible
bonds, preferred stock, foreign currency exchange transactions, options on
foreign currencies, options on foreign bond indices, futures contracts on
foreign bond indices, options on futures contracts, Rule 144A securities,
when-issued or delayed delivery securities, securities lending, repurchase
agreements and reverse repurchase agreements. See "Risk Factors and Certain
Securities and Investment Practices" in this Prospectus and in the SAI for
further information.

The Portfolio may borrow money for investment purposes. See "Risk Factors and
Certain Securities and Investment Practices -- Leverage."

The CAPITAL APPRECIATION PORTFOLIO'S investment objective is long-term capital
growth; the production of any current income is secondary to this objective. The
Portfolio invests primarily in growth-oriented common stocks of medium-sized
domestic corporations and, to a lesser extent, foreign corporations.

Bankers Trust employs a flexible investment program in pursuit of the
Portfolio's investment objective. The Portfolio is not restricted to investments
in specific market sectors. The Portfolio may invest in any market sectors and
in companies of any size and may take advantage of any investment opportunity
with attractive long-term prospects. The Adviser takes advantage of its market
access and the research available to it to select investments in promising
growth companies that are involved in new technologies, new products, foreign
markets and special developments, such as research discoveries, acquisitions,
recapitalizations, liquidations or management changes, and companies whose stock
may be undervalued by the market. These situations are only illustrative of the
types of investment the Portfolio may make. The Portfolio is free to invest in
any common stock which in the Adviser's judgment provides above average
potential for long-term growth of capital and income.

The Portfolio will generally invest a majority of its assets in equity
securities of medium-sized companies (companies with a market capitalization of
between $500 million and $2 billion), but may invest in securities of companies
having various levels of market capitalization, including smaller companies
whose securities may be more volatile and less liquid than securities issued by
larger companies with higher levels of net worth. Investments will be in
companies in various industries. Industry and company fundamentals along with
key investment themes and various quantitative screens will be used in the
investment process. Criteria for selection of individual securities include the
issuer's competitive environment and position, prospects for growth, managerial
strength, earnings momentum and quality, underlying asset value, relative market
value and overall marketability. The Portfolio will follow a disciplined selling
process to lessen market risks.

The Portfolio may also invest up to 25% of its assets in similar securities of
foreign issuers. For further information on foreign investments see "Risk
Factors and Certain Securities and Investment Practices -- Risks of Investing in
Foreign Securities."

Other Investments and Investment Techniques. The Portfolio may also utilize the
following investments and investment techniques and practices: short-term
investments, options on stocks, options on stock indices, futures contracts on
stock indices, options on futures contracts, foreign currency exchange
transactions, options on foreign currencies, Rule 144A securities, when-issued
and delayed delivery securities, securities lending, and repurchase agreements.
See "Risk Factors and Certain Securities and Investment Practices" in this
Prospectus and in the SAI for further information.

The SMALL CAP PORTFOLIO'S investment objective is long-term capital growth; the
production of any current income is secondary to this objective.

The Portfolio seeks to provide long term capital growth by investing primarily
in equity securities of smaller U.S. companies. The Portfolio's policy is to
invest in equity securities of smaller companies that Bankers Trust believes are
in an early stage or transitional point in their development and have
demonstrated or have the potential for above average capital growth. The Adviser
will select companies which have the potential to gain market share in their
industry, achieve and maintain high consistent profitability or produce
increases in earnings. The Adviser also seeks companies with strong company
management and superior fundamental strength.

The Adviser employs a flexible investment program in pursuit of the Portfolio's
investment objective. The Portfolio is free to invest in any common stock which
in the Adviser's judgement provides above average potential for long-term growth
of capital and income.

Under normal market conditions, the Portfolio will invest at least 65% of its
assets in smaller companies (with market capitalizations less than $750 million
at time of purchase) that offer strong potential for capital growth. Small
capitalization companies have the potential to show earnings growth over time
that is well above the growth rate of the overall economy. The Portfolio may
also invest in larger, more established companies that the Adviser believes may
offer the potential for strong capital growth due to their relative market
position, anticipated earnings growth, changes in management or other similar
opportunities. The Portfolio will follow a disciplined selling process to lessen
market risks.

For temporary defensive purposes, when in the opinion of the Adviser that market
conditions so warrant, the Portfolio may invest all or a portion of its Assets
in common stocks of larger, more established companies or in fixed-income
securities or short-term money market securities. To the extent the Portfolio is
engaged in temporary defensive investments, the Portfolio will not be pursuing
its investment objective.

Other Investments and Techniques. The Portfolio may also utilize the following
investments and investment techniques and practices: short-term investments,
options on stocks, options on stock indices, futures contracts on stock indices,
options on future contracts, foreign currency exchange transactions, options on
foreign currencies, Rule 144A securities, when-issued and delayed delivery
securities, securities lending and repurchase agreements. See "Risk Factors and
Certain Securities and Investment Practices" in this Prospectus and in the SAI
for further information.

The INTERNATIONAL EQUITY PORTFOLIO'S investment objective is long-term capital
appreciation from investment in foreign equity securities (or other securities
with equity characteristics); the production of any current income is incidental
to this objective. The Portfolio invests primarily in established companies
based in developed countries outside the United States, but the Portfolio also
invests in securities of issuers in emerging markets. See "Risk Factors and
Certain Securities and Investment Practices -- Risks of Investing in Foreign
Securities" and "-- Risk of Investing in Emerging Markets." Under normal
circumstances, the Portfolio will invest at least 65% of the value of its total
assets in the equity securities of issuers based in at least three countries
other than the United States. The Portfolio's investments will generally be
diversified among several geographic regions and countries.

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. Here, to the extent available and consistent
with applicable regulations, the Portfolio may seek to achieve country exposure
through use of options or futures based on an established local index or through
investment in other registered investment companies rather than investing
directly in individual securities. Investment in other investment companies is
limited in amount by the 1940 Act, 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.

The Portfolio invests in securities listed on foreign or domestic securities
exchanges and securities traded in foreign or domestic over-the-counter markets
and may invest in restricted or unlisted securities.

Other Investments and Investment Techniques. The Portfolio may also utilize the
following investments and investment techniques and practices: short-term
investments, foreign currency exchange transactions, options on foreign
currencies, American Depositary Receipts ("ADRs"), Global Depositary Receipts
("GDRs") and European Depositary Receipts ("EDRs"), options on stocks, options
on foreign stock indices, futures contracts on foreign stock indices, options on
futures contracts, Rule 144A securities, when-issued and delayed delivery
securities, securities lending and repurchase agreements. See "Risk Factors and
Certain Securities and Investment Practices" in this Prospectus and in the SAI
for further information.

The PACIFIC BASIN EQUITY PORTFOLIO'S investment objective is long-term capital
appreciation from investment primarily in the equity securities (or other
securities with equity characteristics) of companies domiciled in, or doing
business in the Pacific Basin region, other than Japan; the production of any
current income is incidental to this objective. Investment in such securities
involves certain considerations which are not normally involved in investment in
securities of U.S. issuers, and an investment in the Fund may be considered
speculative.

For purposes of this Prospectus, "issuers domiciled in, or doing business in,
the Pacific Basin region (other than Japan)" shall include securities of
issuers: (1) which are organized under the laws of Pacific Basin countries (see
below); (2) for which the principal securities trading market is in a Pacific
Basin country; or (3) which derive a significant proportion (at least 50
percent) of their revenues or profits from goods produced or sold, investments
made, or services performed in the countries of the Pacific Basin or which have
at least 50 percent of their assets situated in the countries of the Pacific
Basin. It is expected under normal conditions that at least 65% of the
Portfolio's assets will be invested in the equity securities of issuers located
in at least three countries in the Pacific Basin.

For the purpose of this Prospectus, the "Pacific Basin" includes, but is not
limited to, the following countries: Hong Kong, India, Indonesia, Malaysia, New
Zealand, Pakistan, the Philippines, the People's Republic of China ("China"),
Singapore, Sri Lanka, South Korea, Thailand, Taiwan and Vietnam. See "Risk
Factors and Certain Securities and Investment Practices -- Risks of Investing in
Foreign Securities" and "-- Risks of Investing in Emerging Markets" in this
Prospectus and "Risk Factors and Certain Securities and Investment Practices --
Risks of Investing in China and China Region" in the SAI.

The Portfolio will be managed using a disciplined, value-oriented investment
philosophy that stresses the inherent value of, and the medium term outlook for,
the companies under examination. Experience has proven that often the real basis
of a business is quite different from that perceived by the market: a
misconception that usually results in its shares trading below its true business
or replacement value. The exploitation of this "perception/reality" gap is a
hallmark of the investment style that has been adopted for the Portfolio, and a
potential source of value for its investors.

"Value" investing means trying to find companies which are mispriced by the
market for reasons of neglect, fashion or misconception. These opportunities
arise out of legislative changes, industrial restructuring and technology
advancements, for example. As a result, Bankers Trust and the sub-investment
adviser attach great importance to analyzing trends and accessing possible
breaks with traditional price patterns. At the company level, the emphasis is
placed on assessing the inherent "business" value of the firm. While this often
varies from the stock market's valuation, the Adviser and the sub-investment
adviser believe a company's stock price tends to gravitate to their "business"
value over time.

The Portfolio's investments will generally be diversified among several
geographic regions and countries in the Pacific Basin. Criteria for determining
the appropriate distribution of investment 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.

The Portfolio will not invest more than 20% of the value of its total assets in
issuers domiciled in China.

In 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. Here, to the extent available and consistent
with applicable regulations, the Portfolio may seek to achieve country exposure
through the use of options on futures based on an established local index or
through investment in other registered investment companies. Investment in other
investment companies is limited in amount by the 1940 Act, 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.

Other Investments and Investment Techniques. The Portfolio may also utilize the
following investments and investment techniques and practices: short-term
investments, foreign currency exchange transactions, options on foreign
currencies, ADRs, GDRs and EDRs, options on stocks, options on foreign stock
indices, futures contracts on foreign stock indices, options on futures
contracts, 144A securities, when-issued and delayed delivery securities,
securities lending and repurchase agreements. See "Risk Factors and Certain
Securities and Investment Practices" in this Prospectus and in the SAI for
further information.

The LATIN AMERICAN EQUITY PORTFOLIO'S investment objective is long-term capital
appreciation from investment primarily in the equity securities (or other
securities with equity characteristics) of companies domiciled in, or doing
business in, Latin America; the production of any current income is incidental
to this objective. Investment in such securities involves certain considerations
which are not normally involved in investment in securities of U.S. issuers, and
an investment in the Fund may be considered speculative. See "Risk Factors and
Certain Securities and Investment Practices -- Risks of Investing in Foreign
Securities" and "-- Risk of Investing in Emerging Markets" herein and "Foreign
Securities: Special Consideration Concerning Latin America" in the SAI. It is
expected under normal conditions that at least 65% of the Portfolio's total
assets will be invested in the equity securities of Latin American issuers.

The Fund may borrow money for investment purposes. See "Risk Factors and
Certain Securities and Investment Practices -- Leverage."

For purposes of this Prospectus, "Latin America" is defined as Mexico, and all
countries in Central America and South America, including Argentina, Brazil,
Chile, Colombia, Peru and Venezuela.

As used in this Prospectus, "securities of Latin American issuers" is defined
as: (i) securities of companies the principal securities trading market for
which is in Latin America; (ii) securities, traded in any market, of companies
that derive 50% or more of their total revenue from either goods or services
produced in Latin America or sales made in Latin America; (iii) securities of
companies organized under the laws of, and with a principal office in, Latin
America; or (iv) securities issued or guaranteed by the government of a country
in Latin America, its agencies or instrumentalities, political subdivisions or
the central bank of such a country. Determinations as to eligibility will be
made by Bankers Trust, under the supervision of the Board of Trustees of BT
Investment Portfolios, based on publicly available information and inquiries
made to the issuers.

Bankers Trust intends to consider investment only in those countries in Latin
America in which it believes investing is feasible and does not involve undue
political risks. As of the date of this Prospectus, this list included
Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela. Under normal
circumstances, the Portfolio's investments will be diversified among at least
three Latin American countries.

The Portfolio may invest in securities of companies having various levels of net
worth, including small 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. Here, to the extent available and consistent
with applicable regulations, the Portfolio may seek to achieve country exposure
through the use of options or futures based on an established local index or
through investment in other registered investment companies. Investment in other
investment companies is limited in amount by the 1940 Act, 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.

Fixed Income Investments. For purposes of seeking capital appreciation, the
Portfolio may invest up to 35% of its total assets in debt securities of Latin
American issuers which are rated at least C by S&P or Moody's or, if unrated, of
comparable quality in the opinion of Bankers Trust. As an operating policy,
which may be changed by the Board of Trustees of BT Investment Portfolios, the
Portfolio will not invest more than 10% of its total assets in debt securities
rated BBB or lower by S&P or Baa or lower by Moody's. Securities which are rated
BBB by S&P or Baa by Moody's possess speculative characteristics. Bonds rated C
by S&P are of the lowest quality and may be used when the issuer has filed a
bankruptcy petition, but debt payments are still being paid. Moody's lowest
rating is C, which is applied to bonds which have extremely poor prospects of
ever attaining any real investment standing. See "Risk Factors and Certain
Securities and Investment Practices -- Risks of Investing in High Yield
Securities (Junk Bonds)." Certain debt securities can provide the potential for
capital appreciation based on various factors such as changes in interest rates,
economic and market conditions, improvement in an issuer's ability to repay
principal and pay interest and ratings upgrades. Additionally, convertible bonds
offer the potential for capital appreciation through the conversion feature,
which enables the holder of the bond to benefit from increases in the market
price of the securities into which they are convertible.

Other Investments and Investment Techniques. The Portfolio may also utilize the
following investments and investment techniques and practices: Brady bonds,
foreign currency exchange transactions, options on foreign currencies, ADRs,
GDRs and EDRs, options on stocks, options on foreign stock indices, futures
contracts on foreign stock indices, options on futures contracts, when-issued
and delayed delivery securities, Rule 144A securities, short-term investments,
repurchase agreements, reverse repurchase agreements and securities lending. See
"Risk Factors and Certain Securities and Investment Practices" in this
Prospectus and in the SAI for further information.

The SHORT/INTERMEDIATE U.S. GOVERNMENT SECURITIES PORTFOLIO (LIMITED TERM U.S.
GOVERNMENT SECURITIES FUND), investment objective is a high level of current
income consistent with preservation of capital. The Portfolio invests 100% of
its assets in short- and intermediate-term U.S. Government securities,
including repurchase agreements secured by U.S. Government securities.

In selecting securities for the Portfolio, Bankers Trust attempts to maintain
the Portfolio's overall sensitivity to interest rates in a range similar to that
of short-term to intermediate-term government bonds and notes with weighted
average maturities of two to five years. Because the Portfolio may invest in
mortgage securities whose prices are less sensitive to interest rates than their
relatively long maturities would suggest, the Portfolio's dollar-weighted
average maturity may be longer than five years from time to time, but will not
exceed seven years under normal conditions. The Portfolio may hold individual
securities with remaining maturities of more than seven years as long as the
Portfolio's dollar-weighted average maturity remains within the above limit. The
remaining maturities of individual securities, excluding mortgage securities,
will normally not exceed ten years.

"U.S. Government securities" as used in this Prospectus means securities
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. U.S. Government securities have varying degrees of
government backing. They may be backed by the credit of the government as a
whole or only by the issuing agency. Securities issued by certain agencies are
supported only by the credit of the agency that issued them, and not by the
U.S. Government. Securities issued by the Federal Home Loan Mortgage
Corporation and the Federal National Mortgage Association are supported by the
agency's right to borrow money from the U.S. Treasury under certain
circumstances. There is no assurance that the U.S. government will support the
obligations of its agencies or instrumentalities if it is not required to do
so by law. U.S. Treasury bonds, notes and bills, and some agency securities,
such as those issued by the Government National Mortgage Association, are
backed by the full faith and credit of the U.S. Government as to payment of
principal and interest and are the highest quality government securities. The
Fund itself, and its share price and yield, are not guaranteed by the U.S.
Government. For additional information on U.S. Government securities, see
"Risk Factors and Certain Securities and Investment Practices."

The Portfolio may invest a portion of its assets in short-term U.S. Government
securities with remaining maturities of one year or less and repurchase
agreements relating thereto. When Bankers Trust believes market conditions
warrant a temporary defensive position, the Portfolio may invest up to 100% of
its assets in these instruments.

Other Investments and Investment Techniques. The Portfolio may also utilize the
following investments and investment techniques and practices: repurchase
agreements, when-issued and delayed delivery securities, Rule 144A securities,
securities lending, mortgage-backed securities, collateralized mortgage
obligations, zero coupon securities, and options and futures. See "Risk Factors
and Certain Securities and Investment Practices" in this Prospectus and in the
SAI for more information.

The INTERMEDIATE TAX FREE PORTFOLIO investment objective is a high level of
current income exempt from federal income tax consistent with moderate risk of
capital. The Portfolio intends to manage its holdings actively. Portfolio
transactions are undertaken principally to accomplish the Portfolio's investment
objective in relation to expected movements in the general level of interest
rates, but the Portfolio may also engage in short-term trading consistent with
its objective.

The Portfolio seeks to maintain a current yield that is greater than that
generally obtainable from a portfolio of short-term tax-exempt obligations,
subject to applicable quality restrictions. The Portfolio seeks to increase
yields by adjusting the average maturity of its portfolio in light of prevailing
market conditions and credit considerations. The Portfolio will normally consist
of a portfolio of securities with a weighted average maturity of three to ten
years. The remaining maturity of securities generally will not exceed 20 years
at the time of investment. The Portfolio adjusts its holdings of long-term and
short-term debt securities to reflect its assessment of prospective changes in
interest rates, which may adversely affect current income. The success of this
strategy depends upon the ability of Bankers Trust, as the investment adviser
(the "Adviser"), to forecast changes in interest rates.

The value of securities held by the Portfolio will generally fluctuate inversely
with changes in prevailing interest rates and will also be affected by changes
in the creditworthiness of issuers and other market factors. The quality
criteria applied in the selection of Portfolio securities are intended to
minimize adverse price changes due to credit considerations. The value of
municipal securities in the Portfolio can also be affected by market reaction to
legislative consideration of various tax reform proposals. Although the value of
the assets of the Portfolio and the net asset value of the Fund will fluctuate,
the Portfolio attempts to conserve the value of its assets to the extent
consistent with its objective.

The Portfolio attempts to invest 100% of its assets in tax-exempt municipal
securities; however the Portfolio is permitted to invest up to 20% (or greater
while maintaining a temporary defensive position) of the value of its total
assets in securities, the interest income on which is subject to Federal income
or alternative minimum tax. The Portfolio may make taxable investments pending
investment of proceeds of tax-exempt securities, pending settlement of purchases
of portfolio securities, to maintain liquidity to meet redemptions or when it is
advisable in Bankers Trust's opinion because of adverse market conditions. The
taxable investments permitted for the Portfolio include obligations of the U.S.
and its agencies and instrumentalities, bank obligations, commercial paper and
repurchase agreements and other debt securities which meet the Portfolio's
quality requirements.

Municipal Securities. The Intermediate Tax Free Portfolio may invest in notes
and bonds issued by or on behalf of states, territories and possessions of the
United States and the District of Columbia and their political subdivisions,
agencies, authorities and instrumentalities. These obligations may be general
obligation instruments secured by the issuer's pledge of its full faith, credit
and taxing power for the payment of principal and interest, or they may be
revenue instruments payable from specific revenue sources, but not generally
backed by the issuer's taxing power. These include industrial development bonds
where payment is the responsibility of the private industrial user of the
facility financed by the instruments.

Short-Term Municipal Investments. For temporary defensive purposes or for
purposes of liquidity, the assets of the Intermediate Tax Free Portfolio may be
invested in short-term municipal obligations. These short-term obligations
include municipal notes of various types, including notes issued in anticipation
of receipt of taxes, the proceeds of the sale of bonds, other revenues or grant
proceeds and project notes, as well as municipal commercial paper and municipal
demand obligations such as variable rate demand notes and master demand
obligations. The interest rate on variable rate demand notes is adjustable at
periodic intervals as specified in the notes. Master demand obligations permit
the investment of fluctuating amounts at periodically adjusted interest rates.
Although master demand obligations are not marketable to third parties, the
Portfolio considers them to be liquid because they are payable on demand. There
is no specific percentage limitation on these investments. The credit quality of
variable rate demand notes and other municipal obligations is frequently
enhanced by various arrangements with domestic or foreign financial
institutions, such as letters of credit, guarantees and insurance, and these
arrangements are considered when investment quality is evaluated. These
obligations will be of comparable quality to municipal bonds and will be
purchased in anticipation of a declining market and rising interest rates,
pending purchase of longer term investments or to maintain liquidity to meet
redemptions. The amortized cost method is used by the Portfolio to value
municipal securities with maturities of less than 60 days; when these securities
are subject to puts separate from the underlying securities, no value is
assigned to the puts. The cost of any such put is carried as an unrealized loss
from the time of purchase until it is exercised or expires.

Other Investments and Investment Techniques. The Portfolio may also utilize the
following investments and investment techniques and practices: puts, zero coupon
municipal securities, repurchase agreements, Rule 144A securities, when-issued
and delayed delivery securities, and options and futures contracts. See "Risk
Factors and Certain Securities and Investment Practices" in this Prospectus and
in the SAI for more information.

RISK FACTORS AND CERTAIN SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of instruments
in which a Portfolio may invest and strategies Bankers Trust may employ in
pursuit of a Portfolio's investment objective. A summary of risks and
restrictions associated with these instrument types and investment practices is
included as well.

Bankers Trust may not buy all of these instruments or use all of these
techniques to the full extent permitted unless it believes that doing so will
help a Portfolio achieve its goal. Holdings and recent investment strategies are
described in the financial reports of a Fund and the corresponding Portfolio,
which are sent to Fund shareholders twice a year. For a free SAI or financial
report, call an Investment Professional.

RISKS OF INVESTING IN FOREIGN SECURITIES
Investors should realize that investing in securities of foreign issuers
involves considerations not typically associated with investing in securities of
companies organized and operated in the United States. Investors should realize
that the value of a Portfolio's foreign 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
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 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, the value of the net assets of a Portfolio as
measured in U.S. dollars will be affected favorably or unfavorably by changes in
exchange rates. In order to protect against uncertainty in the level of future
foreign currency exchange rates, each Portfolio is also authorized to enter into
certain foreign currency exchange transactions. Furthermore, a Portfolio's
foreign investments may be less liquid and their prices may be more volatile
than comparable investments in securities of U.S. companies. The settlement
periods for foreign securities, which are often longer than those for securities
of U.S. issuers, may affect portfolio liquidity. Finally, there may be less
government supervision and regulation of securities exchanges, brokers and
issuers in foreign countries than in the United States.

RISK OF INVESTING IN 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, the Netherlands, New
Zealand, Norway, 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, Bolivia, Brazil, Bulgaria, Chile, China,
Colombia, Costa Rica, the Czech Republic, Ecuador, Egypt, Greece, Hungary,
India, Indonesia, Israel, the Ivory Coast, Jordan, Malaysia, Mexico, Morocco,
Nicaragua, Nigeria, Pakistan, Peru, the Philippines, Poland, Portugal, 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 countries entails
all of the risks of investing in securities of foreign issuers outlined in this
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; (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; and (iv) in the case of Eastern Europe and in China and other Asian
countries, the absence of developed capital markets and legal structures
governing private or foreign investment and private property and the possibility
that recent favorable economic and political developments could be slowed or
reversed by unanticipated events.

So long as the Communist Party continues to exercise a significant or, in some
countries, dominant role in Eastern European countries or in China and other
Asian countries, investments in such countries will involve risks of
nationalization, expropriation and confiscatory taxation. The Communist
governments of a number of Eastern European countries expropriated large amounts
of private property in the past, in many cases without adequate compensation,
and there may be no assurance that such expropriation will not occur in the
future. In the event of such expropriation, a Portfolio could lose a substantial
portion of any investments it has made in the affected countries. Further, no
accounting standards exist in Eastern European countries. Finally, even though
certain Eastern European currencies may be convertible into U.S. dollars, the
conversion rates may be artificial to the actual market values and may be
adverse to Fund shareholders.

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 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 security 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.

RISKS OF INVESTING IN HIGH YIELD SECURITIES (JUNK BONDS)
Lower-rated securities, including securities rated from BB to D by S&P or Ba to
C by Moody's or, if unrated, of comparable quality in the opinion of Bankers
Trust, will usually offer higher yields than higher-rated securities. However,
there is more risk associated with these investments. This is because of the
reduced creditworthiness and increased risk of default that these securities
carry. Lower-rated securities generally tend to reflect short-term corporate and
market developments to a greater extent than higher-rated securities which react
primarily to fluctuations in the general level of interest rates. Lower rated
securities also involve greater sensitivity to significant increases in interest
rates. Short-term corporate and market developments affecting the prices and
liquidity of lower-rated securities could include adverse news impacting major
issues or underwriters or dealers in lower-rated or unrated securities. In
addition, since there are fewer investors in lower-rated securities, it may be
harder to sell securities at an optimum time.

An economic downturn may adversely affect the value of some lower-rated bonds.
Such a downturn may especially affect highly leveraged companies or companies in
cyclically sensitive industries, where deterioration in a company's cash flow
may impair its ability to meet its obligation to pay principal and interest to
bondholders in a timely fashion. From time to time, as a result of changing
conditions, issuers of lower-rated bonds may seek or may be required to
restructure the terms and conditions of the securities they have issued. As a
result of these restructurings, holders of lower-rated securities may receive
less principal and interest than originally expected at the time such bonds were
purchased. In the event of a restructuring, the Portfolio may bear additional
legal or administrative expenses in order to maximize recovery from an issuer.
The secondary trading market for lower-rated bonds is generally less liquid than
the secondary trading market for higher-rated bonds.

The risk of loss due to default by the issuer is significantly greater for the
holders of high yield securities because such securities are generally unsecured
and are often subordinated to other obligations of the issuer. During an
economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of high yield securities may experience financial stress and
may not have sufficient revenues to meet their interest payment obligations. An
issuer's ability to service its debt obligations may also be adversely affected
by specific corporate developments, its inability to meet specific projected
business forecasts, or the unavailability of additional financing.

Factors adversely affecting the market value of high yield and other Portfolio
securities will adversely affect the corresponding Fund's net asset value. In
addition, a Portfolio may incur additional expenses to the extent it is required
to seek recovery upon a default in the payment of principal or interest on its
portfolio holdings.

RISKS OF INVESTING IN MEDIUM- AND SMALL-CAPITALIZATION STOCKS
The Small Cap Portfolio and Capital Appreciation Portfolio invest primarily in
smaller-sized and medium-sized, respectively, growth-oriented common stocks of
domestic corporations and, to a limited extent, foreign corporations.
Historically, medium- and small-capitalization stocks have been more volatile in
price that the larger-capitalization stocks included in the S&P 500. Among the
reasons for the greater price volatility of these securities are the less
certain growth prospects of smaller firms, the lower degree of liquidity in the
markets for such stocks, and the greater sensitivity of medium- and small-size
companies to changing economic conditions. In addition to exhibiting greater
volatility, medium- and small-size company stocks may fluctuate independently of
larger company stocks. Medium- and small-size company stocks may decline in
price as large company stocks rise, or rise in prices as large company stocks
decline.

NON-DIVERSIFIED FUND
The Global High Yield Securities Portfolio and Fund are each classified as a
"non-diversified" investment company so that with respect to 50% of the
Portfolio's assets, it will be able to invest more than 5% of its assets in
obligations of one or more issuers, while being limited with respect to the
other half of its assets to investments not exceeding 5% of the Portfolio's
total assets. (A "diversified" investment company would be required under the
1940 Act, to maintain at least 75% of its assets in cash (including foreign
currency), cash items, U.S. Government securities, and other securities limited
per issuer to not more than 5% of the investment company's total assets.) In
order to enable the Fund to qualify as a regulated investment company under the
Internal Revenue Code of 1986, as amended (the "Code"), the Portfolio, among
other things, may not invest more than 25% of its assets in obligations of any
one issuer (other than U.S. Government securities). As a "non-diversified"
investment company, the Portfolio may invest a greater proportion of its assets
in the securities of a smaller number of issuers and therefore may be subject to
greater market and credit risk than a more broadly diversified fund.

The Portfolio will not have more than 25% of the current value of its total
assets invested in any single industry, provided that this restriction shall not
apply to debt securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities.

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, each Fund seeks to
achieve its investment objective by investing all of its Assets in the
corresponding Portfolio, a separate registered investment company with the same
investment objectives as the Fund. Therefore, an investor's interest in the
Portfolio's securities is indirect. In addition to selling a beneficial interest
to the corresponding Fund, each Portfolio may sell beneficial interests to other
mutual funds or institutional investors. Such investors will invest in a
Portfolio on the same terms and conditions and will pay a proportionate share of
the Portfolio's expenses. However, the other investors investing in a 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 a 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, as the Administrator, at (800)
730-1313.

The master-feeder structure has been developed relatively recently, so
shareholders should carefully consider this investment approach.

Smaller funds investing in a Portfolio may be materially affected by the actions
of larger funds investing in the Portfolio. For example, if a large fund
withdraws from a 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, a Portfolio may become less diverse, resulting in
increased portfolio risk. Also, funds with a greater pro rata ownership in a
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 a Portfolio, the Trust will hold a meeting of
shareholders of the Fund and will cast all of its votes in the same proportion
as the votes of the Fund's shareholders. Fund shareholders who do not vote will
not affect the Trust's votes at the Portfolio meeting. The percentage of the
Trust's votes representing Fund shareholders not voting will be voted by the
Trustees or officers of the Trust in the same proportion as the Fund
shareholders who do, in fact, vote. Certain changes in the Portfolio's
investment 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 distribution in kind may result in a less diversified portfolio of
investments or adversely affect the liquidity of the Fund. Notwithstanding the
above, there are other means for meeting redemption requests, such as borrowing.

A 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 objectives 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 corresponding Portfolio.

Each 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 a 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 each Portfolio is also not a
fundamental policy. Shareholders of the Funds will receive 30 days prior written
notice with respect to any change in the investment objective of a Fund or the
corresponding Portfolio. See "Risk Factors and Certain Securities and Investment
Practices" in the SAI for a description of the fundamental policies of each
Portfolio that cannot be changed without approval by "the vote of a majority of
the outstanding voting securities" (as defined in the 1940 Act) of the
Portfolio.

For descriptions of the investment objective, policies and restrictions of each
Portfolio, see "The Funds in Detail" herein and "Risk Factors and Certain
Securities and Investment Practices" in this Prospectus and in the SAI. For
descriptions of the management of the Trusts and the Portfolios, see "Management
of the Trusts and the Portfolios" herein and in the SAI. For descriptions of the
expenses of the Portfolio, see "The Funds -- Expense Summary" herein and
"Management of the Trust and the Portfolios" herein and in the SAI.

SECURITIES AND INVESTMENT PRACTICES
EQUITY SECURITIES. As used herein, "equity securities" are defined as common
stock, preferred stock, trust or limited partnership interests, rights and
warrants to subscribe to or purchase such securities, sponsored or unsponsored
ADRs, EDRs and GDRs, 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. Common stocks, the most familiar type, represent
an equity (ownership) interest in a corporation. Although equity securities have
a history of long-term growth in value, their prices fluctuate based on changes
in a company's financial condition and on overall market and economic
conditions. Smaller companies are especially sensitive to these factors.

DEBT SECURITIES. Bonds and other debt instruments are used by issuers to borrow
money from investors. The issuer pays the investor a fixed or variable rate of
interest, and must repay the amount borrowed at maturity. Some debt securities,
such as zero coupon bonds, do not pay current interest, but are purchased at a
discount from their face values. Debt securities, loans, and other direct debt
have varying degrees of quality and varying levels of sensitivity to changes in
interest rates. Longer-term bonds are generally more sensitive to interest rate
changes than short-term bonds.

Lower-quality foreign government securities are often considered to be
speculative and involve greater risk of default or price changes, or they may
already be in default. These risks are in addition to the general risks
associated with foreign securities.

CONVERTIBLE SECURITIES. A convertible security is a bond or preferred stock
which may be converted at a stated price within a specific period of time into a
specified number of shares of common stock of the same or different issuer.
Convertible securities are senior to common stock in a corporation's capital
structure, but usually are subordinated to non-convertible debt securities.
While providing a fixed income stream -- generally higher in yield than in the
income derived from a common stock but lower than that afforded by a
non-convertible debt security -- a convertible security also affords an investor
the opportunity, through its conversion feature, to participate in the capital
appreciation of common stock into which it is convertible.

In general, the market value of a convertible security is the higher of its
investment value (its value as a fixed income security) or its conversion value
(the value of the underlying shares of common stock if the security is
converted). As a fixed income security, the market value of a convertible
security generally increases when interest rates decline and generally decreases
when interest rates rise; however, the price of a convertible security generally
increases as the market value of the underlying stock increases, and generally
decreases as the market value of the underlying stock declines. Investments in
convertible securities generally entail less risk than investments in the common
stock of the same issuer.

PREFERRED STOCK. Preferred stock has a preference in liquidation (and, generally
dividends) over common stock but is subordinated in liquidation to debt. As a
general rule the market value of preferred stocks with fixed dividend rates and
no conversion rights varies inversely with interest rates and perceived credit
risk, with the price determined by the dividend rate. Some preferred stocks are
convertible into other securities, for example common stock, at a fixed price
and ratio or upon the occurrence of certain events. The market price of
convertible preferred stocks generally reflects an element of conversion value.
Because many preferred stocks lack a fixed maturity date, these securities
generally fluctuate substantially in value when interest rates change; such
fluctuations often exceed those of long-term bonds of the same issuer. Some
preferred stocks pay an adjustable dividend that may be based on an index,
formula, auction procedure or other dividend rate reset mechanism. In the
absence of credit deterioration, adjustable rate preferred stocks tend to have
more stable market values than fixed rate preferred stocks.

All preferred stocks are also subject to the same types of credit risks of the
issuer as corporate bonds. In addition, because preferred stock is junior to
debt securities and other obligations of an issuer, deterioration in the credit
rating of the issuer will cause greater changes in the value of a preferred
stock than in a more senior debt security with similar yield characteristics.
Preferred stocks may be rated by S&P and Moody's although there is no minimum
rating which a preferred stock must have (and a preferred stock may not be
rated) to be an eligible investment for a Portfolio. Bankers Trust expects,
however, that generally the preferred stocks in which a Portfolio invests will
be rated at least CCC by S&P or Caa by Moody's or, if unrated, of comparable
quality in the opinion of Bankers Trust. Preferred stocks rated CCC by S&P are
regarded as predominantly speculative with respect to the issuer's capacity to
pay preferred stock obligations and represent the highest degree of speculation
among securities rated between BB and CCC; preferred stocks rated Caa by Moody's
are likely to be in arrears on dividend payments. Moody's rating with respect to
preferred stocks does not purport to indicate the future status of payments of
dividends.

WARRANTS are instruments which entitle the holder to buy underlying equity
securities at a specific price for a specific period of time. A warrant tends to
be more volatile than its underlying securities and ceases to have value if it
is not exercised prior to its expiration date. In addition, changes in the value
of a warrant do not necessarily correspond to changes in the value of its
underlying securities.

U.S. GOVERNMENT SECURITIES are high-quality debt securities issued or guaranteed
by the U.S. Treasury or by an agency or instrumentality of the U.S. government.
Not all U.S. government securities are backed by the full faith and credit of
the United States. For example, securities issued by the Federal Farm Credit
Bank or by the Federal National Mortgage Association are supported by the
instrumentality's right to borrow money from the U.S. Treasury under certain
circumstances. However, securities issued by other agencies or instrumentalities
are supported only by the credit of the entity that issued them.

MORTGAGE-BACKED SECURITIES. The Short/Intermediate Term U.S. Government
Securities Portfolio may purchase mortgage-backed securities issued by the U.S.
Government and its agencies and instrumentalities. Mortgage-backed securities
include mortgage pass-through securities, mortgage-backed bonds and mortgage
pay-through securities. A mortgage pass-through security is a pro rata interest
in a pool of mortgages where the cash flow generated from the mortgage
collateral is passed through to the security holder. Mortgage-backed bonds are
general obligations of their issuers, payable out of the issuers' general funds
and additionally secured by a first lien on a pool of mortgages. Mortgage
pay-through securities exhibit characteristics of both pass-throughs and
mortgage-backed bonds. Mortgage-backed securities also include other debt
obligations secured by mortgages on commercial real estate or residential
properties. Other types of mortgage-backed securities will likely be developed
in the future, and the Portfolio may invest in them if Bankers Trust determines
they are consistent with the Portfolio's investment objective and policies.

COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). The Short/Intermediate Term U.S.
Government Securities Portfolio may purchase CMOs issued by the U.S. Government
and its agencies and instrumentalities. CMOs are pay-through securities
collateralized by mortgages or mortgage-backed securities. CMOs are issued in
classes and series that have different maturities and often are retired in
sequence.

ADRS, GDRS AND 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. 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. See "Risk Factors and
Certain Securities and Investment Practices -- Risks of Investing in Foreign
Securities."

ZERO COUPON SECURITIES are the separate income or principal components of a debt
instrument. These involve risks that are similar to those of other debt
securities, although they may be more volatile, and certain zero coupon
securities move in the same direction as interest rates.

FLOATING RATE BONDS may have interest rates that move in tandem with a
benchmark, helping to stabilize their prices.

SOVEREIGN AND SUPRANATIONAL DEBT OBLIGATIONS. Debt instruments issued or
guaranteed by foreign governments, agencies, and supranational organizations
("sovereign debt obligations"), especially sovereign debt obligations of
developing countries, may involve a high degree of risk, and may be in default
or present the risk of default. The issuer of the obligation or the governmental
authorities that control the repayment of the debt may be unable or unwilling to
repay principal and interest when due, and may require renegotiation or
rescheduling of debt payments. In addition, prospects for repayment of principal
and interest may depend on political as well as economic factors.

BRADY BONDS. "Brady bonds" are bonds issued as a result of a restructuring of a
country's debt obligations to commercial banks under the "Brady plan." Brady
bonds have been issued by the governments of Argentina, Costa Rica, Mexico,
Nigeria, Uruguay and Venezuela, Brazil and the Philippines, as well as other
emerging market countries. Most Brady bonds are currently rated below BBB by S&P
or Baa by Moody's. While Bankers Trust is not aware of the occurrence of any
payment defaults on Brady bonds, investors should recognize that these debt
securities have been issued only recently and, accordingly, do not have a long
payment history. Brady bonds may be collateralized or uncollateralized, are
issued in various currencies (primarily the U.S. dollar) and are actively traded
in the secondary market for Latin American debt.

RULE 144A SECURITIES are 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's Rule 144A. Provided that a dealer or institutional trading
market in such securities exists, these restricted securities are treated as
exempt from the 15% limit on illiquid securities. Under the supervision of the
Board of Trustees of the Portfolio, Bankers Trust determines the liquidity of
restricted securities and, through reports from Bankers Trust, the Board will
monitor trading activity in restricted securities. Because Rule 144A is
relatively new, it is not possible to predict how these markets will develop. If
institutional trading in restricted securities were to decline, the liquidity of
the Portfolio could be adversely affected. No more than 10% of the Portfolio's
assets may be invested in securities restricted as to transfer or re-sale,
including Rule 144A securities.

WHEN ISSUED AND DELAYED DELIVERY SECURITIES. Each 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 maintains with the Custodian a segregated
account containing high grade liquid securities in an amount at least equal to
these commitments.

REPURCHASE AGREEMENTS. In a repurchase agreement, a Portfolio buys a security at
one price and simultaneously agrees to sell it back at a higher price. Delays or
losses could result if the other party to the agreement defaults or becomes
insolvent.

REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a Portfolio
temporarily transfers possession of a portfolio instrument to another party in
return for cash. This could increase the risk of fluctuation in the fund's yield
or in the market value of its assets. A reverse repurchase agreement is a form
of borrowing and will be counted towards each Portfolio's borrowing
restrictions. See "Risk Factors and Certain Securities and Investment Practices
- -- Leverage" and in the SAI.

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 registered investment companies that in
turn are authorized to invest in the securities of such countries. Investment in
other investment companies is limited in amount by the 1940 Act, 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.

SHORT-TERM INVESTMENTS. Each Portfolio intends to stay invested in the
securities described above to the extent practical in light of its objective and
long-term investment perspective. However, a Portfolio's assets may be invested
in high quality short-term investments with remaining maturities of 397 days or
less to meet anticipated redemptions and expenses for day-to-day operating
purposes and when, in Bankers Trust's opinion, it is advisable to adopt a
temporary defensive position because of unusual and adverse conditions affecting
the respective markets.

SECURITIES LENDING. Each Portfolio (other than the Intermediate Tax Free
Portfolio) is permitted to lend up to 30% of the total value of its securities.
These loans must be secured continuously by cash or equivalent collateral or by
a letter of credit at least equal to the market value of the securities loaned
plus accrued income. By lending its securities, the Portfolio can increase its
income by continuing to receive income on the loaned securities as well as by
the opportunity to receive interest on the collateral. Any gain or loss in the
market price of the borrowed securities which occurs during the term of the loan
inures to the Portfolio and its investors. In lending securities to brokers,
dealers and other financial organizations, a Portfolio is subject to risks,
which like those associated with other extensions of credit, include delays in
recovery and possible loss of rights in the collateral should the borrower fail
financially.

LEVERAGE. The Global High Yield Securities Portfolio and Latin American Equity
Portfolio may each borrow up to one-third of the value of its total assets, from
banks or through the use of reverse repurchase agreements, to increase its
holdings of portfolio securities. Under the 1940 Act, each Portfolio is required
to maintain continuous asset coverage of 300% with respect to such borrowings
and to sell (within three days) sufficient portfolio holdings to restore such
coverage if it should decline to less than 300% due to market fluctuations or
otherwise, even if such liquidations of a Portfolio's holdings may be
disadvantageous from an investment standpoint.

Leveraging by means of borrowing may exaggerate the effect of any increase or
decrease in the value of each Portfolio's securities and the corresponding
Fund's net asset value and money borrowed by a Portfolio will be subject to
interest and other costs (which may include commitment fees and/or the cost of
maintaining minimum average balances) which may or may not exceed the income
received from the securities purchased with borrowed funds.

LOAN PARTICIPATIONS AND ASSIGNMENTS. The Global High Yield Securities Portfolio
may invest in fixed and floating rate loans ("loans") arranged through private
negotiations between a borrower and one or more institutions ("lenders"). The
majority of the Portfolio's investments in loans in emerging markets is expected
to be in the form of participations in loans ("participations") and assignments
of portions of loans from third parties ("assignments"). The Portfolio may also
invest in loans, participations or assignments of loans to borrowers located in
the industrialized world. Participations typically will result in the
Portfolio's having a contractual relationship only with the lender, not the
borrower. The Portfolio will have the right to receive payments of principal,
interest and any fees to which it is entitled only from the lender selling the
participation and only upon receipt by the lender of the payments from the
borrower. In connection with purchasing participations, the Portfolio generally
will have no right to enforce compliance by the borrower with the terms of the
loan agreement relating to the loan ("loan agreement"), nor any rights of
set-off against the borrower, and the Portfolio may not directly benefit from
any collateral supporting the loan in which it has purchased the participation.
As a result, the Portfolio will assume the credit risk of both the borrower and
the lender that is selling the participation. In the event of the insolvency of
the lender selling the participation, the Portfolio may be treated as a general
creditor of the lender and may not benefit from any set-off between the lender
and the borrower. The Portfolio will acquire participations only if the lender
interpositioned between the Portfolio and the borrower is determined by Bankers
Trust to be creditworthy. When the Portfolio purchases assignments from lenders,
the Portfolio will acquire direct rights against the borrower on the loan;
however, since assignments are arranged through private negotiations between the
potential assignees and assignors, the rights and obligations acquired by the
Portfolio as the purchaser of an assignment may differ from, and be more limited
than, those held by the assigning lender.

The Portfolio may have difficulty disposing of assignments and participations.
The liquidity of such securities is limited and the Portfolio anticipates that
such securities could only be sold to a limited number of institutional
investors. The lack of a liquid secondary market could have an adverse impact on
the value of such securities and on the Portfolio's ability to dispose of
particular assignments or participations when necessary to meet the Portfolio's
liquidity needs or in response to a specific economic event, such as a
deterioration in the creditworthiness of the borrower. The lack of a liquid
secondary market for assignments and participations also may make it more
difficult in valuing the Portfolio and, therefore, calculating the net asset
value per share of the Fund. All assignments and participations shall be
considered to be illiquid securities by the Portfolio. The investment by the
Portfolio in illiquid securities, including assignments and participations, is
limited to a total of 15% of net assets.

PUTS. The Intermediate Tax Free Portfolio may purchase municipal bonds or notes
together with the right to resell them at an agreed price or yield within a
specified period prior to maturity. This right to resell is known as a put. The
aggregate price paid for securities with puts may be higher than the price which
otherwise would be paid. Consistent with the investment objectives of the
Portfolio and subject to the supervision of the Trustees of the Portfolio, the
purpose of this practice is to permit the Portfolio to be fully invested in
tax-exempt securities while maintaining the necessary liquidity to purchase
securities on a when-issued basis, to meet unusually large redemptions, to
purchase at a later date securities other than those subject to the put and to
facilitate Bankers Trust's ability to manage the Portfolio actively. The
principal risk of puts is that the put writer may default on its obligation to
repurchase. Bankers Trust will monitor each writer's ability to meet its
obligations under puts.

The amortized cost method is used by the Portfolio to value municipal securities
with maturities of less than 60 days; when these securities are subject to puts
separate from the underlying securities, no value is assigned to the puts. The
cost of any such put is carried as an unrealized loss from the time of purchase
until it is exercised or expires.

ZERO COUPON MUNICIPAL SECURITIES. The Portfolio may invest in zero coupon
municipal securities which are debt securities issued or sold at a discount from
their face value which do not entitle the holder to any periodic payment of
interest prior to maturity or a specified redemption date (or cash payment
date). The amount of the discount varies depending on the time remaining until
maturity or cash payment date, prevailing interest rates, liquidity of the
security and perceived credit quality of the issuer. Zero coupon securities also
may take the form of debt securities that have been stripped of their unmatured
interest coupons, the coupons themselves and receipts or certificates
representing interests in such stripped debt obligations and coupons. The market
prices of zero coupon securities generally are more volatile than the market
prices of interest-bearing securities and are likely to respond to a greater
degree to changes in interest rates than interest-bearing securities having
similar maturities and credit qualities.

DERIVATIVES
Each 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 are 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 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 will
use derivatives only in circumstances where they offer the most efficient means
of improving the risk/reward profile of a Portfolio. The use of derivatives for
non-hedging purposes may be considered speculative.

Foreign Currency Exchange Transactions. Each Portfolio (other than the Short/
Intermediate U.S. Government Securities Portfolio and the Intermediate Tax Free
Portfolio) may enter into foreign currency exchange transactions to convert to
and from different foreign currencies and to convert foreign currencies to and
from the U.S. dollar. A 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.

A forward foreign currency exchange contract is an obligation by a Portfolio to
purchase or to 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 their customers. A forward foreign currency
exchange contract generally has no deposit requirement and is traded at a net
price without commission. Neither spot transactions nor forward foreign currency
exchange contracts eliminate fluctuations in the prices of a Portfolio's
securities or in foreign exchange rates, or prevent loss if the prices of these
securities should decline.

A Portfolio may enter into foreign currency hedging transactions in an attempt
to protect against changes in foreign currency exchange rates between the trade
and settlement dates of specific securities transactions or changes in foreign
currency exchange rates that would adversely affect a portfolio position or an
anticipated investment position. 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.

Options on Foreign Currencies. Each Portfolio (other than the Short/
Intermediate U.S. Government Securities Portfolio and the Intermediate Tax Free
Portfolio) may write covered put and call options and purchase put and call
options on foreign currencies for the purpose of protecting against declines in
the U.S. dollar value of portfolio securities and against increases in the U.S.
dollar cost of securities to be acquired. A Portfolio may use options on
currency to cross-hedge, which involves writing or purchasing options on one
currency to hedge against changes in exchange rates for a different, but related
currency. As with other types of options, however, the writing of an option on
foreign currency will constitute only a partial hedge up to the amount of the
premium received, and the Portfolio could be required to purchase or sell
foreign currencies at disadvantageous exchange rates, thereby incurring losses.
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 a Portfolio's position, it may forfeit the entire amount of the
premium plus related transaction costs. In addition, a Portfolio may purchase
call options on a currency when the investment adviser anticipates that the
currency will appreciate in value.

There is no assurance that a liquid secondary market on an options exchange will
exist for any particular option, or at any particular time. If a 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 it closes out the
options or the options expire or are exercised. Similarly, if the Portfolio is
unable to close out options it has purchased, it would have to exercise the
options in order to realize any profit and will incur transaction costs. The
Portfolio pays brokerage commissions or spreads in connection with its options
transactions.

Options on Stocks. Each Portfolio (except the Global High Yield Securities
Portfolio, the Short/Intermediate U.S. Government Securities Portfolio and the
Intermediate Tax Free Portfolio) may write and purchase options on stocks. A
call option gives the purchaser of the option the right to buy, and obligates
the writer to sell, the underlying stock at the exercise price at any time
during the option period. Similarly, a put option gives the purchaser of the
option the right to sell, and obligates the writer to buy the underlying stock
at the exercise price at any time during the option period. A covered call
option with respect to which a Portfolio owns the underlying stock sold by the
Portfolio exposes the Portfolio during the term of the option to possible loss
of opportunity to realize appreciation in the market price of the underlying
stock or to possible continued holding of a stock which might otherwise have
been sold to protect against depreciation in the market price of the stock. A
covered put option sold by a Portfolio exposes the Portfolio during the term of
the option to a decline in price of the underlying stock.

Options on Securities Indices. Each Portfolio may purchase and write put and
call options on stock or bond indices listed on domestic and foreign stock
exchanges, in lieu of direct investment in the underlying securities or for
hedging purposes. A stock or bond index fluctuates with changes in the market
values of the securities included in the index.

Options on securities indices are generally similar to options on stocks except
that the delivery requirements are different. Instead of giving the right to
take or make delivery of securities at a specified price, an option on a stock
or bond index gives the holders 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 the exercise,
multiplied by (b) a fixed "index multiplier."

Successful use by a Portfolio of options on security indices will be subject to
Bankers Trust's ability to predict correctly movement in the direction of the
security market generally or of a particular industry. This requires different
skills and techniques than predicting changes in the price of individual
securities.

Futures Contracts on Securities Indices. Each Portfolio may enter into contracts
providing for the making and acceptance of a cash settlement based upon changes
in the value of an index of domestic or foreign securities ("Futures
Contracts"). 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 changes 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. A Futures
Contract may also be entered into to close out or offset an existing futures
position.

When used for hedging purposes, each transaction in Futures Contracts involves
the establishment of a position which will move in a direction opposite to that
of the investment being hedged. If these hedging transactions are successful,
the futures position 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 is being hedged. Should general market prices move
in an unexpected manner, the full anticipated benefits of Futures Contracts may
not be achieved or a loss may be realized.

The risks of Futures Contracts also include a potential lack of liquidity in the
secondary market and incorrect assessments of market.

Brokerage costs will be incurred and "margin" will be required to be posted and
maintained as a good faith deposit against performance of obligations under
Futures Contracts written for a Portfolio. A Portfolio may not purchase or sell
a Futures Contract if immediately thereafter its margin deposits on its
outstanding Futures Contracts, other than Futures Contracts used for hedging
purposes, would exceed 5% of the market value of the Portfolio's total assets.

Options on Futures Contracts. Each Portfolio may invest in options on futures
contracts for similar purposes.

There can be no assurance that the use of these portfolio strategies will be
successful.

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, entering into an
off-setting transaction, or by establishing a segregated account with the
Portfolio's custodian containing high grade liquid debt securities in an amount
at all times equal to or exceeding the Portfolio's commitment with respect to
these instruments or contracts.

PORTFOLIO TURNOVER
The portfolio turnover rate for each Portfolio for the periods indicated were as
follows: Global High Yield Securities Portfolio -- 169% and 347% for the fiscal
year ended September 30, 1995 and for the period from December 14, 1993
(commencement of operations) to September 30, 1994, respectively; Capital
Appreciation Portfolio -- 125%, 157% and 137% for the period from January 1,
1995 to September 30, 1995, the fiscal year ended December 31, 1994 and the
period from March 9, 1993 (commencement of operations) to December 31, 1993,
respectively; Small Cap Portfolio -- 161% and 154% for the fiscal year ended
September 30, 1995 and for the period from October 21, 1993 (commencement of
operations) to September 30, 1994, respectively; International Equity Portfolio
- -- 21%, 15%, 17% and 7% for the period from January 1, 1995 to September 30,
1995, the fiscal years ended December 31, 1994, 1993 and the period from August
4, 1992 (commencement of operations) to December 31, 1992, respectively; Pacific
Basin Equity Portfolio -- 104% and 40% for the fiscal year ended September 30,
1995 and for the period from November 1, 1993 (commencement of operations) to
September 30, 1994, respectively; Latin American Equity Portfolio -- 161% and
124% for the fiscal year ended September 30, 1995 and for the period from
October 25, 1993 (commencement of operations) to September 30, 1994,
respectively; Short/Intermediate Term U.S. Government Securities Portfolio --
246%, 202%, 267% and 75% for the fiscal years ended December 31, 1995, 1994 and
1993 and for the period from August 24, 1992 (commencement of operations) to
December 31, 1992, respectively; and Intermediate Tax Free Portfolio -- 95%,
118%, 40% and 132% for the fiscal years ended December 31, 1995, 1994, 1993 and
for the period from July 20, 1992 (commencement of operations) to December 31,
1992, respectively. These rates will vary from year to year. High turnover rates
increase transaction costs and may increase investable capital gains. Bankers
Trust considers these effects when evaluating the anticipated benefits of
short-term investing.

PERFORMANCE
Each Portfolio's recent strategies and holdings, and the corresponding Fund's
performance, is detailed twice a year in the Funds' financial reports, which are
sent to all Fund shareholders.

For current Fund performance or a free copy of the Funds' financial report,
please contact a Service Agent.

Mutual fund performance is commonly measured as total return and/or yield. Each
Fund's performance is affected by the expenses of that Fund. The exclusion of
any applicable sales charge from a performance calculation produces a higher
return.

EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a Fund over a given
period, assuming reinvestment of any dividends and capital gains. A cumulative
total return reflects actual performance over a stated period of time. An
average annual total return is a hypothetical rate of return that, if achieved
annually, would have produced the same cumulative total return if performance
had been constant over the entire period. Average annual total return
calculations smooth out variations in performance; they are not the same as
actual year-by-year results. Average annual total returns covering periods of
less than one year assume that performance will remain constant for the rest of
the year.

YIELD refers to the income generated by an investment in a Fund over a given
period of time, expressed as an annual percentage rate. Yields are calculated
according to a standard that is required for all stock and bond funds. Because
this differs from other accounting methods, the quoted yield may not equal the
income actually paid to shareholders. This difference may be significant for a
Fund investing in a Portfolio whose investments are denominated in foreign
currencies.

Performance information may include comparisons of a Fund's investment results
to various unmanaged indices or results of other mutual funds or investment or
savings vehicles. From time to time, Fund rankings may be quoted from various
sources, such as Lipper Analytical Services, Inc., Value Line and Morningstar,
Inc.

Unlike some bank deposits or other investments which pay a fixed yield for a
stated period of time, the total return of a Fund will vary depending upon
interest rates, the current market value of the securities held by the
corresponding Portfolio and changes in the expenses of the Fund or Portfolio. In
addition, during certain periods for which total return may be provided, Bankers
Trust or SBDS may have voluntarily agreed to waive portions of their fees, or
reimburse certain operating expenses of a Fund or Portfolio, on a month-to-month
basis. Such waivers will have the effect of increasing the Fund's net income
(and therefore its yield and total return) during the period such waivers are in
effect.

TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN INDICATION OF
FUTURE PERFORMANCE.

MANAGEMENT OF THE TRUSTS AND THE PORTFOLIOS

BOARD OF TRUSTEES
Each Trust and each Portfolio is governed by a Board of Trustees which is
responsible for protecting the interests of investors. A majority of the
Trustees who are not "interested persons" (as defined in the 1940 Act) of the
Trust or the Portfolio, as the case may be, have adopted written procedures
reasonably appropriate to deal with potential conflicts of interest arising from
the fact that some of the same individuals are Trustees of a Trust and the
Portfolios, up to and including creating separate boards of trustees. See
"Management of the Trusts and the Portfolios" in the SAI for more information
with respect to the Trustees and officers of each Trust and each Portfolio.

INVESTMENT ADVISER
Neither Trust has retained the services of an investment adviser since each
Trust seeks to achieve the investment objective of each of its Funds by
investing all the Assets of the Fund in the corresponding Portfolio. Each
Portfolio has retained the services of Bankers Trust as investment adviser (the
"Adviser").

BANKERS TRUST COMPANY AND ITS AFFILIATES
Bankers Trust Company, a New York banking corporation with principal offices at
280 Park Avenue, New York, New York 10017, is a wholly owned subsidiary of
Bankers Trust New York Corporation. Bankers Trust conducts a variety of general
banking and trust activities and is a major wholesale supplier of financial
services to the international and domestic institutional market.

As of September 30, 1995, Bankers Trust New York Corporation was the ninth
largest bank holding company in the United States with total assets of
approximately $104 billion. Bankers Trust is a worldwide merchant bank dedicated
to servicing the needs of corporations, governments, financial institutions and
private clients through a global network of over 120 offices in more than 40
countries. Investment management is a core business of Bankers Trust, built on a
tradition of excellence from its roots as a trust bank founded in 1903. The
scope of Bankers Trust's investment management capability is unique due to its
leadership positions in both active and passive quantitative management and its
presence in major equity and fixed income markets around the world. Bankers
Trust is one of the nation's largest and most experienced investment managers
with approximately $200 billion in assets under management globally.

Bankers Trust has more than 50 years of experience managing retirement assets
for the nation's largest corporations and institutions. In the past, these
clients have been serviced through separate account and commingled fund
structures. Now, the BT Family of Funds brings Bankers Trust's extensive
investment management expertise - once available to only the largest
institutions in the U.S. - to individual investors. Bankers Trust's officers
have had extensive experience in managing investment portfolios having
objectives similar to those of each Portfolio.

Bankers Trust, subject to the supervision and direction of the Board of Trustees
of each Portfolio, manages each Portfolio in accordance with the Portfolio's
investment objective and stated investment policies, makes investment decisions
for the Portfolio, places orders to purchase and sell securities and other
financial instruments on behalf of the Portfolio and employs professional
investment managers and securities analysts who provide research services to the
Portfolio. Bankers Trust may utilize the expertise of any of its world wide
subsidiaries and affiliates to assist it in its role as investment adviser. All
orders for investment transactions on behalf of a Portfolio are placed by
Bankers Trust with broker-dealers and other financial intermediaries that it
selects, including those affiliated with Bankers Trust. A Bankers Trust
affiliate will be used in connection with a purchase or sale of an investment
for the Portfolio only if Bankers Trust believes that the affiliate's charge for
the transaction does not exceed usual and customary levels. The Portfolio will
not invest in obligations for which Bankers Trust or any of its affiliates is
the ultimate obligor or accepting bank. The Portfolio may, however, invest in
the obligations of correspondents and customers of Bankers Trust.

The Investment Advisory Agreement provides for each Portfolio to pay Bankers
Trust a fee, accrued daily and paid monthly, equal on an annual basis to the
following percentages of the average daily net assets of the Portfolio for its
then-current fiscal year: Global High Yield Securities Portfolio, 0.80%; Capital
Appreciation Portfolio, 0.65%; Small Cap Portfolio, 0.65%; International Equity
Portfolio, 0.65%; Pacific Basin Equity Portfolio, 0.75%; Latin American Equity
Portfolio, 1.00%; Short/Intermediate U.S. Government Securities Portfolio,
0.25%; and Intermediate Tax Free Portfolio, 0.40%. With respect to Global High
Yield Securities Portfolio, Pacific Basin Equity Portfolio, and Latin American
Equity Portfolio, the investment advisory fee is higher than that of most funds,
but not necessarily higher than that of a typical international fund, due to the
greater complexity, expense and commitment of resources involved in
international investing.

Bankers Trust has been advised by its counsel that, in counsel's opinion,
Bankers Trust currently may perform the services for the Trust and the
Portfolios described in this Prospectus and the SAI without violation of the
Glass-Steagall Act or other applicable banking laws or regulations. 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.

SUB-INVESTMENT ADVISER -- PACIFIC BASIN EQUITY PORTFOLIO
Bankers Trust has entered into a sub-investment advisory agreement (the
"Sub-Advisory Agreement") with BT Fund Managers International Limited ("BT Fund
Managers International"), a wholly owned registered investment advisory
subsidiary of Bankers Trust Australia Limited ("BTAL"). BTAL is a wholly owned
subsidiary of Bankers Trust New York Corporation. Under the Sub-Advisory
Agreement, Bankers Trust may receive investment advice and research services
with respect to companies based in the Pacific Basin and may grant BT Fund
Managers International investment management authority as well as the authority
to buy and sell securities if Bankers Trust believes it would be beneficial to
the Pacific Basin Equity Portfolio. Under the Sub-Advisory Agreement, BT Fund
Managers International receives a fee from Bankers Trust for providing
investment advice and research services, accrued daily and paid monthly, at the
annual rate of 0.60% of the average daily assets of the Portfolio.

PORTFOLIO MANAGERS
David A. Reiss, Vice President of Bankers Trust and Stephen C. Freidheim,
Managing Director of Bankers Trust are responsible for the day-to-day
management of the Global High Yield Securities Portfolio. Mr. Reiss has been
employed by Bankers Trust since March, 1994 and has managed the Portfolio's
assets since March, 1994. From September, 1989 to March, 1994, Mr. Reiss was a
Portfolio Manager at Kidder Peabody Asset Management. Prior to September,
1989, he was an associate in Mortgage Research at Goldman, Sachs & Co. Mr.
Freidheim has been employed by Bankers Trust since August, 1993 and has
managed the Portfolio's assets since December, 1993. From July, 1990 to July,
1993 he was a Senior Vice President and Director of Research and Trading at
Nomura Securities International. Mr. Freidheim was also on the Board of
Directors of Nomura Corporate Research and Asset Management. Prior to July,
1990, he was Director of Research at Kidder, Peabody High Yield Asset
Management.

Mary Lisanti, Managing Director of Bankers Trust, is responsible for the
day-to-day management of the Capital Appreciation Portfolio and Small Cap
Portfolio. Ms. Lisanti has been employed by Bankers Trust since February, 1993
and has managed each Portfolio's assets since each Portfolio commenced
operations. Prior to 1993, she was a Vice President and Portfolio Manager with
Lieber & Company/The Evergreen Funds (since 1990).

Michael Levy has been the primary portfolio manager for the International Equity
Portfolio since August 1995. He also heads the international active equity team,
which is responsible for the day to day management of the Portfolio. Mr. Levy
has been the head of this team since joining Bankers Trust in March, 1993, and
is a Managing Director and International Equity Strategist of Bankers Trust. The
international active equity team has provided input into the management of the
Portfolio since the Portfolio's commencement of operations. Prior to joining
Bankers Trust, Mr. Levy was an investment banker and an equity analyst with
Oppenheimer & Company. He has twenty-four years of business experience, of which
fourteen years have been in the investment industry.

Robert Reiner has been the co-manager of the International Equity Portfolio
since joining Bankers Trust in 1994. Mr. Reiner is responsible for managing
global portfolios and developing analytical and investment tools for the group's
global equity team. As a member of the international active equity team, he
focuses on Japanese and European markets. Prior to joining Bankers Trust, he was
an equity analyst and also provided macroeconomic coverage for Scudder, Stevens
and Clark. He previously served as Senior Analyst at Sanford C. Bernstein & Co.
and was instrumental in the development of Bernstein's International Value Fund.
For more than nine years, Mr. Reiner was employed by S&P in its ratings group.
His tenure included managing the day to day operations of S&P's Tokyo office for
three years.

Louis M. Hudson, Vice President, is responsible for the day to day management
of the Short/Intermediate Term U.S. Government Securities Portfolio. Mr.
Hudson has been employed by Bankers Trust since 1961 and has managed the
Portfolio's assets since February, 1994.

Paul Durham, Vice President of BTAL, is responsible for the day-to-day
management of the Pacific Basin Equity Portfolio. Mr. Durham has been employed
by Bankers Trust since January, 1988 and has managed the Portfolio's assets
since November, 1993.

Maria-Elena Carrion (CFA), Vice President of Bankers Trust, is primarily
responsible for the day-to-day management of the Latin American Equity
Portfolio. Ms. Carrion has been employed by Bankers Trust since April, 1993 and
has managed the Portfolio's assets since the Portfolio commenced operations.
Prior to April, 1993, Ms. Carrion was employed by Latin American Securities
(London) (from June, 1991 to April, 1993). Prior to June, 1991, Ms. Carrion was
employed by US Trust Company (from September, 1986 to June, 1991).

Gary Pollack is responsible for the day-to-day management of the Intermediate
Tax Free Portfolio. Mr. Pollack has been employed by Bankers Trust since prior
to 1989 and has managed the Portfolio's assets since the Portfolio's
commencement of operations.

Bankers Trust investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for personal
investing and restricts certain transactions.

ADMINISTRATOR
Under its Administration and Services Agreement with each Trust, Bankers Trust
calculates the net asset value of each Fund and generally assists the Board of
Trustees of the Trust in all aspects of the administration and operation of the
Funds. The Administration and Services Agreement provides for the Trust to pay
Bankers Trust a fee, accrued daily and paid monthly equal on an annual basis to
the following percentages of the average daily net assets of the Fund for its
then-current fiscal year: Global High Yield Securities Fund, 0.95%; Capital
Appreciation Fund, 0.65%; Small Cap Fund, 0.65%; International Equity Fund,
0.85%; Pacific Basin Equity Fund, 0.75%; Latin American Equity Fund, 0.95%;
Limited Term U.S. Government Securities Fund, 0.30%; and Intermeidate Tax Free
Portfolio, 0.40%.

Under an Administration and Services Agreement with each Portfolio, Bankers
Trust calculates the value of the assets of the Portfolio and generally assists
the respective Board of Trustees in all aspects of the administration and
operation of the Portfolios. The Administration and Services Agreement provides
for each Portfolio to pay Bankers Trust a fee, accrued daily and paid monthly,
equal on an annual basis to the following percentages of the Portfolio's average
daily net assets for its then-current fiscal year: Global High Yield Securities
Portfolio, 0.20%; Capital Appreciation Portfolio, 0.10%; Small Cap Portfolio,
0.10%; International Equity Portfolio, 0.15%; Pacific Basin Equity Portfolio,
0.25%; Latin American Equity Portfolio, 0.20%; Short/ Intermediate U.S.
Government Securities Portfolio, 0.05%; and Intermediate Tax Free Portfolio,
0.05%. Under each Administration and Services Agreement, Bankers Trust may
delegate one or more of its responsibilities to others, including SBDS, at
Bankers Trust's expense.

DISTRIBUTOR
Under its Distribution Agreement with each Trust, SBDS, as Distributor, serves
as the Trust's principal underwriter on a best efforts basis. In addition, SBDS
provides the Trust with office facilities. SBDS is a wholly owned subsidiary of
Signature Financial Group, Inc. ("SFG"). SFG and its affiliates currently
provide administration and distribution services for other registered investment
companies. The principal business address of SFG and SBDS is 6 St. James Avenue,
Boston, Massachusetts 02116.

DISTRIBUTION AND SERVICE PLAN
Pursuant to the terms of each Trust's Plan of Distribution pursuant to Rule
12b-1 under the 1940 Act (the "Plan"), Signature may seek reimbursement in an
amount not exceeding 0.20% of each Fund's average daily net assets annually for
expenses incurred in connection with any activities primarily intended to result
in the sale of the Fund's shares, including, but not limited to: compensation to
and expenses (including overhead and telephone expenses) of account executives
or other employees of Signature who, as their primary activity, engage in or
support the distribution of shares; printing of prospectuses, statements of
additional information and reports for other than existing Fund shareholders in
amounts in excess of that typically used in connection with the distribution of
shares of the Fund; costs of placing advertising in various media; services of
parties other than Signature or its affiliates in formulating sales literature;
and typesetting, printing and distribution of sales literature. All costs and
expenses in connection with implementing and operating the Plan will be paid by
the Fund, subject to the 0.20% of net assets limitation. All costs and expenses
associated with preparing the Prospectus and SAI and in connection with printing
them for and distributing them to existing shareholders and regulatory
authorities, which costs and expenses would not be considered distribution
expenses for purposes of the Plan, will also be paid by the Funds. To the extent
expenses of SBDS under the Plan in any fiscal year of the Trust exceed amounts
payable under the Plan during that year, those expenses may be reimbursed in a
succeeding fiscal year; however, no carrying charge or interest will be added to
the amount of the expense. Expenses incurred in connection with distribution
activities will be identified to each Fund or the other series of the Trust
involved, although it is anticipated that some activities may be conducted on a
Trust-wide basis, with the result that those activities will not be identifiable
to any particular series. In the latter case, expenses will be allocated among
the series of the Trust on the basis of their relative net assets.

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 each
Trust and receives no additional compensation from the Funds 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. Each Service Agent has agreed to transmit to
shareholders, who are its customers, appropriate disclosures of any fees that it
may charge them directly.

CUSTODIAN AND TRANSFER AGENT
Bankers Trust acts as custodian of the assets of the Trusts and each Portfolio
and serves as the transfer agent (the "Transfer Agent") for the Trust and each
Portfolio under the Administration and Services Agreement with the Trust and
each Portfolio.

NET ASSET VALUE
The net asset value per share of each Fund is calculated on each day on which
the New York Stock Exchange Inc. (the "NYSE") is open (each such day being a
"Valuation Day"). The NYSE is currently open on each day, Monday through Friday,
except: (a) January 1st, Presidents' Day (the third Monday in February), Good
Friday, Memorial Day (the last Monday in May), July 4th, Labor Day (the first
Monday in September), Thanksgiving Day (the last Thursday in November) and
December 25th; and (b) the preceding Friday or the subsequent Monday when one of
the calendar-determined holidays falls on a Saturday or Sunday, respectively.

The net asset value per share of each Fund is calculated once on each Valuation
Day as of the close of regular trading on the NYSE (the "Valuation Time"), which
is currently 4:00 p.m., New York time or in the event that the NYSE closes
early, at the time of such early closing. The net asset value per share of the
Fund is computed by dividing the value of the Fund's Assets (i.e., the value of
its investment in the Portfolio and other assets), less all liabilities, by the
total number of its shares outstanding. The 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.

PURCHASE AND REDEMPTION OF SHARES

PURCHASE OF SHARES
Each Trust accepts purchase orders for shares of each Fund at the net asset
value per share of the Fund next determined on each Valuation Day. See "Net
Asset Value" above. There is no sales charge on the purchase of shares, but
costs of distributing shares of each Fund may be reimbursed from its assets, as
described herein. Service Agents may impose initial and subsequent investment
minimums that differ from the amounts presented in the "Minimum Investments"
table below. Shares of each Fund may be purchased in only those states where
they may be lawfully sold.

Purchase orders for shares of each Fund that are received by a Service Agent and
transmitted to Bankers Trust, as the Trust's transfer agent (the "Transfer
Agent"), prior to the Valuation Time (currently 4:00 p.m., New York time or
earlier should the NYSE close earlier) on any Valuation Day will be effective at
that day's Valuation Time. Each Trust and Signature reserve the right to reject
any purchase order.

Shares must be purchased in accordance with procedures established by the
Transfer Agent and Service Agents, including Bankers Trust, in connection with
customers' accounts. It is the responsibility of each Service Agent to transmit
to the Transfer Agent purchase and redemption orders and to transmit to Bankers
Trust as each Trust's custodian (the "Custodian") purchase payments on behalf of
its customers in a timely manner, and a shareholder must settle with the Service
Agent his or her entitlement to an effective purchase or redemption order as of
a particular time. Because Bankers Trust is the Custodian and Transfer Agent of
each Trust, funds may be transferred directly from or to a customer's account
with Bankers Trust to or from the Fund without incurring the additional costs or
delays associated with the wiring of Federal funds.

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

Automatic Investment Plan. Each Fund may offer shareholders an automatic
investment plan under which shareholders may authorize some Service Agents to
place a purchase order each month or quarter for Fund shares. For further
information regarding the automatic investment plan, shareholders should contact
their Service Agent.

MINIMUM INVESTMENTS

TO OPEN AN ACCOUNT $2,500
For retirement accounts $ 500
Through automatic investment plans $1,000

TO ADD TO AN ACCOUNT $ 250
For retirement accounts $ 100
Through automatic investment plans $ 100

MINIMUM BALANCE $1,000
For retirement accounts None

REDEMPTION OF SHARES
Shareholders may redeem shares at the net asset value per share next determined
on each Valuation Day. Redemption requests should be transmitted by customers in
accordance with procedures established by the Transfer Agent and the
shareholder's Service Agent. Redemption requests for shares of each Fund
received by the Service Agent and transmitted to the Transfer Agent prior to the
Valuation Time (currently 4:00 p.m., New York time or earlier should the NYSE
close earlier) 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 with the Service Agent on 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 also
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 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 each Trust. A Service Agent
may on at least 30 days' notice involuntarily redeem a shareholder's account
with the Fund having a minimum market value, but not if an account is below the
minimum due to a change in market value. See "Minimum Investments" above for
minimum balance amounts.

Automatic Cash Withdrawal Plan. Service Agents may offer shareholders an
automatic cash withdrawal plan, under which shareholders who own shares of a
Fund may elect to receive periodic cash payments. Retirement plan accounts are
eligible for automatic cash withdrawal plans only where the shareholder is
eligible to receive qualified distributions. For further information regarding
the automatic cash withdrawal plan, shareholders should contact their Service
Agent.

EXCHANGE PRIVILEGE
Shareholders may exchange their shares for shares of certain other funds in the
BT Family of Funds registered in their state. Each Trust reserves the right to
terminate or modify the exchange privilege in the future with respect to any
Fund. To make an exchange, follow the procedures indicated in "Purchase of
Shares" and "Redemption of Shares" in that fund's prospectus. Before making an
exchange, please note the following:

* Call your Service Agent for information and a prospectus. Read the
prospectus for relevant information.

* Complete and sign an application, taking care to register your new account in
the same name, address and taxpayer identification number as your existing
account(s).

* Each exchange represents the sale of shares of one fund and the purchase of
shares of another, which may produce a gain or loss for tax purposes. Your
Service Agent will send a written confirmation of each exchange transaction.

TAX-SAVING RETIREMENT PLANS
Retirement plans offer significant tax savings and are available to individuals,
partnerships, small businesses, corporations, nonprofit organizations and other
institutions. Contact your Service Agent or Bankers Trust for further
information. Bankers Trust can set up your new account in a Fund under a number
of several tax-sheltered plans. These plans contain special tax advantages and
let you invest for retirement while sheltering your investment income from
current taxes. Minimums may differ from those listed elsewhere in the
Prospectus.

* Individual Retirement Accounts (IRAs): personal savings plans that offer tax
advantages for individuals to set aside money for retirement and allow new
contributions of $2,000 per tax year.

* Rollover IRAs: tax-deferred retirement accounts that retain the special tax
advantages of lump sum distributions from qualified retirement plans and
transferred IRA accounts.

* Simplified Employee Pension Plans (SEP): a relatively easy and inexpensive
alternative to retirement planning for sole proprietors, partnerships and
corporations. Under a SEP, employers make tax-deductible contributions to
their own and to eligible employees' IRA accounts. Employee contributions are
available through a "Salary Deferral" SEP for businesses with fewer than 25
eligible employees.

* Keogh Plans: defined contribution plans available to individuals with self-
employed income and nonincorporated businesses such as sole proprietors,
professionals and partnerships. Contributions are tax-deductible to the
employer and earnings are tax-sheltered until distribution.

* Corporate Profit-Sharing and Money-Purchase Plans: defined contribution
plans available to corporations to benefit their employees by making
contributions on their behalf and in some cases permitting their employees
to make contributions.

* 401(k) Programs: defined contribution plans available to corporations allowing
tax-deductible employer contributions and permitting employees to contribute a
percentage of their wages on a tax-deferred basis.

* 403(b) Custodian Accounts: defined contribution plans open to employees of
most nonprofit organizations and educational institutions.

* Deferred Benefit Plans: plan sponsors may invest all or part of their
pension assets in the Fund.

SHAREHOLDER AND ACCOUNT POLICIES

DIVIDENDS, CAPITAL GAINS, AND TAXES
Each Fund distributes substantially all of its net income and capital gains to
shareholders each year. Each Fund distributes capital gains annually. Normally,
income dividends for the Global High Yield Securities Fund and the Capital
Appreciation Fund are distributed quarterly; income dividends for the Small Cap
Fund, International Equity Fund, Pacific Basin Equity Fund and the Latin
American Equity Fund are distributed annually. Income dividends for the Limited
Term U.S. Government Securities Fund and the Intermediate Tax Free Fund are
declared daily and paid monthly.

Unless a shareholder instructs a Trust to pay such dividends and distributions
in cash, they will be automatically reinvested in additional shares of the Fund.

FOR RETIREMENT ACCOUNTS, all distributions are automatically reinvested. When
you are over 59 1/2 years old, you can receive distributions in cash. If
distributions from a retirement account for any taxable year following the year
in which the participant reaches age 70 1/2 are less than the "minimum required
distribution" for that taxable year, an excise tax equal to 50% of the
deficiency may be imposed by the Internal Revenue Service (the "IRS"). The
administrator, trustee or custodian of such a retirement account will be
responsible for reporting distributions from such accounts to the IRS.

When each of the Funds deducts a distribution from its NAV, the reinvestment
price is the applicable Fund's NAV at the close of business that day.
Distribution checks will be mailed within seven days, or longer for a December
ex-dividend date.

TAXES
As with any investment, you should consider how an investment in the Funds could
affect you. Below are some of the Funds' tax implications. If your account is
not a tax-deferred retirement account beware of these tax implications.

TAXES ON DISTRIBUTIONS. Distributions from the Funds are subject to federal
income tax and may also be subject to state or local taxes. Annual statements as
to the federal tax status of distributions, and distributions that are
attributable to state and local income and personal taxes, if applicable, will
be mailed to shareholders shortly after the end of the year. If living outside
the United States, your distributions from the Funds could also be taxed by the
country in which you reside.

For federal tax purposes, income and short-term capital gain distributions from
each of the Funds are taxed as dividends; long-term capital gain distributions
are taxed as long-term capital gains.

Mutual fund dividends from U.S. government securities are generally free from
state and local income taxes. However, particular states may limit this benefit,
and some types of securities, such as repurchase agreements and some
agency-backed securities, may not qualify for the benefit. In addition, some
states may impose intangible property taxes. You should consult your own tax
adviser for details and up-to-date information on the tax laws in your state.

Distributions are taxable when they are paid, whether you take them in cash or
reinvest them. However, distributions declared in December and paid in January
are taxable as if they were paid on December 31.

Every January, the Transfer Agent will send the IRS a statement showing the
taxable distributions paid to you in the previous year.

TAXES ON TRANSACTIONS. Your redemptions, including exchanges, are subject to
capital gains tax. A capital gain or loss is the difference between the cost of
your Shares and the price you receive when you sell them.

Whenever you sell Shares of a Fund, the Transfer Agent will send you or your
Investment Professional a confirmation statement showing how many Shares you
sold and at what price. You also receive a consolidated transaction statement at
least quarterly. However, it is up to you or your tax preparer to determine
whether this sale resulted in a capital gain and, if so, the amount of tax to be
paid. BE SURE TO KEEP YOUR REGULAR ACCOUNT STATEMENTS; the information they
contain will be essential in calculating the amount of your capital gains.

"BUYING A DIVIDEND." If you buy Shares just before a Fund deducts a capital gain
distribution or dividend distribution, as applicable, from its NAV, you will pay
the full price for the Shares and then receive a portion of the price back in
the form of a taxable distribution.

CURRENCY CONSIDERATIONS. If a Fund's dividends exceed its taxable income in any
year, which is sometimes the result of currency-related losses, all or a portion
of the Fund's dividends may be treated as a return of capital to shareholders
for tax purposes. To minimize the risk of a return of capital, each of the Funds
may adjust its dividends to take currency fluctuations into account, which may
cause the dividends to vary. Any return of capital will reduce the cost basis of
your Shares, which will result in a higher reported capital gain or a lower
reported capital loss when you sell your Shares. The statement you receive in
January will specify whether any distributions included a return of capital.

Undistributed net gains from currency transactions, if any, will generally be
distributed as a separate dividend in December.

There are tax requirements that all Funds must follow in order to avoid federal
taxation. In its effort to adhere to these requirements, a Fund may have to
limit its investment activity in some types of instruments.

ADDITIONAL INFORMATION ABOUT THE TRUSTS AND PORTFOLIOS Each Fund is a mutual
fund: an investment that pools shareholders' money and invests it toward a
specified goal. Each Fund (with the exception of the Limited Term U.S.
Government Securities Fund) is a separate series of BT Investment Funds, a
Massachusetts business trust. The Limited Term U.S. Government Securities Fund
is a separate series of BT Pyramid Mutual Funds. Each of the Global High Yield
Securities Portfolio, Small Cap Portfolio, Pacific Basin Equity Portfolio and
Latin American Equity Portfolio is a separate subtrust of BT Investment
Portfolios, a New York master trust fund. Each of the Capital Appreciation
Portfolio, International Equity Portfolio, Short/Intermediate U.S. Government
Portfolio and Intermediate Tax Free Portfolio is a New York trust.

Each of the Trust and BT Investment Portfolios reserves the right to add
additional series in the future. The Trust also reserves the right to issue more
than one class of shares of each Fund.

Each Trust or a Portfolio may hold special meetings and mail proxy materials.
These meetings may be called to elect or remove trustees, change fundamental
policies, approve Portfolio's investment advisory agreement, or for other
purposes. Shareholders not attending these meetings are encouraged to vote by
proxy. Each Trust's Transfer Agent will mail proxy materials in advance,
including a voting card and information about the proposals to be voted on.

When matters are submitted for shareholder vote, shareholders of each Fund will
have one vote for each full share held and proportionate, fractional votes for
fractional shares held. A separate vote of one of the Funds is required on any
matter affecting only that Fund on which shareholders are entitled to vote.
Shareholders of a Fund are not entitled to vote on Trust matters that do not
affect that Fund and do not require a separate vote of the Fund. All series of a
Trust will vote together on certain matters, such as electing trustees or
approving independent public auditors. There normally will be no meetings of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of Trustees holding office have been elected by
shareholders, at which time the Trustees then in office will call a
shareholders' meeting for the election of Trustees. Any Trustee may be removed
from office upon the vote of shareholders holding at least two-thirds of the
Trust's outstanding shares at a meeting called for that purpose. The Trustees
are required to call such a meeting upon the written request of shareholders
holding at least 10% of the Trust's outstanding shares. The Trust will also
assist shareholders in communicating with one another as provided for in the
1940 Act.

Each series of the BT Investment Portfolios will vote separately on any matter
involving the corresponding Portfolio. 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. The series of BT
Investment Portfolios will vote together or separately on matters in the same
manner, and in the same circumstances, as do the series of the Trust. As with
the Trust, the investors in one or more series of BT Investment Portfolios could
control the outcome of these votes.

Each Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a business trust may,
under certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.

Each Portfolio was organized as a trust under the laws of the State of New York.
Each Portfolio's Declaration of Trust provides that each Fund and other entities
investing in a Portfolio (e.g., other investment companies, insurance company
separate accounts and common and commingled trust funds) will each be liable for
all obligations of that Portfolio. However, the risk of a Fund incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance existed and a Portfolio itself was unable to meet its
obligations. Accordingly, the Trustees of the Trust believe that neither the
Funds nor their shareholders will be adversely affected by reason of the Funds'
investing in the Portfolios. No series of BT Investment Portfolios has any
preference over any other series.
<PAGE>
APPENDIX

DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS:
Aaa - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa - Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group they comprise what are generally known as high-grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.

A - Bonds rated A possess many favorable investment attributes and are to be
considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

Baa - Bonds rated Baa are considered as medium-grade obligations, i.e. they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such, bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

Ba - Bonds rated Ba are judged to have speculative elements. Their future cannot
be considered as well assured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded during both (good
and bad times over the future). Uncertainty of position characterizes bonds in
this class.

B - Bonds rated B generally lack characteristics of a desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.

Caa - Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.

Ca - Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked short-comings.

C - Bonds rated C are the lowest-rated class of bonds and issued so rated can be
regarded as having extremely poor prospects of ever attaining any real
investment standing.

Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond system. The modifier 1
indicates that the security ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.

DESCRIPTION OF S&Ps CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's to a
debt obligation. Capacity to pay interest and repay principal is extremely
strong.

AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.

A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.

BBB - Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to weakened capacity to pay interest and repay principal for debt
in this category than in higher-rated categories.

BB - Debt rate BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.

B - Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB-rating.

CCC - Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal.

CC - Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.

C - The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed but debt service
payments are continued.

CI - The rating CI is reserved for income bonds on which no interest is being
paid.

D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating will also be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.

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

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

Description of Fitch Investors Service's commercial paper ratings: F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are regarded as
having the strongest degree of assurance for timely payment.

F-1 Very Strong Credit Quality. Issues assigned this rating reflect an assurance
of timely payment only slightly less in degree than the strongest issue.

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

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

Description of IBCA's Long-Term Ratings:
AAA - Obligations for which there is the lowest expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial. Adverse
changes in business, economic or financial conditions are unlikely to increase
investment risk significantly.

AA - Obligations for which there is a very low expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial. Adverse
changes in business economic or financial conditions may increase investment
risk albeit not very significantly.

A - Obligations for which there is a low expectation of investment risk.
Capacity for timely repayment of principal and interest is strong, although
adverse changes in business, economic or financial conditions may lead to
increased investment risk.

BBB - Capacity for timely repayment of principal and interest is adequate,
although adverse changes in business, economic or financial conditions are more
likely to lead to increased investment risk than for obligations in higher
categories.

BB - Obligations for which there is a possibility of investment risk developing.
Capacity for timely repayment of principal and interest exists, but is
susceptible over time to adverse changes in business, economic or financial
conditions.

B - Obligations for which investment risk exists. Timely repayment of principal
and interest is not sufficiently protected against adverse changes in business,
economic or financial conditions.

CCC - Obligations for which there is a current perceived possibility of default.
Timely repayment of principal and interest is dependent on favourable business,
economic or financial conditions.

CC - Obligations which are highly speculative or which have a high risk of
default.

C - Obligations which are currently in default.

Notes: "+" or "-" may be appended to a rating to denote relative status
within major rating categories.

Ratings of BB and below are assigned where it is considered that speculative
characteristics are present.

Description of IBCA's Short-Term Ratings:
A1+ - Obligations supported by the highest capacity for timely repayment.

A1 - Obligations supported by a strong capacity for timely repayment.

A2 - Obligations supported by a satisfactory capacity for timely repayment,
although such capacity may be susceptible to adverse changes in business,
economic or financial conditions.

A3 - Obligations supported by an adequate capacity for timely repayment. Such
capacity is more susceptible to adverse changes in business, economic or
financial conditions than for obligations in higher categories.

B - Obligations for which the capacity for timely repayment is susceptible to
adverse changes in business, economic or financial conditions.

C - Obligations for which there is an inadequate capacity to ensure timely
repayment.

D - Obligations which have a high risk of default or which are currently in
default.

Description of Thomson Bank Watch Short-Term Ratings:
TBW-1 - The highest category; indicates a very high likelihood that principal
and interest will be paid on a timely basis.

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

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

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

Description of Thomson BankWatch Long-Term Ratings:

AAA - The highest category; indicates that the ability to repay principal and
interest on a timely basis is extremely high.

AA - The second-highest category; indicates a very strong ability to repay
principal and interest on a timely basis, with limited incremental risk compared
to issues rated in the highest category.

A - The third-highest category; indicates the ability to repay principal and
interest is strong. Issues rated "a" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.

BBB - The lowest investment-grade category; indicates an acceptable capacity to
repay principal and interest. Issues rated "BBB" are, however, more vulnerable
to adverse developments (both internal and external) than obligations with
higher ratings.

Non-Investment Grade
(Issues regarded as having speculative characteristics in the likelihood of
timely repayment of principal and interest.)

BB - While not investment grade, the "BB" rating suggests that the likelihood of
default is considerably less than for lower-rated issues. However, there are
significant uncertainties that could affect the ability to adequately service
debt obligations.

B - Issues rated "B" show a higher degree of uncertainty and therefore greater
likelihood of default than higher-rated issues. Adverse development could well
negatively affect the payment of interest and principal on a timely basis.

CCC - Issues rated "CCC" clearly have a high likelihood of default, with little
capacity to address further adverse changes in financial circumstances.

CC - "CC" is applied to issues that are subordinate to other obligations rated
"CCC" and are afforded less protection in the event of bankruptcy or
reorganization.

D - Default

These long-term debt ratings can also be applied to local currency debt. In such
cases the ratings defined above will be preceded by the designation "local
currency."

RATINGS IN THE LONG-TERM DEBT CATEGORIES MAY INCLUDE A PLUS (+) OR MINUS
(-) DESIGNATION, WHICH INDICATES WHERE WITHIN THE RESPECTIVE CATEGORY THE
ISSUE IS PLACED.

Description of S&P Municipal Bond Ratings:

AAA - Prime - These are obligations of the highest quality. They have the
strongest capacity for timely payment of debt service.

General Obligations Bonds - In a period of economic stress, the issuers will
suffer the smallest declines in income and will be least susceptible to
autonomous decline. Debt burden is moderate. A strong revenue structure appears
more than adequate to meet future expenditure requirements. Quality of
management appears superior.

Revenue Bonds - Debt service coverage has been, and is expected to remain,
substantial, stability of the pledged revenues is also exceptionally strong due
to the competitive position of the municipal enterprise or to the nature of the
revenues. Basic security provisions (including rate covenant, earnings test for
issuance of additional bonds and debt service reserve requirements) are
rigorous. There is evidence of superior management.

AA - High Grade - The investment characteristics of bonds in this group are only
slightly less marked than those of the prime quality issues. Bonds rated AA have
the second strongest capacity for payment of debt service.

A - Good Grade - Principal and interest payments on bonds in this category are
regarded as safe although the bonds are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds in higher
rated categories. This rating describes the third strongest capacity for payment
of debt service. Regarding municipal bonds, the rating differs from the two
higher ratings because:

General Obligation Bonds - There is some weakness, either in the local economic
base, in debt burden, in the balance between revenues and expenditures, or in
quality of management. Under certain adverse circumstances, any one such
weakness might impair the ability of the issuer to meet debt obligations at some
future date.

Revenue Bonds - Debt service coverage is good, but not exceptional. Stability of
the pledged revenues could show some variations because of increased competition
or economic influences on revenues. Basic security provisions, while
satisfactory, are less stringent. Management performance appearance appears
adequate.

S&P's letter ratings may be modified by the addition of a plus or a minus sign,
which is used to show relative standing within the major rating categories,
except in the AAA rating category.

Description of Moody's Municipal Bond Ratings:

Aaa - Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge". Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa - Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities, or fluctuation of protective elements
may be of greater amplitude, or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.

A - Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Moody's may apply the numerical modifier in each generic rating classification
from Aa through B. The modifier 1 indicates that the security within its generic
rating classification possesses the strongest investment attributes.

Description of S&P Municipal Note Ratings:

Municipal notes with maturities of three years or less are usually given note
ratings (designated SP-1, or -2) to distinguish more clearly the credit quality
of notes as compared to bonds. Notes rated SP-1 have a very strong or strong
capacity to pay principal and interest. Those issues determined to possess
overwhelming safety characteristics are given the designation of SP-1. Notes
rates SP-2 have a satisfactory capacity to pay principal and interest.

Description of Moody's Municipal Note Ratings:

Moody's ratings for state and municipal notes and other short-term loans are
designated Moody's Investment Grade (MIG) and for variable rate demand
obligations are designated Variable Moody's Investment Grade (VMIG). This
distinction recognizes the differences between short-term credit risk and
long-term risk. Loans bearing the designation MIG 1/VMIG 1 are of the best
quality, enjoying strong protection from established cash flows of funds for
their servicing or from established cash flows of funds for their servicing or
from established and broad-based access to the market for refinancing, or both.
Loans bearing the designation MIG2/VMIG2 are of high quality, with ample margins
of protection, although not as large as the preceding group.

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 ratings 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 tread.
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 a superior
capacity for repayment of short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics: leasing
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 a strong
capacity 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 rates Prime-3 (or related supporting institutions) have an acceptable
capacity 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 strangest issue.

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.
<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>

INVESTMENT ADVISER OF EACH PORTFOLIO AND ADMINISTRATOR
BANKERS TRUST COMPANY

DISTRIBUTOR
SIGNATURE BROKER-DEALER SERVICES, INC.

CUSTODIAN AND TRANSFER AGENT
BANKERS TRUST COMPANY

INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.

COUNSEL
WILLKIE FARR & GALLAGHER

..............................................................................
No person has been authorized to give any information or to make any
representations other than those contained in the Trusts' Prospectuses, the
corresponding SAIs or the Trusts' 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 a Trust. This Prospectus does not constitute an offer in any state in
which, or to any person to whom, such offer may not lawfully be made.
..............................................................................
<PAGE>

BT0176F
PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) FINANCIAL STATEMENTS

The following are included in Part B:

To be added by amendment.

(b) EXHIBITS:

(1A) Declaration of Trust of the Trust.5
(1B) Second Amended and Restated Designation of Series.5
(1C) Third Amended and Restated Establishment and Designation of
Series.5
(1D) Fourth Amended and Restated Establishment and Designation of
Series.5
(1E) Fifth Amended and Restated Establishment and Designation of
Series.5

(2) By-Laws of the Trust.5

(3) Inapplicable.

(4) Inapplicable.

(5) Inapplicable.

(6) Distribution Agreement.1

(7) Inapplicable.

(8) See Exhibit (9).

(9) Administration and Services Agreement.3

(10) Inapplicable.

(11) Consents of Independent Accountants.6

(12) Inapplicable.

(13) Investment representation letters of initial shareholders of
the Trust.1

(14) Inapplicable.

(15) Plan of Distribution pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940
Act").1

(16) Schedule for Computation of Performance Quotations.1

(17) Financial Data Schedules 6

(25A) Powers of Attorney.1
(25B) Powers of Attorney for the Trustees of Capital Growth
Portfolio and Capital Appreciation Portfolio.2

1 Incorporated by reference herein from Pre-Effective Amendment
No. 1 to this Registration Statement as filed with the SEC on
June 9, 1992.

2 Incorporated by reference herein from Post-Effective Amendment
No. 1 to this Registration Statement as filed with the SEC on
August 17, 1992.

3 Incorporated by reference herein from Post-Effective Amendment
No. 5 to this Registration Statement as filed with the SEC on
April 30, 1993.

4 Incorporated by reference herein from Post-Effective Amendment
No. 4 to this Registration Statement as filed with the SEC on
April 28, 1995.

5 Incorporated by reference herein from Post-Effective Amendment
No. 5 to this Registration Statement as filed with the SEC on
July 31, 1995.

6 To be filed by amendment.

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE TRUST.

Inapplicable.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES.

Number of Record Holders
TITLE OF CLASS (AS OF APRIL , 1996)
-------------- ----------------------

BT Investment Money Market Fund
BT Investment Limited Term U.S. Government
Securities Fund
BT Investment Equity 500 Index Fund
BT Institutional Asset Management Fund
BT Investment Equity Appreciation Fund

ITEM 27. INDEMNIFICATION.

Reference is made to Article V of the Trust's Declaration of Trust,
filed as Exhibit 1 to this Registration Statement.

Insofar as indemnification for liability arising under the 1933 Act,
may be permitted to Trustees, officers and controlling persons of the
Trust pursuant to the Trust's Declaration of Trust, or otherwise, the
Trust has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the 1933 Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Trust of expenses incurred or paid by a Trustee, officer or controlling
person of the Trust in the successful defense of any action, suit or
proceeding) is asserted by such Trustee, officer or controlling person
in connection with the securities being registered, the Trust will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

Inapplicable.

ITEM 29. PRINCIPAL UNDERWRITERS.

(a) Signature Broker-Dealer Services, Inc. ("Signature") is the
Distributor (the "Distributor") for the shares of BT Pyramid
Mutual Funds. The Distributor also serves as the principal
underwriter or placement agent for other registered investment
companies.

(b) Set forth below are the names, principal business addresses
and positions of each director and officer of the Distributor.
The principal business address of these individuals is
Signature Broker-Dealer Services, Inc., 6 St. James Avenue,
Boston, Massachusetts 02116. Unless otherwise specified, none
of the officers and directors of the Distributor serve as
officers and Trustees of the Trust.

<TABLE>
<S> <C> <C>
Position and Offices Position and Offices
NAME WITH SIGNATURE WITH THE REGISTRANT

Philip W. Coolidge Chief Executive President and Trustee
Officer, President
and Director

Linwood C. Downs Treasurer --

John R. Elder -- Treasurer

Thomas M. Lenz Assistant Secretary Secretary

Molly S. Mugler Assistant Secretary Assistant Secretary

Linda T. Gibson Assistant Secretary Assistant Secretary

Andres E. Saldana Assistant Secretary Assistant Secretary

Susan Jakuboski Assistant Treasurer --

David G. Danielson -- Assistant Treasurer

James S. Lelko, Jr. -- Assistant Treasurer

Daniel E. Shea -- Assistant Treasurer

Barbara M. O'Dette Assistant Treasurer Assistant Treasurer

Beth A. Remy Assistant Treasurer --

Julie J. Wyetzner Product Management
Officer --

Robert G. Davidoff Director --
CMNY Capital, L.P
135 East 57th Street
New York, NY 10022

Donald S. Chadwick Director --
Scarborough & Company
110 East 42nd Street
New York, NY 10017

Leeds Hackett Director --
National Credit
Management Corporation
10155 York Road
Cockeysville, MD 21030

Laurence E. Levine Director --
First International
Capital, Ltd.
130 Sunrise Avenue
Palm Beach, FL 33480
</TABLE>

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.

BT Pyramid Mutual Funds
6 St. James Avenue
Boston, MA 02116

Bankers Trust Company
4 Albany Street
New York, NY 10006

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

Signature Broker-Dealer Services, Inc.
6 St. James Avenue
Boston, MA 02116

ITEM 31. MANAGEMENT SERVICES.

Inapplicable.

ITEM 32. UNDERTAKINGS.

(a) The Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest
annual report, with respect to the respective series of the
Trust, to shareholders upon request and without charge.

(b) The Registrant undertakes to comply with Section 16(c) of the
1940 Act as though such provisions of the Act were applicable
to the Registrant except that the request referred to in the
third full paragraph thereof may only be made by shareholders
who hold in the aggregate at least 10% of the outstanding
shares of the Registrant, regardless of the net asset value or
values of shares held by such requesting shareholders.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the 1933 Act and that it has duly caused this
Amendment to Registrant's Registration Statement on Form N-1A to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Boston

and the Commonwealth of Massachusetts on the 29th day of February, 1996.

BT PYRAMID MUTUAL FUNDS

By: /S/PHILIP W. COOLIDGE
Philip W. Coolidge
President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the

capacities indicated with respect to BT Pyramid Mutual Funds on February 29,
1996.

SIGNATURE TITLE

/S/PHILIP W. COOLIDGE President and Trustee
Philip W. Coolidge

HARRY VAN BENSCHOTEN* Trustee
Harry Van Benschoten

KELVIN J. LANCASTER* Trustee
Kelvin J. Lancaster

MARTIN J. GRUBER* Trustee
Martin J. Gruber

/S/JOHN R. ELDER Treasurer (Principal Financial
John R. Elder Officer and Principal Accounting
Officer)

*By: /S/PHILIP W. COOLIDGE
Philip W. Coolidge
as Attorney-in-Fact pursuant to a
Power of Attorney filed previously.

<PAGE>

SIGNATURES

Short/Intermediate U.S. Government Securities Portfolio has duly caused
this Registration Statement on Form N-1A of BT Pyramid Mutual Funds to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of

Boston and the Commonwealth of Massachusetts on the 29th day of February, 1996.

SHORT/INTERMEDIATE U.S. GOVERNMENT SECURITIES PORTFOLIO

By: /S/PHILIP W. COOLIDGE
Philip W. Coolidge
President

This Registration Statement on Form N-1A of BT Pyramid Mutual Funds has
been signed below by the following persons in the capacities indicated with

respect to Short/Intermediate U.S. Government Securities Portfolio on February
29, 1996.

SIGNATURE TITLE

/S/PHILIP W. COOLIDGE President and Trustee
Philip W. Coolidge

S. LELAND DILL* Trustee
S. Leland Dill

PHILIP SAUNDERS, JR. Trustee
Philip Saunders, Jr.

CHARLES P. BIGGAR* Trustee
Charles P. Biggar

/S/JOHN R. ELDER Treasurer (Principal Financial
John R. Elder and Principal Accounting
Officer)

*By: /S/PHILIP W. COOLIDGE
Philip W. Coolidge
as Attorney-in-Fact pursuant to a
Power of Attorney filed previously.

BT0176F