September 30, 1999
[GRAPHIC OMITTED] BT Mutual Funds
BT Investment
Equity Appreciation Fund
Annual Report
TRUST: BT PYRAMID MUTUAL FUNDS
INVESTMENT ADVISOR: BANKERS TRUST COMPANY
<PAGE>
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BT Investment Equity Appreciation Fund
Table of Contents
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Letter to Shareholders ......................... 3
BT Investment Equity Appreciation Fund
Schedule of Portfolio Investments ........... 6
Statement of Assets and Liabilities ......... 8
Statement of Operations ..................... 8
Statements of Changes in Net Assets ......... 9
Financial Highlights ........................ 9
Notes to Financial Statements ...............10
Report of Independent Accountants ...........12
Tax Information .............................12
Proxy Results ..................................13
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The Fund is not insured by the FDICand is not a deposit, obligation of or
guaranteed by Bankers Trust Company. The Fund is subject to investment
risks, including possible loss of principal amount invested.
-----------------------------
2
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BT Investment Equity Appreciation Fund
Letter to Shareholders
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We are pleased to present you with this annual report for the BT Investment
Equity Appreciation Fund (the "Fund"), providing a review of the market, the
portfolio, and our outlook as well as a complete financial summary of the Fund's
operations and a listing of the Portfolio's holdings.
MARKET ACTIVITY
Mid capitalization growth stocks experienced significant volatility throughout
the twelve months ended September 30, 1999. Mid cap relative performance also
diverged rather dramatically from the first half of this fiscal year to the
second. For the first half, equities in general were strong, but the mid cap
sector lagged the S&P 500 Index, as concerns over both foreign and domestic
economies kept investor preference toward large-capitalization stocks. During
the second half of the fiscal year, equities in general produced lackluster
performance, and the mid cap sector, as measured by the S&P 400 Mid Cap Index,
returned 4.57%, far outperforming the S&P 500 return of 0.36% for the same six
months. While mid cap stocks still underperformed large caps for the fiscal
year, the mid cap sector did outperform small cap stocks for the twelve months.
The first half of the Fund's fiscal year began in October 1998 with a
continuation of the summer's sharp sell off in mid cap growth stocks as well as
in the broader equity markets, followed by an even more pronounced recovery
quickly thereafter.
o The U.S. stock markets reacted favorably to three Federal Reserve Board
easings in the fall of 1998, interest rate cuts in a number of other
countries, better coordination of international monetary policy, receding
concerns of a global credit crunch, positive earnings reports, and an ongoing
strong U.S. economy with low inflation and healthy consumer spending. This
market recovery was particularly apparent in the sharp improvement of
internet-related stocks.
o The mid cap market rally that began in mid-October continued into the first
quarter of 1999, only to become subject to fears and uncertainty again in
February. Ironically, a very positive economic and broader market environment
raised concerns that, at best, the Federal Reserve Board was on hold with
respect to interest rates and, perhaps, may act to raise rates at the first
sign of inflation.
o After the February sell-off, March witnessed a rebound in the mid cap equity
market once again, as subsequent economic reports pointed to a continuation of
economic growth with little or no evidence of inflation. Investors continued
to be attracted to companies and industries exhibiting strong growth trends,
such as those in the technology and internet sectors.
The second half of the Fund's fiscal year began with a sharp shift in investor
preference from larger, growth and technology-oriented names to smaller, value
and more economically cyclical stocks, following economic data indicating that
the worst of the Asian financial crisis was apparently over.
o The combination of expectations of improving fundamentals as well as low
valuations for long-ignored economically sensitive stocks, such as those in
the paper, chemical and steel industries, served to propel these
value-oriented stocks at the expense of larger company growth stocks during
both April and May.
o This broadening of the stock market also included strong performance by
smaller and mid-sized companies as worries about world economies abated.
o Still, market volatility continued throughout the second calendar quarter, as
strong economic data led the Federal Reserve Board to officially shift in
mid-May from a neutral stance to a bias toward raising interest rates.
Additional economic data released throughout the quarter continued to show
robust U.S. economic growth with little sign of inflation.
o Investors began to believe that the Federal Reserve Board would raise rates in
a limited manner rather than make a series of increases, and equity markets
reflected this optimism toward the end of June with broad-based strength.
o On June 30, the Federal Reserve Board did, in fact, increase the fed funds
rate by 0.25% and signaled it would be resuming its neutral stance.
The third calendar quarter witnessed weakness across all U.S. equity sectors on
renewed fears of further interest rate increases.
o Economic data pointed to a still robust U.S. economy, a slight uptick in the
rate of wage growth, and stronger global economic growth in Europe, Asia, and
even Japan.
o Financial markets grew concerned that synchronized global growth would lead to
inflation.
o Against this backdrop, the Federal Reserve Board raised the fed funds rate by
another 0.25% on August 24.
o In September, the U.S. equity markets continued to be volatile and nervous, as
the U.S. economy remained vibrant and economic momentum continued to build
around the world.
Throughout the annual period, mid cap companies exhibited strong earnings
growth, positive fundamentals, and attractive relative valuations. In fact, mid
cap relative valuations as compared to large cap stocks were, as of September
30, 1999, still at multi-decade lows.
INVESTMENT REVIEW
The Fund significantly outperformed its benchmark for the twelve month period,
particularly well worth noting given the extremely high volatility in the mid
cap equity market during this annual period. Specific stock selection and sector
positioning bolstered Fund performance.
For example, in the fourth quarter of 1998, the Fund was overweight in the best
performing sector, i.e. technology, and underweight in the worst performing
sector, i.e. energy.
3
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BT Investment Equity Appreciation Fund
Letter to Shareholders
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<TABLE>
<CAPTION>
Periods ended September 30, 1999 Cumulative Total Returns Average Annual Total Returns
- -------------------------------------------------------------------------------------------------------------------------------
Past 1 Past 3 Past 5 Since Past 1 Past 3 Past 5 Since
year years years inception year years years inception
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BT Investment Equity
Appreciation Fund/1 44.33% 49.32% 141.28% 137.42% 44.33% 14.30% 19.26% 15.60%
(inception 10/12/93)
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S&P MidCap 400 Index/2 25.50% 63.56% 134.51% 137.17% 25.50% 17.82% 18.59% 15.71%
- -------------------------------------------------------------------------------------------------------------------------------
Lipper MidCap Growth Average/3 41.88% 74.11% 161.32% 155.16% 41.88% 19.93% 20.86% 16.85%
</TABLE>
In the first quarter of 1999, the Fund held an overweight position in two of the
top four performing sectors-communications services and technology. Also
benefiting performance were underweight positions in the three poorest
performing sectors for the first quarter-capital goods, utilities, and basic
materials.
The Fund's relative performance was impacted negatively by investors' sharp
shift from growth to value stocks in April and May. More specifically, the
Fund's overweight positions in technology and energy helped during the second
quarter of 1999, but its underweight positions in such top performing
value-oriented sectors as capital goods and basic materials detracted from Fund
performance. During the third calendar quarter, energy and technology, where the
Fund remained overweight, continued to outperform, as did the communications
services sector where the Fund is also overweight. In addition, the
value-oriented sectors that did well in the previous quarter now underperformed.
Thus the Fund's underweighting in these poorer performing sectors had a positive
effect.
- -----------------------------------------------------------
Ten Largest Stock Holdings
- -----------------------------------------------------------
Univision Communications, Inc. 3.25%
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Maxim Integrated Products, Inc. 2.91%
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Allergan, Inc. 2.61%
- -----------------------------------------------------------
Lexmark International Group, Inc. - Class A 2.56%
- -----------------------------------------------------------
Northeast Utilities Corp. 2.52%
- -----------------------------------------------------------
Scientific-Atlanta, Inc. 2.38%
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Network Appliance, Inc. 2.25%
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Citrix Systems, Inc. 2.21%
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Hispanic Broadcasting Corp. 2.00%
- -----------------------------------------------------------
Clear Channel Communications, Inc. 1.98%
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----------------------------------------
Diversification of Portfolio Investments
----------------------------------------
By Theme as of September 30, 1999
(percentages are based on market value)
New Healthcare Paradigm 4% Stores of Value 4%
Energizing the Globe 9% Client Server Computing 8%
Our Strengthening Financial Managing the Information Age 7%
Structure 5% The Ubiquitous Semiconductor 7%
New Consumer 8% Interactive Media 5%
America's Changing Leisure Time 12% Miscellaneous/1 8%
Telecommunications 7% Special Situations 10%
Life Sciences Revolution 6%
1/ Includes themes with weightings of less than 4%.
MANAGER OUTLOOK
The U.S. continues to experience tight labor markets, although signs of
inflation remain scant. Internationally, few inflationary pressures are expected
due to the economic capacity that exists. Stronger economic growth abroad may
weigh on U.S. financial markets, as synchronized global growth raises the fear
of overheating in the U.S. However, we continue to believe that a cycle of
full-blown overheating in the U.S. economy is unlikely due to the slack still
remaining in overseas markets. We also expect the Federal Reserve Board to
remain vigilant on the inflation front.
Although we anticipate future periods of volatility in the marketplace while
global and domestic economic and political events run their course, we remain
optimistic regarding
- ----------
1/ Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost. During the period the
Fund waived certain fees and expenses. Had these fees and expenses not been
waived, the Fund's return would have been lower.
2/ Indices are unmanaged, and investments cannot be made in an index. The S&P
MidCap 400 Index consists of 400 domestic stocks chosen for market size,
liquidity and industry group representation.
3/ Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper, Inc. as falling into the respective
categories indicated. These figures do not reflect sales charges.
4
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BT Investment Equity Appreciation Fund
Letter to Shareholders
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mid cap stocks in general. Mid cap fundamentals remain solid, earnings growth
healthy, and relative valuations attractive. We expect strong third quarter
earnings to be reported shortly and, to date, have seen a relative scarcity of
negative earnings preannouncements.
Given the recent high volatility in the stock market, it is also important to
keep in mind that we remain disciplined in our process, and we continue to:
o focus on companies that offer compelling valuations relative to their growth
rates
o focus on companies that have strong, consistent earnings and revenue growth
o use extensive fundamental research to identify attractive investment
opportunities in unrecognized growth companies and sectors
o strictly adhere to our sell discipline to help mitigate risk, and
o use the volatility of the marketplace to our investors' advantage by
initiating or adding to positions on weakness.
It is important to remember that investors should take a long-term view when
investing in this segment of the market, as returns can be volatile in the short
term.
We will continue to monitor economic conditions and their effect on financial
markets, as we seek capital growth over the long term.
We value your ongoing support of the BT Investment Equity Appreciation Fund and
look forward to continuing to serve your investment needs in the years ahead.
/s/ Mary P. Dugan
/s/ Audrey M.T. Jones
/s/ John P. Callaghan
Mary P. Dugan, Audrey M.T. Jones, and John P. Callaghan
Portfolio Managers of the
BT Investment Equity Appreciation Fund
September 30, 1999
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Performance Comparison
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<TABLE>
<S> <C> <C>
Comparison of Change in BT Investment Equity S&P MidCap 400
Value of a $10,000 Appreciation Fund - $23,742 Index - $23,717
Investment in the BT --------------------------- ---------------
Investment Equity Oct-93 10000 Oct-93 10000
Appreciation Fund and the Mar-94 9657 Mar-94 9844
S&P MidCap 400 Index Sep-94 9939 Sep-94 10217
since October 31, 1993. Mar-95 10909 Mar-95 10664
Sep-95 14283 Sep-95 12737
Total Return for the Year Mar-96 14262 Mar-96 13715
Ended September 30, 1999 Sep-96 16061 Sep-96 14521
Mar-97 13679 Mar-97 15171
One Year 5 Year Since 10/12/93/1 Sep-97 18603 Sep-97 20199
44.33% 19.26%/2 15.60%/2 Mar-98 19815 Mar-98 22682
Sep-98 16450 Sep-98 19035
1/ The Fund's inception date. Mar-99 22148 Mar-99 22681
2/ Annualized. Sep-99 23742 Sep-99 23717
- ------------------------------------ Past performance is not indicative of future performance. Performance figures
Investment return and principal assume the reinvestment of dividends and capital gain distributions.
value will fluctuate so that shares,
when redeemed, may be worth more
or less than their original cost.
- ------------------------------------
</TABLE>
5
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BT Investment Equity Appreciation Fund
Schedule of Portfolio Investments September 30, 1999
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Shares Description Value
------ ----------- -----
COMMON STOCKS - 97.5%
America's Changing Leisure Time - 11.7%
42,600 Clear Channel Communications, Inc./1 ............... $ 3,402,675
55,000 Harley-Davidson, Inc. .............................. 2,753,437
45,100 Hispanic Broadcasting Corp./1 ...................... 3,433,237
107,900 Mandalay Resort Group, Inc./1 ...................... 2,131,025
60,200 Royal Caribbean Cruises Ltd. ....................... 2,709,000
68,600 Univision Communications, Inc./1 ................... 5,582,325
------------
20,011,699
------------
America's Industrial Renaissance - 2.4%
30,600 Black & Decker Corp. ............................... 1,398,037
29,100 SPX Corp./1 ........................................ 2,640,825
------------
4,038,862
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Client Server Computing - 7.5%
11,700 BMC Software, Inc./1 ............................... 837,281
61,200 Citrix Systems, Inc./1 ............................. 3,790,575
54,500 Lexmark International Group, Inc. - Class A/1 ...... 4,387,250
54,000 Network Appliance, Inc./1 .......................... 3,867,750
------------
12,882,856
------------
Energizing The Globe - 8.7%
63,400 Apache Corp. ....................................... 2,738,088
102,500 BJ Services Co.1 ................................... 3,260,781
34,200 Cooper Cameron Corp./1 ............................. 1,291,050
42,900 Devon Energy Corp. ................................. 1,777,669
100,900 Noble Drilling Corp./1 ............................. 2,207,187
88,400 Sante Fe International Corp. ....................... 1,906,125
42,700 Smith International, Inc./1 ........................ 1,729,350
------------
14,910,250
------------
Flourishing In The Managed Care
Environment - 1.0%
62,000 Trigon Healthcare, Inc./1 .......................... 1,790,250
------------
Interactive Media - 5.3%
54,900 General Instrument Corp./1 ......................... 2,642,063
82,600 Scientific-Atlanta, Inc. ........................... 4,093,862
60,900 USA Networks, Inc./1 ............................... 2,359,875
------------
9,095,800
------------
Life On The Net - 2.5%
25,500 Etoys, Inc./1 ...................................... 1,697,344
27,200 Infospace.com, Inc./1 .............................. 1,118,600
39,600 PSINet, Inc./1 ..................................... 1,424,363
------------
4,240,307
------------
Life Sciences Revolution - 6.2%
40,700 Allergan, Inc. ..................................... 4,477,000
44,500 Genzyme Corp./1 .................................... 2,005,281
23,600 Immunex Corp./1 .................................... 1,023,650
42,500 Pe Corp. - Pe Biosystems Group ..................... 3,070,625
------------
10,576,556
------------
Shares Description Value
------ ----------- -----
Managing The Information Age - 7.2%
43,100 Flextronics International1 ......................... $ 2,507,881
79,100 Maxim Integrated Products, Inc./1 .................. 4,990,716
19,300 Portal Software, Inc./1 ............................ 747,875
19,600 Redback Networks, Inc./1 ........................... 2,116,800
26,200 Sanmina Corp./1 .................................... 2,027,225
------------
12,390,497
------------
New Consumer - 8.1%
62,700 Abercrombie & Fitch Co. - Class A/1 ................ 2,135,719
46,800 Circuit City Stores, Inc. .......................... 1,974,375
11,765 Gucci Group NV ..................................... 982,378
82,300 Jones Apparel Group, Inc./1 ........................ 2,366,125
61,900 Tommy Hilfiger Corp./1 ............................. 1,744,806
45,200 Williams-Sonoma, Inc./1 ............................ 2,195,025
67,300 Zale Corp./1 ....................................... 2,578,431
------------
13,976,859
------------
New Health Paradigm - 4.5%
176,200 IVAX Corp./1 ....................................... 2,907,300
22,400 MiniMed, Inc./1 .................................... 2,200,800
50,000 Stryker Corp. ...................................... 2,556,250
------------
7,664,350
------------
Our Strengthening Financial Structure - 4.5%
13,100 AMBAC Financial Group .............................. 620,613
66,990 Charter One Financial, Inc. ........................ 1,549,144
98,100 Concord EFS, Inc./1 ................................ 2,023,313
83,500 Dime Bancorp, Inc. ................................. 1,461,250
105,300 North Fork BanCorp, Inc. ........................... 2,053,350
------------
7,707,670
------------
Return To Home Ownership - 0.4%
21,300 Linens 'N Things, Inc./1 ........................... 718,875
------------
Special Situations - 9.9%
54,600 Allegheny Energy, Inc. ............................. 1,736,962
67,900 American Water Works Co., Inc. ..................... 1,964,856
34,700 Bowater, Inc. ...................................... 1,821,750
74,000 Energy East Corp./1 ................................ 1,757,500
25,100 Intuit, Inc./1 ..................................... 2,200,172
235,300 Northeast Utilities Corp./1 ........................ 4,323,637
90,062 Outdoor Systems, Inc./1 ............................ 3,219,716
------------
17,024,593
------------
Stores of Value - 4.2%
88,800 BJ's Wholesale Club, Inc./1 ........................ 2,625,150
113,200 Family Dollar Stores, Inc. ......................... 2,391,350
80,100 TJX Companies, Inc. ................................ 2,247,806
------------
7,264,306
------------
Telecommunications - 6.5%
76,200 American Tower Corp. - Class A ..................... 1,490,662
16,700 E-Tek Dynamics, Inc./1 ............................. 905,975
34,304 Global Crossing Ltd./1 ............................. 909,056
30,500 Newbridge Networks Corp./1 ......................... 794,906
46,400 Qwest Communications International, Inc./1.......... 1,371,700
See Notes to Financial Statements.
6
<PAGE>
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BT Investment Equity Appreciation Fund
Schedule of Portfolio Investments September 30, 1999
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Shares Description Value
------ ----------- -----
34,300 Voicestream Wireless Corp./1 ....................... $ 2,116,953
34,300 Western Wireless Corp. - Class A/1 ................. 1,538,141
52,900 WinStar Communications, Inc./1 ..................... 2,066,406
------------
11,193,799
------------
The Ubiquitous Semiconductor - 6.9%
9,500 Broadcom Corp. - Class A/1 ......................... 1,035,500
55,000 Linear Technology Corp. ............................ 3,232,969
34,700 National Semiconductor Corp./1 ..................... 1,058,350
30,500 Novellus Systems, Inc./1 ........................... 2,056,844
77,600 Teradyne, Inc./1 ................................... 2,735,400
20,200 Vitesse Semiconductor Corp./1 ...................... 1,724,575
------------
11,843,638
------------
Total Common Stocks (Cost $134,313,985) ............ 167,331,167
------------
Shares Description Value
------ ----------- -----
SHORT TERM INSTRUMENT - 7.6%
Mutual Fund
13,096,292 Institutional Cash Management Fund
(Cost $13,096,292) .............................. $ 13,096,292
------------
Total Investments (Cost $147,410,277).................. 105.1% 180,427,459
Liabilities in Excess of Other Assets.................. (5.1)% (8,718,909)
----- ------------
Net Assets............................................. 100.0% $171,708,550
===== ============
- ----------
1/Non-Income Producing Security
See Notes to Financial Statements.
7
<PAGE>
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BT Investment Equity Appreciation Fund
Statement of Assets and Liabilities September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets
Investments, at Value (Cost $147,410,277) ....................................................... $180,427,459
Receivable for Shares of Beneficial Interest Subscribed ......................................... 1,138,563
Receivable for Securities Sold .................................................................. 781,652
Dividends and Interest Receivable/1 ............................................................. 100,282
Prepaid Expenses and Other ...................................................................... 23,215
------------
Total Assets ....................................................................................... 182,471,171
------------
Liabilities
Payable for Securities Purchased ................................................................ 10,626,187
Payable for Shares of Beneficial Interest Redeemed .............................................. 51
Due to Bankers Trust ............................................................................ 99,961
Accrued Expenses and Other ...................................................................... 36,422
------------
Total Liabilities .................................................................................. 10,762,621
------------
Net Assets ......................................................................................... $171,708,550
============
Composition of Net Assets
Paid-in Capital ................................................................................. $103,019,050
Accumulated Net Realized Gain from Investment Transactions ...................................... 35,672,318
Net Unrealized Appreciation on Investments ...................................................... 33,017,182
------------
Net Assets ......................................................................................... $171,708,550
============
Net Asset Value, Offering and Redemption Price Per Share (net assets divided by shares outstanding). $ 20.11
============
Shares Outstanding ($0.001 par value per share, unlimited number of shares of
beneficial interest authorized) ................................................................. 8,536,924
============
</TABLE>
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Statement of Operations For the year ended September 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment Income
Dividends ....................................................................................... $ 1,060,541
------------
Expenses
Advisory Fees ................................................................................... 981,463
Administration and Services Fees ................................................................ 768,495
Professional Fees ............................................................................... 37,928
Printing and Shareholder Reports Fees ........................................................... 29,051
Trustees Fees ................................................................................... 13,081
Registration Fees ............................................................................... 5,044
Miscellaneous ................................................................................... 9,144
------------
Total Expenses .................................................................................. 1,844,206
Less Fees Waived/Expenses Reimbursed by Bankers Trust ........................................... (302,505)
------------
Net Expenses ................................................................................. 1,541,701
------------
Expenses in Excess of Investment Income ............................................................ (481,160)
------------
Realized and Unrealized Gain on Investments
Net Realized Gain from Investment Transactions .................................................. 36,268,372
Net Change in Unrealized Appreciation/Depreciation on Investments ............................... 16,844,927
------------
Net Realized and Unrealized Gain on Investments .................................................... 53,113,299
------------
Net Increase in Net Assets from Operations ......................................................... $ 52,632,139
============
</TABLE>
- ----------
1/ Includes $58,200 from the Portfolio's investment in the BT Institutional Cash
Management Fund.
See Notes to Financial Statements.
8
<PAGE>
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BT Investment Equity Appreciation Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the
year ended year ended
September 30, 1999 September 30, 1998
-------------------- --------------------
<S> <C> <C>
Increase (Decrease) in Net Assets from:
Operations
Expenses in Excess of Investment Income ............................ $ (481,160) $ (589,412)
Net Realized Gain from Investment Transactions ..................... 36,268,372 9,600,928
Net Change in Unrealized Appreciation/Depreciation on Investments .. 16,844,927 (23,654,809)
------------- -------------
Net Increase (Decrease) in Net Assets from Operations ................. 52,632,139 (14,643,293)
------------- -------------
Distributions to Shareholders
Net Realized Gain from Investment Transactions ..................... (513,014) (10,600,974)
------------- -------------
Capital Transactions
Proceeds from Sales of Shares ...................................... 56,395,709 129,443,699
Dividend Reinvestments ............................................. 513,014 10,600,487
Cost of Shares Redeemed ............................................ (59,396,404) (162,731,127)
------------- -------------
Net Decrease in Net Assets from Capital Transactions .................. (2,487,681) (22,686,941)
------------- -------------
Total Increase (Decrease) in Net Assets ............................... 49,631,444 (47,931,208)
Net Assets
Beginning of Year ..................................................... 122,077,106 170,008,314
------------- -------------
End of Year ........................................................... $ 171,708,550 $ 122,077,106
============= =============
</TABLE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Contained below are selected data for a share outstanding, total investment
return, ratios to average net assets and other supplemental data for the periods
indicated for the Equity Appreciation Fund.
<TABLE>
<CAPTION>
For the period For the
January 1, 1995 year ended
For the years ended September 30, to September 30, Dec. 31
-------------------------------------------- ---------------- ----------
1999 1998 1997 1996 1995/2 1994
---- ---- ---- ---- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value, Beginning of Period .................. $ 13.98 $ 16.70 $ 15.23 $ 14.14 $ 10.14 $ 9.80
-------- -------- -------- -------- ------- -------
Income from Investment Operations
Expenses in Excess of Income ....................... (0.06) (0.07) (0.06) (0.05) (0.02) (0.03)
Net Realized and Unrealized Gain (Loss)
on Investment Transactions ........................ 6.25 (1.68) 2.31 1.72 4.02 0.37
-------- -------- -------- -------- ------- -------
Total from Investment Operations ...................... 6.19 (1.75) 2.25 1.67 4.00 0.34
-------- -------- -------- -------- ------- -------
Distributions to Shareholders
Net Realized Gain from Investment Transactions ..... (.06) (0.97) (0.78) (0.58) -- --
-------- -------- -------- -------- ------- -------
Net Asset Value, End of Period ........................ $ 20.11 $ 13.98 $ 16.70 $ 15.23 $ 14.14 $ 10.14
======== ======== ======== ======== ======= =======
Total Investment Return ............................... 44.33% (10.68)% 15.82% 12.45% 39.45% 3.47%
Supplemental Data and Ratios:
Net Assets, End of Period (000s omitted) ........... $171,709 $122,077 $170,008 $157,568 $92,033 $29,973
Ratios to Average Net Assets:
Expenses in Excess of Income .................... (0.31)% (0.36)% (0.39)% (0.42)% (0.38)%/1 (0.32)%
Expenses ........................................ 1.00% 1.00% 1.00% 1.00% 1.00%/1 1.00%
Decrease Reflected in Above Expense
Ratio Due to Fees Waived/Expenses
Reimbursed by Bankers Trust ................... 0.20% 0.20% 0.20% 0.24% 0.33%/1 0.46%
Portfolio Turnover Rate ............................ 165% 159% 188% 271%/3 125%/3 157%
</TABLE>
- ----------
1/ Annualized.
2/ Board of Trustees approved the change of the Equity Appreciation Fund's year
end from December 31 to September 30.
3/ Amounts were previously included in the Capital Appreciation Portfolio
Financial Highlights.
See Notes to Financial Statements.
9
<PAGE>
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BT Investment Equity Appreciation Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 1--Organization and Significant Accounting Policies
A. Organization
BT Pyramid Mutual Funds (the "Trust") is registered under the Investment Company
Act of 1940 (the "Act"), as amended, as an open-end management investment
company. The Trust was organized on February 28, 1992, as a business trust under
the laws of the Commonwealth of Massachusetts. The BT Investment Equity
Appreciation Fund (the "Fund") is one of the funds offered to investors by the
Trust. The Fund began operations on October 12, 1993.
B. Security Valuation
The Fund's investments listed or traded on National Stock Exchanges or other
domestic or foreign exchanges are valued based on their closing price.
Short-term debt securities are valued at market value until such time as they
reach a remaining maturity of 60 days, whereupon they are valued at amortized
cost using their value on the 61st day. All other securities and other assets
are valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Trustees.
C. Security Transactions and Interest Income
Security transactions are accounted for on a trade date basis. Dividend income
is recorded on the ex-dividend date. Interest income is recorded on the accrual
basis and includes amortization of premium and discount on investments. Expenses
are recorded when incurred. Realized gains and losses from securities
transactions are recorded on the identified cost basis.
D. Distributions
It is the Fund's policy to declare and distribute dividends quarterly to
shareholders from net investment income, if any. Dividends and distributions
payable to shareholders are recorded by the Fund on the ex-dividend date.
Distributions of net realized short-term and long-term capital gains, if any,
earned by the Fund are made annually to the extent they are not offset by any
capital loss carryforwards.
E. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all of its taxable income to shareholders. Therefore, no federal
income tax provision is required.
The Fund may periodically make reclassifications among certain of its capital
accounts as a result of the differences in the characterization and allocation
of certain income and capital gain distributions determined annually in
accordance with federal tax regulations which may differ from generally accepted
accounting principles.
F. Other
The Trust accounts separately for the assets, liabilities, and operations of
each fund. Expenses directly attributable to a fund are charged to that fund,
while expenses, which are attributable to all of the Trust's funds are allocated
among them.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts in the financial statements. Actual results could
differ from those estimates.
Note 2--Fees and Transactions with Affiliates
The Fund has entered into an Administration and Services Agreement with Bankers
Trust Company ("Bankers Trust"). Under this agreement, Bankers Trust provides
administrative, custody, transfer agency and shareholder services to the Fund in
return for a fee computed daily and paid monthly at an annual rate of .50% of
the Fund's average daily net assets.
The Fund has entered into an agreement in which the Fund pays Bankers Trust an
advisory fee computed daily and paid monthly at an annual rate .65% of the
Fund's average daily net assets.
Bankers Trust has voluntarily undertaken to waive its fees and reimburse
expenses of the Fund, to the extent necessary, to limit all expenses to 1.00% of
the average daily net assets of the Fund.
The Fund may invest in the Institutional Cash Management Fund (the "Cash
Management Fund"), an open-end management investment company managed by Bankers
Trust Company (the "Company"). The Cash Management Fund is offered as a cash
management option to the Fund and other accounts managed by the Company.
Distributions from the "Cash Management Fund" to the Fund as of September 30,
1999, amounted to $626,692 and are included in dividend income.
At September 30, 1999, the Portfolio was a participant with other affiliated
entities in a revolving credit facility in the amount of $100,000,000, which
expires April 29, 2000. A commitment fee of .10% per annum on the average daily
amount of the available commitment is payable on a quarterly basis and
apportioned equally among all participants. On October 8, 1999, the revolving
credit facility was increased to $150,000,000. No amounts were drawn down or
outstanding under the credit facility for the year ended September 30, 1999.
ICC Distributors, Inc. provides distribution services to the Fund.
10
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BT Investment Equity Appreciation Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
Bankers Trust was a wholly owned subsidiary of Bankers Trust Corporation ("BT
Corp."). On June 4, 1999, BT Corp. was acquired by Deutsche Bank AG ("Deutsche
Bank"). As a result of the transaction, Bankers Trust became an indirect
wholly-owned subsidiary of Deutsche Bank.
Note 3--Shares of Beneficial Interest
At September 30, 1999, there were an unlimited number of shares of beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
For the For the
period ended year ended
September 30, 1999 September 30, 1998
------------------------ -----------------------------
Shares Amount Shares Amount
--------- ------------ ----------- --------------
Sold 3,051,438 $ 56,395,709 8,206,412 $ 129,443,699
Reinvested 33,076 513,014 734,106 10,600,487
Redeemed (3,282,762) (59,396,404) (10,385,246) (162,731,127)
---------- ------------ ----------- -------------
Net Decrease (198,248) $ (2,487,681) (1,444,728) $ (22,686,941)
========== ============ =========== =============
Note 4--Purchases and Sales of Investment Securities
The aggregate cost of purchases and proceeds from sales of investments, other
than short-term obligations, for the year ended September 30, 1999 were
$234,827,304 and $237,080,000, respectively. For federal income tax purposes,
the tax basis of investments held at September 30, 1999 was $147,442,869 The
aggregate gross unrealized appreciation for all investments was $36,993,230 and
the aggregate gross unrealized depreciation for all investments was $4,008,640.
Note 5--Fund Merger
On September 8, 1999, the Board of Trustees voted to recommend the
reorganization of the Fund into the BT Investment Funds Capital Appreciation
Fund (the "Capital Appreciation Fund"). The Board has determined that this
proposal is in the best interests of shareholders. The Fund and the Capital
Appreciation Fund currently have the same investment management teams. The
merger requires the approval of the Fund's shareholders.
11
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- --------------------------------------------------------------------------------
BT Investment Equity Appreciation Fund
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Trustees of BT Pyramid Mutual Funds and
Shareholders of BT Investment Equity Appreciation Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the BT Investment Equity
Appreciation Fund (one of the funds comprising BT Pyramid Mutual Funds,
hereafter referred to as the "Fund") at September 30, 1999, and the results of
its operations, the changes in its net assets and the financial highlights for
each of the fiscal periods presented, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at September 30, 1999 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
November 16, 1999
- --------------------------------------------------------------------------------
Tax Information (Unaudited For the Year Ended September 30, 1999)
- --------------------------------------------------------------------------------
The Fund paid long term capital gains during the year ending
September 30, 1999 in the amount of $513,014.
12
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- --------------------------------------------------------------------------------
BT Investment Equity Appreciation Fund
Proxy Results (unaudited)
- --------------------------------------------------------------------------------
For the year ended September 30, 1999, the Bankers Trust Funds shareholders
voted on the following proposals at the annual meeting of shareholders on
October 8, 1999 or as adjourned. The description of each proposal and number of
shares voted are as follows:
1. To elect the Bankers Trust Funds Board of Trustees.
Shares Shares Voted
Voted Withheld
For Authority
-------- ------------
Messr Biggar 7,969,651 --
Messr Dill 7,969,651 --
Messr Hale 7,969,651 --
Messr Langton 7,969,651 --
Messr Saunders 7,969,651 --
Messr Van Benschoten 7,969,651 --
Dr. Gruber 7,969,651 --
Dr. Herring 7,969,651 --
2. To approve the New Investment Advisory Agreement with Bankers Trust Company.
For Against Abstain
--------- ------- -------
7,968,522 -- 1,129
3. To approve the New Investment Advisory Agreement with Morgan Grenfell, Inc.
For Against Abstain
--------- ------- -------
7,968,522 -- 1,129
4. To approve the New Investment Sub-advisory Agreement with Bankers Trust
Company.
For Against Abstain
--------- ------- -------
7,968,522 -- 1,129
5. To ratify the selection of PricewaterhouseCoopers LLP as the independent
accountants of the Fund and its corresponding Portfolio.
For Against Abstain
--------- ------- -------
7,968,522 -- 1,129
13
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[LOGO] Bankers Trust
Architects of Value
For information on how to invest, shareholder account information and current
price and yield information, please contact your relationship manager or write
to us at: BT Service Center
P.O. Box 419210
Kansas City, MO 64141-6210
or call our toll-free number: 1-800-730-1313
This report must be preceded or accompanied by a current prospectus for the
Fund.
BT Investment Equity Appreciation Fund CUSIP #055922751
BT Pyramid Mutual Funds 477ANN (9/99)
Distributed by:
ICC Distributors, Inc.
Two Portland Square
Portland, ME 04101
