MARCH 31, 1999
[LOGO] BT Mutual Funds
Equity Appreciation Fund
Semi-Annual Report
TRUST: BT PYRAMID MUTUAL FUNDS
INVESTMENT ADVISOR: BANKERS TRUST COMPANY
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Equity Appreciation Fund
Table of Contents
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Letter to Shareholders 3
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
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The Fund is not insured by the FDIC and 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.
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2
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Equity Appreciation Fund
Letter to Shareholders
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We are pleased to present you with this semi-annual report for the 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
Overall, the six months ended March 31, 1999 witnessed a continuation of the
significant volatility experienced by mid capitalization growth stocks during
the previous year. While equities in general were strong, the midcap sector in
particular still lagged the S&P 500 Index, as concerns over both foreign and
domestic economies kept investor preference toward large-capitalization stocks.
The midcap sector did outperform small cap stocks, as measured by the Russell
2000 Index.
The fourth calendar quarter of 1998 began with a continuation of the summer's
sharp sell off in midcap growth stocks as well as in the broader equity markets.
This was followed by an even more pronounced recovery quickly thereafter.
The rally was furthered by several factors:
o Two quickly successive and surprise interest rate cuts of 25 basis points
each by the Federal Reserve Board on October 15th and then again on
November 17th, following the first of the series of cuts on September 29th
o Overseas developments, including interest rate cuts in a number of other
countries, International Monetary Fund help for Brazil, and the announcement
of a Japanese banking reform bill
o Receding concerns of a global credit crunch and recession
o Regained investor confidence as reported earnings results for the third
calendar quarter were relatively positive
o Sharp improvement in the Internet-related stocks, as these companies
continued to show strong growth, as an Internet Initial Public Offering (IPO)
market had some success, and as Internet-related commerce emerged as a real
factor during the holiday season
o Continuation of a relatively strong overall U.S. economy with low inflation
and bullish consumer spending.
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Ten Largest Stock Holdings
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Univision Communications RSL Communications-Cl-A
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PSINet, Inc. Gemstar International Group, Ltd.
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Qwest Telecommunications Global Crossing Ltd.
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Safeguard Scientific, Inc. Abercrombe & Fitch
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Clear Channel Communications Outdoor Systems, Inc.
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The midcap market rally that began in mid-October continued into the first
calendar quarter of 1999, only to become subject to fears and uncertainty again
in February. As the quarter began, the positive market environment for midcap
stocks was buoyed by strength in economic growth, consumer spending, and fourth
quarter earnings reports as well as by low inflation and interest rates. Many
companies, in the technology arena especially, expressed upbeat outlooks.
Ironically, this very positive environment raised concerns that, at best, the
Federal Reserve Board was on hold and, perhaps, may act to raise interest rates
at the first sign of inflation.
Diversification of Portfolio Investments
By Theme as of March 31, 1999
(percentages are based on market value)
Money Market 9%
Convertible Preferred Stock 1%
The Ubiquitous Semiconductor 7%
Telecommunications 11%
Stores of Value 6%
Special Situations 2%
Return to Home Ownership 1%
Our Strengthening Financial Structure 7%
New Health Paradigm 4%
New Consumer 5%
Managing the Information Age 4%
Life Sciences Revolution 6%
Life on the Net 10%
Interactive Media 5%
Energizing the Globe 4%
Consolidating America 7%
Client Server Computing 7%
America's Industrial Renaissance 1%
America's Changing Leisure Time 3%
March witnessed a rebound in the midcap equity market. After the February
sell-off, subsequent economic reports pointed to a continuation of economic
growth with little or no evidence of inflation. Such data was interpreted as
neutral to positive for interest rates, propelling the equity markets higher.
Investors continued to be attracted to companies and industries exhibiting
strong growth trends, such as those in the technology and Internet sectors.
Throughout the semi-annual period, midcap companies exhibited strong earnings
growth, positive fundamentals, and attractive relative valuations. In fact,
midcap relative valuations as compared to large cap stocks remain at
multi-decade lows.
INVESTMENT REVIEW
The Fund significantly outperformed its category average and its benchmark for
the six month period, particularly well worth noting given the extremely high
volatility in the midcap equity market during these months. Specific stock
selection and, to an even greater degree, sector positioning bolstered Fund
performance.
3
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Equity Appreciation Fund
Letter to Shareholders
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<TABLE>
<CAPTION>
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Periods ended March 31, 1999 Cumulative Total Returns Average Annual Total Returns
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Past 6 Past 1 Past 3 Past 5 Since Past 1 Past 3 Past 5 Since
months year years years inception year years years inception
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Equity Appreciation Fund(1)
(inception 10/12/93) 34.64% 11.77% 56.86% 131.67% 121.48% 11.77% 16.19% 18.30% 15.66%
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S&P MidCap 400 Index(2) 20.02% 0.45% 65.61% 130.72% 126.81% 0.45% 18.31% 18.20% 16.32%
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Lipper MidCap Average(3) 23.42% 0.24% 49.37% 111.63% 106.33% 0.24% 13.95% 15.79% 13.99%
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</TABLE>
For example, in the fourth quarter of 1998, the Fund was overweight the best
performing sector, i.e. technology, and underweight the worst performing sector,
i.e. energy. 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.
MANAGER OUTLOOK
Although we expect future periods of volatility in the marketplace while global
and domestic economic and political events run their course, we remain
optimistic regarding midcap stocks in general. Midcap fundamentals remain solid,
earnings growth superior, and relative valuations attractive. In particular, the
companies in the Fund's portfolio are, overall, experiencing strong fundamental
growth in revenues and earnings and are expressing upbeat outlooks for the
remainder of 1999.
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. Given the recent high volatility in the stock market, it is also important
to keep in mind that at Bankers Trust 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--as well as our thematic approach and
screening process--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.
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 Equity Appreciation Fund and look forward
to continuing to serve your investment needs in the years ahead.
/s/ Mary P. Dugan
---------------------------
Mary P. Dugan
Portfolio Manager of the
Equity Appreciation Fund
March 31, 1999
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(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.
(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. 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.
(3) Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling
into the respective categories indicated. These figures do not reflect sales
charges.
4
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Equity Appreciation Fund
Performance Comparison
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Comparison of Change in Value of a $10,000 Investment in the Equity Appreciation
Fund and the S&P MidCap 400 Index since October 31, 1993.
Total Return for the Periods
Ended March 31, 1999(3)
One Year 5 Year Since 10/12/93(1)
11.77% 18.30%(2) 15.66%(2)
(1) The Fund's inception date.
(2) Annualized.
(3) Unaudited
Investment return and principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
[GRAPHIC]
In the printed version of the document, a line graph
appears which depicts the following plot points:
Equity Appreciation Fund - $22,148
S&P MidCap 400 Index - $22,681
Equity S&P
Appreciation MidCap 400
Fund Index
Oct-93 10000 10000
Mar-94 9657 9844
Sep-94 9939 10217
Mar-95 10909 10664
Sep-95 14283 12737
Mar-96 14262 13715
Sep-96 16061 14521
Mar-97 13679 15171
Sep-97 18603 20199
Mar-98 19815 22682
Sep-98 16450 19035
Mar-99 22148 22681
Past performance is not indicative of future performance. Performance figures
assume the reinvestment of dividends and capital gain distributions.
5
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Equity Appreciation Fund
Schedule of Portfolio Investments March 31, 1999 (unaudited)
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Shares Description Value
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Common Stocks - 89.7%
America's Changing Leisure Time - 3.4%
39,100 Gemstar International Group Ltd.(1) $ 2,942,275
39,400 Sotheby's Holdings, Inc. - Class A 1,275,575
36,400 Starbucks Corp.(1) 1,021,475
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5,239,325
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America's Industrial Renaissance - 1.0%
28,900 Black & Decker Corp. 1,602,144
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Client Server Computing - 6.6%
55,200 Citrix Systems, Inc(1) 2,104,500
11,000 Lexmark International Group, Inc. - Class A(1) 1,229,250
23,200 Network Solutions, Inc.(1) 2,453,400
45,700 Safeguard Scientifics, Inc.(1) 3,099,031
45,100 Seagate Technology, Inc.(1) 1,333,269
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10,219,450
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Consolidating America - 7.2%
45,800 Clear Channel Communications, Inc.(1) 3,071,462
42,500 Heftel Broadcasting Corp. - Class A(1) 1,843,437
84,962 Outdoor Systems, Inc.(1) 2,548,860
72,600 Univision Communications, Inc.(1) 3,630,000
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11,093,759
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Energizing The Globe - 3.9%
20,300 Allegheny Energy, Inc. 598,850
20,300 DQE, Inc. 779,012
82,100 Noble Drilling Corp.(1) 1,421,356
83,400 Sante Fe International Corp. 1,558,537
40,300 Smith International, Inc.(1) 1,612,000
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5,969,755
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Interactive Media - 4.7%
86,700 CBT Group PLC-ADR(1) 991,631
61,800 General Instrument Corporation(1) 1,873,312
83,200 Snyder Communications, Inc. 2,319,200
57,400 USA Networks, Inc.(1) 2,055,637
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7,239,780
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Life On The Net - 10.3%
13,100 At Home Corp. - Series A1 2,063,250
13,600 Broadcast.com, Inc.(1) 1,607,350
13,600 CMG Information Services(1) 2,489,650
17,300 Exodus Communications, Inc.(1) 2,326,850
19,100 Infoseek Corp.(1) 1,413,400
20,800 Intuit, Inc.(1) 2,116,400
1,200 Priceline.com, Inc.(1) 99,450
84,700 PSINet, Inc.(1) 3,605,044
4,600 Ziff-Davis, Inc.(1) 165,600
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15,886,994
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Life Sciences Revolution - 6.0%
27,318 Elan Corp. PLC-ADR(1) 1,905,430
39,000 Forest Laboratories, Inc.(1) 2,198,625
16,300 Perkin Elmer Corp. 1,582,119
16,700 Sepracor, Inc.(1) 1,874,575
39,000 Watson Pharmaceuticals(1) 1,720,875
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9,281,624
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Shares Description Value
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Managing The Information Age - 3.6%
40,700 Flextronics International(1) $ 2,075,700
24,800 Sanmina Corp.(1) 1,581,000
23,300 Veritas Software Corp.(1) 1,881,475
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5,538,175
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New Consumer - 5.0%
27,800 Abercrombie & Fitch Co. - Class A(1) 2,557,600
16,165 Gucci Group NV 1,301,283
58,700 TJX Companies, Inc. 1,995,800
25,900 Tommy Hilfiger Corp.(1) 1,783,863
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7,638,546
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New Health Paradigm - 4.1%
55,800 AmeriSource Health Corp. - Class A(1) 1,907,663
10,600 MiniMed, Inc.(1) 1,077,225
131,000 Oxford Health Plans Corp.(1) 2,046,875
17,300 Wellpoint Health Networks, Inc.(1) 1,311,556
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6,343,319
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Our Strengthening Financial Structure - 7.2%
67,200 ACE Ltd. 2,095,800
12,400 AMBAC Financial Group 669,600
38,700 Astoria Financial Corp. 1,935,000
60,200 Charter One Financial, Inc. 1,737,334
76,100 Concord EFS, Inc.(1) 2,097,506
29,700 Metris Companies, Inc. 1,199,138
32,800 PartnerRe, Ltd. 1,328,400
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11,062,778
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Return To Home Ownership - 1.2%
39,500 Linens 'N Things, Inc.(1) 1,792,313
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Special Situations - 1.7%
37,400 Dial Corp. 1,285,625
39,800 Suiza Foods Corp.(1) 1,340,763
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2,626,388
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Stores of Value - 6.2%
57,900 BJ's Wholesale Club, Inc.(1) 1,530,731
28,400 Consolidated Stores Corp.(1) 860,875
106,800 Family Dollar Stores, Inc. 2,456,400
51,100 Office Depot, Inc.(1) 1,881,119
33,900 U.S. Foodservice, Inc.(1) 1,576,350
42,600 Williams-Sonoma, Inc.(1) 1,203,450
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9,508,925
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Telecommunications - 11.1%
63,500 Global Crossing Ltd.(1) 2,936,875
40,600 Globalstar Telecom Ltd.(1) 563,325
63,200 Newbridge Networks Corp.(1) 1,959,200
14,200 Qualcomm, Inc.(1) 1,766,125
45,700 Qwest Communications International, Inc.(1) 3,294,684
82,300 RSL Communications - Class A(1) 2,957,656
32,400 Western Wireless Corp - Class A(1) 1,174,500
68,400 WinStar Communications, Inc.(1) 2,485,913
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17,138,278
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See Notes to Financial Statements.
6
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Equity Appreciation Fund
Schedule of Portfolio Investments March 31, 1999 (unaudited)
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Shares Description Value
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The Ubiquitous Semiconductor - 6.5%
19,000 Broadcom Corp - Class A(1) $ 1,170,875
71,700 Cadence Design Systems, Inc.(1) 1,846,275
49,500 Lam Research Corp.(1) 1,435,500
33,200 Linear Technology Corp. 1,701,500
22,800 Micron Technology, Inc. 1,100,100
20,300 Rambus, Inc.(1) 1,306,813
27,400 Teradyne, Inc.(1) 1,495,013
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10,056,076
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Total Common Stocks (Cost $101,672,241) 138,237,629
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Shares Description Value
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Convertible Preferred Stock - 1.2%
40,200 United Rentals Conv Pfd. $ 1,788,900
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Total Convertible Preferred Stock
(Cost $2,002,125) 1,788,900
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SHORT TERM INSTRUMENT - 9.5%
Mutual Fund
14,589,467 BT Institutional Cash Management Fund
(Cost $14,589,467) 14,589,467
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Total Investments (Cost $118,263,833) 100.4% $154,615,996
Liabilities in Excess of Other Assets (0.4)% (678,550)
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Net Assets 100.0% $153,937,446
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Net Asset Value
($153,937,446 / 8,207,903 shares outstanding) $18.75
======
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(1) Non-Income Producting Security
The following abbreviation is used in portfolio descriptions:
ADR -- American Depository Receipt
See Notes to Financial Statements.
7
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Equity Appreciation Fund
Statement of Assets and Liabilities March 31, 1999 (unaudited)
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<TABLE>
<S> <C>
Assets
Investment, at Value (Cost of investments $118,263,833) $154,615,996
Dividends and Interest Receivable 77,473
Prepaid Expenses and Other 6,706
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Total Assets 154,700,175
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Liabilities
Payable for Securities Purchased 620,356
Payable for Shares of Beneficial Interest Redeemed 2,806
Due to Bankers Trust 123,094
Accrued Expenses and Other 16,473
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Total Liabilities 762,729
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Net Assets $153,937,446
============
Composition of Net Assets
Paid-in Capital $ 96,389,312
Accumulated Expenses in Excess of Income (205,925)
Accumulated Net Realized Gain from Investment Transactions 21,401,896
Net Unrealized Appreciation on Investment 36,352,163
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Net Assets $153,937,446
============
</TABLE>
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Statement of Operations For the six months ended March 31, 1999 (unaudited)
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<TABLE>
<S> <C>
Investment Income
Dividends $ 485,596
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Expenses
Advisory Fees 449,489
Administration and Services Fees 345,761
Professional Fees 15,675
Registration Fees 4,535
Shareholder Reports 9,269
Trustees Fees 6,064
Miscellaneous 4,174
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Total Expenses 834,967
Less Expenses absorbed by Bankers Trust (143,446)
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Net Expenses 691,521
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Expenses in Excess of Investment Income (205,925)
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Realized and Unrealized Gain on Investments
Net Realized Gain from Investment Transactions 21,516,791
Net Change in Unrealized Appreciation/Depreciation on Investments 20,179,908
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Net Realized and Unrealized Gain on Investments 41,696,699
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Net Increase in Net Assets from Operations $41,490,774
===========
</TABLE>
See Notes to Financial Statements.
8
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Equity Appreciation Fund
Statements of Changes in Net Assets
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<TABLE>
<CAPTION>
For the For the
six months ended year ended
March 31, 1999(4) September 30, 1998
------------------ ---------------------
<S> <C> <C>
Increase (Decrease) in Net Assets from:
Operations
Expenses in Excess of Investment Income $ (205,925) $ (589,412)
Net Realized Gain from Investment Transactions 21,516,791 9,600,928
Net Change in Unrealized Appreciation/Depreciation on Investments 20,179,908 (23,654,809)
------------ ------------
Net Increase (Decrease) in Net Assets from Operations 41,490,774 (14,643,293)
------------ ------------
Distributions to Shareholders
Net Realized Gain from Investment Transactions (513,014) (10,600,974)
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Capital Transactions
Proceeds from Sales of Shares 24,316,154 129,443,699
Dividend Reinvestments 513,014 10,600,487
Cost of Shares Redeemed (33,946,588) (162,731,127)
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Net Decrease in Net Assets from Capital Transactions (9,117,420) (22,686,941)
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Total Increase (Decrease) in Net Assets 31,860,340 (47,931,208)
Net Assets
Beginning of Period 122,077,106 170,008,314
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End of Period $153,937,446 $122,077,106
============ ============
</TABLE>
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Financial Highlights
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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 For the years For the period For the
six months ended ended September 30, Jan. 1, 1995 year ended
March 31, ------------------------------ to Sept. 30, Dec. 31,
1999(4) 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 (0.03) (0.07) (0.06) (0.05) (0.02) (0.03)
Net Realized and Unrealized Gain (Loss)
on Investment Transactions 4.86 (1.68) 2.31 1.72 4.02 0.37
------ ------ ------ ------ ------ ------
Total from Investment Operations 4.83 (1.75) 2.25 1.67 4.00 0.34
------ ------ ------ ------ ------ ------
Distributions to Shareholders
Net Realized Gain from Investment
Transactions (0.06) (0.97) (0.78) (0.58) -- --
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period $18.75 $13.98 $16.70 $15.23 $14.14 $10.14
====== ====== ====== ====== ====== ======
Total Investment Return 34.64% (10.86)% 15.82% 12.45% 39.45% 3.47%
Supplemental Data and Ratios:
Net Assets, End of Period (000s omitted) $153,937 $122,077 $170,008 $157,568 $92,033 $29,973
Ratios to Average Net Assets:
Expenses in Excess of Income (0.30)%(1) (0.36)% (0.39)% (0.42)% (0.38)%(1) (0.32)%
Expenses 1.00%(1) 1.00% 1.00% 1.00% 1.00%(1) 1.00%
Decrease Reflected in Above Expense
Ratio Due to Absorption of Expenses
by Bankers Trust 0.20%(1) 0.20% 0.20% 0.24% 0.33%(1) 0.46%
Portfolio Turnover Rate 89% 160% 188% 271%(3) 125%(3) 157%(3)
</TABLE>
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(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.
(4) Unaudited
See Notes to Financial Statements.
9
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Equity Appreciation Fund
Notes to Financial Statements (unaudited)
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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 Equity Appreciation Fund (the
"Fund") is one of the funds offered to investors by the Trust. The Fund
commenced operations and began offering shares of beneficial interest 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. Repurchase Agreements
The Fund may enter into repurchase agreements with financial institutions deemed
to be creditworthy by the Fund's investment advisor, subject to the seller's
agreement to repurchase such securities at a mutually agreed upon price.
Securities purchased subject to repurchase agreements are deposited with the
Fund's custodian and, pursuant to the terms of the repurchase agreement, must
have an aggregate market value greater than or equal to the repurchase price
plus accrued interest at all times. If the value of the underlying securities
falls below the value of the repurchase price plus accrued interest, the Fund
will require the seller to deposit additional collateral by the next business
day. If the request for additional collateral is not met, or the seller defaults
on its repurchase obligation, the Fund maintains the right to sell the
underlying securities at market value and may claim any resulting loss against
the seller. However, in the event of default or bankruptcy by the seller,
realization and/or retention of the collateral may be subject to legal
proceedings.
E. Distributions
It is the Fund's policy to declare and distribute dividends quarterly to
shareholders from net investment income. 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.
F. 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.
G. Other
The Trust accounts separately for the assets, liabilities, and operations of the
Fund. Expenses directly attributable to the 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 Administration and Services
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 Advisory 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% of
the average daily net assets of the Fund.
The Fund may invest in the BT Institutional Cash Management Fund (the "Cash
Management Fund"), an open-end management investment company managed by Bankers
10
<PAGE>
Equity Appreciation Fund
Notes to Financial Statements (unaudited)
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 March 31, 1999,
amounted to $276,386 and are included in dividend income.
ICC Distributors, Inc., a member of the Forum Group of Companies, provides
distribution services to the Fund.
The Equity Appreciation Fund is a participant with other affiliated entities in
a revolving credit facility and a discretionary demand line of credit facility,
(collectively the "credit facilities") in the amounts of $50,000,000 and
$100,000,000, respectively. A commitment fee of .07% per annum on the average
daily amount of the available commitment is payable on a quarterly basis and
apportioned equally among all participants. Amounts borrowed under the credit
facilities will bear interest at a rate per annum equal to the Federal Funds
Rate plus .45%. No amounts were drawn down or outstanding under the credit
facilities as of and for the six month period ended March 31, 1999.
Bankers Trust Company is a wholly owned subsidiary of Bankers Trust Corporation.
On November 30, 1998, Bankers Trust Corporation entered into an Agreement and
Plan of Merger with Deutsche Bank AG under which Bankers Trust Corporation would
merge with and into a subsidiary of Deutsche Bank AG. Deutsche Bank AG is a
major global banking institution that is engaged in a wide range of financial
services, including investment management, mutual funds, retail and commercial
banking, investment banking and insurance. The transaction is contingent upon
various regulatory approvals, and continuation of the Fund's advisory
relationship with Bankers Trust thereafter is subject to the approval of Fund
shareholders. If the transaction is approved and completed, Deutsche Bank AG, as
Bankers Trust's new parent company, will control its operations as investment
adviser. Bankers Trust believes that, under this new arrangement, the services
provided to the Fund will be maintained at their current level.
Note 3--Shares of Beneficial Interest
At March 31, 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
March 31, 1999(1) September 30, 1998
-------------------------- -----------------------------
Shares Amount Shares Amount
---------- ------------ ----------- ------------
Sold 1,446,091 $ 24,316,154 8,206,412 $129,443,699
Reinvested 33,076 513,014 734,106 10,600,487
Redeemed (2,006,436) (33,946,588) (10,385,246) (162,731,127)
---------- ------------ ---------- ------------
Net Decrease (527,269) $ (9,117,420) (1,444,728) $(22,686,941)
========== ============ =========== ============
- -------------
1 Unaudited
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 six month period ended March 31, 1999 were
$118,784,453 and $135,119,563, respectively. For federal income tax purposes,
the tax basis of investments held at March 31, 1999 was $118,263,833. The
aggregate gross unrealized appreciation for all investments was $39,975,237 and
the aggregate gross unrealized depreciation for all investments was $3,623,074.
Note 5--Subsequent Event
Subsequent to period end, the fund has entered into a $100,000,000 364-day
senior unsecured committed revolving credit facility ("the facility") with two
lenders. The borrowings shall bear interest at a rate based on the Federal Funds
rate. A commitment fee is charged on the unused portion of the facility. The
facility replaces the revolving credit facility described in footnote 2.
11
<PAGE>
Investment Advisor and Administrator of the Portfolio
BANKERS TRUST COMPANY
130 Liberty Street
New York, NY 10006
Distributor
ICC DISTRIBUTORS, INC.
Two Portland Square
Portland, ME 04101
Custodian and Transfer Agent
BANKERS TRUST COMPANY
130 Liberty Street
New York, NY 10006
Independent Accountants
PRICEWATERHOUSECOOPERS LLP
250 West Pratt Street
Baltimore, MD 21201
Counsel
WILLKIE FARR & GALLAGHER
787 7th Avenue
New York, NY 10019
[LOGO]
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.
Equity Appreciation Fund CUSIP #055922751
BT Pyramid Mutual Funds 477 SA (3/99)
Distributed by:
ICC Distributors, Inc.
Two Portland Square
Portland, ME 04101
