BT PYRAMID MUTUAL FUNDS
Institutional Asset Management Fund
SUPPLEMENT DATED MARCH 20, 2000, (REPLACING SUPPLEMENT DATED FEBRUARY 10, 2000)
TO PROSPECTUS DATED JULY 31, 1999
THE FOLLOWING REVISES THE FUND'S ADDRESS FOR ALL CORRESPONDENCE, INCLUDING
APPLICATIONS:
Service Center
P.O. Box 219210
Kansas City, MO 64121-9210
THE FOLLOWING REPLACES THE "STRATEGIES" SECTION:
In seeking the Fund's goal, the investment adviser allocates the Fund's assets
among three principal asset classes: stocks, bonds and short-term instruments.
The investment adviser will generally allocate the largest portion of the Fund's
assets to stocks, with smaller allocations to short-term instruments and bonds.
These are general guidelines. The Fund's investment in each asset class
fluctuates depending on the investment adviser's perception of the opportunities
available among the three asset classes and the relative risks associated with
such opportunities, consistent with the Fund's goal. The Fund regularly uses
derivatives to increase or decrease its exposure to the various asset classes.
THE FOLLOWING REPLACES THE SECOND SENTENCE IN THE "PRINCIPAL INVESTMENTS -
STOCKS" SECTION:
The Fund's investment adviser seeks to maximize total return by assembling a
portfolio of stocks that attempt to track the S&P 500 Index in terms of risk and
sector allocation. The investment adviser then uses a set of quantitative
measures to signal which stocks have characteristics which imply favorable
returns, and then determines whether to overweight, underweight, or hold a
neutral position relative to S&P 500 Index weightings. These measures have been
developed over several years of fundamental research in which the investment
adviser has consistently sought to identify significant market inefficiencies,
and then use these imperfections to affect returns.
The Fund may also invest a portion of their assets in common stocks of companies
that are the targets of publicly announced acquisitions. The selection of these
investments is based on a proprietary quantitative model that provides a
disciplined approach to both the timing and quantity of shares purchased.
THE FOLLOWING REPLACES THE FIRST SENTENCE IN THE "PRINCIPAL INVESTMENTS - BONDS"
SECTION:
These securities include investment grade domestic and foreign fixed income
securities.
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THE FOLLOWING SUPPLEMENTS THE THIRD SENTENCE IN THE "PRINCIPAL INVESTMENTS -
BONDS" SECTION:
Securities in this asset class also include taxable municipal securities.
THE FOLLOWING REPLACES THE FIRST SENTENCE IN THE "PRINCIPAL INVESTMENTS -
SHORT-TERM INSTRUMENTS" SECTION:
The short-term instruments in which the Fund invests include domestic and
foreign securities, money market mutual funds and money market instruments.
THE FOLLOWING REPLACES THE SECOND SENTENCE IN THE "PRINCIPAL INVESTMENTS -
DERIVATIVES" SECTION:
The Fund primarily uses futures, options, forward currency transactions and
swaps.
THE FOLLOWING SUPPLEMENTS THE "PRINCIPAL INVESTMENTS -- DERIVATIVES" SECTION:
The Fund may use derivatives for leveraging, which is a way to attempt to
enhance returns.
THE FOLLOWING SUPPLEMENTS THE "INVESTMENT PROCESS" SECTION:
The Fund employs a global asset allocation strategy which attempts to enhance
returns and manage risk by responding effectively to changes in global markets
using instruments including, but not limited to, futures, options and currency
forwards. This strategy employs a multi-factor global asset allocation model
that evaluates equity, bond, cash and currency opportunities across domestic and
international markets.
In implementing the global asset allocation strategy, the Fund invests in
derivatives based on any type of security or index including futures traded on
foreign exchanges, such as bonds and equity indices of foreign countries. Some
derivative strategies, including selling futures, buying puts and writing calls,
may hedge the Fund's investments against price fluctuations. Other strategies,
including buying futures, writing puts and buying calls, tend to increase and
will broaden the Fund's market exposure. Options and futures may be combined
with each other, or with forward contracts, in order to adjust the risk and
return characteristics of an overall strategy.
The Fund may also enter into forward currency exchange contracts (agreements to
exchange one currency for another at a future date), may buy and sell futures
contracts relating to foreign currencies and may purchase securities indexed to
foreign currencies. Currency management strategies allow us to shift investment
exposure from one currency to another or to attempt to profit from anticipated
declines in the value of a foreign currency relative to the U.S. dollar.
Successful implementation of the global asset allocation strategy depends on the
investment adviser's judgment as to the potential risks and rewards of
implementing the different types of strategies.
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THE FOLLOWING SUPPLEMENTS THE "RISKS - PRIMARY RISKS" SECTION:
Derivative Risk. Derivatives may be more volatile and less liquid than
traditional securities. Risks associated with derivatives include:
o the derivative may not fully offset the underlying positions;
o the derivatives used for risk management may not have the intended effects and
may result in losses or missed opportunities; and
o the possibility the Fund cannot sell the derivative because of an illiquid
secondary market.
The use of derivatives for leveraging purposes tends to magnify the effect of an
instrument's price changes as market conditions change.
Merger Arbitrage Risk. The mergers and acquisitions marketplace can produce
unforeseeable results. Merger and acquisition transactions may be renegotiated,
terminated or delayed for a variety of reasons. In the event these transactions
fail to close or close at a less than expected price per share, the Fund may
realize losses or a lower return than anticipated.
THE FOLLOWING SUPPLEMENTS THE "MANAGEMENT OF THE FUND" SECTION:
On June 4, 1999, Bankers Trust Corporation merged with a subsidiary of Deutsche
Bank A.G. ("Deutsche Bank"). Deutsche Bank 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. At a special meeting of shareholders held in 1999, shareholders voted
to approve a new investment advisory agreement (the "Advisory Agreement") with
Bankers Trust Company ("Bankers Trust"). Approval of the Advisory Agreement was
sought because Deutsche Bank became Bankers Trust's parent company and,
therefore, controls its operations as investment adviser.
At the special meeting, shareholders of the Fund also approved a new investment
advisory agreement with Deutsche Asset Management, Inc. (formerly Morgan
Grenfell Inc.) The new investment advisory agreement may be implemented within
two years of the date of the special meeting upon approval of a majority of the
members of the Board of Trustees who are not "interested persons," generally
referred to as independent trustees. Shareholders of the Fund also approved a
new sub-investment advisory agreement among the Fund's portfolio, Deutsche Asset
Management, Inc. and Bankers Trust under which Bankers Trust may perform certain
of Deutsche Asset Management Inc.'s responsibilities, at Deutsche Asset
Management, Inc.'s expense, upon approval of the independent trustees, within
two years of the date of the special meeting.
Under the new investment advisory agreements and new sub-advisory agreement, the
compensation paid and the services provided would be the same as those under the
Advisory Agreements with Bankers Trust.
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Deutsche Asset Management, Inc. is located at 885 Third Avenue, 32nd Floor, New
York, New York 10022. The firm provides a full range of investment advisory
services to institutional clients. It serves as investment adviser to 11 other
investment companies and as sub-adviser to five other investment companies.
THE FOLLOWING REPLACES THE "MANAGEMENT OF THE FUND - PORTFOLIO MANAGER" SECTION:
PORTFOLIO MANAGERS. The following portfolio managers are responsible for the
day-to-day management of the master portfolio:
JANET CAMPAGNA
o Managing Director and Lead Manager of the master portfolio.
o Head of Global and Tactical Asset Allocation.
o Joined the adviser in 1999 and began managing the master portfolio in 2000.
o Investment Strategist and Manager of the Asset Allocation Strategies Group for
Barclays Global Investors from 1994 to 1999.
o Over nine years of investment industry experience.
o Bachelor's degree in Economics from Northeastern University; Master's degree
in Social Science from California Institute of Technology and Ph. D in
Political Science from University if California at Irvine.
ROBERT WANG
o Vice President and Co-Manager of the master portfolio.
o Joined the adviser in 1995 and began managing the master portfolio in 2000.
o Fixed income trader for J.P. Morgan from 1983 to 1985.
o Over 16 years of investment industry experience.
o Bachelor's degree in Economics from the Wharton School at the University of
Pennsylvania.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
SUPP482 (3/00)
CUSIP:
055847404
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