Deutsche Asset Management
[GRAPHIC OMITTED]
Mutual Fund
Semi-Annual Report
March 31, 2000
Equity Appreciation
Formerly BT Investment Equity Appreciation Fund
Deutsche Bank Group
[LOGO OMITTED]
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Equity Appreciation
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TABLE OF CONTENTS
Letter to Shareholders 3
Equity Appreciation
Schedule of Investments 7
Statement of Assets and Liabilities 9
Statement of Operations 10
Statements of Changes in Net Assets 11
Financial Highlights 12
Notes to Financial Statements 13
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The Fund is not insured by the FDIC and is not a deposit, obligation of or
guaranteed by Deutsche Bank. The Fund is subject to investment risks,
including possible loss of principal amount invested.
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Equity Appreciation
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LETTER TO SHAREHOLDERS
We are pleased to present you with this semi-annual report for Equity
Appreciation (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.
The name of the Fund has changed to Deutsche Equity Appreciation to reflect the
acquisition of Bankers Trust by DeutscheBank.The Fund's investment objectives,
policies and strategies remain the same.
MARKET ACTIVITY
MID CAPITALIZATION GROWTH STOCKS SIGNIFICANTLY OUTPERFORMED BOTH THEIR LARGE CAP
AND SMALL CAP BRETHREN DURING THE SIX MONTHS ENDED MARCH 31, 2000. The S&P 400
Mid Cap Index returned 32.06% for the semi-annual period as compared to the
large cap return of the S&P 500 of 17.51% and the small cap return of the
Russell 2000 Index of 26.83%.
A THEME OF "VOLATILITY AND REVERSAL" CONTINUED TO DOMINATE THE MID CAP EQUITY
MARKET AS WELL AS THE BROADER EQUITY MARKETS.
o In October the U.S. equity markets were buffeted between fears that the
economy may be overheating and hopes that the strong growth/low inflation
scenario would continue. There was slight moderation in some of the more
interest-sensitive, cyclical sectors such as housing and autos, but domestic
demand still had considerable momentum and the export sector began to revive,
buoyed by the pickup in global demand. By mid-October, the equity markets
gained strength, as investors' set aside concerns of higher interest rates and
focused on the positive aspects of growth.
o Overall, the fourth calendar quarter of 1999 experienced significant strength
in the equity markets, as the U.S. economy remained robust with few signs of
inflation. There continued to be tight labor markets, but productivity stayed
strong. Economic momentum also continued to build around the world. However,
this equity market strength was relatively narrow and confined primarily to
the technology and telecommunications sectors across all market
capitalizations.
o January began with weakness in the broader markets as investors looked toward
a number of possible Federal Reserve Board interest rate increases in the
first half of the year 2000 following a robust fourth quarter and holiday
selling season. Following this short-lived early weakness, the mid cap market
as well as the broader equity markets resumed strength, narrowly confined to
technology, telecommunications and select biotechnology issues where growth
was expected to continue despite rising interest rates.
TEN LARGEST STOCK HOLDINGS
(percentages are based on market value of total investments)
PE-Corp - PE Biosystems 3.02%
Maxim Integrated Product 2.78
Network Appliance, Inc. 2.76
Immunex Corp. 2.64
Flextronics International 2.52
BJ Services Co. 2.44
Ivax Corp. 2.41
Scientific-Atlantic, Inc. 2.37
Dynegy, Inc. 2.32
Citrix Systems, Inc. 2.30
o In February, there was a sell off of such "Old Economy" sectors as
manufacturing and other cyclical industries on fears of higher interest rates.
However, such "New Economy" sectors as technology and biotechnology
continued to do well, helping to boost the S&P 400 Mid Cap Index overall.
o Market volatility intensified in March on fears of further interest rate
increases as well as valuation concerns in the technology and biotechnology
areas.
THROUGHOUT THE SEMI-ANNUAL PERIOD, MID CAP COMPANIES EXHIBITED STRONG EARNINGS
GROWTH AND VERY ATTRACTIVE RELATIVE VALUATIONS. Growth outperformed value within
the mid cap sector. Communications services, mostly driven by the cellular and
wireless industries, health care and technology were among the best performing
sectors for the semi-annual period. The utilities sector and the energy sector
performed particularly well in the first quarter of 2000, the latter benefiting
from rising oil prices.
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3
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Equity Appreciation
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LETTER TO SHAREHOLDERS
INVESTMENT REVIEW
The Fund significantly outperformed its benchmark for the six month period,
particularly well worth noting given the extremely high volatility in the mid
cap equity market during this semi-annual period. Specific stock selection and
sector positioning bolstered Fund performance.
For example, among the Fund's largest holdings within the top performing sectors
were Network Appliance Inc., PE Corp.-PE Biosystems, Ivax Corp., Citrix Systems,
Maxim Integrated Product, Univision Communications, BEA Systems Inc.,
InfoSpace.com Inc., and Immunex Corp. Given the narrowness of mid cap
outperformance, our team's stock-picking skills became ever more critical to the
Fund's success. So, too, did our extensive research into sectors.
In the fourth quarter of 1999, the Fund was overweight in the three best
performing sectors--technology, communications services and health care. Also
having a positive impact on relative performance were underweight positions in
three of the poorer performing sectors--utilities, financials and basic
materials. Detracting from performance was an underweight position in capital
goods and an overweight position in consumer staples.
The energy sector was an outstanding performer in the first quarter of 2000, and
the Fund's overweight position boosted the portfolio's return. Technology
continued to be a winning sector in the first quarter of 2000, and the Fund
remained overweight there as well. Performance was also aided during these
months by underweight positions in financials, basic materials and consumer
cyclicals, three of the poorer performing sectors.
MANAGER OUTLOOK
Our outlook for the equity markets in general is favorable. The U.S. economy
continues to benefit from strong productivity-led growth without an apparent
rise in inflation. In addition, synchronized worldwide growth is not expected to
cause inflationary pressure due to excess economic capacity. However, we expect
the Federal Reserve Board to remain vigilant on the inflation front and believe
the likelihood exists that the Federal Reserve Board may well raise interest
rates several more times during the remainder of the year 2000. There is also
the risk that Presidential campaign rhetoric and elections may cause market
volatility to increase.
<TABLE>
<CAPTION>
CUMULATIVE AVERAGE ANNUAL
TOTAL RETURNS TOTAL RETURNS
PERIODS ENDED Past 6 Past 1 Past 3 Past 5 Since Past 1 Past 3 Past 5 Since
MARCH 31, 2000 months year years years inception year years years inception
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Equity Appreciation(1)
(inception 10/12/93) 58.60% 70.01% 178.06% 248.65% 276.54% 70.01% 40.62% 28.37% 22.76%
S&P Midcap 400 Index(2)
(since 10/31/93) 32.06% 38.08% 106.72% 194.10% 213.63% 38.08% 27.39% 24.08% 19.50%
Lipper Multi Cap
Growth Average(3)
(since 10/31/93) 55.62% 65.13% 182.02% 284.12% 297.73% 65.13% 40.24% 30.23% 23.49%
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<FN>
(1) Past performance is not indicative of future results. 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. Performance figures
assume the reinvestment of dividends and capital gain distributions. 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. During the
six months ended March 31, 2000, Lipper changed the way it classifies mutual
funds. As a result of this reclassification, Equity Appreciation is now part
of the Lipper Multi Cap Growth Average. Previously, Equity Appreciation was
part of the Lipper Mid Cap Growth Average.
</FN>
</TABLE>
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LETTER TO SHAREHOLDERS
PORTFOLIO DIVERSIFICATION
By Theme as of March 31, 2000
(percentages are based on market value of total investments)
Energizing the Globe 13.8%
Client Server Computing 12.3
The Ubiquitous Semiconductor 11.6
Telecommunications 10.6
Life Sciences Revolution 9.6
Short TermInstruments 8.3
Managing the Information Age 8.1
America's Changing Leisure Time 4.9
Interactive Media 3.6
Life on the Net 3.4
Special Situations 3.0
New Consumer 2.6
New Healthcare Paradigm 2.4
Stores of Value 2.4
Our Strengthening Financial Structure 1.6
Miscellaneous(1) 1.8
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(1) Includes themes with weightings of less than 1.5%.
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 mid cap stocks in general. The outlook for profit growth in
this segment remains strong and relative valuations continue to be attractive.
Company earnings reports continue to be generally positive to date.
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 historically 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 seek to 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 Deutsche 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
EQUITY APPRECIATION
March 31, 2000
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Equity Appreciation
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PERFORMANCE COMPARISON
[GRAPH OMITTED]
PLOT POINTS FOLLOW:
EQUITY APPRECIATION AND THE S&P MIDCAP 400 INDEX
GROWTH OF A $10,000 INVESTMENT (SINCE OCTOBER 21, 1993)
Equity S&P MidCap
Appreciation - $37,654 400 Index - $31,363
Oct-93 10,000 10,000
Mar-94 9,657 9,844
Sep-94 9,939 10,217
Mar-95 10,909 10,664
Sep-95 14,283 12,737
Mar-96 14,262 13,715
Sep-96 16,061 14,521
Mar-97 13,679 15,171
Sep-97 18,603 20,199
Mar-98 19,815 22,682
Sep-98 16,450 19,035
Mar-99 22,148 22,681
Sep-99 23,742 23,717
Mar-00 37,654 31,363
Average Annual Total Return for the Periods Ended March 31, 2000(2)
One Year 70.01%, Five Years 28.37% Since 10/21/93(1) 22.76%
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(1) The Fund's inception date.
(2) Unaudited.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Performance figures assume the reinvestment of
dividends and capital gain distributions. During the period the Fund waived
certain fees and expenses.
Benchmark return is for the period beginning October 31, 1993.
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Equity Appreciation
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SCHEDULE OF INVESTMENTS MARCH 31, 2000 (UNAUDITED)
SHARES DESCRIPTION VALUE
------ ----------- -----
COMMON STOCKS - 91.9%
AMERICA'S CHANGING LEISURE TIME - 4.9%
77,000 Harley-Davidson, Inc. $ 6,111,875
36,500 Hispanic Broadcasting Corp.(1) 4,133,625
62,200 Univision Communications, Inc.(1) 7,028,600
------------
17,274,100
------------
AMERICA'S INDUSTRIAL RENAISSANCE - 1.2%
36,000 SPX Corp.(1) 4,101,750
------------
CLIENT SERVER COMPUTING - 12.3%
86,000 BEA Systems, Inc.(1) 6,310,250
122,400 Citrix Systems, Inc.(1) 8,109,000
126,400 Flextronics International Ltd.(1) 8,903,300
62,800 Mercury Interactive Corp.(1) 4,976,900
117,600 Network Appliance, Inc.(1) 9,731,400
69,100 Rational Software Corp.(1) 5,286,150
------------
43,317,000
------------
ENERGIZING THE GLOBE - 13.8%
88,720 Apache Corp. 4,413,820
116,700 BJ Services Co.(1) 8,621,212
71,100 Cooper Cameron Corp.(1) 4,754,812
53,300 Devon Energy Corp. 2,588,381
130,179 Dynegy, Inc. 8,168,732
91,700 Montana Power Co.(1) 5,868,800
132,140 Noble Drilling Corp.(1) 5,475,551
108,900 Sante Fe International Corp. 4,029,300
59,400 Smith International, Inc.(1) 4,603,500
------------
48,524,108
------------
INTERACTIVE MEDIA - 3.6%
60,200 Charter Communications(1) 862,553
131,800 Scientific-Atlanta Corp. 8,361,062
155,000 USA Networks, Inc.(1) 3,497,187
------------
12,720,802
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LIFE ON THE NET - 3.4%
25,000 Art Technology Group(1) 1,642,187
42,400 Broadvision, Inc.(1) 1,902,700
50,700 Infospace.com, Inc.(1) 7,373,681
6,700 Vignette Corp.(1) 1,073,675
------------
11,992,243
------------
LIFE SCIENCES REVOLUTION - 9.6%
4,500 Abgenix, Inc.(1) 621,563
14,900 Alkermes, Inc.(1) 1,378,250
147,000 Immunex Corp.(1) 9,325,312
40,300 Invitrogen Corp.(1) 2,339,919
31,900 Medimmune, Inc.(1) 5,554,587
19,700 Nanogen, Inc.(1) 669,800
110,400 Pe Corp. - Pe Biosystems Group(1) 10,653,600
12,300 Qiagen NV(1) 1,672,800
23,300 Techne Corp.(1) 1,607,700
------------
33,823,531
------------
SHARES DESCRIPTION VALUE
------ ----------- -----
MANAGING THE INFORMATION AGE - 8.1%
5,800 Aether Systems, Inc.(1) 1,052,700
44,100 Alteon Websystems, Inc.(1) 3,616,200
38,900 Brocade Communications(1) 6,975,256
16,700 Cobalt Networks, Inc.(1) 784,900
26,300 OTG Software(1) 1,060,219
104,400 Portal Software, Inc.(1) 5,944,275
25,900 Redback Networks, Inc.(1) 7,768,381
8,300 Verisign, Inc.(1) 1,240,850
------------
28,442,781
------------
NEW CONSUMER - 2.6%
58,000 Circuit City Stores, Inc. 3,530,750
14,165 Gucci Group NV(1) 1,259,800
89,600 Zale Corp.(1) 4,228,001
------------
9,018,551
------------
NEW HEALTH PARADIGM - 2.4%
312,500 IVAX Corp.(1) 8,515,625
------------
OUR STRENGTHENING FINANCIAL STRUCTURE - 1.6%
33,500 AMBAC Financial Group(1) 1,687,563
81,190 Charter One Financial, Inc.(1) 1,704,990
131,000 North Fork BanCorp, Inc.(1) 2,341,625
------------
5,734,178
------------
PRODUCTIVITY ENHANCEMENT - 0.8%
27,000 Caliper Technologies(1) 2,183,625
14,300 Palm, Inc.(1) 641,713
------------
2,825,338
------------
SPECIAL SITUATIONS - 3.0%
41,700 Bowater, Inc. 2,225,738
91,300 Energy East Corp.(1) 1,808,881
297,300 Northeast Utilities Corp.(1) 6,391,950
------------
10,426,569
------------
STORES OF VALUE - 2.4%
117,500 BJ's Wholesale Club, Inc.(1) 4,538,438
182,200 Family Dollar Stores, Inc. 3,792,038
------------
8,330,476
------------
TELECOMMUNICATIONS - 10.6%
61,050 Allegiance Telecom, Inc.(1) 4,922,156
100,400 American Tower Corp. - Class A(1) 4,957,250
18,600 Avanex Corp.(1) 2,822,550
61,500 Clarent Corp.(1) 5,546,531
22,400 Micromuse, Inc.(1) 3,109,400
25,400 Netro Corp.(1) 1,651,397
45,200 Nextlink Communications, Inc.(1) 5,590,675
22,200 SDL, Inc.(1) 4,725,825
31,400 Voicestream Wireless Corp.(1) 4,044,713
------------
37,370,497
------------
See Notes to Financial Statements.
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SCHEDULE OF INVESTMENTS MARCH 31, 2000 (Unaudited)
SHARES DESCRIPTION VALUE
------ ----------- -----
THE UBIQUITOUS SEMICONDUCTOR - 11.6%
45,800 Altera Corp.(1) $ 4,087,650
26,500 EMCORE Corp.(1) 3,049,156
78,830 LSI Logic Corp.(1) 5,725,029
138,000 Maxim Integrated Products, Inc.(1) 9,806,625
94,050 Microchip Technology, Inc.(1) 6,183,788
69,700 National Semiconductor Corp.(1) 4,225,563
94,400 Teradyne, Inc.(1) 7,764,400
------------
40,842,211
------------
TOTAL COMMON STOCKS
(Cost $212,055,652) 323,259,760
------------
SHARES DESCRIPTION VALUE
------ ----------- -----
SHORT-TERM INSTRUMENT - 8.3%
MUTUAL FUND - 8.3%
29,356,947 Institutional Cash Management Fund
5.93%, 4/3/00 $029,356,947
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TOTAL SHORT-TERM INSTRUMENT
(Cost $29,356,947) 29,356,947
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TOTAL INVESTMENTS
(Cost $241,412,599) 100.2% $352,616,707
LIABILITIES IN EXCESS OF OTHER ASSETS (0.2) (584,638)
----- ------------
NET ASSETS 100.0% $352,032,069
===== ============
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(1) Non-income producing security during the six month period ended March 31,
2000.
See Notes to Financial Statements.
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Equity Appreciation
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STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
<TABLE>
<CAPTION>
AS OF
MARCH 31, 2000
--------------
<S> <C>
ASSETS
Investments, at Value (Cost of $241,412,599) $352,616,707
Receivable for Shares of Beneficial Interest Subscribed 2,263,063
Receivable for Securities Sold 1,081,612
Other Assets 64,554
Prepaid Expenses 104,439
------------
Total Assets 356,130,375
------------
LIABILITIES
Payable for Securities Purchased 3,267,401
Payable for Shares of Beneficial Interest Redeemed 517,641
Due to Bankers Trust 306,357
Accrued Expenses and Other 6,907
------------
Total Liabilities 4,098,306
------------
NET ASSETS $352,032,069
============
COMPOSITION OF NET ASSETS
Paid-in Capital $221,242,212
Accumulated Net Realized Gain from Investment Transactions 19,585,749
Net Unrealized Appreciation on Investments 111,204,108
------------
NET ASSETS $352,032,069
============
SHARES OUTSTANDING ($0.001 par value per share, unlimited number of shares of
beneficial interest authorized) 13,694,033
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
(net assets divided by shares outstanding) $ 25.71
============
</TABLE>
See Notes to Financial Statements.
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Equity Appreciation
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STATEMENT OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
MARCH 31, 2000
--------------
<S> <C>
INVESTMENT INCOME
Dividends $ 1,047,214
------------
EXPENSES
Advisory Fees 793,091
Administration and Services Fees 617,071
Professional Fees 13,337
Registration Fees 7,126
Printing and Shareholder Reports 3,009
Trustees Fees 2,150
Miscellaneous 1,768
------------
Total Expenses 1,437,552
Less: Fee Waivers or Expense Reimbursements (208,122)
------------
Net Expenses 1,229,430
------------
EXPENSES IN EXCESS OF INVESTMENT INCOME (182,216)
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net Realized Gain from Investment Transactions 24,721,772
Net Change in Unrealized Appreciation/Depreciation on Investments 78,186,926
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 102,908,698
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $102,726,482
============
</TABLE>
See Notes to Financial Statements.
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STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
2000(1) 1999
-------------- --------------
<S> <C> <C>
Increase (Decrease) in Net Assets from:
Operations
Expenses in Excess of Investment Income $ (182,216) $ (481,160)
Net Realized Gain from Investment Transactions 24,721,772 36,268,372
Net Change in Unrealized Appreciation/Depreciation on Investments 78,186,926 16,844,927
------------- ------------
Net Increase in Net Assets from Operations 102,726,482 52,632,139
------------- ------------
Distributions to Shareholders
Net Realized Gain from Investment Transactions (40,626,125) (513,014)
------------- ------------
Capital Transactions
Proceeds from Sales of Shares 131,719,041 56,395,709
Dividend Reinvestments 40,454,261 513,014
Cost of Shares Redeemed (53,950,140) (59,396,404)
------------- ------------
Net Increase (Decrease) in Net Assets from Capital Transactions 118,223,162 (2,487,681)
------------- ------------
Total Increase in Net Assets 180,323,519 49,631,444
Net Assets
Beginning of Period 171,708,550 122,077,106
------------- ------------
End of Period $ 352,032,069 $171,708,550
============= ============
--------------------------------------------------------------------------------
<FN>
(1) Unaudited.
</FN>
</TABLE>
See Notes to Financial Statements.
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Equity Appreciation
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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 Equity Appreciation.
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX JAN. 1, 1995
MONTHS ENDED FOR THE YEARS ENDED SEPT. 30, TO SEPT. 30,
MARCH 31, 2000(4) 1999 1998 1997 1996 1995(2)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
NET ASSET VALUE, BEGINNING OF PERIOD $20.11 $13.98 $16.70 $15.23 $14.14 $10.14
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Expenses in Excess of Investment Income (0.01) (0.06) (0.07) (0.06) (0.05) (0.02)
Net Realized and Unrealized Gain
(Loss) on Investment Transactions 10.30 6.25 (1.68) 2.31 1.72 4.02
------ ------ ------ ------ ------ ------
Total from Investment Operations 10.29 6.19 (1.75) 2.25 1.67 4.00
------ ------ ------ ------ ------ ------
DISTRIBUTIONS TO SHAREHOLDERS
Net Realized Gain from Investment
Transactions (4.69) (0.06) (0.97) (0.78) (0.58) --
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $25.71 $20.11 $13.98 $16.70 $15.23 $14.14
====== ====== ====== ====== ====== =====
TOTAL INVESTMENT RETURN 58.60% 44.33% (10.68)% 15.82% 12.45% 39.45%
SUPPLEMENTAL DATA AND RATIOS:
Net Assets, End of Period (000s omitted) $352,032 $171,709 $122,077 $170,008 $157,568 $92,033
Ratios to Average Net Assets:
Expenses in Excess of Investment Income (0.15)%(1) (0.31)% (0.36)% (0.39)% (0.42)% (0.38)%(1)
Expenses After Waivers 1.00%(1) 1.00% 1.00% 1.00% 1.00% 1.00%(1)
Expenses Before Waivers 1.16%(1) 1.20% 1.20% 1.20% 1.24% 1.33%(1)
Portfolio Turnover Rate 55% 165% 159% 188% 271%(3) 125%(3)
--------------------------------------------------------------------------------
<FN>
(1) Annualized.
(2) Board of Trustees approved the change of the Equity Appreciation's year end
from December 31 to September 30.
(3) Amounts were previously included in the Capital Appreciation Portfolio
Financial Highlights.
(4) Unaudited.
</FN>
</TABLE>
See Notes to Financial Statements.
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NOTES TO FINANCIAL STATEMENTS (Unaudited)
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. Equity Appreciation (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 accretion of 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 exceed 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 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 gains
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 of its funds. Expenses directly attributable to a fund are charged to
that fund, while expenses which are attributable to the Trust are allocated
among the funds in the Trust.
The preparation of financial statements in conformity with accounting principles
generally accepted in the UnitedStates 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"), an indirect wholly owned subsidiary of Deutsche
Bank A.G. 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 Advisory Agreement with Bankers Trust. Under this
agreement, the Fund pays Bankers Trust an advisory fee computed daily and paid
monthly at an annual rate of .65% of the Fund's average daily net assets.
Bankers Trust has contractually agreed to waive its fees through January 31,
2001 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 ("Cash Management
Fund"), an open-end management investment company managed by Bankers Trust
Company. The Cash Management Fund is offered as a cash management option to the
Fund and
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13
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Equity Appreciation
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
other accounts managed by Bankers Trust. Distributions from the Cash Management
Fund to the Fund for the six months ended March 31, 2000, amounted to $683,936
and are included in dividend income.
At March 31, 2000, the Fund was a participant with other affiliated entities in
a revolving credit facility in the amount of $150,000,000, which expires April
29, 2000. A commitment fee on the average daily amount of the available
commitment is payable on a quarterly basis and apportioned among all
participants, based on net assets. No amounts were drawn down or outstanding for
this Portfolio under the credit facility for the six months ended March 31,
2000. Subsequent to March 31, 2000, the revolving credit facility was renewed
and increased to $200,000,000, which expires April 27, 2001.
ICC Distributors, Inc. provides distribution services to the Fund.
NOTE 3--SHARES OF BENEFICIAL INTEREST
At March 31, 2000, 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, 20001 SEPTEMBER 30, 1999
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------------------------
Sold 5,431,890 $131,719,041 3,051,438 $ 56,395,709
Reinvested 2,069,272 40,454,261 33,076 513,014
Redeemed (2,344,053) (53,950,140) (3,282,762) (59,396,404)
---------- ------------ --------- ------------
Net Increase
(Decrease) 5,157,109 $118,223,162 (198,248) $ (2,487,681)
========== ============ ========= ============
--------------------------------------------------------------------------------
(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 months ended March 31, 2000 were
$179,439,713 and $123,123,876, respectively.
For federal income tax purposes, the tax basis of investments held at March 31,
2000 was $241,412,599. The aggregate gross unrealized appreciation for all
investments was $123,315,532 and the aggregate gross unrealized depreciation for
all investments was $12,111,424.
NOTE 5--FUND MERGER
On September 8, 1999, the Board of Trustees voted to recommend the
reorganization of the Fund into Mid Cap (previously named the Capital
Appreciation Fund), a series of BT Investment Funds. The Board has determined
that this proposal is in the best interest of shareholders. The merger will take
place on August 31, 2000.
NOTE 6--FUND NAME CHANGE
On January 31, 2000, the Fund changed its name from BT Investment Equity
Appreciation Fund to Equity Appreciation.
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14
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<PAGE>
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:
DEUTSCHE ASSET MANAGEMENT SERVICE CENTER
P.O. BOX 219210
KANSAS CITY, MO 64121-9210
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 CUSIP #055922751
BT PYRAMID MUTUAL FUNDS 1677SA (3/00)
Distributed by:
ICC Distributors, Inc.
