1940 Act File No. 811-07774
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 16 ........................... X
BT INVESTMENT PORTFOLIOS
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal pursuant Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
Jay S. Neuman, Esquire Copies to: Burton M. Leibert, Esq.
Investors Tower Willkie Farr & Gallagher
Pittsburgh, Pennsylvania 15222-3779 One Citicorp Center
(Name and Address of Agent for Service) 153 East 53rd Street
New York, New York 10022
Explanatory
This Amendment to the Registrant's Registration Statement on Form N-1A (the
`Registration Statement'') has been filed by the Registrant to Section
8(b) of the Investment Company Act of 1940. However, beneficial interests
in the series of the Registrant are not being registered under the
Securities Act of 1933 (the `1933 Act''), because such interests will be
issued solely in private placement transactions that do not involve any
`public offering'' within the meaning of Section 4(2) of the 1933 Act.
Investments in the Registrant's series may only be made by investment
companies, insurance company separate accounts, common or commingled trust
funds or similar organizations or entities that are `accredited
investors''within the meaning of Regulation D under the 1933 Act. The
registration Statement does not constitute an offer to sell, or the
solicitation of an offer to buy, any beneficial interests in any series of
the Registrant.
BT Investment Portfolios is comprised of fifteen portfolios. This Amendment
to the Registration Statement relates only to Liquid Assets Portfolio
BT Investment Portfolios
LIQUID ASSETS PORTFOLIO
PART A
Responses to Items 1 through 3 and 5A have been omitted pursuant to
paragraph 4 of Instruction F of the General Instructions to Form N-1A.
ITEM 4. GENERAL DESCRIPTION OF REGISTRANT.
BT Investment Portfolios (the "Trust") is a no-load, open-end management
investment company which was organized as a trust under the laws of the
State of New York on March 27, 1993.
Beneficial interests in the Trust are divided into separate series, each
having distinct investment objectives and policies, only one of which,
Liquid Assets Portfolio (the "Portfolio"), is currently active and is
described herein. Beneficial interests in the Portfolio are issued solely
in private placement transactions that do not involve any "public offering"
within the meaning of Section 4(2) of the Securities Act of 1933, as
amended (the "1933 Act"). Investments in the Portfolio may only be made by
investment companies, insurance company separate accounts, common or
commingled trust funds or similar organizations or entities that are
"accredited investors" within the meaning of Regulation D under the 1933
Act. This registration statement does not constitute an offer to sell, or
the solicitation of an offer to buy, any "security" within the meaning of
the 1933 Act.
The investment objective of the Portfolio is to seek a high level of
current income to the extent consistent with liquidity and the preservation
of capital. The Portfolio seeks to accomplish this investment objective by
investing primarily in high quality money market instruments. Bankers Trust
Company (`Bankers Trust'') is the investment adviser (the ``Adviser'') of
the Portfolio. Investments in the Portfolio not deposits or obligations of,
or guaranteed or endorsed by, Bankers Trust or any other banking or
depository institution. Investments in the Portfolio are not Federally
guaranteed or insured by the Federal Deposit Insurance Corporation, the
U.S. government, the Federal Reserve Board or any other agency and are
subject to investment risk including possible loss of principal amount
invested.
There can be no assurance that the investment objective of the Portfolio
will be achieved. The investment objective of the Portfolio is a
fundamental policy which may only be changed be a majority vote of the
investors in the Portfolio.
The following is a discussion of the various investments and investment
policies of the Portfolio. Additional information about the investment
policies of the Portfolio appears in Part B.
BANK OBLIGATIONS. The Portfolio may invest in U.S. dollar-denominated fixed
rate or variable rate obligations of U.S. or foreign banks which are rated
in the highest short-term rating category by any two nationally recognized
statistical rating organizations (`NRSROs'') (or one NRSRO if that NRSRO
is the only such NRSRO which rates such obligations) or, if not so rated,
are believed by Bankers Trust, acting under the supervision of the Board of
Trustees of the Trust, to be of comparable quality. Bank obligations in
which the Portfolio invests include certificates of deposit, bankers'
acceptances, time deposits and other U.S. dollar-denominated instruments
issued or supported by the credit of U.S. or foreign banks. If Bankers
Trust, acting under the supervision of the Board of Trustees of the Trust,
deems the instruments to present minimal credit risk the Portfolio may
invest in obligations of foreign banks or foreign branches of U.S. banks,
which include subsidiaries of U.S. banks located in the United Kingdom,
Grand Cayman Island, Nassau, Japan and Canada. Investments in these
obligations may entail risks that are different from those of investments
in obligations of U.S. domestic banks because of differences in political,
regulatory and economic systems and conditions. These risks include future
political and economic developments, currency blockage, the possible
imposition of withholding taxes on interest payments, differing reserve
requirements, reporting and recordkeeping requirements and accounting
standards, possible seizure or nationalization of foreign deposits,
difficulty or inability of pursuing legal remedies and obtaining judgments
in foreign courts, possible establishment of exchange controls or the
adoption of other foreign governmental restrictions that might affect
adversely the payment of principal and interest on bank obligations. Under
normal market conditions, the Portfolio will invest more than 25% of its
assets in the foreign and domestic bank obligations described above. The
Portfolio's concentration of its investments in bank obligations will cause
the Portfolio to be subject to the risks peculiar to the domestic and
foreign banking industries to a greater extent than if its investments were
not so concentrated. A description of the ratings set forth above is
provided under Item 13 in Part B.
COMMERCIAL PAPER. The Portfolio may invest in fixed rate or variable
rate commercial paper, including variable rate master demand notes, issued
by U.S. or foreign corporations. Commercial paper when purchased by the
Portfolio must be rated in the highest short-term rating category by any
two NRSROs (or one NRSRO if that NRSRO is the only such NRSRO which rates
such security) or, if not so rated, must be believed by Bankers Trust,
action under the supervision of the Board of Trustees of the Portfolio, to
be of comparable quality. Any commercial paper issued by a foreign
corporation and purchased by the Portfolio must be U.S. dollar-denominated
and must not be subject to foreign withholding tax at the time of purchase.
Investing in foreign commercial paper generally involves risks similar to
those described above relating to obligations of foreign banks or foreign
branches of U.S. and foreign banks.
Variable rate master demand notes are unsecured instruments that permit the
indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate. Because variable rate master demand notes are direct lending
arrangements between the Portfolio and the issuer, they are not normally
traded. Although no active secondary market may exist for these notes, the
Portfolio will purchase only those notes under which it may demand and
receive payment of principal and accrued interest daily or receive payment
upon demand or may resell the note to a third party. While the notes are
not typically rated by credit rating agencies, issuers of variable rate
master demand notes must satisfy Bankers Trust, acting under the
supervision of the Board of Trustees, that the same criteria as set forth
above for issuers of commercial paper are met. In the event an issuer of a
variable rate master demand note defaulted on its payment obligation, the
Portfolio might be unable to dispose of the note because of the absence of
a secondary market and could, for this reason or other reasons, suffer a
loss to the extent of the default.
U.S. GOVERNMENT OBLIGATIONS. The Portfolio may invest in obligations issued
or guaranteed by the U.S. Treasury or by agencies or instrumentalities of
the U.S. government ("U.S. Government Obligations"). Obligations of certain
agencies and instrumentalities of the U.S. government, such as short-term
obligations of the Government National Mortgage Association, are supported
by the "full faith and credit" of the U.S. government; others, such as
those of the Export-Import Bank of the U.S., are supported by the right of
the issuer to borrow from the U.S. Treasury; others, such as those of the
Federal National Mortgage Association, are supported by the discretionary
authority of the U.S. government to purchase the agency's obligations; and
still others, such as those of the Student Loan Marketing Association, are
supported only by the credit of the instrumentality. No assurance can be
given that the U.S. government would provide financial support to U.S.
government-sponsored instrumentalities if it is not obligated to do so by
law.
OTHER CORPORATE DEBT OBLIGATIONS. The Portfolio may invest in bonds,
notes and debentures of issuers that at the time of purchase have
outstanding short-term obligations meeting the above short-term rating
requirements, or if there are no such short-term ratings, are determined by
Bankers Trust to be of comparable quality and are rated in the top two
highest long-term rating categories by two NRSROs (or one NRSRO if that
NRSRO is the only such NRSRO which rates the security).
The Portfolio may also invest in securities generally referred to as asset-
backed securities, which directly or indirectly represent a participation
interest in, or are secured by and payable from, a stream of payments
generated by particular assets such as motor vehicle or credit card
receivables. Asset-backed securities provide periodic payments that
generally consist of both interest and principal payments. Consequently,
the life of an asset-backed security varies with the prepayment and loss
experience of the underlying assets.
REPURCHASE AGREEMENTS. The Portfolio may engage in repurchase agreement
transactions with banks and governmental securities dealers approved by the
Board of Trustees of the Trust. Under the terms of a typical repurchase
agreement, the Portfolio would acquire U.S. Government Obligations of any
remaining maturity for a relatively short period (usually not more than one
week), subject to an obligation of the seller to repurchase, and the
Portfolio to resell, the obligation at an agreed price and time, thereby
determining the yield during the Portfolio's holding period. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Portfolio's holding period. The value of the
underlying securities will be at least equal at all times to the total
amount of the repurchase obligations, including interest. The Portfolio
bears a risk of loss in the event that the other party to a repurchase
agreement defaults on its obligations and the Portfolio is delayed in or
prevented from exercising its rights to dispose of the collateral
securities, including the risk of a possible decline in the value of the
underlying securities during the period in which the Portfolio seeks to
assert these rights. Bankers Trust, acting under the supervision of the
Board of Trustees of the Trust, reviews the creditworthiness of those banks
and dealers with which the Portfolio enters into repurchase agreements and
monitors on an ongoing basis the value of the securities subject to
repurchase agreements to ensure that it is maintained at the required
level.
SECURITIES LENDING. The Portfolio is permitted to lend up to 20% of the
total value of its securities to brokers, dealers and other financial
organizations. These loans must be secured continuously by cash or
equivalent collateral or by a letter of credit at least equal to 100% of
the current market value of the securities loaned plus accrued income. By
lending its securities, the Portfolio can increase its income by continuing
to receive income on the loaned securities as well as by the opportunity to
receive interest on the collateral. During the term of the loan, the
Portfolio continues to bear the risk of fluctuations in the price of loaned
securities. There may be risks of delay in receiving additional collateral
or risks of delay in recovery of the securities or even loss of rights in
the securities lent should the borrower of the securities fail financially.
REVERSE REPURCHASE AGREEMENTS. The Portfolio may enter into reverse
repurchase agreements. In a reverse repurchase agreement the Portfolio
agrees to sell portfolio securities to financial institutions such as banks
and broker-dealers and to repurchase them at a mutually agreed date and
price. At the time the Portfolio enters into a reverse repurchase agreement
it will place in a segregated custodial account cash, U.S. Government
Obligations or other high grade, liquid debt instruments having a value
equal to the repurchase price, including accrued interest. Reverse
repurchase agreements involve the risk that the market value of the
securities sold by the Portfolio may decline below the repurchase price of
the securities. Reverse repurchase agreements are considered to be
borrowings by the Portfolio for purposes of the limitations described
herein and in Part B.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. To secure prices deemed
advantageous at a particular time, the Portfolio may purchase securities on
a when-issued or delayed delivery basis, in which case delivery of the
securities occurs beyond the normal settlement period; payment for or
delivery of the securities would be made prior tot he reciprocal delivery
or payment by the other party to the transaction. The Portfolio will enter
into when-issued or delayed delivery transactions for the purpose of
acquiring securities and not for the purpose of leverage. When-issued
securities purchased by the Portfolio may include securities purchased on a
`when, as and if issued'' basis under which the issuance of the securities
depends on the occurrence of a subsequent event.
Securities purchased on a when-issued or delayed delivery basis may expose
the Portfolio to risk because the securities may experience fluctuations in
value prior to their actual delivery. The Portfolio does not accrue income
with respect to a when-issued or delayed delivery security prior to its
stated delivery date. Purchasing securities on a when-issued or delayed
delivery basis can involve the additional risk that the yield available in
the market when the delivery takes place may be higher than that obtained
in the transaction itself. Upon purchasing a security on a when-issued or
delayed delivery basis, the Portfolio will segregate with the Portfolio's
custodian high grade liquid debt instruments in an amount at least equal to
the when-issued or delayed delivery commitment.
ILLIQUID SECURITIES. The Portfolio may not invest more than 10% of its net
assets in securities which are illiquid or otherwise not readily
marketable. If a security becomes illiquid after purchase by the Portfolio,
the Portfolio will normally sell the security unless to do so would not be
in the best interest of shareholders.
CREDIT ENHANCEMENT. Certain of the Portfolio's acceptable investments may
be credit-enhanced by a guaranty, letter of credit, or insurance. Any
bankruptcy, receivership, default, or change in the credit quality of the
party providing the credit enhancement will adversely affect the quality
and marketability of the underlying security and could cause losses to the
Portfolio. The Portfolio may have more than 25% of its total assets
invested in securities credit-enhanced by banks.
PORTFOLIO QUALITY AND MATURITY. The Portfolio will maintain a dollar-
weighted average maturity of 90 days or less. All securities in which the
Portfolio invests will have or be deemed to have remaining maturities of
397 days or less on the date of their purchase, will be denominated in U.S.
dollars and will have been granted the required ratings established herein
by two NRSROs (or one such NRSRO if that NRSRO is the only such NRSRO which
rates the security), or not so rated, are believed by Bankers Trust, under
the supervision of the Trust's Board of Trustees, to be of comparable
quality. Currently, there are six rating agencies which have been
designated by the SEC as an NRSRO. These organizations and their highest
short term rating category (which also may be modified by a "+") are: Duff
and Phelps, Inc., D-1; Fitch Investors Services, LP, F-1; Moody's Investors
Service Inc. Prime-1; Standard & Poor's Ratings Group, A-1; IBCA Limited
and IBCA Inc., A-1; Thomson Bank Watch, Inc., TBW-1. A description of all
short- and long-term ratings is provided under Item 13 in Part B. Bankers
Trust, acting under the supervision of and procedures adopted by the Board
of Trustees of the Trust, will also determine that all securities purchased
by the Portfolio present minimal credit risks. Bankers Trust will cause the
Portfolio to dispose of any security as soon as practicable if the security
is no longer of the requisite quality, unless such action would not be in
the best interest of the Portfolio.
ADDITIONAL INVESTMENT LIMITATIONS. The Portfolio may not invest more than
25% of its total assets in the securities of issuers in any single
industry( excluding U.S. Government Obligations and repurchase agreements),
except that, under normal market conditions, more than 25% of the total
assets of the Portfolio will be invested in foreign and domestic bank
obligations. As an operating policy, the Portfolio may not invest more than
5% of its total assets in the obligations of any one issuer except for U.S.
Government Obligations and repurchase agreements, which may be purchased
without limitation. The Portfolio is also authorized to borrow, including
entering into reverse repurchase transactions, in an amount up to 10% of
its total assets for temporary purposes, but not for leverage, and to
pledge its assets to the same extent in connection with these borrowings.
At the time of an investment, the Portfolio's aggregate holdings of
repurchase agreements having remaining maturities of more than seven
calendar days (or which may not be terminated within seven calendar days
upon notice by the Portfolio), time deposits having remaining maturities of
more than seven calendar days, illiquid securities will not exceed 10% of
the Portfolio's net assets. If changes in the liquidity of certain
securities cause the Portfolio to exceed such 10% limit, the Portfolio will
take steps to bring the aggregate amount of its illiquid securities back
below 10% of its net assets as soon as practicable, unless such action
would not be in the best interest of the Portfolio. The Portfolio's
limitations on investment in a single industry and on borrowing may not be
changed without the approval of the investors in the Portfolio. All other
investment policies and limitations described in this Part A may be changed
by a vote of the Trustees of the Trust. Part B contains further
information on the Portfolio's investment restrictions.
The assets of the Portfolio are valued by using the amortized cost method
of valuation. This method involves valuing each security held by the
Portfolio at its cost at the time of its purchase and thereafter assuming
a constant amortization to maturity of any discount or premium. The Board
of Trustees of the Trust will monitor the valuation of assets by this
method and will make such changes as it deems necessary to assure that the
assets are valued fairly and in good faith.
The Portfolio follows practices which enable investment companies that
invest in the Portfolio to attempt to seek to maintain a stable share
price: limiting average dollar-weighted maturity of the securities held by
the Portfolio to 90 days or less; buying securities which mature in 397
days or less as determined under Rule 2a-7 of the 1940 Act; and buying only
high quality securities with minimal credit risks. While the Portfolio
invests in high quality money market securities, investors should be aware
that investment in the Portfolio is not without risk. All money market
instruments, including U.S. Government securities, can change in value when
interest rates or an issuer's creditworthiness changes. It is expected that
the majority of investors in investment companies that invest in the
Portfolio will issue standing orders, effective in the late afternoon of
each day on which an investment company cash balances remaining in accounts
at Bankers Trust. Because the investment company may receive significant
purchase orders late Valuation Day, the Portfolio may be unable to take
advantage of suitable investment opportunities on that date. To assist the
Portfolio in remaining fully invested, the Portfolio intends to request
that the SEC grant it an order permitting the Portfolio and Bankers Trust
jointly to enter into repurchase agreements and other investments with non-
affiliated banks, broker-dealers or other issuers with respect to amounts
estimated to be received on any day through the operation of the sweep
program. Such investments will be apportioned between the Portfolio and
Bankers Trust in such a manner as to maximize the investment of cash by the
Portfolio. While in the past the SEC has granted orders permitting similar
sweep programs, there is no assurance that it will continue to do so.
Until such an order is granted, the Portfolio will be unable to engage in
such transactions with Bankers Trust and may have significant uninvested
cash balances at the end of each Valuation Day. Accordingly, Bankers Trust
has agreed to waive or reimburse the Portfolio for all operating expenses
until the order is granted. It is expected that these waivers and
reimbursements will be sufficient to offset the impact of the uninvested
cash; however it is possible that they may be insufficient to do so.
ITEM 5. MANAGEMENT OF THE FUND.
The affairs of the Trust are managed under the supervision of their
Board of Trustees. By virtue of the responsibilities assumed by Bankers
Trust, as administrator of the Trust, the Trust may not require employees
other than its executive officers. None of the executive officers of the
Trust devoted full time to the affairs of the Trust.
The Trust has retained the services of Bankers Trust as investment adviser.
Bankers Trust, a New York banking corporation with principal offices at 280
Park Avenue, New York, New York 10017, is a wholly-owned subsidiary of
Bankers Trust New York Corporation. Bankers Trust conducts a variety of
general banking and trust activities and is a major wholesale supplier of
financial services to the international and domestic institutional markets.
As of December 31, 1996, Bankers Trust New York Corporation was the seventh
largest bank holding company in the United States with total assets of
approximately $120 billion. Bankers Trust is a worldwide merchant bank
dedicated to servicing the needs of corporations, governments, financial
institutions and private clients through a global network of over 120
offices in more than 40 countries. Investment management is a core business
of Bankers Trust, built on a tradition of excellence from its roots as a
trust bank founded in 1903. The scope of Bankers Trust's investment
management capability is unique due to its leadership positions in both
active and passive quantitative management and its presence in major equity
and fixed income markets around the world. Bankers Trust is one of the
nation's largest and most experienced investment managers, with
approximately $227 billion in assets under management globally. Of that
total, in excess of $45 billion are in cash assets alone. This makes
Bankers Trust one of the nation's leading managers of cash funds.
Bankers Trust has more than 50 years of experience managing retirement
assets for the nation's largest corporations and institutions. In the past,
these clients have been serviced through separate account and commingled
fund structures. Now, the BT Family of Funds brings Bankers Trust's
extensive investment management expertise, once available to only the
largest institutions in the U.S., to individual investors. Bankers Trust's
officers have had extensive experience in managing investment portfolios
having objectives similar to that of the Portfolio.
Bankers Trust, subject to the supervision and direction of the Board of
Trustees of the Trust, manages the Portfolio in accordance with the
Portfolio's investment objective and stated investment policies, makes
investment decisions for the Portfolio, places orders to purchase and sell
securities and other financial instruments on behalf of the Portfolio and
employs professional investment managers and securities analysts who
provide research services to the Trust and the Portfolio. All orders for
investment transactions on behalf of the Portfolio are placed by Bankers
Trust with broker-dealers and other financial intermediaries that it
selects, including those affiliated with Bankers Trust. A Bankers Trust
affiliate will be used in connection with a purchase or sale of an
investment for the Portfolio only if Bankers Trust believes that the
affiliate's charge for the transaction does not exceed usual and customary
levels. The Portfolio will not invest in obligations for which Bankers
Trust or any of its affiliates is the ultimate obligor or accepting bank.
The Portfolio may, however, invest in the obligations of correspondents and
customers of Bankers Trust.
Under its Investment Advisory Agreement with the Trust, Bankers Trust
receives a fee from the Portfolio computed daily and paid monthly at the
annual rate of 0.15% of the average daily net assets of the Portfolio.
Bankers Trust has been advised by its counsel that, in counsel's opinion,
Bankers Trust currently may perform the services for the Trust described in
this Registration Statement without violation of the Glass-Steagall Act or
other applicable banking laws or regulations.
Under an administration and services agreement with the Trust, Bankers
Trust calculates the value of the assets of the Portfolio and generally
assists the Board of Trustees of the Trust in all aspects of the
administration and operation of the Trust and the Portfolio. The
administration and services agreement provides for the Trust to pay the
Administrator a fee computed daily and paid monthly at the annual rate of
0.05% of the average daily net assets of the Portfolio. Under the
administration and services agreement, the Administrator may delegate one
or more of its responsibilities to others at its expense.
The Portfolio bears its own expenses. Operating expenses for the
Portfolio generally consist of all costs not specifically borne by Bankers
Trust or Edgewood Services, Inc. ("Edgewood"), the Trust's placement agent
and sub-administrator, including investment advisory and administration and
service fees, fees for necessary professional services, the costs
associated with regulatory compliance and maintaining legal existence and
investor relations.
Bankers Trust acts as Custodian of the Assets of the Trust and serves as
the Transfer Agent for the Trust under an Administration and Services
Agreement with the Trust.
The Portfolio bears its own expenses. Operating expenses for the Portfolio
generally consist of all costs not specifically borne by Bankers Trust or
Edgewood, including investment advisor and administration and services
fees, fees for necessary professional services, amortization of
organizational expenses, the costs associated with regulatory compliance
and maintaining legal existence and investor relations.
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.
The Trust is organized as a trust under the laws of the State of New York.
Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in separate series of the Trust, such as the
Portfolio. Each investor is entitled to a vote in proportion to the amount
of its investment in the Portfolio. Investments in the Portfolio may not be
transferred, but an investor may withdraw all or any portion of his
investment at any time at net asset value. Investors in the Portfolio
(e.g., investment companies, insurance company separate accounts and common
and commingled trust funds) will each be liable for all obligations of the
Portfolio. However, the risk of an investor in the Portfolio incurring
financial loss on account of such liability is limited to circumstances in
which both inadequate insurance existed and the Portfolio itself was unable
to meet its obligations.
The Trust reserves the right to create and issue a number of series, in
which case investments in each series would participate equally in the
earnings and assets of the particular series. Currently, the Trust has
fifteen series: the Portfolio, Asset Management Portfolio II, Asset
Management Portfolio III, Global High Yield Securities Portfolio, Latin
American Equity Portfolio, Small Cap Portfolio, Pacific Basin Equity
Portfolio, European Equity Portfolio, International Bond Portfolio, U.S.
Bond Index Portfolio, EAFE(R) Equity Index Portfolio, Equity 500 Equal
Weighted Index Portfolio, Small Cap Index Portfolio, BT RetirementPlus
Portfolio and 100% Treasury Portfolio.
Investments in the Portfolio have no pre-emptive or conversion rights and
are fully paid and non-assessable, except as set forth below. The Trust is
not required and has no current intention to hold annual meetings of
investors, but the Trust will hold special meetings of investors when in
the judgment of the Trustees it is necessary or desirable to submit matters
for an investor vote. Changes in fundamental policies will be submitted to
investors for approval. Investors have under certain circumstances (e.g.
upon application and submission of certain specified documents to the
Trustees by a specified percentage of the aggregate value of the Trust's
outstanding interests) the right to communicate with other investors in
connection with requesting a meeting of investors for the purpose of
removing one or more Trustees. Investors also have the right to remove one
or more Trustees without a meeting by a declaration in writing by a
specified number of investors. Upon liquidation of the Portfolio, investors
would be entitled to share PRO RATA in the net assets of the Portfolio
available for distribution to investors.
The net asset value of the Portfolio is determined each day on which the
Portfolio is open ("Portfolio Business Day") (and on such other days as are
deemed necessary in order to comply with Rule 22c-1 under the 1940 Act).
This determination is made twice during each such day as of 12:00 noon, New
York time and as of the close of regular trading on the New York Stock
Exchange Inc. ("NYSE") which is currently 4:00 p.m., New York time (or in
the event that the NYSE closes early, at the time of such early closing),
(each, a "Valuation Time").
Each investor in the Portfolio may add to or reduce its investment in the
Portfolio on each Portfolio Business Day. At each Valuation Time on each
such business day, the value of each investor's beneficial interest in the
Portfolio will be determined by multiplying the net asset value of the
Portfolio by the percentage, effective for that day, that represents that
investor's share of the aggregate beneficial interests in the Portfolio.
Any additions or withdrawals, which are to be effected on that day, will
then be effected. The investor's percentage of the aggregate beneficial
interests in the Portfolio will then be recomputed as the percentage equal
to the fraction (i) the numerator of which is the value of such investor's
investment in the Portfolio as of the Valuation Time, on such day plus or
minus, as the case may be, the amount of any additions to or withdrawals
from the investor's investment in the Portfolio effected on such day, and
(ii) the denominator of which is the aggregate net asset value of the
Portfolio as of the Valuation Time, on such day plus or minus, as the case
may be, the amount of the net additions to or withdrawals from the
aggregate investments in the Portfolio by all investors in the Portfolio.
The percentage so determined will then be applied to determine the value of
the investor's interest in the Portfolio as of the Valuation Time, on the
following business day of the Portfolio.
The net income of the Portfolio shall consist of (i) all income accrued,
less the amortization of any premium, on the assets of the Portfolio, less
(ii) all actual and accrued expenses of the Portfolio determined in
accordance with generally accepted accounting principles ("Net Income").
Interest income includes discount earned (including both original issue and
market discount) on discount paper accrued ratably to the date of maturity
and any net realized gains or losses on the assets of the Portfolio. All
the Net Income of the Portfolio is allocated PRO RATA among the investors
in the Portfolio. The Net Income is accrued daily and distributed monthly
to the investors in the Portfolio.
Under the anticipated method of operation of the Trust, the Portfolio will
not be subject to any income tax. However, each investor in the Portfolio
will be taxable on its share (as determined in accordance with the
governing instruments of the Trust) of the Portfolio's ordinary income and
capital gain in determining its income tax liability. The determination of
such share will be made in accordance with the Internal Revenue Code of
1986, as amended (the "Code"), and regulations promulgated thereunder.
It is intended that the Portfolio's assets, income and distributions will
be managed in such a way that an investor in the Portfolio will be able to
satisfy the requirements of Subchapter M of the Code, assuming that the
investor invested all of its assets in the Portfolio.
ITEM 7. PURCHASE OF SECURITIES BEING OFFERED.
Beneficial interests in the Portfolio are issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. See "General Description of
Registrant" above.
An investment in the Portfolio may be made without a sales load. All
investments are made at the net asset value next determined if an order is
received by the Portfolio by the designated cutoff time for each accredited
investor. The net asset value of the Portfolio is determined on each
Portfolio Business Day. The Portfolio's securities are valued at amortized
cost, which the Trustees of the Trust have determined in good faith
constitutes fair value for the purposes of complying with the 1940 Act.
This valuation method will continue to be used with respect to the
Portfolio until such time as the Trustees of the Trust determine that it
does not constitute fair value for such purposes.
There is no minimum initial or subsequent investment in the Portfolio.
However, because the Portfolio intends to be as fully invested at all times
as is reasonably practicable in order to enhance the yield on its assets,
investments must be made in Federal funds (i.e., monies credited to the
account of the Trust's custodian bank by a Federal Reserve Bank).
The Trust and Edgewood reserve the right to cease accepting investments
in the Portfolio at any time or to reject any investment order.
The placement agent for the Trust is Edgewood Services, Inc. The principal
business address of Edgewood is Clearing Operations, P.O. Box 897,
Pittsburgh, Pennsylvania 15230-0897. Edgewood receives no additional
compensation for serving as the placement agent for the Trust.
ITEM 8. REDEMPTION OR REPURCHASE.
An investor in the Portfolio may withdraw all or any portion of its
investment at the net asset value next determined if a withdrawal request
in proper form is furnished by the investor to the Portfolio by the
designated cutoff time for each accredited investor. The proceeds of a
withdrawal will be paid by the Portfolio in Federal funds normally on the
Portfolio Business Day the withdrawal is effected, but in any event within
seven days. The Portfolio reserves the right to pay redemptions in kind.
Investments in the Portfolio may not be transferred.
The right of any investor to receive payment with respect to any withdrawal
may be suspended or the payment of the withdrawal proceeds postponed during
any period in which the NYSE is closed (other than weekends or holidays) or
trading on such Exchange is restricted, or, to the extent otherwise
permitted by the 1940 Act, if an emergency exists.
ITEM 9. PENDING LEGAL PROCEEDINGS.
Not applicable.
BT INVESTMENT PORTFOLIOS
LIQUID ASSETS PORTFOLIO
PART B
ITEM 10. COVER PAGE.
Not applicable.
ITEM 11. TABLE OF CONTENTS.
General Information and History................1
Investment Objectives and Policies................1
Management of the Fund............................6
Control Persons and Principal Holders of Securities 7
Investment Advisory and Other Services............8
Brokerage Allocation and Other Practices..........9
Capital Stock and Other Securities................10
Purchase, Redemption and Pricing of Securities Being Offered 11
Tax Status........................................12
Underwriters......................................12
Calculation of Performance Data. .................12
Financial Statements..............................13
ITEM 12. GENERAL INFORMATION AND HISTORY.
Not applicable.
ITEM 13. INVESTMENT OBJECTIVES AND POLICIES.
Part A contains additional information about the investment objectives and
policies of Liquid Assets Portfolio (the "Portfolio"), a series of BT
Investment Portfolios (the "Trust"). This Part B should only be read in
conjunction with Part A. This section contains supplemental information
concerning the types of securities and other instruments in which the
Portfolio may invest, the investment policies and portfolio strategies that
the Portfolio may utilize and certain risks attendant to those investments,
policies and strategies.
BANK OBLIGATIONS. For purposes of the Portfolio's investment policies with
respect to bank obligations, the assets of a bank will be deemed to include
the assets of its domestic and foreign branches. Obligations of foreign
branches of U.S. banks and foreign banks may be general obligations of the
parent bank in addition to the issuing bank or may be limited by the terms
of a specific obligation and by government regulation. If Bankers Trust
Company ("Bankers Trust"), the Trust's investment adviser (the "Adviser")
with respect to the Portfolio, acting under the supervision of the Board of
Trustees of the Trust, deems the instruments to present minimal credit
risk, the Portfolio may invest in obligations of foreign banks or foreign
branches of U.S. banks, which include banks located in the United Kingdom,
Grand Cayman Island, Nassau, Japan and Canada. Investments in these
obligations may entail risks that are different from those of investments
in obligations of U.S. domestic banks because of differences in political,
regulatory and economic systems and conditions. These risks include future
political and economic developments, currency blockage, the possible
imposition of withholding taxes on interest payments, differing reserve
requirements, reporting and recordkeeping requirements and accounting
standards, possible seizure or nationalization of foreign deposits,
difficulty or inability of pursuing legal remedies and obtaining judgments
in foreign courts, possible establishment of exchange controls or the
adoption of other foreign governmental restrictions that might affect
adversely the payment of principal and interest on bank obligations.
Foreign branches of U.S. banks and foreign banks may also be subject to
less stringent reserve requirements and to different accounting, auditing,
reporting and recordkeeping standards that those applicable to domestic
branches of U.S. banks.
COMMERCIAL PAPER. Commercial paper obligations in which the Portfolio may
invest are short-term, unsecured negotiable promissory notes of U.S. or
foreign corporations that at the time of purchase meet the rating criteria
described in the Part A. Investments in foreign commercial paper generally
involve risks similar to those described above relating to obligations of
foreign banks or foreign branches of U.S. banks.
U.S. GOVERNMENT OBLIGATIONS. The Portfolio may invest in direct obligations
issued by the U.S. Treasury or in obligations issued or guaranteed by the
U.S. Treasury or by agencies or instrumentalities of the U.S. government
("U.S. Government Obligations"). Certain short-term U.S. Government
Obligations, such as those issued by the Government National Mortgage
Association , are supported by the "full faith and credit" of the U.S.
government; others, such as those of the Export-Import Bank of the United
States, are supported by the right of the issuer to borrow from the U.S.
Treasury; others, such as those of the Federal National Mortgage
Association are solely the obligations of the issuing entity but are
supported by the discretionary authority of the U.S. government to purchase
the agency's obligations; and still others, such as those of the Student
Loan Marketing Association, are supported by the credit of the
instrumentality. No assurance can be given that the U.S. government would
provide financial support to U.S. government-sponsored instrumentalities if
it is not obligated to do so by law.
Examples of the types of U.S. Government Obligations that the Portfolio may
hold include, in addition to those described above and direct U.S. Treasury
obligations, the obligations of the Federal Housing Administration, Farmers
Home Administration, Small Business Administration, General Services
Administration, Central Bank for Cooperatives, Farm Credit Banks, Federal
Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal
Intermediate Credit Banks, Federal Land Banks and Maritime Administration.
LENDING OF PORTFOLIO SECURITIES. The Portfolio has the authority to lend
portfolio securities to brokers, dealers and other financial organizations.
The Portfolio will not lend securities to Bankers Trust, Edgewood Services,
Inc. ("Edgewood") or their affiliates. By lending its securities, the
Portfolio can increase its income by continuing to receive interest on the
loaned securities as well as by either investing the cash collateral in
short-term securities or obtaining yield in the form of interest paid by
the borrower when U.S. Government Obligations are used as collateral. There
may be risks of delay in receiving additional collateral or risks of delay
in recovery of the securities or even loss of rights in the collateral
should the borrower of the securities fail financially. The Portfolio will
adhere to the following conditions whenever its securities are loaned: (i)
the Portfolio must receive at least 100% cash collateral or equivalent
securities from the borrower; (ii) the borrower must increase this
collateral whenever the market value of the securities including accrued
interest rises above the level of the collateral; (iii) the Portfolio must
be able to terminate the loan at any time; (iv) the Portfolio must receive
reasonable interest on the loan, as well as any dividends, interest or
other distributions on the loaned securities, and any increase in market
value; (v) the Portfolio may pay only reasonable custodian fees in
connection with the loan; and (vi) voting rights on the loaned securities
may pass to the borrower; provided, however, that if a material event
adversely affecting the investment occurs, the Board of Trustees of the
Trust must terminate the loan and regain the right to vote the
securities.
REVERSE REPURCHASE AGREEMENTS. The Portfolio may borrow funds for temporary
or emergency purposes, such as meeting larger than anticipated redemption
requests, and not for leverage, by among other things, agreeing to sell
portfolio securities to financial institutions such as banks and broker-
dealers and to repurchase them at a mutually agreed date and price (a
"reverse repurchase agreement"). At the time the Portfolio enters into a
reverse repurchase agreement it will place in a segregated custodial
account cash, U.S. Government Obligations or high-grade debt obligations
having a value equal to the repurchase price, including accrued interest.
Reverse repurchase agreements involve the risk that the market value of the
securities sold by the Portfolio may decline below the repurchase price of
those securities. Reverse repurchase agreements are considered to be
borrowings by the Portfolio.
RATING SERVICES. The ratings of Moody's Investors Service, Inc.
("Moody's") and Standard & Poor's Ratings Group ("S&P") represent their
opinions as to the quality of the securities that they undertake to rate.
It should be emphasized, however, that ratings are relative and subjective
and are not absolute standards of quality. Although these ratings are an
initial criterion for selection of portfolio investments, Bankers Trust
also makes its own evaluation of these securities, subject to review by the
Board of Trustees of the Trust. After purchase by the Portfolio, an
obligation may cease to be rated or its rating may be reduced below the
minimum required for purchase by the Portfolio. Neither event would require
the Portfolio to eliminate the obligation from its portfolio, but Bankers
Trust will consider such an event in its determination of whether the
Portfolio should continue to hold the obligation. A description of the
ratings categories of Moody's and S&P is set forth herein.
INVESTMENT RESTRICTIONS
The investment restrictions below have been adopted by the Trust with
respect to the Portfolio as fundamental policies. Under the Investment
Company Act of 1940, as amended (the "1940 Act"), a "fundamental" policy
may not be changed without the vote of a "majority of the outstanding
voting securities" of the Portfolio, which is defined in the 1940 Act as
the lesser of (a) 67% or more of the securities present at a meeting if the
holders of more than 50% of the outstanding securities are present or
represented by proxy, or (b) more than 50% of the outstanding securities.
The percentage limitations contained in the restrictions listed below apply
at the time of the purchase of the securities.
As a matter of fundamental policy, the Portfolio may not:
1. Borrow money or mortgage or hypothecate assets of the Portfolio,
except that in an amount not to exceed 1/3 of the current value of the
Portfolio's total assets, it may borrow money as a temporary measure for
extraordinary or emergency purposes and enter into reverse repurchase
agreements or dollar roll transactions, and except that it may pledge,
mortgage or hypothecate not more than 1/3 of such assets to secure such
borrowings (it is intended that money would be borrowed only from banks
and only either to accommodate requests for the withdrawal of beneficial
interests while effecting an orderly liquidation of portfolio securities or
to maintain liquidity in the event of an unanticipated failure to complete
a portfolio security transaction or other similar situations) or reverse
repurchase agreements, provided that collateral arrangements with respect
to options and futures, including deposits of initial deposit and variation
margin, are not considered a pledge of assets for purposes of this
restriction and except that assets may be pledged to secure letters of
credit solely for the purpose of participating in a captive insurance
company sponsored by the Investment Company Institute; for additional
related restrictions, see clause (i) under the caption "Additional
Restrictions" below. (As an operating policy, the Portfolio may not engage
in dollar roll transactions);
2. Underwrite securities issued by other persons except insofar as the
Portfolio may technically be deemed an underwriter under the Securities Act
of 1933, as amended (the "1933 Act"), in selling a portfolio security;
3. Make loans to other persons except (a) through the lending of the
Portfolio's portfolio securities and provided that any such loans not
exceed 20% of the Portfolio's total assets (taken at market value), (b)
through the use of repurchase agreements or the purchase of short-term
obligations or (c) by purchasing a portion of an issue of debt securities
of types distributed publicly or privately;
4. Purchase or sell real estate (including limited partnership interests
but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity contracts
(except futures and option contracts) in the ordinary course of business
(except that the Portfolio may hold and sell, for the Portfolio's
portfolio, real estate acquired as a result of the Portfolio's ownership of
securities);
5. Concentrate its investments in any particular industry (excluding U.S.
Government securities), but if it is deemed appropriate for the achievement
of the Portfolio's investment objective, up to 25% of its total assets may
be invested in any one industry; and
6. Issue any senior security (as that term is defined in the 1940 Act) if
such issuance is specifically prohibited by the 1940 Act or the rules and
regulations promulgated thereunder, provided that collateral arrangements
with respect to options and futures, including deposits of initial deposit
and variation margin, are not considered to be the issuance of a senior
security for purposes of this restriction.
ADDITIONAL RESTRICTIONS. In order to comply with certain statutes and
policies the Portfolio will not as a matter of operating policy:
(i) borrow money (including through dollar roll transactions) for any
purpose in excess of 10% of the Portfolio's total assets (taken at cost),
except that the Portfolio may borrow for temporary or emergency purposes up
to 1/3 of its assets;
(ii) pledge, mortgage or hypothecate for any purpose in excess of 10% of
the Portfolio's net assets (taken at market value), provided that
collateral arrangements with respect to options and futures, including
deposits of initial deposit and variation margin, are not considered a
pledge of assets for purposes of this restriction;
(iii) purchase any security or evidence of interest therein on margin,
except that such short-term credit as may be necessary for the clearance of
purchases and sales of securities may be obtained and except that deposits
of initial deposit and variation margin may be made in connection with the
purchase, ownership, holding or sale of futures;
(iv) sell any security which it does not own unless by virtue of its
ownership of other securities it has at the time of sale a right to obtain
securities, without payment of further consideration, equivalent in kind
and amount to the securities sold and provided that if such right is
conditional the sale is made upon the same conditions;
(v) invest for the purpose of exercising control or management;
(vi) purchase securities issued by any investment company except by
purchase in the open market where no commission or profit to a sponsor or
dealer results from such purchase other than the customary broker's
commission, or except when such purchase, though not made in the open
market, is part of a plan of merger or consolidation; provided, however,
that securities of any investment company will not be purchased for the
Portfolio if such purchase at the time thereof would cause (a) more than
10% of the Portfolio's total assets (taken at the greater of cost or market
value) to be invested in the securities of such issuers; (b) more than 5%
of the Portfolio's total assets (taken at the greater of cost or market
value) to be invested in any one investment company; or (c) more than 3% of
the outstanding voting securities of any such issuer to be held for the
Portfolio; and, provided further, that the Portfolio shall not invest in
any other open-end investment company unless the Portfolio (1) waives the
investment advisory fee with respect to assets in vested in other open-end
investment companies and (2) incurs no sales charge in connection with the
investment (as an operating policy each Portfolio will not invest in
another open-end registered investment company);
(vii) invest more than 15% of the Portfolio's net assets (taken at the
greater of cost or market value) in securities that are illiquid or not
readily marketable not including (a) Rule 144A securities that have been
determined to be liquid by the Board of Trustees; and (b) commercial paper
that is sold under section 4(2) of the Securities Act of 1933 which: (i) is
not traded flat or in default as to interest or principal; and (ii) is
rated in one of the two highest categories by at least two nationally
recognized statistical rating organizations and the Portfolio's (Fund's)
Board of Trustees have determined the commercial paper to be liquid; or
(iii) is rated in one of the two highest categories by one nationally
recognized statistical rating agency and the Portfolio's (Fund's) Board of
Trustees have determined that the commercial paper is equivalent quality
and is liquid;
(vii) no more than 5% of the Portfolio's total assets are invested in
securities issued by issuers which (including predecessors) have been in
operation less than three years;
(ix) invest more than 10% of the Portfolio's total assets (taken at the
greater of cost or market value) in securities that are restricted as to
resale under the 1933 Act (other than Rule 144A securities deemed liquid by
the Portfolio's Board of Trustees);
(x) with respect to 75% of the Portfolio's total assets, purchase
securities of any issuer if such purchase at the time thereof would cause
the Portfolio to hold more than 10% of any class of securities of such
issuer, for which purposes all indebtedness of an issuer shall be deemed a
single class and all preferred stock of an issuer shall be deemed a single
class, except that futures or option contracts shall not be subject to this
restriction;
(xi) if the Portfolio is a "diversified" fund with respect to 75% of its
assets, invest more than 5% of its total assets in the securities
(excluding U.S. government securities) of any one issuer;
(xii) purchase or retain in the Portfolio's portfolio any securities
issued by an issuer any of whose officers, directors, trustees or security
holders is an officer or Trustee of the Portfolio, or is an officer or
partner of the Adviser, if after the purchase of the securities of such
issuer for the Portfolio one or more of such persons owns beneficially more
than 1/2 of 1% of the shares or securities, or both, all taken at market
value, of such issuer, and such persons owning more than 1/2 of 1% of such
shares or securities together own beneficially more than 5% of such shares
or securities, or both, all taken at market value;
(xiii) invest more than 5% of the Portfolio's net assets in warrants
(valued at the lower of cost or market)(other than warrants acquired by the
Portfolio as part of a unit or attached to securities at the time of
purchase), but not more than 2% of the Portfolio's net assets may be
invested in warrants not listed on the American Stock Exchange or the New
York Stock Exchange Inc. (the "NYSE");
(xiv) make short sales of securities or maintain a short position, unless
at all times when a short position is open it owns an equal amount of such
securities or securities convertible into or exchangeable, without payment
of any further consideration, for securities of the same issue and equal in
amount to, the securities sold short, and unless not more than 10% of the
Portfolio's net assets (taken at market value) is represented by such
securities, or securities convertible into or exchangeable for such
securities, at any one time (the Portfolio has no current intention to
engage in short selling);
The Portfolio will comply with the permitted investments and investment
limitations in the securities laws and regulations of all states in which
any registered investment company investing in the Portfolio is registered.
PORTFOLIO TURNOVER. The Portfolio may attempt to increase yields by trading
to take advantage of short-term market variations, which results in higher
portfolio turnover. This policy does not result in higher brokerage
commissions to the Portfolio, however, as the purchases and sales of
portfolio securities are usually effected as principal transactions. The
Portfolio's turnover rate is not expected to have a material effect on its
income and is expected to be zero for regulatory reporting purposes.
ITEM 14. MANAGEMENT OF THE FUND.
The Board of Trustees is composed of persons experienced in financial
matters who meet throughout the year to oversee the activities of the
Portfolio. In addition, the Trustees review contractual arrangements with
companies that provide services to the Portfolio.
The Trustees and officers of the Trust, their birthdates, and their
principal occupations during the past five years are set forth below. Their
titles may have varied during that period. Unless otherwise indicated
below, the address of each officer is Clearing Operations, P.O. Box 897,
Pittsburgh, Pennsylvania 15230-0897.
TRUSTEES
CHARLES P. BIGGAR (birthdate: October 13, 1930) - Trustee; Retired;
Director of Chase/NBW Bank Advisory Board; Director, Batemen, Eichler, Hill
Richards Inc.; formerly Vice President of International Business Machines
and President of the National Services and the Field Engineering Divisions
of IBM. His address is 12 Hitching Post Lane, Chappaqua, New York 10514.
PHILIP W. COOLIDGE* (birthdate: September 2, 1951) - Trustee and President;
Chairman, Chief Executive Officer and President, SFG (since December, 1988)
and Signature (since April, 1989). His address is 6 St. James Avenue,
Boston, Massachusetts 02116.
S. LELAND DILL (birthdate: March 28, 1930) - Trustee; Retired; Director,
Coutts Group; Coutts (U.S.A.) International; Coutts Trust Holdings, Ltd;
Director, Zweig Series Trust; formerly Partner of KPMG Peat Marwick;
Director, Vinters International Company Inc.; General Partner of Pemco (an
investment company registered under the 1940 Act). His address is 5070
North Ocean Drive, Singer Island, Florida 33404.
PHILIP SAUNDERS, JR. (birthdate: October 11, 1935) - Trustee; Principal,
Philip Saunders Associates (Consulting); former Director of Financial
Industry Consulting, Wolf & Company; President, John Hancock Home Mortgage
Corporation; and Senior Vice President of Treasury and Financial Services,
John Hancock Mutual Life Insurance Company, Inc. His address is 445 Glen
Road, Weston, Massachusetts 02193.
*Indicates an `interested person'' (as defined in the 1940 Act) for the
Trust.
OFFICERS
RONALD M. PETNUCH (birthdate: February 27, 1960) - President and Treasurer;
Senior Vice President; Federated Services Company (`FSC''); formerly,
Director of Proprietary Client Services, Federated Administrative Services
(`FAS''), and Associate Corporate Counsel, Federated Investors (``FI'').
CHARLES L. DAVIS, JR. (birthdate: March 23, 1960) - Vice President and
Assistant Treasurer; Vice President, FAS.
JAY S. NEUMAN (birthdate: April 22, 1950) - Secretary; Corporate Counsel,
FI.
Messrs. Coolidge, Petnuch, Davis, and Neuman also hold similar positions
for other investment companies for which Signature, or Edgewood,
respectively, or an affiliate serves as the principal underwriter.
No person who is an officer or director of Bankers Trust is an officer or
Trustee of the Trust. No director, officer or employee of Edgewood or any
of its affiliates will receive any compensation from the Trust for serving
as an officer or Trustee of the Trust.
The following table reflects fees paid to the Trustees of the Trust for the
year ended December 31, 1996.
TRUSTEE COMPENSATION TABLE
NAME, AGGREGATE TOTAL
POSITION WITH COMPENSATION COMPENSATION FROM
TRUST FROM TRUST FUND COMPLEX*
Philip W. Coolidge
Trustee $23 $1,250
Charles P. Biggar,
Trustee $765 $28,750
S. Leland Dill,
Trustee $705 $28,750
Philip Saunders, Jr.,
Trustee $705 $28,750
*Aggregated information is furnished for the BT Family of Funds which
consists of the following: BT Investment Funds, BT Institutional Funds,
BT Pyramid Funds, BT Advisor Funds, BT Investment Portfolios, Cash
Management Portfolio, Treasury Money Portfolio, Tax Free Money Portfolio,
NY Tax Free Money Portfolio, International Equity Portfolio, Utility
Portfolio, Short Intermediate US Government Securities Portfolio,
Intermediate Tax Free Portfolio, Asset Management Portfolio, Equity 500
Index Portfolio, and Capital Appreciation Portfolio.
The Trust's Declaration of Trust provides that it will indemnify its
Trustees and officers against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Trust, unless, as to liability to the Trust or the
investors in the Portfolio or any other series of the Trust, it is finally
adjudicated that they engaged in wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in their offices,
or unless with respect to any other matter it is finally adjudicated that
they did not act in good faith in the reasonable belief that their actions
were in the best interests of the Trust. In the case of settlement, such
indemnification will not be provided unless it has been determined by a
court or other body approving the settlement or other disposition, or by a
reasonable determination, based upon a review of readily available facts,
by vote of a majority of disinterested Trustees or in a written opinion of
independent counsel, that such officers or Trustees have not engaged in
wilful misfeasance, bad faith, gross negligence or reckless disregard of
their duties.
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of March 1, 1997, Institutional Liquid Assets Fund (the "Fund") (a
series of BT Institutional Funds) owned approximately 100% of the value of
the outstanding interests in the Portfolio. Because the Fund controls the
Portfolio, it may take actions without the approval of any other investor
in the Portfolio.
The Fund has informed the Trust that whenever it is requested to vote on
matters pertaining to the fundamental policies of the Portfolio, the Fund
will hold a meeting of shareholders and will cast its votes as instructed
by the Fund's shareholders. It is anticipated that other registered
investment companies investing in the Portfolio will follow the same or a
similar practice.
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.
Under the terms of an investment advisory agreement (the `Advisory
Agreement') between the Portfolio and Bankers Trust, the adviser manages
the portfolio subject to the supervision and direction of the Board of
Trustees of the Portfolio. Bankers Trust will: (i) act in strict conformity
with the Trust's Declaration of Trust, the 1940 Act and the Investment
Advisors Act of 1940, as the same may from time to time be amended; (ii)
manage the Portfolio in accordance with the Portfolio's investment
objectives, restrictions and policies as stated herein; (iii) make
investment decisions for the Portfolio; and (iv) place purchase and sale
orders for securities and other financial instruments on behalf of the
Portfolio.
Bankers Trust bears all expenses in connection with the performance of
services under the Advisory Agreement. The Portfolio bears certain other
expenses incurred in its operation including: taxes, interest, brokerage
fees and commissions, if any; fees of Trustees of the Portfolio who are not
officers, directors or employees of Bankers Trust, Edgewood or any of their
affiliates; Securities and Exchange Commission fees, and state Blue Sky
qualification fees, if any; administrative and services fees; certain
insurance premiums; outside auditing an legal expenses; costs of
maintenance of corporate existence;; costs attributable to investor
services; costs of shareholders' reports and meetings of shareholders,
officers and Trustees of the Portfolio; and any extraordinary expenses.
The Advisory Agreement will continue in effect if such continuance is
specifically approved at least annually by the Board of Trustees or by a
majority vote of the investors in the Portfolio (with the vote of each
being in proportion to the amount of its investment), and, in either case,
by a majority of the Trust's Trustees who are not parties to the Advisory
Agreement or interested persons of any such party, at a meeting called for
the purpose of voting on the Advisory Agreement.
The Advisory Agreement is terminable with respect to the Portfolio without
penalty on 60 days' written notice by the Portfolio when authorized either
by majority vote of the investors in the Portfolio (with the vote of each
being in proportion to the amount of its investment), or by a vote of a
majority of the Trust's Board of Trustees, or by the Adviser, and will
automatically terminate in the event of its assignment. The Advisory
Agreement provides that neither the Adviser not its personnel shall be
liable for any error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in the execution of
security transactions for the Portfolio, except for wilful misfeasance, bad
faith or gross negligence or of reckless disregard of its or their
obligations and duties under the Advisory Agreement.
For the fiscal year ended December 31, 1996, the period ended December 31,
1995 and the fiscal year ended December 31, 1994, Bankers Trust earned
$2,794,472, $127,704, and $22,347, respectively, in compensation for
investment advisory services provided to the Portfolio. During the same
periods, Bankers Trust reimbursed $3,187,013, $178,381, and $44,908,
respectively, to the Portfolio to cover expenses.
Under the Administration and Services Agreement, Bankers Trust is
obligated on a continuous basis to provide such administrative services as
the Board of Trustees reasonably deems necessary for the proper
administration of the Trust. Bankers Trust will generally assist in all
aspects of the Trust's operations; supply and maintain the Trust with
office facilities, statistical and research data, data processing services,
clerical, accounting, bookkeeping and recordkeeping services (including
without limitation the maintenance of such books and records as are
required under the 1940 Act and the rules thereunder, except as maintained
by other agents of the Trust), internal auditing, executive and
administrative services, and stationery and office supplies; prepare
reports to investors; prepare and file tax returns; supply financial
information and supporting data for reports to and filings with the
Securities and Exchange Commission ; supply supporting documentation for
meetings of the Board of Trustees; provide monitoring reports and
assistance regarding compliance with the Trust's Declaration of Trust, by-
laws, investment objectives and policies and with Federal and state
securities laws; arrange for appropriate insurance coverage; calculate the
net asset value, net income and realized capital gains or losses of the
Portfolio; and negotiate arrangements with, and supervise and coordinate
the activities of, agents and others retained by the Trust to supply
services to the Trust and/or the investors in the Portfolio.
Pursuant to a sub-administration agreement (the "Sub-Administration
Agreement"), FSC performs such sub-administration duties for the Trust as
from time to time may be agreed upon by Bankers Trust and FSC. The Sub-
Administration Agreement provides that FSC will receive such compensation
as from time to time may be agreed upon by FSC and Bankers Trust. All such
compensation will be paid by Bankers Trust.
Bankers Trust also provides fund accounting, transfer agency and custodian
services to the Trust and the Portfolio, pursuant to the Administration
Agreement.
For the fiscal year ended December 31, 1996, the period ended December
31, 1995, and the fiscal year ended December 31, 1994, Bankers Trust earned
compensation $931,490, $42,568, and $7,449, respectively, for
administrative and other services provided to the Portfolio.
Bankers Trust, 280 Park Avenue, New York, New York, 10017, serves as
custodian for the Portfolio pursuant to the Administration and Services
Agreement discussed herein. As custodian, Bankers Trust holds the
Portfolios assets. For such services, Bankers Trust receives monthly fees
from the Portfolio, which are included in the administrative and services
fees discussed above.
Bankers Trust has been advised by its counsel that in its opinion Bankers
Trust may perform the services for the Portfolio contemplated by the
Advisory Agreement and other activities for the Trust described herein and
in Part A without violation of the Glass-Steagall Act or any other
applicable banking laws or regulations. However, counsel has pointed out
that future changes in either Federal or state statutes and regulations
concerning the permissible activities of banks or trust companies, as well
as future judicial or administrative decisions or interpretations of
present and future statutes and regulations, might prevent bankers Trust
from continuing to perform those services for the Portfolio. If the
circumstances described above should change, the Board of Trustees would
review the Trust's relationship with Bankers Trust and consider taking all
actions necessary in the circumstances.
Willkie Farr & Galagher, One Citicorp Center, 153 East 53rd Street, New
York, New York 10022-4669, serve as Counsel to the Trust and from time to
time provides certain legal services to Bankers Trust. Coopers & Lybrand
L.L.P., 1100 Main Street, Suite 900, Kansas City, Missouri 64105 has been
selected as Independent Accountants for the Trust.
ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.
Decisions to buy and sell securities and other financial instruments for
the Portfolio are made by Bankers Trust, which also is responsible for
placing these transactions, subject to the overall review of the Board of
Trustees of the Trust. Although investment requirements for the Portfolio
are reviewed independently from those of the other accounts managed by
Bankers Trust, investments of the type the Portfolio may make may also be
made by these other accounts. When the Portfolio or accounts managed by
Bankers Trust are prepared to invest in, or desire to dispose of, the same
security or other financial instrument, available investments or
opportunities for sales will be allocated in a manner believed by Bankers
Trust to be equitable to each. In some cases, this procedure may affect
adversely the price paid or received by the Portfolio or the size of the
position obtained or disposed of by the Portfolio.
Purchases and sales of securities on behalf of the Portfolio usually are
principal transactions. These securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities.
The cost of securities purchased from underwriters includes an underwriting
commission or concession and the prices at which securities are purchased
from and sold to dealers include a dealer's mark-up or mark-down. U.S.
Government Obligations are generally purchased from underwriters or
dealers, although certain newly issued U.S. Government Obligations may be
purchased directly from the U.S. Treasury or from the issuing agency or
instrumentality.
Over-the-counter purchases and sales are transacted directly with principal
market makers except in those cases in which better prices and executions
may be obtained elsewhere and principal transactions are not entered into
with persons affiliated with the Portfolio or any other series of the Trust
except pursuant to exemptive rules or orders adopted by the SEC. Under
rules adopted by the SEC, broker-dealers may not execute transactions on
the floor of any national securities exchange for the accounts of
affiliated persons, but may effect transactions by transmitting orders for
execution.
In selecting brokers or dealers to execute portfolio transactions on behalf
of the Portfolio, Bankers Trust seeks the best overall terms available. In
assessing the best overall terms available for any transaction, Bankers
Trust will consider the factors it deems relevant, including the breadth of
the market in the investment, the price of the investment, the financial
condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction and
on a continuing basis. In addition, Bankers Trust is authorized, in
selecting parties to execute a particular transaction and in evaluating the
best overall terms available, to consider the brokerage, but not research
services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) provided to the Portfolio and/or the other accounts
over which Bankers Trust or its affiliates exercise investment discretion.
Bankers Trust's fees under its agreements with the Trust are not reduced by
reason of its receiving brokerage services.
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.
Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in separate series, such as the Portfolio. No series
of the Trust has any preference over any other series. Investors in the
Portfolio are entitled to participate PRO RATA in distributions of taxable
income, loss, gain and credit of the Portfolio. Upon liquidation or
dissolution of the Portfolio, investors are entitled to share PRO RATA in
the net assets of the Portfolio available for distribution to investors.
Investments in the Portfolio have no preference, preemptive, conversion or
similar rights and are fully paid and nonassessable, except as set forth
below. Investments in the Portfolio may not be transferred.
Each investor in the Portfolio is entitled to a vote in proportion to the
amount of its investment. The Portfolio and the other series of the Trust
will all vote together in certain circumstances (e.g., election of the
Trust's Trustees and auditors, as required by the 1940 Act and the rules
thereunder). One or more series of the Trust could control the outcome of
these votes. Investors do not have cumulative voting rights, and investors
holding more than 50% of the aggregate beneficial interests in the Trust,
or in a series as the case may be, may control the outcome of votes and in
such event the other investors in the Portfolio, or in the series, would
not be able to elect any Trustee. The Trust is not required and has no
current intention to hold annual meetings of investors but the Trust will
hold special meetings of investors when in the judgment of the Trust's
Trustees it is necessary or desirable to submit matters for an investor
vote. No material amendment may be made to the Trust's Declaration of Trust
without the affirmative majority vote of investors (with the vote of each
being in proportion to the amount of its investment).
The Trust, with respect to the Portfolio, may enter into a merger or
consolidation, or sell all or substantially all of its assets, if approved
by the vote of two-thirds of the Portfolio's investors (with the vote of
each being in proportion to its percentage of the beneficial interests in
the Portfolio), except that if the Trustees of the Trust recommend such
sale of assets, the approval by vote of a majority of the investors (with
the vote of each being in proportion to its percentage of the beneficial
interests of the Portfolio) will be sufficient. The Portfolio may also be
terminated (i) upon liquidation and distribution of its assets, if approved
by the vote of two-thirds of its investors (with the vote of each being in
proportion to the amount of its investment), or (ii) by the Trustees of the
Trust by written notice to its investors.
The Trust is organized as a trust under the laws of the State of New York.
Investors in the Portfolio or any other series of the Trust will be held
personally liable for its obligations and liabilities, subject, however, to
indemnification by the Trust in the event that there is imposed upon an
investor a greater portion of the liabilities and obligations than its
proportionate beneficial interest. The Declaration of Trust also provides
that the Trust shall maintain appropriate insurance (for example, fidelity
bonding and errors and omissions insurance) for the protection of the
Trust, its investors, Trustees, officers, employees and agents covering
possible tort and other liabilities. Thus, the risk of an investor
incurring financial loss on account of investor liability is limited to
circumstances in which both inadequate insurance existed and the Trust
itself was unable to meet its obligations with respect to any series
thereof.
The Declaration of Trust further provides that obligations of the Portfolio
or any other series of the Trust are not binding upon the Trustees
individually but only upon the property of the Portfolio or other series of
the Trust, as the case may be, and that the Trustees will not be liable for
any action or failure to act, but nothing in the Declaration of Trust
protects a Trustee against any liability to which he would otherwise be
subject by reason of wilful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office.
The Trust reserves the right to create and issue a number of series, in
which case investments in each series would participate equally in the
earnings and assets of the particular series. Investors in each series
would be entitled to vote separately to approve advisory agreements or
changes in investment policy, but investors of all series may vote together
in the election or selection of Trustees, principal underwriters and
accountants. Upon liquidation or dissolution of any series of the Trust,
the investors in that series would be entitled to share PRO RATA in the net
assets of that series available for distribution to investors.
ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED.
Beneficial interests in the Portfolio are issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. See "General Description of
Registrant," "Purchase of Securities Being Offered" and "Redemption or
Repurchase" in Part A.
The Portfolio determines its net asset value as of 12:00 noon and 4:00
p.m., New York time, on each day on which the Portfolio is open ("Portfolio
Business Day"), by dividing the value of the Portfolio's net assets (I.E.,
the value of its securities and other assets less its liabilities,
including expenses payable or accrued) by the value of the investment of
the investors in the Portfolio at the time the determination is made. (As
of the date of this Registration Statement, the Portfolio is open every
weekday except for: (a) the following holidays: New Year's Day, Martin
Luther King Day, Presidents' Day, Memorial Day, Independence Day, Labor
Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas Day and (b)
the preceding Friday of the subsequent Monday when one of the calendar-
determined holidays falls on a Saturday or Sunday, respectively. Purchases
and withdrawals will be effected at the time of determination of net asset
value next following the receipt of any purchase or withdrawal order.
The valuation of the Portfolio's securities is based on their amortized
cost, which does not take into account unrealized capital gains or losses.
Amortized cost valuation involves initially valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any
discount or premium, generally without regard to the impact of fluctuating
interest rates on the market value of the instrument. Although this method
provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price
the Portfolio would receive if it sold the instrument.
The Portfolio's use of the amortized cost method of valuing its securities
is permitted by a rule adopted by the SEC. The Portfolio will also maintain
a dollar-weighted average portfolio maturity of 90 days or less, purchase
only instruments having remaining maturities of two years or less and
invest only in securities determined by or under the supervision of the
Board of Trustees to be of high quality with minimal credit risks.
Pursuant to the rule, the Board of Trustees of the Trust also has
established procedures designed to allow investors in the Portfolio to
stabilize, to the extent reasonably possible, the investors' price per
share as computed for the purpose of sales and redemptions. These
procedures include review of the Portfolio's holdings by the Trust's Board
of Trustees, at such intervals as it deems appropriate, to determine
whether the value of the Portfolio's assets calculated by using available
market quotations or market equivalents deviates from such valuation based
on amortized cost.
The rule also provides that the extent of any deviation between the value
of the Portfolio's assets based on available market quotations or market
equivalents and such valuation based on amortized cost must be examined by
the Trust's Board of Trustees. In the event the Board of Trustees
determines that a deviation exists that may result in material dilution or
other unfair results to investors, pursuant to the rule, the Trust's Board
of Trustees must cause the Portfolio to take such corrective action as the
Board of Trustees regards as necessary and appropriate, including: selling
portfolio instruments prior to maturity to realize capital gains or losses
or to shorten average portfolio maturity; paying distributions from capital
or capital gains; redeeming interests in kind; or valuing the Portfolio's
assets by using available market quotations.
ITEM 20. TAX STATUS.
The Trust is organized as a trust under New York law. Under the anticipated
method of operation of the Trust, the Portfolio will not be subject to any
income tax. However each investor in the Portfolio will be taxable on its
share (as determined in accordance with the governing instruments of the
Trust) of the Portfolio's ordinary income and capital gain in determining
its income tax liability. The determination of such share will be made in
accordance with the Internal Revenue Code of 1986, as amended (the "Code"),
and regulations promulgated thereunder.
The Trust's taxable year-end is December 31. Although, as described above,
the Portfolio will not be subject to Federal income tax, the Trust will
file appropriate income tax returns with respect to the Portfolio.
It is intended that the assets, income and distributions of the Portfolio
will be managed in such a way that an investor in the Portfolio will be
able to satisfy the requirements of Subchapter M of the Code, assuming that
the investor invested all of its assets in the Portfolio.
There are certain tax issues that will be relevant to only certain of the
investors, specifically investors that are segregated asset accounts and
investors who contribute assets rather than cash to the Portfolio. It is
intended that such segregated asset accounts will be able to satisfy
diversification requirements applicable to them and that such contributions
of assets will not be taxable provided certain requirements are met. Such
investors are advised to consult their own tax advisors as to the tax
consequences of an investment in the Portfolio.
ITEM 21. UNDERWRITERS.
The placement agent for the Trust is Edgewood, which receives no
additional compensation for serving in this capacity. Investment companies,
insurance company separate accounts, common and commingled trust funds and
similar organizations and entities may continuously invest in the
Portfolio.
ITEM 22. CALCULATION OF PERFORMANCE DATA.
Not applicable.
ITEM 23. FINANCIAL STATEMENTS.
The financial statements for the Portfolio for the period ended December
31, 1996, are incorporated herein by reference to the Annual Report to
shareholders of the Institutional Liquid Assets Fund dated December 31,
1996. A copy of the Annual Report may be obtained without charge by
contacting the Trust.
APPENDIX
DESCRIPTION OF SECURITIES RATINGS
Description of S&P's corporate bond ratings:
AAA-Bonds rated AAA have the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely
strong.
AA-Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small
degree.
S&P's letter ratings may be modified by the addition of a plus or a
minus sign, which is used to show relative standing within the major
categories, except in the AAA rating category.
Description of Moody's corporate bond ratings:
Aaa-Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to
as `gilt-edge.'' Interest payments are protected by a large or
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
Aa-Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
Moody's applies the numerical modifiers 1, 2 and 3 to each generic
rating classification from Aa through B. The modifier 1 indicates that the
security ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end of its generic rating category.
Description of Fitch Investors Service's corporate bond ratings:
AAA-Securities of this rating are regarded as strictly high-grade,
broadly marketable, suitable for investment by trustees and fiduciary
institutions, and liable to but slight market fluctuation other than
through changes in the money rate. The factor last named is of importance
varying with the length of maturity. Such securities are mainly senior
issues of strong companies, and are most numerous in the railway and public
utility fields, though some industrial obligations have this rating. The
prime feature of an AAA rating is showing of earnings several times or many
times interest requirements with such stability of applicable earnings that
safety is beyond reasonable question whatever changes occur in conditions.
Other features may enter in, such as a wide margin of protection through
collateral security or direct lien on specific property as in the case of
high class equipment certificates or bonds that are first mortgages on
valuable real estate. Sinking funds or voluntary reduction of the debt by
call or purchase are often factors, while guarantee or assumption by
parties other than the original debtor may also influence the rating.
AA-Securities in this group are of safety virtually beyond question,
and as a class are readily salable while many are highly active. Their
merits are not greatly unlike those of the AAA class, but a security so
rated may be of junior though strong lien in many cases directly following
an AAA security or the margin of safety is less strikingly broad. The
issue may be the obligation of a small company, strongly secured but
influenced as to ratings by the lesser financial power of the enterprise
and more local type of market.
Description of Duff & Phelps' corporate bond ratings:
AAA-Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury Funds.
AA+, AA, AA-High credit quality. Protection factors are strong. Risk
is modest but may vary slightly from time to time because of economic
conditions.
Description of S&P's municipal bond ratings:
AAA-Prime-These are obligations of the highest quality. They have the
strongest capacity for timely payment of debt service.
General Obligation Bonds-In a period of economic stress, the issuers
will suffer the smallest declines in income and will be least susceptible
to autonomous decline. Debt burden is moderate. A strong revenue
structure appears more than adequate to meet future expenditure
requirements. Quality of management appears superior.
Revenue Bonds-Debt service coverage has been, and is expected to
remain, substantial; stability of the pledged revenues is also
exceptionally strong due to the competitive position of the municipal
enterprise or to the nature of the revenues. Basic security provisions
(including rate covenant, earnings test for issuance of additional bonds
and debt service reserve requirements) are rigorous. There is evidence of
superior management.
AA-High Grade-The investment characteristics of bonds in this group
are only slightly less marked than those of the prime quality issues.
Bonds rated AA have the second strongest capacity for payment of debt
service.
S&P's letter ratings may be modified by the addition of a plus or a
minus sign, which is used to show relative standing within the major rating
categories, except in the AAA rating category.
Description of Moody's municipal bond ratings:
Aaa-Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as `gilt edge.'' Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of
such issues.
Aa-Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities, or
fluctuation of protective elements may be of greater amplitude, or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
Moody's may apply the numerical modifier in each generic rating
classification from Aa through B. The modifier 1 indicates that the
security within its generic rating classification possesses the strongest
investment attributes.
Description of S&P's municipal note ratings:
Municipal notes with maturities of three years or less are usually
given note ratings (designated SP-1 or SP-2) to distinguish more clearly
the credit quality of notes as compared to bonds. Notes rated SP-1 have a
very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics are given the
designation of SP-1+. Notes rated SP-2 have a satisfactory capacity to pay
principal and interest.
Description of Moody's municipal note ratings:
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG) and for variable rate
demand obligations are designated Variable Moody's Investment Grade (VMIG).
This distinction recognizes the differences between short-term credit risk
and long-term risk. Loans bearing the designation MIG-1/VMIG-1 are of the
best quality, enjoying strong protection from established cash flows of
funds for their servicing or from established and broad-based access to the
market for refinancing, or both. Loans bearing the designation
MIG-2/VMIG-2 are of high quality, with ample margins of protection,
although not as large as the preceding group.
Description of S&P commercial paper ratings:
Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics are
denoted A-1+.
Description of Moody's commercial paper ratings:
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Issuers rated Prime-1 (or related supporting institutions) are
considered to have a superior capacity for repayment of short-term
promissory obligations.
Description of Fitch Investors Service's commercial paper ratings:
F-1+-Exceptionally Strong Credit Quality. Issues assigned this rating
are regarded as having the strongest degree of assurance for timely
payment.
F-1-Very Strong Credit Quality. Issues assigned this rating reflect
an assurance of timely payment only slightly less in degree than the
strongest issue.
Description of Duff & Phelps' commercial paper ratings:
Duff 1+-Highest certainty of timely payment. Short term liquidity,
including internal operating factors and/or access to alternative sources
of funds, is outstanding, and safety is just below risk free U.S. Treasury
short term obligations.
Duff 1-Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk
factors are minor.
Description of IBCA's Long-Term Ratings:
AAA-Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and interest
is substantial. Adverse changes in business, economic or financial
conditions are unlikely to increase investment risk significantly.
AA-Obligations for which there is a very low expectation of investment
risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business economic or financial conditions
may increase investment risk albeit not very significantly.
A-Obligations for which there is a low expectation of investment risk.
Capacity for timely repayment of principal and interest is strong, although
adverse changes in business, economic or financial conditions may lead to
increased investment risk.
BBB-Capacity for timely repayment of principal and interest is
adequate, although adverse changes in business, economic or financial
conditions are more likely to lead to increased investment risk than for
obligations in higher categories.
BB-Obligations for which there is a possibility of investment risk
developing. Capacity for timely repayment of principal and interest
exists, but is susceptible over time to adverse changes in business,
economic or financial conditions.
B-Obligations for which investment risk exists. Timely repayment of
principal and interest is not sufficiently protected against adverse
changes in business, economic or financial conditions.
CCC-Obligations for which there is a current perceived possibility of
default. Timely repayment of principal and interest is dependent on
favorable business, economic or financial conditions.
CC-Obligations which are highly speculative or which have a high risk
of default.
C-Obligations which are currently in default.
Notes: `+'' or ``-'' may be appended to a rating to denote relative
status within major rating categories.
Ratings of BB and below are assigned where it is considered that
speculative characteristics are present.
Description of IBCA's Short-Term Ratings:
A1+-Obligations supported by the highest capacity for timely
repayment.
A1-Obligations supported by a strong capacity for timely repayment.
A2-Obligations supported by a satisfactory capacity for timely
repayment, although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
A3-Obligations supported by an adequate capacity for timely repayment.
Such capacity is more susceptible to adverse changes in business, economic
or financial conditions than for obligations in higher categories.
B-Obligations for which the capacity for timely repayment is
susceptible to adverse changes in business, economic or financial
conditions.
C-Obligations for which there is an inadequate capacity to ensure
timely repayment.
D-Obligations which have a high risk of default or which are currently
in default.
Description of Thomson Bank Watch Short-Term Ratings:
TBW-1-The highest category; indicates a very high likelihood that
principal and interest will be paid on a timely basis.
TBW-2-The second-highest category; while the degree of safety
regarding timely repayment of principal and interest is strong, the
relative degree of safety is not as high as for issues rated `TBW-1''.
TBW-3-The lowest investment-grade category; indicates that while the
obligation is more susceptible to adverse developments (both internal and
external) than those with higher ratings, the capacity to service principal
and interest in a timely fashion is considered adequate.
TBW-4-The lowest rating category; this rating is regarded as non-
investment grade and therefore speculative.
Description of Thomson BankWatch Long-Term Ratings:
AAA-The highest category; indicates that the ability to repay
principal and interest on a timely basis is extremely high.
AA-The second-highest category; indicates a very strong ability to
repay principal and interest on a timely basis, with limited incremental
risk compared to issues rated in the highest category.
A-The third-highest category; indicates the ability to repay principal
and interest is strong. Issues rated `a'' could be more vulnerable to
adverse developments (both internal and external) than obligations with
higher ratings.
BBB-The lowest investment-grade category; indicates an acceptable
capacity to repay principal and interest. Issues rated `BBB'' are,
however, more vulnerable to adverse developments (both internal and
external) than obligations with higher ratings.
Non-Investment Grade
(Issues regarded as having speculative characteristics in the likelihood of
timely repayment of principal and interest.)
BB-While not investment grade, the `BB'' rating suggests that the
likelihood of default is considerably less than for lower-rated issues.
However, there are significant uncertainties that could affect the ability
to adequately service debt obligations.
B-Issues rated `B'' show a higher degree of uncertainty and therefore
greater likelihood of default than higher-rated issues. Adverse
development could well negatively affect the payment of interest and
principal on a timely basis.
CCC-Issues rated `CCC'' clearly have a high likelihood of default,
with little capacity to address further adverse changes in financial
circumstances.
CC-'CC'' is applied to issues that are subordinate to other
obligations rated `CCC'' and are afforded less protection in the event of
bankruptcy or reorganization.
D-Default
These long-term debt ratings can also be applied to local currency
debt. In such cases the ratings defined above will be preceded by the
designation `local currency''.
RATINGS IN THE LONG-TERM DEBT CATEGORIES MAY INCLUDE A PLUS (+) OR MINUS (-
) DESIGNATION, WHICH INDICATES WHERE WITHIN THE RESPECTIVE CATEGORY THE
ISSUE IS PLACED.
PART C OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Incorporated by reference to the Annual Report of BT
Institutional Funds dated December 31, 1996, pursuant to Rule 411
under the Securities Act of 1933. (File Nos. 33-07474 and 811-
04760)
(b) Exhibits:
(l) Declaration of Trust of the Registrant; 3
(i) Conformed copy of Amendment No. 7 to Declaration of
Trust of BT Investment Portfolios; 7
(2) By-Laws of the Registrant; 7
(3) Not Applicable
(4) Not Applicable
(5) (i) Investment Advisory Agreement between the Registrant
and Bankers Trust Company (`Bankers Trust''); 3
(ii) Sub-Investment Advisory Agreement between Bankers
Trust and BT Fund Managers International Limited; 2
(iii) Schedule of fees under Investment Advisory
Agreement; 4
(6) Not Applicable
(7) Not Applicable
(8) Not Applicable
(9) Administration and Services Agreement between the
Registrant and Bankers Trust; 1
(i) Conformed Copy of Exclusive Placement Agent
Agreement; 8
(ii) Copy of Exhibit A to Exclusive Placement Agent
Agreement; 8
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) (i) Investment Representation letters of
initial investors; 1
(ii) Investment Representation Letters of Initial
Investors, EAFE(R) Equity Index Portfolio, U.S. Bond
Index Portfolio, Equity 500 Equal Weighted Index
Portfolio, Small Cap Index Portfolio; 4
(14) Not Applicable
(15) Not Applicable
+ All exhibits have been filed electronically.
1. Incorporated by reference to the Registrant's registration statement
on Form N-lA ("Registration Statement") as filed with the Commission
on June 7, 1993.
2. Incorporated by reference to Amendment No. 3 to Registrant's
Registration Statement as filed with the Commission on September 20,
1993.
3. Incorporated by reference to Amendment No. 9 to Registrant's
Registration Statement as filed with the Commission on August 1, 1995.
4. Incorporated by reference to Amendment No. 10 to Registrant's
Registration Statement as filed with the Commission on January 1,
1996.
7. Incorporated by reference to Amendment No. 13 to Registrant's
Registration Statement as filed with the Commission on January 30,
1997.
8. Incorporated by reference to Amendment No. 15 to Registrant's
Registration Statement as filed with the Commission on February 28,
1997.
(16) Not Applicable
(17) Financial Data Schedules
(i) Asset Management Portfolio II, Asset Management
Portfolio III; 3
(ii) EAFE(R)Equity Index Portfolio, Small Cap Index
Portfolio; 8
(iii) Liquid Assets Portfolio; +
(iv) Pacific Basin Equity Portfolio, Latin American Equity
Portfolio, Global High Yield Portfolio, Small Cap
Portfolio; 7
(18) Not Applicable
(19) Conformed copy of Power of Attorney; 8
ITEM 25. Persons Controlled by or Under Common Control with Registrant:
None
ITEM 26. Number of Holders of Securities.
Title of Class Number of Record Holders
as of December 31, 1996
International Bond Portfolio 1
Latin American Equity Portfolio 2
Pacific Basin Equity Portfolio 2
Global High Yield Securities Portfolio 2
Small Cap Portfolio 2
European Equity Portfolio 1
Liquid Assets Portfolio 1
100% Treasury Portfolio 2
Asset Management Portfolio II 1
Asset Management Portfolio III 1
U.S. Bond Index Portfolio 1
Equity 500 Equal Weighted Index Portfolio 1
Small Cap Index Portfolio 1
EAFE(R) Equity Index Portfolio 1
BT RetirementPlus Portfolio 1
ITEM 27. Indemnification; 5
+ All exhibits have been filed electronically.
3. Incorporated by reference to Amendment No. 9 to Registrant's
Registration Statement as filed with the Commission on August 1, 1995.
5. Incorporated by reference ( to Post-Effective Amendment No. 11 to
Registrant's Registration Statement as filed with the Commission on
January 29, 1996.
6. Incorporated by reference to Amendment No. 12 to Registrant's
Registration Statement as filed with the Commission on April 24, 1996.
7. Incorporated by reference to Amendment No. 13 to Registrant's
Registration Statement as filed with the Commission on January 30,
1997.
8. Incorporated by reference to Amendment No. 15 to Registrant's
Registration Statement as filed with the Commission on February 28,
1997.
ITEM 28. Business and Other Connections of Investment Adviser:
Bankers Trust serves as investment adviser to each Portfolio. Bankers
Trust, a New York banking corporation, is a wholly owned subsidiary of
Bankers Trust New York Corporation. Bankers Trust conducts a variety of
commercial banking and trust activities and is a major wholesale supplier
of financial services to the international institutional market. To the
knowledge of the Trust, none of the directors or
officers of Bankers Trust, except those set forth below, is or has been at
anytime during the past two fiscal years engaged in any other business,
profession, vocation or employment of a substantial nature, except that
certain directors and officers also hold various positions with and engage
in business for Bankers Trust New York Corporation. Set forth below are the
names and principal businesses of the directors and officers of Bankers
Trust who are or during the past two fiscal years have been engaged in any
other business, profession, vocation or employment of a substantial nature.
These persons may be contacted c/o Bankers Trust Company, 280 Park Avenue,
New York, New York 10017.
George B. Beitzel, International Business Machines Corporation, Old Orchard
Road, Armonk, NY 10504. Retired Senior Vice President and Director, Member
of Advisory Board of International Business Machines Corporation. Director
of Bankers Trust and Bankers Trust New York Corporation. Director of
FlightSafety International, Inc. Director of Phillips Petroleum Company.
Director of Roadway Services, Inc. Director of Rohm and Hass Company.
William R. Howell, J.C. Penney Company, Inc., P.O. Box 10001, Dallas, TX
75301-0001. Chairman of the Board and Chief Executive Officer, J.C. Penney
Company, Inc. Director of Bankers Trust and Bankers Trust New York
Corporation. Also a Director of Exxon Corporation, Halliburton Company,
Warner-Lambert Corporation
Jon M. Huntsman, Huntsman Chemical Corporation, 2000 Eagle Gate Tower, Salt
Lake City, UT 84111. Chairman and Chief
Executive Officer, Huntsman Chemical Corporation, Director of Bankers
Trust and Bankers Trust New York Corporation. Chairman of Constar
Corporation, Huntsman Corporation, Huntsman Holdings Corporation and
Petrostar Corporation. President of Autostar Corporation, Huntsman
Polypropylene Corporation and Restar Corporation. Director of Razzleberry
Foods Corporation and Thiokol Corporation. General Partner of Huntsman
Group Ltd., McLeod Creed Partnership and Trustar Ltd.
Vernon E. Jordan, Jr., Akin, Gump, Strauss, Hauer & Feld, LLP, 1333 New
Hampshire Ave., N.W., Washington, DC 20036. Partner, Akin, Gump, Strauss,
Hauer & Feld, LLP. Director of Bankers Trust and Bankers Trust New York
Corporation. Also a Director of American Express Company, Corning
Incorporated, Dow Jones, Inc., J.C. Penney Company, Inc., Revlon Group
Incorporated, Ryder System, Inc., Sara Lee Corporation, Union Carbide
Corporation and Xerox Corporation.
Hamish Maxwell, Philip Morris Companies Inc., 120 Park Avenue, New York, NY
10017. Chairman of the Executive Committee, Philip Morris Companies Inc.
Director of Bankers Trust and Bankers Trust New York Corporation. Director
of The New Corporation Limited.
Donald F. McCullough, Collins & Aikman Corporation, 210 Madison Avenue, New
York, New York 10016. Chairman Emeritus, Collins & Aikman Corporation.
Director of Bankers Trust and Bankers Trust New York Corporation. Director
of Massachusetts Mutual Life Insurance Co. and Melville Corporation.
N.J. Nicholas Jr., 745 Fifth Avenue, New York, NY 10020. Former President,
Co-Chief Executive Officer and Director of Time Warner Inc. Director of
Bankers Trust and Bankers Trust New York Corporation. Also a Director of
Xerox Corporation.
Russell E. Palmer, The Palmer Group, 3600 Market Street, Suite 530,
Philadelphia, PA 19104. Chairman and Chief Executive Officer of The Palmer
Group. Director of Bankers Trust and Bankers Trust New York Corporation.
Also Director of Allied-Signal Inc., Contel Cellular, Inc., Federal Home
Loan Mortgage Corporation, GTE Corporation, Goodyear Tire & Rubber Company,
Imasco Limited, May Department Stores Company and Safeguard Scientifics,
Inc. Member, Radnor Venture Partners Advisory Board.
Didier Pineau-Valencienne, Schneider S.A., 4 Rue de Longchamp, 75116 Paris,
France. Chairman and Chief Executive Officer, Schneider S.A. Director and
member of the European Advisory Board of Bankers Trust and Director of
Bankers Trust New York Corporation. Director of (France), and Equitable
Life Assurance Society of America, Arbed (Luxembourg), Banque Paribas
(France), Ciments Francais (France), Cofibel (Belgique), Compagnie
Industrielle de Paris (France), SIAPAP, Schneider USA, Sema Group PLC
(Great Britain), Spie-Batignolles, Tractebel (Belgique) and Whirlpool.
Chairman and Chief Executive Officer of Societe Parisienne d'Entreprises et
de Participations.
Charles S. Sanford, Jr., Bankers Trust Company, 280 Park Avenue, New York,
NY 10017. Chairman of the Board of Bankers Trust and Bankers Trust New York
Corporation. Also a Director of Mobil Corporation and J.C. Penney Company,
Inc.
Eugene B. Shanks, Jr., Bankers Trust Company, 280 Park Avenue, New York, NY
10017. President of Bankers Trust and Bankers Trust New York Corporation.
Patricia Carry Stewart, c/o Office of the Secretary, 280 Park Avenue - 17W,
New York, NY 10017. Former Vice President, The Edna McConnell Clark
Foundation. Director of Bankers Trust and Bankers Trust New York
Corporation. Director, Borden Inc., Continental Corp. and Melville
Corporation.
George J. Vojta, Bankers Trust Company, 280 Park Avenue, New York, NY
10017. Vice Chairman of the Board of Bankers Trust and Bankers Trust New
York Corporation. Director of Northwest Airlines and Private Export
Funding Corp.
ITEM 29. Principal Underwriters
Not Applicable
ITEM 30. Location of Accounts and Records:
Registrant: Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Bankers Trust Company: 280 Park Avenue,
(Investment Adviser, Custodian New York, New York 10017.
and Administrator)
Investors Fiduciary Trust Company: 127 West 10th Street,
(Transfer Agent and Dividend Kansas City, MO 64105.
Distribution Agent)
Edgewood Services, Inc.: Clearing Operations, P.O. Box 897,
(Placement Agent Pittsburgh, Pennsylvania 15230-0897.
and Sub-Administrator)
ITEM 31. Management Services:
Not Applicable
ITEM 32. Undertakings
Not Applicable
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940,
the Registrant, BT INVESTMENT PORTFOLIOS, has duly caused this 16th
amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized in the City of Pittsburgh and the
Commonwealth of Pennsylvania, on the 19th day of March, 1997.
BT INVESTMENT PORTFOLIOS
By: /s/ Jay S. Neuman
Jay S. Neuman, Secretary
March 19, 1997
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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This schedule contains Summary Financial Information extracted from the BT
Investment Portfolios Annual Report dated December 31, 1996, and is
qualified in its entirety by reference to such Annual Report.
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