DEUTSCHE ASSET MANAGEMENT, N-30D, 2000-06-28

DEUTSCHE ASSET MANAGEMENT
N-30D, 2000-06-28

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Deutsche Asset Management

Mutual Fund
Semi-Annual Report
April 30, 2000

International Select Equity

European Equity

International Small Cap Equity

Emerging Markets Equity

Each formerly a Morgan Grenfell Fund

[LOGO OF DEUTSCHE BANK GROUP]
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International Equity Funds
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Table of Contents

<TABLE>
<S> <C>
Letter to Shareholders.............................................. 3

International Equity Funds
Schedule of Investments.......................................... 14
Statements of Assets and Liabilities............................. 24
Statements of Operations......................................... 25
Statements of Changes in Net Assets.............................. 26
Financial Highlights............................................. 28
Notes to Financial Statements.................................... 29
</TABLE>

____________________

The Fund is not insured by the FDIC and is not a deposit, obligation of or
guaranteed by Deutsche Bank. The Fund is subject to investment risks, including
possible loss of principal amount invested.

____________________

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International Equity Funds
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Letter to Shareholders

Dear Fellow Shareholder:

We are pleased to present you with this newly designed semi-annual report for
the international equity funds of the Morgan Grenfell Investment Trust. Please
note that with the acquisition of Morgan Grenfell by Deutsche Bank, the Board of
Trustees approved a change in the name of your Funds. The Funds' investment
objectives, policies and strategies remain the same.

We are also pleased to announce that Morningstar(TM) continues to recognize
several of the Funds for their strong investment performance./1/ Most notably,
two of our international equity offerings' maintained Morningstar's highest
Overall Ratings based on their risk-adjusted performance.

As of April 30, 2000:
. Deutsche International Select Equity was rated 5 stars out of 1,138
international equity funds.
. Deutsche European Equity was rated 5 stars out of 1,138 international equity
funds.

In the pages that follow, you will find a discussion of the Funds' investment
performance by the portfolio management teams. The analyses highlight key
factors influencing recent performance of the funds and are followed by detailed
financial statements for the six-month period ended April 30, 2000.

Our continuing goal is to provide you with high-quality investment management
services across a broad range of specialized mutual funds. As always, the Board
of Trustees of the Trust and the employees of Deutsche Asset Management thank
you for investing in our family of mutual funds. We appreciate your continued
support and confidence.

Sincerely,

/s/ Patrick Dean
Patrick Deane, Fund Director of
International Select Equity

/s/ Neil Jenkins
Neil Jenkins, Fund Director of
Emerging Markets Equity

/s/ Richard Curling
Richard Curling, Fund Director of
International Small Cap Equity

/s/ Michael Levy
Michael Levy, Managing Director of
European Equity Fund

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International Equity Funds
. International Select Equity
. European Equity
. International Small Cap Equity
. Emerging Markets Equity

MARKET REVIEW

While many forecasters had expected global economic growth to accelerate towards
the end of 1999 and into 2000, the acceleration was even beyond expectations.

Indeed, in response to such strong growth, interest rates rose in all G7
countries, except Japan. In Europe, the European Central Bank raised rates four
times during the six months ended April 30, 2000. There had been concern as to
the underlying strength of the global economic recovery as well as the growth in
money supply, but inflation remained largely benign. Throughout 1999, higher oil
prices made headlines, but energy inflation failed to significantly impact core
inflation. This scenario changed in 2000, when nascent inflationary pressures
were seen in both Europe and the U.S.

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/1/Past performance is no guarantee of future results. Morningstar proprietary
ratings on U.S. domiciled funds reflect historical risk-adjusted performance
as of April 30, 2000. The ratings are subject to change every month.
Morningstar ratings on U.S. domiciled funds are calculated from the funds'
three-, five-, and 10-year average annual returns (if applicable) in excess
of 90-day Treasury bill returns with appropriate fee adjustments, and a risk
factor that reflects fund performance below 90-day T-bill returns.
International Select Equity and European Equity were rated 5 stars among
1,138 International Equity funds for the 3-year period. International Small
Cap was rated 4 stars among 1,138 and 3 stars among 687 International Equity
funds for the 3- and 5-year periods, respectively. Emerging Markets Equity
was rated 2 stars among 1,138 and 687 International Equity funds for the 3-
and 5-year periods, respectively. The top 10% of the funds in a broad asset
class receive 5 stars. The Funds were rated exclusively against U.S.
domiciled funds. Ratings are for the Institutional Class only. Other classes
may vary.

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3
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International Equity Funds
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Letter to Shareholders

International equity markets significantly outperformed weak bond markets,
supported by corporate merger and acquisition activity and strong corporate
earnings, especially in Europe. European equity markets were further helped by
positive news on German tax reform, corporate restructuring, a strengthening
unified economy and considerable inflows from retail investors into technology
stocks. The Japanese equity market was an overall good performer, although
volatile and extremely narrow.

There was also severe volatility and sector rotation within the Europe,
Australia and Far East markets as a whole. As the semi-annual period began,
international equity markets, which had been largely flat, began to rally
sharply. This was partly in response to the excess liquidity pumped into markets
by the central banks as Y2K approached. However, the rally was largely
concentrated in the "New Economy" growth stocks that were benefiting from the
explosion of the technological age and the increasingly buoyant world economy.
Towards the end of the six months, valuations were stretched to unprecedented
levels, and some of these "New Economy" growth stocks began to falter.
International markets, taking their lead from the technology-dominated NASDAQ in
the U.S., suffered losses in March and April. The sell-off was further
exacerbated by the negative judgment against Microsoft, which became public at
the end of March.

Emerging equity markets, with the exception of South Africa, generally performed
well over the semi-annual period, including those in Asia, Latin America and
Central Europe. In fact, the emerging markets outperformed most developed global
markets for the six months ended April 30, 2000.

In terms of currencies, although the European Central Bank raised rates
preemptively against inflation, the euro failed to respond. The weak euro
remained a factor of influence through the semi-annual period, despite a
supportive trade surplus that reflected the continued growth differential
between the U.S. and Europe. The continued weakness of the currency has meant
that monetary conditions in Europe remain loose. The British sterling, in
comparison, was extremely strong, negatively impacting the U.K. manufacturing
sector. Still, the sterling continued in its trading range against the yen and
the U.S. dollar. The yen was broadly unchanged, although there was some official
intervention in foreign exchange markets to stem its appreciation.

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. International Select Equity
(formerly the Morgan Grenfell International Select Equity Fund)

International Select Equity produced a return of 40.78% for the six months ended
April 30, 2000, as compared to just 6.72% for the MSCI EAFE Index in U.S. dollar
terms.*

The Fund is a focused portfolio of what we believe to be the best ideas from
international markets represented in the MSCI EAFE Index. It is managed by a
team of five specialists supported by a research base of over 240 investment
professionals. The team remains focused on growth companies with a high and
sustainable return on capital and pays careful attention to a range of valuation
measures. There is a consistent emphasis on the long term. There is no active
allocation between countries and regions. In fact, the Fund's outperformance
during the semi-annual period was primarily due to individual stock selection
across all regions. Importantly, the Fund was not hedged during the period.

Technology was a strong investment theme during the six months, and the Fund did
benefit from its holdings in this sector. The Fund's investments in technology
were concentrated in companies where we regard the franchise or competitive
advantage to be well established, such as Sage, ARM, Ericsson, SCMicrosystems
and GFI Informatique. Such companies generally provide equipment and/or
expertise related to the technology revolution. They each demonstrate sound
business models, a strong franchise in its respective field and excellent
management capabilities. We believe that such companies will continue to
generate significant performance even in an environment of market insecurity.
Taking a long-term view, the valuations of these companies remain attractive.

Effective stock selection and portfolio balance across sectors proved important
in March and April 2000 when the Fund held up well during extreme volatility.
Some stocks began to be traded on what can only be considered unsustainable
multiples. For example, price targets in stocks such as Softbank (the Japanese
Internet company), Canal Plus (French media), Sonera (Finland's mobile

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4
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International Equity Funds
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Letter to Shareholders

operator), UPC (Netherlands cable operator), Lagardere (French defense and media
company) and ConSors AG (German on-line discount broker) were all reached
rapidly. We sold these holdings.

The telecommunications sector offered interesting opportunities, experiencing
strong corporate merger and acquisition activity. For example, in the U.K.,
Vodafone Airtouch countered Mannesmann's (Germany) offer for Hutchison Whampoa's
stake in mobile operator Orange with a hostile bid for the enlarged Mannesmann
group. Also in the U.K., Telewest and Flextech announced a merger that has
created an integrated communications and media group with enhanced growth
potential in advertising and e-commerce revenues. In Japan, one major positive
contributor was NTT DoCoMo, where growth in mobile phone subscribers
significantly surpassed analyst expectations. Overall, we reduced the Fund's
exposure to the telecommunications sector during the semi-annual period,
focusing on those companies whose valuations still fail to fully reflect
prospects.

The portfolio also contained a number of core holdings in stable growth areas,
such as food and retailing through companies including Nestle, Allied Domecq,
Ahold, Asahi Breweries and Kao Corp., and pharmaceuticals through companies
including Akzo Nobel and Fujisawa.

Toward the end of the semi-annual period, we found it harder to find compelling
purchase candidates to replace many of the positions sold during these months.
Those recent additions to the portfolio that we did find are generally in the
mid-cap area, where we identified a number of interesting, under-researched
companies with good growth profiles and relatively modest valuations. These
included TNT Post Group in the Netherlands, Amadeus Travel Group in Spain and
Valeo in France. At the end of the period, the Fund maintained a cash position
of about 10%, which we intend to use opportunistically to capitalize on market
volatility or specific stock weaknesses.

We do expect market volatility to continue for some time, but believe that it
may lessen in the second half of the year. The Fund's positioning remains
entirely determined by our views on specific companies. While we continue to be
able to find attractive new investment opportunities, valuations had become
somewhat stretched over the semi-annual period, and though they have corrected a
bit recently, there is still some way to go. In terms of regional allocation,
the Fund remains underweight in Japan and overweight in the U.K. and continental
Europe. We intend to maintain our strict focus on strong stock selection across
the market sectors, as we seek only the most competitive, high quality companies
in a select portfolio of 30 to 40 stocks.

*One factor impacting the International Select Equity Fund's performance was the
Fund's recent investment in initial public offerings (IPOs) during the first
quarter of the year. These investments had an extraordinary effect on the Fund's
recent performance. There is no assurance that these investments or the Fund's
future investments in IPOs will have the same effect on the Fund's future
performance.

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. European Equity
(formerly the Morgan Grenfell European Equity Growth Fund)

European Equity produced a return of 151.27% for the six months ended April 30,
2000, dramatically outperforming the 8.45% return of the MSCI Europe Index. This
strong outperformance is particularly notable given the volatility of the
European markets during the semi-annual period.*

The most significant macroeconomic event affecting the European equity markets
was central bank policies in combat with strong underlying economic growth.
Toward the end of 1999, central banks conducted a loose monetary policy given
Y2K liquidity concerns. This, combined with a strong underlying growth rate in
Europe, led to strong performance by growth stocks. But following the lead of
Federal Reserve Board action in the U.S., the European Central Bank then
tightened policy, raising rates three times during the first four months of
2000. The peripheral markets that had led the European economic recovery
continued to show strong GDP growth, but their stock markets quieted on concerns
of overheating. Spain, Ireland and Portugal were negatively impacted. The Dutch
market also suffered despite healthy economic growth in the Netherlands. The
U.K. market underperformed the continent, held back by the dual headwinds of the
increasing interest rates and persistantly strong sterling. The fund was
underweight in the U.K., avoiding currency sensitive sectors.

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5
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International Equity Funds
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Letter to Shareholders

The two power engines of the continent were Germany and France, and the Fund was
overweight in both of these markets. Germany was one of the top performing
markets in Europe for two primary reasons. First, the German government is
committed to tax reform. Munich Re, a recently established position, is a prime
beneficiary of this watershed change in the German tax regime which will
encourage the restructuring of its large industrial portfolio. Another
development in German companies is an increasing focus on core competencies and
a shedding of peripheral businesses. Fund holding Mannesmann exemplified this
trend, as it was recently purchased by Vodafone at a handsome premium. Several
of the Fund's new positions come from spin-offs of German conglomerates. For
example, both EPCOS, a leading passive components company with gearing to
cellular handsets, and Infineon, a large diversified semiconductor company, are
both spin-offs of large German conglomerate Siemens AG.

Weakness in the euro currency helped exporters and companies with large
operations outside of the continent. Many global blue-chip growth stocks which
were amongst the fund's largest holdings outperformed over the period, in
particular those in the technology, media and telecoms (TMT) sectors, such as
Siemens AG, Philips Electronics, Nokia, Canal Plus and Telefonica. Early in the
new year, we trimmed our positions in some of our TMT holdings to lock in gains.
The fund was also able to take advantage of a bouyant initial public offering
(IPO) market by participating in some exciting opportunities. Profits were taken
in some of those investments whose momentum carried them ahead of their
fundamentals.

Equally important, we were underweight in sectors that were hurt by the collapse
in the bond market, such as banks. In March, when valuations of financials
toughened, we gradually began to increase the Fund's weighting to this sector.
We purchased Hypo Vereinsbank, a mortgage bank in Germany that has written off
most of its problem loans in Eastern Europe. We also purchased Royal Bank of
Scotland and Italian insurer RAS. During the last two months of the period, we
added to our energy exposure and initiated a position in the oil services sub-
sector. These oil services companies had been hard hit following the Asian
crisis, but have begun to rise on the back of higher oil prices and increased
consumer demand.

Looking forward, we maintain our "growth at a reasonable price" strategy as well
as our positive long-term outlook for European equities. Europe and its equity
culture are undergoing a revolution. EMU agreements have forced fiscal
discipline, fostered deregulation and initiated privatization. High growth
markets, such as the Neuer Market in Germany and the Nouvelle Marche in France,
are being established. Entire new businesses are being created, such as
temporary employment agencies, which only became legal in several countries over
the last two years. These factors along with a low inflation global economic
environment are supportive for heightened corporate earnings growth and a
narrowing of economic growth differentials between the U.S. and Europe.

At the same time, volatility will no doubt continue. Thus, it is important to
remember that equity investing whether home or abroad is a long-term endeavor.
While we intend to continue to seek growth from the technology, media and
telecommunications sectors, we also intend to increase diversification in the
portfolio by seeking new names in the financial, energy and other sectors where
our bottom-up discipline makes a compelling investment case.

*One factor impacting the European Equity Fund's performance was the Fund's
recent investment in an initial public offering (IPO). This investment had an
extraordinary effect on the Fund's recent performance. There is no assurance
that this investment or the Fund's future investments in IPOs will have the same
effect on performance as the IPO did for February.

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. International Small Cap Equity
(formerly the Morgan Grenfell International Small Cap Equity)

International Small Cap Equity outperformed its benchmark for the six months
ended April 30, 2000 with a return of 29.03% as compared to 14.25% for the SSB
Global Equity Extended Market Index. We continued to focus our investment
strategy on high quality, growth companies with visible earnings streams and
above average return on capital. Through a disciplined investment process with a
clear control of risk, we believe we have constructed a portfolio of the best
small businesses outside the United States as we seek to deliver excellent
performance over the long term.*

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International Equity Funds
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Letter to Shareholders

Within European small capitalization equities, the main driver of Fund
performance during the semi-annual period was its high exposure to the
technology sector. In particular, the Fund was strongly overweight in smart-card
related stocks, where our research revealed many companies with good
opportunities for growth and already positive free cash flow. The Fund was also
overweight in the media sector, where we believe European companies with strong
content are well placed for strong growth and the generation of free cash.

In March and April, when European small cap markets experienced some
consolidation, broader equity markets grew increasingly volatile and European
small cap stocks in particular suffered the derating of the technology sectors,
we began to reduce exposure to stocks that had performed well but were now
deemed overvalued. With these profits and in an effort to control risk, we added
holdings in more attractively valued stocks in traditional sectors such as
engineering and utilities. We sold ASM Lithography, Aumar, FI System, Randstad
Holdings and Securitas. We either created or added to positions in Bachem,
Biodata, Eurotunnel, Kuoni, Lectra Systems, Nutreco and Riverdeep Interactive.

Within the U.K., we retained the Fund's overweight exposure to growth stocks
where volume growth and pricing power were not reflected in valuations. For
example, one of the Fund's larger U.K. holdings was Sage, a software company
selling to small businesses in the U.S., the U.K. and continental Europe. In our
view, this company can benefit from high levels of repeat upgrade income and has
significant potential to leverage its customer loyalty by providing e-commerce
enabled sites for its clients. New additions to the Fund's U.K. portfolio during
the semi-annual period included ED&F Man, a company that has a proven
quantitative fund management business with strong growth prospects. Another was
Autonomy, a company with superior browser software that can be applied to the
substantial volume of unstructured data existing on the Internet as well as on
intranets operated by corporations for their own internal use.

In Asia ex-Japan, the macroeconomic fundamentals for small cap stocks remained
particularly positive for Hong Kong and Singapore. We focused on companies that
we believe should benefit from their niche positions in a global market, such as
logistics and contract manufacturers, as well as on consumer stocks that should
be beneficiaries of the long-term growth in domestic consumption.

The Japanese small cap equity market followed the same basic pattern as most
other international small cap markets--rising more or less consistently over the
first four months before peaking in February and then showing significant
volatility in March and April. The first four months saw continued buying
support by foreigners correcting underweight positions in light of seemingly
improved economic statistics. The volatility later in the period was due to a
combination of several factors. These included:

. weaker economic statistics following a fall-off in fiscal stimulus;
. profit taking in the highly valued "New Economy" stocks where 1999 market
performance was concentrated;
. concerns about the effect of rising interest rates on the U.S. stock markets
in general and the highly valued technology issues of NASDAQ in particular;
and
. stock specific issues such as Hikari Tsushin's surprise earnings downgrade,
which in turn damaged the valuations of many other "New Economy" securities.

During the semi-annual period, we sold certain economically sensitive stocks
such as Kagome, Nippon Zeon and Yamato Kogyo and replaced them with high quality
secular growth stocks such as Trend Micro, Yokowo and Net One Systems.

Looking ahead, we expect market volatility to continue in the international
small cap equity markets, primarily due to continued uncertainty about
developments in the U.S. Over the medium to long term, however, we remain
generally positive. High growth markets, such as the Neuer Market in Germany,
the Nouvelle Marche in France and the TSE Mothers market and NASDAQ Japan in
Japan are being established. We believe there will be a strong flow of high
quality Initial Public Offerings (IPOs) into the small cap sector from these new
markets and from existing over-the-counter markets. Another positive factor is
the shift across the international markets from durables consumption to services
and information technology (IT) consumption. The small cap sector has a
relatively higher concentration in IT and services companies than the large cap
sector. Finally, merger and acquisition activity remains strong.

In Europe, we remain focused primarily on the U.K., Germany, France and
Switzerland and on business and public services within those markets. In Asia
ex-Japan, we remain positive on Hong Kong and Singapore. Economic recovery there
is on track, notwithstanding

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International Equity Funds
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Letter to Shareholders

Hong Kong's peg to the US dollar. In Japan, weaker economic statistics on the
back of the fall-off in fiscal spending may cause volatility in the near term.
But over the longer term, there is the promise of further fiscal stimulus,
ongoing restructuring at the corporate level to improve profitability and the
likely flow of funds out of postal savings and other areas into the small cap
stock markets.

*One factor impacting the International Small Cap Equity Fund's performance was
the Fund's recent investment in initial public offerings (IPOs) during the first
quarter of the year. These investments had an extraordinary effect on the Fund's
recent performance. There is no assurance that these investments or the Fund's
future investments in IPOs will have the same effect on the Fund's future
performance.

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. Emerging Markets Equity
(formerly the Morgan Grenfell Emerging Markets Equity)

Overall, emerging equity markets performed well over the semi-annual period due
primarily to three clear themes. First, Y2K-related risk abated. Second,
aggregate interest rates declined in key markets. Finally and most importantly,
the telecommunications, media and technology (TMT) sectors were re-rated. While
the TMT sectors' performance positively impacted stock markets worldwide,
emerging markets typically have a greater percentage of their respective market
capitalizations concentrated in these three sectors and were therefore
particularly sensitive to the re-rating.

Within Asia, the strongest equity markets were Malaysia, Taiwan and India.
Malaysia rose as foreign investors re-entered its market anticipating its re-
inclusion in the MSCI indices in May 2000. The Taiwan market was volatile
following the earthquake in the fourth quarter of 1999 and in the weeks leading
up to its presidential election in March. However, both events proved to have
short-term effect and the combined influences of economic recovery and the
technology rally drove the Taiwan market higher. The Indian market performed
well primarily due to its significant weighting in software stocks.

The rally in Latin American equity markets continued, sustained by economic
acceleration, currency strength and declining interest rates in the two
principal economies of the region. Mexico was awarded an investment grade rating
on its sovereign debt by Moody's in March, which led to a further fall in
interest rates. In Brazil, inflation fears receded sufficiently to enable its
central bank to cut overnight rates for the first time in eight months. A bias
toward telecommunications stocks across the region's benchmark indices also
contributed to positive performance.

Central European markets performed well on improving corporate fundamentals and
economic convergence with continental Europe. The Russian market responded
particularly well to the resignation of President Yeltsin in January and to the
nation's improving economy. The Turkish market had considerable strength through
1999 but experienced a degree of profit taking late in the semi-annual period.

The South African equity market was negatively impacted by its predominately
"Old Economy" status and its dependence on commodities. Its currency also
weakened late in the semi-annual period as foreign investors reduced their
exposure to this market.

Our strategy for the Fund was to favor those markets with greatest exposure to
the technology sectors where products and earnings appear sustainable in the
long term as well as those markets in nations with declining interest rates.
Thus, the Fund was overweight in India, Malaysia and Mexico throughout the semi-
annual period. Equally important, the Fund remained underweight in Greece and
Argentina, where we considered valuations unjustifiably high. This strategy
proved quite effective. The Emerging Markets Equity Fund outperformed its
benchmark for the six months ended April 30, 2000 with a return of 16.06% as
compared to 13.87% for the MSCI Emerging Markets Free Index.

MARKET OUTLOOK

Following a period of outperformance by "New Economy" stocks through much of the
semi-annual period, we expect March and April's increased attention to
fundamentals to continue over the remainder of 2000. Among the "New Economy"
companies, competition will no doubt be fierce and not all will survive. This,
along with an environment of rising interest rates, will likely mean continued
market volatility.

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International Equity Funds
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Letter to Shareholders

Regionally, we believe accelerating deregulation, restructuring and
consolidation are key catalysts for earnings growth in Europe. The convergence
of information and communication technologies and their application to
traditional businesses are additional stimuli for further market gains. If
Japan's growth potential is to be fully realized, we believe the nation will
need to complement its leading position in "New Economy" technology with a
willingness to alter traditional ways of doing business.

We are generally positive in our outlook for the emerging equity markets. In
Asia, fundamentals remain strong with economic growth gaining momentum in a low
inflation environment. More critical perhaps is that unlike in the past, the
region's economic growth is likely to translate into profits in the relatively
near term, as many companies have restructured in the last year or so and have
re-focused on core competencies. Asian economies are also highly geared to the
rapidly growing global demand for technology products and services. In fact,
electronics account for about 50% of the region's total exports. We believe the
Asian equity markets should also benefit from increased cash flow in
anticipation of MSCI index changes that will begin to take effect in phases
beginning in May 2000.

Latin American markets, and these markets' TMT sectors in particular, are
vulnerable to Wall Street weakness, but overall we remain positive. In Brazil,
with its currency stable, GDP growth ahead of expectations and export
performance improving, we believe that interest rates can fall significantly by
the end of the year and that this should have a positive impact on the equity
market as a whole. In Mexico, we believe that much of the good news--including
less than 10% inflation, strong economic growth and low interest rates--is
already priced into the market. Still, we continue to find attractively priced
individual stocks and sectors. Of the three major regional markets, we continue
to be the least optimistic about Argentina.

We expect Central Europe's good performance to continue as economic growth
recovers following Russia's troubles and as inflation is expected to decline. We
are particularly positive on the Russian economy ahead, given the stability
following the presidential elections and the strong cash flow from commodity
companies. In Israel, inflation continues to improve. Interest rate cuts and
economic acceleration should provide support to Israel's stocks. We believe
there is further upside in specific Turkish stocks. Also, since the beginning of
Turkey's economic adjustment program, there has been progress on both inflation
and privatization, which in turn are supporting valuations. While further
downside is likely near-term in the Greek market, many stocks are close to
levels seen in mid-1999, prior to the start of the speculative bubble.

Most indicators are positive on the South African equity market, despite its
recent weakness. South Africa's trade account has shown surpluses above
expectations, GDP growth and money supply are rising and inflation has been
stable. The outlook for earnings growth is therefore reasonable, subject to its
currency not weakening further.

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9
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International Equity Funds
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Performance Comparison

INTERNATIONAL SELECT EQUITY, INSTITUTIONAL CLASS/2/, MORGAN STANLEY CAPITAL
INTERNATIONAL EAFE INDEX AND LIPPER INTERNATIONAL EQUITY FUNDS AVERAGE GROWTH OF
A $250,000 INVESTMENT (SINCE MAY 15, 1995)

-- International Select Equity,
Institutional Class - $783,775

-- Morgan Stanley Capital International
(MSCI) EAFE Index - $414,300

-- Lipper International Equity Funds
Average - $468,350

Average Annual Total Return for the Period Ended April 30, 2000.
1 year 65.83%. 3 year 35.51%. Since 5/15/95/1/ 25.90%.
Benchmark returns are for the period beginning 5/31/95.

INTERNATIONAL SELECT EQUITY, INVESTMENT CLASS/3/, MORGAN STANLEY CAPITAL
INTERNATIONAL EAFE INDEX AND LIPPER INTERNATIONAL EQUITY FUNDS AVERAGE GROWTH OF
A $2,500 INVESTMENT (SINCE OCTOBER 29, 1999)

-International Select Equity,
Investment Class - $3,487

-Morgan Stanley Capital International
(MSCI) EAFE Index - $2,668

-Lipper International Equity Funds
Average - $2,854

Average Annual Total Return for the Period Ended April 30, 2000.
Since 10/29/99/1/ 39.47%.
Benchmark returns are for the period beginning 10/31/99.

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Past performance is not indicative of future results. One factor impacting the
International Select Equity Fund's performance was the Fund's recent investment
in initial public offerings (IPOs) during the first quarter of the year. These
investments had an extraordinary effect on the Fund's recent performance. There
is no assurance that these investments or the Fund's future investments in IPOs
will have the same effect on the Fund's future performance. Investment return
and principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost. Performance figures assume
the reinvestment of dividends and capital gain distributions. Performance would
have been lower during the specified period if certain fees and expenses had not
been waived.
The MSCI EAFE Index of major stocks in Europe, Australia and the Far East is a
widely accepted unmanaged benchmark of international stock performance. Lipper
figures represent the average of the total returns reported by all the mutual
funds designated by Lipper Inc. as falling into the respective categories
indicated. These figures do not reflect sales charges.
/1/ The Fund's inception date.
/2/ On February 28, 2000 the Institutional Shares were renamed the Institutional
Class.
/3/ On February 28, 2000 the Service Shares were renamed the Investment Class.

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International Equity Funds
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Performance Comparison

EUROPEAN EQUITY, INSTITUTIONAL CLASS/2/, MORGAN STANLEY CAPITAL INTERNATIONAL
EUROPE INDEX AND LIPPER EUROPEAN REGIONS FUNDS AVERAGE GROWTH OF A $250,000
INVESTMENT (SINCE SEPTEMBER 3, 1996)

-European Equity,
Institutional Class - $1,140,050

-Morgan Stanley Capital International
(MSCI) Europe Index - $499,025

-Lipper European Region Funds
Average - $482,375

Average Annual Total Return for the Period Ended April 30, 2000.
1 year 173.60%. 3 year 56.45%. Since 9/3/96/1/ 51.46%.
Benchmark returns are for the period beginning 8/31/96.

--------------------------------------------------------------------------------
Past performance is not indicative of future results. One factor impacting the
European Equity Fund's performance was the Fund's recent investment in an
initial public offering (IPO). This investment had an extraordinary effect on
the Fund's recent performance. There is no assurance that this investment or the
Fund's future investments in IPOs will have the same effect on performance as
the IPO did for February. Investment return and principal value will fluctuate,
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. Performance figures assume the reinvestment of dividends
and capital gain distributions. Performance would have been lower during the
specified period if certain fees and expenses had not been waived.
The MSCI Europe Index of major markets of Europe is an unmanaged benchmark of
international stock performance. Lipper figures represent the average of the
total returns reported by all the mutual funds designated by Lipper Inc. as
falling into the respective categories indicated. These figures do not reflect
sales charges.
/1/ The Fund's inception date.
/2/ On February 28, 2000 the Institutional Shares were renamed the Institutional
Class.

--------------------------------------------------------------------------------

11
<PAGE>

International Equity Funds
--------------------------------------------------------------------------------
Performance Comparison

INTERNATIONAL SMALL CAP EQUITY, INSTITUTIONAL CLASS/2/ AND SSB GLOBAL EQUITY
EXTENDED MARKET INDEX GROWTH OF A $250,000 INVESTMENT (SINCE JANUARY 3, 1994)

-- International Small
Cap Equity - $418,975

-- SSB Global Equity Extended
Market Index - $428,525

Average Annual Total Return for the Period Ended April 30, 2000.
1 year 47.96%. 5 year 13.13%. Since 1/3/94/1/ 8.51%.
Benchmark returns are for the period beginning 12/31/93.

--------------------------------------------------------------------------------
Past performance is not indicative of future results. One factor impacting the
International Small Cap Equity Fund's performance was the Fund's recent
investment in initial public offerings (IPOs) during the first quarter of the
year. These investments had an extraordinary effect on the Fund's recent
performance. There is no assurance that these investments or the Fund's future
investments in IPOs will have the same effect on the Fund's future performance.
Investment return and principal value will fluctuate, so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
Performance figures assume the reinvestment of dividends and capital gain
distributions. Performance would have been lower during the specified period if
certain fees and expenses had not been waived.
SSB Global Equity Extended Market Index comprises the small capitalization
equities of each country in the Salomon Broad Market Index. The unmanaged Index
contains approximately 3,000 issues in more than 20 countries.
/1/ The Fund's inception date.
/2/ On February 28, 2000 the Institutional Shares were renamed the Institutional
Class.

--------------------------------------------------------------------------------

12
<PAGE>

International Equity Funds
--------------------------------------------------------------------------------
Performance Comparison

EMERGING MARKETS EQUITY, INSTITUTIONAL CLASS/2/ MORGAN STANLEY CAPITAL
INTERNATIONAL EMERGING MARKETS FREE INDEX AND LIPPER EMERGING MARKETS EQUITY
FUNDS AVERAGE GROWTH OF A $250,000 INVESTMENT (SINCE FEBRUARY 1, 1994)

-- Emerging Markets Equity - $232,925

-- Morgan Stanley Capital International Emerging
Markets Free Index - $237,175

-- Lipper Emerging Markets Equity
Funds Average - $234,275

Average Annual Total Return for the Period Ended April 30, 2000.
1 year 25.21%. 3 Year (3.09)%. 5 Year 1.53%. Since 2/1/94/1/ (1.13)%.
Benchmark returns are for the period beginning 1/31/94.

--------------------------------------------------------------------------------
Past performance is not indicative of future results. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed, may
be worth more or less than their original cost. Performance figures assume the
reinvestment of dividends and capital gain distributions. Performance would have
been lower during the specified period if certain fees and expenses had not been
waived.
MSCI Emerging Markets Free Index is an unmanaged Market Capitalization Index of
over 850 stocks traded in 22 world markets. Lipper figures represent the average
of the total returns reported by all the mutual funds designated by Lipper Inc.
as falling into the respective categories indicated. These figures do not
reflect sales charges.
/1/ The Fund's inception date.
/2/ On February 28, 2000 the Institutional Shares were renamed the Institutional
Class.

--------------------------------------------------------------------------------

13
<PAGE>

International Select Equity
--------------------------------------------------------------------------------
Schedule of Investments April 30, 2000 (Unaudited)

Shares Description Value

Foreign Common Stocks - 93.3%
Finland - 5.3%
213,600 Nokia Oyj......................... $ 12,263,778
------------

France - 9.4%
28,730 GFI Informatique.................. 4,208,770
45,450 Total Fina SA..................... 6,902,142
8,020 UBI Soft Entertainment
SA* ............................. 371,802
98,400 Valeo SA.......................... 5,461,584
48,090 Vivendi........................... 4,760,771
------------
21,705,069
------------

Germany - 1.7%
48,180 SCM Microsystems, Inc.*........... 3,945,508
------------

Hong Kong - 2.3%
1,340,000 Li & Fung Ltd..................... 5,229,805
------------

Italy - 4.2%
1,501,930 Banca Nazionale Del
Lavoro (BNL)*.................... 4,919,782
488,610 Telecom Italia SPA................ 4,668,155
------------
9,587,937
------------

Japan - 21.5%
500,000 Asahi Breweries Ltd............... 5,093,536
75,000 Capcom Co., Ltd................... 2,778,292
37,500 Capcom Co., Ltd. - New*........... 1,389,146
280,000 Daito Trust Construction
Co., Ltd......................... 4,408,224
165,000 Fujisawa Pharmaceutical
Co., Ltd......................... 6,188,646
180,000 Kao Corp.......................... 5,484,349
1,380 Keyence Corp...................... 458,168
160,000 Nihon Denpa Kogyo Co.,
Ltd.............................. 5,882,571
25,000 Nintendo Co., Ltd................. 4,167,438
125 NTT DoCoMo, Inc.*................. 4,179,015
850,000 Sanyo Electric Co., Ltd........... 5,675,588
36,000 Takefuji Corp..................... 3,810,706
------------
49,515,679
------------

Netherlands - 11.5%
131,200 Akzo Nobel NV..................... 5,375,631
130,920 ASM Lithography
Holding NV*...................... 5,122,337
221,970 Koninklijke Ahold NV.............. 5,180,543
122,268 Philips Electronics............... 5,459,119
98,900 VNU NV........................... 5,295,859
------------
26,433,489
------------

Portugal - 1.7%
249,620 Telecel Comuni Pes SA............. $ 3,952,049
------------

Spain - 2.4%
248,409 Telefonica de Espana.............. 5,533,150
------------

Sweden - 5.8%
149,052 Ericsson LM,
Series B.......................... 13,270,157
------------

Switzerland - 4.9%
3,310 Nestle SA......................... 5,839,708
2,206 Compagnie Financiere
Richemont........................ 5,364,250
------------
11,203,958
------------
United Kingdom - 22.6%
1,166,830 Allied Domecq Plc................. 5,720,805
353,100 Arm Holdings Plc*................. 3,602,656
56,177 BATM Advanced
Communications Ltd............... 3,981,565
1,009,381 Billiton Plc...................... 3,749,966
1,329,814 British Energy Plc................ 3,542,182
87,655 Colt Telecom Group Plc*........... 3,726,182
139,150 Geo Interactive Media
Group Plc*....................... 2,606,466
276,050 Kingston Communication
Plc*............................. 3,452,925
153,956 Logica Plc........................ 4,640,464
455,225 Marconi Plc....................... 5,683,468
486,292 Telewest Communications
Plc*............................. 2,956,132
1,842,157 Vodafone Airtouch Plc............. 8,450,760
------------
52,113,571
------------

Total Foreign Common Stocks
(Cost $220,480,546)............................... 214,754,150
------------

Foreign Preferred Stocks - 2.1%
Germany - 2.1%
9,200 Mars & Lautens......................... 4,871,969
------------
Total Foreign Preferred Stocks
(Cost $3,169,928)................................. 4,871,969
------------

Total Investments
(Cost $223,650,474)................... 95.4% $219,626,119

Other Assets in Excess of
Liabilities......................... 4.6% 10,475,391
----- ------------

Total Net Assets....................... 100.0% $230,101,510
===== ============

________________________________________________________________
*Non-income producing security

The accompanying notes are an integral part of the financial statements.
--------------------------------------------------------------------------------

14
<PAGE>

European Equity
--------------------------------------------------------------------------------
Schedule of Investments April 30, 2000 (Unaudited)

Shares Description Value

Foreign Common Stocks - 80.8%
Czech Republic - 0.7%
26,635 Zagrebacka Banka Gdr 144A............. $ 384,210
------------

Finland - 5.2%
79,386 JOT Automation Group Oyj.............. 574,255
20,760 Nokia Oyj............................. 1,191,929
12,386 Sonera Oyj............................ 681,836
7,149 Tietoenator Oyj....................... 344,758
------------
2,792,778
------------

France - 12.9%
8,364 Banque Nationale de Paris............. 676,565
4,842 Business Objects SA ADR*.............. 473,911
5,221 Canal Plus............................ 1,007,125
2,324 Christian Dior SA..................... 552,970
4,850 Coflexip SA........................... 472,193
2,873 Galeries Lafayette.................... 489,106
8,165 Total Fina SA......................... 1,239,956
490 TV Francaise.......................... 335,726
9,830 Vivendi............................... 973,142
3,810 STMicroelectronics NV................. 722,709
------------
6,943,403
------------

Germany - 15.0%
947 ADVA AG Optical
Networking.......................... 520,452
11,563 Bayer AG.............................. 479,239
9,000 Bayerische Vereinsbank................ 557,678
22,086 Deutsche Lufthansa AG................. 461,204
5,853 Epcos AG*............................. 828,138
15,143 Infineon Technologies AG*............. 1,047,175
2,002 Intershop Communications
AG*................................. 889,861
13,800 Jenoptik AG........................... 396,789
18,022 Kamps AG.............................. 589,516
1,684 Muenchener
Rueckversicherungs.................. 491,859
9,526 Siemens AG............................ 1,406,769
20,420 Thyssen Krupp AG...................... 427,344
------------
8,096,024
------------

Ireland - 2.3%
77,361 Bank of Ireland....................... 522,300
17,200 Elan Corp. ADR*....................... 737,450
------------
1,259,750
------------

Israel - 1.3%
8,043 Orckit Communications
Ltd.*............................... $ 355,903
31,330 Partner Communications
Co. ADR*............................ 334,839
------------
690,742
------------

Italy - 3.8%
130,610 Banca Nazionale del
Lavoro*............................. 427,831
47,130 RAS SPA............................... 482,012
18,060 San Paolo - IMI SPA................... 253,065
84,948 Seat Pagine Gialle SPA................ 373,331
79,973 Telecom Italia SPA.................... 504,278
------------
2,040,517
------------

Netherlands - 7.7%
10,284 ASM Lithography Holdings
NV*................................. 402,369
27,196 Buhrmann NV........................... 701,539
14,867 ING Groep NV.......................... 811,920
5,993 Kloninklijke KPN NV................... 604,468
32,160 Philips Electronics................... 1,435,905
2,270 OpenTV Corp.*......................... 185,856
------------
4,142,057
------------

Poland - 2.0%
6,071 Agora SA GDR*......................... 140,999
12,900 Agora SA GDR 144A*.................... 299,603
14,167 Prokom Software SA
GDR 144A*........................... 286,173
48,127 Telekomunikacja Polska
GDR 144A............................ 369,375
------------
1,096,150
------------

Spain - 5.0%
18,300 Banco Popular Espanol................. 494,540
42,704 Banco Santander Central
Hispano............................. 445,683
50,792 Telefonica de Espana.................. 1,131,359
33,000 Union Electrica Fenosa SA............. 632,662
------------
2,704,244
------------

Sweden - 2.5%
15,361 Ericsson LM, Series B................. 1,367,596
------------

The accompanying notes are an integral part of the financial statements
--------------------------------------------------------------------------------

15
<PAGE>

European Equity
--------------------------------------------------------------------------------
Schedule of Investments April 30, 2000 (Unaudited)

Shares Description Value

Switzerland - 5.0%
6,878 ABB Ltd............................. $ 772,383
910 Adecco SA........................... 747,287
215 Ares-Serono SA `B' (BR)............. 660,684
551 SEZ Holding AG...................... 510,037
------------
2,690,391
------------

Turkey - 1.4%
20,869,100 Global Menkul Degerler AS........... 259,549
233,090 Vestel.............................. 87,731
13,320,680 Yapi ve Kredi Bank.................. 425,072
------------
772,352
------------

United Kingdom - 16.0%
36,490 ARM Holdings Plc*................... 372,305
4,320 Baltimore Technologies Plc*......... 434,912
20,094 Barclays Bank....................... 513,953
10,820 Bookham Technology Spon
ADR*............................... 562,640
15,110 BP Amoco............................ 770,610
33,369 Cable & Wireless Plc................ 552,536
31,120 Celltech Group Plc*................. 509,964
12,888 Colt Telecom Group Plc*............. 547,864
12,970 Logica Plc.......................... 390,935
5,950 NTL Incorporated*................... 455,175
88,638 Reckitt Benckiser Plc............... 905,748
43,690 Royal Bank of Scotland
Group Plc.......................... 678,177
100,963 Shell Transport &
Trading Co......................... 821,736
235,495 Vodafone Airtouch Plc............... 1,080,316
------------
8,596,871
------------

Total Foreign Common Stocks
(Cost $48,795,764).............................. $ 43,577,085
------------

Foreign Preferred Stocks - 0.9%
Germany - 0.9%
782 SAP AG......................... 460,367
------------
Total Foreign Preferred Stocks
(Cost $697,249).................................. 460,367
------------

Total Investments
(Cost $49,493,013)..................... 81.7% $ 44,037,452

Other Assets in Excess
Liabilities........................... 18.3% 9,829,004
----- ------------

Total Net Assets........................ 100.0% $ 53,866,456
===== ============

__________________________________________________________________
*Non-income producing security

ADR American Depository Receipt

GDR Global Depository Receipt

144A Security exempt from registration under 144A of the Security Act of 1933.
These securities may be resold in transactions exempt from registrations,
normally to qualified institutional buyers.

The accompanying notes are an integral part of the financial statements
--------------------------------------------------------------------------------

16
<PAGE>

International Small Cap Equity
------------------------------------------------------------------------------
Schedule of Investments April 30, 2000 (Unaudited)

Shares Description Value
------ ----------- -----

Common Stocks - 92.1%
Austria - 0.4%
560 Cybertron Telekom AG.......... $ 94,368
-----------
Belgium - 0.2%
3,100 Custom Silicon Configuration
Services*.................... 58,106
-----------
Denmark - 1.3%
3,020 Navision Software*............ 221,056
800 William Demant................ 121,508
-----------
342,564
-----------
Finland - 1.0%
5,500 Amer Group `A'................ 147,631
2,170 Tieto Corp.................... 104,648
-----------
252,279
-----------
France - 7.2%
1,810 Altran Technologies SA*....... 370,227
730 Aubay Technology SA*.......... 105,612
208,350 Eurotunnel SA................. 216,119
1,450 FI Systems.................... 80,613
1,460 GFI Informatique.............. 213,881
1,890 Groupe GTM.................... 145,316
1,720 Hachette Filipacc Medias...... 128,254
6,070 Infogrames Entertainment*..... 171,768
630 Infonie SA.................... 88,279
1,350 Ingenico...................... 133,523
7,400 Lectra Systemes*.............. 120,525
1,760 Sidel Bearer.................. 110,178
-----------
1,884,295
-----------
Germany - 9.2%
250 Aixtron AG.................... 63,920
440 Biodata Information
Technology AG*.............. 127,714
2,520 BKN International AG*......... 120,380
2,880 Dino Entertainment AG*........ 127,095
2,960 Direkt Anlage Bank AG*........ 124,565
450 GFT Ges Fuer
Technologies*............... 71,655
890 Intershop Communications
AG*......................... 395,593
200 LPKF Laser & Electronics...... 53,684
3,640 Medion AG..................... 319,611
16,190 Metallgesellschaft AG......... 256,472
1,580 Qiagen*....................... 229,298
3,800 SCM Microsystems, Inc.*....... 311,185
1,540 SGL Carbon.................... 117,004
1,730 Zapf Creaton AG*.............. 107,828
-----------
2,426,004
-----------
Greece - 0.0%
660 Intrasoft SA.................. $ 12,680
-----------
Hong Kong - 2.3%
56,000 Li & Fung Ltd. ............... 218,559
55,000 Smartone Telecom
Holdings Ltd. .............. 171,937
138,000 South China Morning Post
Holdings Ltd. .............. 147,050
22,000 Wing Hang Bank Ltd. .......... 53,946
-----------
591,492
-----------
Ireland - 0.9%
4,300 Riverdeep Group Plc........... 98,363
2,770 Smartforce Plc ADR............ 132,268
-----------
230,631
-----------
Italy - 3.5%
3,660 Banca Popolare Commercio
e Industria................. 91,881
1,320 Banca Popolare di Brescia..... 120,107
97,790 Cementir SPA.................. 117,452
28,310 Cir-Compagnie Industriali
SPA......................... 90,673
7,750 Class Editori................. 105,776
870 Freedomland-Internet
Television Network SPA*..... 71,047
8,144 Gruppo Editoriale
L'espresso.................. 114,859
32,510 Seat Pagine Gialle............ 97,321
2,200 Tiscali SPA*.................. 118,005
-----------
927,121
-----------
Japan - 20.5%
1,750 Aiful Corp ................... 176,653
825 Aiful Corp* .................. 90,920
300 Bellsystem 24, Inc. .......... 207,538
67 Chubu Sekiwa Real Estate ..... 354
1,200 C Two-Network Co., Ltd. ...... 200,037
2,900 Doutor Coffee Co., Ltd. ...... 239,026
4,500 Enplas Corp. ................. 227,542
500 Fujitsu Support and
Service Inc. ............... 59,919
400 Fujitsu Support and
Service Inc. ............... 59,270
300 Funai Electric Co., Ltd. ..... 166,698
9 Goodwill Group (The), Inc. ... 138,359
6,900 Hakuto Co., Ltd. ............. 232,599
5,640 Hakuto Corp. ................. 202,660
3,400 H.I.S. Co., Ltd. ............. 204,668
6,000 Hosiden Corp. ................ 280,052

The accompanying notes are an integral part of the financial statements
------------------------------------------------------------------------------

17
<PAGE>

International Small Cap Equity
------------------------------------------------------------------------------
Schedule of Investments April 30, 2000 (Unaudited)

Shares Description Value
------ ----------- -----

9,500 Idec Izumi Corp. ............. $ 151,324
2,000 Kobayashi Pharmaceutical
Co., Ltd. .................. 190,776
2,330 Misumi Corp. ................. 227,217
10,000 MKC-Stat Corp. ............... 205,594
7 Mobilephone Telecom
International Ltd. ......... 138,729
6 Net One Systems Co., Ltd. .... 205,038
75 Nichii Gakkan Co. ............ 6,876
2,710 People Co., Ltd. ............. 233,655
4,500 Plenus Co., Ltd. ............. 225,042
13,000 Sailor Pen Co. (The), Ltd. ... 227,542
2,550 Square Co. Ltd. .............. 187,743
3,770 Sunkus & Associates Inc. ..... 134,418
800 Trans Cosmos Inc. ............ 159,289
1,500 Trend Micro Inc.* ............ 225,042
3,100 Tsuraha Co., Ltd. ............ 160,771
8,000 Yokowo Co., Ltd. ............. 225,227
-----------
5,390,578
-----------
Netherlands - 4.3%
8,500 Fugro NV...................... 398,309
4,187 IHC Caland.................... 169,534
7,010 Libertel NV*.................. 123,103
5,100 Meta4 NV*..................... 58,006
3,850 Nutreco Holding NV............ 149,758
9,070 Vendex NV..................... 139,885
2,450 Versatel Telecom Intl NV*..... 98,310
-----------
1,136,905
-----------
Norway - 1.1%
11,530 TGS Nopec Geophysical
Co*......................... 127,588
8,030 Tomra Systems................. 166,048
-----------
293,636
-----------
Singapore - 1.0%
33,000 Delgro Corp., Ltd.*........... 81,209
16,000 Sembcorp Logistics Ltd. ...... 99,373
8,000 Venture Manufacturing Ltd. ... 93,748
-----------
274,330
-----------
Spain - 2.1%
9,270 Aldeasa SA* .................. 174,178
9,410 Amadeus Global Travel
Distribution SA*............ 116,445
7,050 Grupo Empresarial Ence, SA.... 130,862
10,480 NH Hoteles SA................. 117,767
-----------
539,252
-----------
Sweden - 3.9%
15,640 Assa Abloy, Series B.......... $ 317,971
750 Enea Data AB.................. 132,289
13,750 Europolitan Holdings.......... 210,428
4,820 Modern Times Group AB*........ 237,446
2,770 QM Gruppen AB................. 115,107
-----------
1,013,241
-----------
Switzerland - 5.7%
145 Adecco Shs.................... 119,073
220 Also Holding.................. 97,034
75 Bachem AG Registered.......... 140,590
70 Bank Sarasin & Cie............ 188,497
340 Forbo Holding AG.............. 122,732
360 Geberit International AG...... 116,790
150 Kaba Holding AG............... 172,364
21 Kudelski*..................... 216,203
30 Kuoni Reisen AG............... 130,056
300 Miracle Holding AG*........... 89,664
130 Publigroupe SA................ 100,342
-----------
1,493,345
-----------
United Kingdom - 27.5%
78,455 Aegis Group Plc............... 213,866
15,955 ARM Holdings Plc*............. 162,788
3,215 Autonomy Corp Plc*............ 427,595
40,842 Barratt Developments.......... 158,731
1,901 BATM Advanced
Comm. Ltd. ................. 134,734
18,108 Bowthorpe Holdings............ 334,251
8,661 Britannic Plc................. 117,104
18,300 British Energy Plc............ 48,745
60,782 Bunzl......................... 274,099
42,290 Burford Holdings Plc.......... 54,676
3,033 Burmah Castrol Plc............ 74,647
7,629 Caledonia Investments Plc..... 86,751
18,220 Canary Wharf Finance Plc*..... 99,335
13,570 Capita Group.................. 348,143
31,594 Cattles Plc................... 105,564
1,625 CMG Plc....................... 105,250
2,453 COLT Telecom Group Plc*....... 104,276
101,424 Corus Group Plc............... 135,870
55,505 Countrywide Assured GRP....... 151,738
8,513 Debenhams Plc................. 23,869
16,891 EMAP Publishing Plc........... 325,995
1,614 Energis Plc*.................. 79,673
20,824 Forth Ports................... 177,596
11,715 Galen Holdings Plc............ 111,772
4,554 Geo Interactive Media
Group....................... 85,303
4,343 GWR Group Plc................. 54,628
9,842 Logica Plc.................... 296,653

The accompanying notes are an integral part of the financial statements
------------------------------------------------------------------------------

18
<PAGE>

International Small Cap Equity
------------------------------------------------------------------------------
Schedule of Investments April 30, 2000 (Unaudited)

Shares Description Value
------ ----------- -----

443 London Bridge Software........ $ 23,117
9,500 London Clubs Int'l............ 14,280
17,907 Lonmin Plc.................... 182,704
25,298 Man (ED&F) Group Plc.......... 195,654
14,982 Next.......................... 117,271
3,230 Nxt Plc....................... 58,741
9,383 Northern Rock Plc............. 48,379
8,326 PIC Int'l Group Plc*.......... 4,604
32,169 Pillar Property Plc........... 140,808
12,594 PowderJect
Pharmaceuticals Plc*........ 87,299
18,421 Premier Farnell Plc........... 119,225
29,543 Sage Group (The).............. 327,196
1,465 Schroders Plc................. 18,941
4,694 Schroders Plc................. 71,437
6,159 Schroders Plc B............... 28,782
16,237 Severn Trent Plc.............. 164,780
23,746 SIG Plc....................... 89,699
10,127 Smiths Industries Plc......... 118,075
19,468 Telewest Communications
Plc*........................ 118,345
6,109 Thistle Hotels Plc............ 11,275
11,827 Trafficmaster Plc*............ 111,458
19,797 United News & Media Plc....... 251,944
24,957 Vitec Group Plc............... 193,405

32,905 Wolseley Plc.................. $ 180,421
16,117 WPP Group Plc 259,589
-----------
7,231,081
-----------
Total Common Stocks
(Cost $24,870,334)...................... 24,191,908
-----------
Preferred Stocks - 1.4%
Germany - 1.4%
690 Marschollek Lauten............ 365,397
-----------
Total Preferred Stocks
(Cost $178,562)......................... 365,397
-----------
Total Investments
(Cost $25,048,896)............ 93.5% $24,557,305

Other Assets in Excess of
Liabilities................... 6.5% 1,699,845
----- -----------

Total Net Assets................ 100.0% $26,257,150
===== ===========

_______________________________________________________
*Non-income producing security
ADR American Depository Receipt

The accompanying notes are an integral part of the financial statements
------------------------------------------------------------------------------

19
<PAGE>

Emerging Markets Equity
--------------------------------------------------------------------------------
Schedule of Investments April 30, 2000 (Unaudited)

<TABLE>
<CAPTION>
Shares Description Value
------ ----------- -----
<S> <C> <C>
Common Stocks - 93.4%
Argentina - 0.4%
412,318 PC Holdings SA Cl B*................. $ 627,153
-----------

Brazil - 6.0%
71,813 CVRD ADR............................. 1,778,959
47,291 Embratel Participacoes
ADR*............................... 1,064,047
15,000,000 Siderurgica Nacional*................ 423,388
24,796 Tele Centro Sul Participacoes
ADR*............................... 1,580,745
27,585 Telecomunicacoes de Sao
Paulo SA........................... 696,521
131,118 Tele Norte Leste Participacoes
ADR................................ 2,335,539
25,500 Telesp Celular Participacoes
ADR*............................... 1,125,187
70,615 Unibanco GDR......................... 1,760,962
-----------
10,765,348
-----------

Chile - 2.8%
23,000 Andina ADR........................... 267,375
20,900 Banco Santander Chile ADR............ 309,581
101,094 CTC ADR.............................. 1,870,239
73,900 DyS ADR*............................. 1,256,300
39,200 Endesa SA*........................... 450,800
49,569 Enersis ADR.......................... 923,223
-----------
5,077,518
-----------

China - 0.5%
1,300 Hueneng Power International,
Inc. ADR*.......................... 12,025
800,000 Legend Holdings Ltd.................. 924,357
-----------
936,382
-----------

Czech Republic - 0.7%
139,500 Ceske Energeticke Zavody............. 405,734
36,500 Cesky Telecom AS..................... 677,888
9,830 IF Zivnobanka........................ 163,128
-----------
1,246,750
-----------

Greece - 1.8%
34,565 Alpha Credit Bank.................... 1,906,093
40,720 Stet Hellas Telecom ADR*............. 931,470
12,160 Titan Cement......................... 490,256
-----------
3,327,819
-----------

Hong Kong - 2.1%
397,000 China Telecom*....................... 2,841,466
200,000 Citic Pacific Ltd.................... 919,222
179 First Pacific Co., Ltd............... 63
-----------
3,760,751
-----------

Hungary - 2.0%
239,640 Matav................................ $ 1,644,133
1,076 Matav ADR............................ 37,458
21,940 MOL.................................. 387,136
1,376 MOL GDR*............................. 24,252
20,663 OTP Bank............................. 917,329
55,460 Raba................................. 540,087
-----------
3,550,395
-----------

India - 9.3%
1 Associated Cement Co................. 3
1 EIH Ltd.............................. 3
91,000 Grasim Industries Ltd................ 750,515
6,000 Gujarat Ambuja Cements
Ltd. GDR........................... 26,700
28,000 HCL Technologies Ltd.*............... 1,032,761
15,459 Hindustan Lever...................... 848,173
12,724 Infosys Technologies Ltd............. 2,361,155
65,281 ITC Ltd.............................. 852,467
2,000 ITC Ltd. GDR......................... 34,100
161,900 Larsen & Toubro Ltd.................. 866,063
1,000 Larsen & Toubro Ltd. GDR............. 13,750
125,400 Mahanagar Telephone
Nigam.............................. 646,535
3,110 Mahanagar Telephone
Nigam GDR*......................... 40,624
35,360 NIIT Ltd............................. 1,652,563
1,803 Pentamedia Graphics Ltd.............. 26,250
26,300 Pentamedia Software.................. 0
New 99............................. 382,871
53,100 Ranbaxy Laboratories*................ 750,456
260,371 Reliance Industries Ltd.............. 2,069,249
28,000 Satyam Computer...................... 9
Services Ltd....................... 2,004,978
152,300 State Bank of India.................. 719,107
252,622 Tata Iron & Steel Co. Ltd............ 627,938
14,000 Wipro Ltd............................ 1,068,250
-----------
16,774,511
-----------

Indonesia - 0.8%
180 Bank Panin Warrants*................. 0
360,000 PT Gudang Garam Tbk.................. 569,620
247,500 PT Indosat (Persero) Tbk............. 328,172
328,000 PT Indofood Sukes
Makmur Tbk......................... 224,203
845,000 PT Telekomunukasi
Indonesia.......................... 369,019
-----------
1,491,014
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.
--------------------------------------------------------------------------------

20
<PAGE>

Emerging Markets Equity
-----------------------------------------------------------------
Schedule of Investments April 30, 2000 (Unaudited)

<TABLE>
<CAPTION>
Shares Description Value
------ ----------- -----
<S> <C> <C>
Israel - 5.8%
347,140 Bank Hapoalim Ltd....................... $ 1,066,537
991,500 Bank Leumi Le-Israel*................... 2,155,195
26,080 Baran Group............................. 806,435
305,630 Bezeq*.................................. 1,622,258
96,790 Blue Square Chain Stores*............... 1,337,100
19,680 Discount Investment Corp................ 992,465
24,105 Elite Industries........................ 1,275,893
39,920 Elron*.................................. 1,285,781
-----------
10,541,664
-----------

Korea - 11.9%
2,843 Housing & Commercial
Bank GDR*............................. 48,971
52,100 Hyundai Electronics Ind., Co............ 826,276
62,080 Hyundai Motor Co., Ltd.................. 584,578
53,721 Kookmin Bank............................ 580,898
104,700 Korea Electric Power Corp............... 3,066,231
4,000 Korea Electric Power Corp.
ADR................................... 65,500
36,075 Korea Telecom Corp ADR*................. 1,244,587
40,516 LG Chemical............................. 930,983
15,246 Pohang Iron & Steel..................... 1,228,253
2,525 Pohang Iron & Steel ADR................. 53,025
40,300 Samsung Corp............................ 457,563
30,732 Samsung Electronics..................... 8,307,817
1,374 Samsung Electronics
GDR 144A*............................. 221,454
1,134 Samsung Fire & Marine
Insurance............................. 23,196
27,000 Samsung Securities Co.,
Ltd.*................................. 454,967
114,510 Shinhan Bank............................ 1,098,925
1,300 Shinhan Bank GDR*....................... 24,863
3,940 SK Telecom.............................. 1,047,353
42,109 SK Telecom Co., Ltd. ADR *.............. 1,350,120
-----------
21,615,560
-----------

Malaysia - 4.2%
30,000 Abric Berhad............................ 106,578
319,000 Berjaya Sports Toto..................... 667,373
224,000 Malayan Banking......................... 931,356
225,000 MNI Holdings Berhad*.................... 476,638
287,000 New Straits Times Press................. 959,172
65,000 Oriental Holdings Berhad................ 154,801
460,000 Resorts World Berhad.................... 1,488,928
570,000 Technology Resources Ind.*.............. 728,990
190,000 Telekom Malaysia........................ 659,991
169,000 Unisem Berhad........................... 1,500,967
-----------
7,674,794
-----------

Mexico - 10.7%
279,750 Alfa S.A. de C.V.*...................... $ 864,930
270,840 Banacci................................. 978,385
220,005 Cemex SA CPO*........................... 952,529
450,000 Carso Global Telecom.................... 1,195,283
35,420 Desc. ADR............................... 495,880
501,610 Femsa*.................................. 1,985,229
154,301 Grupo Carso............................. 524,610
232,800 Grupo Industrial Saltillo*.............. 516,949
489,567 Grupo Modelo, Series C*................. 1,040,304
320,946 Kimberly Clark, Series A*............... 1,033,220
252,200 Organization Soriana*................... 1,004,834
120,708 Telmex ADR.............................. 7,099,139
27,741 Televisa GDR*........................... 1,759,820
-----------
19,451,112
-----------

Peru - 0.5%
92,600 Credicorp Ltd........................... 978,087
-----------

Philippines - 0.9%
224,600 ABS CBN Broadcasting
Corp. ADR*............................ 266,571
293,260 Bank of the Philippine
Islands*.............................. 657,056
25,660 Philippine Long Distance
Telephone Co.......................... 459,935
2,154,700 SM Prime Holdings....................... 281,831
-----------
1,665,393
-----------

Poland - 1.4%
60,920 Budimex*................................ 400,682
86,745 Elektrim................................ 1,106,144
94,030 Wielkopolski Bank
Kredytowy............................. 536,413
34,960 Zaklady Metali Lekkich
Kety*................................. 472,390
-----------
2,515,629
-----------
Portugal - 0.0%
40 Jeronimo Martins........................ 714
-----------

Romania - 0.1%
8,790 Arlo.................................... 66,051
1,202,500 Dacia................................... 31,716
299,212 Terapia................................. 17,570
-----------
115,337
-----------

Russia - 1.5%
44,440 Lukoil Holding ADR...................... 2,678,843
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.
--------------------------------------------------------------------------------

21
<PAGE>

Emerging Markets Equity
--------------------------------------------------------------------------------
Schedule of Investments April 30, 2000 (Unaudited)

<TABLE>
<CAPTION>
Shares Description Value
------ ----------- -----
<S> <C> <C>
South Africa - 8.1%
267,108 ABSA.................................... $ 945,445
288,300 African Bank Investments
Ltd.*................................. 622,903
699 Anglo American Plc...................... 29,628
35,600 Anglo American Platinum
Corp.................................. 861,057
15,900 AngloGold............................... 605,000
87,600 Barlow.................................. 549,075
70,296 Bidvest Group........................... 518,369
1,838 DataTec *............................... 13,364
87,450 De Beers Centenary
Linked Units.......................... 1,792,722
6,177 Dimension Data Holdings................. 40,539
78,400 Fedsure Holdings........................ 434,753
1, 384,600 FirstRand............................... 1,633,626
4,374 Johnnies Industrial Corp.*.............. 64,509
1,100 Liberty Life............................ 10,302
322,700 Metropolitan Life....................... 366,461
74,000 Naspers Ltd............................. 763,955
63,600 Nedcor.................................. 1,206,247
503,556 New Clicks Holdings..................... 746,366
218,210 Sappi................................... 1,528,645
232,700 Sasol................................... 1,365,896
84,358 South African Breweries................. 622,063
------------
14,720,925
------------

Taiwan - 13.3%
599,910 Advanced Semiconductor
Engineering, Inc.*.................... 1,921,594
1,220 ASE Test Ltd.*.......................... 36,143
134,489 Asustek Computer Inc.*.................. 1,490,171
4,344 Asustek Computer Inc.
GDR*.................................. 57,341
256 Asustek Computer Inc.
GDR 144A*............................. 3,379
1,913,341 Bank Sinopac............................ 1,063,141
238,100 Cathay Life Insurance................... 575,892
881,100 China Steel Corp........................ 624,934
230 China Steel Corp. GDR*.................. 3,263
181,800 Compeq Manufacturing
Co., Ltd.............................. 1,004,223
865,140 Far Eastern Textile Ltd................. 1,329,027
613,750 Formosa Plastics Corp................... 1,273,840
139,800 Hon Hai Precision Industry
Co., Ltd.*............................ 1,347,965
439,831 Phoenixtec Power Co., Ltd.*............. 1,049,442
75,000 Procomp Informatics
Co., Ltd.*............................ 588,331
1,640,880 Taishin International Bank.............. 852,753
752,000 Taiwan Semiconductor*................... 4,842,098
4,637 Taiwan Semiconductor
ADR*.................................. 242,573
990,500 United Microelectronics
Corp., Ltd............................ $ 3,350,768
117,000 Via Technologies Inc.*.................. 1,950,319
148,000 Winbond Electronics Corp.*.............. 457,134
------------
24,064,331
------------
Thailand - 1.7%
85,800 Advanced Info Services*................. 1,005,301
45,600 Hana Microelectronics Public
Co., Ltd.............................. 342,614
22,950 Siam Cement Public Co.,
Ltd.*................................. 530,566
92,000 Siam Commercial Bank
Wt 05/10/02*.......................... 23,686
275,500 TelecomAsia Corp.*...................... 369,119
86,999 TelecomAsia Warrants
12/31/49*............................. 43,425
679,400 Thai Farmers Bank
Public Co.*.......................... 713,937
------------
3,028,648
------------
Turkey - 6.1%
2,212,852 Akbank.................................. 49,792
153,449,300 Finansbank.............................. 1,167,669
73,006,914 Hurriyet................................ 1,851,815
76,778,200 T. Garanti Bank*........................ 1,294,128
11,032,600 Tansas.................................. 2,753,275
5,640,091 Vestel.................................. 2,122,833
56,155,260 Yapi ve Kredi Bank...................... 1,791,955
------------
11,031,467
------------

United Kingdom - 0.0%
8,200 Old Mutual Plc *........................ 18,521
------------

Venezuela - 0.4%
26,200 Cia Anonima Tel De
Ven ADR*............................. 759,800
------------

Other - 0.4%
12,500 Framlington Maghreb Fund*............... 178,125
49,000 Mauritius Fund Limited*................. 318,500
14,450 Oryx Fund Limited*...................... 158,950
------------
655,575
------------

Total Common Stocks
(Cost $148,192,634)............................... 169,074,041
------------
</TABLE>

The accompanying notes are an integral part of the financial statements.
--------------------------------------------------------------------------------

22
<PAGE>

Emerging Markets Equity
--------------------------------------------------------------------------------
Schedule of Investments April 30, 2000 (Unaudited)

<TABLE>
<CAPTION>
Shares Description Value
------ ----------- -----
<S> <C> <C>
Preferred Stocks - 3.9%
Brazil - 3.8%
10,263,400 Banespa..................... $ 380,595
1,897,210 Brahma...................... 1,375,779
30,445,350 Electrobras................. 502,226
51,862,000 Gerdau SA................... 1,251,693
22,461,850 Itaubanco................... 1,678,577
7,131,867 Petrobras*.................. 1,697,988
------------
6,886,858
------------

Thailand - 0.1%
322,000 Siam Commercial Bank
Public Co., Ltd........... 258,006
------------

Total Preferred Stocks
(Cost $5,731,839)....................... $ 7,144,864
------------

Total Investment
(Cost $153,924,473)..................... 97.3% $176,218,905

Other Assets in Excess of
Liabilities............................. 2.7% 4,869,067
---- ------------

Net Assets................................ 100.0% $181,087,972
===== ============
</TABLE>

--------------------------------------------------------------------------------
* Non-income producing security
ADR American Depository Receipt
GDR Global Depository Receipt
144A Security exempt from registration under 144A of the Security Act of 1933.
These securities may be resold in transactions exempt from registrations,
normally to qualified institutional buyers.

The accompanying notes are an integral part of the financial statements.
--------------------------------------------------------------------------------

23
<PAGE>

International Equity Funds
--------------------------------------------------------------------------------
Statements of Assets and Liabilities April 30, 2000 (Unaudited)

<TABLE>
<CAPTION>
International International Emerging
Select European Small Cap Markets
Equity Equity Equity Equity
------ ------ ------ ------
<S> <C> <C> <C> <C>
Assets
Investment at Value/1/............................................ $219,626,119 $44,037,452 $24,557,305 $176,218,905
Cash.............................................................. 8,020,806 5,299,093 1,516,103 2,614,917
Foreign Currency/1/................................................. -- -- 23,624 1,468,351
Receivable for Securities Sold.................................... 14,512,888 14,678,852 896,044 932,341
Receivable for Capital Shares Sold................................ 2,352,840 1,851,331 100 10,000
Dividend and Interest Receivable.................................. 264,629 58,240 46,904 666,364
Receivable for Foreign Taxes Withheld............................. 26,742 102,310 28,074 2,886
Net Unrealized Appreciation on Forward Currency Contracts......... -- 60,059 -- --
------------ ----------- ----------- ------------
Total Assets......................................................... 244,804,024 66,087,337 27,068,154 181,913,764
------------ ----------- ----------- ------------
Liabilities
Due to Advisor.................................................... 93,394 27,826 2,175 95,706
Due to Administrator.............................................. 57,721 18,169 10,617 48,180
Payable for Securities Purchased.................................. 14,445,185 12,051,251 773,517 549,245
Payable for Capital Shares Redeemed............................... 52,197 90,000 -- --
Net Unrealized Depreciation on Forward Currency Contracts......... -- -- -- 20
Accrued Other Expenses............................................ 54,017 33,635 24,695 132,641
------------ ----------- ----------- ------------
Total Liabilities.................................................... 14,702,514 12,220,881 811,004 825,792
------------ ----------- ----------- ------------
Net Assets........................................................... $230,101,510 $53,866,456 $26,257,150 $181,087,972
============ =========== =========== ============
Composition of Net Assets
Capital Shares of Institutional Class/2/
(unlimited authorization $0.001 par value)
Based on Outstanding Shares of Beneficial Interest.............. $ 24,000,942 $41,560,339 $22,380,084 $159,709,184
Capital Shares of Investment Class/3/
(unlimited authorization $0.001 par value)
Based on Outstanding Shares of Beneficial Interest.............. 15,285,819 13,008,146 -- --
Capital Shares of Premier Shares/4/
(unlimited authorization $0.001 par value)
Based on Outstanding Shares of Beneficial Interest.............. 143,147,054 -- -- --
Undistributed Net Investment Income (Loss)........................ (391,764) 292,774 (56,118) (2,622,477)
Accumulated Net Realized Gains from Securities, Forward
Currency Contracts and Foreign Currency Translations............ 52,075,665 4,434,164 4,426,082 1,753,035
Net Unrealized Appreciation (Depreciation) on Investments......... (4,024,350) (5,455,561) (491,592) 22,294,432
Net Unrealized Appreciation (Depreciation) on Foreign
Currencies and Forward Currency Contracts....................... 8,144 26,594 (1,306) (46,202)
------------ ----------- ----------- ------------
Net Assets........................................................... $230,101,510 $53,866,456 $26,257,150 $181,087,972
============ =========== =========== ============

Computation of Net Asset Value
Institutional Class:
Net Assets........................................................ $ 30,336,922 $41,614,917 $26,257,150 $181,087,972
Shares Outstanding................................................ 1,209,732 1,449,166 1,831,167 22,892,972
Net Asset Value Per Share......................................... $ 25.08 $ 28.72 $ 14.34 $ 7.91
Investment Class:
Net Assets........................................................ $ 14,132,537 $12,251,539 -- --
Shares Outstanding................................................ 567,710 448,330 -- --
Net Asset Value Per Share......................................... $ 24.89 $ 27.33 -- --
Premier Class:
Net Assets........................................................ $185,632,051 -- -- --
Shares Outstanding................................................ 7,416,963 -- -- --
Net Asset Value Per Share......................................... $ 25.03 -- -- --
</TABLE>

--------------------------------------------------------------------------------
/1/ Cost of Investments and Currency Investments Foreign Currency
-------------------------------- ----------- ----------------
International Select Equity.............. 223,650,474 --
European Equity.......................... 49,493,013 --
International Small Cap Equity........... 25,048,896 22,701
Emerging Markets Equity.................. 153,924,473 1,470,111
/2/ On February 28, 2000 the Institutional Shares were renamed the
Institutional Class.
/3/ On February 28, 2000 the Investment Shares were renamed the Investment
Class.
/4/ On March 1, 2000 the International Select Equity Premier Class commenced
operations.

See Notes to Financial Statements.
--------------------------------------------------------------------------------
24
<PAGE>

International Equity Funds
--------------------------------------------------------------------------------
Statements of Operations For the six months ended April 30, 2000 (Unaudited)

<TABLE>
<CAPTION>
International International Emerging
Select European Small Cap Markets
Equity Equity Equity Equity
------ ------ ------ ------
<S> <C> <C> <C> <C>
Investment Income
Interest......................................................... $ 199,886 $ 92,617 $ 35,243 $ 41,371
Dividends........................................................ 518,431 251,403 89,397 1,747,411
Less: Foreign Taxes Withheld..................................... (79,484) (35,709) (9,323) (195,677)
----------- ----------- ---------- -----------
Total Investment Income............................................. 638,833 308,311 115,317 1,593,105

Expenses
Investment Advisory Fee.......................................... 649,307 70,126 104,710 983,247
Administration Fees.............................................. 278,275 30,054 31,413 294,974
Registration & Filing Fees....................................... 27,393 22,685 19,509 20,835
Custody Fee...................................................... 64,713 49,777 66,904 296,918
Transfer Agency Fee.............................................. 428 862 428 338
Professional..................................................... 26,649 28,050 27,750 28,050
Printing Fees.................................................... 9,297 8,997 8,037 6,897
Servicing Plan Fee............................................... 7,263 3,989 --
Trustees' Fees................................................... 5,875 5,675 5,665 5,875
Miscellaneous.................................................... 10,486 15,347 921 1,253
----------- ----------- ---------- -----------
Total Expenses...................................................... 1,079,686 235,562 265,337 1,638,387
Less: Fee Waivers or Expense Reimbursements......................... (174,307) (93,126) (134,449) (408,997)
----------- ----------- ---------- -----------
Net Expenses........................................................ 905,379 142,436 130,888 1,229,390
----------- ----------- ---------- -----------
Net Investment Income (Loss)........................................ (266,546) 165,875 (15,571) 363,715
----------- ----------- ---------- -----------

Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions:
Net Realized Gain (Loss) from:
Investment Transactions........................................ 52,172,972 4,405,728 4,588,647 20,108,381*
Foreign Currency Transactions.................................. (37,070) 32,610 (44,688) (188,702)
Net Change in Unrealized Appreciation (Depreciation):
Investments.................................................... (9,577,151) (5,468,696) (2,720,929) 7,682,244
Foreign Currencies and Forward Currency Contracts.............. 46,959 27,916 1,545 5,189
----------- ----------- ---------- -----------
Net Realized and Unrealized Gain (Loss) on Investments,
Foreign Currencies and Forward Currency Contracts................ 42,605,710 (1,002,442) 1,824,575 27,607,112
----------- ----------- ---------- -----------
Net Increase (Decrease) in Net Assets from Operations............... $42,339,164 $ (836,567) $1,809,004 $27,970,827
=========== =========== ========== ===========
</TABLE>

--------------------------------------------------------------------------------
*Net of $1,672,338 in foreign withholding taxes paid on net realized gains in
certain countries

See Notes to Financial Statements.
--------------------------------------------------------------------------------
25
<PAGE>

International Equity Funds
--------------------------------------------------------------------------------
Statements of Changes in Net Assets (Unaudited)

<TABLE>
<CAPTION>
International Select Equity
For the six For the
months ended year ended
April 30, 2000 October 31, 1999
<S> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net Investment Income (Loss)................................................... $ (266,546) $ 102,613
Net Realized Gain on Investments............................................... 52,172,972 2,245,166
Net Realized Gain (Loss) on Foreign Currencies and Forward
Currency Contracts............................................................ (37,070) (124,628)
Net Change in Unrealized Appreciation (Depreciation) on Investments............ (9,577,151) 5,204,201
Net Change in Unrealized Gain (Loss) on Foreign Currencies and
Forward Currency Contracts.................................................... 46,959 30,912
------------- -----------
Net Increase (Decrease) in Net Assets from Operations............................ 42,339,164 7,458,264
------------- -----------
Distributions to Shareholders
Net Investment Income
Institutional Class.......................................................... (313,559) (33,758)
Investment Class............................................................. -- --
Net Realized Gain from Investment Transactions
Institutional Class.......................................................... (2,159,370) (300,608)
Investment Class............................................................. (242) --
------------- -----------
Total Distributions.............................................................. (2,473,171) (334,366)
------------- -----------
Capital Share Transactions:
Institutional Class:/1/
Proceeds from Shares Issued.................................................. 132,936,715 52,180,716
Shares Issued in Lieu of Cash Distributions.................................. 2,468,314 334,363
Cost of Shares Repurchased................................................... (165,179,674) (3,480,553)
------------- -----------
Increase (Decrease) in Net Assets from Institutional Class Transactions........ (29,774,645) 49,034,526
------------- -----------
Investment Class:/2/
Proceeds from Shares Issued.................................................. 27,761,905 10,030
Shares Issued in Lieu of Cash Distributions.................................. 242 --
Cost of Shares Repurchased................................................... (12,486,358) --
------------- -----------
Increase in Net Assets from Investment Class Transactions...................... 15,275,789 10,030
------------- -----------
Premier Class:
Proceeds from Shares Issued.................................................. 143,147,054 --
Shares Issued in Lieu of Cash Distributions.................................. -- --
Cost of Shares Repurchased................................................... -- --
------------- -----------
Increase in Net Assets from Premier Class Transactions......................... 143,147,054 --
------------- -----------
Net Increase (Decrease) in Net Assets from Capital Transactions.................. 128,648,198 49,044,556
------------- -----------
Total Increase (Decrease) in Net Assets.......................................... 168,514,191 56,168,454
------------- -----------
Net Assets
Beginning of Period.............................................................. 61,587,319 5,418,865
------------- -----------
End of Period.................................................................... $ 230,101,510 $61,587,319
------------- -----------
Capital Share Transactions:
Institutional Class:/1/
Shares Issued................................................................ 5,957,975 3,146,537
Shares Issued in Lieu of Cash Distributions.................................. 110,157 26,328
Shares Repurchased........................................................... (8,261,319) (220,914)
------------- -----------
Increase (Decrease) in Capital Shares from Institutional
Class Transactions........................................................... (2,193,187) 2,951,951
============= ===========

Investment Class:/2/
Shares Issued................................................................ 1,031,796 555
Shares Issued in Lieu of Cash Distributions.................................. 11 --
Shares Repurchased........................................................... (464,652) --
------------- -----------
Increase in Capital Shares from Investment Class Transactions.................. 567,155 555
============= ===========
Premier Class:/3/
Shares Issued................................................................ 7,416,963 --
Shares Issued in Lieu of Cash Distributions.................................. -- --
Shares Repurchased........................................................... -- --
============= ===========
Increase in Capital Shares from Premier Class Transactions..................... 7,416,963 --
============= ===========
</TABLE>

--------------------------------------------------------------------------------
*Net of $1,672,338 in foreign withholding taxes paid on net realized gains in
certain countries.

**Net of $676,141 in foreign withholding taxes paid on net realized gains in
certain countries.

/1/ On February 28, 2000 the Institutional Shares were renamed the Institutional
Class.

/2/ On February 28, 2000 the Service Shares were renamed the Investment Class.

/3/ On March 1, 2000 the International Select Equity Premier Class commenced
operations.
--------------------------------------------------------------------------------

26
<PAGE>

<TABLE>
<CAPTION>
European Equity International Small Cap Equity Emerging Markets Equity
For the six For the For the six For the For the six For the
months ended year ended months ended year ended months ended year ended
April 30, 2000 October 31, 1999 April 30, 2000 October 31, 1999 April 30, 2000 October 31, 1999
<S> <C> <C> <C> <C> <C>
$ 165,875 $ 551,068 $ (15,571) $ 196,973 $ 363,715 $ 689,853
4,405,728 10,236,450 4,588,647 5,196,812 20,108,381* (654,123)**

32,610 101,694 (44,688) (525,849) (188,702) (454,941)
(5,468,696) (7,017,873) (2,720,929) 2,511,436 7,682,244 29,872,448

27,916 (3,741) 1,545 569,181 5,189 411,389
------------ ------------ ------------ ------------ ------------ ------------
(836,567) 3,867,598 1,809,004 7,948,553 27,970,827 29,864,626
------------ ------------ ------------ ------------ ------------ ------------

-- (1,025,913) (258,184) -- (721,835) --
-- -- -- -- -- --

-- (14,753,865) (1,074,834) -- -- --
-- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
-- (15,779,778) (1,333,018) -- (721,835) --
------------ ------------ ------------ ------------ ------------ ------------

102,496,221 3,624,733 38,427,276 -- 49,737,629 98,148,288
-- 15,779,765 1,333,010 -- 718,906 --
(61,698,279) (51,982,255) (24,908,743) (21,429,276) (60,503,659) (10,206,765)
------------ ------------ ------------ ------------ ------------ ------------
40,797,942 (32,577,757) 14,851,543 (21,429,276) (10,047,124) 87,941,523
------------ ------------ ------------ ------------ ------------ ------------

18,709,574 -- -- -- -- --
-- -- -- -- -- --
(5,701,428) -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
13,008,146 -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------

-- -- -- -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
-- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
53,806,088 (32,577,757) 14,851,543 (21,429,276) (10,047,124) 87,941,523
------------ ------------ ------------ ------------ ------------ ------------
52,969,521 (44,489,937) 15,327,529 (13,480,723) 17,201,868 117,806,149
------------ ------------ ------------ ------------ ------------ ------------

896,935 45,386,872 10,929,621 24,410,344 163,886,104 46,079,955
------------ ------------ ------------ ------------ ------------ ------------
$ 53,866,456 $ 896,935 $ 26,257,150 $ 10,929,621 $181,087,972 $163,886,104
------------ ------------ ------------ ------------ ------------ ------------

3,471,306 280,578 2,351,206 -- 5,760,763 16,111,925
-- 1,435,078 99,672 -- 85,482 --
(2,100,599) (4,998,828) (1,510,482) (1,863,550) (6,904,213) (1,536,163)
------------ ------------ ------------ ------------ ------------ ------------

1,370,707 (3,283,172) 940,396 (1,863,550) (1,057,968) 14,575,762
============ ============ ============ ============ ============ ============

651,069 -- -- -- -- --
-- -- -- -- -- --
(202,739) -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
448,330 -- -- -- -- --
============ ============ ============ ============ ============ ============

-- -- -- -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
============ ============ ============ ============ ============ ============
-- -- -- -- -- --
============ ============ ============ ============ ============ ============
</TABLE>

See Notes to Financial Statements.
--------------------------------------------------------------------------------

27
<PAGE>

International Equity Funds
--------------------------------------------------------------------------------
Financial Highlights
For the six months ended April 30, 2000 and the years ended October 31
(Unaudited)

For a Share Outstanding Throughout each Period
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Net
Net Realized Distributions Distributions Net
Asset Net and from from Asset
Value Investment Unrealized Net Realized Value
Beginning Income Gains/ Investment Capital End of Total
of Period Loss Losses Income Gains Period Return
--------- ---- ------ ------ ----- ------ ------
Select Equity++:
Institutional Class/5/
<S> <C> <C> <C> <C> <C> <C> <C>
2000 $18.10 $(0.39) $ 7.69 $(0.04) $(0.28) $25.08 40.78%
1999 12.02 (0.09) 6.91 (0.07) (0.67) 18.10 59.39
1998 11.62 0.12 0.90 (0.23) (0.39) 12.02 9.28
1997 11.88 0.16 0.28 (0.15) (0.55) 11.62 3.78
1996 10.95 0.11 1.25 (0.43) -- 11.88 12.70
1995/1/ 10.00 0.08 0.87 -- -- 10.95 9.50+
Investment Class/6/
2000 18.09 -- 7.08 -- (0.28) 24.89 39.47
Premier Class/7/
2000 27.67 0.01 (2.65) -- -- 25.03 --

European Equity:
Institutional Class/5/
2000 $11.43 $(1.29) $21.48 $(0.13) $(2.77) $28.72 151.27%
1999 13.50 0.29 2.04 (0.29) (4.11) 11.43 21.18
1998 12.81 0.15 1.68 (0.24) (0.90) 13.50 15.36
1997 10.60 0.25 2.11 (0.03) (0.12) 12.81 22.48
1996/2/ 10.00 -- 0.60 -- -- 10.60 6.00+
Investment Class/6/
2000 11.43 0.09 15.81 -- -- 27.33 --

International Small Cap Equity:
Institutional Class/5/
2000 $12.27 $(0.02) $ 3.46 $(0.25) $(1.12) $14.34 29.03%
1999 8.86 0.03 3.38 -- -- 12.27 38.49
1998 8.81 0.08 0.07 (0.10) -- 8.86 1.81
1997 9.96 0.10 (1.12) (0.13) -- 8.81 (10.40)
1996 9.40 0.03 0.57 (0.04) -- 9.96 6.43
1995 10.35 0.03 (0.72) (0.04) (0.22) 9.40 (6.67)
1994/3/ 10.00 0.02 0.33 -- -- 10.35 3.50+

Emerging Market Equity:
Institutional Class/5/
2000 $ 6.84 $(0.09) $ 1.19 $(0.03) $ -- $ 7.91 16.06%
1999 4.92 0.03 1.89 -- -- 6.84 39.02
1998 7.69 0.03 (2.42) -- (0.38) 4.92 (32.66)
1997 8.80 (0.03) (0.85) (0.01) (0.22) 7.69 (10.31)
1996 8.11 0.06 0.75 (0.03) (0.09) 8.80 10.02
1995 11.00 0.04 (2.29) (0.02) (0.62) 8.11 (21.00)
1994/4/ 10.00 (0.01) 1.01 -- -- 11.00 10.00+
<CAPTION>

Ratio of
Net
Ratio of Investment
Net Ratio of Income/
Investment Expenses to (Loss) to
Net Ratio of Income Average Average
Assets Expenses Loss Net Net
End to to Assets Assets
of Average Average Excluding Excluding Portfolio
Period Net Net Expense Expense Turnover
(000) Assets Assets Limitations/1/ Limitations/1/ Rate
----- ------ ------ -------------- -------------- ----
Select Equity++:
Institutional Class/5/
<S> <C> <C> <C> <C> <C> <C>
2000 $ 30,337 0.99% (0.54)% 1.15% (0.38)% 131%
1999 61,577 0.90 0.52 2.21 (0.79) 239
1998 5,419 0.90 0.92 2.89 (1.07) 127
1997 4,954 0.90 0.97 2.79 (0.92) 55
1996 3,423 0.90 0.72 3.59 (1.97) 39
1995/1/ 2,738 0.90 1.55 2.73 (0.28) 19
Investment Class/6/
2000 14,133 1.40 (0.43) 1.41 (0.43) 131
Premier Class/7/
2000 185,632 0.90 0.05 0.39 0.13 131

European Equity:
Institutional Class/5/
2000 $ 41,615 1.25% 1.97% 2.80% 3.08% 321%
1999 897 0.90 1.23 1.64 0.49 80
1998 5,387 0.90 1.12 1.13 0.89 49
1997 39,330 0.90 1.71 1.17 1.44 45
1996/2/ 17,902 0.90 (0.41) 1.40 (0.91) 5
Investment Class/6/
2000 12,252 1.50 1.59 1.79 1.72 321

International Small Cap Equity:
Institutional Class/5/
2000 $ 26,257 1.25% (0.15)% 2.53% 1.13% 79%
1999 10,930 1.25 0.86 2.47 (0.36) 86
1998 24,410 1.25 0.43 1.49 0.19 106
1997 53,395 1.25 0.16 1.37 0.04 59
1996 106,709 1.25 0.35 1.38 0.22 47
1995 90,917 1.25 0.41 1.48 0.18 62
1994/3/ 68,798 1.25 0.34 1.67 (0.08) 41

Emerging Market Equity:
Institutional Class/5/
2000 $ 181,088 1.25% 0.37% 1.67% (0.79)% 29%
1999 163,886 1.25 0.63 1.90 (0.02) 70
1998 46,080 1.25 0.90 1.52 0.63 85
1997 94,101 1.25 0.68 1.44 0.49 94
1996 88,279 1.25 0.63 1.52 0.36 69
1995 43,288 1.25 0.44 1.55 0.14 49
1994/4/ 56,842 1.36 (0.12) 1.79 (0.55) 45
</TABLE>

+ Returns are for the period indicated and have not been annualized.

++ The International Select Equity Fund Investment Class commenced operations
on 10/29/99. The net assets on October 31, 1999 were $10,043.

/1/ International Select Equity Fund Institutional Class commenced operations on
5/15/95. All ratios, except for Portfolio Turnover Rate, for the period have
been annualized.

/2/ European Equity Growth Fund Institutional Class commenced operations on
9/03/96. All ratios, except for Portfolio Turnover Rate, for the period have
been annualized.

/3/ International Small Cap Equity Fund Institutional Class commenced operations
on 1/03/94. All ratios, except for Portfolio Turnover Rate, for the period
have been annualized.

/4/ Emerging Market Equity Fund Institutional Class commenced operations on
2/01/94. All ratios, except for Portfolio Turnover Rate, for the period have
been annualized.

/5/ On February 28, 2000 the Institutional Shares were renamed the Institutional
Class.

/6/ On February 28, 2000 the Service Shares were renamed the Investment
Class.

/7/ On March 1, 2000 the International Select Equity Premier Class commenced
operations.

--------------------------------------------------------------------------------

28
<PAGE>

Investment Trust
--------------------------------------------------------------------------------
Notes to Financial Statements April 30, 2000 (Unaudited)

1. Organization

Morgan Grenfell Investment Trust (the "Trust") was organized as a Delaware
business trust on September 13, 1993. The Trust is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company consisting of fourteen investment portfolios. The Funds' prospectuses
provide a description of each Fund's investment objectives, policies and
strategies.

2. Significant Accounting Policies

The preparation of financial statements in accordance with generally accepted
accounting principles requires Trust management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates. The following is a
summary of significant accounting policies followed by the Funds.

Security Valuation--Securities listed on a securities exchange for which market
quotations are readily available are valued at the last quoted sales price on
the principal exchange on which they are traded on the valuation date or, if
there is no such reported sale on the valuation date, at the most recently
quoted bid price. Unlisted securities for which market quotations are readily
available are valued at the most recently quoted bid price. Certain debt and
fixed income investments owned by the Funds are valued at prices supplied by
independent pricing agents selected by Deutsche Asset Management, Inc. ("DeAM",
formerly Morgan Grenfell Inc.) and Deutsche Asset Management Investment Services
Limited ("DAMIs", formerly Morgan Grenfell Investment Services Limited),
(collectively, the "Advisers", each an affiliate of Deutsche Bank AG), which
prices reflect broker-dealer supplied valuations. Short-term investments are
valued at amortized cost which approximates market value. Other securities for
which market quotations are not with less than 60 days of maturity readily
available or securities whose market quotations do not, in the opinion of the
applicable Adviser, reflect market value are valued at fair value using methods
determined in good faith by the valuation committee of the Board of Trustees.

Income Taxes--It is the intention of each Fund to qualify as a regulated
investment company and to distribute all of its taxable income. Accordingly, no
provision for Federal income taxes is considered necessary.

The Funds may be subject to taxes imposed by countries in which they invest with
respect to their investments in issuers existing or operating in such countries.
Such taxes are generally based on either income earned or repatriated and/or
capital gains realized on sale of such investments. The Funds accrue such taxes
when the related income or gains are earned.

Net Asset Value Per Share--The net asset value per share is calculated on a
daily basis by dividing the assets of each Fund or Class, less its liabilities,
by the number of outstanding shares, of the Fund or Class.

Classes--Class-specific expenses, such as service plan fees, are borne by that
class. Income, expenses and realized and unrealized gains/losses are allocated
to the respective classes on the basis of relative daily net assets.

Repurchase Agreements--Securities pledged as collateral for repurchase
agreements are held by the custodian banks until maturity of the repurchase
agreements. Provisions of the repurchase agreements and procedures adopted by
the Trust require that the market value of the collateral, including accrued
interest thereon, is sufficient in the event of default by the counterparty.

The Funds may also invest in tri-party repurchase agreements. Securities held as
collateral for tri-party repurchase agreements are maintained in a segregated
account by the broker's custodian bank until maturity of the repurchase
agreement. Provisions of the agreements require that the market value of the
collateral, including accrued interest thereon, is sufficient in the event of
default by the counterparty.

If the counterparty defaults and the value of the collateral declines or if the
counterparty enters an insolvency proceeding, realization of the collateral by
the Funds may be delayed or limited.

Foreign Currency Translation--The books and records of the Funds are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis: (I) market value of investment securities, other assets and
liabilities at the current rate of exchange; and (II) purchases and sales of
investment securities, income and expenses at the relevant rates of exchange
prevailing on the respective dates of such transactions.

The Funds do not isolate that portion of gains and losses on investments in
equity securities which is due to changes in the foreign exchange rates from
that which is due to changes in market prices of such securities. The

--------------------------------------------------------------------------------

29
<PAGE>

Investment Trust
--------------------------------------------------------------------------------
Notes to Financial Statements

Funds do isolate the effect of fluctuations in foreign currency rates when
determining the gain or loss upon sale or maturity of foreign currency
denominated debt obligations pursuant to the Federal income tax regulations.
Such amounts are categorized as foreign currency gain or loss for both financial
reporting and income tax reporting purposes.

The Funds report gains and losses on foreign currency related transactions as
realized and unrealized gains and losses for financial reporting purposes,
whereas such gains and losses, to the extent realized, are treated as ordinary
income or loss for federal income tax purposes.

Forward Foreign Currency Contracts--The Funds may enter into forward foreign
currency contracts as hedges against portfolio positions as well as for non-
hedging purposes. The aggregate principal amounts of the contracts are not
recorded. All commitments are "marked-to-market" daily at the applicable foreign
exchange rate and any resulting unrealized gains or losses are recorded
currently. The Funds realize gains or losses at the time forward contracts are
extinguished, except that gains or losses on certain open contracts are required
to be recognized for U.S. federal income tax purposes at the close of the Fund's
taxable year and are generally treated as ordinary income or loss for such
purposes. Risk may arise upon entering into these contracts from the potential
inability of the counterparties to meet the terms of their contracts and is
generally limited to the amount of unrealized gain on the contracts, if any, at
the date of default. Risk may also arise from unanticipated movements in the
value of a foreign currency relative to the U.S. dollar.

Foreign Currency Options--The premium paid by a Fund for the purchase of an
option is included in the Fund's Statement of Assets and Liabilities as an
investment and subsequently marked to market to reflect the current market value
of the option. For an option held by a Fund on the stipulated expiration date,
the Fund realizes a loss. If the Fund enters into a closing sale transaction, it
realizes a gain or loss, depending on whether the proceeds from the sale are
greater or less than the cost of the purchased option. If the Fund exercises a
put option, it realizes a gain or loss from the sale of the underlying
investment and proceeds from such sale will be decreased by the premium
originally paid. If the Fund exercises a call option, the cost of the underlying
investment which the Fund purchases upon exercise will be increased by the
premium originally paid. The risk associated with purchasing options is limited
to premiums originally paid. Certain foreign currency options may be required to
be marked-to-market for Federal income tax purposes at the close of a Fund's
taxable year, giving rise to a gain or loss that may, depending upon whether
certain elections are made, be capital or ordinary in character.

Distributions--Distributions from net investment income and net realized capital
gains are determined in accordance with U.S. Federal income tax regulations,
which may differ from those amounts determined under generally accepted
accounting principles. These book/tax differences are either temporary or
permanent in nature. To the extent these differences are permanent, they are
charged or credited to paid in capital in the period that the difference arises.
Accordingly, permanent differences primarily attributable to net operating loss
or realized foreign exchange gains and losses for the year ended October 31,
1999 have been reclassified as follows:

<TABLE>
<CAPTION>
Undistributed
Net Investment
Income Accumulated
(Expenses in Net Realized Paid-in
Fund Excess of Income) Gains (Losses) Capital
---- ----------------- -------------- -------
<S> <C> <C> <C>
International Select
Equity 20,669 (21,106) 437
European Equity 103,310 (105,388) 2,078
International Small
Cap Equity (573,757) 525,849 47,908
Emerging Markets
Equity (392,512) 449,331 (56,819)
</TABLE>

The above reclassifications have no effect on net assets or net asset value per
share of the above Funds.

Expenses--Expenses that are directly related to a Fund are charged directly to
that fund. Other operating expenses of the Trust are prorated to the funds on
the basis of relative net assets. DeAM absorbed all expenses of organizing the
Trust.

Other--Security transactions are accounted for on the date the security is
purchased or sold (trade date). Costs used in determining net realized capital
gains and losses on the sale of investment securities are those of the specific
securities sold adjusted for the accretion and amortization of original issue
discounts and purchase premiums during the respective holding period. Original
issue discounts and purchase premiums on securities held by the Funds are
accreted and amortized ratably to maturity using the effective interest method.
Dividend

--------------------------------------------------------------------------------

30
<PAGE>

Investment Trust
--------------------------------------------------------------------------------
Notes to Financial Statements

income is recognized on the ex-dividend date or, using reasonable diligence,
when known to the Funds. Interest income is recognized using the accrual method.

3. Administration, Investment Advisory, Distribution and Service Agreements

By an agreement dated August 27, 1998, the Trust entered into an administration
agreement with DeAM (the "Administrator"), pursuant to which the Administrator
will receive an annual fee based on the average daily net assets of each Fund as
follows:

<TABLE>
<CAPTION>
Annual
Fund Fees
------ ----------
<S> <C>
International Select Equity 0.30%
European Equity 0.30%
International Small Cap Equity 0.30%
Emerging Markets Equity 0.30%
</TABLE>

The Administrator generally assists in all matters relating to the
administration of the Funds, including the coordination and monitoring of any
third parties furnishing services to the Funds, preparation and maintenance of
financial accounting records, and the provision of necessary office space,
equipment and personnel to perform administrative and clerical functions. The
Administrator is also responsible for engaging an accounting agent, custodian
and transfer agent for the Trust's operations. Fees for services rendered by the
accounting agent and the transfer agent are paid by the Administrator and not
the Fund. At a meeting held on August 19, 1999 the Board of Trustees of the
Trust adopted a resolution to approve a transfer agent agreement between
Investment Capital Company, Inc., an affiliate of Deutsche Bank AG, and the
Trust, replacing DST Systems Inc., effective November 22, 1999.

Under the advisory agreements with the Trust, DAMIs serves as the Adviser for
the Funds. For these services, the Adviser is entitled to a monthly fee at an
annual rate of each Fund's average daily net assets as follows:

<TABLE>
<S> <C>
International Select Equity 0.70%
European Equity 0.70%
International Small Cap Equity 1.00%
Emerging Markets Equity 1.00%
</TABLE>

The Adviser has contractually agreed to reduce its advisory fees and/or
reimburse each Fund to the extent necessary to limit the Fund's operating
expenses to a specified percentage of its average net assets as follows:

<TABLE>
<CAPTION>
Institutional Investment Premier
Class Class Class
------------- ---------- -------
<S> <C> <C> <C>
International Select Equity 1.25% 1.50% .90%
European Equity 1.25% 1.50% --
International Small Cap Equity 1.25% 1.50% --
Emerging Markets Equity 1.25% 1.50% --
</TABLE>

At its meeting held on November 18, 1999, the Board of Trustees approved a
proposal by the Adviser to change the Adviser fee waivers and/ or reimbursements
to limit the total operating expenses of the International Select Equity
Institutional Class shares and Investment Class shares to 1.25% and 1.50%,
respectively, and of the European Equity Institutional Class shares and
Investment Class shares to 1.25% and 1.50%, respectively, effective November 18,
1999.

By an Expense Limitation agreement dated November 2, 1999, between the Trust and
the Adviser, the Adviser has agreed to waive its fees and reimburse expenses to
each Fund in order to limit the total operating expenses of each Fund at the
above levels for a period of 16 months from October 31, 1999.

Certain officers and/or Trustees of the Trust are affiliated with the
Administrator or the Adviser.

ICC Distributors, Inc. (the "Distributor") serves as the distributor of shares
of the Funds pursuant to a distribution agreement with the Trust and assists in
the sale of shares of the Funds. The Adviser, and not the Trust, is responsible
for payment of any expenses or fees incurred in the marketing and distribution
of shares of the Trust. Prior to November 1, 1999, SEI Investments Distribution
Co. served as distributor of the funds.

The Trust, on behalf of each Fund, has adopted a service plan pursuant to which
each Fund that offers an Investment Class pays service fees at an aggregate
annual rate of up to 0.25% of the Fund's average daily net assets attributable
to the Investment Class. Service plan fees are payable to Service Organizations
that have agreements with the Trust, and are intended to compensate Service

--------------------------------------------------------------------------------

31
<PAGE>

International Equity Funds
------------------------------------------------------------------------------
Notes to Financial Statements

Organizations for providing personal services and/ or account maintenance
services to their customers who invest in Investment Shares.

During the period ended April 30, 2000, certain portfolios of the Trust
purchased securities from and sold securities to other portfolios of the Trust
or other accounts managed by the Adviser at market value.

4. Forward Foreign Currency Contracts

The International Funds may enter into forward foreign currency contracts for
hedging against portfolio positions denominated in foreign currencies as well as
for non-hedging purposes. Such contracts, which protect the value of the Fund's
investment securities against a decline in the value of the hedged currency, do
not eliminate fluctuations in the underlying prices of the securities. They
simply establish an exchange rate at a future date. Also, although such
contracts tend to minimize the risk of loss due to a decline in the value of a
hedged currency, at the same time they tend to limit any potential gain that
might be realized should the value of such foreign currency increase.

The following forward foreign currency contracts were outstanding at April 30,
2000:

Currency to In Unrealized
Maturity (Deliver)/ Exchange Appreciation/
Date Receive For (Depreciation)
------- ----------- -------- --------------

Emerging Markets Equity Fund
----------------------------
Foreign Currency Sales:
04/17/00 HKD (31,304) $4,000 $ (20)
--------
$ (20)
========
European Equity
---------------
Foreign Currency Sales:
05/25/00 EUR (1,317,743) $1,225,000 $ 24,003
05/25/00 EUR (1,314,942) 1,225,000 26,556
05/25/00 GBP (475,315) 750,000 9,500
--------
$ 60,059
========
Currency Legend
---------------
HKD Hong Kong Dollar
EUR Euro
GBP United Kingdom Pound

5. Investment Transactions

The cost of securities purchased and the proceeds from the sale of securities,
other than short-term investments and U.S. government securities, during the six
months ended April 30, 2000, were as follows:

Purchases Sales
------------ -----
International Select Equity $340,026,303 $221,345,634
European Equity 101,167,318 56,187,756
International Small Cap Equity 54,178,547 68,642,680
Emerging Markets Equity 26,975,658 14,765,924

For federal income tax purposes, the cost of securities owned, the aggregate
gross unrealized appreciation and depreciation and the net unrealized
appreciation (depreciation) on investments at April 30, 2000 for each Fund are
as follows:

Tax
Fund Cost
------ ------------
International Select Equity $223,650,474
European Equity 49,493,013
International Small Cap Equity 25,048,896
Emerging Markets Equity 153,924,473

Net
Unrealized
Appreciated Depreciated Appreciated/
Fund Securities Securities (Depreciated)
----- ----------- ----------- -------------
International Select
Equity $17,794,311 $(21,818,661) $(4,024,350)
European Equity 1,400,133 (6,855,694) (5,455,561)
International Small
Cap Equity 2,629,152 (3,120,744) 491,592
Emerging Markets
Equity 37,049,483 (14,755,051) 22,294,432

At April 30, 2000 the following Funds had available realized capital losses to
offset future net capital gains:

Expiration
Date
----------
Emerging Markets Equity $18,865,462 10/31/2006

-------------------------------------------------------------------------------
32
<PAGE>

Investment Trust
-------------------------------------------------------------------------------
Notes to Financial Statements

6. Concentration of Risks

Each Fund invests in securities of foreign issuers in various countries. These
investments may involve certain considerations and risks not typically
associated with investments in the United States, as a result of, among other
factors, the possibility of future political and economic developments and the
level of governmental supervision and regulation of securities markets in the
respective countries. The Emerging Markets Equity Fund invests in emerging
markets securities. Emerging markets are substantially smaller, less developed,
less liquid, and more volatile than the major securities markets in the United
States. Also, the ability of the issuers of debt securities held by the Funds to
meet their obligations may be affected by economic and political developments in
a specific country, industry, or region.

International Select Equity, European Equity, and International SmallCap Equity
may invest in Initial Public Offerings (IPO's), which may impact these fund's
performance.

7. Borrowing Agreements

By an agreement dated November 2, 1998, certain Funds of the Trust entered into
a Credit Agreement (the "Agreement") with the BankBoston, N.A. (the "Lender").
The maximum aggregate credit available to all the participating Funds under the
Agreement was approximately $50,000,000. The Agreement expires on February 27,
2001. Interest payments on borrowings are payable by the borrowing Funds on a
monthly basis at the federal funds rate plus 1.00% per annum and the borrowings
are payable on demand. The participating Funds are also subject to a commitment
fee of 0.10% per annum of the unused portion of the maximum aggregate credit
available under the Agreement. During the six months ended April 30, 2000, the
participating Funds incurred commitment fees under the Agreement which have been
allocated to the participating Funds based on their relative net assets during
the non-borrowing period. During the period ended April 30, 2000, the
International Select Equity Fund and the European Equity Growth Fund borrowed
under the Agreement at different times.

The Emerging Markets Equity Fund and International Small Cap Equity Fund do not
participate in the Agreement with BankBoston, N.A. In the event of an overdraft,
each of these Funds may execute a demand note with Brown Brothers Harriman & Co.
("BBH"), the Trust's custodian, to meet their short-term liquidity
requirements. Interest payment on borrowings under the BBH demand notes are
payable at the federal funds rate plus 2.00% and the borrowings are secured by
each borrowing Funds' assets and securities held in the custody of BBH for the
respective Fund. At April 30, 2000 there were no borrowings from BBH
outstanding.

Following is the summary of borrowings made under the Agreement with
BankBoston., N.A. and the Line of Credit facility with BBH:

Weighted Weighted
Maximum Average Average
Amount Balance Interest Interest
Fund Borrowed Outstanding Paid Rate
---- -------- ----------- -------- ---------
Credit Agreement:
International Select
Equity $ 6,500,000 3,684,545 $ 7,358 6.64%
European Equity 15,400,000 6,975,000 13,661 7.17%

Line of Credit:
Emerging Markets
Equity 11,396,315 2,462,390 11,668 8.26%

8. Subsequent Events

At the meeting of the Board of Trustees held on November 18, 1999, the Trustees:

i. Approved a proposal for a master/feeder structure (the "Master/Feeder
Structure") for the European Equity Growth Fund. Under the proposed
Master/Feeder Structure European Equity Growth Fund will invest all of its
investable assets in European Equity Portfolio, a series of newly created
Deutsche Investment Portfolios, an open-end investment company and portfolio
having substantially the same investment objective, policies and restrictions
as the Fund. A consent of the majority of the shareholders of Morgan Grenfell
European Equity Growth Fund to approve the proposed Master/Feeder Structure
was obtained on December 2, 1999.

--------------------------------------------------------------------------------
33
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<PAGE>

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<PAGE>

For information on how to invest, shareholder account information and current
price and yield information, please contact your relationship manager or write
to us at:

Deutsche Asset Management Service Center
P.O. Box 219210
Kansas City, MO 64121-9210
or call our toll-free number: 1-800-730-1313

This report must be preceded or accompanied by a current prospectus for the
Fund.

International Equity Funds CUSIP #61735K695
International Select Equity 61735K604
European Equity 61735K679
International Small Cap Equity 61735K307
Emerging Markets Equity 61735K406
Morgan Grenfell Investment Trust 61735K109
INTLEQSA (04/00)

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