<PAGE>
Deutsche Asset Management
Mutual Fund
Annual Report
October 31, 2000
Global Fixed Income
International Fixed Income
Each formerly a Morgan Grenfell Fund
A Member of the
Deutsche Bank Group [LOGO]
<PAGE>
Global and International Fixed Income Funds
--------------------------------------------------------------------------------
Table of Contents
<TABLE>
<S> <C>
Letter to Shareholders.............................. 3
Global and International Fixed Income
Schedules of Investments.......................... 8
Statements of Assets and Liabilities.............. 11
Statements of Operations.......................... 12
Statements of Changes in Net Assets............... 13
Financial Highlights.............................. 14
Notes to Financial Statements..................... 16
Report of Independent Accountants................. 22
Tax Information................................... 22
</TABLE>
__________________
The Fund is not insured by the FDIC and is
not a deposit, obligation of or guaranteed
byDeutsche Bank. The Fund is subject to
investment risks, including possible loss
of principal amount invested.
__________________
________________________________________________________________________________
2
<PAGE>
Global and International Fixed Income Funds
--------------------------------------------------------------------------------
Letter to Shareholders
We are pleased to present you with this annual report for Global Fixed Income
and International Fixed Income.
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 twelve-month period ended October 31, 2000.
Our continuing goal is to provide you with high-quality investment management
services across a broad range of specialized mutual funds. We thank you for
investing in our family of mutual funds. We appreciate your continued support
and confidence.
Sincerely,
/s/ Annette Fraser /s/ Ian Clarke
Annette Fraser and Ian Clarke
Portfolio Managers of
Global Fixed Income and
International Fixed Income
--------------------------------------------------------------------------------
International Fixed Income
. Global Fixed Income
. International Fixed Income
Market Review
Overall, global bonds benefited from reduced government issuance in the US and
Europe, which in turn prompted comparatively stronger performance at the long-
term end of the US and European yield curves. The Japanese bond market was
supported by domestic investors, despite a deteriorating fiscal position. Still,
this was a challenging period for the global bond markets.
The robust pace of US economic expansion was a factor the global bond markets
contended with for much of the annual period. Economic growth was broad based,
with both manufacturing and a buoyant consumer contributing. Another factor
impacting the global bond markets was rising oil prices and thus the heightened
potential for rising inflation. From below $24/barrel at the beginning of the
period, the price of oil reached a peak of just under $35/barrel in mid-
September.
In an attempt to quell rising inflation and unsustainably strong economic
growth, the US Federal Reserve Board raised interest rates by 1.25% through four
hikes during the fiscal year. Despite the momentum within the global economy,
the rise in the price of oil and the tightening labor market, the core rate of
inflation remained firmly under control. As the US economic growth rate
moderated, the bond markets responded favorably to evidence of further gains in
the productive capacity of its economy.
In the dollar bloc, the Canadian market maintained a negative yield spread for
almost the whole year, as the inflation differential between Canada and the US
remained supportive. More recently, the strong US Treasury market caused Canada
to underperform, moving the market back to a current positive yield spread of
0.05%. Australia struggled to perform well. This market was faced with continued
fears of ever-tighter monetary policy in response to a steady rise and
broadening of price pressures.
The euro market also benefited from an improving fiscal outlook. The receipts
generated by the auction of third generation telecommunications licenses
particularly boosted the fiscal outlook in Europe. The fundamental outlook was
also largely supportive. The rise in the price of oil and weakness of the euro
impacted only the headline rate of inflation, which peaked at 2.8%. In spite of
economic growth levels picking up in several European nations, the core rate of
inflation rose to only 1.5% across the region. The European Central Bank was
pro-active in reaching a "neutral" interest rate of 4.75%. A further boost to
the long-term end of the European bond markets was provided by the progress
governments have made in implementing structural reforms previously viewed as
impediments to growth across Europe. This government progress was especially
notable in Germany.
Greek bond yields converged closer to the core European markets through the
fiscal period. Greece achieved the economic criteria required to enable European
Monetary Union membership as of January 2001. Denmark had divergent performance.
It performed poorly during the months ahead of the referendum on EMU membership
in late September. Denmark then rallied upon the acknowledgment from both
domestic and international investors that its bond market offered strong
fundamental value. Sweden outperformed, as strong domestic investor sentiment
took yield levels lower. The Swedish economy enjoyed a period of robust economic
expansion and very low inflation.
Japanese bond yields remained relatively stable through the fiscal year. The
tightening of monetary policy from the "emergency rate" of 0% it had held for a
decade to 0.25% did little to reduce expectations that the long-awaited economic
revival may remain elusive.
________________________________________________________________________________
3
<PAGE>
Global and International Fixed Income Funds
--------------------------------------------------------------------------------
Letter to Shareholders
Emerging debt markets performed well over the period, due to strong global
growth and the general improvement in credit prospects within emerging markets.
The non-government credit sector performed poorly over the first half of the
fiscal year based on diminishing government supply that served to widen swap
spreads. However, since June, spreads have tightened due to the reshaping of the
government curve and as the spread between ten-year and thirty-year bonds
normalized.
The US dollar performed well against both the euro and the yen. The dollar
appreciated against the euro due to the perceived growth differentials early in
the period and to the strong advantage in terms of productivity. Also
underpinning the dollar were the flows of capital from Europe to the US.
Coordinated central bank intervention in late September helped to steady the
euro currency.
. Global Fixed Income
From a shorter-than-benchmark duration in the latter part of 1999, we steadily
moved to a longer-than-benchmark duration in the Fund and maintained that longer
duration for most of the fiscal year. Given the declining yield levels at the
longer end of the yield curve in many global bond markets, this strategy
benefited Fund performance for most of the annual period. In recent months,
longer-dated bonds in the US and Europe did not do as well as other areas of the
yield curve, and so this duration positioning then detracted from Fund
performance.
The Fund held positions primarily in the US and Europe in preference to Japan.
Within Europe, the portfolio was overweight in Greece, Denmark and Sweden rather
than the euro market and underweight in the UK. Value was added through exposure
to emerging markets and through currency positioning within Europe. An
overweight position in the Polish zloty was particularly beneficial. However,
exposure to credit markets and an underweight position in the US dollar versus
the euro caused the Fund to slightly underperform its benchmark. Global Fixed
Income produced a total annual return of -5.81% as compared to -5.08% for the
Salomon Smith Barney ("SSB") World Government Bond Index.
. International Fixed Income
From a shorter-than-benchmark duration in the latter part of 1999, we steadily
moved to a longer-than-benchmark duration in the Fund and maintained that longer
duration for most of the fiscal year. Given the declining yield levels at the
longer end of the yield curve in many global bond markets, this strategy
benefited Fund performance for most of the annual period. In recent months,
longer-dated bonds in Canada and Europe did not do as well as other areas of the
yield curve, and so this duration positioning then detracted from Fund
performance.
We maintained our preference for the European bond markets over Japan. Within
Europe, we focused exposure on the Greek, Danish and Swedish markets and
maintained a major position in the euro market. We underweighted the portfolio's
UK position relative to the Fund's benchmark. Value was added through currency
positioning within Europe, especially by an overweight position in the Polish
zloty. Exposure to credit markets and an overweight position in the euro against
dollar bloc currencies had a negative impact on the Fund that outweighed all of
these positive strategies. International Fixed Income produced a total annual
return of -10.19% as compared to -9.70% for the SSB World Government Bond Ex US
Index.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Cumulative Total Returns Average Annual Total Returns
Past Past Past Since Past Past Past Since
Periods ended October 31, 2000 1-year 3-years 5-years inception 1-year 3-years 5-years inception
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Global Fixed Income Institutional
Class/1/ (inception 1/4/94) (5.81)% 0.00% 10.15% 23.52% (5.81)% 0.00% 1.95% 3.14%
--------------------------------------------------------------------------------------------------------------------------------
SSB World Government Bond
Index/2/ (5.08)% 4.21% 12.67% 34.32%/4/ (5.08)% 1.38% 2.41% 4.41%/4/
--------------------------------------------------------------------------------------------------------------------------------
Lipper Global Income
Funds Average/3/ (0.80)% 2.44% 22.16% 32.39%/4/ (0.80)% 0.70% 3.88% 4.10%/4/
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
______________
/1/ Past performance is not indicative of future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost. These figures assume
the reinvestment of dividend and capital gain distributions. Performance
would have been lower during the specified periods if certain fees and
expenses had not been waived by the Fund.
/2/ The Salomon Smith Barney ("SSB") World Government Bond Index is an
unmanaged foreign securities index representing major international
government bond markets. Index returns do not reflect expenses, which have
been deducted from the Fund's returns.
/3/ Lipper figures represent the average of the total returns reported by all
of the mutual funds designated by Lipper Inc. as falling into the category
indicated. These figures do not reflect sales charges.
/4/ Benchmark returns are for the periods beginning December 31, 1993.
________________________________________________________________________________
4
<PAGE>
Global and International Fixed Income Funds
--------------------------------------------------------------------------------
Letter to Shareholders
Market Outlook
We believe global economic growth will slow, but that a "soft landing" will be
achieved, as core inflation measures remain muted. In our view, the primary
impact of higher oil prices will likely be felt on GDP growth rather than
inflation, as pricing power at the final goods level has remained extremely
weak. As a result, we maintain a generally positive view on the global bond
markets.
The US bond market, in our view, should benefit from a slowing of growth and a
loosening of the labor market. The question is whether inflation will be enough
for the Federal Reserve Board to ease interest rates in an attempt to maintain
growth. Also in doubt will be fiscal policy under a new administration.
In Canada, we see the potential for bond yields to outperform the US, as the
inflation environment is rather favorable and the Bank of Canada is less
concerned about capacity constraints than it was a few months ago. In Australia,
inflation prospects are less favorable, and we expect its central bank to
tighten monetary policy further, thereby constraining the performance of its
bond market.
We are optimistic about the economic outlook for Euroland, as both fiscal and
monetary policies are supportive for growth. However, we expect the spike in
energy prices to have some impact on core inflation and therefore expect short-
dated European bonds to remain volatile. Still, declining government bond supply
and further structural reform should continue to underpin the longer-term end of
the yield curve across Europe. Elsewhere, we maintain our favorable outlook for
Sweden's and Denmark's bond markets, but we think that Greece is trading close
to fair value. In the UK, moderating growth with low inflation should mean that
official interest rates remain unchanged. The primary investment opportunity is
likely to be in the long-term end of the yield curve, where investor interest
may focus increasingly on non-government bonds rather than gilts.
In Japan, we expect bond yields to remain within their well-established trading
range. However, near term, we think the market is vulnerable to supply concerns
and thus may trade toward the top of the trading range. The Bank of Japan is
unlikely to contemplate a further increase in interest rates until after next
spring, as the nation's economic recovery is still not broad based. Fiscal
policy remains the primary negative risk for the Japanese bond market.
As for credit, we see value in the US and euro credit markets at currently
higher spread levels. The UK credit market may come under pressure from higher
issuance in the fourth calendar quarter.
We believe that central banks have set a floor for the euro and will continue to
support the currency. Therefore, looking ahead, we believe that slower US
economic growth, combined with strong and steady European economic growth, will
benefit the euro. As for the yen, the trade surplus is a source of ongoing
support for the currency, although this is offset by expectations of likely Bank
of Japan intervention. If, as we believe, consumption remains weak and there is
no major disruption to US or European growth, the trade balance is unlikely to
fall substantially and hence stability of the yen should be retained.
The Polish zloty remains attractive. Short-term rates have been pushed higher as
a result of greater than expected inflation. Confidence remains strong that the
inflation and current account profile of Poland will improve and that foreign
direct investment flows will be sufficiently strong to fund the deficit.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Cumulative Total Returns Average Annual Total Returns
Past Past Past Since Past Past Past Since
Periods ended October 31, 2000 1-year 3-years 5-years inception 1-year 3-years 5-years inception
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
International Fixed Income Institutional
Class/1/(inception 3/15/94) (10.19)% (3.08)% 4.38% 18.97% (10.19)% (1.04)% 0.86% 2.65%
-----------------------------------------------------------------------------------------------------------------------------------
SSB World Government Bond
Ex US Index/2/ (9.70)% (1.16)% 3.90% 26.92%/4/ (9.70)% (0.39)% 0.77% 3.69%/4/
-----------------------------------------------------------------------------------------------------------------------------------
Lipper International Income
Funds Average/3/ (5.23)% 1.69% 14.92% 31.01%/4/ (5.23)% 0.41% 2.57% 4.02%/4/
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
_______________
/1/ Past performance is not indicative of future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost. These figures assume
the reinvestment of dividend and capital gain distributions. Performance
would have been lower during the specified periods if certain fees and
expenses had not been waived by the Fund.
/2/ The Salomon Smith Barney ("SSB") World Government Bond Ex US Index is an
unmanaged foreign securities index representing major international
government bond markets other than the United States. Index returns do not
reflect expenses, which have been deducted from the Fund's returns.
/3/ Lipper figures represent the average of the total returns reported by all
of the mutual funds designated by Lipper Inc. as falling into the category
indicated. These figures do not reflect sales charges.
/4/ Benchmark returns are for the periods beginning March 31, 1994.
________________________________________________________________________________
5
<PAGE>
Global and International Fixed Income Funds
--------------------------------------------------------------------------------
Performance Comparison
GLOBAL FIXED INCOME INSTITUTIONAL CLASS/1/,
SSB WORLD GOVERNMENT BOND INDEX AND
LIPPER GLOBAL INCOME FUNDS AVERAGE
GROWTH OF A $250,000 INVESTMENT (SINCE JANUARY 4, 1994)/2/
1/4/94 252,000 252,025 253,078
10/31/94 246,250 258,727 238,999
10/31/95 280,325 298,086 265,528
10/31/96 298,900 314,085 298,167
10/31/97 308,825 322,300 316,472
10/31/98 341,500 362,723 329,532
10/31/99 327,850 353,804 330,752
10/31/00 308,800 335,874 331,454
===== Global Fixed Income Institutional Class $308,800
_____ SSB World Government Bond Index $335,874
----- Lipper Global Income Funds Average $331,454
Average Annual Total Return for the Periods Ended October 31, 2000
One-Year (5.81)% Three-Year 0.00% Five-Year 1.95% Since 1/4/94/2/ 3.14%
________________________________________________________________________________
/1/ On February 28, 2000 the Institutional Shares were renamed the
Institutional Class.
/2/ The Fund's inception date.
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. These figures assume the
reinvestment of dividend and capital gain distributions. Performance would have
been lower during the specified periods if certain fees and expenses had not
been waived by the fund.
The SSB World Government Bond Index is an unmanaged foreign securities index
representing major international government bond markets. Lipper figures
represent the average of the total returns reported by all the mutual funds
designated by Lipper Inc. as falling into the category indicated.
Benchmark returns are for the period beginning December 31, 1993.
________________________________________________________________________________
6
<PAGE>
Global and International Fixed Income Funds
--------------------------------------------------------------------------------
Performance Comparison
INTERNATIONAL FIXED INCOME INSTITUTIONAL CLASS1,
SSB WORLD GOVERNMENT BOND EX
U.S INDEX, AND LIPPER INTERNATIONAL INCOME FUNDS AVERAGE
GROWTH OF A $250,000 INVESTMENT (SINCE MARCH 15, 1994)2
3/15/94 251,750 250,000 250,000
10/31/94 248,500 265,130 252,140
10/31/95 284,925 305,370 289,263
10/31/96 304,375 321,994 318,789
10/31/97 306,850 320,976 328,325
10/31/98 343,600 362,078 358,817
10/31/99 331,175 351,289 350,400
10/31/00 297,425 317,226 327,525
==== International Fixed Income Institutional Class $297,425
____ SSB World Government Bond EX US Index $317,226
---- Lipper International Income Funds Average $327,525
Average Annual Total Return for the Periods Ended October 31, 2000
One-Year (10.19)% Three-Year (1.04)% Five-Year 0.86% Since 3/15/94/2/ 2.65%
--------------------------------------------------------------------------------
/1/ On February 28, 2000 the Institutional Shares were renamed the
Institutional Class.
/2/ The Fund's inception date.
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. These figures assume the
reinvestment of dividend and capital gain distributions. Performance would have
been lower during the specified periods if certain fees and expenses had not
been waived by the fund.
The SSB World Government Bond Ex US Index is an unmanaged foreign securities
index representing major international government bond markets other than the
United States. Lipper figures represent the average of the total returns
reported by all the mutual funds designated by Lipper Inc. as falling into the
category indicated.
Benchmark returns are for the period beginning March 31, 1994.
________________________________________________________________________________
7
<PAGE>
Global Fixed Income
--------------------------------------------------------------------------------
Schedules of Investments October 31, 2000
Face
Amount/1/ Security Value
FOREIGN BONDS - 61.77%
CANADA - 2.56%
Government of Canada
320,000 5.500%, 6/1/10............. $ 204,465
-----------
DENMARK - 3.83%
Kingdom of Denmark
1,850,000 8.000%, 5/15/03............ 222,785
700,000 6.000%, 11/15/09........... 82,358
-----------
305,143
-----------
EURO - 28.06%
Belgium Kingdom
410,000 5.750%, 3/28/08............ 353,938
Federal Republic of Germany
369,500 6.250%, 1/4/24............. 335,093
Government of the
Netherlands
521,000 6.500%, 4/15/03............ 454,172
Government of Spain
178,000 6.000%, 1/31/29............ 153,778
Government of France
240,000 4.000%, 4/25/09........... 185,432
Household Finance Corp.
125,000 6.250%, 9/21/05............ 106,188
Republic of Italy
510,000 6.000%, 11/1/07............ 444,274
239,000 6.000%, 5/1/31............. 204,097
-----------
2,236,972
-----------
GREECE - 4.26%
Republic of Greece
25,000,000 8.600%, 3/26/08............ 72,160
105,000,000 6.300%, 1/29/09............ 267,643
-----------
339,803
-----------
JAPAN - 18.48%
Government of Japan
58,000,000 0.080%, 12/22/03........... 532,165
72,000,000 1.300%, 11/21/05........... 665,567
35,000,000 1.500%, 3/20/19............ 275,202
-----------
1,472,934
-----------
SWEDEN - 4.58%
Government of Sweden
3,700,000 5.000%, 1/28/09............ 365,281
-----------
Total Foreign Bonds
(Cost $3,004,998)...................... 4,924,598
-----------
UNITED STATES INVESTMENTS -.20.71%
UNITED STATES NOTES & BONDS.- 11.20%
US Treasury Bond
160,000 8.125%, 8/15/19............ $ 197,650
395,000 6.500%, 11/15/26........... 422,388
US Treasury Note
270,000 6.000%, 8/15/09............ 272,804
-----------
Total US Treasury Notes & Bonds
(Cost $869,186)........................ 892,842
-----------
ASSET-BACKED SECURITIES - 9.51%
Capital One Master Trust
270,000 5.430%, 1/15/07............ 260,169
Erac USA Finance Company
180,000 6.625%, 5/15/06............ 168,559
First Union Corp., Reg. D
335,000 6.950%, 11/1/04............ 330,029
-----------
Total Asset-Backed Securities
(Cost $773,717)........................ 758,757
-----------
Total United States Investments
(Cost $1,642,903)...................... 1,651,599
-----------
SOVEREIGN EMERGING
MARKETS BONDS - 8.14%
BRAZIL - 2.16%
Republic of Brazil
USD 88,000 7.625%, 4/15/06............ 80,197
USD 123,141 8.000%, 4/15/14............ 91,957
-----------
172,154
-----------
COLUMBIA - 0.60%
Republic of Columbia
USD 60,000 9.750%, 4/23/09............ 48,000
-----------
MEXICO - 1.47%
United Mexican States,
USD 735,000 0.000%, 6/30/03/2/......... --
USD 100,000 11.500%, 5/15/26........... 117,250
-----------
117,250
-----------
NETHERLANDS - 0.92%
Koninklijke KPN NV
USD 75,000 8.000%, 10/1/10............ 73,634
-----------
QATAR - 1.21%
State of Qatar, Reg. S
USD 100,000 9.750%, 6/15/30............ 96,157
-----------
RUSSIA - 1.78%
Russian Federation, Reg. S
USD 180,000 8.750%, 7/24/05............ 141,525
-----------
See Notes to Financial Statements.
--------------------------------------------------------------------------------
8
<PAGE>
Global Fixed Income
--------------------------------------------------------------------------------
Schedules of Investments October 31, 2000
Security......................... Value
Total Sovereign Emerging Market Bonds
(Cost $630,670)........................ $ 648,720
-----------
Total Investments
(Cost $7,527,382).......... 90.62% 7,224,917
Other Assets in Excess
of Liabilities........... 9.38 747,541
------ -----------
Total Net Assets............. 100.00% $ 7,972,458
====== ===========
______________________________________________________
/1/ In local currency unless otherwise indicated.
/2/ Non income producing security.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
9
<PAGE>
International Fixed Income
--------------------------------------------------------------------------------
Schedules of Investments October 31, 2000
Face
Amount/1/ Security Value
FOREIGN BONDS - 88.70%
CANADA - 6.63%
Government of Canada
3,130,000 5.500%, 6/1/10.............. $ 1,999,921
1,350,000 5.750%, 6/1/29.............. 893,077
-----------
2,892,998
-----------
DENMARK - 3.57%
Kingdom of Denmark
9,540,000 7.000%, 12/15/04............ 1,145,944
3,500,000 6.000%, 11/15/09............ 411,790
-----------
1,557,734
-----------
EURO - 43.19%
Belgium Kingdom
2,220,000 7.250%, 4/29/04............. 1,993,606
Federal Republic of Germany
2,080,000 6.500%, 10/14/05............ 1,862,308
1,980,000 5.250%, 1/4/08.............. 1,680,762
1,900,000 3.750%, 1/4/09.............. 1,458,292
2,180,324 6.250%, 1/4/24.............. 1,977,295
Government of the
Netherlands
2,250,000 6.000%, 1/15/06............. 1,968,077
Government of Spain
1,000,000 6.000%, 1/31/08............. 870,383
1,224,000 6.000%, 1/31/29............. 1,057,441
Government of France
1,540,000 5.250%, 4/25/08............. 1,302,246
850,000 4.000%, 4/25/09............. 656,739
Household Finance Corp.
1,900,000 5.125%, 6/24/09............. 1,454,188
Republic of Italy
1,030,000 5.75%, 9/15/02.............. 880,741
1,021,000 6.000%, 5/1/31.............. 871,895
Standard Chartered Cap Trust
1,000,000 8.160%, 3/29/49............. 819,381
-----------
18,853,354
-----------
GREECE - 3.96%
Republic of Greece
254,000,000 8.600%, 3/26/08............. $ 733,144
390,000,000 6.300%, 1/29/09............. 994,102
-----------
1,727,246
-----------
JAPAN - 24.58%
Government of Japan
70,000,000 0.900%, 2/20/04............. 644,167
635,000,000 0.800%, 5/20/05............. 5,757,359
215,000,000 1.300%, 11/21/05............ 1,984,261
137,000,000 1.500%, 3/20/19............. 1,080,898
161,000,000 1.500%, 3/20/19............. 1,265,031
-----------
10,731,716
-----------
SWEDEN - 4.70%
Government of Sweden
20,800,000 5.000%, 1/28/09............. 2,053,470
-----------
UNITED KINGDOM - 2.07%
Abbey National
620,000 7.500%, 9/28/10............. 905,360
-----------
Total Foreign Bonds
(Cost $41,089,802)...................... 38,721,878
-----------
Total Investments
(Cost $41,089,802)............. 88.70% 38,721,878
------ -----------
Other Assets in Excess
of Liabilities................. 11.30 4,935,163
------ -----------
Total Net Assets................. 100.00% $43,657,041
====== ===========
______________________________________________________
/1/ In local currency unless otherwise indicated.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
10
<PAGE>
Global and International Fixed Income Funds
--------------------------------------------------------------------------------
Statements of Assets and Liabilities October 31, 2000
<TABLE>
<CAPTION>
Global International
Fixed Fixed
Income Income
<S> <C> <C>
Assets
Investment at value/1/.................................................................... $ 7,224,917 $38,721,878
Cash...................................................................................... 366,331 1,124,965
Foreign currency/1/....................................................................... 312,021 2,327,895
Receivable for capital shares sold........................................................ 123 47,718
Receivable for securities sold............................................................ 76,184 2,670,906
Interest receivable....................................................................... 173,077 973,212
Due from advisor.......................................................................... 1,174 3,149
Net unrealized appreciation on forward currency contracts................................. 52,145 673,702
----------- -----------
Total Assets................................................................................. 8,205,972 46,543,425
----------- -----------
Liabilities
Payable for securities purchased.......................................................... 82,081 2,152,461
Payable for capital shares purchased...................................................... 49,033 --
Due to administrator...................................................................... 5,675 18,799
Due to custodian.......................................................................... 14,965 16,980
Net unrealized depreciation on forward foreign
currency contracts...................................................................... 55,604 673,672
Accrued expenses and other................................................................ 26,156 24,472
----------- -----------
Total Liabilities............................................................................ 233,514 2,886,384
----------- -----------
Net Assets................................................................................... $ 7,972,458 $43,657,041
=========== ===========
Composition of Net Assets
Paid-in capital........................................................................... $10,587,770 $46,624,688
Undistributed net investment loss......................................................... (3,276) (39,144)
Accumulated net realized loss from investments and foreign
currency transactions................................................................... (2,297,624) (531,405)
Net unrealized depreciation on investments and
foreign currencies...................................................................... (314,412) (2,397,098)
----------- -----------
Net Assets................................................................................... $ 7,972,458 $43,657,041
=========== ===========
Shares Outstanding ($0.001 par value per share, unlimited
number of shares of beneficial interest authorized)....................................... 957,231 5,117,455
=========== ===========
Net Asset Value,Offering and Redemption Price Per Share
(net assets divided by shares outstanding)
Institutional Class/2/.................................................................... $ 8.33 $ 8.53
=========== ===========
</TABLE>
--------------------------------------------------------------------------------
/1/ Cost of Investments and Foreign Currency Investments Foreign Currency
----------------------------------------- ----------- ----------------
Global Fixed Income Fund................... $ 7,527,382 $ 313,809
International Fixed Income Fund............ 41,089,802 2,327,125
/2/ On February 28, 2000 the Institutional Shares were renamed the Institutional
Class.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
11
<PAGE>
Global and International Fixed Income Funds
--------------------------------------------------------------------------------
Statements of Operations For the year ended October 31, 2000
<TABLE>
<CAPTION>
Global International
Fixed Fixed
Income Income
<S> <C> <C>
Investment Income
Interest........................................................................ $ 713,399 $ 2,215,678
Less: Foreign taxes withheld.................................................... (4,674) (5,074)
----------- -------------
Total Investment Income........................................................... 708,725 2,210,604
----------- -------------
Expenses
Investment advisory fee......................................................... 90,560 256,909
Administration fees............................................................. 45,280 128,454
Custody fee..................................................................... 59,184 71,247
Professional fees............................................................... 59,202 61,693
Registration and filing fees.................................................... 17,301 12,955
Printing fees................................................................... 14,369 9,989
Interest expense................................................................ 10,699 8,929
Trustees' fees.................................................................. 6,075 6,314
Miscellaneous................................................................... 2,051 --
----------- -------------
Total Expenses.................................................................... 304,721 556,490
----------- -------------
Less: Fee Waivers or Expense Reimbursements....................................... (185,349) (272,190)
----------- -------------
Net Expenses...................................................................... 119,372 284,300
----------- -------------
Net Investment Income............................................................. 589,353 1,926,304
----------- -------------
Realized and Unrealized Gain (Loss) on Investments and
Foreign Currency Transactions
Net realized loss from:
Investment transactions........................................................ (1,254,319) (476,554)
Foreign currency transactions.................................................. (2,194,252) (4,502,524)
Net change in unrealized appreciation/depreciation of:
Investments.................................................................... 1,917,588 (1,987,811)
Foreign currencies............................................................. (240,419) (283,117)
----------- -------------
Net Realized and Unrealized Loss on Investments and
Foreign Currencies.............................................................. (1,771,402) (7,250,006)
----------- -------------
Net Decrease in Net Assets from Operations........................................ $(1,182,049) $ (5,323,702)
=========== =============
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
12
<PAGE>
Global and International Fixed Income Funds
--------------------------------------------------------------------------------
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
International
Global Fixed Income Fixed Income
For the years ended October 31,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
from Operations
Net investment income.............................. $ 589,353 $ 3,729,038 $ 1,926,304 $ 803,217
Net realized gain (loss) on investment and
foreign currency transactions..................... (3,448,571) (1,187,881) (4,979,078) 154,264
Net change in unrealized appreciation/
depreciation on investments and
foreign currencies................................ 1,677,169 (4,901,381) (2,270,928) (1,213,006)
------------ ------------ ------------ -------------
Net Decrease in Net Assets from Operations........... (1,182,049) (2,360,224) (5,323,702) (255,525)
------------ ------------ ------------ -------------
Distributions to Shareholders:
Institutional Class:/1/
Net investment income............................. (2,888,699) (3,729,333) (1,140,075) (884,825)
Return of capital................................. (761,556) -- (365,008) --
Net realized gain from investment
transactions...................................... -- (2,677,667) -- (656,245)
------------ ------------ ------------ -------------
Total Distributions.................................. (3,650,255) (6,407,000) (1,505,083) (1,541,070)
------------ ------------ ------------ -------------
Capital Share Transactions:
Institutional Class:/1/
Proceeds from sales of shares..................... 786,551 4,360,407 5,587,539 41,101,893
Dividend reinvestments............................ 2,530,131 4,933,778 1,259,549 1,124,046
Cost of shares redeemed........................... (42,731,555) (6,728,948) (12,357,964) (3,953,447)
------------ ------------ ------------ -------------
Increase (decrease) in net assets
from capital share transactions................... (39,414,873) 2,565,237 (5,510,876) 38,272,492
------------ ------------ ------------ -------------
Total Increase/(Decrease) in Net Assets.............. (44,247,177) (6,201,987) (12,339,661) 36,475,897
Net Assets
Beginning of year.................................. 52,219,635 58,421,622 55,996,702 19,520,805
------------ ------------ ------------ -------------
End of year........................................ $ 7,972,458 $ 52,219,635 $ 43,657,041 $ 55,996,702
============ ============ ============ =============
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ On February 28, 2000 the Institutional Shares were renamed the Institutional
Class.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
13
<PAGE>
Global and International Fixed Income Funds
--------------------------------------------------------------------------------
Financial Highlights
GLOBAL FIXED INCOME INSTITUTIONAL CLASS/1/
<TABLE>
<CAPTION>
For the years ended October 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value, Beginning of Period................. $ 9.72 $ 11.36 $ 10.84 $ 11.26 $ 10.99
--------- --------- --------- --------- ---------
Income from Investment Operations:
Net investment income.............................. -- 0.68 0.63 0.35 0.59
Net realized and unrealized gain (loss) on
investments and foreign currencies................ (0.52) (1.07) 0.45 0.01 0.12
--------- --------- --------- --------- ---------
Total from Investment Operations..................... (0.52) (0.39) 1.08 0.36 0.71
--------- --------- --------- --------- ---------
Distributions to Shareholders:
Net investment income.............................. (0.87) (0.73) (0.34) (0.50) (0.37)
Realized capital gain from investment
transactions...................................... -- (0.52) (0.22) (0.28) (0.07)
--------- --------- --------- --------- ---------
Total distributions................................ (0.87) (1.25) (0.56) (0.78) (0.44)
--------- --------- --------- --------- ---------
Net Asset Value, End of Period....................... $ 8.33 $ 9.72 $ 11.36 $ 10.84 $ 11.26
========= ========= ========= ========= =========
Total Investment Return.............................. (5.81)% (3.91)% 10.58 % 3.34 % 6.60 %
Supplemental Data and Ratios:
Net Assets at End of Period (000 Omitted)............ $ 7,972 $ 52,220 $ 58,422 $ 42,180 $ 149,917
Ratio of Expenses to Average Net Assets
(Including Expense Limitations
and Including Interest Expense).................... 0.66% -- % -- % -- % -- %
Ratio of Expenses to Average Net Assets
(Excluding Expense Limitations
and Including Interest Expense).................... 1.68% 1.13 % 0.77 % 0.77 % 0.79 %
Ratio of Expenses to Average Net Assets
(Including Expense Limitations and
Excluding Interest Expense)........................ 0.60% 0.60 % 0.60 % 0.65 % 0.75 %
Ratio of Net Investment Income to Average
Net Assets......................................... 3.25% 6.67 % 4.82 % 5.30 % 5.39 %
Ratio of Net Investment Income to Average
Net Assets (Excluding Expense Limitations)......... 2.23% 6.14 % 4.65 % 5.18 % 5.35 %
Portfolio Turnover................................... 181% 161 % 182 % 179 % 223 %
----------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ On February 28, 2000 the Institutional Shares were renamed the
Institutional Class.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
14
<PAGE>
Global and International Fixed Income Funds
--------------------------------------------------------------------------------
Financial Highlights
INTERNATIONAL FIXED INCOME INSTITUTIONAL CLASS/1/
<TABLE>
<CAPTION>
For the years ended October 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value, Beginning of Period.............. $ 9.76 $ 10.95 $ 10.16 $ 11.30 $ 11.34
-------- ------- ------- ------- -------
Income from Investment Operations:
Net investment of income......................... 0.36 0.21 0.51 0.20 0.86
Net realized and unrealized gain (loss) on
investments and foreign currencies.............. (1.33) (0.56) 0.65 (0.11) (0.12)
-------- ------- ------- ------- -------
Total from Investment Operations.................. (0.97) (0.35) 1.16 0.09 0.74
-------- ------- ------- ------- -------
Distributions to Shareholders:
Net investment income............................ (0.26) (0.48) (0.27) (0.64) (0.66)
Realized capital gain from investment
transactions.................................... -- (0.36) (0.10) (0.59) (0.12)
-------- ------- ------- ------- -------
Total distributions.............................. (0.26) (0.84) (0.37) (1.23) (0.78)
-------- ------- ------- ------- -------
Net Asset Value, End of Period.................... $ 8.53 $ 9.76 $ 10.95 $ 10.16 $ 11.30
======== ======= ======= ======= =======
Total Investment Return........................... (10.19)% (3.53)% 11.87% 0.82% 6.82%
Supplemental Data and Ratios:
Net Assets at End of Period (000 Omitted)......... $ 43,657 $55,997 $19,521 $27,937 $21,155
Ratio of Expenses to Average Net Assets
(Including Expenses Limitations
and Including Interest Expense).................. 0.55% --% --% --% --%
Ratio of Expenses to Average Net Assets
(Excluding Expense Limitations
and Including Interest Expense).................. 1.08% 1.70% 1.08% 1.06% 1.03%
Ratio of Expenses to Average Net Assets
(Including Expenses Limitations and
Excluding Interest Expense)...................... 0.55% 0.55% 0.57% 0.65% 0.75%
Ratio of Net Investment Income to Average
Net Assets....................................... 3.75% 3.53% 4.36% 5.00% 5.41%
Ratio of Net Investment Income to Average
Net Assets (Excluding Expense Limitations)....... 3.22% 2.38% 3.85% 4.59% 5.13%
Portfolio Turnover................................ 181% 140% 181% 174% 235%
</TABLE>
--------------------------------------------------------------------------------
/1/On February 28, 2000 the Institutional Shares were renamed the
Institutional Class.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
15
<PAGE>
Global and International Fixed Income Funds
--------------------------------------------------------------------------------
Notes to Financial Statements
Note 1--Organization and Significant Accounting Policies
A. 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. The Trust currently consists of fifteen separate investment portfolios
(collectively, the "Funds"). The accompanying financial statements and notes
thereto relate to Global Fixed Income and International Fixed Income (the
"Funds"), formerly Morgan Grenfell Global Fixed Income Fund and Morgan Grenfell
International Fixed Income Fund, respectively. The Funds' prospectuses provide
a description of each Fund's investment objectives, policies and strategies.
B. Valuation of Securities
Each Fund's investments listed or traded on national stock exchanges or other
domestic or foreign exchanges are valued based on the closing price of the
security traded on that exchange prior to the time when each Fund's assets are
valued. Short-term debt securities are valued at market value until such time as
they reach a remaining maturity of 60 days, whereupon they are valued at
amortized cost using their value on the 61st day. All other securities and other
assets are valued at their fair value as determined in good faith under
procedures established by and under the general supervision of the Trustees.
C. Securities Transactions and Interest Income
Securities transactions are accounted for on a trade date basis. Dividend
income, less foreign taxes withheld, if any, is recorded on the ex-dividend date
or upon receipt of ex-dividend notification in the case of certain foreign
securities. Interest income is recorded on the accrual basis and includes
amortization of premium and accretion of discount on investments. Expenses are
recorded as incurred. Realized gains and losses from securities transactions are
recorded on the identified cost basis.
D. Distributions
It is each Fund's policy to declare and distribute dividends annually to
shareholders from net investment income. Dividends and distributions payable to
shareholders are recorded by each Fund on the ex-dividend date. Distributions of
net realized short-term and long-term capital gains, if any, earned by each Fund
are made annually to the extent they exceed capital loss carryforwards.
E. Repurchase Agreements
Each Fund may enter into repurchase agreements with financial institutions
deemed to be creditworthy by the Fund's investment adviser, subject to the
seller's agreement to repurchase such securities at a mutually agreed upon
price. Securities purchased subject to repurchase agreements are deposited with
the respective Fund's custodian, and pursuant to the terms of the repurchase
agreement must have an aggregate market value greater than or equal to the
repurchase price plus accrued interest at all times. If the value of the
underlying securities falls below the value of the repurchase price plus accrued
interest, the respective Fund requires the seller to deposit additional
collateral by the next business day. If the request for additional collateral is
not met, or the seller defaults on its repurchase obligation, the respective
Fund maintains the right to sell the underlying securities at market value and
may claim any resulting loss against the seller. However, in the event of a
default or bankruptcy by the seller, realization and/or retention of the
collateral may be subject to legal proceedings.
Each Fund may enter into tri-party repurchase agreements with broker-dealers and
domestic banks. The third party, which is the broker's custodial bank, holds the
collateral in a separate account until the repurchase agreement matures. The
agreement ensures that the collateral's market value, including any accrued
interest, is adequate to cover the agreement if the broker defaults.
F. Foreign Currency Transactions
The books and records of the Trust are maintained in US dollars. All assets and
liabilities initially expressed in foreign currencies are converted into U.S.
dollars at prevailing exchange rates. Purchases and sales of investment
securities, dividend and interest income and certain expenses are translated at
the rates of exchange prevailing on the respective dates of such transactions.
The International 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
International 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.
________________________________________________________________________________
16
<PAGE>
Global and International Fixed Income Funds
--------------------------------------------------------------------------------
Notes to Financial Statements
The International 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.
G. Forward Foreign Currency Contracts
Each Fund may enter into forward foreign currency contracts for the purpose of
settling specific purchases or sales of securities denominated in a foreign
currency or with respect to the Fund's investments. The net US dollar value of
foreign currency underlying all contractual commitments held by each Fund and
the resulting unrealized appreciation or depreciation are determined using
prevailing exchange rates. With respect to forward foreign currency contracts,
losses in excess of amounts recognized in the Statement of Assets and
Liabilities may arise due to changes in the value of the foreign currency or if
the counterparty does not perform under the contract.
H. Federal Income Taxes
It is each Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and distribute substantially
all of its taxable income to shareholders. Therefore, no federal income tax
provision is required. Each Fund may periodically make reclassifications among
certain of its capital accounts as a result of differences in the
characterization and allocation of certain income and capital gain distributions
determined annually in accordance with federal tax regulations that may differ
from 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 or accumulated net realized gain, as appropriate, in the period that the
differences arise. Accordingly, permanent differences as of October 31, 2000
have been primarily attributable to return of capital allocations, net operating
losses, and foreign currency transactions, and have been reclassified to the
following accounts.
Undistributed Accumulated
Net Investment Net Realized Paid-In
Income (Loss) Gains (Losses) Capital
-------------- -------------- ------------
International Fixed
Income Fund ($1,352,818) $4,502,524 ($3,149,706)
Global Fixed Income
Fund 347,348 2,194,253 (2,541,601)
The International 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
International Funds accrue such taxes when the related income is or gains are
earned.
Global Fixed Income has capital loss carryovers of $975,149 and $1,314,617,
expiring October 31, 2007 and October 31, 2008, respectively.
International Fixed Income has capital loss carryovers of $43,169 and $51,251,
expiring October 31, 2007 and October 31, 2008, respectively.
I. Cash
Deposits held at Brown Brother's Harriman ("BBH"), the Fund's custodian, in a
variable rate account are classified as cash. At October 31, 2000 the interest
rate was 6.03%, which resets on a periodic basis. Amounts on deposit are
generally available on the same business day.
J. 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.
K. 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.
L. Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles in the United States requires management to make estimates
and assumptions that affect the reported amounts in the financial statements.
Actual results could differ from those estimates.
Note 2--Fees and Transactions with Affiliates
By an agreement dated August 27, 1998, the Trust entered into an administration
agreement with Deutsche Asset Management, Inc. ("DeAM, Inc."), formerly Morgan
Grenfell, Inc. (the "Administrator"), an affiliate of
________________________________________________________________________________
17
<PAGE>
Global and International Fixed Income Funds
--------------------------------------------------------------------------------
Notes to Financial Statements
Deutsche BankAG, pursuant to which the Administrator will receive on a monthly
basis a fee at an annual rate of 0.25% based on the average daily net assets of
each Fund.
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 Fund's operations. Fees for services rendered by the
accounting agent and the transfer agent are paid by the Administrator and not
the Fund. Effective November 22, 1999 the Trust has entered into an agreement
with Investment CompanyCapital Corp. ("ICCC"), an indirect wholly owned
subsidiary of Deutsche Bank AG, to provide transfer agency services to the
Trust, replacing DST Systems, Inc.
Under the advisory agreement with the Trust, Deutsche Asset Management
Investment Services Ltd. (DeAMIS") is the Adviser to these Funds. Under the
agreement, DeAMIS receives on a monthly basis, a fee at an annual rate based on
the average daily net assets of each Fund as follows:
Global Fixed Income 0.50%
International Fixed Income 0.50%
The Adviser has contractually agreed to reduce their advisory fees and reimburse
each Fund through February 28, 2002, to the extent necessary, to limit each
Fund's operating expenses to a specified percentage of its average daily net
assets as follows:
Global Fixed Income 0.60%
International Fixed Income 0.55%
Certain officers and/or Trustees of the Trust are affiliated with the
Administrator or the Advisers. These people are not compensated by the Trust for
serving in this capacity.
ICC Distributors, Inc., a non-affiliated company, provides distribution services
to the Fund.
On October 31, 2000 the Funds were participants in a revolving credit facility
with Fleet National Bank in the amount of $50,000,000, which expires on February
27, 2001. A commitment fee on the average daily amount of the available
commitment is payable on a quarterly basis and apportioned among all
participants based on net assets. During the year ended October 31, 2000, the
participating Funds incurred commitment fees under the agreement which have been
allocated to each fund based on their relative net assets. The following is a
summary of borrowings made during the year ended October 31, 2000:
Weighted Weighted
Maximum Average Average
Amount Balance Interest Interest
Borrowed Outstanding Paid Rate
-------- ----------- -------- --------
Global Fixed Income $7,320,000 $1,995,138 $10,699 5.45%
International Fixed
Income 4,790,000 2,359,222 8,929 7.70%
Note 3--Purchases and Sales of Investment Securities
The aggregate cost of purchases and proceeds from sales of investments, other
than short-term obligations, for the year ended October 31, 2000, were as
follows:
Purchases Sales
--------- -----
Global Fixed Income $31,195,208 $68,501,009
International Fixed Income 85,417,740 82,851,225
For federal income tax purposes, the tax basis of investments held, aggregate
gross unrealized appreciation and aggregate gross unrealized depreciation for
all investments were as follows on October 31, 2000:
Tax Unrealized Unrealized
Cost Appreciation Depreciation
---- ------------ ------------
Global Fixed Income 7,535,240 $67,319 $ 377,642
International Fixed Income 41,532,331 86,410 2,896,863
________________________________________________________________________________
18
<PAGE>
Global and International Fixed Income Funds
--------------------------------------------------------------------------------
Notes to Financial Statements
Note 4--Capital Share Transactions
At October 31, 2000, there were an unlimited number of shares authorized.
Transactions in shares during the year were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 2000 October 31, 1999
----------------------------- --------------------------
Shares Amount Shares Amount
----------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Global Fixed Income
Shares Sold 85,018 $ 786,551 441,783 $ 4,360,407
Reinvestment of Distributions 286,538 2,530,131 485,608 4,933,778
Shares Redeemed (4,782,344) (42,731,555) (701,109) (6,728,948)
----------- ------------ ---------- -----------
Increase (Decrease) in Capital Shares (4,410,788) $(39,414,873) 226,282 $ 2,565,237
=========== ============ ========== ===========
International Fixed Income
Shares Sold 622,553 $ 5,587,539 4,246,787 $41,101,893
Reinvestment of Distributions 133,568 1,259,549 110,092 1,124,046
Shares Redeemed (1,377,309) (12,357,964) (401,212) (3,953,447)
----------- ------------ ---------- -----------
Increase (Decrease) in Capital Shares (621,188) $ (5,510,876) 3,955,667 $38,272,492
=========== ============ ========== ===========
</TABLE>
Note 5--Open Forward Foreign Currency Contracts
On October 31, 2000, the Global Fixed Income Fund had the following open forward
foreign currency contracts outstanding:
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
Contract (Depreciation)
Contracts to Deliver In Exchange For Settlement Date Value (U.S.$) (U.S.$)
---------------------------------------------------------------------------------------------------------------------
Sales
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Canadian Dollar 350,000 US Dollar 233,639 11/22/2000 229,237 $ 4,401
Euro 390,000 US Dollar 341,055 11/22/2000 331,303 9,752
Euro 280,000 US Dollar 243,776 11/22/2000 237,859 5,918
Euro 140,000 US Dollar 119,732 11/22/2000 118,929 802
Euro 150,000 US Dollar 132,765 11/22/2000 127,424 5,341
Euro 250,000 US Dollar 210,508 11/22/2000 212,374 (1,866)
Euro 100,000 US Dollar 85,334 11/22/2000 84,950 384
Japanese Yen 13,000,000 US Dollar 123,774 11/22/2000 119,555 4,219
Japanese Yen 15,250,000 US Dollar 143,066 11/22/2000 140,247 2,819
Polish New Zloty 1,100,000 US Dollar 239,965 11/22/2000 235,031 4,934
Swedish Krona 3,800,000 US Dollar 388,548 11/22/2000 380,889 7,659
---------------------------------------------------------------------------------------------------------------------
Total Sales 44,363
---------------------------------------------------------------------------------------------------------------------
Purchases
---------------------------------------------------------------------------------------------------------------------
Canadian Dollar 405,000 US Dollar 274,019 11/22/2000 265,260 (8,759)
Euro 120,000 US Dollar 104,400 11/22/2000 101,939 (2,461)
Euro 90,000 US Dollar 80,105 11/22/2000 76,455 (3,650)
Euro 350,000 US Dollar 307,188 11/22/2000 297,323 (9,865)
Euro 500,000 US Dollar 435,945 11/22/2000 424,748 (11,197)
Euro 75,000 US Dollar 62,118 11/22/2000 63,712 1,594
Japanese Yen 5,000,000 US Dollar 46,555 11/22/2000 45,983 (572)
Japanese Yen 23,000,000 US Dollar 215,618 11/22/2000 211,520 (4,098)
Japanese Yen 12,900,000 US Dollar 119,081 11/22/2000 118,635 (445)
Polish New Zloty 1,100,000 US Dollar 242,558 11/22/2000 235,031 (7,527)
Polish New Zloty 1,100,000 US Dollar 240,196 11/22/2000 235,031 (5,164)
British Pound 315,000 US Dollar 452,876 11/22/2000 457,198 4,322
---------------------------------------------------------------------------------------------------------------------
Total Purchases (47,822)
---------------------------------------------------------------------------------------------------------------------
Net Unrealized Depreciation $ (3,459)
---------------------------------------------------------------------------------------------------------------------
</TABLE>
________________________________________________________________________________
19
<PAGE>
Global and International Fixed Income Funds
--------------------------------------------------------------------------------
Notes to Financial Statements
Note 5--Continued
On October 31, 2000, the International Fixed Income Fund had the following open
forward foreign currency contracts outstanding:
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
Contract (Depreciation)
Contracts to Deliver In Exchange For Settlement Date Value (U.S.$) (U.S.$)
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales
----------------------------------------------------------------------------------------------------------------------------------
Canadian Dollar 1,750,000 US Dollar 1,178,292 11/28/2000 1,146,335 $ 31,957
Canadian Dollar 450,000 US Dollar 302,684 11/28/2000 294,772 7,912
Canadian Dollar 2,300,000 US Dollar 1,535,534 11/28/2000 1,506,612 28,922
Canadian Dollar 2,200,000 US Dollar 1,471,572 11/28/2000 1,441,107 30,465
Canadian Dollar 850,000 US Dollar 569,705 11/28/2000 556,791 12,914
Danish Krone 3,700,000 US Dollar 436,743 11/28/2000 422,213 14,530
Euro 5,850,000 US Dollar 5,227,560 11/28/2000 4,970,969 256,591
Euro 520,000 US Dollar 470,808 11/28/2000 441,864 28,944
Euro 750,000 US Dollar 664,050 11/28/2000 637,304 26,746
Euro 1,300,000 US Dollar 1,095,263 11/28/2000 1,104,660 (9,397)
Euro 1,300,000 US Dollar 1,094,938 11/28/2000 1,104,660 (9,722)
Euro 1,300,000 US Dollar 1,094,938 11/28/2000 1,104,660 (9,722)
Japanese Yen 47,000,000 US Dollar 450,127 11/28/2000 432,727 17,400
Japanese Yen 200,000,000 US Dollar 1,915,434 11/28/2000 1,841,391 74,042
Japanese Yen 90,000,000 US Dollar 845,118 11/28/2000 828,626 16,492
Polish New Zloty 2,300,000 US Dollar 505,884 11/28/2000 490,359 15,525
Polish New Zloty 2,300,000 US Dollar 519,481 11/28/2000 490,359 29,122
Polish New Zloty 6,500,000 US Dollar 1,415,166 11/28/2000 1,385,797 29,369
Swedish Krona 21,190,000 US Dollar 2,167,553 11/28/2000 2,125,046 42,507
British Pound 480,000 US Dollar 699,552 11/28/2000 696,757 2,795
----------------------------------------------------------------------------------------------------------------------------------
Total Sales 637,392
----------------------------------------------------------------------------------------------------------------------------------
Purchases
----------------------------------------------------------------------------------------------------------------------------------
Canadian Dollar 300,000 US Dollar 203,652 11/28/2000 196,515 (7,138)
Canadian Dollar 650,000 US Dollar 440,723 11/28/2000 425,782 (14,941)
Canadian Dollar 1,000,000 US Dollar 677,645 11/28/2000 655,049 (22,596)
Canadian Dollar 1,800,000 US Dollar 1,187,884 11/28/2000 1,179,088 (8,796)
Canadian Dollar 1,500,000 US Dollar 990,099 11/28/2000 982,573 (7,526)
Danish Krone 3,700,000 US Dollar 420,550 11/28/2000 422,213 1,663
Euro 1,200,000 US Dollar 1,086,480 11/28/2000 1,019,686 (66,794)
Euro 576,427 US Dollar 519,481 11/28/2000 489,812 (29,669)
Euro 750,000 US Dollar 654,975 11/28/2000 637,304 (17,671)
Euro 750,000 US Dollar 652,725 11/28/2000 637,304 (15,421)
Euro 300,000 US Dollar 259,560 11/28/2000 254,921 (4,639)
Euro 1,500,000 US Dollar 1,316,895 11/28/2000 1,274,607 (42,288)
Euro 2,450,000 US Dollar 2,136,768 11/28/2000 2,081,859 (54,909)
Euro 350,000 US Dollar 303,240 11/28/2000 297,408 (5,832)
Japanese Yen 501,500,000 US Dollar 4,795,831 11/28/2000 4,617,288 (178,542)
Japanese Yen 84,000,000 US Dollar 788,214 11/28/2000 773,384 (14,830)
Japanese Yen 61,500,000 US Dollar 568,287 11/28/2000 566,228 (2,059)
Japanese Yen 45,000,000 US Dollar 421,388 11/28/2000 414,313 (7,075)
Japanese Yen 190,000,000 US Dollar 1,756,007 11/28/2000 1,749,322 (6,686)
Polish New Zloty 11,100,000 US Dollar 2,462,016 11/28/2000 2,366,515 (95,501)
Polish New Zloty 6,000,000 US Dollar 1,307,474 11/28/2000 1,279,197 (28,277)
British Pound 1,200,000 US Dollar 1,755,540 11/28/2000 1,741,899 (13,641)
British Pound 1,040,000 US Dollar 1,503,840 11/28/2000 1,509,646 5,806
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Total Purchases (637,362)
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Net Unrealized Appreciation $ 30
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</TABLE>
20
<PAGE>
Global and International Fixed Income Funds
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Notes to Financial Statements
Note 6--Concentration of Risks
Each Fund invests in foreign securities. Investing in foreign companies and
foreign governments involves special risks and considerations not typically
associated with investing in securities of U.S. companies and the U.S.
government. These risks include devaluation of currencies and future adverse
political and economic developments. Moreover, securities of many foreign
companies and foreign governments and their markets may be less liquid and their
prices more volatile than those of securities of comparable U.S. companies and
the U.S. government. This is particularly true with respect to emerging markets
in developing countries.
21
<PAGE>
Global and International Fixed Income Funds
--------------------------------------------------------------------------------
Report of Independent Accountants
To the Board of Trustees of Morgan Grenfell Investment Trust and Shareholders of
Global Fixed Income and International Fixed Income:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the International Fixed Income and
the Global Fixed Income (two of the funds comprising the Morgan Grenfell
Investment Trust, hereafter referred to as the "Funds") at October 31, 2000, the
results each of their operations, the changes in each of their net assets and
the financial highlights for each of the periods indicated, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 2000 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
December 20, 2000
--------------------------------------------------------------------------------
Tax Information (Unaudited) For the Tax Year Ended October 31, 2000
The amounts may differ from those elsewhere in this report because of
differences between tax and financial reporting requirements.
Of the net investment income distributions made by the Global Fixed Income Fund
during the fiscal year ended October 31, 2000, 2.74%, has been derived from
investments in U.S. Government and Agency Obligations. All or a part of the
distributions from this income may be exempt from taxation at the state level.
Consult your tax advisor for state specific information.
22
<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.
Deutsche Asset Management is the marketing name for the asset management
activities of Deutsche Bank AG, Deutsche Fund Management, Inc., Bankers Trust
Company, DB Alex. Brown LLC, Deutsche Asset Management, Inc., and Deutsche Asset
Management Investment Services Limited.
Global Fixed Income CUSIP #61735K208
International Fixed Income 61735K505
Morgan Grenfell Investment Trust INTLFIANN (10/00)
Distributed by:
ICC Distributors, Inc.
