AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 3, 1996
File Nos. 33-62103 and 811-7347
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. 1
AND
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 2
BT GLOBAL INVESTORS
(Exact Name of Registrant as Specified in Charter)
6 ST. JAMES AVENUE, BOSTON MASSACHUSETTS 02116
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 423-0800
THOMAS M. LENZ
SIGNATURE FINANCIAL GROUP, INC.
6 ST. JAMES AVENUE
BOSTON, MASSACHUSETTS 02116
(Name and Address of Agent for Service)
copies to:
Burton S. Leibert, Esq. Anne B. McMillen
Willkie Farr & Gallagher Bankers Trust Company
One Citicorp Center One Bankers Trust Plaza
153 East 53rd Street 130 Liberty Street
New York, New York 10022-4669 New York, New York 10006
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: AS SOON AS PRACTICABLE AFTER THE
EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
PURSUANT TO RULE 24F-2(A)(1), REGISTRANT HEREBY DECLARES THAT AN INDEFINITE
NUMBER OF ITS SHARES OF BENEFICIAL INTEREST (PAR VALUE $0.00001 PER SHARE) IS
BEING REGISTERED BY THIS REGISTRATION STATEMENT.
BT Investment Portfolios, International Equity Portfolio and Capital
Appreciation Portfolio have also executed this Registration Statement.
================================================================================
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
<PAGE>
BT0499
BT GLOBAL INVESTORS
FORM N-1A
CROSS REFERENCE SHEET
Part A
ITEM NO. HEADINGS IN PROSPECTUS
1. Cover Page . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . The Funds -- Expense Summary
3. Condensed Financial
Information . . . . . . . . . . Not applicable
4. General Description of
Registrant . . . . . . . . . . Cover Page; The Funds -- Who May Want
to Invest; The Funds in Detail --
Risk Factors and Certain Securities
and Investment Practices
5. Management of the Fund . . . . The Funds -- Expense Summary; The
Funds in Detail -- Management of the
Trust and the Portfolios
6. Capital Stock and Other
Securities . . . . . . . . . . Cover Page; The Funds in Detail --
Performance; Your Account -- Types of
Accounts, How to Buy Shares, How to
Sell Shares; Shareholder and Account
Policies -- Dividends, Capital Gains
and Taxes, Exchange Restrictions,
Sales Charge Reductions and Waivers,
Additional Information About the
Trust and Portfolios
7. Purchase of Securities Being
Offered . . . . . . . . . . . Your Account -- How to Buy Shares;
Shareholder and Account Policies --
Valuation Details, Exchange
Restrictions, Sales Charge Reductions
and Waivers
8. Redemption or Repurchase . . . Your Account -- How to Sell Shares;
Shareholder and Account Policies --
Valuation Details, Exchange
Restrictions
9. Pending Legal Proceedings . . Not applicable
<PAGE>
Part B Headings in Statement of
ITEM NO. ADDITIONAL INFORMATION
10. Cover Page . . . . . . . . . . Cover Page
11. Table of Contents . . . . . . Table of Contents
12. General Information and
History . . . . . . . . . . . Not applicable
13. Investment Objectives and
Policies . . . . . . . . . . . Risk Factors and Certain Securities
and Investment Practices
14. Management of the Fund . . . . Management of the Trust and the
Portfolios
15. Control Persons and Principal
Holders of Securities . . . . Management of the Trust and the
Portfolios (See also Prospectus--
Additional Information About the
Trust and Portfolios")
16. Investment Advisory and Other
Services . . . . . . . . . . . Management of the Trust and the
Portfolios
17. Brokerage Allocation and Other
Practices . . . . . . . . . . Risk Factors and Certain Securities
and Investment Practices
18. Capital Stock and Other
Securities . . . . . . . . . . Organization of the Trust; (see also
Prospectus--"Dividends, Capital Gains
and Taxes")
19. Purchase, Redemption and
Pricing of Securities
Being Offered . . . . . . . . Valuation of Securities; Redemptions
and Purchases in Kind
20. Tax Status . . . . . . . . . . Taxation (see also Prospectus--
"Dividends, Capital Gains and Taxes")
21. Underwriters . . . . . . . . . See Prospectus--"Breakdown of
Expenses"
22. Calculations of Yield Quotations
of Money Market Funds . . . . . Performance Information
23. Financial Statements . . . . . . Financial Statements
<PAGE>
^ BT0433M
BT GLOBAL INVESTORS
PROSPECTUS
^ JANUARY , 1996
GLOBAL HIGH YIELD SECURITIES FUND
CAPITAL APPRECIATION FUND
SMALL CAP FUND
INTERNATIONAL EQUITY FUND
PACIFIC BASIN EQUITY FUND
LATIN AMERICAN EQUITY FUND
BT Global Investors (the "Trust") is an open-end, management investment company
(mutual fund) which currently consists of ^ ten funds. Shares of the six ^ funds
listed above (each, a "Fund") are offered by this prospectus.
UNLIKE OTHER OPEN-END MANAGEMENT INVESTMENT COMPANIES (MUTUAL FUNDS), EACH FUND
SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY INVESTING ALL OF ITS INVESTABLE
ASSETS ("ASSETS") IN THE CORRESPONDING PORTFOLIO WHICH IS A SEPARATE FUND WITH
AN IDENTICAL INVESTMENT OBJECTIVE. SEE "SPECIAL INFORMATION CONCERNING
MASTER-FEEDER FUND STRUCTURE" ON PAGE __.
Bankers Trust Company ("Bankers Trust") is the investment adviser (the
"Adviser") of each Portfolio.
Please read this Prospectus before investing, and keep it on file for future
reference. It contains important information, including how each Fund invests
and the services available to shareholders.
To learn more about each Fund and its investments, ^ investors can obtain a copy
of the Funds' Statement of Additional Information ^(the "SAI"), dated^ January ,
1996, which contains each Portfolio's most recent financial report and portfolio
listing. The SAI has been filed with the Securities and Exchange Commission
^(the "SEC") and is incorporated herein by reference (legally forms a part of
the Prospectus). For a free copy of this document, call (800) 730-1313 or
contact the ^ Trust at 6 St. James Avenue, Boston, MA 02116, or ^ an Investment
Professional.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, BANKERS
TRUST OR ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THE GLOBAL HIGH YIELD SECURITIES PORTFOLIO AND LATIN AMERICAN
EQUITY PORTFOLIO MAY INVEST IN LOWER-QUALITY DEBT SECURITIES, SOMETIMES CALLED
"JUNK BONDS." THE GLOBAL HIGH YIELD SECURITIES
1
<PAGE>
PORTFOLIO MAY INVEST IN THESE TYPES OF SECURITIES WITHOUT LIMIT. INVESTORS
SHOULD CONSIDER THAT THESE SECURITIES CARRY GREATER RISKS, SUCH AS THE RISK OF
DEFAULT, THAN OTHER DEBT SECURITIES. REFER TO "RISK FACTORS AND CERTAIN
SECURITIES AND INVESTMENT PRACTICES -- RISKS OF INVESTING IN HIGH YIELD
SECURITIES (JUNK
BONDS)" ON PAGE __ FOR FURTHER INFORMATION.
THE LATIN AMERICAN EQUITY PORTFOLIO AND GLOBAL HIGH YIELD SECURITIES PORTFOLIO
MAY BORROW MONEY FOR INVESTMENT IN SECURITIES. SUCH LEVERAGE WILL EXAGGERATE ANY
INCREASE OR DECREASE THE VALUE OF SHARES IN THE FUNDS. BORROWING ALSO INVOLVES
COSTS TO THE PORTFOLIO. SEE "RISK FACTORS AND CERTAIN SECURITIES AND INVESTMENT
PRACTICES -- LEVERAGE" ON PAGE __ HEREIN. EACH OF THESE FUNDS MAY BE CONSIDERED
A SPECULATIVE INVESTMENT AND IS DESIGNED FOR AGGRESSIVE INVESTORS.
LIKE SHARES OF ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
2
<PAGE>
CONTENTS
THE FUNDS __ WHO MAY WANT TO INVEST
__ INVESTMENT PRINCIPLES AND RISKS Each
Fund's overall approach to
investing.
__ EXPENSE SUMMARY ^ Each Fund's sales
charges and annual operating expenses.
THE FUNDS IN DETAIL __ INVESTMENT OBJECTIVES AND POLICIES
__ RISK FACTORS AND CERTAIN SECURITIES
AND INVESTMENT PRACTICES
__ SPECIAL INFORMATION CONCERNING
MASTER-FEEDER FUND STRUCTURE
__ SECURITIES AND INVESTMENT PRACTICES
__ PERFORMANCE How each Fund has done
over time.
__ MANAGEMENT OF THE TRUST AND THE
PORTFOLIOS
^ ACCOUNT INFORMATION __ TYPES OF ACCOUNTS Different ways to
setup your account, including
tax-sheltered retirement plans.
__ HOW TO BUY SHARES Opening an account and
making additional investments.
__ HOW TO SELL SHARES Taking money out
and closing your account.
__ INVESTOR SERVICES ^ To help you
manage your account.
SHAREHOLDER AND
ACCOUNT POLICIES __ DIVIDENDS, CAPITAL GAINS AND TAXES
__ VALUATION DETAILS Share price
calculations and the timing of
purchases and redemptions.
__ EXCHANGE ^ LIMITATIONS
__ SALES CHARGE REDUCTIONS AND WAIVERS
__ ADDITIONAL INFORMATION ABOUT THE TRUST
AND PORTFOLIOS
__ APPENDIX
3
<PAGE>
THE FUNDS
The Trust seeks to achieve the investment objective of each Fund by investing
all the Assets of the Fund in the corresponding Portfolio.
GLOBAL HIGH YIELD SECURITIES FUND'S investment objective is high current income
from investment in a non-diversified portfolio of high yield, non-investment
grade debt securities issued in many of the world's securities markets. Capital
appreciation will be considered when consistent with the primary investment
objective of high current income. See "Risk Factors and Certain Securities and
Investment Practices."
CAPITAL APPRECIATION FUND'S investment objective is long-term capital growth;
the production of any current income is secondary to this objective. The
Portfolio invests primarily in
4
<PAGE>
growth-oriented common stocks of medium sized domestic
corporations and, to a lesser extent, foreign corporations. See
"Risk Factors and Certain Securities and Investment Practices."
SMALL CAP FUND'S investment objective is long-term capital growth; the
production of any current income is secondary to this objective. The Portfolio
seeks to provide long-term capital growth by investing primarily in equity
securities of smaller sized growth companies. See "Risk Factors and Certain
Securities and Investment Practices."
INTERNATIONAL EQUITY FUND'S investment objective is long-term capital
appreciation from investment in foreign equity securities (or other securities
with equity characteristics); the production of any current income is incidental
to this objective. The Portfolio invests primarily in established companies
based in developed countries outside the United States, but the Portfolio may
also invest in emerging market securities. See "Risk Factors and Certain
Securities and Investment Practices."
PACIFIC BASIN EQUITY FUND'S investment objective is long-term capital
appreciation from investment primarily in the equity securities (or other
securities with equity characteristics) of companies domiciled in, or doing
business in the Pacific Basin region, other than Japan; the production of any
current income is incidental to this objective. See "Risk Factors and Certain
Securities and Investment Practices."
LATIN AMERICAN EQUITY FUND'S investment objective is long-term capital
appreciation from investment primarily in the equity securities (or other
securities with equity characteristics) of companies domiciled in, or doing
business in, Latin America; the production of any current income is incidental
to this objective.
See "Risk Factors and Certain Securities and Investment
Practices."
WHO MAY WANT TO INVEST
Shares of each Fund are offered through this Prospectus to investors who engage
an Investment Professional.
The Capital Appreciation Fund, Small Cap Fund, International Equity Fund,
Pacific Basin Equity Fund, and Latin American Equity Fund are designed for
investors who are willing to accept short-term domestic and/or foreign stock
market fluctuations in pursuit of potentially high long-term returns. These
Funds invest for growth and do not pursue income.
In addition, the International Equity Fund, Global High Yield Securities Fund,
Latin American Equity Fund and Pacific Basin Equity Fund may also be appropriate
for investors who want to pursue their investment goals in markets outside of
the United States. By including international investments in your portfolio, you
can achieve an extra level of diversification and
5
<PAGE>
also participate in opportunities around the world.
Each Fund is not in itself a balanced investment plan. ^ Investors should
consider ^ their investment objective and tolerance for risk when making an
investment decision. When ^ investors sell ^ their Fund ^ Shares, they may be
worth more or less than what ^ they originally paid for them.
INVESTMENT PRINCIPLES AND RISKS
^
The value of each Portfolio's investments varies based on many factors. The
value of bonds fluctuates based on changes in domestic or foreign interest
rates, the credit quality of the issuer, market conditions, and other economic
and political news.
In general, bond prices rise when interest rates fall, and vice versa. This
effect is usually more pronounced for longer-term securities. Lower-quality
securities offer higher yields, but also carry more risk.
Stock values fluctuate, sometimes dramatically, in response to the activities of
individual companies and general market and economic conditions. Over time,
however, stocks have shown greater long-term growth potential than other types
of securities.
Because many foreign investments are denominated in foreign currencies, changes
in the value of these currencies can significantly affect a Fund's share price.
General economic factors in the various world markets can also impact the value
of ^ an investor's investment, especially for securities in emerging markets.
Many investments in emerging markets can be considered speculative, and
therefore may offer higher income (for debt funds) and total return potential,
but significantly greater risk.
The Global High Yield Securities Portfolio is classified as a "non-diversified"
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and may invest a greater portion of its assets in a single issuer
than a diversified fund. As a result, this Portfolio may be more susceptible to
any single economic, political or regulatory occurrence than a diversified fund.
See "Risk Factors and Certain Securities and Investment Practices --
Non-Diversified Fund" for more information.
Bankers Trust may use various investment techniques to hedge a Portfolio's
risks, but there is no guarantee that these strategies will work as intended.
When ^ an investor sells their Fund shares ("Shares"), they may be worth more or
less than what ^ they paid for them. See "Risk Factors and Certain Securities
and Investment Practices" for more information.
6
<PAGE>
EXPENSE SUMMARY
ANNUAL OPERATING EXPENSES are paid out of the assets of each Portfolio and Fund.
Each Portfolio pays an investment advisory fee and an administrative services
fee to Bankers Trust. Each Fund ^ incurs ^ expenses such as maintaining
shareholder records and furnishing shareholder statements. Each Fund must
provide financial reports.
The following table provides: (i) a summary of expenses relating to purchases
and sales of the ^ Shares of each Fund and the ^ annual operating expenses of
the Fund and expenses of the corresponding Portfolio, in the aggregate, as a
percentage of average daily net assets of each Fund; and (ii) an example
illustrating the dollar cost of such expenses on a $1,000 investment in each
Fund. THE TRUSTEES OF THE TRUST BELIEVE THAT THE AGGREGATE PER SHARE EXPENSES OF
EACH FUND AND THE CORRESPONDING PORTFOLIO WILL BE LESS THAN OR APPROXIMATELY
EQUAL TO THE EXPENSES WHICH THE FUND WOULD INCUR IF THE TRUST RETAINED THE
SERVICES OF AN INVESTMENT ADVISER AND THE ASSETS OF EACH FUND WERE INVESTED
DIRECTLY IN THE TYPE OF SECURITIES BEING HELD BY THE CORRESPONDING PORTFOLIO.
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge on Purchases
(as a percentage of offering price) 4.75%
Maximum Sales Charge on Reinvested
Distributions None
Redemption Fee None
Shareholder transaction expenses are charges ^ paid when ^ investors buy, sell,
exchange, or hold ^ Shares of a Fund. Lower front-end sales charges may be
available with purchases of $50,000 or more and/or in conjunction with various
programs. See "Valuation Details," on page __, for an explanation of how and
when these charges apply.
ANNUAL OPERATING EXPENSES
GLOBAL HIGH YIELD SECURITIES FUND
Investment advisory fee
(after reimbursement or waiver) 0.41%
12b-1 fees 0.35
Other expenses
(after reimbursements or waivers) ^ 0.74%
TOTAL OPERATING EXPENSES
(after reimbursements or waivers) ^ 1.50%
CAPITAL APPRECIATION FUND
Investment advisory fee
(after reimbursement or waiver) 0.52%
7
<PAGE>
12b-1 fees 0.50
Other expenses
(after reimbursements or waivers) 0.48%
TOTAL OPERATING EXPENSES
(after reimbursements or waivers) 1.50%
SMALL CAP FUND
Investment advisory fee
(after reimbursement or waiver) 0.37%
12b-1 fees 0.50
Other expenses
(after reimbursements or waivers) 0.63%
----
TOTAL OPERATING EXPENSES
(after reimbursements or waivers) 1.50%
INTERNATIONAL EQUITY FUND
Investment advisory fee
(after reimbursement or waiver) 0.56%
12b-1 fees 0.50
Other expenses
(after reimbursements or waivers) 0.64%
----
TOTAL OPERATING EXPENSES
(after reimbursements or waivers) 1.70%
PACIFIC BASIN EQUITY FUND
Investment advisory fee
(after reimbursement or waiver) 0.74%
12b-1 fees 0.50
Other expenses
(after reimbursements or waivers) 0.61%
----
TOTAL OPERATING EXPENSES
(after reimbursements or waivers) 1.85%
LATIN AMERICAN EQUITY FUND
Investment advisory fee
(after reimbursement or waiver) 0.41%
12b-1 fees 0.50
Other expenses
(after reimbursements or waivers) 1.34%
----
TOTAL OPERATING EXPENSES
(after reimbursements or waivers) 2.25%
EXPENSE TABLE EXAMPLE: ^ An investor would pay the following expenses, including
the maximum front-end sales charge on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
EXAMPLES
1 YEAR 3 YEARS
------ -------
GLOBAL HIGH YIELD SECURITIES FUND ^ $52
$83
CAPITAL APPRECIATION FUND $62 $93
8
<PAGE>
SMALL CAP FUND $62 $93
INTERNATIONAL EQUITY FUND $64 $99
PACIFIC BASIN EQUITY FUND $65 $103
LATIN AMERICAN EQUITY FUND $69 $114
The expense table and the example above show the costs and expenses that an
investor will bear directly or indirectly as a shareholder of a Fund. Bankers
Trust has voluntarily agreed to waive a portion of its investment advisory fee
with respect to each Portfolio. Without such waiver, each Portfolio's investment
advisory fee would be equal to the following: Global High Yield Securities
Portfolio -- 0.80%; Capital Appreciation Portfolio -- 0.65%; Small Cap Portfolio
- -- 0.65%; International Equity Portfolio -- 0.65%; Pacific Basin Equity
Portfolio -- 0.75%; and Latin American Equity Portfolio -- 1.00%. The expense
table and the example reflect a voluntary undertaking by Bankers Trust or
Signature Broker-Dealer Services, Inc. ("SBDS"), as the distributor (the
"Distributor") of the ^ Shares of each Fund, to waive or reimburse expenses such
that the total operating expenses of each Fund and the corresponding Portfolio
(as a percentage of the Fund's average daily net assets) will not exceed the
following: Global High Yield Securities Fund -- ^ 1.50%; Capital Appreciation
Fund -- 1.50%; Small Cap Fund -- 1.50%; International Equity Fund -- 1.70%;
Pacific Basin Equity Fund -- 1.85%; and Latin American Equity Fund -- 2.25%. In
the absence of this undertaking, assuming total assets of $25 million in each
Fund, it is estimated that "Total Operating Expenses" would be as follows:
Global High Yield Securities Fund -- 2.82%; Capital Appreciation Fund -- 2.41%;
Small Cap Fund -- 2.41%; International Equity Fund -- 2.67%; Pacific Basin
Equity Fund -- 2.78%; and Latin American Equity Fund -- 3.18%. THE EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Moreover, while each example
assumes a 5% annual return, actual performance will vary and may result in a
return greater or less than 5%.
12b-1 fees for each Fund include a shareholder service fee and a distribution
fee. Shareholder service fees are paid by a Fund to SBDS to enable SBDS to
compensate Investment Professionals for providing personal shareholder service
and/or maintenance of shareholder accounts. Distribution fees are paid by a Fund
to SBDS to compensate Investment Professionals for services and expenses in
connection with the distribution of the applicable Fund's shares. Long-term
shareholders may pay more than the economic equivalent of the maximum sales
charges permitted by the National Association of Securities Dealers, Inc.
("NASD"), due to 12b-1 fees.
For more information about each Fund's and each Portfolio's
9
<PAGE>
expenses see "Management of the Trust and the Portfolios" and
"Valuation Details."
THE FUNDS IN DETAIL
INVESTMENT OBJECTIVES AND POLICIES
The Trust seeks to achieve the investment objective of each Fund by investing
all of its Assets in the corresponding Portfolio, which has the same investment
objective as the Fund. Since the investment characteristics of each Fund will
correspond directly to those of the corresponding Portfolio, the following is a
discussion of the various investments of and techniques employed by each
Portfolio. Additional information about the investment policies of each
Portfolio appears in "Risk Factors and Certain Securities and Investment
Practices" in this Prospectus and in the Funds' SAI. There can be no assurance
that the investment objective of either a Fund or the corresponding Portfolio
will be achieved.
The GLOBAL HIGH YIELD SECURITIES PORTFOLIO'S investment objective is high
current income from investment in a non-diversified portfolio of high yield^
non-investment grade debt securities issued in many of the world's securities
markets. Capital appreciation will be considered when consistent with the
primary investment objective of high current income. The Portfolio intends to
invest in Brady bonds and other sovereign debt and in high risk, lower quality
debt securities commonly referred to as "junk bonds" and regarded as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation as well as in
the debt securities of issuers located in emerging markets, Brady bonds and
other sovereign debt.
Under normal circumstances, at least 65% of the Portfolio's assets will be
invested in high yield, non-investment grade debt securities of both
governmental and corporate issuers in both the major industrialized markets and
the so-called "emerging markets." See "Risk Factors and Certain Securities and
Investment Practices -- Risks of Investing in Foreign Securities" and "--
Emerging Markets." Although Bankers Trust considers both industrialized and
emerging countries eligible for investment pursuant to the Portfolio's
objective, the Portfolio will not be invested in all such markets at all times.
Furthermore, investing in some emerging markets may be neither feasible nor
desirable from time to time, due to the lack of adequate custodial arrangements
for the Portfolio's assets, exchange controls and overly burdensome repatriation
rules, the lack of organized and liquid securities markets, and unacceptable
political risks. Under normal circumstances, the Portfolio will invest in at
least three emerging markets countries. See "Risk Factors and Certain Securities
and Investment Practices --Risks of Investing in Foreign Securities" and " --
Emerging Markets."
10
<PAGE>
The Portfolio generally invests in securities which are rated BBB or lower by
Standard & Poor's Corporation ("S&P") or Baa or lower by Moody's Investors
Service, Inc. ("Moody's") or, if unrated, of comparable quality in the opinion
of Bankers Trust. Securities which are rated BBB by S&P or Baa by Moody's
possess some speculative characteristics. A description of the rating categories
is attached to this Prospectus. THERE IS NO LOWER LIMIT WITH RESPECT TO THE
RATING CATEGORIES FOR SECURITIES IN WHICH THE PORTFOLIO MAY INVEST. See "Risk
Factors and Certain Securities and Investment Practices -- Risks of Investing
High Yield Securities (Junk Bonds)."
The Portfolio is not required to dispose of debt securities whose credit quality
declines at some point after the security is purchased; however, no more than
25% of the Portfolio's assets will be invested at any time in securities rated
less than CCC by S&P or Caa by Moody's or, if unrated, of comparable quality in
the opinion of Bankers Trust. S&P's lowest rating for bonds is CI, which is
reserved for income bonds on which no interest is being paid and D, which is
reserved for debt in default and in respect of which payment of interest or
repayment of principal is in arrears. Moody's lowest rating is C, which is
applied to bonds which have extremely poor prospects for ever attaining any real
investment standing. The Portfolio may, from time to time, purchase defaulted
debt securities if, in the opinion of Bankers Trust, the issuer may resume
interest payments in the near future. The Portfolio will not invest more than
10% of its total assets (at the time of purchase) in defaulted debt securities,
which may be illiquid. Other than as set forth above, there is no restriction on
the percentage of the Portfolio's assets which may be invested in bonds of a
particular rating.
The Portfolio invests in debt obligations allocated among diverse markets and
denominated in various currencies, including multi-currency units such as
European Currency Units ("ECUs"). The Portfolio may purchase securities that are
issued by the government or a company or financial institution of one country
but denominated in the currency (or multi-currency unit) of another country.
The Portfolio is classified as a "non-diversified" fund under the 1940 Act,
which means the Portfolio is not limited by the 1940 Act in the proportion of
its assets that may be invested in a single issuer. The Portfolio may,
therefore, invest in the securities of individual issuers to a greater degree
than a diversified fund and may be more susceptible to any single economic,
political or regulatory occurrence affecting those issuers. However, in order to
enable the Fund (and other registered investment companies which may in the
future invest all their assets in the Portfolio) to qualify as a regulated
investment company (a "RIC") the Portfolio must comply with the diversification
requirement of Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), for U.S. federal
11
<PAGE>
income tax purposes. See "Risk Factors and certain Securities
and Investment Practices -- Non-Diversified Fund" herein.
OTHER INVESTMENTS AND INVESTMENT TECHNIQUES. The Portfolio may also utilize the
following investments and investment techniques and practices: short-term
investments, floating rate bonds, zero coupon bonds, sovereign and supranational
debt obligations, Brady bonds, loan participations and assignments, convertible
bonds, preferred stock, foreign currency exchange transactions, options on
foreign currencies, options on foreign bond ^ indices, futures contracts on
foreign bond ^ indices, options on futures contracts, Rule 144A securities,
when-issued or delayed delivery securities, securities lending, repurchase
agreements and reverse repurchase agreements. See "Risk Factors and Certain
Securities and Investment Practices" in this Prospectus and in the SAI for
further information.
The Portfolio may borrow money for investment purposes. See
"Risk Factors and Certain Securities and Investment Practices --
Leverage."
The CAPITAL APPRECIATION PORTFOLIO'S investment objective is long-term capital
growth; the production of any current income is secondary to this objective. The
Portfolio invests primarily in growth-oriented common stocks of medium-sized
domestic corporations and, to a lesser extent, foreign corporations.
Bankers Trust, employs a flexible investment program in pursuit of the
Portfolio's investment objective. The Portfolio is not restricted to investments
in specific market sectors. The Portfolio may invest in any market sectors and
in companies of any size and may take advantage of any investment opportunity
with attractive long-term prospects. The Adviser takes advantage of its market
access and the research available to it to select investments in promising
growth companies that are involved in new technologies, new products, foreign
markets and special developments, such as research discoveries, acquisitions,
recapitalizations, liquidations or management changes, and companies whose stock
may be undervalued by the market. These situations are only illustrative of the
types of investment the Portfolio may make. The Portfolio is free to invest in
any common stock which in the Adviser's judgment provides above average
potential for long-term growth of capital and income.
The Portfolio will generally invest a majority of its assets in equity
securities of medium-sized companies (companies with a market capitalization of
between $500 million and $2 billion), but may invest in securities of companies
having various levels of market capitalization, including smaller companies
whose securities may be more volatile and less liquid than securities issued by
larger companies with higher levels of net worth. Investments will be in
companies in various industries. Industry and company fundamentals along with
key investment themes and various quantitative screens will be used in the
investment
12
<PAGE>
process. Criteria for selection of individual securities include the issuer's
competitive environment and position, prospects for growth, managerial strength,
earnings momentum and quality, underlying asset value, relative market value and
overall marketability. The Portfolio will follow a disciplined selling process
to lessen market risks.
The Portfolio may also invest up to 25% of its assets in similar securities of
foreign issuers. For further information on foreign investments see "Risk
Factors and Certain Securities and Investment Practices -- Risks of Investing in
Foreign Securities."
OTHER INVESTMENTS AND INVESTMENT TECHNIQUES. The Portfolio may also utilize the
following investments and investment techniques and practices: short-term
investments, options on stocks, options on stock ^ indices, futures contracts on
stock ^ indices, options on futures contracts, foreign currency exchange
transactions, options on foreign currencies, Rule 144A securities, when-issued
and delayed delivery securities, securities lending, and repurchase agreements.
See "Risk Factors and Certain Securities and Investment Practices" in this
Prospectus and in the SAI for further information.
The SMALL CAP PORTFOLIO'S investment objective is long-term capital growth; the
production of any current income is secondary to this objective.
The Portfolio seeks to provide long term capital growth by investing primarily
in equity securities of smaller U.S. companies. The Portfolio's policy is to
invest in equity securities of smaller companies that Bankers Trust believes are
in an early stage or transitional point in their development and have
demonstrated or have the potential for above average capital growth. The Adviser
will select companies which have the potential to gain market share in their
industry, achieve and maintain high consistent profitability or produce
increases in earnings. The Adviser also seeks companies with strong company
management and superior fundamental strength.
The Adviser employs a flexible investment program in pursuit of the Portfolio's
investment objective. The Portfolio is free to invest in any common stock which
in the Adviser's judgement provides above average potential for long-term growth
of capital and income.
Under normal market conditions, the Portfolio will invest at least 65% of its
assets in smaller companies (with market capitalizations less than $750 million
at time of purchase) that offer strong potential for capital growth. Small
capitalization companies have the potential to show earnings growth over time
that is well above the growth rate of the overall economy. The Portfolio may
also invest in larger, more established companies that the Adviser believes may
offer the potential for strong
13
<PAGE>
capital growth due to their relative market position, anticipated earnings
growth, changes in management or other similar opportunities. The Portfolio will
follow a disciplined selling process to lessen market risks.
For temporary defensive purposes, when in the opinion of the Adviser that market
conditions so warrant, the Portfolio may invest all or a portion of its Assets
in common stocks of larger, more established companies or in fixed-income
securities or short-term money market securities. To the extent the Portfolio is
engaged in temporary defensive investments, the Portfolio will not be pursuing
its investment objective.
The Portfolio may also invest up to 25% of its assets in similar securities of
foreign issuers. For further information on foreign investments see "Risk
Factors and Certain Securities and Investment Practices -- Risks of Investing in
Foreign Securities."
OTHER INVESTMENTS AND TECHNIQUES. The Portfolio may also utilize the following
investments and investment techniques and practices: short-term investments,
options on stocks, options on stock ^ indices, futures contracts on stock ^
indices, options on future contracts, foreign currency exchange transactions,
options on foreign currencies, Rule 144A securities, when-issued and delayed
delivery securities, securities lending and repurchase agreements. See "Risk
Factors and Certain Securities and Investment Practices" in this Prospectus and
in the SAI for further information.
The INTERNATIONAL EQUITY PORTFOLIO'S investment objective is long-term capital
appreciation from investment in foreign equity securities (or other securities
with equity characteristics); the production of any current income is incidental
to this objective. The Portfolio invests primarily in established companies
based in developed countries outside the United States, but the Portfolio also
invests in securities of issuers in emerging markets. See "Risk Factors and
Certain Securities and Investment Practices -- Risks of Investing in Foreign
Securities" and "-- Emerging Markets." Under normal circumstances, the Portfolio
will invest at least 65% of the value of its total assets in the equity
securities of issuers based in at least three countries other than the United
States. The Portfolio's investments will generally be diversified among several
geographic regions and countries.
In countries and regions with well-developed capital markets where more
information is available, Bankers Trust will seek to select individual
investments for the Portfolio. Criteria for selection of individual securities
include the issuer's competitive position, prospects for growth, managerial
strength, earnings quality, underlying asset value, relative market value and
overall marketability. The Portfolio may invest in securities of companies
having various levels of net worth,
14
<PAGE>
including smaller companies whose securities may be more volatile than
securities offered by larger companies with higher levels of net worth.
In other countries and regions where capital markets are underdeveloped or not
easily accessed and information is difficult to obtain, the Portfolio may choose
to invest only at the market level. Here, to the extent available and consistent
with applicable regulations, the Portfolio may seek to achieve country exposure
through use of options or futures based on an established local index or through
investment in other registered investment companies rather than investing
directly in individual securities. Investment in other investment companies is
limited in amount by the ^ 1940 Act, will involve the indirect payment of a
portion of the expenses, including advisory fees, of such other investment
companies and may result in a duplication of fees and expenses.
The Portfolio invests in securities listed on foreign or domestic securities
exchanges and securities traded in foreign or domestic over-the-counter markets
and may invest in restricted or unlisted securities.
OTHER INVESTMENTS AND INVESTMENT TECHNIQUES. The Portfolio may also utilize the
following investments and investment techniques and practices: short-term
investments, foreign currency exchange transactions, options on foreign
currencies, American Depositary Receipts ("ADRs"), Global Depositary Receipts
("GDRs") and European Depositary Receipts ("EDRs"), options on stocks, options
on foreign stock ^ indices, futures contracts on foreign stock ^ indices,
options on futures contracts, Rule 144A securities, when-issued and delayed
delivery securities, securities lending and repurchase agreements. See "Risk
Factors and Certain Securities and Investment Practices" in this Prospectus and
in the SAI for further information.
The PACIFIC BASIN EQUITY PORTFOLIO'S investment objective is long-term capital
appreciation from investment primarily in the equity securities (or other
securities with equity characteristics) of companies domiciled in, or doing
business in the Pacific Basin region, other than Japan; the production of any
current income is incidental to this objective. Investment in such securities
involves certain considerations which are not normally involved in investment in
securities of U.S. issuers, and an investment in the Fund may be considered
speculative.
For purposes of this Prospectus, "issuers domiciled in, or doing business in,
the Pacific Basin region (other than Japan)" shall include securities of
issuers: (1) which are organized under the laws of Pacific Basin countries (see
below); (2) for which the principal securities trading market is in a Pacific
Basin country; or (3) which derive a significant proportion (at least 50
percent) of their revenues or profits from goods produced or sold, investments
made, or services performed in the countries of
15
<PAGE>
the Pacific Basin or which have at least 50 percent of their assets situated in
the countries of the Pacific Basin. It is expected under normal conditions that
at least 65% of the Portfolio's assets will be invested in the equity securities
of issuers located in at least three countries in the Pacific Basin.
For the purpose of this Prospectus, the "Pacific Basin" includes, but is not
limited to, the following countries: Hong Kong, India, Indonesia, Malaysia, New
Zealand, Pakistan, the Philippines, the People's Republic of China ("China"),
Singapore, Sri Lanka, South Korea, Thailand, Taiwan and Vietnam. See "Risk
Factors and Certain Securities and Investment Practices -- Risks of Investing in
Foreign Securities" in this Prospectus and "Risk Factors and Certain Securities
and Investment Practices -- Risks of Investing in China and China Region" in the
SAI.
The Portfolio will be managed using a disciplined, value-oriented investment
philosophy that stresses the inherent value of, and the medium term outlook for,
the companies under examination. Experience has proven that often the real basis
of a business is quite different from that perceived by the market: a
misconception that usually results in its shares trading below its true business
or replacement value. The exploitation of this "perception/reality" gap is a
hallmark of the investment style that has been adopted for the Portfolio, and a
potential source of value for its investors.
"Value" investing means trying to find companies which are mispriced by the
market for reasons of neglect, fashion or misconception. These opportunities
arise out of legislative changes, industrial restructuring and technology
advancements, for example. As a result, Bankers Trust and the sub-investment
adviser attach great importance to analyzing trends and accessing possible
breaks with traditional price patterns. At the company level, the emphasis is
placed on assessing the inherent "business" value of the firm. While this often
varies from the stock market's valuation, the Adviser and the sub-investment
adviser believe a company's stock price tends to gravitate to their "business"
value over time.
The Portfolio's investments will generally be diversified among several
geographic regions and countries in the Pacific Basin. Criteria for determining
the appropriate distribution of investment among various countries and regions
include the prospects for relative growth among foreign countries, expected
levels of inflation, government policies influencing business conditions, the
outlook for currency relationships and the range of alternative opportunities
available to international investors.
The Portfolio will not invest more than 20% of the value of its total assets in
issuers domiciled in China.
16
<PAGE>
In countries and regions where capital markets are underdeveloped or not easily
accessed and information is difficult to obtain, the Portfolio may choose to
invest only at the market level. Here, to the extent available and consistent
with applicable regulations, the Portfolio may seek to achieve country exposure
through the use of options on futures based on an established local index or
through investment in other registered investment companies. Investment in other
investment companies is limited in amount by the 1940 Act, will involve the
indirect payment of a portion of the expenses, including advisory fees, of such
other investment companies and may result in a duplication of fees and expenses.
The Portfolio invests in securities listed on foreign or domestic securities
exchanges and securities traded in foreign or domestic over-the-counter markets
and may invest in restricted unlisted securities.
OTHER INVESTMENTS AND INVESTMENT TECHNIQUES. The Portfolio may also utilize the
following investments and investment techniques and practices: short-term
investments, foreign currency exchange transactions, options on foreign
currencies, ADRs, GDRs and EDRs, options on stocks, options on foreign stock ^
indices, futures contracts on foreign stock ^ indices, options on futures
contracts, 144A securities, when-issued and delayed delivery securities,
securities lending and repurchase agreements. See "Risk Factors and Certain
Securities and Investment Practices" in this Prospectus and in the SAI for
further information.
The LATIN AMERICAN EQUITY PORTFOLIO'S investment objective is long-term capital
appreciation from investment primarily in the equity securities (or other
securities with equity characteristics) of companies domiciled in, or doing
business in, Latin America; the production of any current income is incidental
to this objective. Investment in such securities involves certain considerations
which are not normally involved in investment in securities of U.S. issuers, and
an investment in the Fund may be considered speculative. See "Risk Factors and
Certain Securities and Investment Practices -- Risks of Investing in Foreign
Securities" and "-- Emerging Markets^" herein and "Foreign Securities: Special
Consideration Concerning Latin America" in the SAI. It is expected under normal
conditions that at least 65% of the Portfolio's total assets will be invested in
the equity securities of Latin American issuers.
The Fund may borrow money for investment purposes. See "Risk
Factors and Certain Securities and Investment Practices --
Leverage."
The Portfolio invests in securities listed on foreign or domestic securities
exchanges and securities traded in foreign or domestic over-the-counter markets
and may invest in restricted or unlisted securities.
For purposes of this Prospectus, "Latin America" is defined as
17
<PAGE>
Mexico, and all countries in Central America and South America, including
Argentina, Brazil, Chile, Colombia, Peru and Venezuela.
As used in this Prospectus, "securities of Latin American issuers" is defined
as: (i) securities of companies the principal securities trading market for
which is in Latin America; (ii) securities, traded in any market, of companies
that derive 50% or more of their total revenue from either goods or services
produced in Latin America or sales made in Latin America; (iii) securities of
companies organized under the laws of, and with a principal office in, Latin
America; or (iv) securities issued or guaranteed by the government of a country
in Latin America, its agencies or instrumentalities, political subdivisions or
the central bank of such a country. Determinations as to eligibility will be
made by Bankers Trust, under the supervision of the Board of Trustees of BT
Investment Portfolios, based on publicly available information and inquiries
made to the issuers.
Bankers Trust intends to consider investment only in those countries in Latin
America in which it believes investing is feasible and does not involve undue
political risks. As of the date of this Prospectus, this list included
Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela. Under normal
circumstances, the Portfolio's investments will be diversified among at least
three Latin American countries.
The Portfolio may invest in securities of companies having various levels of net
worth, including small companies whose securities may be more volatile than
securities offered by larger companies with higher levels of net worth.
In other countries and regions where capital markets are underdeveloped or not
easily accessed and information is difficult to obtain, the Portfolio may choose
to invest only at the market level. Here, to the extent available and consistent
with applicable regulations, the Portfolio may seek to achieve country exposure
through the use of options or futures based on an established local index or
through investment in other registered investment companies. Investment in other
investment companies is limited in amount by the 1940 Act, will involve the
indirect payment of a portion of the expenses, including advisory fees, of such
other investment companies and may result in a duplication of fees and expenses.
FIXED INCOME INVESTMENTS. For purposes of seeking capital appreciation, the
Portfolio may invest up to 35% of its total assets in debt securities of Latin
American issuers which are rated at least C by S&P or Moody's or, if unrated, of
comparable quality in the opinion of Bankers Trust. As an operating policy,
which may be changed by the Board of Trustees of BT Investment Portfolios, the
Portfolio will not invest more than 10% of its total assets in debt securities
rated BBB or lower by S&P or Baa or lower by Moody's. Securities which are rated
BBB by S&P or Baa by Moody's possess speculative characteristics. Bonds rated C
by S&P are of the lowest quality and may be used when the
18
<PAGE>
issuer has filed a bankruptcy petition, but debt payments are still being paid.
Moody's lowest rating is C, which is applied to bonds which have extremely poor
prospects of ever attaining any real investment standing. See "Risk Factors and
Certain Securities and Investment Practices -- Risks of Investing in High Yield
Securities (Junk Bonds)." Certain debt securities can provide the potential for
capital appreciation based on various factors such as changes in interest rates,
economic and market conditions, improvement in an issuer's ability to repay
principal and pay interest and ratings upgrades. Additionally, convertible bonds
offer the potential for capital appreciation through the conversion feature,
which enables the holder of the bond to benefit from increases in the market
price of the securities into which they are convertible.
OTHER INVESTMENTS AND INVESTMENT TECHNIQUES. The Portfolio may also utilize the
following investments and investment techniques and practices: Brady bonds,
foreign currency exchange transactions, options on foreign currencies, ADRs,
GDRs and EDRs, options on stocks, options on foreign stock ^ indices, futures
contracts on foreign stock ^ indices, options on futures contracts, when-issued
and delayed delivery securities, Rule 144A securities, short-term investments,
repurchase agreements, reverse repurchase agreements and securities lending. See
"Risk Factors and Certain Securities and Investment Practices" in this
Prospectus and in the SAI for further information.
RISK FACTORS AND CERTAIN SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of instruments
in which a Portfolio may invest^ and strategies Bankers Trust may employ in
pursuit of a Portfolio's investment objective. A summary of risks and
restrictions associated with these instrument types and investment practices is
included as well.
Bankers Trust may not buy all of these instruments or use all of these
techniques to the full extent permitted unless it believes that doing so will
help a Portfolio achieve its goal. Holdings and recent investment strategies are
described in the financial reports of a Fund and the corresponding Portfolio,
which are sent to Fund shareholders twice a year. For a free SAI or financial
report, call ^ an Investment Professional.
RISKS OF INVESTING IN FOREIGN SECURITIES
Investors should realize that investing in securities of foreign issuers
involves considerations not typically associated with investing in securities of
companies organized and operated in the United States. Investors should realize
that the value of a Portfolio's foreign investments may be adversely affected by
changes in political or social conditions, diplomatic relations, confiscatory
taxation, expropriation, nationalization, limitation on the removal of funds or
assets, or imposition of (or change in) exchange control or tax regulations in
foreign countries. In
19
<PAGE>
addition, changes in government administrations or economic or monetary policies
in the United States or abroad could result in appreciation or depreciation of
portfolio securities and could favorably or unfavorably affect the Portfolio's
operations. Furthermore, the economies of individual foreign nations may differ
from the U.S. economy, whether favorably or unfavorably, in areas such as growth
of gross national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position; it may also be more difficult
to obtain and enforce a judgment against a foreign issuer. In general, less
information is publicly available with respect to foreign issuers than is
available with respect to U.S. companies. Most foreign companies are also not
subject to the uniform accounting and financial reporting requirements
applicable to issuers in the United States. Any foreign investments made by the
Portfolio must be made in compliance with U.S. and foreign currency restrictions
and tax laws restricting the amounts and types of foreign investments.
Because foreign securities generally are denominated and pay dividends or
interest in foreign currencies, the value of the net assets of a Portfolio as
measured in U.S. dollars will be affected favorably or unfavorably by changes in
exchange rates. In order to protect against uncertainty in the level of future
foreign currency exchange rates, each Portfolio is also authorized to enter into
certain foreign currency exchange transactions. Furthermore, a Portfolio's
foreign investments may be less liquid and their prices may be more volatile
than comparable investments in securities of U.S. companies. The settlement
periods for foreign securities, which are often longer than those for securities
of U.S. issuers, may affect portfolio liquidity. Finally, there is generally
less government supervision and regulation of securities exchanges, brokers and
issuers in foreign countries than in the United States.
EMERGING MARKETS
The world's industrialized markets generally include but are not limited to the
following: Australia, Austria, Belgium, Canada, Denmark, Finland, France,
Germany, Hong Kong, Ireland, Italy, Japan, Luxembourg, the Netherlands, New
Zealand, Norway, Singapore, Spain, Sweden, Switzerland, the United Kingdom, and
the United States; the world's emerging markets generally include but are not
limited to the following: Argentina, Bolivia, Brazil, Bulgaria, Chile, China,
Colombia, Costa Rica, the Czech Republic, Ecuador, Egypt, Greece, Hungary,
India, Indonesia, Israel, the Ivory Coast, Jordan, Malaysia, Mexico, Morocco,
Nicaragua, Nigeria, Pakistan, Peru, the Philippines, Poland, Portugal, Romania,
Russia, Slovakia, Slovenia, South Africa, South Korea, Sri Lanka, Taiwan,
Thailand, Turkey, Uruguay, Venezuela, Vietnam and Zimbabwe.
Investment in securities of issuers based in underdeveloped countries entails
all of the risks of investing in securities of foreign issuers outlined in this
section to a heightened degree.
20
<PAGE>
These heightened risks include: (i) greater risks of expropriation, confiscatory
taxation, nationalization, and less social, political and economic stability;
(ii) the smaller size of the market for such securities and a low or nonexistent
volume of trading, resulting in lack of liquidity and in price volatility; (iii)
certain national policies which may restrict the Portfolio's investment
opportunities including restrictions on investing in issuers or industries
deemed sensitive to relevant national interests; and (iv) in the case of Eastern
Europe and in China and other Asian countries, the absence of developed capital
markets and legal structures governing private or foreign investment and private
property and the possibility that recent favorable economic and political
developments could be slowed or reversed by unanticipated events.
So long as the Communist Party continues to exercise a significant or, in some
countries, dominant role in Eastern European countries or in China and other
Asian countries, investments in such countries will involve risks of
nationalization, expropriation and confiscatory taxation. The Communist
governments of a number of Eastern European countries expropriated large amounts
of private property in the past, in many cases without adequate compensation,
and there may be no assurance that such expropriation will not occur in the
future. In the event of such expropriation, a Portfolio could lose a substantial
portion of any investments it has made in the affected countries. Further, no
accounting standards exist in Eastern European countries. Finally, even though
certain Eastern European currencies may be convertible into U.S. dollars, the
conversion rates may be artificial to the actual market values and may be
adverse to Fund shareholders.
In addition to brokerage commissions, custodial services and other costs
relating to investment in emerging markets are generally more expensive than in
the United States. Such markets have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Portfolio to make intended security purchases due to settlement
problems could cause the Portfolio to miss attractive investment opportunities.
Inability to dispose of a security due to settlement problems could result
either in losses to the Portfolio due to subsequent declines in the value of the
security or, if the Portfolio has entered into a contract to sell the security,
could result in possible liability to the purchaser.
RISKS OF INVESTING IN HIGH YIELD SECURITIES (JUNK BONDS) Lower-rated securities,
including securities rated from BB to D by S&P or Ba to C by Moody's or, if
unrated, of comparable quality in the opinion of Bankers Trust, will usually
offer higher yields than higher-rated securities. However, there is more risk
associated with these investments. This is because of the reduced
creditworthiness and increased risk of default that these securities carry.
Lower-rated securities generally tend to
21
<PAGE>
reflect short-term corporate and market developments to a greater extent than
higher-rated securities which react primarily to fluctuations in the general
level of interest rates. Lower rated securities also involve greater sensitivity
to significant increases in interest rates. Short-term corporate and market
developments affecting the prices and liquidity of lower-rated securities could
include adverse news impacting major issues or underwriters or dealers in
lower-rated or unrated securities. In addition, since there are fewer investors
in lower-rated securities, it may be harder to sell securities at an optimum
time.
An economic downturn may adversely affect the value of some lower-rated bonds.
Such a downturn may especially affect highly leveraged companies or companies in
cyclically sensitive industries, where deterioration in a company's cash flow
may impair its ability to meet its obligation to pay principal and interest to
bondholders in a timely fashion. From time to time, as a result of changing
conditions, issuers of lower-rated bonds may seek or may be required to
restructure the terms and conditions of the securities they have issued. As a
result of these restructurings, holders of lower-rated securities may receive
less principal and interest than originally expected at the time such bonds were
purchased. In the event of a restructuring, the Portfolio may bear additional
legal or administrative expenses in order to maximize recovery from an issuer.
The secondary trading market for lower-rated bonds is generally less liquid than
the secondary trading market for higher-rated bonds.
The risk of loss due to default by the issuer is significantly greater for the
holders of high yield securities because such securities are generally unsecured
and are often subordinated to other obligations of the issuer. During an
economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of high yield securities may experience financial stress and
may not have sufficient revenues to meet their interest payment obligations. An
issuer's ability to service its debt obligations may also be adversely affected
by specific corporate developments, its inability to meet specific projected
business forecasts, or the unavailability of additional financing.
Factors adversely affecting the market value of high yield and other Portfolio
securities will adversely affect the corresponding Fund's net asset value. In
addition, a Portfolio may incur additional expenses to the extent it is required
to seek recovery upon a default in the payment of principal or interest on its
portfolio holdings.
RISKS OF INVESTING IN MEDIUM- AND SMALL- CAPITALIZATION STOCKS The Small Cap
Portfolio and Capital Appreciation Portfolio invest primarily in smaller-sized
and medium-sized, respectively, growth-oriented common stocks of domestic
corporations and, to a limited extent, foreign corporations. Historically,
medium- and
22
<PAGE>
small-capitalization stocks have been more volatile in price that the
larger-capitalization stocks included in the S&P 500. Among the reasons for the
greater price volatility of these securities are the less certain growth
prospects of smaller firms, the lower degree of liquidity in the markets for
such stocks, and the greater sensitivity of medium- and small-size companies to
changing economic conditions. In addition to exhibiting greater volatility,
medium- and small-size company stocks may fluctuate independently of larger
company stocks. Medium- and small-size company stocks may decline in price as
large company stocks rise, or rise in prices as large company stocks decline.
NON-DIVERSIFIED FUND
The Global High Yield Securities Portfolio and Fund are each classified
as a "non-diversified" investment company so that with respect to 50% of the
Portfolio's assets, it will be able to invest more than 5% of its assets in
obligations of one or more issuers, while being limited with respect to the
other half of its assets to investments not exceeding 5% of the Portfolio's
total assets. (A "diversified" investment company would be required under the
1940 Act, to maintain at least 75% of its assets in cash (including foreign
currency), cash items, U.S. Government securities, and other securities limited
per issuer to not more than 5% of the investment company's total assets.) In
order to enable the Fund to qualify as a regulated investment company under the
Internal Revenue Code of 1986, as amended (the "Code"), the Portfolio, among
other things, may not invest more than 25% of its assets in obligations of any
one issuer (other than U.S. Government securities). As a "non-diversified"
investment company, the Portfolio may invest a greater proportion of its assets
in the securities of a smaller number of issuers and therefore may be subject to
greater market and credit risk than a more broadly diversified fund.
The Portfolio will not have more than 25% of the current value of its
total assets invested in any single industry, provided that this restriction
shall not apply to debt securities issued or guaranteed by the U.S. Government
or its agencies or instrumentalities.
SPECIAL INFORMATION CONCERNING MASTER-FEEDER FUND STRUCTURE Unlike other
open-end management investment companies (mutual funds) which directly acquire
and manage their own portfolio securities, each Fund seeks to achieve its
investment objective by investing all of its Assets in the corresponding
Portfolio, a separate registered investment company with the same investment
objectives as the Fund. Therefore, an investor's interest in the Portfolio's
securities is indirect, like investments in other investment companies and
pooled investment vehicles. In addition to selling a beneficial interest to the
corresponding Fund, each Portfolio may sell beneficial interests to other mutual
funds or institutional investors. Such investors will invest in a Portfolio on
the same terms and conditions and will pay a proportionate share of the
Portfolio's expenses. However, the other investors investing in a Portfolio are
not required to sell
23
<PAGE>
their shares at the same public offering price as the Fund due to variations in
sales commissions and other operating expenses. Therefore, investors in a Fund
should be aware that these differences may result in differences in returns
experienced by investors in the different funds that invest in the Portfolio.
Such differences in returns are also present in other mutual fund structures.
Information concerning other holders of interests in the Portfolio is available
from Bankers Trust, as the Administrator, at (800) ^ 730-1313.
The master-feeder structure has been developed relatively recently, so
shareholders should carefully consider this investment approach.
Smaller funds investing in a Portfolio may be materially affected by the actions
of larger funds investing in the Portfolio. For example, if a large fund
withdraws from a Portfolio, the remaining funds may experience higher pro rata
operating expenses, thereby producing lower returns (however, this possibility
exists as well for traditionally structured funds which have large institutional
investors). Additionally, a Portfolio may become less diverse, resulting in
increased portfolio risk. Also, funds with a greater pro rata ownership in a
Portfolio could have effective voting control of the operations of the
Portfolio. Except as permitted by the SEC, whenever the Trust is requested to
vote on matters pertaining to a Portfolio, the Trust will hold a meeting of
shareholders of the Fund and will cast all of its votes in the same proportion
as the votes of the Fund's shareholders. Fund shareholders who do not vote will
not affect the Trust's votes at the Portfolio meeting. The percentage of the
Trust's votes representing Fund shareholders not voting will be voted by the
Trustees or officers of the Trust in the same proportion as the Fund
shareholders who do, in fact, vote. Certain changes in the Portfolio's
investment objectives, policies or restrictions may require the Fund to withdraw
its interest in the Portfolio. Any such withdrawal could result in a
distribution "in kind" of portfolio securities (as opposed to a cash
distribution from the Portfolio). If securities are distributed, the Fund could
incur brokerage, tax or other charges in converting the securities to cash. In
addition, the distribution in kind may result in a less diversified portfolio of
investments or adversely affect the liquidity of the Fund. Notwithstanding the
above, there are other means for meeting redemption requests, such as borrowing.
A Fund may withdraw its investment from the Portfolio at any time, if the Board
of Trustees of the Trust determines that it is in the best interests of the
shareholders of the Fund to do so. Upon any such withdrawal, the Board of
Trustees of the Trust would consider what action might be taken, including the
investment of all the Assets of the Fund in another pooled investment entity
having the same investment objectives as the Fund or the retaining of an
investment adviser to manage the Fund's Assets in accordance with the investment
policies
24
<PAGE>
described herein with respect to the corresponding Portfolio.
Each Fund's investment objective is not a fundamental policy and may be changed
upon notice to but without the approval of the Fund's shareholders. If there is
a change in a Fund's investment objective, the Fund's shareholders should
consider whether the Fund remains an appropriate investment in light of their
then-current needs. The investment objective of each Portfolio is also not a
fundamental policy. Shareholders of the Funds will receive 30 days prior written
notice with respect to any change in the investment objective of a Fund or the
corresponding Portfolio. See "Risk Factors and Certain Securities and Investment
^ Practices" in the SAI for a description of the fundamental policies of each
Portfolio that cannot be changed without approval by ^"the vote of ^ a majority
of the outstanding voting securities^" (as defined in the 1940 Act) of the
Portfolio.
For descriptions of the investment objective, policies and restrictions of each
Portfolio, see "The Funds in Detail" herein and "Risk Factors and Certain
Securities and Investment Practices" in this Prospectus and in the SAI. For
descriptions of the management of the Trust and the Portfolios, see "Management
of the Trust and the Portfolios" herein and in the SAI. For descriptions of the
expenses of the Portfolio, see "The Funds -- Expense Summary" herein and
"Management of the Trust and the Portfolios" herein and in the SAI.
SECURITIES AND INVESTMENT PRACTICES
EQUITY SECURITIES. As used herein, "equity securities" are defined as common
stock, preferred stock, trust or limited partnership interests, rights and
warrants to subscribe to or purchase such securities, sponsored or unsponsored
ADRs, EDRs and GDRs, and convertible securities, consisting of debt securities
or preferred stock that may be converted into common stock or that carry the
right to purchase common stock. Common stocks, the most familiar type, represent
an equity (ownership) interest in a corporation. Although equity securities have
a history of long-term growth in value, their prices fluctuate based on changes
in a company's financial condition and on overall market and economic
conditions. Smaller companies are especially sensitive to these factors.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to borrow
money from investors. The issuer pays the investor a fixed or variable rate of
interest, and must repay the amount borrowed at maturity. Some debt securities,
such as zero coupon bonds, do not pay current interest, but are purchased at a
discount from their face values. Debt securities, loans, and other direct debt
have varying degrees of quality and varying levels of sensitivity to changes in
interest rates. Longer-term bonds are generally more sensitive to interest rate
changes than short-term bonds.
25
<PAGE>
Lower-quality foreign government securities are often considered to be
speculative and involve greater risk of default or price changes, or they may
already be in default. These risks are in addition to the general risks
associated with foreign securities.
CONVERTIBLE ^ SECURITIES. A convertible security is a bond or preferred stock
which may be converted at a stated price within a specific period of time into a
specified number of shares of common stock of the same or different issuer.
Convertible securities are senior to common stock in a corporation's capital
structure, but usually are subordinated to non-convertible debt securities.
While providing a fixed income stream -- generally higher in yield than in the
income ^ derived from a common stock but lower than that afforded by a
non-convertible debt security -- a convertible security also affords an investor
the opportunity, through its conversion feature, to participate in the capital
appreciation of common stock into which it is convertible.
In general, the market value of a convertible security is the higher of its
investment value (its value as a fixed income security) or its conversion value
(the value of the underlying shares of common stock if the security is
converted). As a fixed income security, the market value of a convertible
security generally increases when interest rates decline and generally decreases
when interest rates rise; however, the price of a convertible security generally
increases as the market value of the underlying stock increases, and generally
decreases as the market value of the underlying stock declines. Investments in
convertible securities generally entail less risk than investments in the common
stock of the same issuer.
PREFERRED STOCK. Preferred stock has a preference in liquidation (and, generally
dividends) over common stock but is subordinated in liquidation to debt. As a
general rule the market value of preferred stocks with fixed dividend rates and
no conversion rights varies inversely with interest rates and perceived credit
risk, with the price determined by the dividend rate. Some preferred stocks are
convertible into other securities, for example common stock, at a fixed price
and ratio or upon the occurrence of certain events. The market price of
convertible preferred stocks generally reflects an element of conversion value.
Because many preferred stocks lack a fixed maturity date, these securities
generally fluctuate substantially in value when interest rates change; such
fluctuations often exceed those of long-term bonds of the same issuer. Some
preferred stocks pay an adjustable dividend that may be based on an index,
formula, auction procedure or other dividend rate reset mechanism. In the
absence of credit deterioration, adjustable rate preferred stocks tend to have
more stable market values than fixed rate preferred stocks.
All preferred stocks are also subject to the same types of credit
risks of the issuer as corporate bonds. In addition, because
26
<PAGE>
preferred stock is junior to debt securities and other obligations of an issuer,
deterioration in the credit rating of the issuer will cause greater changes in
the value of a preferred stock than in a more senior debt security with similar
yield characteristics. Preferred stocks may be rated by S&P and Moody's although
there is no minimum rating which a preferred stock must have (and a preferred
stock may not be rated) to be an eligible investment for a Portfolio. Bankers
Trust expects, however, that generally the preferred stocks in which a Portfolio
invests will be rated at least CCC by S&P or Caa by Moody's or, if unrated, of
comparable quality in the opinion of Bankers Trust. Preferred stocks rated CCC
by S&P are regarded as predominantly speculative with respect to the issuer's
capacity to pay preferred stock obligations and represent the highest degree of
speculation among securities rated between BB and CCC; preferred stocks rated
Caa by Moody's are likely to be in arrears on dividend payments. Moody's rating
with respect to preferred stocks does not purport to indicate the future status
of payments of dividends.
WARRANTS are instruments which entitle the holder to buy underlying equity
securities at a specific price for a specific period of time. A warrant tends to
be more volatile than its underlying securities and ceases to have value if it
is not exercised prior to its expiration date. In addition, changes in the value
of a warrant do not necessarily correspond to changes in the value of its
underlying securities.
U.S. GOVERNMENT SECURITIES are high-quality debt securities issued or guaranteed
by the U.S. Treasury or by an agency or instrumentality of the U.S. government.
Not all U.S. government securities are backed by the full faith and credit of
the United States. For example, securities issued by the Federal Farm Credit
Bank or by the Federal National Mortgage Association are supported by the
instrumentality's right to borrow money from the U.S. Treasury under certain
circumstances. However, securities issued by other agencies or instrumentalities
are supported only by the credit of the entity that issued them.
ADRS, GDRS AND EDRS are certificates evidencing ownership of shares of a
foreign-based issuer held in trust by a bank or similar financial institution.
Designed for use in U.S. and European securities markets, respectively, ADRs,
GDRs and EDRs are alternatives to the purchase of the underlying securities in
their national markets and currencies. ADRs, GDRs and EDRs are subject to the
same risks as the foreign securities to which they relate. See "Risk Factors and
Certain Securities and Investment Practices -- Risks of Investing in Foreign
Securities."
ZERO COUPON SECURITIES are the separate income or principal components of a debt
instrument. These involve risks that are similar to those of other debt
securities, although they may be more volatile, and certain zero coupon
securities move in the same direction as interest rates.
27
<PAGE>
FLOATING RATE BONDS may have interest rates that move in tandem with a
benchmark, helping to stabilize their prices.
SOVEREIGN AND SUPRANATIONAL DEBT OBLIGATIONS. Debt instruments issued or
guaranteed by foreign governments, agencies, and supranational organizations
("sovereign debt obligations"), especially sovereign debt obligations of
developing countries, may involve a high degree of risk, and may be in default
or present the risk of default. The issuer of the obligation or the governmental
authorities that control the repayment of the debt may be unable or unwilling to
repay principal and interest when due, and may require renegotiation or
rescheduling of debt payments. In addition, prospects for repayment of principal
and interest may depend on political as well as economic factors.
BRADY BONDS. "Brady bonds" are bonds issued as a result of a restructuring of a
country's debt obligations to commercial banks under the "Brady plan." Brady
bonds have been issued by the governments of Argentina, Costa Rica, Mexico,
Nigeria, Uruguay and Venezuela, Brazil and the Philippines, as well as other
emerging market countries. Most Brady bonds are currently rated below BBB by S&P
or Baa by Moody's. While Bankers Trust is not aware of the occurrence of any
payment defaults on Brady bonds, investors should recognize that these debt
securities have been issued only recently and, accordingly, do not have a long
payment history. Brady bonds may be collateralized or uncollateralized, are
issued in various currencies (primarily the U.S. dollar) and are actively traded
in the secondary market for Latin American debt.
RULE 144A SECURITIES are securities in the United States that are not registered
for sale under Federal securities laws but which can be resold to institutions
under the SEC's Rule 144A. Provided that a dealer or institutional trading
market in such securities exists, these restricted securities are treated as
exempt from the 15% limit on illiquid securities. Under the supervision of the
Board of Trustees of the Portfolio, Bankers Trust determines the liquidity of
restricted securities and, through reports from Bankers Trust, the Board will
monitor trading activity in restricted securities. Because Rule 144A is
relatively new, it is not possible to predict how these markets will develop. If
institutional trading in restricted securities were to decline, the liquidity of
the Portfolio could be adversely affected. No more than 10% of the Portfolio's
assets may be invested in securities restricted as to transfer or re-sale,
including Rule 144A securities.
WHEN ISSUED AND DELAYED DELIVERY SECURITIES. Each Portfolio may
purchase securities on a when-issued or delayed delivery basis.
Delivery of and payment for these securities may take place as
long as a month or more after the date of the purchase
commitment. The value of these securities is subject to market
fluctuation during this period and no income accrues to the
Portfolio until settlement takes place. The Portfolio maintains
28
<PAGE>
with the Custodian a segregated account containing high grade liquid securities
in an amount at least equal to these commitments.
REPURCHASE AGREEMENTS. In a repurchase agreement, a Portfolio buys a security at
one price and simultaneously agrees to sell it back at a higher price. Delays or
losses could result if the other party to the agreement defaults or becomes
insolvent.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a Portfolio
temporarily transfers possession of a portfolio instrument to another party in
return for cash. This could increase the risk of fluctuation in the fund's yield
or in the market value of its assets. A reverse repurchase agreement is a form
of borrowing and will be counted towards each Portfolio's borrowing
restrictions. See "Risk Factors and Certain Securities and Investment Practices
- -- Leverage" below and in the SAI.
INVESTMENT COMPANIES. With respect to certain countries in which capital markets
are either less developed or not easily accessed, investments by the Portfolio
may be made through investment in other registered investment companies that in
turn are authorized to invest in the securities of such countries. Investment in
other investment companies is limited in amount by the 1940 Act, will involve
the indirect payment of a portion of the expenses, including advisory fees, of
such other investment companies and may result in a duplication of fees and
expenses.
SHORT-TERM INVESTMENTS. Each Portfolio intends to stay invested in the
securities described above to the extent practical in light of its objective and
long-term investment perspective. However, a Portfolio's assets may be invested
in high quality short-term investments with remaining maturities of 397 days or
less to meet anticipated redemptions and expenses for day-to-day operating
purposes and when, in Bankers Trust's opinion, it is advisable to adopt a
temporary defensive position because of unusual and adverse conditions affecting
the respective markets.
SECURITIES LENDING. Each Portfolio is permitted to lend up to 30% of the total
value of its securities. These loans must be secured continuously by cash or
equivalent collateral or by a letter of credit at least equal to the market
value of the securities loaned plus accrued income. By lending its securities,
the Portfolio can increase its income by continuing to receive income on the
loaned securities as well as by the opportunity to receive interest on the
collateral. Any gain or loss in the market price of the borrowed securities
which occurs during the term of the loan inures to the Portfolio and its
investors. In lending securities to brokers, dealers and other financial
organizations, a Portfolio is subject to risks, which like those associated with
other extensions of credit, include delays in recovery and possible loss of
rights in the collateral should the borrower fail financially.
29
<PAGE>
LEVERAGE. The Global High Yield Securities Portfolio and Latin American Equity
Portfolio may each borrow up to one-third of the value of its total assets, from
banks or through the use of reverse repurchase agreements, to increase its
holdings of portfolio securities. Under the 1940 Act, each Portfolio is required
to maintain continuous asset coverage of 300% with respect to such borrowings
and to sell (within three days) sufficient portfolio holdings to restore such
coverage if it should decline to less than 300% due to market fluctuations or
otherwise, even if such liquidations of a Portfolio's holdings may be
disadvantageous from an investment standpoint.
Leveraging by means of borrowing may exaggerate the effect of any increase or
decrease in the value of each Portfolio's securities and the corresponding
Fund's net asset value and money borrowed by a Portfolio will be subject to
interest and other costs (which may include commitment fees and/or the cost of
maintaining minimum average balances) which may or may not exceed the income
received from the securities purchased with borrowed funds.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Global High Yield Securities Portfolio
may invest in fixed and floating rate loans ("loans") arranged through private
negotiations between a borrower and one or more institutions ("lenders"). The
majority of the Portfolio's investments in loans in emerging markets is expected
to be in the form of participations in loans ("participations") and assignments
of portions of loans from third parties ("assignments"). The Portfolio may also
invest in loans, participations or assignments of loans to borrowers located in
the industrialized world. Participations typically will result in the
Portfolio's having a contractual relationship only with the lender, not the
borrower. The Portfolio will have the right to receive payments of principal,
interest and any fees to which it is entitled only from the lender selling the
participation and only upon receipt by the lender of the payments from the
borrower. In connection with purchasing participations, the Portfolio generally
will have no right to enforce compliance by the borrower with the terms of the
loan agreement relating to the loan ("loan agreement"), nor any rights of
set-off against the borrower, and the Portfolio may not directly benefit from
any collateral supporting the loan in which it has purchased the participation.
As a result, the Portfolio will assume the credit risk of both the borrower and
the lender that is selling the participation. In the event of the insolvency of
the lender selling the participation, the Portfolio may be treated as a general
creditor of the lender and may not benefit from any set-off between the lender
and the borrower. The Portfolio will acquire participations only if the lender
interpositioned between the Portfolio and the borrower is determined by Bankers
Trust to be creditworthy. When the Portfolio purchases assignments from lenders,
the Portfolio will acquire direct rights against the borrower on the loan;
however, since assignments are arranged through private negotiations between the
potential assignees and
30
<PAGE>
assignors, the rights and obligations acquired by the Portfolio as the purchaser
of an assignment may differ from, and be more limited than, those held by the
assigning lender.
The Portfolio may have difficulty disposing of assignments and participations.
The liquidity of such securities is limited and the Portfolio anticipates that
such securities could only be sold to a limited number of institutional
investors. The lack of a liquid secondary market could have an adverse impact on
the value of such securities and on the Portfolio's ability to dispose of
particular assignments or participations when necessary to meet the Portfolio's
liquidity needs or in response to a specific economic event, such as a
deterioration in the creditworthiness of the borrower. The lack of a liquid
secondary market for assignments and participations also may make it more
difficult in valuing the Portfolio and, therefore, calculating the net asset
value per share of the Fund. All assignments and participations shall be
considered to be illiquid securities by the Portfolio. The investment by the
Portfolio in illiquid securities, including assignments and participations, is
limited to a total of 15% of net assets.
DERIVATIVES
Each Portfolio may invest in various instruments that are commonly known as
derivatives. Generally, a derivative is a financial arrangement, the value of
which is based on, or "derived" from, a traditional security, asset, or market
index. Some "derivatives" such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities. There are,
in fact, many different types of derivatives and many different ways to use
them. There are a range of risks associated with those uses. Futures and options
are commonly used for traditional hedging purposes to attempt to protect a fund
from exposure to changing interest rates, securities prices, or currency
exchange rates and as a low cost method of gaining exposure to a particular
securities market without investing directly in those securities. However, some
derivatives are used for leverage, which tends to magnify the effects of an
instrument's price changes as market conditions change. Leverage involves the
use of a small amount of money to control a large amount of financial assets,
and can in some circumstances, lead to significant losses. Bankers Trust will
use derivatives only in circumstances where they offer the most efficient means
of improving the risk/reward profile of a Portfolio. The use of derivatives for
non-hedging purposes may be considered speculative.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Each Portfolio may enter into foreign
currency exchange transactions to convert to and from different foreign
currencies and to convert foreign currencies to and from the U.S. dollar. A
Portfolio either enters into these transactions on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market or uses
31
<PAGE>
forward contracts to purchase or sell foreign currencies.
A forward foreign currency exchange contract is an obligation by a Portfolio to
purchase or to sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract. Forward foreign currency exchange
contracts establish an exchange rate at a future date. These contracts are
transferable in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. A forward foreign currency
exchange contract generally has no deposit requirement and is traded at a net
price without commission. Neither spot transactions nor forward foreign currency
exchange contracts eliminate fluctuations in the prices of a Portfolio's
securities or in foreign exchange rates, or prevent loss if the prices of these
securities should decline.
A Portfolio may enter into foreign currency hedging transactions in an attempt
to protect against changes in foreign currency exchange rates between the trade
and settlement dates of specific securities transactions or changes in foreign
currency exchange rates that would adversely affect a portfolio position or an
anticipated investment position. Although these transactions tend to minimize
the risk of loss due to a decline in the value of the hedged currency, at the
same time they tend to limit any potential gain that might be realized should
the value of the hedged currency increase. The precise matching of the forward
contract amounts and the value of the securities involved will not generally be
possible because the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of such securities
between the date the forward contract is entered into and the date it matures.
The projection of currency market movements is extremely difficult, and the
successful execution of a hedging strategy is highly uncertain.
OPTIONS ON FOREIGN CURRENCIES. Each Portfolio may write covered put and call
options and purchase put and call options on foreign currencies for the purpose
of protecting against declines in the U.S. dollar value of portfolio securities
and against increases in the U.S. dollar cost of securities to be acquired. Each
Portfolio may use options on currency to cross-hedge, which involves writing or
purchasing options on one currency to hedge against changes in exchange rates
for a different, but related currency. As with other types of options, however,
the writing of an option on foreign currency will constitute only a partial
hedge up to the amount of the premium received, and the Portfolio could be
required to purchase or sell foreign currencies at disadvantageous exchange
rates, thereby incurring losses. The purchase of an option on foreign currency
may be used to hedge against fluctuations in exchange rates although, in the
event of exchange rate movements adverse to a Portfolio's position, it may
forfeit the entire amount of the premium plus related transaction costs. In
addition, a Portfolio may purchase call options on a currency when the
investment adviser anticipates that the
32
<PAGE>
currency will appreciate in value.
There is no assurance that a liquid secondary market on an options exchange will
exist for any particular option, or at any particular time. If a Portfolio is
unable to effect a closing purchase transaction with respect to covered options
it has written, the Portfolio will not be able to sell the underlying currency
or dispose of assets held in a segregated account until it closes out the
options or the options expire or are exercised. Similarly, if the Portfolio is
unable to close out options it has purchased, it would have to exercise the
options in order to realize any profit and will incur transaction costs. The
Portfolio pays brokerage commissions or spreads in connection with its options
transactions.
OPTIONS ON STOCKS. Each Portfolio (except the Global High Yield Securities
Portfolio) may write and purchase options on stocks. A call option gives the
purchaser of the option the right to buy, and obligates the writer to sell, the
underlying stock at the exercise price at any time during the option period.
Similarly, a put option gives the purchaser of the option the right to sell, and
obligates the writer to buy the underlying stock at the exercise price at any
time during the option period. A covered call option with respect to which a
Portfolio owns the underlying stock sold by the Portfolio exposes the Portfolio
during the term of the option to possible loss of opportunity to realize
appreciation in the market price of the underlying stock or to possible
continued holding of a stock which might otherwise have been sold to protect
against depreciation in the market price of the stock. A covered put option sold
by a Portfolio exposes the Portfolio during the term of the option to a decline
in price of the underlying stock.
OPTIONS ON SECURITIES ^ INDICES. Each Portfolio may purchase and write put and
call options on stock or bond ^ indices listed on domestic and foreign stock
exchanges, in lieu of direct investment in the underlying securities or for
hedging purposes. A stock or bond index fluctuates with changes in the market
values of the securities included in the index.
Options on securities ^ indices are generally similar to options on stocks
except that the delivery requirements are different. Instead of giving the right
to take or make delivery of securities at a specified price, an option on a
stock or bond index gives the holders the right to receive a cash "exercise
settlement amount" equal to (a) the amount, if any, by which the fixed exercise
price of the option exceeds (in the case of a put) or is less than (in the case
of a call) the closing value of the underlying index on the date of the
exercise, multiplied by (b) a fixed "index multiplier."
Successful use by a Portfolio of options on security ^ indices will be subject
to Bankers Trust's ability to predict correctly movement in the direction of the
security market generally or of
33
<PAGE>
a particular industry. This requires different skills and
techniques than predicting changes in the price of individual
securities.
FUTURES CONTRACTS ON SECURITIES ^ INDICES. A Portfolio may enter into contracts
providing for the making and acceptance of a cash settlement based upon changes
in the value of an index of domestic or foreign securities ("Futures
Contracts"). This investment technique may be used as a low-cost method of
gaining exposure to a particular securities market without investing directly in
those securities or to hedge against anticipated future changes in general
market prices which otherwise might either adversely affect the value of
securities held by the Portfolio or adversely affect the prices of securities
which are intended to be purchased at a later date for the Portfolio. A Futures
Contract may also be entered into to close out or offset an existing futures
position.
When used for hedging purposes, each transaction in Futures Contracts involves
the establishment of a position which will move in a direction opposite to that
of the investment being hedged. If these hedging transactions are successful,
the futures position taken for the Portfolio will rise in value by an amount
which approximately offsets the decline in value of the portion of the
Portfolio's investments that is being hedged. Should general market prices move
in an unexpected manner, the full anticipated benefits of Futures Contracts may
not be achieved or a loss may be realized.
The risks of Futures Contracts also include a potential lack of liquidity in the
secondary market and incorrect assessments of market.
Brokerage costs will be incurred and "margin" will be required to be posted and
maintained as a good faith deposit against performance of obligations under
Futures Contracts written for a Portfolio. A Portfolio may not purchase or sell
a Futures Contract if immediately thereafter its margin deposits on its
outstanding Futures Contracts, other than Futures Contracts used for hedging
purposes, would exceed 5% of the market value of the Portfolio's total assets.
OPTIONS ON FUTURES CONTRACTS. Each Portfolio may invest in
options on futures contracts for similar purposes.
There can be no assurance that the use of these portfolio strategies will be
successful.
ASSET COVERAGE. To assure that a Portfolio's use of futures and related options,
as well as when-issued and delayed-delivery securities and foreign currency
exchange transactions, are not used to achieve investment leverage, a Portfolio
will cover such transactions, as required under applicable interpretations, of
the SEC, either by owning the underlying securities, entering
34
<PAGE>
into an off-setting transaction, or by establishing a segregated account with
the Portfolio's custodian containing high grade liquid debt securities in an
amount at all times equal to or exceeding the Portfolio's commitment with
respect to these instruments or contracts.
PORTFOLIO TURNOVER
The portfolio turnover rate for each Portfolio for the periods indicated were as
follows: Global High Yield Securities Portfolio -- 169% and 347% for the fiscal
year ended September 30, 1995 and for the period from December 14, 1993
(commencement of operations) to September 30, 1994, respectively; Capital
Appreciation Portfolio -- 125%, 157% and 137% for the period from January 1,
1995 to September 30, 1995, the fiscal year ended December 31, 1994 and the
period from March 9, 1993 (commencement of operations) to December 31, 1993,
respectively; Small Cap Portfolio -- 161% and 154% for the fiscal year ended
September 30, 1995 and for the period from October 21, 1993 (commencement of
operations) to September 30, 1994, respectively; International Equity Portfolio
- -- 21%, 15%, 17% and 7% for the period from January 1, 1995 to September 30,
1995, the fiscal years ended December 31, 1994, 1993 and the period from August
4, 1992 (commencement of operations) to December 31, 1992, respectively; Pacific
Basin Equity Portfolio -- 104% and 40% for the fiscal year ended September 30,
1995 and for the period from November 1, 1993 (commencement of operations) to
September 30, 1994, respectively; and Latin American Equity Portfolio -- 161%
and 124% for the fiscal year ended September 30, 1995 and for the period from
October 25, 1993 (commencement of operations) to September 30, 1994,
respectively. These rates will vary from year to year. High turnover rates
increase transaction costs and may increase investable capital gains. Bankers
Trust considers these effects when evaluating the anticipated benefits of
short-term investing.
PERFORMANCE
Each Portfolio's recent strategies and holdings, and the corresponding Fund's
performance, is detailed twice a year in the Funds' financial reports, which are
sent to all Fund shareholders.
For current Fund performance or a free copy of the Funds' financial report,
please contact ^ an Investment Professional.
Mutual fund performance is commonly measured as TOTAL RETURN and/or YIELD. Each
Fund's performance is affected by the expenses of that Fund. The exclusion of
any applicable sales charge from a performance calculation produces a higher
return.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a Fund over a given
period, assuming reinvestment of any dividends and capital gains. A cumulative
total return reflects actual
35
<PAGE>
performance over a stated period of time. An AVERAGE annual total return is a
hypothetical rate of return that, if achieved annually, would have produced the
same cumulative total return if performance had been constant over the entire
period. Average annual total return calculations smooth out variations in
performance; they are not the same as actual year-by-year results. Average
annual total returns covering periods of less than one year assume that
performance will remain constant for the rest of the year.
Average annual and cumulative total returns may or may not include the effect of
paying the maximum applicable sales charge.
^ Each Fund, which has not commenced investment operations, invests all of its
Assets in the corresponding Portfolio, ^ which are ^ each a separate registered
investment company which commenced operations as indicated below. Consistent
with applicable regulatory guidance, performance for the period from
commencement of operations of each corresponding Portfolio to the commencement
of operations of each Fund will reflect the investment performance of the
corresponding Portfolio. The performance for this prior period reflects the
deduction of the charges and expenses of each Fund as set forth above under
"Expense Summary" and does not reflect the deduction of the maximum front-end
sales charge.
TOTAL RETURNS (AS OF SEPTEMBER 30, 1995)
Average Cumulative
Annual Total Total
Return for Return for
1 YEAR LIFE OF FUND LIFE OF FUND
Global High Yield Securities Fund ^ 4.62% 4.30%(a) 7.85%(a)
Capital Appreciation Fund ^ 43.01% 22.22%(b) 67.21%(b)
Small Cap Fund ^ 59.10% 36.91%(c) 84.08%(c)
International Equity Fund ^ 13.57% 16.15%(d) 60.39%(d)
Pacific Basin Equity Fund ^-3.97% 6.79%(e) 13.40%(e)
Latin American Equity Fund ^-40.84% -7.52%(f) -14.02%(f)
(a)Portfolio commenced operations on December 14, 1993.
(b)Portfolio commenced operations on March 9, 1993.
(c)Portfolio commenced operations on October 21, 1993.
(d)Portfolio commenced operations on August 4, 1992.
(e)Portfolio commenced operations on November 1, 1993.
(f)Portfolio commenced operations on October 25, 1993.
36
<PAGE>
YIELD refers to the income generated by an investment in a Fund over a given
period of time, expressed as an annual percentage rate. Yields are calculated
according to a standard that is required for all stock and bond funds. Because
this differs from other accounting methods, the quoted yield may not equal the
income actually paid to shareholders. This difference may be significant for a
Fund investing in a Portfolio whose investments are denominated in foreign
currencies.
Performance information may include comparisons of a Fund's investment results
to various unmanaged indices or results of other mutual funds or investment or
savings vehicles. From time to time, Fund rankings may be quoted from various
sources, such as Lipper Analytical Services, Inc., Value Line and Morningstar,
Inc.
Unlike some bank deposits or other investments which pay a fixed yield for a
stated period of time, the total return of a Fund will vary depending upon
interest rates, the current market value of the securities held by the
corresponding Portfolio and changes in the expenses of the Fund or Portfolio. In
addition, during certain periods for which total return may be provided, Bankers
Trust or SBDS may have voluntarily agreed to waive portions of their fees, or
reimburse certain operating expenses of a Fund or Portfolio, on a month-to-month
basis. Such waivers will have the effect of increasing the Fund's net income
(and therefore its yield and total return) during the period such waivers are in
effect.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN INDICATION OF
FUTURE PERFORMANCE.
MANAGEMENT OF THE TRUST AND THE PORTFOLIOS
BOARD OF TRUSTEES
The Trust and each Portfolio is governed by a Board of Trustees which is
responsible for protecting the interests of investors. ^ A majority of the
Trustees who are not "interested persons" (as defined in the 1940 Act) of the
Trust ^ or the Portfolio, as the case may be, have adopted written procedures
reasonably appropriate to deal with potential conflicts of interest arising from
the fact that the same individuals are Trustees of the Trust and the Portfolios,
up to and including creating separate boards of trustees. See "Management of the
Trust and the Portfolios" in the SAI for more information with respect to the
Trustees and officers of the Trust and each Portfolio.
INVESTMENT ADVISER
The Trust has not retained the services of an investment adviser since the Trust
seeks to achieve the investment objective of each Fund by investing all the
Assets of the Fund in the corresponding Portfolio. Each Portfolio has retained
the services of Bankers Trust as investment adviser (the "Adviser").
37
<PAGE>
BANKERS TRUST COMPANY AND ITS AFFILIATES Bankers Trust Company, a New York
banking corporation with ^ principal offices at ^ 280 Park Avenue, New York, New
York 10017, is a wholly owned subsidiary of Bankers Trust New York Corporation.
Bankers Trust conducts a variety of general banking and trust activities and is
a major wholesale supplier of financial services to the international and
domestic institutional market.
As of ^ September 30, 1995, Bankers Trust New York Corporation was the ^ ninth
largest bank holding company in the United States with total assets of
approximately ^ $104 billion. Bankers Trust is a worldwide merchant bank
dedicated to servicing the needs of corporations, governments, financial
institutions and private clients through a global network of over 120 offices in
more than 40 countries. Investment management is a core business of Bankers
Trust, built on a tradition of excellence from its roots as a trust bank founded
in 1903. The scope of Bankers Trust's investment management capability is unique
due to its leadership positions in both active and passive quantitative
management and its presence in major equity and fixed income markets around the
world. Bankers Trust is one of the nation's largest and most experienced
investment managers with approximately ^ $200 billion in assets under management
globally.
Bankers Trust has more than 50 years of experience managing retirement assets
for the nation's largest corporations and institutions. In the past, these
clients have been serviced through separate account and commingled fund
structures. Now, BT Global Investors brings Bankers Trust's extensive investment
management expertise - once available to only the largest institutions in the
U.S. - to individual investors. Bankers Trust's officers have had extensive
experience in managing investment portfolios having objectives similar to those
of each Portfolio.
Bankers Trust, subject to the supervision and direction of the Board of Trustees
of each Portfolio, manages each Portfolio in accordance with the Portfolio's
investment objective and stated investment policies, makes investment decisions
for the Portfolio, places orders to purchase and sell securities and other
financial instruments on behalf of the Portfolio and employs professional
investment managers and securities analysts who provide research services to the
Portfolio. Bankers Trust may utilize the expertise of any of its world wide
subsidiaries and affiliates to assist it in its role as investment adviser. All
orders for investment transactions on behalf of a Portfolio are placed by
Bankers Trust with broker-dealers and other financial intermediaries that it
selects, including those affiliated with Bankers Trust. A Bankers Trust
affiliate will be used in connection with a purchase or sale of an investment
for the Portfolio only if Bankers Trust believes that the affiliate's charge for
the transaction does not exceed usual and customary levels. The Portfolio will
not invest in obligations for which
38
<PAGE>
Bankers Trust or any of its affiliates is the ultimate obligor or accepting
bank. The Portfolio may, however, invest in the obligations of correspondents
and customers of Bankers Trust.
The Investment Advisory Agreement provides for each Portfolio to pay Bankers
Trust a fee, accrued daily and paid monthly, equal on an annual basis to the
following percentages of the average daily net assets of the Portfolio for its
then-current fiscal year: Global High Yield Securities Portfolio, 0.80%; Capital
Appreciation Portfolio, 0.65%; Small Cap Portfolio, 0.65%; International Equity
Portfolio, 0.65%; Pacific Basin Equity Portfolio, 0.75%; and Latin American
Equity Portfolio, 1.00%. With respect to Global High Yield Securities Portfolio,
Pacific Basin Equity Portfolio, and Latin American Equity Portfolio, the
investment advisory fee is higher than that of most funds, but not necessarily
higher than that of a typical international fund, due to the greater complexity,
expense and commitment of resources involved in international investing.
Bankers Trust has been advised by its counsel that, in counsel's opinion,
Bankers Trust currently may perform the services for the Trust and the
Portfolios described in this Prospectus and the SAI without violation of the
Glass-Steagall Act or other applicable banking laws or regulations. State laws
on this issue may differ from the interpretations of relevant Federal law, and
banks and financial institutions may be required to register as dealers pursuant
to state securities law.
SUB-INVESTMENT ADVISER -- PACIFIC BASIN EQUITY PORTFOLIO Bankers Trust has
entered into a sub-investment advisory agreement (the "Sub-Advisory Agreement")
with BT Fund Managers International Limited ("BT Fund Managers International"),
a wholly owned registered investment advisory subsidiary of Bankers Trust
Australia Limited ("BTAL"). BTAL is a wholly owned subsidiary of Bankers Trust
New York Corporation. Under the Sub-Advisory Agreement, Bankers Trust may
receive investment advice and research services with respect to companies based
in the Pacific Basin and may grant BT Fund Managers International investment
management authority as well as the authority to buy and sell securities if
Bankers Trust believes it would be beneficial to the Pacific Basin Equity
Portfolio. Under the Sub-Advisory Agreement, BT Fund Managers International
receives a fee from Bankers Trust for providing investment advice and research
services, accrued daily and paid monthly, at the annual rate of 0.60% of the
average daily assets of the Portfolio.
PORTFOLIO MANAGERS
^ Mr. Michael Levy has been the primary portfolio manager for the International
Equity Fund since August 1995. He also heads the international active equity
team, which is responsible for the day ^ to ^ day management of ^ the Portfolio.
Mr. ^ Levy has been ^ the head of this team since joining Bankers Trust ^ in
March, 1993, and is a Managing Director and International Equity Strategist of
Bankers Trust. The international active equity team
39
<PAGE>
has provided input into the management of the Portfolio^ since the Portfolio's
commencement of operations. Prior to joining Bankers ^ Trust, Mr. Levy was an
investment banker and an equity analyst with Oppenheimer & Company. He has
twenty-four years of business experience, of which fourteen years have been in
the investment industry.
Maria-Elena Carrion (CFA), Vice President of Bankers Trust, is primarily
responsible for the day-to-day management of the Latin American Equity
Portfolio. Ms. Carrion has been employed by Bankers Trust since April, 1993 and
has managed the Portfolio's assets since the Portfolio commenced operations.
Prior to April, 1993, Ms. Carrion was employed by Latin American Securities
(London) (from June, 1991 to April, 1993). Prior to June, 1991, Ms. Carrion was
employed by US Trust Company (from September, 1986 to June, 1991).
David A. Reiss, Vice President of Bankers Trust and Stephen C.
Freidheim, Managing Director of Bankers Trust are responsible for
the day-to-day management of the Global High Yield Securities
Portfolio. Mr. Reiss has been employed by Bankers Trust since
March, 1994 and has managed the Portfolio's assets since March,
1994. From September, 1989 to March, 1994, Mr. Reiss was a
Portfolio Manager at Kidder Peabody Asset Management. Prior to
September, 1989, he was an associate in Mortgage Research at
Goldman, Sachs & Co. Mr. Freidheim has been employed by Bankers
Trust since August, 1993 and has managed the Portfolio's assets
since December, 1993. From July, 1990 to July, 1993 he was a
Senior Vice President and Director of Research and Trading at
Nomura Securities International. Mr. Freidheim was also on the
Board of Directors of Nomura Corporate Research and Asset
Management. Prior to July, 1990, he was Director of Research at
Kidder, Peabody High Yield Asset Management.
Paul Durham, Vice President of BTAL, is responsible for the day-to-day
management of the Pacific Basin Equity Portfolio. Mr. Durham has been employed
by Bankers Trust since January, 1988 and has managed the Portfolio's assets
since November, 1993.
Mary Lisanti, Managing Director of Bankers Trust, is responsible for the
day-to-day management of the Capital Appreciation Portfolio and Small Cap
Portfolio. Ms. Lisanti has been employed by Bankers Trust since February, 1993
and has managed each Portfolio's assets since each Portfolio commenced
operations. Prior to 1993, she was a Vice President and Portfolio Manager with
Lieber & Company/The Evergreen Funds (since 1990).
Bankers Trust investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for personal
investing and restricts certain transactions.
ADMINISTRATOR
Under its Administration and Services Agreement with the Trust,
40
<PAGE>
Bankers Trust calculates the net asset value of each Fund and generally assists
the Board of Trustees of the Trust in all aspects of the administration and
operation of the Funds. The Administration and Services Agreement provides for
the Trust to pay Bankers Trust a fee, accrued daily and paid monthly equal on an
annual basis to the following percentages of the average daily net assets of the
Fund for its then-current fiscal year: Global High Yield Securities Fund, 0.95%;
Capital Appreciation Fund, 0.65%; Small Cap Fund, 0.65%; International Equity
Fund, 0.85%; Pacific Basin Equity Fund, 0.75%; and Latin American Equity Fund,
0.95%.
Under an Administration and Services Agreement with each Portfolio, Bankers
Trust calculates the value of the assets of the Portfolio and generally assists
the respective Board of Trustees in all aspects of the administration and
operation of the Portfolios. The Administration and Services Agreement provides
for each Portfolio to pay Bankers Trust a fee, accrued daily and paid monthly,
equal on an annual basis to the following percentages of the Portfolio's average
daily net assets for its then-current fiscal year: Global High Yield Securities
Portfolio, 0.20%; Capital Appreciation Portfolio, 0.10%; Small Cap Portfolio,
0.10%; International Equity Portfolio, 0.15%; Pacific Basin Equity Portfolio,
0.25%; and Latin American Equity Portfolio, 0.20%. Under each Administration and
Services Agreement, Bankers Trust may delegate one or more of its
responsibilities to others, including SBDS, at Bankers Trust's expense.
DISTRIBUTOR
Under its Distribution Agreement with the Trust, SBDS, as Distributor, serves as
the Trust's principal underwriter on a best efforts basis. In addition, SBDS
provides the Trust with office facilities. SBDS is a wholly owned subsidiary of
Signature Financial Group, Inc. ("SFG"). SFG and its affiliates currently
provide administration and distribution services for other registered investment
companies. The principal business address of SFG and SBDS is 6 St. James Avenue,
Boston, Massachusetts 02116.
DISTRIBUTION AND SERVICE PLAN
Pursuant to the terms of the Trust's Distribution and Service Plan pursuant to
Rule 12b-1 under the 1940 Act (the "Plan"), each Fund shall pay SBDS service
fees equal on an annual basis up to 0.25% of each Fund's average daily net
assets as reimbursement for the costs of compensating Investment Professionals
for providing personal shareholder services and maintaining shareholder
accounts. In addition, each Fund shall pay SBDS a distribution fee equal on an
annual basis to 0.25% (0.10% in the case of Global High Yield Securities Fund)
of each Fund's average daily net assets as reimbursement for expenses incurred
in connection with any activities primarily intended to result in the sale of
the Fund's shares, including, but not limited to: printing of prospectuses,
statements of additional information
41
<PAGE>
and reports for other than existing shareholders; payment of asset-based sales
charges or commissions to Investment Professionals; costs of placing advertising
in various media; services of parties in formulating sales literature; and
typesetting, printing and distribution of sales literature. All costs and
expenses in connection with implementing and operating the Plan will be paid by
each Fund, subject to the 0.50% (0.35% in the case of Global High Yield
Securities Fund) of net assets limitation. All costs and expenses associated
with preparing the Prospectus and SAI and in connection with printing them for
and distributing them to existing shareholders and regulatory authorities, which
costs and expenses would not be considered distribution expenses for purposes of
the Plan, will also be paid by the Funds. To the extent expenses of SBDS under
the Plan in any fiscal year of the Trust exceed amounts payable under the Plan
during that year, those expenses may be reimbursed in a succeeding fiscal year;
however, no carrying charge or interest will be added to the amount of the
expense. Expenses incurred in connection with distribution activities will be
identified to each Fund or the other series of the Trust involved, although it
is anticipated that some activities may be conducted on a Trust-wide basis, with
the result that those activities will not be identifiable to any particular
series. In the latter case, expenses will be allocated among the series of the
Trust on the basis of their relative net assets.
CUSTODIAN AND TRANSFER AGENT
Bankers Trust acts as custodian of the assets of the Trust and each Portfolio
and serves as the transfer agent (the "Transfer Agent") for the Trust and each
Portfolio under the Administration and Services Agreement with the Trust and
each Portfolio.
^ ACCOUNT INFORMATION
TYPES OF ACCOUNTS
Read your Investment Professional's program materials in conjunction with this
Prospectus for details of services that may differ from those described in the
Prospectus and for additional fees that may apply. Some of the services and
features of this Prospectus may not be available to you. Certain features of the
Funds, such as minimum initial or subsequent investment amounts, may be modified
in these programs, and administrative charges may be imposed for the services
rendered.
The different ways to set up (register) your account with ^ BT Global Investors
are listed below.
The account guidelines that follow may not apply to certain Funds
or to certain retirement accounts. If your employer offers a
Fund through a retirement program, contact your employer for more
information. Otherwise, call your Investment Professional
directly.
WAYS TO SET UP YOUR ACCOUNT
42
<PAGE>
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or more
owners (tenants). Joint accounts may be joint tenants in common or joint tenants
with rights of survivorship.
RETIREMENT
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES Retirement plans allow individuals
to shelter investment income and capital gains from current taxes. In addition,
contributions to these accounts may be tax deductible. Retirement accounts
require special applications and typically have lower minimums.
^ O INDIVIDUAL RETIREMENT ACCOUNTS ^("IRAS") allow anyone of legal age under 70
1/2 with earned income to invest up to $2,000 per tax year. Individuals can also
invest in a spouse's IRA if the spouse has earned income of less than $250.
^ O ROLLOVER IRAS retain special tax advantages for certain distributions from
employer sponsored retirement plans.
^ O SIMPLIFIED EMPLOYEE PENSION PLANS ^("SEP-IRAS") provide small business
owners or those with self-employed income (and their eligible employees) with
many of the same advantages as a Keogh, but with fewer administrative
requirements.
^ O 401(K) PLANS allow employees of corporations of all sizes to contribute a
percentage of their wages on a tax deferred basis. These accounts need to be
established by the trustee of the plan.
^ O MONEY PURCHASE/PROFIT SHARING PLANS ^("KEOGH PLANS") are tax deferred
pension accounts designated for employees of unincorporated businesses or for
persons who are self-employed.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA) TO INVEST FOR A CHILD'S EDUCATION OR
OTHER FUTURE NEEDS These custodial accounts provide a way to give money to a
child and obtain tax benefits. An individual can give up to $10,000 a year per
child without paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the Uniform
Transfers to Minors Act (UTMA). Contact your Investment Professional.
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before on account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS Contact your Investment Professional.
HOW TO BUY SHARES
43
<PAGE>
Once each business day, two share prices are calculated for shares of each Fund:
the offering price and the NAV. The offering price includes a front-end sales
charge, which you pay when you buy shares of a Fund, unless you qualify for a
reduction or waiver as described on page __. When you buy shares at the offering
price, the Transfer Agent deducts the applicable sales charge and invests the
rest at NAV.
Shares are purchased at the next offering price or NAV, as applicable,
calculated after your investment is received and accepted. The offering price
and NAV are normally calculated at 4:00 p.m. Eastern time.
If you are placing your order through an Investment Professional, it is the
responsibility of your Investment Professional to transmit your order to buy ^
Shares to the Transfer Agent before 4:00 p.m. Eastern time.
The Transfer Agent must receive payment within ^ three business days after an
order for ^ Shares is placed; otherwise your purchase order may be canceled and
you could be held liable for resulting fees and/or losses.
Share certificates are not available for ^ Shares of the Funds.
IF YOU ARE NEW TO BT GLOBAL INVESTORS, complete and sign an account application
and mail it along with your check. If there is no account application
accompanying this Prospectus, call your Investment Professional.
IF YOU ALREADY HAVE MONEY INVESTED IN A BT GLOBAL INVESTORS FUND (OR THE TAX
FREE MONEY FUND, NY TAX FREE MONEY FUND, BT INVESTMENT MONEY MARKET FUND, BT
INVESTMENT EQUITY 500 INDEX FUND AND THE INSTITUTIONAL EQUITY 500 INDEX FUND),
you can:
o Mail an account application with a check,
o Wire money into your account,
o Open an account by exchanging from another BT Global
Investors Fund (or the Tax Free Money Fund, NY Tax Free Money Fund, BT
Investment Money Market Fund, BT Investment Equity 500 Index Fund and
the Institutional Equity 500 Index Fund), or
o Contact your Investment Professional.
If you are investing through a tax-sheltered retirement plan, such as an IRA,
for the first time, you will need a special application. Contact your Investment
Professional for more information and a retirement account application.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For retirement accounts $ 500
44
<PAGE>
Through automatic investment plans $1,000
TO ADD TO AN ACCOUNT $ 250
For retirement accounts $ 100
Through automatic investment plan $ 100
MINIMUM BALANCE $1,000
For retirement accounts None
For further information on opening an account, please consult your Investment
Professional or refer to the account application.
TO OPEN AN ACCOUNT
PHONE YOUR INVESTMENT Contact your Investment Professional.
^ If you are an PROFESSIONAL existing Shareholder, you
may exchange from another Global Investors Fund ^(or
the Tax Free Money Fund, the NY tax Free Money Fund,
BT Investment Money Market Fund, the BT Investment
Equity 500 Index Fund or the Institutional Equity 500
Index Fund) account with the same registration,
including name,address, and taxpayer ID number.
TO ADD TO AN ACCOUNT Contact your Investment Professional
or call 1-^(800)-730-1313. You may exchange from
another BT Global Investors Fund account (or the Tax
Free Money Fund, NY Tax Free Fund, BT Investment Money
Market Fund, the BT Investment Equity 500 Index Fund
or the Institutional Equity ID numbers
- --------------------------------------------------------------------------------
MAIL Complete and sign the account application. Make your
check payable to the complete name of the Fund of your
choice. appropriate address to the address printed on
your account statement. application.
Make your check payable to the complete name of Fund of
your choice. Indicate your Fund account number on your
choice. Exchange by mail: Call your Investment
Professional for instructions.
- --------------------------------------------------------------------------------
IN PERSON ^ Take your account application and check ^
Investment Professional.
Take your check to your to your Investment
Professional.
- --------------------------------------------------------------------------------
45
<PAGE>
- --------------------------------------------------------------------------------
WIRE Not available. Call your Investment Professional or
wire to:
ROUTING NO.: 021001033
ATTN: Bankers Trust/IFTC Deposit DDA NO.: 00-226-296
FBO: (Account name) (Account number)
CREDIT: Fund Number Global High Yield Securities F
Fund - ^ 506
Capital Appreciation Fund - 501
Small Cap Fund - 502
International Equity Fund - 503
Pacific Basin Equity Fund - 504 Latin
American Equity Fund - 505
46
<PAGE>
^Specify the complete name of the fund of your choice,
and include your account number and your name.
- --------------------------------------------------------------------------------
AUTOMATICALLY Not Use the Systematic Investment Program. Sign up for
available. this service when opening your account on
your application, or call your Investment
Professional to begin the program. The initial
minimum investment in this program is $1,000.
- --------------------------------------------------------------------------------
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by selling
(redeeming) some or all of your ^ Shares. Your ^ Shares shall be sold at the
next NAV calculated after an order is received by the Transfer Agent. NAV is
normally calculated at 4:00 p.m. Eastern time.
TO SELL ^ SHARES IN A RETIREMENT ACCOUNT, your request must be made in writing,
except for exchanges to other eligible BT Global Investors Funds (or the Tax
Free Money Fund, NY Tax Free Money Fund, BT Investment Money Market Fund, the BT
Investment Equity 500 Index Fund or the Institutional Equity 500 Index Fund),
which can be requested by phone or in writing. For ^ information on retirement ^
distributions contact your Investment Professional or call 1-800-^ 677-7596.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR NON-RETIREMENT ACCOUNT SHARES, leave
at least $1,000 worth of shares in the account to keep it open.
TO SELL SHARES BY BANK WIRE you will need to sign up for these services in
advance when completing your account application.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to protect
you and Bankers Trust from fraud. Your request must be made in writing and
include a signature guarantee if any of the following situations apply:
o You wish to redeem more than $100,000 worth of ^ Shares, o Your account
registration has changed within the last 30 days, o The check is being mailed to
a different address than the one on your account (record address), o The check
is being made payable to someone other than the account owner, o The redemption
proceeds are being transferred to a BT account with a different registration, or
o You wish to have redemption proceeds wired to a non-predesignated bank
account.
You should be able to obtain a signature guarantee from a bank, broker, dealer,
credit union (if authorized under state law), securities exchange or
association, clearing agency, or savings association. A notary public cannot
provide a signature guarantee.
47
<PAGE>
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
o Your name,
o The Fund's name and Fund's number,
o Your Fund account number,
o The dollar amount or number of ^ Shares to be redeemed and o Any other
applicable requirements listed in the following table.
Deliver your letter to your Investment Professional, or mail it to the following
address:
Bankers Trust Company
P.O. Box 419210
Kansas City, MO 64141-6210
overnight mailings:
Bankers Trust Company
210 West 10th Street, 8th Floor
Kansas City, MO 64105-1716^
Unless otherwise instructed, the Transfer Agent will send a check to the record
address.
ACCOUNT TYPE SPECIAL REQUIREMENTS
48
<PAGE>
PHONE YOUR All account types
INVESTMENT except retirement Maximum check request: ^ $100,000
^PROFESSIONAL
All account types You may exchange to other BT Global
Investors Funds (or the Tax Free Money
Fund, NY Tax Free Money Fund, BT
Investment Money Market Fund, BT
Investment Equity 500 Index Fund, or
the Institutional Equity 500 Index
Fund) if both accounts are registered
with the same name(s), address, and
taxpayer ID number.
- --------------------------------------------------------------------------------
MAIL OR IN PERSON Individual, Joint Tenant, The letter of instruction (with
Sale Proprietorship, UGMA, signature guaranteed^, if
UTMA required) must be signed by all
persons required to sign for
transactions, exactly as their
names appear on the account and
sent to your Investment
Professional or the Transfer
Agent.
Retirement account The account owner should
complete a retirement distribution
form. Contact your Investment
Professional or call 1-800-^ 677-7596.
Trust The trustee must
sign the letter indicating capacity as
trustee. If the trustee's name is not
^ on the account registration, provide
a copy of the trust document certified
with the last 60 days.
Business or At least one person authorized by corporate
Organization resolution to act on the account must
sign the letter.
Executor, Administrator, For instructions contact your
Conservator/Guardian Investment Professional or call
1-800-^ 730-1313.
- --------------------------------------------------------------------------------
49
<PAGE>
- --------------------------------------------------------------------------------
WIRE All account You must sign up for the wire feature
types except retirement before using it. To verify that it is in
place, contact your Investment Professional
or call 1-800-^ 730-1313. Minimum wire:
^ $1,000. Your wire redemption request
must be received by the Transfer Agent
before 4:00 p.m. Eastern time for money to
be wired on the next business day.
50
<PAGE>
- --------------------------------------------------------------------------------
INVESTOR SERVICES
BT Global Investors Funds provide a variety of services to help you manage your
account.
INFORMATION SERVICES
STATEMENTS AND REPORTS that your Investment Professional or the Transfer Agent
will send to you include the following:
o Confirmation statements (after every transaction that affects your account
balance, including distributions or your account registration) o Account
statements (quarterly) o Financial reports (every six months)
To reduce expenses, only one copy of most financial reports will be mailed, even
if you have more than one account in the Fund. Call your Investment Professional
if you need additional copies of financial reports.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your ^ Shares and buy ^ Shares of other BT
Global Investors Funds by telephone or in writing. The shares you exchange will
carry credit for any front-end sales charge you previously paid in connection
with their purchase. If you are exchanging from the Global High Yield Securities
Fund to another Fund, no incremental sales charge will be assessed.
Note that exchanges out of a ^ Fund may be limited to four per calendar year and
that they may ^ have tax consequences for you. For detail on policies and
restrictions governing exchanges including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page __.
SYSTEMATIC WITHDRAWAL PROGRAM lets you set up periodic redemptions from your
account. Because of the ^ Shares' front-end charge, you may not want to set up a
systematic withdrawal plan during a period when you are buying ^ Shares on a
regular basis.
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, quarterly, To establish call your Investment
semi-annually, or Professional or call 1-800-730
annually -1313 after your account is open.
The accounts from which the
withdrawals be processed
51
<PAGE>
must have a minimum balance of $10,000.
One easy way to pursue your financial goals is to invest money regularly. BT
Global Investors Funds offer convenient services that let you transfer money
into your fund account, or between fund accounts automatically. While regular
investment plans do not guarantee a profit and will not protect you against loss
in a declining market, they can be an excellent way to invest for retirement, a
home, educational expenses, and other long-term financial goals. Certain
restrictions apply for retirement accounts. Call your Investment Professional
for more information.
REGULAR INVESTMENT PLANS
SYSTEMATIC INVESTMENT PROGRAM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A BT GLOBAL INVESTORS
FUND
MINIMUM MINIMUM FREQUENCY SETTING UP OR CHANGING
INITIAL SUBSEQUENT
$1,000 $100 Monthly, bimonthly, For a new account,
quarterly or semi- complete the appropriate
section on the
annually application.For existing
accounts, call your
Investment Professional
for an application.
To change the amount or
frequency of your
investment, contact your
Investment Professional
directly or call 1-800-^
730-1313. Call at least
10 business days prior
to your next scheduled
investment date.
SYSTEMATIC EXCHANGE PROGRAM
TO MOVE MONEY FROM ONE BT GLOBAL INVESTORS FUND TO ANOTHER (OR TO THE TAX FREE
MONEY FUND, NY TAX FREE MONEY FUND, BT INVESTMENT MONEY MARKET FUND, BT
INVESTMENT EQUITY 500 INDEX FUND OR THE INSTITUTIONAL EQUITY 500 INDEX FUND)
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, quarterly, To establish, call your
semi-annually or Investment
Professional after
52
<PAGE>
annually both accounts are open.
To change the amount or
frequency of your investment,
contact your Investment
Professional directly or call
1-800-^ 730-1313. Call at least
two business days prior to your
next scheduled exchange date.
The account from which
the exchanges are to be
processed must have a
minimum balance of $10,000.
The account into which the
exchange is being processed
must have a minimum of
$1,000. ^
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each Fund distributes substantially all of its net income and capital gains to
shareholders each year. Each Fund distributes capital gains annually. Normally,
income dividends for the Global High Yield Securities Fund and the Capital
Appreciation Fund are distributed quarterly; income dividends for the Small Cap
Fund, International Equity Fund, Pacific Basin Equity Fund and the Latin
American Equity Fund are distributed annually.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you want to
receive distributions. The Trust offers four options:
1. REINVESTMENT OPTION. Your dividend and capital gain
distributions will be automatically reinvested in additional ^
Shares of the Fund. If you do not indicate a choice on your
application you will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested in additional ^ Shares of the Fund, but
you will be sent a check for each dividend distribution.
3. CASH OPTION. You will be sent a check for your dividend and
capital gain distributions.
4. AUTOMATIC DIVIDENDS PROGRAM. Your dividend and capital gain distributions be
automatically invested in ^ Shares of another BT Global Investors Fund (or the
Tax Free Money Fund, NY Tax Free Money Fund or the BT Investment Money Market
Fund) as long as minimums for that account are met.
If you select distribution option 2 or 3 and the U.S. Postal
53
<PAGE>
Service cannot deliver your checks, or if your checks remain uncashed for six
months, those checks will be reinvested in your account at the current NAV and
your election may be converted to the Reinvestment Option. You may change
distribution option at anytime by notifying the Transfer Agent in writing.
FOR RETIREMENT ACCOUNTS, all distributions are automatically reinvested. When
you are over 59 1/2 years old, you can receive distributions in cash. If
distributions from a retirement account for any taxable year following the year
in which the participant reaches age 70 1/2 are less than the "minimum required
distribution" for that taxable year, an excise tax equal to 50% of the
deficiency may be imposed by the Internal Revenue Service (the "IRS"). The
administrator, trustee or custodian of such a retirement account will be
responsible for reporting distributions from such accounts to the IRS.
Shares purchased through reinvestment of dividend and capital gain distributions
are not subject to a sales charge.
When each of the Funds deducts a distribution from its NAV, the reinvestment
price is the applicable Fund's NAV at the close of business that day.
Distribution checks will be mailed within seven days, or longer for a December
ex-dividend date.
TAXES
As with any investment, you should consider how an investment in the Funds could
affect you. Below are some of the Funds' tax implications. If your account is
not a tax-deferred retirement account beware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions from the Funds are subject to federal
income tax and may also be subject to state or local taxes. If living outside
the United States, your distributions from the Funds could also be taxed by the
country in which you reside.
For federal tax purposes, income and short-term capital gain distributions from
each of the Funds are taxed as dividends; long-term capital gain distributions
are taxed as long-term capital gains.
Mutual fund dividends from U.S. government securities are generally free from
state and local income taxes. However, particular states may limit this benefit,
and some types of securities, such as repurchase agreements and some
agency-backed securities, may not qualify for the benefit. In addition, some
states may impose intangible property taxes. You should consult your own tax
adviser for details and up-to-date information on the tax laws in your state.
Distributions are taxable when they are paid, whether you take them in cash or
reinvest them. However, distributions declared in December and paid in January
are taxable as if they were paid
54
<PAGE>
on December 31.
Every January, the Transfer Agent will send the IRS a statement showing the
taxable distributions paid to you in the previous year.
TAXES ON TRANSACTIONS. Your redemptions, including exchanges, are subject to
capital gains tax. A capital gain or loss is the difference between the cost of
your ^ Shares and the price you receive when you sell them.
Whenever you sell ^ Shares of a Fund, the Transfer Agent will send you or your
Investment Professional a confirmation statement showing how many ^ Shares you
sold and at what price. You also receive a consolidated transaction statement at
least quarterly. However, it is up to you or your tax preparer to determine
whether this sale resulted in a capital gain and, if so, the amount of tax to be
paid. BE SURE TO KEEP YOUR REGULAR ACCOUNT STATEMENTS; the information they
contain will be essential in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy ^ Shares just before a Fund deducts a capital
gain distribution or dividend distribution, as applicable, from its NAV, you
will pay the full price for the ^ Shares and then receive a portion of the price
back in the form of a taxable distribution.
CURRENCY CONSIDERATIONS. If a Fund's dividends exceed its taxable income in any
year, which is sometimes the result of currency-related losses, all or a portion
of the Fund's dividends may be treated as a return of capital to shareholders
for tax purposes. To minimize the risk of a return of capital, each of the Funds
may adjust its dividends to take currency fluctuations into account, which may
cause the dividends to vary. Any return of capital will reduce the cost basis of
your ^ Shares, which will result in a higher reported capital gain or a lower
reported capital loss when you sell your ^ Shares. The statement you receive in
January will specify whether any distributions included a return of capital.
Undistributed net gains from currency transactions, if any, will generally be
distributed as a separate dividend in December.
There are tax requirements that all Funds must follow in order to avoid federal
taxation. In its effort to adhere to these requirements, a Fund may have to
limit its investment activity in some types of instruments.
VALUATION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the NYSE is open. Each Fund's NAV and
offering price, as applicable, is calculated as of the close of regular trading
on the NYSE, currently 4:00 p.m.
Eastern time.
55
<PAGE>
A FUND'S NAV is the value of a single ^ Share. The NAV of each Fund is computed
by dividing the value of the Fund's Assets (i.e., the value of its investment in
the Portfolio and other assets), less all liabilities, by the total number of
its ^ Shares outstanding. Each Portfolio's securities and other assets are
valued primarily on the basis of market quotations or, if quotations are not
readily available, by Bankers Trust pursuant to procedures adopted by the
Portfolio's Board of Trustees. These procedures require Bankers Trust to value
such a security at the same value as an equivalent security which is readily
marketable and, in making such comparisons, to consider all relevant factors
under applicable guidelines of the SEC.
THE OFFERING PRICE (price to buy one ^ Share) is the applicable Fund's NAV, plus
a sales charge. The Funds have a maximum sales charge of 4.75% of the offering
price (3.75% for the Global High Yield Securities Fund).
SALES CHARGES AND INVESTMENT PROFESSIONAL CONCESSIONS (FOR EACH
FUND EXCEPT THE GLOBAL HIGH YIELD SECURITIES FUND)
Investment
Sales Charge Professional
as a % of Concession as
Offering Net Amout % of Offering
AMOUNT INVESTED PRICE INVESTED PRICE
Less than $50,000 4.75% 4.99% 4.00%
$50,000 to less than $100,000 4.50 4.71 4.00
$100,000 to less than $250,000 3.50 3.63 3.00
$250,000 to less than $500,000 2.50 2.56 2.00
$500,000 to less than $1 million 2.00 2.04 1.75
$1 million or more None None See below[a]
GLOBAL HIGH YIELD SECURITIES FUND
Investment
Sales Charge Professional
as a % of Concession as
Offering Net Amount % of Offering
AMOUNT INVESTED PRICE INVESTED PRICE
Less than $50,000 3.75% 3.90% 3.00%
56
<PAGE>
$50,000 to less than $100,000 3.50 3.63 3.00%
$100,000 to less than $250,000 2.50 2.56 2.00%
$250,000 to less than $500,000 1.50 1.52 1.00%
$500,000 to less than $1 million 1.00 1.01 0.75%
$1 million or more None None None
[a] INVESTMENT PROFESSIONALS WILL BE COMPENSATED ^ WITH A FEE (BASED ON AVERAGE
ASSETS ^) OF 1.00% FOR PURCHASE AMOUNTS OF $1 MILLION TO $3 MILLION OF ASSETS,
0.50% ^ ON THE NEXT $3 MILLION TO $20 MILLION OF ASSETS AND 0.15% FOR ASSETS
OVER $20 MILLION. ASSETS MUST REMAIN IN THE FUND(S) FOR A PERIOD OF 18
UNINTERRUPTED MONTHS, OR THE INVESTMENT PROFESSIONAL WILL BE REQUIRED TO REFUND
THIS FEE TO SBDS. IF THE ASSETS ARE EXCHANGED INTO A BT GLOBAL INVESTORS FUND
WHICH DOES NOT HAVE A SALES CHARGE WITHIN THE 18 MONTH PERIOD, THE INVESTMENT
PROFESSIONAL WILL BE REQUIRED TO REFUND THIS FEE.
REINSTATEMENT PRIVILEGE. If ^ an investor sold all or part of ^ their Shares of
a Fund, ^ they may reinvest an amount equal to all or a portion of the
redemption proceeds in the same Fund or another BT Global Investors Fund,
without paying any sales charge, at the NAV next determined after receipt of ^
the investment order, provided that such reinvestment is made within 30 days of
redemption. ^ An investor must reinstate ^ their Shares into an account with the
same registration. This privilege may be exercised only once by a shareholder
with respect to a Fund and certain restrictions may apply.
WHEN ^ AN INVESTOR SIGNS AN ACCOUNT APPLICATION, ^ they will be asked to certify
that ^ their social security or taxpayer identification number is correct and
that ^ they are not subject to 31% backup withholding for failing to report
income to the IRS. If ^ they violate IRS regulations, the IRS can require a Fund
to withhold 31% of ^ the investor's taxable distributions and redemptions.
^ AN INVESTOR MAY INITIATE MANY TRANSACTIONS BY TELEPHONE: ^ An Investment
Professional or the Transfer Agent may only be liable for losses resulting from
unauthorized transactions if they do not follow reasonable procedures designed
to verify the identity of the caller. ^ An Investment Professional or the
Transfer Agent will request personalized security codes or other information,
and may also record calls. ^ An investor should verify the accuracy of the
confirmation statements immediately after receipt. If ^ investors do not want
the ability to redeem and exchange by telephone, they should call ^ their
Investment Professional or the Transfer Agent for instructions. Additional
documentation may be required from corporations, associations and certain
fiduciaries.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF ^ SHARES for a period of
time. Each Fund also reserves the right to reject any specific purchase order,
including certain purchases
57
<PAGE>
by exchange. Purchase orders may be refused if, in Bankers
Trust's opinion, they would disrupt management of a Fund.
WHEN ^ INVESTORS PLACE AN ORDER TO BUY ^ SHARES, their Shares will be purchased
at the next NAV or offering price, as applicable, calculated after ^ the order
is received and accepted by the Transfer Agent. Note the following:
O All checks should be made payable to the specific Fund.
^ O All ^ purchases must be made in U.S. dollars and checks must
be drawn on U.S. banks.
^ O The Funds do not accept third-party checks, except those payable to an
existing shareholder who is a natural person (not a corporation or partnership),
credit cards or cash.
^ O When making a purchase with more than one check, each check must have a
value of at least $50.
^ O Each Fund reserves the right to limit the number of checks processed at one
time.
^ O If ^ a check does not clear, ^ the purchase will be cancelled and ^ the
investor could be liable for any losses or fees a Fund or the Transfer Agent has
incurred.
O When purchase orders are made by check or periodic automatic investment,
redemptions will not be allowed until the investment being redeemed has been in
the account for 15 business days.
^ O Direct Purchases: ^ Investors begin to earn dividends as of
the first business day following the day the Fund receives
payment.
O Automated Order Purchases: ^ Investors begin to earn dividends
as of the business day your order is received and accepted.
AUTOMATED ORDERS PURCHASE. Shares of the Funds can be purchased or sold through
Investment Professionals utilizing an automated order placement and settlement
system that guarantees payment for orders on a specified date.
TO AVOID THE COLLECTION PERIOD associated with check purchases, consider buying
^ Shares by bank wire, U.S. Postal money order, U.S. Treasury check, or Federal
Reserve check.
WHEN ^ INVESTORS PLACE AN ORDER TO SELL ^ SHARES, Shares will be sold at the
next NAV calculated after ^ the order is received and accepted. Note the
following:
^ O Normally, redemption proceeds will be mailed ^ on the next business day, but
if making immediate payment could adversely affect a Fund it may take up to
seven days to pay you.
58
<PAGE>
^ O Shares of the Funds will earn dividends through the date of redemption;
however, ^ Shares redeemed on a Friday or prior to a holiday will continue to
earn dividends until the next business day.
^ O Each Fund may hold payment on redemptions until it is reasonably satisfied
that investments made by check have been collected which can take up to seven
business days.
^ O Redemptions may be suspended or payment dates postponed when the NYSE is
closed (other than weekends or holidays), when trading on the NYSE is
restricted, or as permitted by the SEC.
THE TRANSFER AGENT RESERVES THE RIGHT TO DEDUCT AN ANNUAL MAINTENANCE FEE of
$12.00 from accounts with a value of less than $2,500 (including any amount paid
as a sales charge). The fee, which is payable to the Transfer Agent, is designed
to offset in part the relatively higher costs of servicing smaller accounts.
IF ^ A NON-RETIREMENT ACCOUNT BALANCE FALLS BELOW $1,000, ^ the investor will be
given 30 days' notice to reestablish the minimum balance. If ^ the investor does
not increase ^ their balance, the Transfer Agent reserves the right to close ^
the account and send the proceeds to ^ the investors. Shares will be redeemed at
the NAV on the day ^ the account is closed.
THE TRANSFER AGENT MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its services.
EXCHANGE ^ LIMITATIONS
As a shareholder, you have the privilege of exchanging ^ Shares of a Fund for ^
Shares of other BT Global Investors Funds (or the Tax Free Money Fund, NY Tax
Free Money Fund, BT Investment Money Market Fund, BT Investment Equity 500 Index
Fund or the Institutional Equity 500 Index Fund.) However, ^ investors should
note the following:
^ O The Fund ^ an investor exchanges into must be registered for sale in ^ their
state.
^ O Investors may only exchange between accounts that are registered in the same
name, address, and taxpayer identification number.
^ O Before exchanging into a Fund, investors should read its Prospectus.
^ O Exchanges between the Funds described in this Prospectus and Funds described
in other BT Global Investors ^ Fund prospectuses are restricted during the 90
days following purchase. Exchanges among the Funds described in this Prospectus
are permitted at any
59
<PAGE>
time after purchase.
^ O Exchanges may have tax consequences for you.
^ O Because excessive trading can hurt Fund performance and shareholders, each
Fund reserves the right to temporarily or permanently terminate the exchange
privilege of any investor who makes more than four exchanges out of the Fund per
calendar year.
Accounts under common ownership or control, including accounts with the same
taxpayer identification number, will be counted together for purposes of the
four exchange limit.
^ O Each Fund reserves the right to refuse exchange purchases by any person or
group if, in Bankers Trust's judgment, the Fund would be unable to invest the
money effectively in accordance with its investment objective and policies, or
would otherwise potentially be adversely affected.
^ O Exchanges may be restricted or refused if a Fund receives or anticipates
simultaneous orders affecting significant portions of the Fund's assets. In
particular, a pattern of exchanges that coincide with a "market timing" strategy
may be disruptive to a Fund.
^ O Although the Funds will attempt to give ^ prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time. The
Funds reserve the right to terminate or modify the exchange privilege in the
future on 60 days' notice to shareholders.
SALES CHARGE REDUCTIONS AND WAIVERS
The front-end sales charge will be reduced for purchases of shares according to
the Sales Charge Schedule shown on page __ if your purchase qualifies for one of
the following reduction plans.
The following programs are available for front-end sales charge reduction.
QUANTITY DISCOUNTS apply to purchases of ^ Shares of a single Fund or to
combined purchases of ^ Shares of other BT Global Investors Funds, including
Funds in this Prospectus and in any other BT Global Investors Funds' prospectus.
(Minimum investment is $50,000).
To qualify for a Quantity Discount, investing in a Fund's ^ Shares for several
accounts at the time same time will be considered a single transaction (Combined
Purchase), as long as ^ Shares are purchased through one Investment Professional
and the total is at least $50,000.
RIGHTS OF ACCUMULATION let you determine your front-end sales charge on a Fund's
^ Shares by adding to your new purchase the value of all of BT Global Investors
Fund ^ Shares including Funds
60
<PAGE>
in this Prospectus and in any other BT Global Investors Funds' prospectus held
by you, your spouse, and your children under age 21.
A LETTER OF INTENT lets you receive the same reduced front-end sales charge on
purchases of ^ Shares made during a 13-month period as if the total amount
invested during the period in BT Global Investors Funds in this Prospectus and
in any BT Global Investors Funds' prospectus had been invested in a single lump
sum. (see "Quantity Discounts" above.) You must file your non-binding Letter
within 90 days of the start of your purchases.
Your initial investment must be at least 5% of the amount you plan to invest.
Out of the initial investment, 5% of the dollar amount specified in the Letter
will be registered in your name and held in escrow. You will earn income
dividends and capital gain distributions on escrowed ^ Shares. Neither income
dividends nor capital gain distributions reinvested in additional ^ Shares will
apply toward completion of the Letter. The escrow will be released when your
purchase of the total amount has been completed. You are not obligated to
complete the Letter, and in such a case, sufficient escrowed ^ Shares will be
redeemed to pay any applicable front-end sales charges.
A front-end sales charge will not apply to the following ^ Shares :
1. Purchased by an existing Bankers Trust investment management
client;
2. Purchased by a bank trust officer, registered representative,
or other employee (or a member of one of their immediate
families) of Investment Professionals having agreements with SBDS
or Bankers Trust;
3. Purchased by a current or former trustee or officer of a BT Fund or a current
or retired officer, director or regular employee of Bankers Trust or its direct
or indirect subsidiaries (a Bankers Trust trustee or employee), the spouse of a
Bankers Trust trustee or employee, a Bankers Trust trustee or employee acting as
custodian for a minor child, or a person acting as trustee of a trust for the
sole benefit of the minor child of a Bankers Trust trustee or employee;
4. Purchased by a charitable organization (as defined in Section
501(c)(3) of the Internal Revenue Code) investing $100,000 or
more;
5. Purchased for a charitable remainder trust or life income pool
established for the benefit of a charitable organization (as
defined in Section 501 (c) (3) of the Internal Revenue Code);
6. Purchased by a trust institution or bank trust department
investing on its own behalf or on behalf of its clients;
61
<PAGE>
7. Purchased in an account for which an Investment Professional, bank,
broker-dealer or financial advisor charges an asset management fee, provided the
Investment Professional's bank, broker-dealer or financial advisor has an
agreement with SBDS or Bankers Trust;
8. Purchased as part of an employee benefit plan having more than 200 eligible
employees or a minimum of $1 million of plan assets.
9. Purchased for any state, county, or city, or any governmental
instrumentality, department, authority or agency; or
10. Purchased with redemption proceeds from other mutual fund complexes on which
you have previously paid a front-end sales charge.
11. Purchased as part of an IRA, 401(k) or other retirement plan
rollover.
12. Purchased as an exchange from any Fund in this Prospectus or
in any other BT Global Investors Fund prospectus.
ADDITIONAL INFORMATION ABOUT THE TRUST AND PORTFOLIOS
Each Fund is a mutual fund: an investment that pools shareholders' money and
invests it toward a specified goal. Each Fund (with the exception of the Global
High Yield Securities Fund) is a separate diversified series of BT Global
Investors, a Massachusetts business trust. ^ The Global High Yield Securities ^
Fund is a non-diversified series of BT Global Investors. Each of the Small Cap
Portfolio, Pacific Basin Equity Portfolio and Latin American Equity Portfolio is
a separate diversified subtrust of BT Investment Portfolios, a New York master
trust fund. The Global High Yield Securities Portfolio is a non-diversified
subtrust of BT Investment Portfolios. Each of the Capital Appreciation Portfolio
and International Equity Portfolio is a New York trust.
Each of the Trust and BT Investment Portfolios reserves the right to add
additional series in the future. The Trust also reserves the right to issue more
than one class of shares of each Fund.
The Trust or a Portfolio may hold special meetings and mail proxy materials.
These meetings may be called to elect or remove trustees, change fundamental
policies, approve Portfolio's investment advisory agreement, or for other
purposes. Shareholders not attending these meetings are encouraged to vote by
proxy. The Trust's Transfer Agent will mail proxy materials in advance,
including a voting card and information about the proposals to be voted on.
When matters are submitted for shareholder vote, shareholders of each Fund will
have one vote for each full share held and proportionate, fractional votes for
fractional shares held. A separate vote of one of the Funds is required on any
matter
62
<PAGE>
affecting only that Fund on which shareholders are entitled to vote.
Shareholders of a Fund are not entitled to vote on Trust matters that do not
affect that Fund and do not require a separate vote of the Fund. All series of
the Trust will vote together on certain matters, such as electing trustees or
approving independent public auditors. There normally will be no meetings of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of Trustees holding office have been elected by
shareholders, at which time the Trustees then in office will call a
shareholders' meeting for the election of Trustees. Any Trustee may be removed
from office upon the vote of shareholders holding at least two-thirds of the
Trust's outstanding shares at a meeting called for that purpose. The Trustees
are required to call such a meeting upon the written request of shareholders
holding at least 10% of the Trust's outstanding shares. The Trust will also
assist shareholders in communicating with one another as provided for in the
1940 Act.
Each series of the Trust will vote separately on any matter involving the
corresponding Portfolio. Shareholders of all of the series of the Trust will,
however, vote together to elect Trustees of the Trust and for certain other
matters. Under certain circumstances, the shareholders of one or more series
could control the outcome of these votes. The series of BT Investment Portfolios
will vote together or separately on matters in the same manner, and in the same
circumstances, as do the series of the Trust. As with the Trust, the investors
in one or more series of BT Investment Portfolios could control the outcome of
these votes.
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a business trust may,
under certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
Each Portfolio was organized as a trust under the laws of the State of New York.
Each Portfolio's Declaration of Trust provides that each Fund and other entities
investing in a Portfolio (e.g., other investment companies, insurance company
separate accounts and common and commingled trust funds) will each be liable for
all obligations of that Portfolio. However, the risk of a Fund incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance existed and a Portfolio itself was unable to meet its
obligations. Accordingly, the Trustees of the Trust believe that neither the
Funds nor their shareholders will be adversely affected by reason of the Funds'
investing in the Portfolios.^ No series of BT Investment Portfolios has any
preference over any other series.
63
<PAGE>
BT0433M
64
<PAGE>
APPENDIX
DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA - Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group they comprise what are generally known as high-grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.
A - Bonds rated A possess many favorable investment attributes and are to be
considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
BAA - Bonds rated Baa are considered as medium-grade obligations, i.e. they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such, bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
BA - Bonds rated Ba are judged to have speculative elements. Their future cannot
be considered as well assured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded during both (good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.
B - Bonds rated B generally lack characteristics of a desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
CAA - Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
CA - Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked short-comings.
Appendix-1
<PAGE>
C - Bonds rated C are the lowest-rated class of bonds and issued so rated can be
regarded as having extremely poor prospects of ever attaining any real
investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond system. The modifier 1
indicates that the security ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
DESCRIPTION OF S&PS CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's to a
debt obligation. Capacity to pay interest and repay principal is extremely
strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to weakened capacity to pay interest and repay principal for debt
in this category than in higher-rated categories.
BB - Debt rate BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.
B - Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal.
Appendix-2
<PAGE>
CC - Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
C -The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed but debt service
payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is being
paid.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating will also be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
^ DESCRIPTION OF S&P COMMERCIAL PAPER RATINGS:
Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics are denoted A-1+.
DESCRIPTION OF MOODY'S COMMERCIAL PAPER RATINGS:
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Issuers rated Prime-1 (or related supporting institutions) are
considered to have a superior capacity for repayment of short-term promissory
obligations.
DESCRIPTION OF FITCH INVESTORS SERVICE'S COMMERCIAL PAPER
RATINGS:
F-1+--Exceptionally Strong Credit Quality. Issues assigned
this rating are regarded as having the strongest degree of
assurance for timely payment.
F-1--Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than the strongest
issue.
DESCRIPTION OF DUFF & PHELPS' COMMERCIAL PAPER RATINGS:
Duff 1+--Highest certainty of timely payment. Short term liquidity,
including internal operating factors and/or access to alternative sources of
funds, is outstanding, and safety is just below risk free U.S. Treasury short
term obligations.
Duff 1--Very high certainty of timely payment. Liquidity
Appendix-3
<PAGE>
factors are excellent and supported by good fundamental
protection factors. Risk factors are minor.
DESCRIPTION OF IBCA'S LONG-TERM RATINGS:
AAA--Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic or financial conditions are
unlikely to increase investment risk significantly.
AA--Obligations for which there is a very low expectation of investment
risk. Capacity for timely repayment of principal and interest is substantial.
Adverse changes in business economic or financial conditions may increase
investment risk albeit not very significantly.
A--Obligations for which there is a low expectation of investment risk.
Capacity for timely repayment of principal and interest is strong, although
adverse changes in business, economic or financial conditions may lead to
increased investment risk.
BBB--Capacity for timely repayment of principal and interest is
adequate, although adverse changes in business, economic or financial conditions
are more likely to lead to increased investment risk than for obligations in
higher categories.
BB--Obligations for which there is a possibility of investment risk
developing. Capacity for timely repayment of principal and interest exists, but
is susceptible over time to adverse changes in business, economic or financial
conditions.
B--Obligations for which investment risk exists. Timely repayment of
principal and interest is not sufficiently protected against adverse changes in
business, economic or financial conditions.
CCC--Obligations for which there is a current perceived possibility of
default. Timely repayment of principal and interest is dependent on favourable
business, economic or financial conditions.
CC--Obligations which are highly speculative or which have a high risk
of default.
C--Obligations which are currently in default.
Notes: "+" or "-" may be appended to a rating to denote
relative status within major rating categories.
Ratings of BB and below are assigned where it is considered that
speculative characteristics are present.
Appendix-4
<PAGE>
DESCRIPTION OF IBCA'S SHORT-TERM RATINGS:
A1+--Obligations supported by the highest capacity for timely
repayment.
A1--Obligations supported by a strong capacity for timely repayment.
A2--Obligations supported by a satisfactory capacity for timely
repayment, although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
A3--Obligations supported by an adequate capacity for timely repayment.
Such capacity is more susceptible to adverse changes in business, economic or
financial conditions than for obligations in higher categories.
B--Obligations for which the capacity for timely repayment is
susceptible to adverse changes in business, economic or financial conditions.
C--Obligations for which there is an inadequate capacity to ensure
timely repayment.
D--Obligations which have a high risk of default or which are currently
in default.
DESCRIPTION OF THOMSON BANK WATCH SHORT-TERM RATINGS:
TBW-1--The highest category; indicates a very high likelihood that
principal and interest will be paid on a timely basis.
TBW-2--The second-highest category; while the degree of safety
regarding timely repayment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated "TBW-1".
TBW-3--The lowest investment-grade category; indicates that while the
obligation is more susceptible to adverse developments (both internal and
external) than those with higher ratings, the capacity to service principal and
interest in a timely fashion is considered adequate.
TBW-4--The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.
DESCRIPTION OF THOMSON BANKWATCH LONG-TERM RATINGS:
AAA--The highest category; indicates that the ability to repay
principal and interest on a timely basis is extremely high.
AA--The second-highest category; indicates a very strong ability to
repay principal and interest on a timely basis, with
Appendix-5
<PAGE>
limited incremental risk compared to issues rated in the highest
category.
A--The third-highest category; indicates the ability to repay principal
and interest is strong. Issues rated "a" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.
BBB--The lowest investment-grade category; indicates an acceptable
capacity to repay principal and interest. Issues rated "BBB" are, however, more
vulnerable to adverse developments (both internal and external) than obligations
with higher ratings.
NON-INVESTMENT GRADE
(ISSUES REGARDED AS HAVING SPECULATIVE CHARACTERISTICS IN THE LIKELIHOOD OF
TIMELY REPAYMENT OF PRINCIPAL AND INTEREST.)
BB--While not investment grade, the "BB" rating suggests that the
likelihood of default is considerably less than for lower-rated issues. However,
there are significant uncertainties that could affect the ability to adequately
service debt obligations.
B--Issues rated "B" show a higher degree of uncertainty and therefore
greater likelihood of default than higher-rated issues.
Adverse development could well negatively affect the payment of interest and
principal on a timely basis.
CCC--Issues rated "CCC" clearly have a high likelihood of default, with
little capacity to address further adverse changes in financial circumstances.
CC--"CC" is applied to issues that are subordinate to other obligations
rated "CCC" and are afforded less protection in the event of bankruptcy or
reorganization.
D--Default
These long-term debt ratings can also be applied to local currency
debt. In such cases the ratings defined above will be preceded by the
designation "local currency".
RATINGS IN THE LONG-TERM DEBT CATEGORIES MAY INCLUDE A PLUS
(+) OR MINUS (-) DESIGNATION, WHICH INDICATES WHERE WITHIN THE
RESPECTIVE CATEGORY THE ISSUE IS PLACED.
Appendix-6
<PAGE>
BT0441F
STATEMENT OF
ADDITIONAL INFORMATION
January , 1996
BT Global Investors
oGlobal High Yield Securities Fund
oCapital Appreciation Fund
oSmall Cap Fund
oInternational Equity Fund
oLatin American Equity Fund
oPacific Basin Equity Fund
BT Global Investors (the "Trust") is comprised of ten funds. The shares
of six of the funds -- Global High Yield Securities Fund, Capital Appreciation
Fund, Small Cap Fund, International Equity Fund, Latin American Equity Fund and
Pacific Basin Equity Fund, (each, a "Fund") -- are described herein.
Table of Contents
Risk Factors and Certain Securities and Investment Practices
Performance Information . . . . . . . . . . . . . . . . .
Valuation of Securities; Redemptions and Purchases in Kind .
Management of the Trust and the Portfolios . . . . . . . . .
Organization of the Trust . . . . . . . . . . . . . . . . .
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . . . . . .
As described in the Prospectus, the Trust seeks to achieve the
investment objectives of each Fund by investing all the investable assets
("Assets") of the Fund (with the exception of the Global High Yield Securities
Fund) in a diversified open-end management investment company (or a series
thereof) having the same investment objectives as such Fund. The Global High
Yield Securities Fund invests its Assets in a non-diversified open-end
management investment company (or series thereof). These investment companies
(or a series thereof) are, respectively, International Equity Portfolio, Capital
Appreciation Portfolio and BT Investment Portfolios. Global High Yield
Securities Portfolio, Small Cap Portfolio, Latin American Equity Portfolio and
Pacific Basin Equity Portfolio are each a series of BT Investment Portfolios.
Since the investment characteristics of the Funds will correspond directly
to those of the respective Portfolio in which
<PAGE>
the Fund invests all of its Assets, the following is a discussion of the various
investments of and techniques employed by the Portfolios.
Shares of the Funds are sold by Signature Broker-Dealer Services, Inc.
("Signature"), the Trust's Distributor, to clients and customers (including
affiliates and correspondents) of Bankers Trust Company ("Bankers Trust"), the
Portfolios' Adviser, and to clients and customers of other organizations.
The Trust's Prospectus for the Funds is dated January , 1996. The
Prospectus provides the basic information investors should know before investing
and may be obtained without charge by calling the Trust at the telephone number
listed below or by contacting any Investment Professional. This Statement of
Additional Information, which is not a Prospectus, is intended to provide
additional information regarding the activities and operations of the Trust and
should be read in conjunction with the Funds' Prospectus. This Statement of
Additional Information is not an offer of any Fund for which an investor has not
received a Prospectus. Capitalized terms not otherwise defined in this Statement
of Additional Information have the meanings accorded to them in the Fund's
Prospectus.
BANKERS TRUST COMPANY
Investment Adviser of each Portfolio and Administrator
SIGNATURE BROKER-DEALER SERVICES, INC.
Distributor
6 St. James Avenue Boston, Massachusetts 02116 (800) 730-1313
2
<PAGE>
RISK FACTORS AND CERTAIN SECURITIES AND INVESTMENT
PRACTICES
Investment Objectives
The investment objective(s) of each Fund is described in that Fund's
Prospectus. There can, of course, be no assurance that any Fund will achieve its
investment objective(s).
Investment Practices
Each Fund seeks to achieve its investment objective by investing all of
its Assets in the corresponding Portfolio. The Trust may withdraw a Fund's
investment from the corresponding Portfolio at any time if the Board of Trustees
of the Trust determines that it is in the best interests of the Fund to do so.
Since the investment characteristics of each Fund will correspond
directly to those of the corresponding Portfolio, the following is a discussion
of the various investments of and techniques employed by each Portfolio.
Certificates of Deposit and Bankers' Acceptances. Certificates of
deposit are receipts issued by a depository institution in exchange for the
deposit of funds. The issuer agrees to pay the amount deposited plus interest to
the bearer of the receipt on the date specified on the certificate. The
certificate usually can be traded in the secondary market prior to maturity.
Bankers' acceptances typically arise from short-term credit arrangements
designed to enable businesses to obtain funds to finance commercial
transactions. Generally, an acceptance is a time draft drawn on a bank by an
exporter or an importer to obtain a stated amount of funds to pay for specific
merchandise. The draft is then "accepted" by a bank that, in effect,
unconditionally guarantees to pay the face value of the instrument on its
maturity date. The acceptance may then be held by the accepting bank as an
earning asset or it may be sold in the secondary market at the going rate of
discount for a specific maturity. Although maturities for acceptances can be as
long as 270 days, most acceptances have maturities of six months or less.
Commercial Paper. Commercial paper consists of short-term (usually from
1 to 270 days) unsecured promissory notes issued by corporations in order to
finance their current operations. A variable amount master demand note (which is
a type of commercial paper) represents a direct borrowing arrangement involving
periodically fluctuating rates of interest under a letter agreement between a
commercial paper issuer and an institutional lender pursuant to which the lender
may determine to invest varying amounts.
For a description of commercial paper ratings, see the Appendix to the
Prospectus.
3
<PAGE>
** 1 Short-Term Instruments. When a Portfolio experiences large cash
inflows through the sale of securities and desirable equity securities, that are
consistent with the Portfolio's investment objective, which are unavailable in
sufficient quantities or at attractive prices, the Portfolio may hold short-term
investments for a limited time pending availability of such equity securities.
Short-term instruments consist of foreign and domestic: (i) short-term
obligations of sovereign governments, their agencies, instrumentalities,
authorities or political subdivisions; (ii) other short-term debt securities
rated AA or higher by S&P or Aa or higher by Moody's or, if unrated, of
comparable quality in the opinion of Bankers Trust; (iii) commercial paper; (iv)
bank obligations, including negotiable certificates of deposit, time deposits
and banker's acceptances; and (v) repurchase agreements. At the time the
Portfolio invests in commercial paper, bank obligations or repurchase
agreements, the issuer of the issuer's parent must have outstanding debt rated
AA or higher by S&P or Aa or higher by Moody's or outstanding commercial paper
or bank obligations rated A-1 by S&P or Prime-1 by Moody's; or, if no such
ratings are available, the instrument must be of comparable quality in the
opinion of Bankers Trust. These instruments may be denominated in U.S dollars or
in foreign currencies.
Lower-Rated Debt Securities ("Junk Bonds"). While the market for high
yield corporate debt securities has been in existence for many years and has
weathered previous economic downturns, the 1980's brought a dramatic increase in
the use of such securities to fund highly leveraged corporate acquisitions and
restructuring. Past experience may not provide an accurate indication of future
performance of the high yield bond market, especially during periods of economic
recession. In fact, from 1989 to 1991, the percentage of lower-rated debt
securities that defaulted rose significantly above prior levels.
The market for lower-rated debt securities may be thinner and less
active than that for higher rated debt securities, which can adversely affect
the prices at which the former are sold. If market quotations are not available,
lower-rated debt securities will be valued in accordance with procedures
established by the Board of Trustees, including the use of outside pricing
services.
Judgement plays a greater role in valuing high yield corporate debt
securities than is the case for securities for which more external sources for
quotations and last sale information is available. Adverse publicity and
changing investor perception may affect the ability of outside pricing services
to value lower-rated debt securities and the Global High Yield Securities
Portfolio's ability to dispose of these securities.
Since the risk of default is higher for lower-rated debt securities,
Bankers Trust's research and credit analysis are an especially important part of
managing securities of this type held by the Portfolio. In considering
investments for the Portfolio, Bankers Trust will attempt to identify those
issuers
4
<PAGE>
of high yielding debt securities whose financial conditions are adequate to meet
future obligations, have improved or are expected to improve in the future.
Bankers Trust's analysis focuses on relative values based on such factors as
interest on dividend coverage, asset coverage, earnings prospects and the
experience and managerial strength of the issuer.
The Global High Yield Securities Portfolio may choose, at its expense
or in conjunction with others, to pursue litigation or otherwise exercise its
rights as a security holder to seek to protect the interest of security holders
if it determines this to be in the best interest of the Global High Yield
Securities Fund.
Illiquid Securities. Historically, illiquid securities have included
securities subject to contractual or legal restrictions on resale because they
have not been registered under the Securities Act of 1933, as amended (the "1933
Act"), securities which are otherwise not readily marketable and repurchase
agreements having a maturity of longer than seven days. Securities which have
not been registered under the 1933 Act are referred to as private placements or
restricted securities and are purchased directly from the issuer or in the
secondary market. Mutual funds do not typically hold a significant amount of
these restricted or other illiquid securities because of the potential for
delays on resale and uncertainty in valuation. Limitations on resale may have an
adverse effect on the marketability of portfolio securities and a mutual fund
might be unable to dispose of restricted or other illiquid securities promptly
or at reasonable prices and might thereby experience difficulty satisfying
redemptions within seven days. A mutual fund might also have to register such
restricted securities in order to dispose of them resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities.
In recent years, however, a large institutional market has developed
for certain securities that are not registered under the 1933 Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale of such investments to the
general public or to certain institutions may not be indicative of their
liquidity.
The Securities and Exchange Commission (the "SEC") has adopted Rule
144A, which allows a broader institutional trading market for securities
otherwise subject to restriction on their resale to the general public. Rule
144A establishes a "safe harbor" from the registration requirements of the 1933
Act of resales of certain securities to qualified institutional buyers. The
Adviser anticipates that the market for certain restricted
5
<PAGE>
securities such as institutional commercial paper will expand further as a
result of this regulation and the development of automated systems for the
trading, clearance and settlement of unregistered securities of domestic and
foreign issuers, such as the PORTAL System sponsored by the National Association
of Securities Dealers, Inc.
The Adviser will monitor the liquidity of Rule 144A securities in each
Portfolio's portfolio under the supervision of the Portfolio's Board of
Trustees. In reaching liquidity decisions, the Adviser will consider, among
other things, the following factors: (i) the frequency of trades and quotes for
the security; (ii) the number of dealers and other potential purchasers wishing
to purchase or sell the security; (iii) dealer undertakings to make a market in
the security and (iv) the nature of the security and of the marketplace trades
(e.g.,
the time needed to dispose of the security, the method of soliciting offers
and the mechanics of the transfer).
* 1 moved from here; text not shown
Lending of Portfolio Securities. Each Portfolio has the authority to lend
portfolio securities to brokers, dealers and other financial organizations. The
Portfolio will not lend securities to Bankers Trust, Signature or their
affiliates. By lending its securities, a Portfolio can increase its income by
continuing to receive interest on the loaned securities as well as by either
investing the cash collateral in short-term securities or obtaining yield in the
form of interest paid by the borrower when U.S. Government obligations are used
as collateral.
There may be risks of delay in receiving additional collateral or risks of
delay in recovery of the securities or even loss of rights in the collateral
should the borrower of the securities fail financially. A Portfolio will adhere
to the following conditions whenever its securities are loaned: (i) the
Portfolio must receive at least 100 percent cash collateral or equivalent
securities from the borrower; (ii) the borrower must increase this collateral
whenever the market value of the securities including accrued interest rises
above the level of the collateral; (iii) the Portfolio must be able to terminate
the loan at any time; (iv) the Portfolio must receive reasonable interest on the
loan, as well as any dividends, interest or other distributions on the loaned
securities, and any increase in market value; (v) the Portfolio may pay only
reasonable custodian fees in connection with the loan; and (vi) voting rights on
the loaned securities may pass to the borrower; provided, however, that if a
material event adversely affecting the investment occurs, the Board of Trustees
of the Portfolio must terminate the loan and regain the right to vote the
securities.
When-Issued and Delayed Delivery Securities. Each Portfolio may purchase
securities on a when-issued or delayed delivery basis. For example, delivery of
and payment for these securities
6
<PAGE>
can take place a month or more after the date of the purchase commitment. The
purchase price and the interest rate payable, if any, on the securities are
fixed on the purchase commitment date or at the time the settlement date is
fixed. The value of such securities is subject to market fluctuation and no
interest accrues to a Portfolio until settlement takes place. At the time a
Portfolio makes the commitment to purchase securities on a when-issued or
delayed delivery basis, it will record the transaction, reflect the value each
day of such securities in determining its net asset value and, if applicable,
calculate the maturity for the purposes of average maturity from that date. At
the time of settlement a when-issued security may be valued at less than the
purchase price. To facilitate such acquisitions, each Portfolio will maintain
with the Custodian a segregated account with liquid assets, consisting of cash,
U.S. Government securities or other appropriate securities, in an amount at
least equal to such commitments. On delivery dates for such transactions, each
Portfolio will meet its obligations from maturities or sales of the securities
held in the segregated account and/or from cash flow. If a Portfolio chooses to
dispose of the right to acquire a when-issued security prior to its acquisition,
it could, as with the disposition of any other portfolio obligation, incur a
gain or loss due to market fluctuation. It is the current policy of each
Portfolio not to enter into when-issued commitments exceeding in the aggregate
15% of the market value of the Portfolio's total assets, less liabilities other
than the obligations created by when-issued commitments.
Additional U.S. Government Obligations. Each Portfolio may invest in
obligations issued or guaranteed by U.S. Government agencies or
instrumentalities. These obligations may or may not be backed by the "full faith
and credit" of the United States. In the case of securities not backed by the
full faith and credit of the United States, each Portfolio must look principally
to the federal agency issuing or guaranteeing the obligation for ultimate
repayment, and may not be able to assert a claim against the United States
itself in the event the agency or instrumentality does not meet its commitments.
Securities in which each Portfolio may invest that are not backed by the full
faith and credit of the United States include, but are not limited to,
obligations of the Tennessee Valley Authority, the Federal Home Loan Mortgage
Corporation and the U.S. Postal Service, each of which has the right to borrow
from the U.S. Treasury to meet its obligations, and obligations of the Federal
Farm Credit System and the Federal Home Loan Banks, both of whose obligations
may be satisfied only by the individual credits of each issuing agency.
Securities which are backed by the full faith and credit of the United States
include obligations of the Government National Mortgage Association, the Farmers
Home Administration, and the Export-Import Bank.
Reverse Repurchase Agreements. The Portfolios may borrow funds for
temporary or emergency purposes, such as meeting larger
7
<PAGE>
than anticipated redemption requests, and not for leverage, by among other
things, agreeing to sell portfolio securities to financial institutions such as
banks and broker-dealers and to repurchase them at a mutually agreed date and
price (a "reverse repurchase agreement"). At the time a Portfolio enters into a
reverse repurchase agreement it will place in a segregated custodial account
cash, U.S. Government Obligations or high-grade debt obligations having a value
equal to the repurchase price, including accrued interest. Reverse repurchase
agreements involve the risk that the market value of the securities sold by a
Portfolio may decline below the repurchase price of those securities. Reverse
repurchase agreements are considered to be borrowings by a Portfolio.
Foreign Securities: Special Considerations Concerning Eastern Europe.
Global High Yield Securities Portfolio may invest in foreign securities issued
by Eastern European countries. Investments in companies domiciled in Eastern
European countries may be subject to potentially greater risks than those of
other foreign issuers. These risks include: (i) potentially less social,
political and economic stability; (ii) the small current size of the markets for
such securities and the low volume of trading, which result in less liquidity
and in greater price volatility; (iii) certain national policies which may
restrict the Portfolios' investment opportunities, including restrictions on
investment in issuers or industries deemed sensitive to national interests; (iv)
foreign taxation; (v) the absence of developed legal structures governing
private or foreign investment or allowing for judicial redress for injury to
private property; (vi) the absence, until recently in certain Eastern European
countries, of a capital market structure or market-oriented economy; and (vii)
the possibility that recent favorable economic developments in Eastern Europe
may be slowed or reversed by unanticipated political or social events in such
countries, or in the Commonwealth of Independent States consisting of the states
of the former Union of Soviet Socialist Republics.
The economic situation remains difficult for Eastern European countries
in transition from central planning, following what has already been a sizable
decline in output. The contraction now appears to be bottoming out in parts of
Eastern Europe, where some countries are projected to register positive growth
in 1995. Following three successive years of output declines, there are
preliminary indications of a turnaround in the former Czech and Slovak Federal
Republic, Hungary and Poland; growth in private sector activity and strong
exports now appear to have contained the fall in output. A number of their
governments, including those of Hungary and Poland, are currently implementing
or considering reforms directed at political and economic liberalization,
including efforts to foster multi-party political systems, decentralize economic
planning, and a move toward free-market economies. But key aspects of the reform
and stabilization efforts have not yet been fully implemented, and
8
<PAGE>
there remain risks of policy slippage. At present, no Eastern European country
has a developed stock market, but Poland, Hungary and the Czech Republic have
small securities markets in operation.
In many other countries of the region, output losses have been even
larger. These declines reflect the adjustment difficulties during the early
stages of the transition, high rates of inflation, the compression of imports,
disruption in trade among the countries of the former Soviet Union, and
uncertainties about the reform process itself. Large-scale subsidies are
delaying industrial restructuring and are exacerbating the fiscal situation. A
reversal of these adverse factors is not anticipated in the near term, and
output is expected to decline further in most of these countries. In the Russian
Federation and most other countries of the former Soviet Union, economic
conditions are of particular concern because of economic instability due to
political unrest and armed conflicts in many regions. Further, no accounting
standards exist in Eastern European countries. Although certain Eastern European
currencies may be convertible into U.S. dollars, the conversion rates may be
artificial to the actual market values and may be adverse to the Fund's
shareholders.
Brady Bonds. Latin American Equity Portfolio and Global High Yield
Securities Portfolio may invest in "Brady bonds," which have been issued by the
governments of Argentina, Brazil, Costa Rica, Mexico, Nigeria, the Philippines,
Uruguay and Venezuela. Most Brady bonds are currently rated below BBB by
Standard & Poor's Corporation ("S&P") or Baa by Moody's Investors Services Inc.
("Moody's").
The Brady Plan was conceived by the U.S. Treasury in the 1980's in an
attempt to produce a debt restructuring program which would enable a debt
country to (i) reduce the absolute level of debt of its creditor banks, and (ii)
reschedule its external debt repayments, based upon its ability to service such
debts by persuading its creditor banks to accept a debt write-off by offering
them a selection of options, each of which represented an attractive substitute
for the nonperforming debt. Although it was envisaged that each debtor country
would agree to a unique package of options with its creditor banks, the plan was
that these options would be based upon the following:(i) a discount bond
carrying a market rate of interest (whether fixed or floating), with principal
collateralized by the debtor country with cash or securities in an amount equal
to at least one year of rolling interest; (ii) a par bond carrying a low rate of
interest (whether fixed or floating), collateralized in the same way as in (i)
above; and (iii) retention of existing debt (thereby avoiding a debt write-off)
coupled with an advance of new money or subscription of new bonds.
Latin American Equity Portfolio and Global High Yield Securities Portfolio
may invest in either collateralized or
9
<PAGE>
uncollateralized Brady bonds. U.S. dollar-denominated, collateralized Brady
bonds, which may be fixed rate par bonds or floating rate discount bonds, are
collateralized in full as to principal by U.S. Treasury zero coupon bonds having
the same maturity as the bonds. Interest payments on such bonds generally are
collateralized by cash or securities in an amount that in the case of fixed rate
bonds, is equal to at least one year of rolling interest payments or, in the
case of floating rate bonds, initially is equal to at least one year's rolling
interest payments based on the applicable interest rate at the time and is
adjusted at regular intervals thereafter.
Foreign Securities: Special Considerations Concerning Latin America.
Investing in securities of Latin American issuers may entail risks relating to
the potential political and economic instability of certain Latin American
countries and the risks of expropriation, nationalization, confiscation or the
imposition of restrictions on foreign investment and on repatriation of capital
invested. In the event of expropriation, nationalization or other confiscation
by any country, Latin American Equity Fund could lose its entire investment in
any such country.
The securities markets of Latin American countries are substantially
smaller, less developed, less liquid and more volatile than the major securities
markets in the U.S. disclosure and regulatory standards are in many respects
less stringent than U.S. standards. Furthermore, there is a lower level of
monitoring and regulation of the markets and the activities of investors in such
markets.
The limited size of many Latin American securities markets and limited
trading volume in the securities of Latin American issuers compared to volume of
trading in the securities of U.S. issuers could cause prices to be erratic for
reasons apart from factors that affect the soundness and competitiveness of the
securities issuers. For example, limited market size may cause prices to be
unduly influenced by traders who control large positions. Adverse publicity and
investors' perceptions, whether or not based on in-depth fundamental analysis,
may decrease the value and liquidity of portfolio securities.
The economies of Latin American countries may be predominantly based in
only a few industries, may be highly vulnerable to changes in local or global
trade conditions, and may suffer from extreme and volatile debt burdens or
inflation rates; and (v) securities of issuers located in Latin America may have
limited marketability and may be subject to more abrupt or erratic price
movements.
Governments of many Latin American countries have exercised and
continue to exercise substantial influence over many aspects of the private
sector through the ownership or control of many companies, including some of the
largest in those countries. As a result, government actions in the future could
have a
10
<PAGE>
significant effect on economic conditions which may adversely affect prices of
certain portfolio securities. Expropriation, confiscatory taxation,
nationalization, political, economic or social instability or other similar
developments, such as military coups, have occurred in the past and could also
adversely affect the Portfolio's investments in this region.
Certain Latin American countries such as Argentina, Brazil and Mexico
are among the world's largest debtors to commercial banks and foreign
governments. At times, certain Latin American countries have declared moratoria
on the payment of principal and/or interest on outstanding debt. Investment in
sovereign debt can involve a high degree of risk.
In recent years, there have been significant improvements in some Latin
American economies; however, others continue to experience economic problems,
including high inflation rates and high interest rates. The emergence of Latin
American economies and securities markets will require economic and fiscal
discipline, as well as stable political and social conditions. Recovery may also
be influenced by international economic conditions, particularly those in the
United States, by world prices for oil and other commodities, and international
trade agreements such as the North American Free Trade Agreement. Because Latin
American securities generally are denominated and pay dividends or interest in
currencies of Latin American countries, and the Portfolio holds various foreign
currencies from time to time, the value of the net assets of the Portfolio as
measured in U.S. dollars will be affected favorably or unfavorably by changes in
exchange rates, the Portfolio is authorized to enter into certain foreign
currency exchange transactions.
Latin American Equity Portfolio invests in securities denominated in
currencies of Latin American countries. Accordingly, changes in the value of
these currencies against the U.S. dollar will result in corresponding changes in
the U.S. dollar value of the Portfolio's assets denominated in those currencies.
Criteria for determining the appropriate distribution of investments among
various countries and regions include the prospects for relative growth among
the countries, expected levels of inflation, government policies influencing
business conditions, the outlook for currency relationships and the range of
alternative opportunities available to international investors. The Portfolio
seeks to benefit from economic and other developments in Latin America.
Some Latin American countries also may have managed currencies, which are
not free floating against the U.S. dollar. In addition, there is risk that
certain Latin American countries may restrict the free conversion of their
currencies into other currencies. Further, certain Latin American currencies may
not be internationally traded. Certain of these currencies have experienced a
steep devaluation relative to the U.S. dollar. Any
11
<PAGE>
devaluations in the currencies in which the Portfolio's securities are
denominated may have a detrimental impact on the Fund's net asset value.
The economies of individual Latin American countries may differ
favorably or unfavorably from the U.S. economy in such respects as the rate of
growth of gross domestic product, the rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payments position. Certain Latin
American countries have experienced high levels of inflation which can have a
debilitating effect on an economy. Furthermore, certain Latin American countries
may impose withholding taxes on dividends payable to the Portfolio at a higher
rate than those imposed by other foreign countries. This may reduce the Fund's
investment income available for distribution to shareholders.
Certain Latin American countries such as Argentina, Brazil and Mexico
are among the world's largest debtors to commercial banks and foreign
governments. At times, certain Latin American countries have declared moratoria
on the payment of principal and/or interest on outstanding debt. Investment in
sovereign debt can involve a high degree of risk. The governmental entity that
controls the repayment of sovereign debt may not be able or willing to repay the
principal and/or interest when due in accordance with the terms of such debt. A
governmental entity's willingness or ability to repay principal and interest due
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the governmental entity's policy
towards the International Monetary Fund, and the political constraints to which
a governmental entity may be subject. Governmental entities may also be
dependent on expected disbursements from foreign governments, multilateral
agencies and others abroad to reduce principal and interest arrearages on their
debt. The commitment on the part of these governments, agencies and others to
make such disbursements may be conditioned on a governmental entity's
implementation of economic reforms and/or economic performance and the timely
service of such debtor's obligations. Failure to implement such reforms, achieve
such levels of economic performance or repay principal or interest when due may
result in the cancellation of such third parties' commitments to lend funds to
the governmental entity, which may further impair such debtor's ability or
willingness to service its debts in a timely manner. Consequently, governmental
entities may default on their sovereign debt.
Holders of sovereign debt, including the Portfolio, may be requested to
participate in the rescheduling of such debt and to extend further loans to
governmental entities. There is no bankruptcy proceeding by which defaulted
sovereign debt may be collected in whole or in part.
12
<PAGE>
Latin America is a region rich in natural resources such as oil,
copper, tin, silver, iron ore, forestry, fishing, livestock and agriculture. The
region has a large population (roughly 300 million) representing a large
domestic market. Economic growth was strong in the 1960's and 1970's, but slowed
dramatically (and in some instances was negative) in the 1980's as a result of
poor economic policies, higher international interest rates, and the denial of
access to new foreign capital. Although a number of Latin American countries are
currently experiencing lower rates of inflation and higher rates of real growth
in Gross Domestic Product than they have in the past, other Latin American
countries continue to experience significant problems, including high inflation
rates and high interest rates. Capital flight has proven a persistent problem
and external debt has been forcibly rescheduled. Political turmoil, high
inflation, capital repatriation restrictions and nationalization have further
exacerbated conditions.
Large budget deficits and a high level of state ownership in many
productive and service areas have given way to balanced budgets and
privatization in Mexico, Brazil, Chile and Argentina.
Changes in political leadership have encouraged the implementation of
market oriented economic policies such as balanced budgets. Privatization trade
reform and monetary reform have been among the steps taken to modernize the
Latin American economies and to regenerate growth in the region. However,
governments of many Latin American countries have exercised and continue to
exercise substantial influence over many aspects of the private sector through
the ownership or control of many companies, including some of the largest in
those countries. As a result, government actions in the future could have a
significant effect on economic conditions which may adversely affect prices of
certain portfolio securities. Expropriation, confiscatory taxation,
nationalization, political, economic or social instability or other similar
developments, such a military coups, have occurred in the past and could also
adversely affect the Portfolio's investments in this region.
Changes in political leadership, the implementation of market oriented
economic policies, such as privatization, trade reform and fiscal and monetary
reform are among the recent steps taken to renew economic growth. External debt
is being restructured and flight capital (domestic capital that has left the
home country) has begun to return. Inflation control efforts have also been
implemented. Free Trade Zones are being discussed in various areas around the
region, the most notable being a free trade zone between Mexico and the U.S.
Various trade agreements have also been formed within the region such as the
Andean Pact, Mercosur and North American Free Trade Agreement (NAFTA). The
largest of these is NAFTA, which was implemented on January 1, 1994. Latin
American equity markets can be extremely volatile and in the past have shown
little correlation with the U.S. market. Currencies are typically weak, but most
are now relatively free floating, and it is not unusual for the
13
<PAGE>
currencies to undergo wide fluctuations in value over short periods of time due
to changes in the market.
Foreign Securities: Special Considerations Concerning the Pacific
Basin. Many Asian countries may be subject to a greater degree of social,
political and economic instability than is the case in the United States and
European countries. Such instability may result from (i) authoritarian
governments or military involvement in political and economic decision-making;
(ii) popular unrest associated with demands for improved political, economic and
social conditions; (iii) internal insurgencies; (iv) hostile relations with
neighboring countries; and (v) ethnic, religious and racial disaffection.
The economies of most of the Asian countries are heavily dependent upon
international trade and are accordingly affected by protective trade barriers
and the economic conditions of their trading partners, principally, the United
States, Japan, China and the European Community. The enactment by the United
States or other principal trading partners of protectionist trade legislation,
reduction of foreign investment in the local economies and general declines in
the international securities markets could have a significant adverse effect
upon the securities markets of the Asian countries.
Thailand has been transformed into one of the fastest growing stock
markets in the world. On February 23, 1991, the military staged its 17th coup
since the overthrow of the absolute monarchy in 1932. The newly appointed
government quickly focused on the economy and enacted major tax revisions,
slashing personal income tax and reducing taxes on imports. Most significantly,
it pushed through a 7% value added tax. Released from political consideration by
the coup, the Bank of Thailand was finally able to implement a monetary
tightening. As a result, interest rates rose and GDP declined to 7.7% from 10%
the previous year. The government continues to move ahead with new projects -
especially telecommunications, roads and port facilities - needed to refurbish
the country's overtaxed infrastructure. Nonetheless, political unrest coupled
with the shooting of anti-government demonstrators in May 1992 has caused many
international businesses to question Thailand's political stability.
Hong Kong's impending return to Chinese dominion in 1997 has not
initially had a positive effect on its economic growth which was vigorous in the
1980's. However, authorities in Beijing have agreed to maintain a capitalist
system for 50 years that, along with Hong Kong's economic growth, continued to
further strong stock market returns. In preparation for 1997, Hong Kong has to
develop trade with China, where it is the largest foreign investor, while also
maintaining its longstanding export relationship with the United States.
Spending on infrastructure improvements is a significant priority of the
colonial government while the private sector continues to diversify abroad based
on its position as an established international trade center in the Far East.
14
<PAGE>
In terms of GDP, industrial standards and level of education, South
Korea is second only to Japan in Asia. It enjoys the benefits of a diversified
economy with well developed sectors in electronics, automotive, textiles and
shoe manufacturing, steel and shipbuilding among others. The driving force
behind the economy's dynamic growth has been the planned development of an
export-oriented economy in a vigorously entrepreneurial society. Real GDP grew
about 7.5% in 1991. Labor unrest was noticeably calmer, unemployment averaged a
low of 2.3%, and investment was strong. Inflation rates, however, are beginning
to challenge South Korea's strong economic performance. In addition, the
international situation between South and North Korea continues to improve. Both
Koreas joined the United Nations separately in late 1991, creating another forum
for negotiation and joint cooperation.
Indonesia is a mixed economy with many socialist institutions and
central planning, but has recently placed emphasis on deregulation and private
enterprise. Like Thailand, Indonesia has extensive natural wealth, yet with a
large and rapidly increasingly population, it remains a poor country.
Agriculture, including forestry and fishing, is an important sector, accounting
for 21% of GDP and over 50% of the labor force. Once the world's largest rice
importer, Indonesia is now nearly self-sufficient.
The Malaysian economy continued to perform well, growing at an average
annual rate of 9% from 1987 through 1991. This placed Malaysia as one of the
fastest growing economies in the Asian-Pacific region. Malaysia has become the
world's third-largest producer of semiconductor devices (after the US and Japan)
and the world's largest exporter of semiconductor devices.
More remarkable is the country's ability to achieve rapid economic growth
with relative price stability (2% inflation over the past five years) as the
government followed prudent fiscal/monetary policies. Malaysia's high export
dependence level leaves it vulnerable to a recession in the OECD countries or a
fall in world commodity prices.
Singapore has an open entrepreneurial economy with strong service and
manufacturing sectors and excellent international trading links derived from its
entrepot history. During the 1970's and early 1980's, the economy expanded
rapidly, achieving an average annual growth rate of 9%. Per capita GDP is among
the highest in Asia. Singapore holds a position as a major oil refining and
services center.
Foreign Securities: Special Considerations Concerning China and China
Region. China's economic reform plan was designed to bring in foreign investment
capital and technological skills. The result has been a move towards a more
mixed economy away from the previous centrally planned economy. The process of
devolving
15
<PAGE>
responsibility for all aspects of enterprise to local management and authorities
continues, even though the system of socialism with Chinese characteristics
involves considerable influence by the central government on production and
marketing.
In order to attract foreign investment, China has since 1978 designated
certain areas of the country where overseas investors can receive special
investment incentives and tax concessions. There are five Special Economic Zones
(Shenzhen, Shantou and Zhuhai in Guangdong Province, Xiamen in Fujian Province
and Hainan Island, which itself is a province). Fourteen coastal cities have
been designated as "open cities" and certain Open Economic Zones have been
established in coastal areas. Shanghai has established the Pudong New Area.
Twenty-seven High and New Technology Industrial Development Zones have been
approved where preferential treatment is given to enterprises which are
confirmed as technology intensive.
China has had for many centuries a well deserved reputation for being
closed to foreigners, with trade with the outside world being carried on under
terms of extreme restriction and under central control. Such conditions were
maintained in the first thirty years of the Communist regime which began in
1949; however there have been several stages of evolution, from the institution
of an industrialization program in the 1950s to a modernization policy
commencing in 1978 which combined economic development with the beginnings of
opening the country.
The securities markets in the China Region are substantially smaller,
less liquid and more volatile than the major securities markets in the United
States. A high proportion of the shares of many Chinese issuers may be held by a
limited number of persons and financial institutions, which may limit the number
of shares available for investment by the Portfolio. Similarly, volume and
liquidity in the bond markets in China are less than in the United States and,
at times, price volatility can be greater than in the United States. A limited
number of issuers in Chinese securities markets may represent a
disproportionately large percentage of market capitalization and trading value.
The limited liquidity of securities markets in China may also affect the
Portfolio's ability to acquire or dispose of securities at the price and time it
wishes to do so. Accordingly, during periods of rising securities prices in the
more illiquid Chinese securities markets, the Portfolio's ability to participate
fully in such price increases may be limited by its investment policy of
investing not more than 15% of its net assets in illiquid securities.
Conversely, the Portfolio's inability to dispose fully and promptly of positions
in declining markets will cause the Portfolio's net asset value to decline as
the value of the unsold positions is marked to lower prices. In addition, the
Chinese securities markets are susceptible to being influenced by large
investors trading significant blocks of securities.
The Chinese, Hong Kong and Taiwan stock markets are
16
<PAGE>
undergoing a period of growth and change which may result in trading volatility
and difficulties in the settlement and recording of transactions, and in
interpreting and applying the relevant law and regulations.
China governmental actions can have a significant effect on the
economic conditions in China, which could adversely affect the value and
liquidity of the Portfolio's investments. Although the Chinese Government has
recently begun to institute economic reform policies, there can be no assurances
that it will continue to pursue such policies or, if it does, that such policies
will succeed.
The securities industry in China is not well developed. China has no
securities laws of nationwide applicability. The municipal securities
regulations adopted by Shanghai and Shenzhen municipalities are very new, as are
their respective securities exchanges and other self-regulatory organizations.
In addition, Chinese stockbrokers and other intermediaries may not perform as
well as their counterparts in the United States and other more developed
securities markets. The prices at which the Portfolio may acquire investments
may be affected by trading by persons with material non-public information and
by securities transactions by brokers in anticipation of transactions by the
Portfolio in particular securities.
China does not have a comprehensive system of laws, although
substantial changes have occurred in this regard in recent years. The corporate
form of organization has only recently been permitted in China and national
regulations governing corporations were introduced only in May, 1992. Prior to
the introduction of such regulations, Shanghai had adopted a set of corporate
regulations applicable to corporations located or listed in Shanghai, and the
relationship between the two sets of regulations is not clear. Consequently,
until a firmer legal basis is provided, even such fundamental corporate law
tenets as the limited liability status of Chinese issuers and their authority to
issue shares remain open to question. Laws regarding fiduciary duties of
officers and directors and the protection of shareholders are not well
developed. China's judiciary is relatively inexperienced in enforcing the laws
that exist, leading to a higher than usual degree of uncertainty as to the
outcome of any litigation. Even where adequate law exists in China, it may be
impossible to obtain swift and equitable enforcement of such law, or to obtain
enforcement of the judgement by a court of another jurisdiction. The bankruptcy
laws pertaining to state enterprises have rarely been used and are untried in
regard to an enterprise with foreign shareholders, and there can be no assurance
that such shareholders, including the Portfolio, would be able to realize the
value of the assets of the enterprise or receive payment in convertible
currency. As the Chinese legal system develops, the promulgation of new laws,
changes to existing laws and the preemption of local laws by national laws may
adversely affect foreign investors, including
17
<PAGE>
the Portfolio. The uncertainties faced by foreign investors in China are
exacerbated by the fact that many laws, regulations and decrees of China are not
publicly available, but merely circulated internally.
Exports continue to rise strongly, although China remains vulnerable to
United States economic conditions and possible trade sanctions, unless it
liberalizes current import restrictions and improves its human rights record.
However, imports are also expected to rise and may outstrip exports in terms of
growth rates.
There are currently two officially recognized securities exchanges in
China -- The Shanghai Securities Exchange which opened in December 1990 and The
Shenzhen Stock Exchange which opened in July 1991. Shares traded on these
Exchanges are two types -- "A" shares which can be traded only by Chinese
investors and "B" shares which can be traded only by individuals and
corporations not resident in China.
In Shanghai, all "B" Shares are denominated in Chinese renminbi
("RMB"), but all transactions in "B" shares must be settled in U.S. dollars, and
all distributions made on "B" shares are payable in U.S. dollars, the exchange
rate being the weighted average exchange rate for the U.S. dollar as published
by the Shanghai Foreign Exchange Adjustment Centre.
In Shenzhen, the purchase and sale prices for "B" shares are quoted in
Hong Kong dollars. Dividends and other lawful revenue derived from "B" shares
are calculated in RMB but payable in Hong Kong dollars, the rate of exchange
being the average rate published by Shenzhen Foreign Exchange Adjustment Centre.
There are no foreign exchange restrictions on the repatriation of gains
made on or income derived from "B" Shares, subject to the payment of taxes
imposed by China thereon.
Company law relating to companies limited by shares and regulations
regarding the issuing of shares by equity joint ventures have not yet been
developed on a national basis. The Shenzhen municipality issued regulations in
1992 relating to joint stock companies, and the Shanghai municipality has a
draft joint stock company law under review. Regulations governing the trading of
securities on both the Shenzhen and the Shanghai stock exchanges have been
issued by each municipality; there is no national securities legislation as yet.
Economies of countries in the China Region may differ favorably or
unfavorably from the U.S. economy in such respects as rate of growth of gross
national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position. As an export-driven economy,
the economy of China is affected by developments in the economies of its
principal trading partners. Revocation by the United States of
18
<PAGE>
China's "Most Favored Nation" trading status, which the U.S. President and
Congress reconsider annually, would adversely affect the trade and economic
development of China and Hong Kong. Hong Kong and Taiwan have limited natural
resources, resulting in dependence on foreign sources for certain raw materials
and economic vulnerability to global fluctuations of price and supply.
Futures Contracts and Options on Futures Contracts
General. The successful use of such instruments draws upon the
Adviser's skill and experience with respect to such instruments and usually
depends on the Adviser's ability to forecast interest rate and currency exchange
rate movements correctly. Should interest or exchange rates move in an
unexpected manner, a Portfolio may not achieve the anticipated benefits of
futures contracts or options on futures contracts or may realize losses and thus
will be in a worse position than if such strategies had not been used. In
addition, the correlation between movements in the price of futures contracts or
options on futures contracts and movements in the price of the securities and
currencies hedged or used for cover will not be perfect and could produce
unanticipated losses.
Successful use of the futures contract and related options are subject
to special risk considerations. A liquid secondary market for any futures or
options contract may not be available when a futures or options position is
sought to be closed. In addition, there may be an imperfect correlation between
movements in the securities or currency in the Portfolio. Successful use of
futures or options contracts are further dependent on Bankers Trust's ability to
correctly predict movements in the securities or foreign currency markets and no
assurance can be given that its judgement will be correct. Successful use of
options on securities or stock indices are subject to similar risk
considerations. In addition, by writing covered call options, the Portfolio
gives up the opportunity, while the option is in effect, to profit from any
price increase in the underlying securities above the options exercise price.
Futures Contracts. A Portfolio may enter into contracts for the
purchase or sale for future delivery of fixed-income securities, foreign
currencies, or contracts based on financial indices including any index of U.S.
Government securities, foreign government securities or corporate debt
securities. U.S. futures contracts have been designed by exchanges which have
been designated "contracts markets" by the Commodity Futures Trading Commission
("CFTC"), and must be executed through a futures commission merchant, or
brokerage firm, which is a member of the relevant contract market. Futures
contracts trade on a number of exchange markets, and, through their clearing
corporations, the exchanges guarantee performance of the contracts as between
the clearing members of the exchange. A Portfolio may enter into futures
contracts which are based on debt securities that are
19
<PAGE>
backed by the full faith and credit of the U.S. Government, such as
long-term U.S. Treasury Bonds, Treasury Notes, GNMA modified pass-through
mortgage-backed securities and three-month U.S. Treasury Bills. A Portfolio may
also enter into futures contracts which are based on bonds issued by entities
other than the U.S. Government.
At the same time a futures contract is purchased or sold, the Portfolio
must allocate cash or securities as a deposit payment ("initial deposit"). It is
expected that the initial deposit would be approximately 1 1/2% to 5% of a
contract's face value. Daily thereafter, the futures contract is valued and the
payment of "variation margin" may be required, since each day the Portfolio
would provide or receive cash that reflects any decline or increase in the
contract's value.
At the time of delivery of securities pursuant to such a contract,
adjustments are made to recognize differences in value arising from the delivery
of securities with a different interest rate from that specified in the
contract. In some (but not many) cases, securities called for by a futures
contract may not have been issued when the contract was written.
Although futures contracts by their terms call for the actual delivery
or acquisition of securities, in most cases the contractual obligation is
fulfilled before the date of the contract without having to make or take
delivery of the securities. The offsetting of a contractual obligation is
accomplished by buying (or selling, as the case may be) on a commodities
exchange an identical futures contract calling for delivery in the same month.
Such a transaction, which is effected through a member of an exchange, cancels
the obligation to make or take delivery of the securities. Since all
transactions in the futures market are made, offset or fulfilled through a
clearinghouse associated with the exchange on which the contracts are traded,
the Portfolio will incur brokerage fees when it purchases or sells futures
contracts.
The purpose of the acquisition or sale of a futures contract, in the
case of a Portfolio which holds or intends to acquire fixed-income securities,
is to attempt to protect the Portfolio from fluctuations in interest or foreign
exchange rates without actually buying or selling fixed-income securities or
foreign currencies. For example, if interest rates were expected to increase,
the Portfolio might enter into futures contracts for the sale of debt
securities. Such a sale would have much the same effect as selling an equivalent
value of the debt securities owned by the Portfolio. If interest rates did
increase, the value of the debt security in the Portfolio would decline, but the
value of the futures contracts to the Portfolio would increase at approximately
the same rate, thereby keeping the net asset value of the Portfolio from
declining as much as it otherwise would have. The Portfolio could accomplish
similar results by selling debt securities and investing in bonds with
20
<PAGE>
short maturities when interest rates are expected to increase. However, since
the futures market is more liquid than the cash market, the use of futures
contracts as an investment technique allows the Portfolio to maintain a
defensive position without having to sell its portfolio securities.
Similarly, when it is expected that interest rates may decline, futures
contracts may be purchased to attempt to hedge against anticipated purchases of
debt securities at higher prices. Since the fluctuations in the value of futures
contracts should be similar to those of debt securities, a Portfolio could take
advantage of the anticipated rise in the value of debt securities without
actually buying them until the market had stabilized. At that time, the futures
contracts could be liquidated and the Portfolio could then buy debt securities
on the cash market. To the extent a Portfolio enters into futures contracts for
this purpose, the assets in the segregated asset account maintained to cover the
Portfolio's obligations with respect to such futures contracts will consist of
cash, cash equivalents or high quality liquid debt securities from its portfolio
in an amount equal to the difference between the fluctuating market value of
such futures contracts and the aggregate value of the initial and variation
margin payments made by the Portfolio with respect to such futures contracts.
The ordinary spreads between prices in the cash and futures market, due
to differences in the nature of those markets, are subject to distortions.
First, all participants in the futures market are subject to initial deposit and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced, thus producing distortion. Third, from
the point of view of speculators, the margin deposit requirements in the futures
market are less onerous than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures market may
cause temporary price distortions. Due to the possibility of distortion, a
correct forecast of general interest rate trends by the Adviser may still not
result in a successful transaction.
In addition, futures contracts entail risks. Although the Adviser
believes that use of such contracts will benefit the Portfolios, if the
Adviser's investment judgment about the general direction of interest rates is
incorrect, a Portfolio's overall performance would be poorer than if it had not
entered into any such contract. For example, if a Portfolio has hedged against
the possibility of an increase in interest rates which would adversely affect
the price of debt securities held in its
21
<PAGE>
portfolio and interest rates decrease instead, the Portfolio will lose part or
all of the benefit of the increased value of its debt securities which it has
hedged because it will have offsetting losses in its futures positions. In
addition, in such situations, if a Portfolio has insufficient cash, it may have
to sell debt securities from its portfolio to meet daily variation margin
requirements. Such sales of bonds may be, but will not necessarily be, at
increased prices which reflect the rising market. A Portfolio may have to sell
securities at a time when it may be disadvantageous to do so.
Options on Futures Contracts. Each Portfolio may purchase and write
options on futures contracts for hedging purposes. The purchase of a call option
on a futures contract is similar in some respects to the purchase of a call
option on an individual security. Depending on the pricing of the option
compared to either the price of the futures contract upon which it is based or
the price of the underlying debt securities, it may or may not be less risky
than ownership of the futures contract or underlying debt securities. As with
the purchase of futures contracts, when a Portfolio is not fully invested it may
purchase a call option on a futures contract to hedge against a market advance
due to declining interest rates.
The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of the security or foreign currency which
is deliverable upon exercise of the futures contract. If the futures price at
expiration of the option is below the exercise price, a Portfolio will retain
the full amount of the option premium which provides a partial hedge against any
decline that may have occurred in the Portfolio's portfolio holdings. The
writing of a put option on a futures contract constitutes a partial hedge
against increasing prices of the security or foreign currency which is
deliverable upon exercise of the futures contract. If the futures price at
expiration of the option is higher than the exercise price, the Portfolio will
retain the full amount of the option premium which provides a partial hedge
against any increase in the price of securities which the Portfolio intends to
purchase. If a put or call option the Portfolio has written is exercised, the
Portfolio will incur a loss which will be reduced by the amount of the premium
it receives. Depending on the degree of correlation between changes in the value
of its portfolio securities and changes in the value of its futures positions,
the Portfolio's losses from existing options on futures may to some extent be
reduced or increased by changes in the value of portfolio securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities. For
example, a Portfolio may purchase a put option on a futures contract to hedge
its portfolio against the risk of rising interest rates.
22
<PAGE>
The amount of risk a Portfolio assumes when it purchases an option on a
futures contract is the premium paid for the option plus related transaction
costs. In addition to the correlation risks discussed above, the purchase of an
option also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the option purchased.
The Board of Trustees of each Portfolio has adopted the requirement
that futures contracts and options on futures contracts be used only as a hedge
and not for speculation. In addition to this requirement, the Board of Trustees
of each Portfolio has also adopted a restriction that the Portfolio will not
enter into any futures contracts or options on futures contracts if immediately
thereafter the amount of margin deposits on all the futures contracts of the
Portfolio and premiums paid on outstanding options on futures contracts owned by
the Portfolio would exceed 5% of the market value of the total assets of the
Portfolio.
Options on Foreign Currencies. Each Portfolio may purchase and write
options on foreign currencies for hedging purposes in a manner similar to that
in which futures contracts on foreign currencies, or forward contracts, will be
utilized. For example, a decline in the dollar value of a foreign currency in
which portfolio securities are denominated will reduce the dollar value of such
securities, even if their value in the foreign currency remains constant. In
order to protect against such diminutions in the value of portfolio securities,
the Portfolio may purchase put options on the foreign currency. If the value of
the currency does decline, a Portfolio will have the right to sell such currency
for a fixed amount in dollars and will thereby offset, in whole or in part, the
adverse effect on its portfolio which otherwise would have resulted.
Conversely, where a rise in the dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, the Portfolio may purchase call options thereon. The
purchase of such options could offset, at least partially, the effects of the
adverse movements in exchange rates. As in the case of other types of options,
however, the benefit to the Portfolio deriving from purchases of foreign
currency options will be reduced by the amount of the premium and related
transaction costs. In addition, where currency exchange rates do not move in the
direction or to the extent anticipated, the Portfolio could sustain losses on
transactions in foreign currency options which would require it to forego a
portion or all of the benefits of advantageous changes in such rates.
Each Portfolio may write options on foreign currencies for the same
types of hedging purposes. For example, where a Portfolio anticipates a decline
in the dollar value of foreign currency denominated securities due to adverse
fluctuations in exchange rates it could, instead of purchasing a put option,
23
<PAGE>
write a call option on the relevant currency. If the expected decline occurs,
the options will most likely not be exercised, and the diminution in value of
portfolio securities will be offset by the amount of the premium received.
Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar cost of securities to be acquired, the
Portfolio could write a put option on the relevant currency which, if rates move
in the manner projected, will expire unexercised and allow the Portfolio to
hedge such increased cost up to the amount of the premium. As in the case of
other types of options, however, the writing of a foreign currency option will
constitute only a partial hedge up to the amount of the premium, and only if
rates move in the expected direction. If this does not occur, the option may be
exercised and the Portfolio would be required to purchase or sell the underlying
currency at a loss which may not be offset by the amount of the premium. Through
the writing of options on foreign currencies, the Portfolio also may be required
to forego all or a portion of the benefits which might otherwise have been
obtained from favorable movements in exchange rates.
Each Portfolio intends to write covered call options on foreign
currencies. A call option written on a foreign currency by a Portfolio is
"covered" if the Portfolio owns the underlying foreign currency covered by the
call or has an absolute and immediate right to acquire that foreign currency
without additional cash consideration (or for additional cash consideration held
in a segregated account by its Custodian) upon conversion or exchange of other
foreign currency held in its portfolio. A call option is also covered if the
Portfolio has a call on the same foreign currency and in the same principal
amount as the call written where the exercise price of the call held (a) is
equal to or less than the exercise price of the call written or (b) is greater
than the exercise price of the call written if the difference is maintained by
the Portfolio in cash, U.S. Government securities and other high quality liquid
debt securities in a segregated account with its custodian.
Each Portfolio also intends to write call options on foreign currencies
that are not covered for cross-hedging purposes. A call option on a foreign
currency is for cross-hedging purposes if it is not covered, but is designed to
provide a hedge against a decline in the U.S. dollar value of a security which
the Portfolio owns or has the right to acquire and which is denominated in the
currency underlying the option due to an adverse change in the exchange rate. In
such circumstances, the Portfolio collateralizes the option by maintaining in a
segregated account with its custodian, cash or U.S. Government securities or
other high quality liquid debt securities in an amount not less than the value
of the underlying foreign currency in U.S. dollars marked to market daily.
Additional Risks of Options on Futures Contracts, Forward
24
<PAGE>
Contracts and Options on Foreign Currencies. Unlike transactions entered into by
a Portfolio in futures contracts, options on foreign currencies and forward
contracts are not traded on contract markets regulated by the CFTC or (with the
exception of certain foreign currency options) by the SEC. To the contrary, such
instruments are traded through financial institutions acting as market-makers,
although foreign currency options are also traded on certain national securities
exchanges such as the Philadelphia Stock Exchange and the Chicago Board Options
Exchange, subject to SEC regulation. Similarly, options on currencies may be
traded over-the-counter. In an over-the-counter trading environment, many of the
protections afforded to exchange participants will not be available. For
example, there are no daily price fluctuation limits, and adverse market
movements could therefore continue to an unlimited extent over a period of time.
Although the purchaser of an option cannot lose more than the amount of the
premium plus related transaction costs, this entire amount could be lost.
Moreover, the option writer and a trader of forward contracts could lose amounts
substantially in excess of their initial investments, due to the margin and
collateral requirements associated with such positions.
Options on foreign currencies traded on national securities exchanges
are within the jurisdiction of the SEC, as are other securities traded on such
exchanges. As a result, many of the protections provided to traders on organized
exchanges will be available with respect to such transactions. In particular,
all foreign currency option positions entered into on a national securities
exchange are cleared and guaranteed by the Options Clearing Corporation ("OCC"),
thereby reducing the risk of counterparty default. Further, a liquid secondary
market in options traded on a national securities exchange may be more readily
available than in the over-the-counter market, potentially permitting a
Portfolio to liquidate open positions at a profit prior to exercise or
expiration, or to limit losses in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options,
however, is subject to the risks of the availability of a liquid secondary
market described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effects of other
political and economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-counter market.
For example, exercise and settlement of such options must be made exclusively
through the OCC, which has established banking relationships in applicable
foreign countries for this purpose. As a result, the OCC may, if it determines
that foreign governmental restrictions or taxes would prevent the orderly
settlement of foreign currency option exercises, or would result in undue
burdens on the OCC or its clearing member, impose special procedures on exercise
and settlement, such as technical
25
<PAGE>
changes in the mechanics of delivery of currency, the fixing of dollar
settlement prices or prohibitions on exercise.
As in the case of forward contracts, certain options on foreign
currencies are traded over-the-counter and involve liquidity and credit risks
which may not be present in the case of exchange-traded currency options. A
Portfolio's ability to terminate over-the-counter options will be more limited
than with exchange-traded options. It is also possible that broker-dealers
participating in over-the-counter options transactions will not fulfill their
obligations. Until such time as the staff of the SEC changes its position, each
Portfolio will treat purchased over-the-counter options and assets used to cover
written over-the-counter options as illiquid securities. With respect to options
written with primary dealers in U.S. Government securities pursuant to an
agreement requiring a closing purchase transaction at a formula price, the
amount of illiquid securities may be calculated with reference to the repurchase
formula.
In addition, futures contracts, options on futures contracts, forward
contracts and options on foreign currencies may be traded on foreign exchanges.
Such transactions are subject to the risk of governmental actions affecting
trading in or the prices of foreign currencies or securities. The value of such
positions also could be adversely affected by: (i) other complex foreign
political and economic factors; (ii) lesser availability than in the United
States of data on which to make trading decisions; (iii) delays in the
Portfolio's ability to act upon economic events occurring in foreign markets
during nonbusiness hours in the United States; (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States; and (v) lesser trading volume.
Options on Securities. Each Portfolio may write (sell) covered call and
put options to a limited extent on its portfolio securities ("covered options")
in an attempt to increase income. However, the Portfolio may forgo the benefits
of appreciation on securities sold or may pay more than the market price on
securities acquired pursuant to call and put options written by the Portfolio.
When a Portfolio writes a covered call option, it gives the purchaser
of the option the right to buy the underlying security at the price specified in
the option (the "exercise price") by exercising the option at any time during
the option period. If the option expires unexercised, the Portfolio will realize
income in an amount equal to the premium received for writing the option. If the
option is exercised, a decision over which the Portfolio has no control, the
Portfolio must sell the underlying security to the option holder at the exercise
price. By writing a covered call option, the Portfolio forgoes, in exchange for
the premium less the commission ("net premium"), the opportunity to profit
during the option period from an increase in the market
26
<PAGE>
value of the underlying security above the exercise price.
When a Portfolio writes a covered put option, it gives the purchaser of
the option the right to sell the underlying security to the Portfolio at the
specified exercise price at any time during the option period. If the option
expires unexercised, the Portfolio will realize income in the amount of the
premium received for writing the option. If the put option is exercised, a
decision over which the Portfolio has no control, the Portfolio must purchase
the underlying security from the option holder at the exercise price. By writing
a covered put option, the Portfolio, in exchange for the net premium received,
accepts the risk of a decline in the market value of the underlying security
below the exercise price. The Portfolio will only write put options involving
securities for which a determination is made at the time the option is written
that the Portfolio wishes to acquire the securities at the exercise price.
A Portfolio may terminate its obligation as the writer of a call or put
option by purchasing an option with the same exercise price and expiration date
as the option previously written. This transaction is called a "closing purchase
transaction." The Portfolio will realize a profit or loss for a closing purchase
transaction if the amount paid to purchase an option is less or more, as the
case may be, than the amount received from the sale thereof. To close out a
position as a purchaser of an option, the Portfolio, may make a "closing sale
transaction" which involves liquidating the Portfolio's position by selling the
option previously purchased. Where the Portfolio cannot effect a closing
purchase transaction, it may be forced to incur brokerage commissions or dealer
spreads in selling securities it receives or it may be forced to hold underlying
securities until an option is exercised or expires.
When a Portfolio writes an option, an amount equal to the net premium
received by the Portfolio is included in the liability section of the
Portfolio's Statement of Assets and Liabilities as a deferred credit. The amount
of the deferred credit will be subsequently marked to market to reflect the
current market value of the option written. The current market value of a traded
option is the last sale price or, in the absence of a sale, the mean between the
closing bid and asked price. If an option expires on its stipulated expiration
date or if the Portfolio enters into a closing purchase transaction, the
Portfolio will realize a gain (or loss if the cost of a closing purchase
transaction exceeds the premium received when the option was sold), and the
deferred credit related to such option will be eliminated. If a call option is
exercised, the Portfolio will realize a gain or loss from the sale of the
underlying security and the proceeds of the sale will be increased by the
premium originally received. The writing of covered call options may be deemed
to involve the pledge of the securities against which the option is being
written. Securities against which call options are written will be segregated on
the books of the custodian for
27
<PAGE>
the Portfolio.
A Portfolio may purchase call and put options on any securities in
which it may invest. The Portfolio would normally purchase a call option in
anticipation of an increase in the market value of such securities. The purchase
of a call option would entitle the Portfolio, in exchange for the premium paid,
to purchase a security at a specified price during the option period. The
Portfolio would ordinarily have a gain if the value of the securities increased
above the exercise price sufficiently to cover the premium and would have a loss
if the value of the securities remained at or below the exercise price during
the option period.
A Portfolio would normally purchase put options in anticipation of a
decline in the market value of securities in its portfolio ("protective puts")
or securities of the type in which it is permitted to invest. The purchase of a
put option would entitle the Portfolio, in exchange for the premium paid, to
sell a security, which may or may not be held in the Portfolio's portfolio, at a
specified price during the option period. The purchase of protective puts is
designed merely to offset or hedge against a decline in the market value of the
Portfolio's portfolio securities. Put options also may be purchased by the
Portfolio for the purpose of affirmatively benefiting from a decline in the
price of securities which the Portfolio does not own. The Portfolio would
ordinarily recognize a gain if the value of the securities decreased below the
exercise price sufficiently to cover the premium and would recognize a loss if
the value of the securities remained at or above the exercise price. Gains and
losses on the purchase of protective put options would tend to be offset by
countervailing changes in the value of underlying portfolio securities.
Each Portfolio has adopted certain other nonfundamental policies
concerning option transactions which are discussed below. The Portfolio's
activities in options may also be restricted by the requirements of the Internal
Revenue Code of 1986, as amended (the "Code"), for qualification as a regulated
investment company.
The hours of trading for options on securities may not conform to the
hours during which the underlying securities are traded. To the extent that the
option markets close before the markets for the underlying securities,
significant price and rate movements can take place in the underlying securities
markets that cannot be reflected in the option markets. It is impossible to
predict the volume of trading that may exist in such options, and there can be
no assurance that viable exchange markets will develop or continue.
A Portfolio may engage in over-the-counter options transactions with
broker-dealers who make markets in these options. At present, approximately ten
broker-dealers, including
28
<PAGE>
several of the largest primary dealers in U.S. Government securities, make these
markets. The ability to terminate over-the-counter option positions is more
limited than with exchange-traded option positions because the predominant
market is the issuing broker rather than an exchange, and may involve the risk
that broker-dealers participating in such transactions will not fulfill their
obligations. To reduce this risk, the Portfolio will purchase such options only
from broker-dealers who are primary government securities dealers recognized by
the Federal Reserve Bank of New York and who agree to (and are expected to be
capable of) entering into closing transactions, although there can be no
guarantee that any such option will be liquidated at a favorable price prior to
expiration. The Adviser will monitor the creditworthiness of dealers with whom
the Portfolio enters into such options transactions under the general
supervision of the Portfolios' Trustees.
Options on Securities Indices. In addition to options on securities,
each Portfolio, with the exception of International Bond Portfolio, may also
purchase and write (sell) call and put options on securities indices. Such
options give the holder the right to receive a cash settlement during the term
of the option based upon the difference between the exercise price and the value
of the index. Such options will be used for the purposes described above under
"Options on Securities."
International Equity Portfolio and Pacific Basin Equity Portfolio may,
to the extent allowed by Federal and state securities laws, invest in securities
indices instead of investing directly in individual foreign securities.
Options on securities indices entail risks in addition to the risks of
options on securities. The absence of a liquid secondary market to close out
options positions on securities indices is more likely to occur, although the
Portfolio generally will only purchase or write such an option if the Adviser
believes the option can be closed out.
Use of options on securities indices also entails the risk that trading
in such options may be interrupted if trading in certain securities included in
the index is interrupted. The Portfolio will not purchase such options unless
the Adviser believes the market is sufficiently developed such that the risk of
trading in such options is no greater than the risk of trading in options on
securities.
Price movements in a Portfolio's portfolio may not correlate precisely
with movements in the level of an index and, therefore, the use of options on
indices cannot serve as a complete hedge. Because options on securities indices
require settlement in cash, the Adviser may be forced to liquidate portfolio
securities to meet settlement obligations.
Forward Foreign Currency Exchange Contracts. Because each
29
<PAGE>
Portfolio buys and sells securities denominated in currencies other than the
U.S. dollar and receives interest, dividends and sale proceeds in currencies
other than the U.S. dollar, each Portfolio from time to time may enter into
foreign currency exchange transactions to convert to and from different foreign
currencies and to convert foreign currencies to and from the U.S. dollar. A
Portfolio either enters into these transactions on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market or uses forward
contracts to purchase or sell foreign currencies.
A forward foreign currency exchange contract is an obligation by a
Portfolio to purchase or sell a specific currency at a future date, which may be
any fixed number of days from the date of the contract. Forward foreign currency
exchange contracts establish an exchange rate at a future date. These contracts
are transferable in the interbank market conducted directly between currency
traders (usually large commercial banks) and their customers. A forward foreign
currency exchange contract generally has no deposit requirement and is traded at
a net price without commission. Each Portfolio maintains with its custodian a
segregated account of high grade liquid assets in an amount at least equal to
its obligations under each forward foreign currency exchange contract. Neither
spot transactions nor forward foreign currency exchange contracts eliminate
fluctuations in the prices of the Portfolio's securities or in foreign exchange
rates, or prevent loss if the prices of these securities should decline.
Each Portfolio may enter into foreign currency hedging transactions in
an attempt to protect against changes in foreign currency exchange rates between
the trade and settlement dates of specific securities transactions or changes in
foreign currency exchange rates that would adversely affect a portfolio position
or an anticipated investment position. Since consideration of the prospect for
currency parities will be incorporated into Bankers Trust's long-term investment
decisions, a Portfolio will not routinely enter into foreign currency hedging
transactions with respect to security transactions; however, Bankers Trust
believes that it is important to have the flexibility to enter into foreign
currency hedging transactions when it determines that the transactions would be
in the Portfolio's best interest. Although these transactions tend to minimize
the risk of loss due to a decline in the value of the hedged currency, at the
same time they tend to limit any potential gain that might be realized should
the value of the hedged currency increase. The precise matching of the forward
contract amounts and the value of the securities involved will not generally be
possible because the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of such securities
between the date the forward contract is entered into and the date it matures.
The projection of currency market movements is extremely difficult, and the
successful execution of a hedging strategy is highly uncertain.
30
<PAGE>
While these contracts are not presently regulated by the CFTC, the CFTC
may in the future assert authority to regulate forward contracts. In such event
the Portfolio's ability to utilize forward contracts in the manner set forth in
the Prospectus may be restricted. Forward contracts may reduce the potential
gain from a positive change in the relationship between the U.S. dollar and
foreign currencies. Unanticipated changes in currency prices may result in
poorer overall performance for the Portfolio than if it had not entered into
such contracts. The use of foreign currency forward contracts may not eliminate
fluctuations in the underlying U.S. dollar equivalent value of the prices of or
rates of return on a Portfolio's foreign currency denominated portfolio
securities and the use of such techniques will subject a Portfolio to certain
risks.
The matching of the increase in value of a forward contract and the
decline in the U.S. dollar equivalent value of the foreign currency denominated
asset that is the subject of the hedge generally will not be precise. In
addition, a Portfolio may not always be able to enter into foreign currency
forward contracts at attractive prices and this will limit the Portfolio's
ability to use such contract to hedge or cross-hedge its assets. Also, with
regard to a Portfolio's use of cross-hedges, there can be no assurance that
historical correlations between the movement of certain foreign currencies
relative to the U.S. dollar will continue. Thus, at any time poor correlation
may exist between movements in the exchange rates of the foreign currencies
underlying a Portfolio's cross-hedges and the movements in the exchange rates of
the foreign currencies in which the Portfolio's assets that are the subject of
such cross-hedges are denominated.
Rating Services
The ratings of rating services represent their opinions as to the
quality of the securities that they undertake to rate. It should be emphasized,
however, that ratings are relative and subjective and are not absolute standards
of quality. Although these ratings are an initial criterion for selection of
portfolio investments, Bankers Trust also makes its own evaluation of these
securities, subject to review by the Board of Trustees. After purchase by a
Portfolio, an obligation may cease to be rated or its rating may be reduced
below the minimum required for purchase by the Portfolio. Neither event would
require a Fund to eliminate the obligation from its portfolio, but Bankers Trust
will consider such an event in its determination of whether a Fund should
continue to hold the obligation. A description of the ratings used herein and in
the Funds' Prospectus is set forth in the Appendix to the Prospectus.
Investment Restrictions
The following investment restrictions are "fundamental
31
<PAGE>
policies" of each Fund and each Portfolio and may not be changed with respect to
the Fund or the Portfolio without the approval of a "majority of the outstanding
voting securities" of the Fund or the Portfolio, as the case may be. "Majority
of the outstanding voting securities" under the Investment Company Act of 1940,
as amended (the "1940 Act"), and as used in this Statement of Additional
Information and the Prospectus, means, with respect to the Fund (or the
Portfolio), the lesser of (i) 67% or more of the outstanding voting securities
of the Fund (or of the total beneficial interests of the Portfolio) present at a
meeting, if the holders of more than 50% of the outstanding voting securities of
the Fund or of the total beneficial interests of the Portfolio) are present or
represented by proxy or (ii) more than 50% of the outstanding voting securities
of the Fund (or of the total beneficial interests of the Portfolio). Whenever
the Trust is requested to vote on a fundamental policy of a Portfolio, the Trust
will hold a meeting of the corresponding Fund's shareholders and will cast its
vote as instructed by that Fund's shareholders. Fund shareholders who do not
vote will not affect the Trust's votes at the Portfolio meeting. The percentage
of the Trust's votes representing Fund shareholders not voting will be voted by
the Trustees of the Trust in the same proportion as the Fund shareholders who
do, in fact, vote.
As a matter of fundamental policy, no Portfolio (or Fund) may (except
that no investment restriction of a Fund shall prevent a Fund from investing all
of its Assets in an open-end investment company with substantially the same
investment objectives):
(1) borrow money or mortgage or hypothecate assets of the Portfolio
(Fund), except that in an amount not to exceed 1/3 of the current value of the
Portfolio's (Fund's) assets, it may borrow money as a temporary measure for
extraordinary or emergency purposes and enter into reverse repurchase agreements
or dollar roll transactions, and except that it may pledge, mortgage or
hypothecate not more than 1/3 of such assets to secure such borrowings (it is
intended that money would be borrowed only from banks and only either to
accommodate requests for the withdrawal of beneficial interests (redemption of
shares) while effecting an orderly liquidation of portfolio securities or to
maintain liquidity in the event of an unanticipated failure to complete a
portfolio security transaction or other similar situations) or reverse
repurchase agreements, provided that collateral arrangements with respect to
options and futures, including deposits of initial deposit and variation margin,
are not considered a pledge of assets for purposes of this restriction and
except that assets may be pledged to secure letters of credit solely for the
purpose of participating in a captive insurance company sponsored by the
Investment Company Institute; for additional related restrictions, see clause
(i) under the caption "State and Federal Restrictions" below (as an operating
policy, the Portfolios may not engage in dollar roll transactions);
32
<PAGE>
(2) underwrite securities issued by other persons except insofar as the
Portfolios (Trust or the Funds) may technically be deemed an underwriter under
the 1933 Act in selling a portfolio security;
(3) make loans to other persons except: (a) through the lending of the
Portfolio's (Fund's) portfolio securities and provided that any such loans not
exceed 30% of the Portfolio's (Fund's) total assets (taken at market value); (b)
through the use of repurchase agreements or the purchase of short-term
obligations; or (c) by purchasing a portion of an issue of debt securities of
types distributed publicly or privately (under current regulations, the
Portfolio's (Fund's) fundamental policy with respect to 20% risk weighing for
financial institutions prevent the Portfolio (Fund) from engaging in securities
lending);
(4) purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity contracts
(except futures and option contracts) in the ordinary course of business (except
that the Portfolio (Trust) may hold and sell, for the Portfolio's (Fund's)
portfolio, real estate acquired as a result of the Portfolio's (Fund's)
ownership of securities);
(5) concentrate its investments in any particular industry (excluding
U.S. Government securities), but if it is deemed appropriate for the achievement
of a Portfolio's (Fund's) investment objective(s), up to 25% of its total assets
may be invested in any one industry; and
(6) issue any senior security (as that term is defined in the 1940 Act)
if such issuance is specifically prohibited by the 1940 Act or the rules and
regulations promulgated thereunder, provided that collateral arrangements with
respect to options and futures, including deposits of initial deposit and
variation margin, are not considered to be the issuance of a senior security for
purposes of this restriction.
State and Federal Restrictions. In order to comply with certain state
and Federal statutes and policies each Portfolio (or the Trust, on behalf of
each Fund) will not as a matter of operating policy (except that no operating
policy shall prevent a Fund from investing all of its Assets in an open-end
investment company with substantially the same investment objectives):
(i) borrow money (including through reverse repurchase or forward roll
transactions) for any purpose in excess of 5% of the Portfolio's (Fund's) total
assets (taken at cost), except that the Portfolio (Fund) may borrow for
temporary or emergency purposes up to 1/3 of its total assets;
33
<PAGE>
(ii) pledge, mortgage or hypothecate for any purpose in excess of 10% of
the Portfolio's (Fund's) total assets (taken at market value), provided that
collateral arrangements with respect to options and futures, including deposits
of initial deposit and variation margin, and reverse repurchase agreements are
not considered a pledge of assets for purposes of this restriction;
(iii) purchase any security or evidence of interest therein on margin,
except that such short-term credit as may be necessary for the clearance of
purchases and sales of securities may be obtained and except that deposits of
initial deposit and variation margin may be made in connection with the
purchase, ownership, holding or sale of futures;
(iv) sell securities it does not own such that the dollar amount of such
short sales at any one time exceeds 25% of the net equity of the Portfolio
(Fund), and the value of securities of any one issuer in which the Portfolio
(Fund) is short exceeds the lesser of 2.0% of the value of the Portfolio's
(Fund's) net assets or 2.0% of the securities of any class of any U.S. issuer
and, provided that short sales may be made only in those securities which are
fully listed on a national securities exchange or a foreign exchange (This
provision does not include the sale of securities of the Portfolio (Fund)
contemporaneously owns or has the right to obtain, without the payment of
additional consideration, securities equivalent in kind and amount to those
sold, i.e., short sales against the box.) (the Portfolios (Funds) have no
current intention to engage in short selling);
(v) invest for the purpose of exercising control or management;
(vi) purchase securities issued by any investment company except by
purchase in the open market where no commission or profit to a sponsor or dealer
results from such purchase other than the customary broker's commission, or
except when such purchase, though not made in the open market, is part of a plan
of merger or consolidation; provided, however, that securities of any investment
company will not be purchased for the Portfolio (Fund) if such purchase at the
time thereof would cause: (a) more than 10% of the Portfolio's (Fund's) total
assets (taken at the greater of cost or market value) to be invested in the
securities of such
34
<PAGE>
issuers; (b) more than 5% of the Portfolio's (Fund's) total assets (taken at the
greater of cost or market value) to be invested in any one investment company;
or (c) more than 3% of the outstanding voting securities of any such issuer to
be held for the Portfolio (Fund); provided further that, except in the case of a
merger or consolidation, the Portfolio (Fund) shall not purchase any securities
of any open-end investment company unless the Portfolio (Fund) (1) waives the
investment advisory fee with respect to assets invested in other open-end
investment companies and (2) incurs no sales charge in connection with the
investment;
(vii) invest more than 10% of the Portfolio's (Fund's) total assets (taken
at the greater of cost or market value) in securities (excluding Rule 144A
securities) that are restricted as to resale under the 1933 Act;
(viii) invest more than 15% of the Portfolio's (Fund's) total assets (taken
at the greater of cost or market value) in (a) securities (including Rule 144A
securities) that are restricted as to resale under the 1933 Act, and (b)
securities that are issued by issuers which (including predecessors) have been
in operation less than three years (other than U.S. Government securities),
provided, however, that no more than 5% of the Portfolio's (Fund's) total assets
are invested in securities issued by issuers which (including predecessors) have
been in operation less than three years;
(ix) with the exception of Global High Yield Securities Portfolio (Fund),
with respect to 75% of the Portfolio's (Fund's) total assets, purchase
securities of any issuer if such purchase at the time thereof would cause the
Portfolio (Fund) to hold more than 10% of any class of securities of such
issuer, for which purposes all indebtedness of an issuer shall be deemed a
single class and all preferred stock of an issuer shall be deemed a single
class, except that futures or option contracts shall not be subject to this
restriction;
(x) with the exception of Global High Yield Securities Portfolio (Fund),
with respect to 75% of its assets, invest more than 5% of its total assets in
the securities (excluding U.S. Government securities) of any one issuer;
35
<PAGE>
(xi) invest in securities issued by an issuer any of whose officers,
directors, trustees or security holders is an officer or Trustee of the
Portfolio (Trust), or is an officer or partner of the Adviser, if after the
purchase of the securities of such issuer for the Portfolio (Fund) one or more
of such persons owns beneficially more than 1/2 of 1% of the shares or
securities, or both, all taken at market value, of such issuer, and such persons
owning more than 1/2 of 1% of such shares or securities together own
beneficially more than 5% of such shares or securities, or both, all taken at
market value;
(xii) invest in warrants (other than warrants acquired by the Portfolio
(Fund) as part of a unit or attached to securities at the time of purchase) if,
as a result, the investments (valued at the lower of cost or market) would
exceed 5% of the value of the Portfolio's (Fund's) net assets or if, as a
result, more than 2% of the Portfolio's (Fund's) net assets would be invested in
warrants not listed on a recognized United States or foreign stock exchange, to
the extent permitted by applicable state securities laws;
(xiii) write puts and calls on securities unless each of the following
conditions are met: (a) the security underlying the put or call is within the
investment policies of the Portfolio (Fund) and the option is issued by the
Options Clearing Corporation, except for put and call options issued by non-U.S.
entities or listed on non-U.S. securities or commodities exchanges; (b) the
aggregate value of the obligations underlying the puts determined as of the date
the options are sold shall not exceed 5% of the Portfolio's (Fund's) net assets;
(c) the securities subject to the exercise of the call written by the Portfolio
(Fund) must be owned by the Portfolio (Fund) at the time the call is sold and
must continue to be owned by the Portfolio (Fund) until the call has been
exercised, has lapsed, or the Portfolio (Fund) has purchased a closing call, and
such purchase has been confirmed, thereby extinguishing the Portfolio's (Fund's)
obligation to deliver securities pursuant to the call it has sold; and (d) at
the time a put is written, the Portfolio (Fund) establishes a segregated account
with its custodian consisting of cash or short-term U.S. Government securities
equal in value to the amount the Portfolio (Fund) will be obligated to pay upon
exercise of the put (this account must be maintained until the put is exercised,
has
36
<PAGE>
expired, or the Portfolio (Fund) has purchased a closing put, which is a
put of the same series as the one previously written); and
(xiv) buy and sell puts and calls on securities, stock index futures or
options on stock index futures, or financial futures or options on financial
futures unless such options are written by other persons and: (a) the options or
futures are offered through the facilities of a national securities association
or are listed on a national securities or commodities exchange, except for put
and call options issued by non-U.S. entities or listed on non-U.S. securities or
commodities exchanges; (b) the aggregate premiums paid on all such options which
are held at any time do not exceed 20% of the Portfolio's (Fund's) total net
assets; and (c) the aggregate margin deposits required on all such futures or
options thereon held at any time do not exceed 5% of the Portfolio's (Fund's)
total assets.
There will be no violation of any investment restriction if that
restriction is complied with at the time the relevant action is taken
notwithstanding a later change in market value of an investment, in net or total
assets, in the securities rating of the investment, or any other later change.
Each Fund will comply with the state securities laws and regulations of
all states in which it is registered. Each Portfolio will comply with the
permitted investments and investment limitations in the securities laws and
regulations of all states in which the corresponding Fund, or any other
registered investment company investing in the Portfolio, is registered.
Portfolio Transactions and Brokerage Commissions
The Adviser is responsible for decisions to buy and sell securities,
futures contracts and options on such securities and futures for each Portfolio,
the selection of brokers, dealers and futures commission merchants to effect
transactions and the negotiation of brokerage commissions, if any.
Broker-dealers may receive brokerage commissions on portfolio transactions,
including options, futures and options on futures transactions and the purchase
and sale of underlying securities upon the exercise of options. Orders may be
directed to any broker-dealer or futures commission merchant, including to the
extent and in the manner permitted by applicable law, Bankers Trust or its
subsidiaries or affiliates. Purchases and sales of certain portfolio securities
on behalf of a Portfolio are frequently placed by the Adviser with the issuer or
a primary or secondary market-maker for these securities on a net basis, without
any brokerage commission being paid by the Portfolio. Trading does,
37
<PAGE>
however, involve transaction costs. Transactions with dealers serving as
market-makers reflect the spread between the bid and asked prices. Transaction
costs may also include fees paid to third parties for information as to
potential purchasers or sellers of securities. Purchases of underwritten issues
may be made which will include an underwriting fee paid to the underwriter.
The Adviser seeks to evaluate the overall reasonableness of the
brokerage commissions paid (to the extent applicable) in placing orders for the
purchase and sale of securities for a Portfolio taking into account such factors
as price, commission (negotiable in the case of national securities exchange
transactions), if any, size of order, difficulty of execution and skill required
of the executing broker-dealer through familiarity with commissions charged on
comparable transactions, as well as by comparing commissions paid by the
Portfolio to reported commissions paid by others. The Adviser reviews on a
routine basis commission rates, execution and settlement services performed,
making internal and external comparisons.
The Adviser is authorized, consistent with Section 28(e) of the
Securities Exchange Act of 1934, as amended, when placing portfolio transactions
for a Portfolio with a broker to pay a brokerage commission (to the extent
applicable) in excess of that which another broker might have charged for
effecting the same transaction on account of the receipt of research, market or
statistical information. The term "research, market or statistical information"
includes advice as to the value of securities; the advisability of investing in,
purchasing or selling securities; the availability of securities or purchasers
or sellers of securities; and furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts.
Consistent with the policy stated above, the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. and such other policies as
the Trustees of the Portfolio may determine, the Adviser may consider sales of
shares of the Trust and of other investment company clients of Bankers Trust as
a factor in the selection of broker-dealers to execute portfolio transactions.
Bankers Trust will make such allocations if commissions are comparable to those
charged by nonaffiliated, qualified broker-dealers for similar services.
Higher commissions may be paid to firms that provide research services
to the extent permitted by law. Bankers Trust may use this research information
in managing the Portfolio's assets, as well as the assets of other clients.
Except for implementing the policies stated above, there is no
intention to place portfolio transactions with particular brokers or dealers or
groups thereof. In effecting transactions in over-the-counter securities, orders
are placed with the principal market-makers for the security being traded
unless,
38
<PAGE>
after exercising care, it appears that more favorable results are available
otherwise.
Although certain research, market and statistical information from
brokers and dealers can be useful to a Portfolio and to the Adviser, it is the
opinion of the management of the Portfolios that such information is only
supplementary to the Adviser's own research effort, since the information must
still be analyzed, weighed and reviewed by the Adviser's staff. Such information
may be useful to the Adviser in providing services to clients other than the
Portfolios, and not all such information is used by the Adviser in connection
with the Portfolios. Conversely, such information provided to the Adviser by
brokers and dealers through whom other clients of the Adviser effect securities
transactions may be useful to the Adviser in providing services to the
Portfolios.
In certain instances there may be securities which are suitable for a
Portfolio as well as for one or more of the Adviser's other clients. Investment
decisions for a Portfolio and for the Adviser's other clients are made with a
view to achieving their respective investment objectives. It may develop that a
particular security is bought or sold for only one client even though it might
be held by, or bought or sold for, other clients. Likewise, a particular
security may be bought for one or more clients when one or more clients are
selling that same security. Some simultaneous transactions are inevitable when
several clients receive investment advice from the same investment adviser,
particularly when the same security is suitable for the investment objectives of
more than one client. When two or more clients are simultaneously engaged in the
purchase or sale of the same security, the securities are allocated among
clients in a manner believed to be equitable to each. It is recognized that in
some cases this system could have a detrimental effect on the price or volume of
the security as far as a Portfolio is concerned. However, it is believed that
the ability of a Portfolio to participate in volume transactions will produce
better executions for the Portfolio.
For period from January 1, 1995 through September 30, 1995 and the
years ended December 31, 1994 and 1993 , International Equity Portfolio paid
brokerage commissions in the amount of $132,894, $110,580 and $63,523
, respectively.
For the year ended September 30, 1995 and the period from October 25,
1993 (commencement of operations) through September 30, 1994, Latin American
Equity Portfolio paid brokerage commissions in the amount of $202,130 and
$188,008,
respectively.
For the year ended September 30, 1995 and the period from December 14,
1993 (commencement of operations) through September
39
<PAGE>
30, 1994, Global High Yield Securities Portfolio paid brokerage commissions
in the amount of $5,655 and $0, respectively.
For the year ended September 30, 1995 and the period from November 1,
1993 (commencement of operations) through September 30, 1994, Pacific Basin
Equity Portfolio paid brokerage commissions in the amount of $192,123 and
$139,363,
respectively.
For the period from January 1, 1995 through September 30, 1995, the
year ended December 31, 1994 and the period from March 9, 1993 (commencement of
operations) through December 31, 1993, Capital Appreciation Portfolio paid
brokerage commissions in the amount of $247,868, $162,941 and $58,016,
respectively.
For the year ended September 30, 1995 and the period from October 21, 1993
(commencement of operations) through September 30, 1994, Small Cap Portfolio
paid brokerage commissions in the amount of $70,603 and $20,835, respectively.
PERFORMANCE INFORMATION
Standard Performance Information
From time to time, quotations of a Fund's performance may be included
in advertisements, sales literature or shareholder reports. These performance
figures are calculated in the following manner:
Yield: Yields for a Fund used in advertising are computed by dividing
the Fund's interest and dividend income for a given 30-day or one-month
period, net of expenses, by the average number of shares entitled to
receive distributions during the period, dividing this figure by the
Fund's net asset value per share at the end of the period, and
annualizing the result (assuming compounding of income) in order to
arrive at an annual percentage rate. Income is calculated for purpose
of yield quotations in accordance with standardized methods applicable
to all stock and bond mutual funds. Dividends from equity investments
are treated as if they were accrued on a daily basis, solely for the
purpose of yield calculations. In general, interest income is reduced
with respect to bonds trading at a premium over their par value by
subtracting a portion of the premium from income on a daily basis, and
is increased with respect to bonds trading at a discount by adding a
portion of the discount to daily income. Capital gains and losses
40
<PAGE>
generally are excluded from the calculation.
Income calculated for the purposes of calculating a Fund's yield
differs from income as determined for other accounting purposes.
Because of the different accounting methods used, and because of the
compounding assumed in yield calculations, the yield quoted for a Fund
may differ from the rate of distributions of the Fund paid over the
same period or the rate of income reported in the Fund's financial
statements.
Total return: A Fund's average annual total return is calculated for
certain periods by determining the average annual compounded rates of
return over those periods that would cause an investment of $1,000
(made at the maximum public offering price with all distributions
reinvested) to reach the value of that investment at the end of the
periods. A Fund may also calculate total return figures which represent
aggregate performance over a period or year-by-year performance.
Performance Results: Any total return quotation provided for a Fund
should not be considered as representative of the performance of the
Fund in the future since the net asset value and public offering price
of shares of the Fund will vary based not only on the type, quality and
maturities of the securities held in the corresponding Portfolio, but
also on changes in the current value of such securities and on changes
in the expenses of the Fund and the corresponding Portfolio. These
factors and possible differences in the methods used to calculate total
return should be considered when comparing the total return of a Fund
to total returns published for other investment companies or other
investment vehicles. Total return reflects the performance of both
principal and income.
Comparison of Fund Performance
Comparison of the quoted nonstandardized performance of various
investments is valid only if performance is calculated in the same manner. Since
there are different methods of calculating performance, investors should
consider the effect of the methods used to calculate performance when comparing
performance of a Fund with performance quoted with respect to other investment
companies or types of investments.
In connection with communicating its performance to current or
prospective shareholders, a Fund also may compare these figures to the
performance of other mutual funds tracked by mutual fund rating services or to
unmanaged indices which may assume reinvestment of dividends but generally do
not reflect deductions for administrative and management costs. The Funds may
include comparisons of their investment results to the following unmanaged
indices: Global High Yield Securities Fund -
41
<PAGE>
JP Morgan Emerging Markets Bonds Index, Merrill Lynch High Yield Master Index or
Lipper World Income Funds Average; Capital Appreciation Fund - Standard & Poor's
500 Composite Stock Price Index, Standard & Poor's MidCap 400 Index, Lipper
General Equity Averages or Lipper MidCap Average; Small Cap Fund - Russell 2000
Index or Lipper Small Companies Growth Funds Average; International Equity Fund
- - MSCI GDP Weighted EAFE Index, MSCI EAFE Index or Lipper International Average;
Latin American Equity Fund - IFCG Latin America Index, IFCI Latin America Index
or Lipper Latin American Funds Average; and Pacific Basin Equity Fund - MSCI
Combined Far East Free Excluding Japan Index or Lipper Pacific Region Funds
Ex-Japan Average.
Evaluations of a Fund's performance made by independent sources may
also be used in advertisements concerning the Fund. Sources for a Fund's
performance information could include the following:
Asian Wall Street Journal, a weekly Asian newspaper that often reviews U.S.
mutual funds investing internationally.
Barron's, a Dow Jones and Company, Inc. business and financial weekly that
periodically reviews mutual fund performance data.
Business Week, a national business weekly that periodically reports the
performance rankings and ratings of a variety of mutual funds investing abroad.
Changing Times, The Kiplinger Magazine, a monthly investment advisory
publication that periodically features the performance of a variety of
securities.
Consumer Digest, a monthly business/financial magazine that includes a
"Money Watch" section featuring financial news.
Financial Times, Europe's business newspaper, which features from time to
time articles on international or country-specific funds.
Financial World, a general business/financial magazine that includes a
"Market Watch" department reporting on activities in the mutual fund industry.
Forbes, a national business publication that from time to time reports the
performance of specific investment companies in the mutual fund industry.
Fortune, a national business publication that periodically rates the
performance of a variety of mutual funds.
Global Investor, a European publication that periodically reviews the
performance of U.S. mutual funds investing internationally.
Investor's Daily, a daily newspaper that features financial, economic and
business news.
42
<PAGE>
Lipper Analytical Services, Inc.'s Mutual Fund Performance Analysis, a
weekly publication of industry-wide mutual fund averages by type of fund.
Money, a monthly magazine that from time to time features both specific
funds and the mutual fund industry as a whole.
Morningstar Inc., a publisher of financial information and mutual fund
research.
New York Times, a nationally distributed newspaper which regularly covers
financial news.
Personal Investing News, a monthly news publication that often reports on
investment opportunities and market conditions.
Personal Investor, a monthly investment advisory publication that includes
a "Mutual Funds Outlook" section reporting on mutual fund performance measures,
yields, indices and portfolio holdings.
Success, a monthly magazine targeted to the world of entrepreneurs and
growing business, often featuring mutual fund performance data.
U.S. News and World Report, a national business weekly that periodically
reports mutual fund performance data.
Value Line, a biweekly publication that reports on the largest 15,000
mutual funds.
Wall Street Journal, a Dow Jones and Company, Inc. newspaper which
regularly covers financial news.
Weisenberger Investment Companies Services, an annual compendium of
information about mutual funds and other investment companies, including
comparative data on funds' backgrounds, management policies, salient features,
management results, income and dividend records, and price ranges.
Working Women, a monthly publication that features a "Financial Workshop"
section reporting on the mutual fund/financial industry.
VALUATION OF SECURITIES; REDEMPTIONS AND PURCHASES IN KIND
Equity and debt securities (other than short-term debt obligations
maturing in 60 days or less), including listed securities and securities for
which price quotations are available, will normally be valued on the basis of
market valuations furnished by a pricing service. Short-term debt obligations
and money market securities maturing in 60 days or less are valued at amortized
cost, which approximates market.
43
<PAGE>
Securities for which market quotations are not available are valued by
Bankers Trust pursuant to procedures adopted by each Portfolio's Board of
Trustees. It is generally agreed that securities for which market quotations are
not readily available should not be valued at the same value as that carried by
an equivalent security which is readily marketable.
The problems inherent in making a good faith determination of value are
recognized in the codification effected by SEC Financial Reporting Release No. 1
("FRR 1" (formerly Accounting Series Release No. 113)) which concludes that
there is "no automatic formula" for calculating the value of restricted
securities. It recommends that the best method simply is to consider all
relevant factors before making any calculation. According to FRR 1 such factors
would include consideration of the:
type of security involved, financial statements, cost at date
of purchase, size of holding, discount from market value of
unrestricted securities of the same class at the time of
purchase, special reports prepared by analysts, information as
to any transactions or offers with respect to the security,
existence of merger proposals or tender offers affecting the
security, price and extent of public trading in similar
securities of the issuer or comparable companies, and other
relevant matters.
To the extent that a Portfolio purchases securities which are
restricted as to resale or for which current market quotations are not
available, the Adviser of the Portfolio will value such securities based upon
all relevant factors as outlined in FRR 1.
The Trust, on behalf of each Fund, and each Portfolio reserve the
right, if conditions exist which make cash payments undesirable, to honor any
request for redemption or repurchase order by making payment in whole or in part
in readily marketable securities chosen by the Trust, or the Portfolio, as the
case may be, and valued as they are for purposes of computing the Fund's or the
Portfolio's net asset value, as the case may be (a redemption in kind). If
payment is made to a Fund shareholder in securities, an investor, including the
Fund, the shareholder may incur transaction expenses in converting these
securities into cash. The Trust, on behalf of each Fund, and each Portfolio have
elected, however, to be governed by Rule 18f-1 under the 1940 Act as a result of
which each Fund and each Portfolio are obligated to redeem shares or beneficial
interests, as the case may be, with respect to any one investor during any
90-day period, solely in cash up to the lesser of $250,000 or 1% of the net
asset value of the Fund or the Portfolio, as the case may be, at the beginning
of the period.
44
<PAGE>
Each Portfolio has agreed to make a redemption in kind to the
corresponding Fund whenever the Fund wishes to make a redemption in kind and
therefore shareholders of the Fund that receive redemptions in kind will receive
portfolio securities of the corresponding Portfolio and in no case will they
receive a security issued by the Portfolio. The Portfolio has advised the Trust
that the Portfolio will not redeem in kind except in circumstances in which the
Fund is permitted to redeem in kind or unless requested by the Fund.
Each investor in a Portfolio, including the corresponding Fund, may add
to or reduce its investment in the Portfolio on each day the Portfolio
determines its net asset value. At the close of each such business day, the
value of each investor's beneficial interest in the Portfolio will be determined
by multiplying the net asset value of the Portfolio by the percentage, effective
for that day, which represents that investor's share of the aggregate beneficial
interests in the Portfolio. Any additions or withdrawals which are to be
effected as of the close of business on that day will then be effected. The
investor's percentage of the aggregate beneficial interests in the Portfolio
will then be recomputed as the percentage equal to the fraction (i) the
numerator of which is the value of such investor's investment in the Portfolio
as of the close of business on such day plus or minus, as the case may be, the
amount of net additions to or withdrawals from the investor's investment in the
Portfolio effected as of the close of business on such day, and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of the
close of business on such day plus or minus, as the case may be, the amount of
net additions to or withdrawals from the aggregate investments in the Portfolio
by all investors in the Portfolio. The percentage so determined will then be
applied to determine the value of the investor's interest in the Portfolio as
the close of business on the following business day.
Each Fund may, at its own option, accept securities in payment for
shares. The securities delivered in payment for shares are valued by the method
described under "Net Asset Value" as of the day the Fund receives the
securities. This is a taxable transaction to the shareholder. Securities may be
accepted in payment for shares only if they are, in the judgment of Bankers
Trust, appropriate investments for the Fund's corresponding Portfolio. In
addition, securities accepted in payment for shares must: (i) meet the
investment objective and policies of the acquiring Fund's corresponding
Portfolio; (ii) be acquired by the applicable Fund for investment and not for
resale (other than for resale to the Fund's corresponding Portfolio); (iii) be
liquid securities which are not restricted as to transfer either by law or
liquidity of market; and (iv) if stock, have a value which is readily
ascertainable as evidenced by a listing on a stock exchange, over-the-counter
market or by readily available market quotations from a dealer in such
45
<PAGE>
securities. Each Fund reserves the right to accept or reject at its own
option any and all securities offered in payment for its shares.
MANAGEMENT OF THE TRUST AND THE PORTFOLIOS
Each Board of Trustees is composed of persons experienced in financial
matters who meet throughout the year to oversee the activities of the Funds or
Portfolios they represent. In addition, the Trustees review contractual
arrangements with companies that provide services to the Funds/Portfolios and
review the Funds' performance.
The Trustees and officers of the Trust and Portfolios and their
principal occupations during the past five years are set forth below. Their
titles may have varied during that period. Asterisks indicate those Trustees who
are "interested persons" (as defined in the 1940 Act) of the Trust. Unless
otherwise indicated, the address of each Trustee and officer is 6 St. James
Avenue, Boston, Massachusetts.
Trustees of the Trust
HARRY VAN BENSCHOTEN -- Trustee; retired (since 1987); Corporate Vice
President , Newmont Mining Corporation (prior to 1987). His address is 105
Seminary Street, New Canaan, Connecticut 06840.
** 2 PHILIP W. COOLIDGE* -- President and Trustee; Chairman, Chief
Executive Officer and President, Signature Financial Group, Inc. ("SFG") (since
December, 1988) and Signature (since April, 1989).
MARTIN J. GRUBER -- Trustee; Chairman of the Finance Department and Nomura
Professor of Finance, Leonard N. Stern School of Business, New York University
(since 1964).
BRUCE E. LANGTON -- Trustee; Retired; Director, Adela Investment Co. and
University Patents, Inc.; formerly Assistant Treasurer of IBM Corporation (until
1986). His address is 99 Jordan Lane, Stamford, Connecticut 06903.
RICHARD J. HERRING -- Trustee; Professor, Finance Department, The Wharton
School, University of Pennsylvania. His address is The Wharton School,
University of Pennsylvania Finance Department, 3303 Steinberg Hall/Dietrich
Hall, Philadelphia, Pennsylvania 19104.
Trustees of the Portfolios
46
<PAGE>
CHARLES P. BIGGAR -- Trustee; Retired; Director of Chase/NBW Bank
Advisory Board; Director, Batemen, Eichler, Hill Richards Inc.; formerly Vice
President of International Business Machines and President of the National
Services and the Field Engineering Divisions of IBM. His address is 12 Hitching
Post Lane, Chappaqua, New York 10514.
S. LELAND DILL -- Trustee; Retired; Director, Coutts & Co. Group, Coutts &
Co. (U.S.A.) International; Director, Zweig Series Trust; formerly Partner of
KPMG Peat Marwick; Director, Vinters International Company Inc.; General Partner
of Pemco (an investment company registered under the 1940 Act). His address is
5070 North Ocean Drive, Singer Island,
Florida 33404.
* 2 moved from here; text not shown
PHILIP W. COOLIDGE* -- President and Trustee; Chairman, Chief Executive
Officer and President, SFG (since December, 1988) and Signature (since April,
1989).
PHILIP SAUNDERS, JR. -- Trustee; Principal, Philip Saunders Associates
(Consulting); former Director of Financial Industry Consulting, Wolf & Company;
President, John Hancock Home Mortgage Corporation; and Senior Vice President of
Treasury and Financial Services, John Hancock Mutual Life Insurance Company,
Inc. His address is 445 Glen Road, Weston, Massachusetts 02193.
Officers of the Trust and Portfolios
Unless otherwise specified, each officer listed below holds the same
position with the Trust and each Portfolio.
JOHN R. ELDER - Treasurer ; Vice President, SFG (since April, 1995);
Treasurer, Phoenix Family of Mutual Funds (prior to April, 1995); Audit Manager,
Price Waterhouse (prior to 1983).
DAVID G. DANIELSON -- Assistant Treasurer; Assistant Manager, SFG (since
May, 1991); Graduate Student, Northeastern University (from April, 1990 to
March, 1991); Tax Accountant & Systems Analyst, Putnam Companies (prior to
March, 1990).
JAMES S. LELKO, JR. -- Assistant Treasurer; Assistant Manager, SFG (since
January 1993); Senior Tax Compliance Accountant, Putnam Investments (prior to
December 1992).
BARBARA M. O'DETTE -- Assistant Treasurer; Assistant Treasurer, SFG (since
December, 1988) and Signature (since April, 1989); Administrative Controller,
Massachusetts Financial Services Company (prior to December, 1988).
DANIEL E. SHEA -- Assistant Treasurer; Assistant Manager, SFG (since
November 1993); Supervisor and Senior Technical Advisor, Putnam Investments
(prior to November 1993).
47
<PAGE>
THOMAS M. LENZ -- Secretary; Vice President and Associate General Counsel,
SFG (since November, 1989); Assistant Secretary, Signature (since February,
1991); Attorney, Ropes &
Gray (prior to November, 1989).
MOLLY S. MUGLER -- Assistant Secretary; Legal Counsel and Assistant
Secretary, SFG (since December, 1988); Assistant Secretary, Signature (since
April, 1989).
LINDA T. GIBSON -- Assistant Secretary; Legal Counsel and Assistant
Secretary, SFG (since May, 1992); Assistant Secretary, Signature (since October,
1992); student, Boston University School of Law (September, 1989 to May, 1992);
Product Manager, SFG (January, 1989 to September, 1989).
ANDRES E. SALDANA -- Assistant Secretary; Legal Counsel, SFG (since
November, 1992); Assistant Secretary, Signature (since September, 1993);
Attorney, Ropes & Gray (September, 1990 to November, 1992); law student, Yale
Law School (September, 1987 to May, 1990).
Messrs. Coolidge, Danielson, Elder, Lelko, Lenz, Saldana and Shea and Mss.
Gibson, Mugler and O'Dette also hold similar positions for other investment
companies for which Signature or an affiliate serves as the principal
underwriter.
No person who is an officer or director of Bankers Trust is an officer
or Trustee of the Trust or the Portfolio. No director, officer or employee of
Signature or any of its affiliates will receive any compensation from the Trust
or a Portfolio for serving as an officer or Trustee of the Trust or a Portfolio.
The Trust pays each Trustee of the Trust who is not a director, officer or
employee of the Adviser, the Distributor, the Administrator or any of their
affiliates an annual fee of $10,000, respectively, per annum plus $1,250,
respectively, per meeting attended and reimburses them for travel and
out-of-pocket expenses. Each Portfolio and Cash Management, Treasury Money, Tax
Free Money, NY Tax Free Money, Utility, Short/Intermediate U.S. Government
Securities, Intermediate Tax Free, Asset Management and BT Investment Portfolios
(together with the Trust, the "Fund Complex") collectively pay each Trustee who
is not a director, officer or employee of the Adviser, the Distributor, the
Administrator or any of their affiliates an annual fee of $10,000, respectively,
per annum plus $1,250, respectively, per meeting attended and reimburses them
for travel and out-of-pocket expenses.
For the period from January 1, 1995 through September 30, 1995, the
International Equity Portfolio accrued Trustees fees equal to $1,079.
48
<PAGE>
For the year ended September 30, 1995, Latin American Equity Portfolio
accrued Trustees fees equal to
$1,535.
For the year ended September 30, 1995, Pacific Basin Equity Portfolio
accrued Trustees fees equal to
$1,535.
For the year ended September 30, 1995, Global High Yield Securities
Portfolio accrued Trustees fees equal to $1,563.
For the period January 1, 1995 through September 30, 1995, Capital
Appreciation Portfolio accrued Trustees fees equal to $1,107.
For the year ended September 30, 1995, Small Cap Portfolio accrued
Trustees fees equal to $1,563.
Bankers Trust reimbursed the Funds and Portfolios for a portion of
their Trustees fees for the period above. See "Investment Adviser" and
"Administrator" below.
As of September 1, 1995, the Trustees and officers of the Trust and the
Portfolios owned in the aggregate less than 1% of the shares of any Fund or the
Trust (all series taken together).
Investment Adviser
Under the terms of each Portfolio's investment advisory agreement with
Bankers Trust (the "Advisory Agreement"), Bankers Trust manages the Portfolio
subject to the supervision and direction of the Board of Trustees of the
Portfolio. Bankers Trust will: (i) act in strict conformity with each
Portfolio's Declaration of Trust, the 1940 Act and the Investment Advisers Act
of 1940, as the same may from time to time be amended; (ii) manage each
Portfolio in accordance with the Portfolio's investment objectives, restrictions
and policies; (iii) make investment decisions for each Portfolio; and (iv) place
purchase and sale orders for securities and other financial instruments on
behalf of each Portfolio.
Bankers Trust bears all expenses in connection with the performance of
services under each Advisory Agreement. The Trust and each Portfolio bears
certain other expenses incurred in its operation, including: taxes, interest,
brokerage fees and
49
<PAGE>
commissions, if any; fees of Trustees of the Trust or the Portfolio who are not
officers, directors or employees of Bankers Trust, Signature or any of their
affiliates; SEC fees and state Blue Sky qualification fees; charges of
custodians and transfer and dividend disbursing agents; certain insurance
premiums; outside auditing and legal expenses; costs of maintenance of corporate
existence; costs attributable to investor services, including, without
limitation, telephone and personnel expenses; costs of preparing and printing
prospectuses and statements of additional information for regulatory purposes
and for distribution to existing shareholders; costs of shareholders' reports
and meetings of shareholders, officers and Trustees of the Trust or the
Portfolio; and any extraordinary expenses.
For the period from January 1, 1995 through September 30, 1995 and for
the years ended December 31, 1994, 1993 , Bankers Trust accrued $322,690,
$322,489 and $25,031 , respectively, in compensation for investment advisory
services provided to International Equity Portfolio. During the same periods,
Bankers Trust reimbursed $108,743, $117,653, and $65,394 , respectively, to that
Portfolio to cover expenses.
For the year ended September 30, 1995 and the period from October 25,
1993 (commencement of operations) through September 30, 1994, Bankers Trust
aggregated $173,145 and $102,872, respectively, in compensation for investment
advisory services provided to Latin American Equity Portfolio. During the same
period, Bankers Trust reimbursed $138,351 and $81,307, respectively, to that
Portfolio to cover expenses.
For the year ended September 30, 1995 and the period from November 1,
1993 (commencement of operations) through September 30, 1994, Bankers Trust
aggregated $173,591 and $116,020, respectively, in compensation for investment
advisory services provided to Pacific Basin Equity Portfolio. During the same
period, Bankers Trust reimbursed $47,338 and $40,461, respectively, to that
Portfolio to cover expenses.
For the fiscal year ended September 30, 1995 and the period from
December 14, 1993 (commencement of operations) through September 30, 1994,
Bankers Trust aggregated $141,692 and $66,073 , respectively, in compensation
for investment advisory services provided to Global High Yield Securities
Portfolio. During the same period, Bankers Trust reimbursed $78,840 and $48,741,
respectively, to that Portfolio to cover expenses.
For the period from January 1, 1995 through September 30, 1995, the
year ended December 31, 1994 and the period from March 9, 1993 (commencement of
operations) through December 31, 1993, Bankers Trust accrued $$482,453, $329,399
and $67,695, respectively, in compensation for investment advisory services
provided to Capital Appreciation Portfolio. During the same
50
<PAGE>
periods, Bankers Trust reimbursed $131,702, $114,930 and $43,137, respectively,
to that Portfolio to cover expenses.
For the year ended September 30, 1995 and the period from October 21,
1993 (commencement of operations) through September 30, 1994, Bankers Trust
aggregated $389,015 and $69,420, respectively, in compensation for investment
advisory services provided to Small Cap Portfolio. During the same period,
Bankers Trust reimbursed $111,862 and $41,110
, respectively, to that Portfolio to cover expenses.
Bankers Trust may have deposit, loan and other commercial banking
relationships with the issuers of obligations which may be purchased on behalf
of the Portfolios, including outstanding loans to such issuers which could be
repaid in whole or in part with the proceeds of securities so purchased. Such
affiliates deal, trade and invest for their own accounts in such obligations and
are among the leading dealers of various types of such obligations. Bankers
Trust has informed the Portfolios that, in making its investment decisions, it
does not obtain or use material inside information in its possession or in the
possession of any of its affiliates. In making investment recommendations for
the Portfolios, Bankers Trust will not inquire or take into consideration
whether an issuer of securities proposed for purchase or sale by a Portfolio is
a customer of Bankers Trust, its parent or its subsidiaries or affiliates and,
in dealing with its customers, Bankers Trust, its parent, subsidiaries and
affiliates will not inquire or take into consideration whether securities of
such customers are held by any fund managed by Bankers Trust or any such
affiliate.
Each Fund's prospectus contains disclosure as to the amount of Bankers
Trust's investment advisory and administration and services fees, including
waivers thereof. Bankers Trust may not recoup any of its waived investment
advisory or administration and services fees. Such waivers by Bankers Trust
shall stay in effect for at least 12 months.
Sub-Investment Adviser
Bankers Trust has entered into a sub-investment advisory agreement (the
"Sub-Advisory Agreement") with BT Fund Managers International Limited ("BT Fund
Managers International") a wholly owned subsidiary of Bankers Trust Australia
Limited ("BTAL") in Sydney. BTAL is a wholly owned subsidiary of Bankers Trust
New York Corporation. Under the Sub-Advisory Agreement, Bankers
51
<PAGE>
Trust may receive investment advice and research services with respect to
companies based in the Pacific Basin and may grant BT Fund Managers
International investment management authority as well as the authority to buy
and sell securities if Bankers Trust believes it would be beneficial to the
Portfolio.
BTAL, which was granted a banking license in 1986, is the parent of
Bankers Trust Australia Group which has offices is Sydney, Melbourne, Perth,
Brisbane, Adelaide, London and Hong Kong. A representative office of Bankers
Trust Company was opened in Australia in 1966 and Australian merchant banking
operations commences in 1969. A related organization, Bankers Trust New Zealand
Limited, was established in 1986. Although BTAL has not previously served as
investment adviser for a registered investment company, BTAL provides investment
services for a range of clients.
Administrator
Under the administration and services agreements, Bankers Trust is
obligated on a continuous basis to provide such administrative services as the
Board of Trustees of the Trust and each Portfolio reasonably deem necessary for
the proper administration of the Trust or a Portfolio. Bankers Trust will
generally assist in all aspects of the Funds' and Portfolios' operations; supply
and maintain office facilities (which may be in Bankers Trust's own offices),
statistical and research data, data processing services, clerical, accounting,
bookkeeping and recordkeeping services (including without limitation the
maintenance of such books and records as are required under the 1940 Act and the
rules thereunder, except as maintained by other agents), internal auditing,
executive and administrative services, and stationery and office supplies;
prepare reports to shareholders or investors; prepare and file tax returns;
supply financial information and supporting data for reports to and filings with
the SEC and various state Blue Sky authorities; supply supporting documentation
for meetings of the Board of Trustees; provide monitoring reports and assistance
regarding compliance with Declarations of Trust, by-laws, investment objectives
and policies and with Federal and state securities laws; arrange for appropriate
insurance coverage; calculate net asset values, net income and realized capital
gains or losses; and negotiate arrangements with, and supervise and coordinate
the activities of, agents and others to supply services.
Pursuant to a sub-administration agreement (the "Sub-Administration
Agreement"), Signature performs such sub-administration duties for the Trust and
the Portfolios as from time to time may be agreed upon by Bankers Trust and
Signature. The Sub-Administration Agreement provides that Signature will receive
such compensation as from time to time may be agreed upon by Signature and
Bankers Trust. All such compensation will be paid by Bankers Trust.
52
<PAGE>
For the period from January 1, 1995 through September 30, 1995 and the
years ended December 31, 1994 and 1993, Bankers Trust received $$74,468, $74,420
and $25,031 , respectively, in compensation for administrative and other
services provided to International Equity Portfolio.
For the year ended September 30, 1995 and the fiscal period from
October 25, 1993 (commencement of operations) through September 30, 1994,
Bankers Trust received $34,629 and $20,574, respectively, in compensation for
administrative and other services provided to Latin American Equity Portfolio.
For the year ended September 30, 1995 and the fiscal period from
November 1, 1993 (commencement of operations) through September 30, 1994,
Bankers Trust received $57,864 and $38,673, respectively, in compensation for
administrative and other services provided to Pacific Basin Equity Portfolio.
For the year ended September 30, 1995 and the fiscal period from
December 14, 1993 (commencement of operations) through September 30, 1994,
Bankers Trust received $35,423 and $16,518, respectively, in compensation for
administrative and other services provided to Global High Yield Securities
Portfolio.
For the period from January 1, 1995 through September 30, 1995, the
year ended December 31, 1994 and the period from March 9, 1993 (commencement of
operations) through December 31, 1993, Bankers Trust received $74,224, $50,677
and $10,415, respectively,
in compensation for administrative and other services provided to Capital
Appreciation Portfolio.
For the year ended September 30, 1995 and the fiscal period from
October 21, 1993 (commencement of operations) through September 30, 1994,
Bankers Trust received $59,848 and $10,680, respectively, in compensation for
administrative and other services provided to Small Cap Portfolio.
Bankers Trust has agreed that if in any fiscal year the aggregate
expenses of any Fund and its respective Portfolio (including fees pursuant to
the Advisory Agreement, but excluding interest, taxes, brokerage and, if
permitted by the relevant
53
<PAGE>
state securities commissions, extraordinary expenses) exceed the expense
limitation of any state having jurisdiction over a Fund, Bankers Trust will
reimburse the Fund for the excess expense to the extent required by state law.
As of the date of this Statement of Additional Information, the most restrictive
annual expense limitation applicable to any Fund is 2.50% of the Fund's first
$30 million of average annual net assets, 2.00% of the next $70 million of
average annual net assets and 1.50% of the remaining average annual net assets.
Custodian and Transfer Agent
Bankers Trust, 280 Park Avenue, New York, New York 10017, serves as
Custodian for the Trust and for each Portfolio pursuant to the administration
and services agreements. As Custodian, it holds the Funds' and each Portfolio's
assets. Bankers Trust also serves as transfer agent of the Trust and of each
Portfolio pursuant to the respective administration and services agreement.
Under its transfer agency agreement with the Trust, Bankers Trust maintains the
shareholder account records for each Fund, handles certain communications
between shareholders and the Trust and causes to be distributed any dividends
and distributions payable by the Trust. Bankers Trust may be reimbursed by the
Funds or the Portfolios for its out-of-pocket expenses. Bankers Trust will
comply with the self-custodian provisions of Rule 17f-2 under the 1940 Act.
Use of Name
The Trust and Bankers Trust have agreed that the Trust may use "BT" as
part of its name for so long as Bankers Trust serves as investment adviser to
the Portfolios. The Trust has acknowledged that the term "BT" is used by and is
a property right of certain subsidiaries of Bankers Trust and that those
subsidiaries and/or Bankers Trust may at any time permit others to use that
term.
The Trust may be required, on 60 days' notice from Bankers Trust at any
time, to abandon use of the acronym "BT" as part of its name. If this were to
occur, the Trustees would select an appropriate new name for the Trust, but
there would be no other material effect on the Trust, its shareholders or
activities.
Banking Regulatory Matters
Bankers Trust has been advised by its counsel that in its opinion
Bankers Trust may perform the services for the Portfolios contemplated by the
Advisory Agreements and other activities for the Funds and the Portfolios
described in the Prospectuses and this Statement of Additional Information
without violation of the Glass-Steagall Act or other applicable banking laws or
regulations. However, counsel has pointed out that future changes in either
Federal or state statutes and regulations concerning the permissible activities
of banks or trust
54
<PAGE>
companies, as well as future judicial or administrative decisions or
interpretations of present and future statutes and regulations, might prevent
Bankers Trust from continuing to perform those services for the Trust and the
Portfolios. State laws on this issue may differ from the interpretations of
relevant Federal law and banks and financial institutions may be required to
register as dealers pursuant to state securities law. If the circumstances
described above should change, the Boards of Trustees would review the
relationships with Bankers Trust and consider taking all actions necessary in
the circumstances.
Counsel and Independent Accountants
Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd Street,
New York, New York 10022-4669, serves as Counsel to the Trust and each
Portfolio. Coopers & Lybrand L.L.P., 1100 Main Street, Suite 900, Kansas City,
Missouri 64105 acts as Independent Accountants of the Trust and each Portfolio.
ORGANIZATION OF THE TRUST
Shares of the Trust do not have cumulative voting rights, which means
that holders of more than 50% of the shares voting for the election of Trustees
can elect all Trustees. Shares are transferable but have no preemptive,
conversion or subscription rights. Shareholders generally vote by Fund, except
with respect to the election of Trustees and the ratification of the selection
of independent accountants.
Massachusetts law provides that shareholders could under certain
circumstances be held personally liable for the obligations of the Trust.
However, the Trust's Declaration of Trust disclaims shareholder liability for
acts or obligations of the Trust and requires that notice of this disclaimer be
given in each agreement, obligation or instrument entered into or executed by
the Trust or a Trustee. The Declaration of Trust provides for indemnification
from the Trust's property for all losses and expenses of any shareholder held
personally liable for the obligations of the Trust. Thus, the risk of a
shareholder's incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be unable to meet its
obligations, a possibility that the Trust believes is remote. Upon payment of
any liability incurred by the Trust, the shareholder paying the liability will
be entitled to reimbursement from the general assets of the Trust. The Trustees
intend to conduct the operations of the Trust in a manner so as to avoid, as far
as possible, ultimate liability of the shareholders for liabilities of the
Trust.
TAXATION
Taxation of the Funds
The Trust intends to qualify annually and to elect each Fund
55
<PAGE>
to be treated as a regulated investment company under the Code.
To qualify as a regulated investment company, each Fund must, among
other things: (a) derive in each taxable year at least 90% of its gross income
from dividends, interest, payments with respect to securities loans and gains
from the sale or other disposition of stock, securities or foreign currencies or
other income derived with respect to its business of investing in such stock,
securities or currencies; (b) derive less than 30% of its gross income from the
sale or other disposition of certain assets (namely, in the case of the Fund,
(i) stock or securities; (ii) options, futures, and forward contracts (other
than those on foreign currencies); and (iii) foreign currencies (including
options, futures, and forward contracts on such currencies) not directly related
to the Fund's principal business of investing in stock or securities (or options
and futures with respect to stocks or securities)) held less than three months
(the 30% Limitation"); (c) diversify its holdings so that, at the end of each
quarter of the taxable year, (i) at least 50% of the market value of the Fund's
assets is represented by cash and cash items (including receivables), U.S.
Government securities, the securities of other regulated investment companies
and other securities, with such other securities of any one issuer limited for
the purposes of this calculation to an amount not greater than 5% of the value
of the Fund's total assets and not greater than 10% of the outstanding voting
securities of such issuer and (ii) not more than 25% of the value of its total
assets is invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies); and (d) distribute at least 90% of its investment company taxable
income (which includes, among other items, dividends, interest and net
short-term capital gains in excess of net long-term capital losses) and its net
tax-exempt interest income, if any, each taxable year.
As a regulated investment company, each Fund will not be subject to
U.S. Federal income tax on its investment company taxable income and net capital
gains (the excess of net long-term capital gains over net short-term capital
losses), if any, that it distributes to shareholders. The Fund intends to
distribute to its shareholders, at least annually, substantially all of its
investment company taxable income and net capital gains. Amounts not distributed
on a timely basis in accordance with a calendar year distribution requirement
are subject to a nondeductible 4% excise tax. To prevent imposition of the
excise tax, the Fund must distribute during each calendar year an amount equal
to the sum of: (1) at least 98% of its ordinary income (not taking into account
any capital gains or losses) for the calendar year; (2) at least 98% of its
capital gains in excess of its capital losses (adjusted for certain ordinary
losses, as prescribed by the Code) for the one-year period ending on October 31
of the calendar year; and (3) any ordinary income and capital gains for previous
years that was not distributed during those years. A distribution will be
treated as paid on December 31 of the
56
<PAGE>
current calendar year if it is declared by the Fund in October, November or
December with a record date in such a month and paid by the Fund during January
of the following calendar year. Such distributions will be taxable to
shareholders in the calendar year in which the distributions are declared,
rather than the calendar year in which the distributions are received. To
prevent application of the excise tax, the Fund intends to make its
distributions in accordance with the calendar year distribution requirement.
Each Fund shareholder will also receive, if appropriate, various
written notices after the close of the Fund's prior taxable year as to the
Federal income status of his dividends and distributions which were received
from the Fund during the Fund's prior taxable year. Shareholders should consult
their tax advisers as to any state and local taxes that may apply to these
dividends and distributions. The dollar amount of dividends excluded from
Federal income taxation and the dollar amount subject to such income taxation,
if any, will vary for each shareholder depending upon the size and duration of
each shareholder's investment in the Fund. To the extent that the Fund earns
taxable net investment income, the Fund intends to designate as taxable
dividends the same percentage of each dividend as its taxable net investment
income bears to its total net investment income earned. Therefore, the
percentage of each dividend designated as taxable, if any, may vary.
International Equity Portfolio, Latin American Equity Portfolio,
Pacific Basin Equity Portfolio and Global High Yield Securities
Portfolio
Foreign Securities. Tax conventions between certain countries and the
United States may reduce or eliminate such taxes. It is impossible to determine
the effective rate of foreign tax in advance since the amount of the Portfolio's
assets to be invested in various countries will vary.
If the Portfolio is liable for foreign taxes, and if more than 50% of
the value of the Portfolio's total assets at the close of its taxable year
consists of stocks or securities of foreign corporations, it may make an
election pursuant to which certain foreign taxes paid by it would be treated as
having been paid directly by shareholders of the entities, such as the
corresponding Fund, which have invested in the Portfolio. Pursuant to such
election, the amount of foreign taxes paid will be included in the income of the
corresponding Fund's shareholders, and such Fund shareholders (except tax-exempt
shareholders) may, subject to certain limitations, claim either a credit or
deduction for the taxes. Each such Fund shareholder will be notified after the
close of the Portfolio's taxable year whether the foreign taxes paid will "pass
through" for that year and, if so, such notification will designate (a) the
shareholder's portion of the foreign taxes paid to each such country and (b) the
portion which represents income derived from sources within each such country
57
<PAGE>
.
The amount of foreign taxes for which a shareholder may claim a credit
in any year will generally be subject to a separate limitation for "passive
income," which includes, among other items of income, dividends, interest and
certain foreign currency gains. Because capital gains realized by the Portfolio
on the sale of foreign securities will be treated as U.S.source income, the
available credit of foreign taxes paid with respect to such gains may be
restricted by this limitation.
Distributions
Dividends paid out of the Fund's investment company taxable income will
be taxable to a U.S. shareholder as ordinary income. Distributions of net
capital gains, if any, designated as capital gain dividends are taxable as
long-term capital gains, regardless of how long the shareholder has held the
Fund's shares, and are not eligible for the dividends-received deduction.
Shareholders receiving distributions in the form of additional shares, rather
than cash, generally will have a cost basis in each such share equal to the net
asset value of a share of the Fund on the reinvestment date. Shareholders will
be notified annually as to the U.S. Federal tax status of distributions.
Taxation of the Portfolios
The Portfolios are not subject to Federal income taxation. Instead, the
Fund and other investors investing in a Portfolio must take into account, in
computing their Federal income tax liability, their share of the Portfolio's
income, gains, losses, deductions, credits and tax preference items, without
regard to whether they have received any cash distributions from the Portfolio.
Distributions received by a Fund from the corresponding Portfolio
generally will not result in the Fund recognizing any gain or loss for Federal
income tax purposes, except that: (1) gain will be recognized to the extent that
any cash distributed exceeds the Fund's basis in its interest in the Portfolio
prior to the distribution; (2) income or gain may be realized if the
distribution is made in liquidation of the Fund's entire interest in the
Portfolio and includes a disproportionate share of any unrealized receivables
held by the Portfolio; and (3) loss may be recognized if the distribution is
made in liquidation of the Fund's entire interest in the Portfolio and consists
solely of cash and/or unrealized receivables. A Fund's basis in its interest in
the corresponding Portfolio generally will equal the amount of cash and the
basis of any property which the Fund invests in the Portfolio, increased by the
Fund's share of income from the Portfolio, and decreased by the amount of any
cash distributions and the basis of any property distributed from the Portfolio.
58
<PAGE>
Sale of Shares
Any gain or loss realized by a shareholder upon the sale or other
disposition of shares of the Fund, or upon receipt of a distribution in complete
liquidation of a Fund, generally will be a capital gain or loss which will be
long-term or short-term, generally depending upon the shareholder's holding
period for the shares. Any loss realized on a sale or exchange will be
disallowed to the extent the shares disposed of are replaced (including shares
acquired pursuant to a dividend reinvestment plan) within a period of 61 days
beginning 30 days before and ending 30 days after disposition of the shares. In
such a case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss. Any loss realized by a shareholder on a disposition of Fund
shares held by the shareholder for six months or less will be treated as a
long-term capital loss to the extent of any distributions of net capital gains
received by the shareholder with respect to such shares.
Foreign Withholding Taxes
Income received by a Portfolio from sources within foreign countries
may be subject to withholding and other taxes imposed by such countries.
Backup Withholding
A Fund may be required to withhold U.S. Federal income tax at the rate
of 31% of all taxable distributions payable to shareholders who fail to provide
the Fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the Internal Revenue Service that
they are subject to backup withholding. Corporate shareholders and certain other
shareholders specified in the Code generally are exempt from such backup
withholding. Backup withholding is not an additional tax. Any amounts withheld
may be credited against the shareholder's U.S. Federal income tax liability.
Foreign Shareholders
The tax consequences to a foreign shareholder of an investment in a
Fund may be different from those described herein. Foreign shareholders are
advised to consult their own tax advisers with respect to the particular tax
consequences to them of an investment in a Fund.
Other Taxation
The Trust is organized as a Massachusetts business trust and, under current
law, neither the Trust nor any Fund is liable for any income or franchise tax in
the Commonwealth of Massachusetts, provided that the Fund continues to qualify
as a regulated investment company under Subchapter M of the Code. The
59
<PAGE>
investment by each Fund in the corresponding Portfolio does not cause the Fund
to be liable for any income or franchise tax in the State of New York.
Each of International Equity Portfolio and Capital Appreciation
Portfolio is organized as a New York trust. BT Investment Portfolios is a New
York master trust fund. Each Portfolio is not subject to any income or franchise
tax in the State of New York or the Commonwealth of Massachusetts.
Fund shareholders may be subject to state and local taxes on their Fund
distributions. Shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in a Fund.
FINANCIAL STATEMENTS
Global High Yield Securities Fund, Capital Appreciation Fund,
Small Cap Fund, International Equity Fund, Latin American Equity
Fund and Pacific Basin Equity Fund
Statement of Assets and Liabilities, December 28, 1995
Report of Independent Accountants
The following financial statements for each of the following Portfolios
are incorporated herein by reference from the its annual report, a copy of which
is attached hereto:
The following financial statements for each of the following Portfolios
are incorporated herein by reference from the its annual report, a copy of which
is attached hereto:
BT Investment Portfolios - Global High Yield Securities Portfolio
Statement of Assets and Liabilities, September 30, 1995
Statement of Operations for the year ended September 30, 1995
Statement of Changes in Net Assets for the year ended September 30,
1995 and the period from December 14, 1993 (commencement of operations)
through September 30, 1994
Financial Highlights: Selected ratios and supplemental data for
the periods indicated
Schedule of Portfolio of Investments, September 30, 1995
Notes to Financial Statements
Report of Independent Accountants
Capital Appreciation Portfolio
Statement of Assets and Liabilities, September 30, 1995
Statement of Operations for the period from January 1, 1995 to
September 30, 1995
Statement of Changes in Net Assets for the period from January 1, 1995
to September 30, 1995 and the year ended December 31, 1994
Financial Highlights: Selected ratios and supplemental data for the
periods indicated
Schedule of Portfolio of Investments, September 30, 1995
Notes to Financial Statements
Report of Independent Accountants
59
<PAGE>
BT Investment Portfolios - Small Cap Portfolio
Statement of Assets and Liabilities, September 30, 1995
Statement of Operations for the year ended September 30, 1995
Statement of Changes in Net Assets for the year ended September 30,
1995 and the period from October 21, 1993 (commencement of operations)
through September 30, 1994
Financial Highlights: Selected ratios and supplemental data for the
period indicated
Schedule of Portfolio of Investments, September 30, 1995
Notes to Financial Statements
Report of Independent Accountants
International Equity Portfolio
Statement of Assets and Liabilities, September 30, 1995
Statement of Operations for the year ended September 30, 1995
Statement of Changes in Net Assets for the period from January 1, 1995
to September 30, 1995 and the year ended December 31, 1994
Financial Highlights:Selected ratios and supplemental data for the
periods indicated
Schedule of Portfolio of Investments, September 30, 1995
Notes to Financial Statements
Report of Independent Accountants
BT Investment Portfolios - Pacific Basin Equity Portfolio
Statement of Assets and Liabilities, September 30, 1995
Statement of Operations for the year ended September 30, 1995
Statement of Changes in Net Assets for the year ended September 30,
1995 and the period from November 1, 1993 (commencement of operations)
through September 30, 1994
Financial Highlights: Selected ratios and supplemental data for
the period indicated
Schedule of Portfolio of Investments, September 30, 1995
Notes to Financial Statements
Report of Independent Accountants
BT Investment Portfolios - Latin American Equity Portfolio
Statement of Assets and Liabilities, September 30, 1995
Statement of Operations for the year ended September 30, 1995
Statement of Changes in Net Assets for the year ended September 30,
1995 and the period from October 25, 1993 (commencement of operations)
through September 30, 1994
Financial Highlights: Selected ratios and supplemental data for
the period indicated
Schedule of Portfolio of Investments, September 30, 1995
Notes to Financial Statements
Report of Independent Accountants
60
<PAGE>
BT0441F
61
<PAGE>
BT GLOBAL INVESTORS --
GLOBAL HIGH YIELD SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
December 28, 1995
Assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . $ 10
Deferred organization expenses . . . . . . . . . . . . 9,000
Total assets . . . . . . . . . . . . . . . . . $9,010
Liabilities:
Accrued organization expenses . . . . . . . . . . . . 9,000
Net assets . . . . . . . . . . . . . . . . . . $ 10
Net Asset Value Per Share of Beneficial
Interest ($10.00 / 1 share outstanding) . . . . . . . . . . . $10.00
NOTES:
(1) BT Global Investors, a Massachusetts business trust (the "Trust"), was
organized on July 24, 1995 and has been inactive since that date, with
respect to Global High Yield Securities Fund (the "Fund"), except for
matters relating to the organization of the Trust, the Fund's
establishment and designation as a series of the Trust, and the
registration under the Securities Act of 1933 of the Fund's shares of
beneficial interest ("Shares") and the sale of one Share ("Initial
Share") of the Fund to SFG Investors II Limited Partnership ("SFG
Investors"). The Trust will invest all of the Fund's investable assets
in Global High Yield Securities Portfolio (the "Portfolio"), a series
of BT Investment Portfolios, an investment company registered under the
Investment Company Act of 1940, as amended. The Fund is one of ^ ten
series of the Trust.
(2) Organization expenses of the Fund are being deferred and will be
amortized on a straight-line basis over a period not to exceed five
years from the commencement of investment operations of the Fund. The
amount paid by the Trust on any redemption by SFG Investors or any
other then-current holder of the Initial Share of the Fund will be
reduced by a portion of any unamortized organization expenses of the
Fund determined by the proportion of the number of the Initial Share of
the Fund redeemed to the number of the Initial Share of the Fund then
outstanding after taking into account any prior redemptions of the
Initial Share of the Fund.
62
<PAGE>
(3) The Trust has entered into an Administration and Services Agreement
with Bankers Trust Company under which Bankers Trust Company provides
administration, custody and transfer agency services to the Trust.
63
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
BT Global Investors -
We have audited the accompanying statement of assets and liabilities of the
Global High Yield Securities Fund (one of the Funds comprising BT Global
Investors) as of December 28, 1995. This financial statement is the
responsibility of the Fund's management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the Global
High Yield Securities Fund of BT Global Investors as of December 28, 1995, in
conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P
Kansas City, Missouri
December 28, 1995
<PAGE>
BT0441F
BT GLOBAL INVESTORS --
CAPITAL APPRECIATION FUND
STATEMENT OF ASSETS AND LIABILITIES
December 28, 1995
Assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . $99,950
Deferred organization expenses . . . . . . . . . . . . 9,000
Total assets . . . . . . . . . . . . . . . . . $108,950
Liabilities:
Accrued organization expenses . . . . . . . . . . . . 9,000
Net assets . . . . . . . . . . . . . . . . . . $99,950
Net Asset Value Per Share of Beneficial
Interest ^($99,950 / 9,995 shares outstanding). . . . . . . $10.00
NOTES:
(1) BT Global Investors, a Massachusetts business trust (the "Trust"), was
organized on July 24, 1995 and has been inactive since that date, with
respect to Capital Appreciation Fund (the "Fund"), except for matters
relating to the organization of the Trust, the Fund's establishment and
designation as a series of the Trust, and the registration under the
Securities Act of 1933 of the Fund's shares of beneficial interest
("Shares") and the sale of ^ 9,995 Shares ("Initial ^ Shares") of the
Fund to SFG Investors II Limited Partnership ("SFG Investors"). The
Trust will invest all of the Fund's investable assets in Capital
Appreciation Portfolio (the "Portfolio"), an investment company
registered under the Investment Company Act of 1940, as amended. The
Fund is one of ^ ten series of the Trust.
(2) Organization expenses of the Fund are being deferred and will be
amortized on a straight-line basis over a period not to exceed five
years from the commencement of investment operations of the Fund. The
amount paid by the Trust on any redemption by SFG Investors or any
other then-current holder of the Initial ^ Shares of the Fund will be
reduced by a portion of any unamortized organization expenses of the
Fund determined by the proportion of the number of the Initial ^ Shares
of the Fund redeemed to the number of the Initial ^ Shares of the Fund
then outstanding after taking into
64
<PAGE>
account any prior redemptions of the Initial ^ Shares of the
Fund.
(3) The Trust has entered into an Administration and Services Agreement
with Bankers Trust Company under which Bankers Trust Company provides
administration, custody and transfer agency services to the Trust.
65
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
BT Global Investors -
We have audited the accompanying statement of assets and liabilities of the
Capital Appreciation Fund (one of the Funds comprising BT Global Investors) as
of December 28, 1995. This financial statement is the responsibility of the
Fund's management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the Capital
Appreciation Fund of BT Global Investors as of December 28, 1995, in conformity
with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P
Kansas City, Missouri
December 28, 1995
<PAGE>
BT0441F
BT GLOBAL INVESTORS --
SMALL CAP FUND
STATEMENT OF ASSETS AND LIABILITIES
December 28, 1995
Assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . $10
Deferred organization expenses . . . . . . . . . . . . 9,000
Total assets . . . . . . . . . . . . . . . . . $9,010
Liabilities:
Accrued organization expenses . . . . . . . . . . . . 9,000
Net assets . . . . . . . . . . . . . . . . . . $10
Net Asset Value Per Share of Beneficial
Interest ($10.00 / 1 share outstanding) . . . . . . . . . . . $10.00
NOTES:
(1) BT Global Investors, a Massachusetts business trust (the "Trust"), was
organized on July 24, 1995 and has been inactive since that date, with
respect to Small Cap Fund (the "Fund"), except for matters relating to
the organization of the Trust, the Fund's establishment and designation
as a series of the Trust, and the registration under the Securities Act
of 1933 of the Fund's shares of beneficial interest ("Share") and the
sale of one Share ("Initial Share") of the Fund to SFG Investors II
Limited Partnership ("SFG Investors"). The Trust will invest all of the
Fund's investable assets in Small Cap Portfolio (the "Portfolio"), a
series of BT Investment Portfolios, an investment company registered
under the Investment Company Act of 1940, as amended. The Fund is one
of ^ ten series of the Trust.
(2) Organization expenses of the Fund are being deferred and will be
amortized on a straight-line basis over a period not to exceed five
years from the commencement of investment operations of the Fund. The
amount paid by the Trust on any redemption by SFG Investors or any
other then-current holder of the Initial Share of the Fund will be
reduced by a portion of any unamortized organization expenses of the
Fund determined by the proportion of the number of the Initial Share of
the Fund redeemed to the number of the Initial Share of the Fund then
outstanding after taking into account
66
<PAGE>
any prior redemptions of the Initial Share of the Fund.
(3) The Trust has entered into an Administration and Services Agreement
with Bankers Trust Company under which Bankers Trust Company provides
administration, custody and transfer agency services to the Trust.
67
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
BT Global Investors -
We have audited the accompanying statement of assets and liabilities of the
Small Cap Fund (one of the Funds comprising BT Global Investors) as of December
28, 1995. This financial statement is the responsibility of the Fund's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the Small
Cap Fund of BT Global Investors as of December 28, 1995, in conformity with
generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P
Kansas City, Missouri
December 28, 1995
<PAGE>
BT0441F
BT GLOBAL INVESTORS --
INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
December 28, 1995
Assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . $10
Deferred organization expenses . . . . . . . . . . . . 9,000
Total assets . . . . . . . . . . . . . . . . . $9,010
Liabilities:
Accrued organization expenses . . . . . . . . . . . . 9,000
Net assets . . . . . . . . . . . . . . . . . . $ 10
Net Asset Value Per Share of Beneficial
Interest ($10.00 / 1 share outstanding) . . . . . . . . . . . $10.00
NOTES:
(1) BT Global Investors, a Massachusetts business trust (the "Trust"), was
organized on July 24, 1995 and has been inactive since that date, with
respect to International Equity Fund (the "Fund"), except for matters
relating to the organization of the Trust, the Fund's establishment and
designation as a series of the Trust, and the registration under the
Securities Act of 1933 of the Fund's shares of beneficial interest
("Shares") and the sale of one Share ("Initial Share") of the Fund to
SFG Investors II Limited Partnership ("SFG Investors"). The Trust will
invest all of the Fund's investable assets in International Equity
Portfolio (the "Portfolio"), an investment company registered under the
Investment Company Act of 1940, as amended. The Fund is one of ^ ten
series of the Trust.
(2) Organization expenses of the Fund are being deferred and will be
amortized on a straight-line basis over a period not to exceed five
years from the commencement of investment operations of the Fund. The
amount paid by the Trust on any redemption by SFG Investors or any
other then-current holder of the Initial Share of the Fund will be
reduced by a portion of any unamortized organization expenses of the
Fund determined by the proportion of the number of the Initial Share of
the Fund redeemed to the number of the Initial Share of the Fund then
outstanding after taking into account any prior redemptions of the
Initial Share of the Fund.
68
<PAGE>
(3) The Trust has entered into an Administration and Services Agreement
with Bankers Trust Company under which Bankers Trust Company provides
administration, custody and transfer agency services to the Trust.
69
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
BT Global Investors -
We have audited the accompanying statement of assets and liabilities of the
International Equity Fund (one of the Funds comprising BT Global Investors) as
of December 28, 1995. This financial statement is the responsibility of the
Fund's management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the
International Equity Fund of BT Global Investors as of December 28, 1995, in
conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P
Kansas City, Missouri
December 28, 1995
<PAGE>
BT0441F
BT GLOBAL INVESTORS --
PACIFIC BASIN EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
December 28, 1995
Assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . $10
Deferred organization expenses . . . . . . . . . . . . 9,000
Total assets . . . . . . . . . . . . . . . . . $9,010
Liabilities:
Accrued organization expenses . . . . . . . . . . . . 9,000
Net assets . . . . . . . . . . . . . . . . . . $ 10
Net Asset Value Per Share of Beneficial
Interest ($10.00 / 1 share outstanding) . . . . . . . . . . . $10.00
NOTES:
(1) BT Global Investors, a Massachusetts business trust (the "Trust"), was
organized on July 24, 1995 and has been inactive since that date, with
respect to Pacific Basin Equity Fund (the "Fund"), except for matters
relating to the organization of the Trust, the Fund's establishment and
designation as a series of the Trust, and the registration under the
Securities Act of 1933 of the Fund's shares of beneficial interest
("Shares") and the sale of one Share ("Initial Share") of the Fund to
SFG Investors II Limited Partnership ("SFG Investors"). The Trust will
invest all of the Fund's investable assets in Pacific Basin Equity
Portfolio (the "Portfolio"), a series of BT Investment Portfolios, an
investment company registered under the Investment Company Act of 1940,
as amended. The Fund is one of ten series of the Trust.
(2) Organization expenses of the Fund are being deferred and will be
amortized on a straight-line basis over a period not to exceed five
years from the commencement of investment operations of the Fund. The
amount paid by the Trust on any redemption by SFG Investors or any
other then-current holder of the Initial Share of the Fund will be
reduced by a portion of any unamortized organization expenses of the
Fund determined by the proportion of the number of the Initial Share of
the Fund redeemed to the number of the Initial Share of the Fund then
outstanding after taking into account
70
<PAGE>
any prior redemptions of the Initial Share of the Fund.
(3) The Trust has entered into an Administration and Services Agreement
with Bankers Trust Company under which Bankers Trust Company provides
administration, custody and transfer agency services to the Trust.
71
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
BT Global Investors -
We have audited the accompanying statement of assets and liabilities of the
Pacific Basin Equity Fund (one of the Funds comprising BT Global Investors) as
of December 28, 1995. This financial statement is the responsibility of the
Fund's management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the Pacific
Basin Equity Fund of BT Global Investors as of December 28, 1995, in conformity
with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P
Kansas City, Missouri
December 28, 1995
<PAGE>
BT0441F
BT GLOBAL INVESTORS --
LATIN AMERICAN EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
December 28, 1995
Assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . $10
Deferred organization expenses . . . . . . . . . . . . 9,000
Total assets . . . . . . . . . . . . . . . . . $9,010
Liabilities:
Accrued organization expenses . . . . . . . . . . . . 9,000
Net assets . . . . . . . . . . . . . . . . . . $ 10
Net Asset Value Per Share of Beneficial
Interest ($10.00 / 1 share outstanding) . . . . . . . . . . . $10.00
NOTES:
(1) BT Global Investors, a Massachusetts business trust (the "Trust"), was
organized on July 24, 1995 and has been inactive since that date, with
respect to Latin American Equity Fund (the "Fund"), except for matters
relating to the organization of the Trust, the Fund's establishment and
designation as a series of the Trust, and the registration under the
Securities Act of 1933 of the Fund's shares of beneficial interest
("Shares") and the sale of one Share ("Initial Share") of the Fund to
SFG Investors II Limited Partnership ("SFG Investors"). The Trust will
invest all of the Fund's investable assets in Latin American Equity
Portfolio (the "Portfolio"), a series of BT Investment Portfolios, an
investment company registered under the Investment Company Act of 1940,
as amended. The Fund is one of ^ ten series of the Trust.
(2) Organization expenses of the Fund are being deferred and will be
amortized on a straight-line basis over a period not to exceed five
years from the commencement of investment operations of the Fund. The
amount paid by the Trust on any redemption by SFG Investors or any
other then-current holder of the Initial Share of the Fund will be
reduced by a portion of any unamortized organization expenses of the
Fund determined by the proportion of the number of the Initial Share of
the Fund redeemed to the number of the Initial Share of the Fund then
outstanding after taking into account
72
<PAGE>
any prior redemptions of the Initial Share of the Fund.
(3) The Trust has entered into an Administration and Services Agreement
with Bankers Trust Company under which Bankers Trust Company provides
administration, custody and transfer agency services to the Trust.
73
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
BT Global Investors -
We have audited the accompanying statement of assets and liabilities of the
Latin American Equity Fund (one of the Funds comprising BT Global Investors) as
of December 28, 1995. This financial statement is the responsibility of the
Fund's management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the Latin
American Equity Fund of BT Global Investors as of December 28, 1995, in
conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P
Kansas City, Missouri
December 28, 1995
<PAGE>
BT0441F
Distributor
Signature Broker-Dealer Services, Inc. BT Global Investors
6 St. James Avenue
Boston, MA 02116 oGlobal High Yield
Securities Fund
oCapital Appreciation Fund
oSmall Cap Fund
oInternational Equity Fund
Investment Adviser of each Portfolio oPacific Basin Equity Fund
oLatin American Equity Fund
Bankers Trust Company
280 Park Avenue
New York, NY 10017
Transfer Agent
Bankers Trust Company
280 Park Avenue
New York, NY 10017
Custodian
Bankers Trust Company STATEMENT OF
280 Park Avenue ADDITIONAL INFORMATION
New York, NY 10015^ JANUARY , 1996
Independent Accountants
Coopers & Lybrand L.L.P.
1100 Main Street, Suite 900
Kansas City, MO 64105
Legal Counsel
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022-4669
74
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS INCLUDED IN PART B
BT GLOBAL INVESTORS:
Statement of Assets and Liabilities as of December 28, 1995
Report of Independent Accountants
BT INVESTMENT PORTFOLIOS - EQUITY 500 EQUAL WEIGHTED PORTFOLIO, BOND INDEX
PORTFOLIO, INTERNATIONAL EQUITY INDEX PORTFOLIO AND SMALL CAP INDEX
PORTFOLIO:
Statement of Assets and Liabilities as of December 28, 1995
Report of Independent Accountants are to be filed by amendment
BT INVESTMENT PORTFOLIOS - LATIN AMERICAN EQUITY PORTFOLIO, GLOBAL HIGH YIELD
SECURITIES PORTFOLIO, SMALL CAP PORTFOLIO AND PACIFIC BASIN EQUITY PORTFOLIO
Statement of Assets and Liabilities, September 30, 1995
Statement of operations for the period indicated
Statement of Changes in Net Assets for each of the periods indicated
Financial Highlights: Selected ratios and supplemental data for each of the
periods indicated
Schedule of Portfolio of Investments, September 30, 1995
Notes to Financial Statements
Report of Independent Accountants
CAPITAL APPRECIATION PORTFOLIO, INTERNATIONAL EQUITY PORTFOLIO AND EQUITY 500
INDEX PORTFOLIO
Statement of Assets and Liabilities, December 31, 1994
Statement of operations for the period indicated
Statement of Changes in Net Assets for each of the periods indicated
Financial Highlights: Selected ratios and supplemental data for each of the
periods indicated
Schedule of Portfolio Investments, December 31, 1994
Notes to Financial Statements
Report of Independent Accountants
CAPITAL APPRECIATION PORTFOLIO, INTERNATIONAL EQUITY PORTFOLIO AND EQUITY 500
INDEX PORTFOLIO
Statement of Assets and Liabilities, June 30, 1995 (unaudited)
Statement of operations for the period indicated (unaudited)
Statement of Changes in Net Assets for each of the periods indicated
(unaudited)
Financial Highlights: Selected ratios and supplemental data for
each of the periods indicated (unaudited)
Schedule of Portfolio Investments, June 30, 1995 (unaudited)
Notes to Financial Statements
(b) EXHIBITS:
(1A) Declaration of Trust of the Trust.1
(1B) Amendment to the Declaration of Trust.2
(2) By-Laws of the Trust.1
(3) Inapplicable.
(4) Inapplicable.
(5) Inapplicable.
<PAGE>
C-2
(6) Distribution Agreement.2
(7) Inapplicable.
(8) See Exhibit 9(b).3
(9) (a) See Exhibit 9(b).3
(b) Administration and Services Agreement.2
(10) Opinion of counsel.2
(11) Consent of independent accountants.2
(12) Inapplicable.
(13) Investment letter of initial shareholder.2
(14) Inapplicable.
(15) Plan of Distribution pursuant to Rule 12b-l under the
Investment Company Act of 1940, as amended
(the "1940 Act").2
(16) Method of computations of performance information.3
(17) Financial Data Schedules.2
(25) Powers of Attorney.2
1 Incorporated by reference to the Registrant's registration statement
on Form N-1A ("Registration Statement") as filed with the Commission
on August 24, 1995.
2 Filed herein.
3 To be filed by amendment.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE TRUST.
Inapplicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
Number of Record
TITLE OF CLASS HOLDERS (AS OF DECEMBER 29, 1995)
-------------- ---------------------------------
International Equity Fund 2
Latin American Equity Fund 2
Pacific Basin Equity Fund 2
Global High Yield Securities Fund 2
Capital Appreciation Fund 2
Small Cap Fund 2
Equity 500 Equal Weighted Index Fund 0
U.S. Bond Index Fund 0
EAFE Equity Index Fund 0
Small Cap Index Fund 0
ITEM 27. INDEMNIFICATION.
Under Article XI, Section 2 of the Trust's Declaration of Trust, any past or
present Trustee or officer of the Trust (including persons who serve at the
Trust's request as directors, officers or trustees of another organization in
which the Trust has any interest as a shareholder, creditor or otherwise
[hereinafter referred to as a "Covered Person"]) is indemnified to the
fullest extent permitted by law against liability and all expenses reasonably
incurred by him in connection with any action, suit or proceeding to which he
may be a party or otherwise involved by reason of his being or having been a
Covered
<PAGE>
C-3
Person. This provision does not authorize indemnification when it is
determined, in the manner specified in the Declaration of Trust, that such
Covered Person has not acted in good faith in the reasonable belief that his
actions were in or not opposed to the best interests of the Trust. Moreover,
this provision does not authorize indemnification when it is determined, in
the manner specified in the Declaration of Trust, that such Covered Person
would otherwise be liable to the Trust or its shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of his
duties. Expenses may be paid by the Trust in advance of the final disposition
of any action, suit or proceeding upon receipt of an undertaking by such
Covered Person to repay such expenses to the Trust in the event that it is
ultimately determined that indemnification of such expenses is not authorized
under the Declaration of Trust and either (i) the Covered Person provides
security for such undertaking, (ii) the Trust is insured against losses from
such advances or (iii) the disinterested Trustees or independent legal
counsel determines, in the manner specified in the Declaration of Trust, that
there is reason to believe the Covered Person will be found to be entitled to
indemnification.
Insofar as indemnification for liability arising under the Securities Act of
1933, as amended (the "1933 Act"), may be permitted to Trustees, officers and
controlling persons of the Trust pursuant to the foregoing provisions, or
otherwise, the Trust has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the 1933 Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Trust
of expenses incurred or paid by a Trustee, officer or controlling person of
the Trust in the successful defense of any action, suit or proceeding) is
asserted by such Trustee, officer or controlling person in connection with
the securities being registered, the Trust will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the 1933 Act and will be
governed by the final adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Not applicable.
<PAGE>
C-4
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) Signature Broker-Dealer Services, Inc. is the Distributor (the
"Signature") for the shares of BT Global Investors. Signature also
serves as the principal underwriter or placement agent for other
registered investment companies.
(b) Set forth below are the names, principal business addresses and
positions of each director and officer of Signature. Unless otherwise
noted, the principal business address of these individuals is
Signature Broker-Dealer Services, Inc., 6 St. James Avenue, Boston,
Massachusetts 02116. Unless otherwise specified, none of the officers
and directors of Signature serve as officers and Trustees of the
Trust.
PHILIP W. COOLIDGE: Chief Executive Officer, President and Director of Signature
and President and Trustee of the Registrant.
LINWOOD C. DOWNS: Treasurer of Signature.
THOMAS M. LENZ: Assistant Secretary of Signature and Secretary of the
Registrant.
MOLLY S. MUGLER: Assistant Secretary of Signature and Assistant Secretary of the
Registrant.
LINDA T. GIBSON: Assistant Secretary of Signature and Assistant Secretary of the
Registrant.
ANDRES E. SALDANA: Assistant Secretary of Signature and Assistant Secretary of
the Registrant.
SUSAN JAKUBOSKI: Assistant Treasurer of Signature.
BARBARA M. O'DETTE: Assistant Treasurer of Signature and Assistant Treasurer of
the Registrant.
BETH A. REMY: Assistant Treasurer of Signature.
JULIE J. WYETZNER: Product Management Officer of Signature.
ROBERT G. DAVIDOFF: Director of Signature; CMNY Capital, L.P, 135 East 57th
Street, New York, NY 10022.
DONALD S. CHADWICK: Director of Signature; Scarborough & Company, 110 East 42nd
Street, New York, NY 10017.
LEEDS HACKETT: Director of Signature; National Credit Management Corporation,
10155 York Road, Cockeysville, MD 21030.
LAURENCE E. LEVINE: Director of Signature; First International Capital, Ltd.,
130 Sunrise Avenue, Palm Beach, FL 33480.
(c) Inapplicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
BT GLOBAL INVESTORS: 6 St. James Avenue, Boston, MA 02116.
BANKERS TRUST COMPANY: 280 Park Avenue, New York, NY 10017.
INVESTORS FIDUCIARY TRUST COMPANY: 127 West 10th Street, Kansas City, MO 64105.
<PAGE>
C-5
SIGNATURE BROKER-DEALER SERVICES, INC.: 6 St. James Avenue, Boston, MA 02116.
ITEM 31. MANAGEMENT SERVICES.
Not applicable.
ITEM 32. UNDERTAKINGS.
(a) The Registrant undertakes to file a post-effective amendment,
including financials, which need not be certified, within four to six
months following the commencement of operations of each of its
series. The financial statements included in such amendment will be
as of and for the time period ended on a date reasonably close or as
soon as practicable to the date of the amendment.
(b) The Registrant undertakes to comply with Section 16(c) of the 1940
Act as though such provisions of the Act were applicable to the
Registrant except that the request referred to in the third full
paragraph thereof may only be made by shareholders who hold in the
aggregate at least 10% of the outstanding shares of the Registrant,
regardless of the net asset value or values of shares held by such
requesting shareholders.
(c) If the information called for by Item 5A of Form N-1A is contained in
the latest annual report to shareholders, the Registrant shall
furnish each person to whom a prospectus is delivered with a copy of
the Registrant's latest annual report to shareholders upon request
and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant has duly caused this
Registration Statement on Form N-1A (the "Registration Statement") to be signed
on its behalf by the undersigned, thereto duly authorized, in the City of Boston
and the Commonwealth of Massachusetts on the 2nd day of January, 1996.
BT GLOBAL INVESTORS
By: /S/PHILIP W. COOLIDGE
Philip W. Coolidge, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
indicated on January 2, 1996.
SIGNATURE TITLE
/S/PHILIP W. COOLIDGE Trustee
Philip W. Coolidge
/S/HARRY VAN BENSCHOTEN* Trustee
Harry Van Benschoten
/S/MARTIN J. GRUBER* Trustee
Martin J. Gruber
/S/BRUCE E. LANGTON* Trustee
Bruce E. Langton
/S/RICHARD J. HERRING* Trustee
Richard J. Herring
/S/JOHN R. ELDER Treasurer (Principal Financial and
John R. Elder Principal Accounting Officer)
*By: /S/THOMAS M. LENZ
Thomas M. Lenz
as Attorney-in-Fact pursuant to
a Power of Attorney filed herein.
<PAGE>
SIGNATURES
International Equity Portfolio has duly caused this Registration Statement on
Form N-1A of BT Global Investors to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston and the Commonwealth of
Massachusetts on the 2nd day of January, 1996.
INTERNATIONAL EQUITY PORTFOLIO
By: /S/PHILIP W. COOLIDGE
Philip W. Coolidge
President
This Registration Statement on Form N-1A of BT Global Investors has been
signed below by the following persons in the capacities indicated on January 2,
1996.
SIGNATURE TITLE
/S/PHILIP W. COOLIDGE Trustee and President of
Philip W. Coolidge International Equity Portfolio
CHARLES P. BIGGAR* Trustee of International Equity
Charles P. Biggar Portfolio
S. LELAND DILL* Trustee of International
S. Leland Dill Equity Portfolio
PHILIP SAUNDERS, JR.* Trustee of International
Philip Saunders, Jr. Equity Portfolio
/S/JOHN R. ELDER Treasurer (Principal Financial and
John R. Elder Principal Accounting Officer) of
International Equity Portfolio
*By: /S/THOMAS M. LENZ
Thomas M. Lenz
as Attorney-in-Fact pursuant to
a Power of Attorney previously filed.
<PAGE>
SIGNATURES
Capital Appreciation Portfolio has duly caused this Registration Statement on
Form N-1A of BT Global Investors to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston and the Commonwealth of
Massachusetts on the 2nd of January, 1996.
CAPITAL APPRECIATION PORTFOLIO
By: /S/PHILIP W. COOLIDGE
Philip W. Coolidge
President
This Registration Statement on Form N-1A of BT Global Investors has been
signed below by the following persons in the capacities indicated on January 2,
1996.
SIGNATURE TITLE
/S/PHILIP W. COOLIDGE Trustee and President of Capital
Philip W. Coolidge Appreciation Portfolio
CHARLES P. BIGGAR* Trustee of Capital Appreciation
Charles P. Biggar Portfolio
S. LELAND DILL* Trustee of Capital Appreciation
S. Leland Dill Portfolio
PHILIP SAUNDERS, JR.* Trustee of Capital Appreciation
Philip Saunders, Jr. Portfolio
/S/JOHN R. ELDER Treasurer (Principal Financial and
John R. Elder Principal Accounting Officer) of
Capital Appreciation Portfolio
*By: /S/THOMAS M. LENZ
Thomas M. Lenz
as Attorney-in-Fact pursuant to
a Power of Attorney previously filed.
<PAGE>
SIGNATURES
BT Investment Portfolios has duly caused this Registration Statement on Form
N-1A of BT Global Investors to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston and the Commonwealth of
Massachusetts on the 2nd day of January , 1996.
BT INVESTMENT PORTFOLIOS
By: /S/PHILIP W. COOLIDGE
Philip W. Coolidge
President
This Registration Statement on Form N-1A of BT Global Investors has been
signed below by the following persons in the capacities indicated on January 2,
1996.
SIGNATURE TITLE
/S/PHILIP W. COOLIDGE Trustee and President of BT
Philip W. Coolidge Investment Portfolios
CHARLES P. BIGGAR* Trustee of BT Investment
Charles P. Biggar Portfolios
S. LELAND DILL* Trustee of BT Investment
S. Leland Dill Portfolios
PHILIP SAUNDERS, JR.* Trustee of BT Investment
Philip Saunders, Jr. Portfolios
/S/JOHN R. ELDER Treasurer (Principal Financial and
John R. Elder Principal Accounting Officer) of BT
Investment Portfolios
*By: /S/THOMAS M. LENZ
Thomas M. Lenz
as Attorney-in-Fact pursuant to
a Power of Attorney previously filed.
<PAGE>
BT GLOBAL INVESTORS
EXHIBITS
TO
REGISTRATION STATEMENT ON
FORM N-1A
EXHIBIT INDEX
EXHIBIT NO.
(1) Amendment to the Declaration of Trust of the Registrant
(6) Distribution Agreement.
(9B) Administration and Services Agreement
(10) Opinion of counsel
(11) Consent of independent accountants
(13) Investment letter of initial shareholder.
(15) Plan of Distribution pursuant to Rule 12b-l under the 1940 Act
(17) Financial Data Schedule
(25) Powers of Attorney
BT GLOBAL INVESTORS
Second Amended and Restated Establishment and
Designation of Series and Classes of Shares of
Beneficial Interest (par value $0.00001 per share)
Dated as of November 8, 1995
Pursuant to Section 6.9 of the Declaration of Trust, dated as of July
24, 1995 (the "Declaration of Trust"), of BT Global Investors (the "Trust"), the
Trustees of the Trust hereby amend and restate the Establishment and Designation
of Series and Classes of Shares of Beneficial Interest (par value $0.00001 per
share), dated as of November 8, 1995, for the following purposes: (a) to change
the names of Bond Index Fund, Equity 500 Equal Weighted Fund and International
Equity Index Fund to "U.S. Bond Index Fund," "Equity 500 Equal Weighted Index
Fund" and "EAFE Equity Index Fund," respectively; and (b) to designate a second
class of Shares (as defined in the Declaration of Trust) of four of the Trust's
series (each a "Fund" and collectively the "Funds"). These Funds are the Equity
500 Equal Weighted Index Fund, the U.S. Bond Index Fund, the EAFE Equity Index
Fund, and the Small Cap Index Fund. The existing series of Shares of each of
such four funds shall be now referred to as the "Advisor Class Shares." The
second class of Shares of each of these four Funds shall be referred to as
"Institutional Class Shares." Each of Advisor Class Shares and Institutional
Class Shares is a "Class" and collectively are the "Classes.") The Funds and the
Classes shall have the following special and relative rights:
1. The Funds and Classes shall be designated as follows:
Capital Appreciation Fund
Small Cap Fund
Latin American Equity Fund
Pacific Basin Equity Fund
International Equity Fund
Global High Yield Securities Fund
Equity 500 Equal Weighted Index Fund - Advisor Class
Shares Equity 500 Equal Weighted Index Fund - Institutional Class
Shares
U.S. Bond Index Fund - Advisor Class Shares
U.S. Bond Index Fund - Institutional Class Shares
EAFE Equity Index Fund - Advisor Class Shares
EAFE Equity Index Fund - Institutional Class Shares
Small Cap Index Fund - Advisor Class Shares
Small Cap Index Fund - Institutional Class Shares
2. Each Fund shall be authorized to hold cash, invest in securities,
instruments and other properties and use investment techniques as from time to
time described in the Trust's then currently effective registration statement
under the Securities Act of 1933 to the extent pertaining to the offering of
Shares of such Fund (or Class thereof). Each Share of a Fund (or Class thereof)
shall be redeemable, shall be entitled to one vote (or fraction thereof in
respect of a fractional share) on matters on which Shares of the Fund (or Class
thereof) shall be entitled to vote, shall represent a PRO RATA beneficial
<PAGE>
interest in the assets belonging to the Fund (or allocated to the Class
thereof), and shall be entitled to receive its PRO RATA share of the net assets
belonging to the Fund (or allocated to the Class thereof) upon liquidation of
the Fund (or the Class thereof), all as provided in Section 6.9 of the
Declaration of Trust. The proceeds of sales of Shares of a Fund (or Class
thereof), together with any income and gain thereon, less any diminution or
expenses thereof, shall irrevocably belong to that Fund (or be allocated to the
Class thereof), unless otherwise required by law.
3. Shareholders of each Fund (or Class thereof) shall vote separately
as a class on any matter to the extent required by, and any matter shall be
deemed to have been effectively acted upon with respect to the Fund (or Class
thereof) as provided in, Rule 18f-2, as from time to time in effect, under the
Investment Company Act of 1940, as amended, or any successor rule, and by the
Declaration of Trust.
4. The assets and liabilities of the Trust shall be allocated among the
Funds (and Classes thereof) as set forth in Section 6.9 of the Declaration of
Trust.
5. Subject to the provisions of Section 6.9 and Article IX of the
Declaration of Trust, the Trustees (including any successor Trustees) shall have
the right at any time and from time to time to reallocate assets and expenses,
to change the designation of any Fund (or Class thereof) now or hereafter
created, or otherwise to change the special and relative rights of any Fund (or
Class thereof).
IN WITNESS WHEREOF, the undersigned have signed this instrument as of
November 8, 1995.
/S/ PHILIP W. COOLIDGE
Philip W. Coolidge
As Trustee and not Individually
/S/ BRUCE E. LANGTON
Bruce E. Langton
As Trustee and not Individually
/S/ MARTIN J. GRUBER
Martin J. Gruber
As Trustee and not Individually
/S/ RICHARD J. HERRING /S/ HARRY VAN BENSCHOTEN
Richard J. Herring Harry Van Benschoten
As Trustee and not Individually As Trustee and not Individually
BT0434A
BT Global Investors
6 St. James Avenue, 9th Floor
Boston, Massachusetts 02116
(617) 423-0800
September 15, 1995
Signature Broker-Dealer Services, Inc.
6 St. James Avenue, 9th Floor
Boston, Massachusetts 02116
Ladies and Gentlemen:
RE: DISTRIBUTION AGREEMENT
This is to confirm that, in consideration of the agreements
hereinafter contained, the undersigned, BT Global Investors (the "Trust"), an
open-end diversified management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), organized as a
Massachusetts business trust, has agreed that Signature Broker-Dealer Services,
Inc. ("SBDS") shall be, for the period of this Agreement, the distributor of the
series of shares of beneficial interest of the Trust ("Shares") which may be
divided into separate series (a "Fund") which, in turn, may be divided into one
or more classes of shares of beneficial interest (a "Class") as each may be
established and designated by the Trustees of the Trust from time to time.
1. SERVICES AS DISTRIBUTOR.
1.1 SBDS will act as principal underwriter for the
distribution of the Shares covered by the registration statement and
prospectuses then in effect under the Securities Act of 1933, as amended (the
"1933 Act"), and the 1940 Act.
1.2 SBDS agrees to use appropriate efforts to solicit orders
for the sale of Shares and will undertake such advertising and promotion as it
believes reasonable in connection with such solicitation. The Trust understands
that SBDS distributes, and may in the future distribute, the shares of several
investment companies ("Companies") including Companies having investment
objectives similar to those of the current and possibly future Funds of the
Trust. The Trust further understands that investors and potential investors in
the Trust may invest in shares of such other Companies. The Trust agrees that
SBDS's duties to such Companies shall not be deemed in conflict with its duties
to the Trust under this paragraph 1.2.
1.3 SBDS shall, at its own expense, finance appropriate
activities that it deems reasonable that are primarily intended to result in the
sale of Shares, including, but not limited to, advertising, compensation of
dealers and sales personnel, the printing and mailing of prospectuses to other
than current shareholders and regulatory authorities and the printing and
mailing of sales literature, except to the extent such expenses may be
reimbursed by the Trust pursuant to an effective plan pursuant to Rule 12b-1
under the 1940 Act. SBDS
<PAGE>
shall be entitled to seek reimbursement for expenses in connection with the
distribution of Shares pursuant to the Trust's Rule 12b-1 Plan as in effect from
time to time.
1.4 All sales literature and advertisements used by SBDS in
connection with the sale of Shares must comply with the 1933 Act and the 1940
Act, as well as rules and regulations promulgated thereunder. Without limiting
the generality of the foregoing, SBDS shall be responsible for making any
filings of advertisements and sales literature as are required by any state or
federal regulatory authorities, including the National Association of Securities
Dealers, Inc. In connection with the sale or arranging for the sale of Shares,
SBDS is authorized to give only such information and to make only such
statements or representations as are contained in the Trust's then current
prospectuses and statements of additional information, or in sales literature or
advertisements approved by the Trust.
1.5 All activities by SBDS and its agents and employees as
distributor of Shares shall comply with all applicable laws, rules and
regulations, including, without limitation, all rules and regulations adopted
pursuant to the 1940 Act by the Securities and Exchange Commission (the
"Commission") or any securities association registered under the Securities
Exchange Act of 1934 (the "1934 Act").
1.6 SBDS will provide one or more persons, during its normal
business hours, to respond to telephone inquiries with respect to the Trust and
will arrange for the dissemination of yield and other performance information in
newspapers.
1.7 SBDS will transmit any orders received by it for purchase
or redemption of Shares to the Trust's transfer agent and custodian.
1.8 Whenever in their judgment such action is permitted by the
1940 Act and warranted by unusual market, economic or political conditions, or
by abnormal circumstances of any kind, the Trust's officers may decline to
accept any orders for, or make any sales of, Shares until such time as those
officers deem it advisable to accept such orders and to make such sales.
1.9 SBDS will act only on its own behalf as principal if it
chooses to enter into selling agreements with selected dealers or others.
1.10 The Trust agrees at its own expense to prepare, execute
and file any and all documents and to furnish any and all information and
otherwise to take all actions that may be reasonably necessary in connection
with the qualification of Shares for sale in such states as SBDS may designate.
1.11 The Trust shall furnish from time to time for use in
connection with the sale of Shares such information with respect to the Trust,
the Funds, or the Classes as SBDS may reasonably request. The Trust shall also
furnish SBDS upon request with: (a) unaudited semiannual statements of the books
and accounts of each Fund or Class prepared by the Trust, (b) quarterly reports
prepared by the Trust, (c) a monthly itemized list of the securities for each of
the Trust's Funds or Classes (d) monthly balance sheets as soon as practicable
after the end of each month, and (e) from time to time such additional
information regarding
<PAGE>
the financial or regulatory condition of the Trust, a Fund, or a Class as SBDS
may reasonably request.
1.12 The Trust represents to SBDS that all registration
statements and prospectuses filed by the Trust with the Commission under the
1933 Act and the 1940 Act with respect to Shares have been prepared in
conformity with the requirements of those statutes and the rules and regulations
of the Commission thereunder. As used in this Agreement the terms "registration
statement" and "prospectus" shall mean any registration statement and any
prospectus and statement of additional information filed with the Commission and
any amendments and supplements thereto that at any time shall have been filed
with the Commission by or on behalf of the Trust. The Trust represents and
warrants to SBDS that any registration statement and prospectus, when effective,
will contain all statements required to be stated therein in conformity with
both those statutes and the rules and regulations of the Commission; that all
statements of fact contained in any registration statement and prospectus will
be true and correct when effective; and that neither any registration statement
nor any prospectus when effective will include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading to a purchaser of Shares. The
Trust may but shall not be obligated to propose from time to time such amendment
to any registration statement and such supplement to any prospectus as in the
light of future developments may, in the opinion of the Trust's counsel, be
necessary or advisable. If the Trust shall not propose such amendment and/or
supplement within fifteen days after receipt by the Trust of a written request
from SBDS to do so, SBDS may, at its option, terminate this Agreement. The Trust
shall not file any amendment to any registration statement or supplement to any
prospectus without giving SBDS reasonable notice thereof in advance; provided,
however, that nothing contained in this Agreement shall in any way limit the
Trust's right to file at any time such amendment to any registration statement
and/or supplement to any prospectus of whatever character as the Trust may deem
advisable, such right being in all respects absolute and unconditional.
1.13 The Trust authorizes SBDS and selected dealers to use any
prospectus in the form as furnished from time to time by the Trust in connection
with the sale of the Shares. The Trust agrees to indemnify, defend and hold
SBDS, its several officers and directors, and any person who controls SBDS
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
(for purposes of this paragraph 1.13, collectively, "Covered Persons") free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which any
Covered Person may incur under the 1933 Act, common law or otherwise, arising
out of or based on any untrue statement of a material fact contained in any
registration statement or any prospectus or arising out of or based on any
omission to state a material fact required to be stated in any registration
statement or any prospectus or necessary to make the statements in either
thereof not misleading; provided, however, that the Trust's agreement to
indemnify Covered Persons shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any financial and other statements as are
furnished in writing to the Trust by SBDS in its capacity as principal
underwriter for use in the answers to any items of any registration statement or
in the corresponding statements made in any prospectus, or arising out of or
based on any omission or alleged omission to state a material fact in connection
with the giving of such
<PAGE>
information required to be stated in such answers or necessary to make the
answers not misleading; and further provided that the Trust's agreement to
indemnify SBDS and the Trust's representations and warranties hereinbefore set
forth in paragraph 1.12 shall not be deemed to cover any liability to the Trust
or its shareholders to which a Covered Person would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of its duties, or by reason of a Covered Person's reckless disregard of its
obligations and duties under this Agreement. The Trust's agreement to indemnify
Covered Persons is expressly conditioned on the Trust's being notified of any
action brought against a Covered Person, such notification to be given by letter
or by telegram addressed to the Trust, c/o Burton M. Leibert, Willkie Farr &
Gallagher, One Citicorp Center, 153 East 53rd Street, New York, New York 10022,
with a copy to Bankers Trust Company, One Bankers Trust Plaza, 130 Liberty
Street, New York, New York 10006, Attention: Stephen Hart, promptly after the
summons or other first legal process shall have been duly and completely served
upon such Covered Person. The failure to so notify the Trust of any such action
shall not relieve the Trust from any liability that the Trust may have to the
Covered Person against whom such action is brought by reason of any such untrue
statement or omission, otherwise than on account of the Trust's indemnity
agreement contained in this paragraph 1.13. The Trust will be entitled to assume
the defense of any suit brought to enforce any such claim, demand or liability,
but in such case such defense shall be conducted by counsel of good standing
chosen by the Trust and approved by SBDS, which approval shall not be
unreasonably withheld. In the event the Trust elects to assume the defense of
any such suit and retain counsel of good standing approved by SBDS, the
defendant or defendants in such suit shall bear the fees and expenses of any
additional counsel retained by any of them; but in case the Trust does not elect
to assume the defense of any such suit, or in case SBDS reasonably does not
approve of counsel chosen by the Trust, the Trust will reimburse the Covered
Person named as defendant in such suit, for the fees and expenses of any counsel
retained by SBDS or it. The Trust's indemnification agreement contained in this
paragraph 1.13 and the Trust's representations and warranties in this Agreement
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of Covered Persons, and shall survive the
delivery of any Shares. This agreement of indemnity will inure exclusively to
Covered Persons and their successors. The Trust agrees to notify SBDS promptly
of the commencement of any litigation or proceedings against the Trust or any of
its officers or Trustees in connection with the issue and sale of any Shares.
1.14 SBDS agrees to indemnify, defend and hold the Trust, its
several officers and Trustees, and any person who controls the Trust within the
meaning of Section 15 of the 1933 Act (for purposes of this paragraph 1.14,
collectively, "Covered Persons") free and harmless from and against any and all
claims, demands, liabilities and expenses (including the costs of investigating
or defending such claims, demands, liabilities and any counsel fees incurred in
connection therewith) that Covered Persons may incur under the 1933 Act or
common law or otherwise, but only to the extent that such liability or expense
incurred by a Covered Person resulting from such claims or demands shall arise
out of or be based on any untrue statement of a material fact contained in
information furnished in writing by SBDS in its capacity as principal
underwriter to the Trust for use in the answers to any of the items of any
registration statement or in the corresponding statements made in any
prospectus, or shall arise out of or be based on any omission to state a
material fact in connection with such information furnished in writing by SBDS
to the Trust required to be stated in
<PAGE>
such answers or necessary to make such information not misleading. SBDS's
agreement to indemnify Covered Persons is expressly conditioned on SBDS's being
notified of any action brought against a Covered Person, such notification to be
given by letter or telegram addressed to SBDS at 6 St. James Avenue, 9th Floor,
Boston, Massachusetts 02116, Attention: Philip W. Coolidge, President, promptly
after the summons or other first legal process shall have been duly and
completely served upon such Covered Person. SBDS shall have the right of first
control of the defense of the action with counsel of its own choosing
satisfactory to the Trust if such action is based solely on such alleged
misstatement or omission on SBDS's part, and in any other event each Covered
Person shall have the right to participate in the defense or preparation of the
defense of any such action. The failure to so notify SBDS of any such action
shall not relieve SBDS from any liability that SBDS may have to Covered Persons
by reason of any such untrue or alleged untrue statement, or omission or alleged
omission, otherwise than on account of SBDS's indemnity agreement contained in
this paragraph 1.14.
1.15 No Shares shall be offered by either SBDS or the Trust
under any of the provisions of this Agreement and no orders for the purchase or
sale of Shares hereunder shall be accepted by the Trust if and so long as the
effectiveness of the registration statement or any necessary amendments thereto
shall be suspended under any of the provisions of the 1933 Act or the 1940 Act
or if and so long as a current prospectus as required by Section 10(b)(2) of the
1933 Act is not on file with the Commission; provided, however, that nothing
contained in this paragraph 1.15 shall in any way restrict or have an
application to or bearing on the Trust's obligation to redeem Shares from any
shareholder in accordance with the provisions of the Trust's prospectuses,
statements of additional information or Declaration of Trust, as amended from
time to time.
1.16 The Trust agrees to advise SBDS as soon as reasonably
practical by a notice in writing delivered to SBDS or its counsel:
(a) of any request by the Commission for amendments to the
registration statement or prospectuses then in effect or for additional
information;
(b) in the event of the issuance by the Commission of any stop
order suspending the effectiveness of the registration statement or prospectuses
then in effect or the initiation by service of process on the Trust of any
proceeding for that purpose;
(c) of the happening of any event that makes untrue any
statement of a material fact made in the registration statement or prospectus
then in effect or that requires the making of a change in such registration
statement or prospectus in order to make the statements therein not misleading;
and
(d) of all action of the Commission with respect to any
amendment to any registration statement or prospectus that may from time to time
be filed with the Commission.
For purposes of this paragraph 1.16, informal requests by or
acts of the Staff of the Commission shall not be deemed actions of or requests
by the Commission.
<PAGE>
1.17 SBDS agrees on behalf of itself and its employees to
treat confidentially and as proprietary information of the Trust all records and
other information not otherwise publicly available relative to the Trust and its
prior, present or potential shareholders and not to use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Trust, which approval shall not be unreasonably withheld and may not be
withheld where SBDS may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
1.18 In addition to SBDS's duties as distributor, the Trust
understands that SBDS may, in its discretion, perform additional functions in
connection with transactions in Shares.
1.19 SBDS may process or cause to be processed requests
received from the Trust's shareholders in connection with their purchase or
redemption of Shares of any Fund or Class, in the manner prescribed from time to
time by the Board of Trustees of the Trust (the "Board"), and shall arrange for
payment for such Shares to or from the Trust's account with its custodian. SBDS
shall reimburse the Trust for any loss caused by the failure of the shareholder
to settle on any purchase, redemption or repurchase order accepted by SBDS. In
the event that orders for the purchase, redemption or repurchase of Shares are
placed and subsequently cancelled, SBDS shall pay to the Trust, on at least a
monthly basis, an amount equal to the losses (net of any gains) realized by any
Fund or Class of the Trust or Class as a result of such cancellations.
The processing of Share transactions may include, but is not
limited to, compilation of all transactions from SBDS's various offices;
creation of a transaction tape and timely delivery of it to the Trust's transfer
agent for processing; reconciliation of all transactions delivered to the
Trust's transfer agent; and the recording and reporting of these transactions
executed by the Trust's transfer agent in customer statements; rendering of
periodic customer statements; and the reporting of IRS Form 1099 information at
year end.
SBDS may also provide other shareholder services, such as
communicating with Trust shareholders and other functions in administering
customer accounts for Trust shareholders.
The Trust understands that these services may result in cost
savings to the Trust or to the Trust's investment manager and the Trust's
investment manager will not compensate SBDS for all or a portion of the costs
incurred in performing functions in connection with transactions in Shares.
Nothing herein is intended, nor shall be construed, as requiring SBDS to perform
any of the foregoing functions and none of such functions performed by SBDS
shall be deemed distribution services.
1.20 In addition to the services described above, SBDS shall
provide the Trust with office facilities, which may be in SBDS's own offices.
1.21 The Declaration of Trust establishing the Trust is on
file with the Secretary of the Commonwealth of Massachusetts and notice is
hereby given that this Agreement is made and executed on behalf of the Trust,
and not by the Trustees or officers of the Trust individually, and SBDS hereby
acknowledges that
<PAGE>
the obligations of or arising out of this Agreement are not binding on the
Trustees, officers or shareholders of the Trust individually but are binding
only on the assets and property of the Trust. With full knowledge of the
circumstances and the effect of its action, SBDS hereby waives any and all
rights that it has now, or may acquire in the future, against any shareholder of
the Trust, which rights arise out of any action or inaction of the Trust under
this Agreement.
2. PUBLIC OFFERING PRICE.
Each Fund (or each of that Fund's Classes if the Fund is so
divided) will be offered to public shareholders at its public offering price,
which shall be its respective net asset value next determined after receipt of
the purchase order plus any applicable sales charge as disclosed in that Fund's
or Class' then-current prospectus.
3. LIMITATION UPON INVESTMENT IN THE TRUST BY SHAREHOLDERS.
SBDS shall not accept any initial or subsequent investment in
any Fund or Class of less than the amount specified in then-current prospectus
of that Fund or Class.
4. NET ASSET VALUE PER SHARE.
Any references herein to "net asset value per share" shall
refer to the net asset value per share computed separately for each Fund or
Class of the Trust in accordance with the Trust's Declaration of Trust, the
prospectus of that Fund or Class and the instructions of the Board, all as
changed or amended from time to time. The Trust or its fund accounting agent
will advise SBDS as promptly as practicable of the net asset value per share for
each Fund (or of each of that Fund's Classes if the Fund is so divided) on each
day on which the Fund's or Class' net asset value per share is determined.
5. TERM.
This Agreement shall become effective on the date first above
written and, unless sooner terminated as provided herein, shall continue until
September 15, 1997 and thereafter shall continue automatically, with respect to
a Fund or Class, for successive annual periods, provided such continuance is
specifically approved at least annually by (i) the Board or (ii) by a vote of a
Majority of the Outstanding Voting Securities (as defined in the 1940 Act) of
the Fund (or Class if the Fund is so divided), provided that in either event the
continuance is also approved by the majority of the Trust's Trustees who are not
Interested Persons (as defined in the 1940 Act) of the Trust and who have no
direct or indirect financial interest in this Agreement, in the Trust's plan of
distribution or in any other agreement relating thereto, by vote cast in person
at a meeting called for the purpose of voting on such approval. This Agreement
is terminable without penalty, on not less than 60 days' notice, by the Board,
by vote of a Majority of the Outstanding Voting Securities of a Fund (or Class
if the Fund is so divided), or by SBDS, such notice to be given in the manner
specified in paragraph 1.13 (if given by SBDS) or in paragraph 1.14 (if given by
the Trust). This Agreement will also terminate automatically in the event of its
Assignment (as defined in the 1940 Act and the rules thereunder).
<PAGE>
6. REPRESENTATIONS AND WARRANTIES.
SBDS and the Trust each hereby represents and warrants to the
other that it has all requisite authority to enter into, execute, deliver and
perform its obligations under this Agreement and that, with respect to it, this
Agreement is legal, valid and binding, and enforceable in accordance with its
terms.
7. CONCERNING APPLICABLE PROVISIONS OF LAW, ETC.
This Agreement shall be subject to all applicable provisions
of law, including the applicable provisions of the 1940 Act, the 1933 Act and
the 1934 Act and to the extent that any provisions herein contained conflict
with any such applicable provisions of law, the latter shall control.
This Agreement is executed and delivered in New York, New
York, and the laws of the State of New York shall, except to the extent that any
applicable provisions of federal law shall be controlling, govern the
construction, validity and effect of this Agreement, without reference to
principles of conflicts of law.
If the contract set forth herein is acceptable to you, please
so indicate by executing the enclosed copy of this Agreement and returning the
same to the undersigned, whereupon this Agreement shall constitute a binding
contract between the parties hereto effective at the closing of business on the
date hereof.
Yours very truly,
BT GLOBAL INVESTORS
By: /S/ PHILIP W. COOLIDGE
Philip W. Coolidge
President
Accepted:
SIGNATURE BROKER-DEALER SERVICES, INC.
By: /S/ PHILIP W. COOLIDGE
Philip W. Coolidge
President
BT0464A
BT0452A
ADMINISTRATION AND SERVICES AGREEMENT
AGREEMENT, made as of this 15th day of September, 1995, by and between
Bankers Trust Company, a New York banking corporation (hereinafter called
"Bankers"), and BT Global Investors, a Massachusetts business trust (hereinafter
called the "Trust").
WHEREAS, the Trust is registered as an open-end diversified management
investment company under the Investment Company Act of 1940, as amended (the
"Act"); and
WHEREAS, the Trust desires to retain Bankers to render administrative
and other services, including custody, transfer agency and shareholder services,
to the Trust and/or for such separate and distinct series (each a "Fund" and
collectively, the "Funds"), which may be divided into one or more separate
classes of shares of beneficial interest ("Classes"), as may from time to time
be created and designated by the Trusttees of the Trust, and Bankers is willing
to so render such services on the terms hereinafter set forth;
NOW, THEREFORE, this Agreement
W I T N E S S E T H:
In consideration of the promises and mutual covenants herein contained,
it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Trust hereby appoints Bankers to act as
administrator, custodian, transfer agent and shareholder servicing agent of the
Trust, the Funds and/or the Classes for the period and on the terms set forth in
this Agreement. Bankers accepts such appointment and agrees to render the
services herein set forth for the compensation herein provided.
2. DUTIES.
(a) ADMINISTRATOR. Bankers shall, on a continuous basis,
furnish the Trust with such administrative services as the Board of Trustees of
the Trust reasonably deems necessary for the proper administration of the Trust.
Without limiting the generality of the foregoing, Bankers will supply executive
and administrative services; negotiate arrangements with, and supervise and
coordinate the activities of, agents and others retained by the Trust to supply
services to the Trust and/or its shareholders; supply stationery and office
supplies; supply statistical and research data; prepare agendas and minutes and
supply supporting documentation for meetings of the Boards of Trustees of the
Trust; provide monitoring reports and assistance regarding the Trust's
compliance with its Declaration of Trust, By-Laws, investment objectives and
policies and federal and state securities laws, including monthly (or more
frequently if required) reports indicating the legal residence of each
beneficial owner (of which Bankers has knowledge) of shares of the Trust
purchased during that month; arrange for dissemination of yield and other
performance information in
<PAGE>
newspapers; supply data processing services, clerical, accounting, bookkeeping
and recordkeeping services (including without limitation the maintenance of such
books and records as are required under the Act and the rules thereunder, except
as maintained by other agents of the Trust); calculate the net asset value, net
income and realized capital gains or losses of each of the Funds or Classes;
prepare and file reports to and filings with the Securities and Exchange
Commission and various state Blue Sky authorities, including Trust registration
statements, periodic reports, prospectuses, proxy statements and Blue Sky and
Rule 24f-2 registrations; prepare reports to shareholders of each of the Funds
and Classes; prepare and file tax returns; arrange for fidelity bond and errors
and omissions insurance coverage; and generally assist in all aspects of each
Fund's or Class' operations.
(b) CUSTODIAN. Bankers shall provide to the Trust custody
services on the terms and conditions set forth in the form of Custody Agreement
set forth as Exhibit A hereto, without giving effect to Section 13(a) thereof as
it regards compensation (but not reimbursement of out-of-pocket expenses) to
Bankers.
(c) TRANSFER AGENT. Bankers shall provide to the Trust
transfer agency services on the terms and conditions set forth in the form of
Transfer Agency Agreement set forth as Exhibit B hereto, without giving effect
to Section 3(a) thereof as it regards compensation (but not reimbursement of
out-of-pocket expenses) to Bankers.
(d) FUND ACCOUNTING AGENT. Bankers shall provide fund
accounting services pursuant to the form of Fund Accounting Services Agreement
set forth as Exhibit C hereto, without giving effect to Section 6 thereof (but
not reimbursement of out-of-pocket expenses) to Bankers.
(e) SERVICE AGENT. Bankers shall provide shareholder and
administrative services to each shareholder of the Trust. Such services shall
include the following: establishing and maintaining shareholder accounts;
processing purchase and redemption transactions; arranging for bank wires;
performing shareholder subaccounting; answering client inquiries regarding the
Funds and Classes; assisting clients in establishing and changing dividend
options, account designations and addresses; providing periodic statements
showing the client's account balance; transmitting proxy statements, periodic
reports, updated prospectuses and other communications to shareholders and, with
respect to meetings of shareholders, collecting, tabulating and forwarding to
the Trust executed proxies; and obtaining such other information and performing
such other services as the Trust may reasonably request and agree upon with
Bankers, but in each case only to the extent permitted by applicable statute,
rule or regulation. Bankers shall provide such personnel and facilities as are
necessary to render the foregoing services, shall comply with all legal
requirements relating to it, including, without limitation, any requirement to
provide Trust materials to shareholders. In addition to the above services,
Bankers shall provide each shareholder with confirmations of purchases,
redemptions or exchanges of shares of the Trust. Bankers agrees to furnish to
the Trust all such records to the extent required by regulatory authorities
having jurisdiction over the Trust or to the extent necessary due to lawful
process upon the Trust. Bankers acknowledges and agrees that, in performing the
foregoing duties, no person is authorized to make any representation concerning
the Trust other than
2
<PAGE>
such representations as are contained in the current Prospectuses, Statements of
Additional Information and printed information subsequently issued by the Trust
as information supplemental to such Prospectuses and/or Statements of Additional
Information.
(f) IN GENERAL. In the performance of all services under this
Agreement, Bankers shall act in strict conformity with the applicable provisions
of the Trust's Declaration of Trust and By-Laws; the Act, the Investment
Advisers Act of 1940 and the Securities Exchange Act of 1934, as the same may
from time to time be amended; and the investment objectives, investment policies
and other practices and policies set forth in the Trust's current Registration
Statement under the Securities Act of 1933, as amended. Bankers may delegate
some or all of its duties hereunder to other persons or entities approved by
Bankers upon notice to the Trust.
3. ALLOCATION OF EXPENSES. Bankers shall bear all expenses in
connection with the performance of its services under this Agreement.
Bankers will from time to time employ or associate with itself such
person or persons as Bankers may believe to be particularly suited to assist it
in the performance of this Agreement. The compensation of such person or persons
shall be paid by Bankers and no obligation shall be incurred on behalf of the
Trust in such respect.
Bankers shall not be required to pay and the Trust shall assume and pay
any of the following expenses incurred by the Trust: out-of-pocket expenses
specified in the forms of agreements set forth in Exhibits A and B hereto;
investment management fees; membership dues in the Investment Company Institute
or any similar organization; distribution expenses; costs of preparing, printing
and mailing stock certificates, prospectuses, reports and notices; interest on
borrowed money; brokerage commissions; taxes and fees payable to federal, state
and other governmental agencies; fees of trustees not affiliated with affiliates
of the Trust; outside auditing and legal expenses; or other expenses not
specified in this Article 3 which may be properly payable by the Trust.
4. COMPENSATION OF BANKERS.
(a) IN GENERAL. For the services to be rendered and the
payments to be made by Bankers, as provided in Sections 2 and 3 hereof, Bankers
shall receive from the Trust, accrued daily and payable monthly, an amount equal
to the annual rate of the percentage of each Fund's or Class' average daily net
assets as listed on Exhibit D hereto.
(b) FEE ACCRUAL AND PAYMENT. Remuneration under this Agreement
shall begin to accrue on the date hereof. The fee for the previous calendar
month shall be paid in a timely manner in each succeeding calendar month.
(c) PRORATION. If this Agreement commences on any date other
than the first day of a calendar month, the fee payable with respect to such
initial fractional calendar month shall be prorated according to the proportion
that such period bears to the full calendar monthly period. Upon any termination
of this Agreement before the end of a calendar month, the fee for such part of
that
3
<PAGE>
calendar month shall be prorated according to the proportion that such period
bears to the full calendar monthly period.
(d) PARTIAL TERMINATION. If any particular aspect of this
Agreement is terminated in accordance with Section 7 hereof, the fee payable
under Paragraph (a) of this Section 4 as to services for which termination has
not occurred shall be the fee agreed upon by the parties.
5. LIMITATION OF LIABILITY. Bankers shall not be liable for any error
of judgment or mistake of law or for any loss suffered by the Trust in
connection with the performance of its obligations and duties under Sections
2(a) and (d) of this Agreement, except a loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of such
obligations and duties, or by reason of a reckless disregard thereof. As to the
duties and obligations set forth in Sections 2(b) and (c) of this Agreement, the
parties shall be governed by the standards of care and provisions for
exculpation and/or indemnification set forth in the forms of agreements set
forth in Exhibits A and B hereto, respectively.
6. DURATION OF AGREEMENT. This Agreement shall become effective on the
date of commencement of investment operation of the Trust and unless terminated
shall continue in force from year to year thereafter, but only so long as such
continuance is specifically approved annually (a) by the Trust's Board of
Trustees or by a vote of a majority of the Trust's outstanding voting securities
(as such term is defined in the Act) and (b) by a majority of the Trustees who
are not parties to this Agreement or interested persons of any such party.
7. TERMINATION OF AGREEMENT. This Agreement may be terminated on 60
days' written notice without payment of any penalty by Bankers or by the Trust
upon the vote of its Board of Trustees or upon the vote of a majority of the
Trust's outstanding voting securities. This Agreement shall automatically
terminate upon its assignment by Bankers; provided, however, that Bankers may
delegate its duties as provided in Section 2(e) hereof. Notwithstanding the
foregoing, this Agreement may also be terminated in part as to the services
specified in Sections 2(b) and (c) hereof in the manner specified in the forms
of agreements set forth as Exhibits A and B hereto, respectively.
8. REPRESENTATIONS AND WARRANTIES. Bankers and the Trust each hereby
represents and warrants to the other that it has all requisite authority to
enter into, execute, deliver and perform its obligations under this Agreement
and that, with respect to it, this Agreement is legal, valid and binding and
enforceable in accordance with its terms.
9. WAIVER. The Declaration of Trust establishing the Trust is on file
with the Secretary of the Commonwealth of Massachusetts and notice is hereby
given that this Agreement is made and executed on behalf of the Trust, and not
by the Trustees or officers of the Trust individually, and Bankers hereby
acknowledges that the obligations of or arising out of this Agreement are not
binding upon the Trustees, officers or shareholders of the Trust individually
but are binding only upon the assets and property of the Trust. With full
knowledge of the circumstances and the effect of its action, Bankers hereby
waives any and all rights that it has now, or may acquire in the future, against
any shareholder
4
<PAGE>
of the Trust, which rights arise out of any action or inaction of the Trust
under this Agreement.
10. NON-EXCLUSIVITY. The services of Bankers to the Trust hereunder are
not to be deemed exclusive and Bankers shall be free to render similar or other
services to others.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without reference to
principles of conflicts of law.
12. NOTICES. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid, to Burton M. Leibert, Esq., Willkie Farr & Gallagher, One Citicorp
Center, 153 East 53rd Street, New York, New York 10022 (if such notice is given
by Bankers), or to Bankers Trust Company, 280 Park Avenue, New York, New York
10017, Attention: Brian Wixted (if such notice is given by the Trust).
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers thereunto duly authorized as of the day and year
first above written.
ATTEST: BANKERS TRUST COMPANY
By:
Name:
Title:
ATTEST: BT GLOBAL INVESTORS
By:
Name:
Title:
BT0452A
5
<PAGE>
BT0452A EXHIBIT D
BT GLOBAL INVESTORS
SCHEDULE OF FEES UNDER THE ADMINISTRATION AND SERVICES AGREEMENT
FEE
Global High Yield Securities Fund......................................0.95%
Capital Appreciation Fund..............................................0.65%
Small Cap Fund.........................................................0.65%
International Equity Fund..............................................0.85%
Pacific Basin Equity Fund..............................................0.75%
Latin American Equity Fund.............................................0.95%
U.S. Bond Index Fund-Advisor Class ....................................0.20%
U.S. Bond Index Fund-Institutional Class ..............................0.20%
Equity 500 Equal Weighted Index Fund-Advisor Class 0.30%
Equity 500 Equal Weighted Index Fund-Institutional
Class ................................................................ 0.15%
Small Cap Index Fund-Advisor Class ....................................0.25%
Small Cap Index Fund-Institutional Class ..............................0.20%
EAFE Equity Index Fund-Advisor Class...................................0.30%
EAFE Equity Index Fund-Institutional Class ............................0.15%
January 2, 1996
BT Global Investors
6 St. James Avenue
Boston, Massachusetts 02116
Ladies and Gentlemen:
RE: REGISTRATION OF SHARES OF BENEFICIAL INTEREST UNDER RULE 24F-2 OF THE
INVESTMENT COMPANY ACT OF 1940
This opinion is being furnished in connection with the filing of the
registration statement on Form N-1A under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the Securities Act of 1933, as amended (the "1933
Act"), of BT Global Investors, a Massachusetts business trust (the "Trust"), and
in conjunction with the registration, pursuant to Rule 24f-2 under the 1940 Act,
of an indefinite number of Shares of Beneficial Interest (par value $0.00001 per
share) (the "Shares") of the Trust's initial series -- Global High Yield
Securities Fund, Pacific Basin Equity Fund, Latin American Equity Fund, Small
Cap Fund, Capital Appreciation Fund and International Equity Fund -- under the
1933 Act.
This opinion is limited solely to the laws of the Commonwealth of
Massachusetts as applied by courts in such Commonwealth. This opinion is limited
solely to the Shares as reflected on the audited balance sheets of the Trust
dated December 28, 1995. I understand that the foregoing limitation is
acceptable to you.
I have examined copies of the Trust's Declaration of Trust, its
By-Laws, resolutions adopted by its Board of Trustees and such other records and
documents as I have deemed necessary for purposes of this opinion.
Based upon the subject of the foregoing, please be advised that it is
my opinion that the Trust's Shares are legally issued and (to the extent still
outstanding) are fully paid and non assessable, except that, as set forth in the
Trust's registration statement as currently in effect filed with the Securities
and Exchange Commission pursuant to the 1933 Act, shareholders of the Trust may
under certain circumstances be held personally liable for its obligations.
Very truly yours,
/S/ PHILIP W. COOLIDGE
Philip W. Coolidge
BT0500
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of the BT Global Investors:
We consent to the inclusion in this Pre-Effective Amendment to the Registration
Statement of the BT Global Investors on Form N-1A of our report dated December
28, 1995 on our audits of the financial statements of the Funds, which reports
are included in the Registration Statement.
/S/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Kansas City, Missouri
December 28, 1995
<PAGE>
December 29, 1995
BT Global Investors
6 St. James Avenue
Boston, Massachusetts 02116
Ladies and Gentlemen:
With respect to our purchase from you of shares of beneficial interest
(the "Initial Shares") of each of the Capital Appreciation Fund, a series (a
"Fund") of BT Global Investors (the "Trust"), we hereby advise you that we are
purchasing the Initial Shares of the Fund with no intention to dispose of them
either through resale to others or redemption by the Trust. The Trust will
invest all of the investable assets of the Fund in the Capital Appreciation
Portfolio (the "Portfolio"), an investment company registered under the
Investment Company Act of 1940, as amended.
The amount paid by the Fund on any redemption by us, or any other
then-current holder of the Fund's Initial Shares, will be reduced by a portion
of any unamortized organization expenses of the Fund and the Portfolio, such
portion to be determined by the proportion of the number of Initial Shares of
the Fund redeemed to the number of the Initial Shares of the Fund then
outstanding after taking into account any prior redemptions of the Initial
Shares of the Fund. The amount of such reduction in excess of the unamortized
organization expenses of the Fund shall be contributed by the Fund to the
Portfolio.
Very truly yours,
SFG INVESTORS II LIMITED PARTNERSHIP
By /S/ LINWOOD C. DOWNS
Name: Linwood C. Downs
Title: Treasurer
BT0501
<PAGE>
December 29, 1995
BT Global Investors
6 St. James Avenue
Boston, Massachusetts 02116
Ladies and Gentlemen:
With respect to our purchase from you of shares of beneficial interest
(the "Initial Shares") of each of the following series (each a "Fund") of BT
Global Investors (the "Trust"):
International Equity Fund
Global High Yield Securities Fund
Pacific Basin Equity Fund
Latin American Equity Fund
Small Cap Equity Fund
we hereby advise you that we are purchasing the Initial Shares of each Fund with
no intention to dispose of them either through resale to others or redemption by
the Trust. The Trust will invest all of the investable assets of each Fund in
the corresponding series of BT Investment Portfolios or International Equity
Portfolio (the "Corresponding Portfolio"), each an investment company registered
under the Investment Company Act of 1940, as amended.
The amount paid by a Fund on any redemption by us, or any other
then-current holder of that Fund's Initial Shares, will be reduced by a portion
of any unamortized organization expenses of the Fund and the Corresponding
Portfolio, such portion to be determined by the proportion of the number of
Initial Shares of the Fund redeemed to the number of the Initial Shares of the
Fund then outstanding after taking into account any prior redemptions of the
Initial Shares of the Fund. The amount of such reduction in excess of the
unamortized organization expenses of the Fund shall be contributed by the Fund
to the Corresponding Portfolio.
Very truly yours,
SIGNATURE FINANCIAL GROUP, INC.
By /S/ LINWOOD C. DOWNS
Name: Linwood C. Downs
Title: Treasurer
BT0501
DISTRIBUTION AND SERVICE PLAN
This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan of BT Global Investors, a
Massachusetts business trust (the "Trust"), contemplated by Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "Act").
W H E R E A S:
The Trust has been organized to operate as an open-end management
investment company and is registered as such under the Act;
The Trust intends to distribute the shares of its series (each, a
"Fund"), which may be divided into one or more separate classes of shares of
beneficial interest (a "Class"), and desires to adopt a distribution and service
plan pursuant to Rule 12b-1 under the Act, and the Trustees of the Trust have
determined, in the exercise of their reasonable business judgment and in light
of their fiduciary duty, that there is a reasonable likelihood that adoption of
this Plan will benefit each Fund or Class and its shareholders; and
The Trust desires to engage Signature Broker-Dealer Services, Inc.
("Signature") to provide (or cause to be provided) certain distribution and
shareholder services for each Fund or Class.
NOW, THEREFORE, in consideration of the foregoing, the Trust hereby
adopts this Plan in accordance with Rule 12b-1 under the Act on the following
terms and conditions:
1. The Trust may reimburse Signature, as the distributor, for costs and
expenses incurred in connection with the distribution and marketing of shares of
the Funds or Classes, at an annual rate not exceeding the percentage of the
average daily net assets of each Fund or Class as set forth in the Exhibit A
attached hereto. Such expenses shall be calculated and accrued daily and
reimbursed monthly or at such other intervals as the Board of Trustees shall
determine.
2. Signature may seek reimbursement under paragraph 1 of this Plan for
expenses incurred in connection with any activities primarily intended to result
in the sale of shares of a Fund or Class, including, but not limited to:
compensation to and expenses (including overhead and telephone expenses) of
account executives or other employees of Signature who, as their primary
activity, engage in or support the distribution of shares; payment of
asset-based sales charges and service fees to broker-dealers who provide
shareholders with personal services and account maintenance services or payment
of similar fees to banks or other financial institutions; printing of
prospectuses, statements of additional information and reports for other than
existing shareholders in amounts in excess of that typically used in connection
with the distribution of
<PAGE>
shares of a Fund or Class; costs of placing advertising in various media;
services of parties other than Signature or its affiliates in formulating sales
literature; and typesetting, printing and distribution of sales literature.
3. The Trust may pay Signature service fees from each Fund or Class not
to exceed on an annual basis the percentage as presented on Exhibit A of the
average daily net assets of the Fund or Class for its then-current fiscal year
(and with regard to future Funds or Classes such percentage of the average daily
net assets of such Fund or Class as is agreed to by the Trust and the
Distributor) in connection with providing (or causing to be provided) personal
services and shareholder account maintenance services.
4. The Trust may also pay Signature distribution fees from each Fund or
Class not to exceed on an annual basis the percentage as presented on Exhibit A
of the average daily net assets of the Fund or Class for its then-current fiscal
year (and with regard to future Funds or Classes, such percentage of the average
daily net assets of such Fund or Class as is agreed to by the Trust and
Signature) as reimbursement for costs and expenses incurred in connection with
the distribution and sales of shares of the respective Fund or Class. To the
extent such expenses exceed the stated limit, Signature will bear such expenses.
5. This Plan together with any related agreements shall not take
effect, with respect to a Fund or Class, until it has been approved by a vote of
at least a "Majority of the Outstanding Voting Securities" (as defined in the
Act) of the Fund or Class.
6. This Plan together with any related agreements shall become
effective upon approval, by a majority vote of both (i) the Board of Trustees
and (ii) those Trustees who are not "Interested Persons" (as defined in the Act)
of the Trust and have no direct or indirect financial interest in the operation
of this Plan or any agreements related to it (the "Qualified Trustees"), cast in
person at a meeting called for the purpose of voting on this Plan and such
related agreements.
7. This Plan shall continue in effect for so long as such continuance
is specifically approved at least annually in the manner provided in paragraph 5
hereof.
8. In each year that the Plan remains in effect, any person authorized
to direct the disposition of monies paid or payable by the Trust pursuant to
this Plan or any related agreement shall prepare and furnish to the Board and
the Board shall review, at least quarterly, written reports complying with the
requirements of Rule 12b-1 under the Act of the amounts expended under the Plan
and purposes for which such expenditures were made.
9. This Plan may be terminated at any time with respect to a Fund or
Class by a majority vote of the Qualified Trustees or by vote of a majority of
the Outstanding Voting Securities of the Fund or Class.
2
<PAGE>
10. This Plan may not be amended in order to increase materially the
amount of distribution expenses provided for in paragraph 1 hereof unless such
amendment is approved in the manner provided for initial approval in paragraph 4
hereof and no material amendment to the Plan shall be made unless approved in
the manner provided for approval and annual renewal in paragraph 5 hereof.
11. While this Plan shall be in effect, the selection and nomination of
Trustees who are not Interested Persons of the Trust shall be committed to the
discretion of the Trustees then in office who are not Interested Persons of the
Trust.
12. To the extent expenses of Signature under this Plan in any fiscal
year of the Trust exceed amounts payable under this Plan during such fiscal
year, such expenses shall be payable to Signature in any succeeding fiscal year
of the Trust; however no carrying or interest charges shall be payable by the
Fund or Class to Signature.
13. Signature hereby acknowledges that (i) payments to be made by the
Trust to Signature pursuant to this Plan shall be for actual expenses of
Signature as contemplated hereunder, and (ii) upon termination of this Plan, the
benefits inuring to Signature hereunder shall immediately cease.
14. The Trust shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 7 hereof for a period of
not less than six years from the date of (a) this Plan or (b) the agreements or
such report, as the case may be, the first two years in an easily accessible
place.
Dated: September 15, 1995
BT0451C
3
<PAGE>
BT0451C
EXHIBIT A
BT GLOBAL INVESTORS
SCHEDULE OF FEES UNDER THE DISTRIBUTION AND SERVICE PLAN
<TABLE>
<CAPTION>
SERVICE DISTRIBUTION
FEE FEE
<S> <C> <C>
Global High Yield Securities Fund...................................... 0.25% 0.10%
Capital Appreciation Fund.............................................. 0.25% 0.25%
Small Cap Fund......................................................... 0.25% 0.25%
International Equity Fund.............................................. 0.25% 0.25%
Pacific Basin Equity Fund.............................................. 0.25% 0.25%
Latin American Equity Fund............................................. 0.25% 0.25%
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Statement of Assets and Liabilities dated December 28, 1995 and is qualified
in its entirety by reference to such Statement.
</LEGEND>
<CIK>0000948630
<NAME> BT GLOBAL INVESTORS
<SERIES>
<NUMBER>001
<NAME> CAPITAL APPRECIATION FUND
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-28-1995
<PERIOD-START> DEC-28-1995
<PERIOD-END> DEC-28-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 108,950
<TOTAL-ASSETS> 108,950
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,000
<TOTAL-LIABILITIES> 9,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 99,950
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,995
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 9,995
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Statement of Assets and Liabilities dated December 28, 1995 and is qualified
in its entirety by reference to such Statement.
</LEGEND>
<CIK> 0000948630
<NAME> BT GLOBAL INVESTORS
<SERIES>
<NUMBER> 002
<NAME> GLOBAL HIGH YIELD SECURITIES FUND
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-28-1995
<PERIOD-START> DEC-28-1995
<PERIOD-END> DEC-28-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 9,010
<TOTAL-ASSETS> 9,010
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,000
<TOTAL-LIABILITIES> 9,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 10
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Statement of Assets and Liabilities dated December 28, 1995 and is qualified in
its entirety by reference to such Statement.
</LEGEND>
<CIK> 0000948630
<NAME> BT GLOBAL INVESTORS
<SERIES>
<NUMBER> 003
<NAME> INTERNATIONAL EQUITY FUND
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-28-1995
<PERIOD-START> DEC-28-1995
<PERIOD-END> DEC-28-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 9,010
<TOTAL-ASSETS> 9,010
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,000
<TOTAL-LIABILITIES> 9,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 10
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Statement of Assets and Liabilities dated December 28, 1995 and is qualified
in its entirety by reference to such Statement.
</LEGEND>
<CIK> 0000948630
<NAME> BT GLOBAL INVESTORS
<SERIES>
<NUMBER> 004
<NAME> LATIN AMERICAN EQUITY FUND
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-28-1995
<PERIOD-START> DEC-28-1995
<PERIOD-END> DEC-28-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 9,010
<TOTAL-ASSETS> 9,010
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 9,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 10
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Statement of Assets and Liabilities dated December 28, 1995 and is qualified
in its entirety by reference to such Statement.
</LEGEND>
<CIK> 0000948630
<NAME> BT GLOBAL INVESTORS
<SERIES>
<NUMBER> 005
<NAME> PACIFIC BASIN EQUITY FUND
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-28-1995
<PERIOD-START> DEC-28-1995
<PERIOD-END> DEC-28-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 9,010
<TOTAL-ASSETS> 9,010
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,000
<TOTAL-LIABILITIES> 9,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 10
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Statement of Assets and Liabilities dated December 28, 1995 and is qualified
in its entirety by reference to such Statement.
</LEGEND>
<CIK> 0000948630
<NAME> BT GLOBAL INVESTORS
<SERIES>
<NUMBER> 006
<NAME> SMALL CAP FUND
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-28-1995
<PERIOD-START> DEC-28-1995
<PERIOD-END> DEC-28-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 9,010
<TOTAL-ASSETS> 9,010
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,000
<TOTAL-LIABILITIES> 9,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 10
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Philip W. Coolidge,
Thomas M. Lenz, Molly S. Mugler, Linda T. Gibson, Andres E. Saldana, John R.
Elder, David G. Danielson, James S. Lelko, Jr. and Daniel E. Shea, and each of
them, with full powers of substitution as his true and lawful attorneys and
agents to execute in his name and on his behalf in any and all capacities the
Registration Statements on Form N-1A, and any and all amendments thereto, filed
by BT Pyramid Mutual Funds or BT Global Investors (each a "Trust"), or the
Registration Statement(s), and any and all amendments thereto, filed by any
other investor in any registered investment company in which any of the Trusts
invest, with the Securities and Exchange Commission under the Investment Company
Act of 1940, as amended, and the Securities Act of 1933, as amended, and any and
all instruments which such attorneys and agents, or any of them, deem necessary
or advisable to enable each Trust to comply with such Acts, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction, and the
undersigned hereby ratifies and confirms as his own act and deed any and all
acts that such attorneys and agents, or any of them, shall do or cause to be
done by virtue hereof. Any one of such attorneys and agents have, and may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 8th
day of November, 1995, in New York, New York.
/S/ HARRY VAN BENSCHOTEN
-------------------------------
Harry Van Benschoten
BT0480
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Philip W. Coolidge,
Thomas M. Lenz, Molly S. Mugler, Linda T. Gibson, Andres E. Saldana, John R.
Elder, David G. Danielson, James S. Lelko, Jr. and Daniel E. Shea, and each of
them, with full powers of substitution as his true and lawful attorneys and
agents to execute in his name and on his behalf in any and all capacities the
Registration Statements on Form N-1A, and any and all amendments thereto, filed
by BT Pyramid Mutual Funds or BT Global Investors (each a "Trust"), or the
Registration Statement(s), and any and all amendments thereto, filed by any
other investor in any registered investment company in which any of the Trusts
invest, with the Securities and Exchange Commission under the Investment Company
Act of 1940, as amended, and the Securities Act of 1933, as amended, and any and
all instruments which such attorneys and agents, or any of them, deem necessary
or advisable to enable each Trust to comply with such Acts, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction, and the
undersigned hereby ratifies and confirms as his own act and deed any and all
acts that such attorneys and agents, or any of them, shall do or cause to be
done by virtue hereof. Any one of such attorneys and agents have, and may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 8th
day of November, 1995, in New York, New York.
/S/ MARTIN J. GRUBER
-------------------------------
Martin J. Gruber
BT0480
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Philip W. Coolidge,
Thomas M. Lenz, Molly S. Mugler, Linda T. Gibson, Andres E. Saldana, John R.
Elder, David G. Danielson, James S. Lelko, Jr. and Daniel E. Shea, and each of
them, with full powers of substitution as his true and lawful attorneys and
agents to execute in his name and on his behalf in any and all capacities the
Registration Statements on Form N-1A, and any and all amendments thereto, filed
by BT Investment Funds, BT Institutional Funds, BT Pyramid Mutual Funds or BT
Global Investors (each a "Trust"), or the Registration Statement(s), and any and
all amendments thereto, filed by any other investor in any registered investment
company in which any of the Trusts invest, with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, and the
Securities Act of 1933, as amended, and any and all instruments which such
attorneys and agents, or any of them, deem necessary or advisable to enable each
Trust to comply with such Acts, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction, and the undersigned hereby ratifies and confirms as
his own act and deed any and all acts that such attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof. Any one of such attorneys
and agents have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 8th
day of November, 1995, in New York, New York.
/S/ CHARLES P. BIGGAR
-------------------------------
Charles P. Biggar
BT0480
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Philip W. Coolidge,
Thomas M. Lenz, Molly S. Mugler, Linda T. Gibson, Andres E. Saldana, John R.
Elder, David G. Danielson, James S. Lelko, Jr. and Daniel E. Shea, and each of
them, with full powers of substitution as his true and lawful attorneys and
agents to execute in his name and on his behalf in any and all capacities the
Registration Statements on Form N-1A, and any and all amendments thereto, filed
by BT Investment Funds, BT Institutional Funds, BT Pyramid Mutual Funds or BT
Global Investors (each a "Trust"), or the Registration Statement(s), and any and
all amendments thereto, filed by any other investor in any registered investment
company in which any of the Trusts invest, with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, and the
Securities Act of 1933, as amended, and any and all instruments which such
attorneys and agents, or any of them, deem necessary or advisable to enable each
Trust to comply with such Acts, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction, and the undersigned hereby ratifies and confirms as
his own act and deed any and all acts that such attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof. Any one of such attorneys
and agents have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 8th
day of November, 1995, in New York, New York.
/S/ S. LELAND DILL
-------------------------------
S. Leland Dill
BT0480
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Philip W. Coolidge,
Thomas M. Lenz, Molly S. Mugler, Linda T. Gibson, Andres E. Saldana, John R.
Elder, David G. Danielson, James S. Lelko, Jr. and Daniel E. Shea, and each of
them, with full powers of substitution as his true and lawful attorneys and
agents to execute in his name and on his behalf in any and all capacities the
Registration Statements on Form N-1A, and any and all amendments thereto, filed
by BT Institutional Funds or BT Global Investors (each a "Trust"), or the
Registration Statement(s), and any and all amendments thereto, filed by any
other investor in any registered investment company in which any of the Trusts
invest, with the Securities and Exchange Commission under the Investment Company
Act of 1940, as amended, and the Securities Act of 1933, as amended, and any and
all instruments which such attorneys and agents, or any of them, deem necessary
or advisable to enable each Trust to comply with such Acts, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction, and the
undersigned hereby ratifies and confirms as his own act and deed any and all
acts that such attorneys and agents, or any of them, shall do or cause to be
done by virtue hereof. Any one of such attorneys and agents have, and may
exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 8th
day of November, 1995, in New York, New York.
/S/ RICHARD J. HERRING
-------------------------------
Richard J. Herring
BT0480