1933 Act File No. 33-07404
                                                      1940 Act File No. 811-4760

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933             X

    Pre-Effective Amendment No.         ....................

    Post-Effective Amendment No.   47  .....................        X

                                     and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940     X

    Amendment No.   47   ...................................        X

                               BT INVESTMENT FUNDS
               (Exact Name of Registrant as Specified in Charter)

                              5800 Corporate Drive
                       Pittsburgh, Pennsylvania 15237-7010
                    (Address of Principal Executive Offices)

                                 (412) 288-1900
                         (Registrant's Telephone Number)

Jay S. Neuman, Esquire              Copies to:  Burton M. Leibert, Esq.
Federated Investors Tower                       Willkie Farr & Gallagher
Pittsburgh, Pennsylvania 15222-3779             One Citicorp Center
(Name and Address of Agent for Service)         153 East 53rd Street
      ......                                    New York, New York 10022

It is proposed that this filing will become effective
(check appropriate box)

[ ] immediately upon filing pursuant to paragraph (b) [ ] on ..... pursuant to
paragraph (b) [ ] 60 days after filing pursuant to paragraph (a)(1) [ ] on
(date) pursuant to paragraph (a)(1) [X] 75 days after filing pursuant to
paragraph (a)(2) [ ] on (date) pursuant to paragraph (a)(2) of rule 485.

If appropriate, check the following box:

    This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.







                              CROSS-REFERENCE SHEET

      This Amendment to the Registration Statement of BT INVESTMENT FUNDS, which
is comprised of sixteen funds, relates only to Global Emerging Markets Equity
Fund and is comprised of the following:

PART A......INFORMATION REQUIRED IN A PROSPECTUS.

                                          Prospectus Heading
                                          (Rule 404(c) Cross Reference)

Item 1.     Cover Page....................Cover Page.
Item 2.     Synopsis......................Summary of Fund Expenses.
Item 3.     Condensed Financial
            Information...................Financial Highlights; Performance
                                          Information and Reports.
Item 4.     General Description of
            Registrant....................The Fund; Who May Invest; Investment
                                          Objective(s) and Policies; Risk
                                          Factors:  Matching the Fund to Your
                                          Investment Needs; Special Information
                                          Concerning Master-Feeder Fund
                                          Structure; Additional Information.
Item 5.     Management of the Fund........Management of the Trust and
                                         Portfolio(s).
Item 6.     Capital Stock and Other
            Securities                    Dividends, Distributions and Taxes.
Item 7.     Purchase of Securities Being
            Offered.......................Net Asset Value; Purchase and
                                          Redemption of Shares.
Item 8.     Redemption or Repurchase......Purchase and Redemption of Shares.
Item 9.     Legal Proceedings             None.






PART B.    INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.

Item 10.    Cover Page....................Cover Page.
Item 11.    Table of Contents.............Table of Contents.
Item 12.    General Information and
            History                       Organization of the Trust.
Item 13.    Investment Objectives and
            Policies                      Investment Objectives and Policies.
Item 14.    Management of the Fund........Management of the Trust and
                                          Portfolio(s).
Item 15.    Control Persons and Principal
            Holders of Securities.........Management of the Trust and
                                          Portfolio(s), Trustee Compensation
                                          Table.
Item 16.    Investment Advisory and Other
            Services                      Investment Adviser; Administrator.
Item 17.    Brokerage Allocation..........Portfolio Transactions and Brokerage
                                          Commissions.
Item 18.    Capital Stock and Other
            Securities                    Not Applicable.
Item 19.    Purchase, Redemption and
            Pricing of Securities Being
            Offered.......................Net Asset Value; Valuation of
                                          Securities; Redemption in Kind.
Item 20.    Tax Status....................Taxation.
Item 21.    Underwriters                  Not applicable.
Item 22.    Calculation of Performance
            Data                          Performance Information.
Item 23.    Financial Statements..........To be filed by Amendment.





INFORMATION HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION
STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE
ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

                  SUBJECT TO COMPLETION, DATED FEBRUARY 2, 1998

                             O BT INVESTMENT FUNDS O

                       GLOBAL EMERGING MARKETS EQUITY FUND

Seeks long-term capital growth through investments in a well-diversified
portfolio of equity securities of non-U.S. companies predominantly domiciled in
the world's emerging countries.

                                                                   PROSPECTUS

                            __________________, 1998

BT Investment Funds (the "Trust") is an open-end management investment company
(mutual fund) which consists of a number of separate investment series.

Please read this Prospectus carefully before investing and retain it for future
reference. It contains important information about the BT Investment Funds'
Global Emerging Markets Equity Fund (the "Fund") that you should know and to
which you can refer in deciding whether the Fund's goals match your own.

A Statement of Additional Information ("SAI") with the same date has been filed
with the Securities and Exchange Commission ("SEC"), and is incorporated herein
by reference. You may request a copy of the SAI or a paper copy of this
prospectus, if you have received your prospectus electronically, free of charge
by calling the Fund's Service Agent at 1-800-368-4031. The SAI, material
incorporated by reference into this document, and other information regarding
the Trust is maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).

UNLIKE OTHER MUTUAL FUNDS, THE FUND SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY
INVESTING ALL OF ITS INVESTABLE ASSETS ("ASSETS") IN THE GLOBAL EMERGING MARKETS
EQUITY PORTFOLIO (THE "PORTFOLIO"), A SEPARATE INVESTMENT COMPANY WITH AN
IDENTICAL INVESTMENT OBJECTIVE. THE INVESTMENT PERFORMANCE OF THE FUND WILL
CORRESPOND DIRECTLY TO THE INVESTMENT PERFORMANCE OF THE PORTFOLIO. SEE "SPECIAL
INFORMATION CONCERNING MASTER-FEEDER FUND STRUCTURE" HEREIN.

BANKERS TRUST COMPANY ("BANKERS TRUST") IS THE INVESTMENT ADVISER (THE
"ADVISER") OF THE PORTFOLIO. SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED OR ENDORSED BY, BANKERS TRUST OR ANY OTHER BANKING OR
DEPOSITORY INSTITUTION. SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE U.S. GOVERNMENT, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF
THE PRINCIPAL AMOUNT INVESTED.

LIKE SHARES OF ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

                             EDGEWOOD SERVICES, INC.

   CLEARING OPERATIONS O P.O. BOX 897 O PITTSBURGH, PENNSYLVANIA O 15230-0897







TABLE OF CONTENTS                                                 PAGE

The Fund                                                            1

Who May Invest                                                      1

Investment Principles and Risks                                     1

Summary of Fund Expenses                                            2

Investment Objective and Policies                                   3

Risk Factors: Matching the Fund to Your Investment Needs            3

Securities and Investment Practices                                 6

Performance Information and Reports                                12

Management of the Trust and Portfolio                              14

Net Asset Value                                                    16

Purchase and Redemption of Shares                                  16

Dividends, Distributions and Taxes                                 21

Organization of the Trust                                          21






5





THE FUND

The Fund's investment objective is to seek long-term capital growth through
investments in a well-diversified portfolio of non-U.S. companies predominantly
domiciled in the world's emerging countries. The Fund will attempt to outperform
the return of the Morgan Stanley Capital International Emerging Markets Free
Total Return Index before expenses, although there is no assurance that it will
be able to do so.

See "Risk Factors: Matching the Fund to Your Investment Needs" herein.

WHO MAY INVEST

The Fund is designed for investors who are willing to accept short-term foreign
stock market fluctuations in pursuit of potentially higher long-term returns.
The Fund invests for growth and does not pursue income. The Trust seeks to
achieve the investment objective of the Fund by investing all the Assets of the
Fund in the Portfolio.

In addition, the 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 a higher level of
diversification and also participate in opportunities around the world.

The 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 the Portfolio's investments varies, based on many factors. 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 the 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 total return potential, but significantly greater
risk.

Bankers Trust may use various investment techniques to hedge the Portfolio's
risks, but there is no guarantee that these strategies will always provide the
results anticipated. When an investor sells their Fund shares ("Shares"), they
may be worth more or less than what they originally paid for them. See "Risk
Factors: Matching the Fund to Your Investment Needs" herein for more
information.






SUMMARY OF FUND EXPENSES

ANNUAL OPERATING EXPENSES are paid out of the assets of the Portfolio and Fund.
The Portfolio pays an investment advisory fee and an administrative services fee
to Bankers Trust. The Fund incurs expenses such as maintaining shareholder
records and furnishing shareholder statements. The Fund must provide financial
reports.

The following table provides: (i) a summary of estimated expenses relating to
purchases and sales of Shares and the annual operating expenses of the Fund and
the expenses of the Portfolio, as a percentage of average net assets of the
Fund, and (ii) an example illustrating the dollar cost of such expenses on a
$1,000 investment in the Fund. THE TRUSTEES OF THE TRUST BELIEVE THAT THE
AGGREGATE PER SHARE EXPENSES OF THE FUND AND THE 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 THE FUND WERE
INVESTED DIRECTLY IN THE TYPE OF SECURITIES BEING HELD BY THE PORTFOLIO.

ANNUAL OPERATING EXPENSES

(as a percentage of the average daily net assets of the Fund)

Investment advisory fee (after reimbursements or waivers)          1.00%

12b-1 fees                                                          None

Other expenses (after reimbursements or waivers)                   1.00%

Total operating expenses (after reimbursements or waivers)         2.00%

EXAMPLES

You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of the time period:

                        1 year                  3 years

                          $23                      $63

The expense table and the examples above show the costs and expenses that an
investor will bear directly or indirectly as a shareholder of the Fund. Bankers
Trust has voluntarily agreed to waive a portion of its investment advisory fee
with respect to the Portfolio. Without such waiver, the Portfolio's investment
advisory fee would be equal to 1.10%. The expense table and example reflect a
voluntary undertaking by Bankers Trust to waive or reimburse expenses such that
the total aggregate operating expenses of the Fund for the fiscal year will not
exceed 2.00%. In the absence of this undertaking it is estimated that "Total
Operating Expenses" would be 2.15%. 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 the example assumes a 5% annual return,
actual performance will vary and may result in a return greater or less than 5%.

For more information about the Fund's and the Portfolio's expenses see
"Management of the Trust and Portfolio" herein.

The Fund is distributed by Edgewood Services, Inc. ("Edgewood," or the
"Distributor") to investors including customers of Bankers Trust or to customers
of another bank or a dealer or other institution that has a sub-shareholder
servicing agreement with Bankers Trust (along with Bankers Trust, a "Service
Agent"). Some Service Agents may impose certain conditions on their customers in
addition to or different from those imposed by the Fund and may charge their
customers a direct fee for their services including transaction fees on
purchases and redemptions of Fund shares. The Service Agent has agreed to
transmit to shareholders who are its customers appropriate disclosures of any
fees that it may charge them directly.

FUND FINANCIAL HIGHLIGHTS

The Fund will have a fiscal year end of September 30. As this is the Fund's
first fiscal year, financial information with respect to the Fund is not
available at this time.






INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is to seek long-term capital growth through
investments in a well-diversified portfolio of equity securities of non-U.S.
companies predominantly domiciled in the world's emerging countries. It is
expected under normal conditions that at least 65% of the Portfolio's assets
will be invested in the equity securities of issuers based in at least three
emerging market countries. Investment in such securities involves certain
considerations that are not normally present in investments in securities of
U.S. issuers and an investment in the Fund may be considered speculative. The
Fund will attempt to outperform the return of the Morgan Stanley Capital
International Emerging Markets Free Total Return Index before expenses, although
there is no assurance it will be able to do so.

The Trust seeks to achieve the investment objective of the Fund by investing all
of its Assets in the Portfolio, which has the same investment objective as the
Fund. Since the investment characteristics of the Fund will correspond directly
to those of the Portfolio, the following is a discussion of the various
investments of and techniques employed by the Portfolio. Additional information
about the investment policies of the Portfolio appears in "Risk Factors:
Matching the Fund to Your Investment Needs" herein and in the SAI. There can be
no assurance that the investment objective of either the Fund or the Portfolio
will be achieved. The investment objective of the Fund and the Portfolio is not
a fundamental policy and may be changed upon notice to but without the approval
of the Fund's shareholders or the Portfolio's investors, respectively. See
"Special Information Concerning Master-Feeder Fund Structure" herein.

In selecting securities for investment, the Adviser employs a research-driven
process that emphasizes proprietary economic and stock specific analysis. The
Adviser's process is geared to identifying those companies whose growth
prospects and/or risk profile has been incorrectly analyzed and priced by the
market as a whole. The Adviser's process concentrates on understanding the
relevant industry dynamics in terms of the risks and opportunities that may
arise, and then focusing on the comparative strengths and weaknesses of the
individual constituent companies. The Adviser then combines this fundamental
assessment with a valuation analysis which establishes a `fair value' for each
stock. This is calculated after considering the above factors, as well as local
and international peer comparisons.

The Adviser uses asset allocation, country selection and currency selection
primarily as risk management tools. That is, the Adviser seeks to identify and
underweight or eliminate those markets that research shows as offering poor
return opportunities or relatively high risks, and focus the Portfolio in those
markets where the risk/return profile is more favorable. Country and cash
exposure is managed within predetermined ranges around the Morgan Stanley
Capital International Emerging Markets Free Total Return Index. The Adviser's
macro research is coordinated around the consistent analysis of five key
investment indicators. These indicators capture the essential risk/return
characteristics of each market. They include, earnings, liquidity, politics,
supply and demand, and valuation.

While currency management draws heavily on this macro analysis, currency
decisions themselves are taken separately to the asset decision, as once again
the Portfolio seeks to eliminate or reduce exposure to those currencies that
research indicates to be most at risk of depreciation, and to concentrate
exposure in those currencies that will be stable or even appreciate against the
U.S. dollar.

OTHER INVESTMENTS AND INVESTMENT TECHNIQUES. The Portfolio may also utilize the
following investments and investment techniques and practices: short-term
instruments, foreign currency exchange transactions, options on foreign
currencies, American Depository Receipts ("ADRs"), Global Depository Receipts
("GDRs"), and European Depository 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 "Securities and
Investment Practices" and "Risk Factors: Matching the Fund to Your Investment
Needs" herein and the SAI for further information.

RISK FACTORS: MATCHING THE FUND TO YOUR INVESTMENT NEEDS

The following pages contain more detailed information about types of instruments
in which the Portfolio may invest and strategies Bankers Trust may employ in
pursuit of the 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 the Portfolio achieve its goal. Holdings and recent investment strategies
are described in the financial reports of the Fund and the 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 the 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 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 the 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, the Portfolio is also authorized to enter into
certain foreign currency exchange transactions. Furthermore, the 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 may be less
government supervision and regulation of securities exchanges, brokers and
issuers in foreign countries than in the United States.

RISKS OF INVESTING IN EMERGING MARKETS

The risks involved when investing in emerging markets are of a nature generally
not encountered when investing in securities traded on major international
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 emerging markets
entails all of the risks of investing in securities of foreign issuers outlined
in this section to a heightened degree. 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; (iv) accounting, auditing and financial reporting standards
applicable can be less demanding than the levels acceptable in the United States
which can result in incomplete company information; and (v) 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.

Although external debt in most emerging markets is generally falling, it remains
at high levels. This acts as a depressant on economic growth and limits access
to global savings. As a result, many emerging markets are reliant on foreign
capital inflows for fund development. During periods of uncertainty, foreign
capital may be withdrawn from these economies, causing financial market
weakness.

Investments in certain countries may require government approval which may
restrict the size and nature of investments. These restrictions may limit the
Portfolio's access to certain emerging markets. Additionally, the Adviser may be
required to obtain government consent to redeem the Portfolio's capital and
profits. Therefore, the Portfolio could encounter delays or refusals to grant
permission for money to be removed from the country. This could impact the
amount of cash available to meet shareholder redemptions.

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.

It should be noted that developments affecting investments cannot always be
foreseen. Therefore, a shareholder may find it difficult to protect their
investments against risk.

Further information about the foreign markets in which the Portfolio may invest,
including a further discussion of related risks and special considerations, is
contained in the SAI.

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, the Fund seeks to
achieve its investment objective by investing all of its Assets in the
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. In addition to selling a beneficial interest to the
Fund, the Portfolio may sell beneficial interests to other mutual funds or
institutional investors. Such investors will invest in the Portfolio on the same
terms and conditions and will pay a proportionate share of the Portfolio's
expenses. However, the other investors investing in the Portfolio are not
required to sell their Shares at the same public offering price as the Fund due
to variations in sales commissions and other operating expenses. Therefore,
investors in the 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
1-800-730-1313.

The master-feeder fund structure is relatively complex, so shareholders should
carefully consider this investment approach.

Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the 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, the Portfolio may become less diverse, resulting in
increased portfolio risk. Also, funds with a greater pro rata ownership in the
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 the 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.

The 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 described herein with respect to the Portfolio.

The 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 the 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 the Portfolio is also not a
fundamental policy. Shareholders of the Fund will receive 30 days prior written
notice with respect to any change in the investment objective of the Fund or the
Portfolio. See "Risk Factors and Certain Securities and Investment Practices" in
the SAI for a description of the fundamental policies of the 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 the
Portfolio, see "Investment Objective and Policies" and "Risk Factors: Matching
the Fund to Your Investment Needs" herein and in the SAI. For descriptions of
the management of the Trust and the Portfolio, see "Management of the Trust and
the Portfolio" herein and in the SAI. For descriptions of the expenses of the
Portfolio, see "Summary of Fund Expenses" herein and "Management of the Trust
and the Portfolio" 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, 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.

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 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 Standard & Poor's ("S&P") and Moody's Investors
Service ("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 the Portfolio. Bankers Trust expects, however, that generally the preferred
stocks in which the 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. 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. 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 Farm Credit Banks 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. 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" herein.

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, 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. 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 SEC 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.
If institutional trading in restricted securities were to decline, the liquidity
of the Portfolio could be adversely affected.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The 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 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, the Portfolio buys a security
at one price and simultaneously agrees to sell it back at a higher price at a
future date. Delays or losses could result if the other party to the agreement
defaults or becomes insolvent.

REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, the 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 the Portfolio's borrowing restrictions.
See "Risk Factors and Certain Securities and Investment Practices --Leverage"
herein 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. Investments
in other investment companies may also be made for other purposes, such as noted
below under "Short-Term Instruments," are limited in amount by the 1940 Act
(except the Portfolio may exceed the applicable percentage limits to the extent
permitted by an exemptive order of the SEC), and 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 INSTRUMENTS. The 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, the Portfolio's assets may be invested in high
quality short-term investments with remaining maturities of 397 days or less, or
in money market mutual funds, 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. The 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. During the term of the loan, the Portfolio continues to bear the
risk of fluctuations in the price of the loaned securities. In lending
securities to brokers, dealers and other financial organizations, the 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.

DERIVATIVES. The 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 the Portfolio and when consistent with
the Portfolio's investment objective and policies. The use of derivatives for
non-hedging purposes may be considered speculative.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Because the 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,
the 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. The 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.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACT. A forward foreign currency exchange
contract is an obligation by the 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. The Portfolio maintains with its custodian a segregated
account of 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.

The 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, the 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.

OPTIONS ON FOREIGN CURRENCIES. The 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 dollar value of portfolio securities and
against increases in the dollar cost of securities to be acquired. The Portfolio
may use options on a foreign 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 a 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 a foreign currency 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 the Portfolio's position, it may
forfeit the entire amount of the premium plus related transaction costs. In
addition, the Portfolio may purchase call options on a foreign currency when the
Adviser anticipates that the currency will appreciate in value.

There is no assurance that a liquid secondary market will exist for any
particular option, or at any particular time. If the 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 the options expire or are
exercised. Similarly, if the Portfolio is unable to effect a closing sale
transaction with respect to options it has purchased, it would have to exercise
the options in order to realize any profit and will incur transaction costs upon
the purchase or sale of underlying currency. The Portfolio pays brokerage
commissions or spreads in connection with its options transactions.

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. In some circumstances,
the Portfolio's ability to terminate over-the-counter options ("OTC Options")
may be more limited than with exchange-traded options. It is also possible that
broker-dealers participating in OTC Options transactions will not fulfill their
obligations. Provided that a dealer or institutional trading market in such
securities exists, these restricted securities are not covered by the
Portfolio's 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. 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.

OPTIONS ON STOCKS. The Portfolio may write and purchase put and call 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, which is a call option with respect to the underlying Portfolio stock,
is sold by exposing 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 the Portfolio exposes the Portfolio during the term
of the option to a decline in price of the underlying stock. A put option sold
by the Portfolio is covered when, among other things, cash or liquid securities
are placed in a segregated account to fulfill the obligations undertaken.

To close out a position when writing covered options, the Portfolio may make a
"closing purchase transaction," which involves purchasing an option on the same
stock with the same exercise price and expiration date as the option which it
has previously written on the stock. 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.

OPTIONS ON FOREIGN STOCK INDICES. The Portfolio may purchase and write put and
call options on foreign stock indices listed on domestic and foreign stock
exchanges. The portfolio may also purchase and write OTC Options on foreign
stock indices. These OTC Options would be subject to the same liquidity and
credit risks noted above with respect to OTC Options on foreign currencies. A
stock index fluctuates with changes in the market values of the stocks included
in the index.

OTC Options are purchased from or sold to securities dealers, financial
institutions or other parties (collectively referred to as "Counterparties" and
individually referred to as a "Counterparty") through direct bilateral agreement
with the Counterparty. In contrast to exchange listed options, which generally
have standardized terms and performance mechanics, all of the terms of an OTC
Option, including such terms as method of settlement, term exercise price,
premium, guaranties and security, are set by negotiation of the parties.

Unless the parties provide for it, no central clearing or guaranty function is
involved in an OTC Option. As a result, if a Counterparty fails to make or take
delivery of the security, currency or other instrument underlying an OTC Option
it has entered into with the Portfolio or fails to make a cash settlement
payment due in accordance with the terms of that option, the Portfolio will lose
any premium it paid for the option as well as any anticipated benefit of the
transaction. Thus, Bankers Trust must assess the creditworthiness of each such
Counterparty or any guarantor or credit enhancement of the Counterparty's credit
to determine the likelihood that the terms of the OTC Option will be met.

Options on stock indices are generally similar to options on stock except that
the delivery requirements are different. Instead of giving the right to take or
make delivery of stock at a specified price, an option on a stock index gives
the holder 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 exercise, multiplied by (b) a fixed "index
multiplier." Receipt of this cash amount will depend upon the closing level of
the stock index upon which the option is based being greater than, in the case
of a call, or less than, in the case of a put, the exercise price of the option.
The amount of cash received will be equal to such difference between the closing
price of the index and the exercise price of the option expressed in dollars or
a foreign currency, as the case may be, times a specified multiple. The writer
of the option is obligated, in return for the premium received, to make delivery
of this amount. The writer may offset its position in stock index options prior
to expiration by entering into a closing transaction on an exchange or the
option may expire unexercised.

To the extent permitted by U.S. federal or state securities laws, the Portfolio
may invest in options on foreign stock indices in lieu of direct investment in
foreign securities. The Portfolio may also use foreign stock index options for
hedging purposes.

Because the value of an index option depends upon movements in the level of the
index rather than the price of a particular stock, whether the Portfolio will
realize a gain or loss from the purchase or writing of options on an index
depends upon movements in the level of stock prices in the stock market
generally or, in the case of certain indices, in an industry or market segment,
rather than movements in the price of a particular stock. Accordingly,
successful use by the Portfolio of options on stock indices will be subject to
Bankers Trust's ability to predict correctly movements in the direction of the
stock market generally or of a particular industry. This requires different
skills and techniques than predicting changes in the price of individual stocks.

FUTURES CONTRACTS ON FOREIGN STOCK INDICES. The 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 foreign securities ("Futures
Contracts"). This investment technique is designed only to hedge against
anticipated future change 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.

In general, 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
positions 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 are 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.

Although Futures Contracts would be entered into for hedging purposes only, such
transactions do involve certain risks. These risks could include a lack of
correlation between the Futures Contract and the foreign equity market being
hedged, a potential lack of liquidity in the secondary market and incorrect
assessments of market trends which may result in poorer overall performance than
if a Futures Contract had not been entered into.

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 the Portfolio. The Portfolio may not purchase or
sell a Futures Contract if immediately thereafter its margin deposits on its
outstanding Futures Contracts, for other than bona fide hedging transactions,
would exceed 5% of the market value of the Portfolio's net assets.

OPTIONS ON FUTURES CONTRACTS. The Portfolio may invest in options on such
futures contracts for similar purposes. All options that the Portfolio writes
will be covered under applicable requirements of the SEC.

There can be no assurance that the use of these portfolio strategies will be
successful.

ASSET COVERAGE. To assure that the 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, the
Portfolio will cover such transactions, as required under applicable
interpretations of the SEC, either by owning the underlying securities, entering
into an off-setting transaction, or by segregating with the Portfolio's
custodian or futures commission merchant liquid securities in an amount at all
times equal to or exceeding the Portfolio's commitment with respect to these
instruments or contracts.



PERFORMANCE INFORMATION AND REPORTS

The Fund's performance may be used from time to time in advertisements,
shareholder reports or other communications to shareholders or prospective
shareholders. Performance information may include the Fund's investment results
and/or comparisons of its investment results to the Morgan Stanley Capital
International Emerging Markets Free Total Return Index or to various other
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.

Mutual fund performance is commonly measured as total return and/or yield. The
Fund's performance is affected by its expenses.

PRIOR PERFORMANCE OF BT FUND MANAGERS INTERNATIONAL, SUB-INVESTMENT ADVISER OF
THE FUND, AND BT FUNDS MANAGEMENT.

Set forth below is certain composite information regarding the performance for
certain periods through December 31, 1997, of five funds each of which is
advised or sub-advised by either BT Fund Managers (International) Limited ("BT
Fund Managers International") or BT Funds Management Limited ("BT Funds
Management"). Although the investment objectives, policies and strategies of
these funds are substantially the same as those of the Fund, it should be noted
that none of these funds are registered as investment companies under the 1940
Act, nor are any of them subject to investment restrictions that are identical
to those that apply to the Fund. Therefore, the performance of the funds set
forth below may be better or worse than it would have been had all of the funds
been subject to requirements applicable to a registered investment company and
the investment restrictions applicable to the Fund.

The composite table below reflects the performance of the following types of
funds: two bank commingled funds which are primarily available to U.S.
retirement plans that are subject to ERISA ("BT Pyramid Global Emerging Markets
Fund" and "BT Pyramid Emerging Markets Equity Fund"); one offshore fund which is
available to non-U.S. and non-Australian institutions ("BT Global Series
Emerging Markets Equity Fund"); one offshore fund which is available to
Australian institutions ("BT Emerging Markets Fund"); and the emerging markets
portfolio of an investment vehicle established for Australian pension money ("BT
Retirement Fund-Emerging Markets Portfolio"). Although (1) the two bank
commingled funds are managed by the Adviser and are sub-advised by BT Fund
Managers International, (2) the offshore fund that is available to non-U.S. and
non-Australian institutions is advised by BT Fund Managers International and (3)
the other two funds are managed by BT Funds Management, all five funds are
managed by the same investment personnel that will manage the Fund.

Performance information for the five funds described above is provided below on
a composite basis, showing the combined performance of the funds over various
periods of time up to three years. Of the funds that comprise the composite,
only one fund has been operational for the three year period indicated. The
other funds were added to the composite at their inception or at the time when
their investment objectives became substantially similar to those of the Fund.

BT Pyramid Global Emerging Markets Fund commenced operations on October 31,
1996, but took until January 31, 1997 to be in a structure that was
substantially similar to the other funds in the composite. As such, its
performance is included in the composite as of January 31, 1997. For the same
reason, performance of the following funds has been included as of a date after
their inception. BT Global Series Emerging Markets Equity Fund commenced
operations on March 31, 1995 and its performance is included as of April 31,
1995. BT Emerging Markets Fund commenced operations on June 13, 1997 and its
performance is included as of July 31, 1997.

BT Pyramid Emerging Markets Equity Fund commenced operations as at March 31,
1996. Its performance is included in the composite as of July 31, 1997 due to
the fact that prior to that date, the portfolio structure of the fund was not
substantially similar to those of the other four funds in the composite. In
addition, prior to March 31, 1997 the fund was not managed by BT Fund Managers
International and BT Funds Management personnel but rather by different
personnel within the Bankers Trust Group. The fund underwent portfolio
reconstruction during the period from March 31 to July 31, 1997.

The prior performance information below is presented net of (or after payment
of) fees and expenses by the relevant funds. These fees and expenses averaged
approximately 0.88% per year of the average assets under management. It is
anticipated that the Fund, during its initial period of operation, will incur
expenses at an annualized rate of 1.70% of its average daily net assets (which
the Adviser has undertaken to reduce to 1.45% through fee waivers and/or expense
reimbursements). Had the funds reflected in the table below been subject to fees
and expenses at the higher level expected to be incurred by the Fund, the
performance shown below would be reduced by an amount approximately equal to the
difference between the Fund's anticipated expenses and the approximate expenses
incurred by the funds included in the table.

The performance below is compared to the Morgan Stanley Capital International
("MSCI") Emerging Markets Free Total Return Index which is an index of
securities of companies domiciled in countries determined by MSCI to be emerging
markets. Since the index reflects the performance of unmanaged portfolio of
securities, the performance of the index is not subject to any fees or expenses,
nor is it subject to any brokerage fees or other transaction costs.

The prior performance shown below should not be considered a representation of
future performance of the Fund.

   PERFORMANCE (NET OF FEES AND EXPENSES) THROUGH DECEMBER 31, 1997 (% IN $US)

                                            -----------------
                                               Annualized
    ---------------------------------------------------------
                                     1yr     2yrs     3yrs
    ---------------------------------------------------------
    BT Emerging Market              -3.83    5.67     2.32
    Equities Composite
    MSCI Emerging                   -11.59   -3.18   -3.86
    Markets Free Total
    Return Index
    ---------------------------------------------------------


EXPLANATION OF TERMS

TOTAL RETURN is the change in value of an investment in the Fund over a given
period, assuming reinvestment of any dividends and capital gains. A cumulative
total return reflects actual 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.

YIELD refers to the income generated by an investment in the 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 the
Fund investing in the Portfolio whose investments are denominated in foreign
currencies.

Unlike some bank deposits or other investments which pay a fixed yield for a
stated period of time, the total return of the Fund will vary depending upon
interest rates, the current market value of the securities held by the 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 may have
voluntarily agreed to waive portions of their fees, or reimburse certain
operating expenses of the 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 PORTFOLIO

BOARD OF TRUSTEES

The Trust and the Portfolio are each 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 some of the same individuals are Trustees of the Trust and the
Portfolio, up to and including creating separate boards of trustees. See
"Management of the Trust and the Portfolio" in the SAI for more information with
respect to the Trustees and officers of the Trust and the Portfolio.

INVESTMENT ADVISER

The Trust has not retained the services of an investment adviser since the Trust
seeks to achieve the investment objective of the Fund by investing all the
Assets of the Fund in the Portfolio. The Portfolio has retained the services of
Bankers Trust as Adviser.

BANKERS TRUST COMPANY AND ITS AFFILIATES

Bankers Trust Company, a New York banking corporation with principal offices at
130 Liberty Street (One Bankers Trust Plaza), New York, New York 10006, 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 December 31, 1997, Bankers Trust New York Corporation was the seventh
largest bank holding company in the United States with total assets of over $100
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 90 offices in more than 50 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 over $300
billion in assets under management globally.

Bankers Trust, subject to the supervision and direction of the Board of Trustees
of the Portfolio, manages the Portfolio in accordance with the Portfolio's
investment objective and stated investment policies, makes investment decisions
for the Portfolio, places orders to purchase and sell securities and other
financial instruments on behalf of the Portfolio and employs professional
investment managers and securities analysts who provide research services to the
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 the Portfolio are placed by
Bankers Trust with broker-dealers and other financial intermediaries that it
selects, including those affiliated with Bankers Trust. A Bankers Trust
affiliate will be used in connection with a purchase or sale of an investment
for the Portfolio only if Bankers Trust believes that the affiliate's charge for
the transaction does not exceed usual and customary levels. The Portfolio will
not invest in obligations for which Bankers Trust or any of its affiliates is
the ultimate obligor or accepting bank. The Portfolio may, however, invest in
the obligations of correspondents and customers of Bankers Trust.

The Investment Advisory Agreement provides for the Portfolio to pay Bankers
Trust a fee, accrued daily and paid monthly, equal on an annual basis to 1.10%
of the average daily net assets of the Portfolio for its then-current fiscal
year. Under certain circumstances Bankers Trust, the Fund's Adviser, has agreed
to pay fees to certain securities brokers, dealers and other entities that
facilitate the sale of Fund shares, and in connection therewith provide
administrative, shareholder or distribution related services to the Fund or its
shareholders. Fees paid to entities that administer mutual fund "supermarkets"
may be higher than fees paid for other types of services.

The investment advisory fee of the Portfolio is higher than that of most funds,
but not necessarily higher than that of a typical emerging markets 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.

SUB-INVESTMENT ADVISER

Bankers Trust has entered into a sub-investment advisory agreement (the
"Sub-Advisory Agreement") with BT Fund Managers International, a wholly owned
subsidiary of Bankers Trust Australia Limited ("BTAL"). BTAL is a wholly owned
subsidiary of Bankers Trust New York Corporation. BT Funds Management, adviser
of two of the funds in the composite performance table, is a wholly owned
subsidiary of BTAL. Identical investment personnel at BT Fund Managers
International and BT Funds Management currently manage each of the five funds
included in the performance composite. Under the Sub-Advisory Agreement, Bankers
Trust receives investment advice and research services with respect to companies
in which the Portfolio may invest and grants BT Fund Managers International
investment management authority as well as the authority to buy and sell
securities. 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 1.10% of the
average daily assets of the Portfolio.

PORTFOLIO MANAGERS

Paul Durham, Executive Vice President, Bankers Trust Fund Managers International
and Executive Vice President, BTAL, BEc (Hons) (Syd). Mr. Durham joined Bankers
Trust's Australian Equity Group in January 1988. In 1992 Mr. Durham joined the
U.S. Equities group and was based in New York from December 1992 to March 1994,
managing Bankers Trust's U.S. and Latin American equities portfolio. In April
1994 he returned to Australia to become the head of the Asian Equity Group. In
1996, Mr. Durham was also appointed as the head of Bankers Trust's Global
Emerging Markets Equity Group. In his capacity as head of both Asian and Global
Emerging Markets, Mr. Durham directly manages a variety of fund portfolios
including the BT Investment Funds' Pacific Basin Equity Portfolio, the Pyramid
Asian Growth Fund, the Pyramid Global Emerging Markets Fund as well as the
Australia based Bankers Trust Asian Growth Fund. Mr. Durham also sits on Bankers
Trust's Central Asset Allocations Committee, responsible for overall investment
policy of all Bankers Trust investment products.

     Mr. Durham has a Bachelor of Economics (Honours 1st Class) from Sydney
University where he majored in accounting and finance. Mr. Durham has been
responsible for the day-to-day management of the Portfolio since its inception.

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, Bankers Trust
calculates the net asset value of the Fund and generally assists the Board of
Trustees of the Trust in all aspects of the administration and operation of the
Fund. 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
0.90% of the average daily net assets of the Fund for its then-current fiscal
year.

Under an Administration and Services Agreement with the 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 Portfolio. The Administration and Services Agreement provides for the
Portfolio to pay Bankers Trust a fee, accrued daily and paid monthly, equal on
an annual basis to 0.15% of the Portfolio's average daily net assets for its
then-current fiscal year. Under the Administration and Services Agreements,
Bankers Trust may delegate one or more of its responsibilities to others,
including affiliates of Edgewood, at Bankers Trust's expense. For more
information, see the SAI.

DISTRIBUTOR

     Edgewood Services, Inc. is the principal distributor for the Shares of the
Fund. In addition, Edgewood and its affiliates provide the Trust with office
facilities, and currently provide administration and distribution services for
other registered investment companies. The principal business address of
Edgewood and its affiliates is Clearing Operations, P.O. Box 897, Pittsburgh,
Pennsylvania 15230-0897.

SERVICE AGENT

All shareholders must be represented by a Service Agent. Bankers Trust acts as a
Service Agent pursuant to its Administration and Services Agreement with the
Trust and receives no additional compensation from the Fund for such shareholder
services. The service fees of any other Service Agents, including
broker-dealers, will be paid by Bankers Trust from its fees. The services
provided by a Service Agent may include establishing and maintaining shareholder
accounts, processing purchase and redemption transactions, arranging for bank
wires, performing shareholder sub-accounting, answering client inquiries
regarding the Trust, assisting clients in 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 Administrator or the Service Agent's clients may reasonably
request and agree upon with the Service Agent. Service Agents may separately
charge their clients additional fees only to cover provision of additional or
more comprehensive services not already provided under the Administration and
Services Agreement with Bankers Trust, or of the type or scope not generally
offered by a mutual fund, such as cash management services or enhanced
retirement or trust reporting. Each Service Agent has agreed to transmit to
shareholders, who are its customers, appropriate disclosures of any fees that it
may charge them directly.

CUSTODIAN AND TRANSFER AGENT

Bankers Trust acts as custodian of the assets of the Trust and the Portfolio and
serves as the transfer agent (the "Transfer Agent") for the Trust and the
Portfolio under the Administration and Services Agreement with the Trust and the
Portfolio.

NET ASSET VALUE

The net asset value ("NAV") per Share of the Fund is calculated on each day on
which the New York Stock Exchange, Inc. (the "NYSE") is open (each such day
being a "Valuation Day"). The NYSE is currently open on each day, Monday through
Friday, except: (a) January 1st, Martin Luther King Day, Presidents' Day (the
third Monday in February), Good Friday, Memorial Day (the last Monday in May),
July 4th, Labor Day (the first Monday in September), Thanksgiving Day (the last
Thursday in November) and December 25th; and (b) the preceding Friday or the
subsequent Monday when one of the calendar-determined holidays falls on a
Saturday or Sunday, respectively.

The NAV per Share of the Fund is calculated once on each Valuation Day as of the
close of regular trading on the NYSE (the "Valuation Time"), which is currently
4:00 p.m., Eastern time or in the event that the NYSE closes early, at the time
of such early closing. The NAV per Share of the 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 as of the Valuation Time. The Portfolio's securities and other
assets are valued primarily on the basis of market quotations or, if quotations
are not readily available, by a method which the Portfolio's Board of Trustees
believes accurately reflects fair value.

Under procedures adopted by the Board, a NAV for the Fund later determined to
have been inaccurate for any reason will be recalculated. Purchases and
redemptions made at a NAV determined to have been inaccurate will be adjusted,
although in certain circumstances, such as where the difference between the
original NAV and the recalculated NAV divided by the recalculated NAV is 0.005%
( 1/2 of 1%) or less or shareholder transactions are otherwise insubstantially
affected, further action is not required.

PURCHASE AND REDEMPTION OF SHARES

HOW TO BUY SHARES

The Trust accepts purchase orders for Shares of the Fund at the NAV per Share
next determined after the order is received on each Valuation Day. See "Net
Asset Value" herein. Shares of the Fund may be available through Investment
Professionals, such as broker/dealers and investment advisers (including Service
Agents).






Purchase orders for Shares of the Fund (including those purchased through a
Service Agent) that are transmitted to the Trust's Transfer Agent (the "Transfer
Agent"), prior to the Valuation Time on any Valuation Day will be effective at
that day's Valuation Time. The Trust and Transfer Agent reserve the right to
reject any purchase order.

Shares must be purchased in accordance with procedures established by the
Transfer Agent and each Service Agent. It is the responsibility of each Service
Agent to transmit to the Transfer Agent purchase and redemption orders and to
transmit to Bankers Trust as the Trust's custodian (the "Custodian") purchase
payments by the following business day (trade date + 1) after an order for
Shares is placed. A shareholder must settle with the Service Agent for his or
her entitlement to an effective purchase or redemption order as of a particular
time. Because Bankers Trust is the Custodian and Transfer Agent of the Trust,
funds may be transferred directly from or to a customer's account held with
Bankers Trust to settle transactions with the Fund without incurring the
additional costs or delays associated with the wiring of federal funds.

Certificates for Shares will not be issued. Each shareholder's account will be
maintained by a Service Agent or Transfer Agent.

The Trust and Bankers Trust have authorized one or more brokers to accept on the
Trust's behalf purchase and redemption orders. Such brokers are authorized to
designate other intermediaries to accept purchase and redemption orders on the
Trust's behalf. The Transfer Agent will be deemed to have received a purchase or
redemption order when an authorized broker or, if applicable, a broker's
authorized designee, accepts the order. Customer orders will be priced at the
Fund's NAV next computed after they are accepted by an authorized broker or the
broker's authorized designee.

If orders are placed through an Investment Professional, it is the
responsibility of the Investment Professional to transmit the order to buy
Shares to the Transfer Agent before 4:00 p.m. Eastern time.

The Transfer Agent must receive payment within one business day after an order
for Shares is placed; otherwise, the purchase order may be canceled and the
investor could be held liable for resulting fees and/or losses.

MINIMUM INVESTMENTS

TO OPEN AN ACCOUNT                        $2,500

For retirement accounts                   500

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

If you are new to BT Investment Funds, complete and sign an account application
and mail it along with your check to the address listed below. If there is no
account application accompanying this Prospectus, call the BT Service Center at
1-800-730-1313.

      BT Service Center
      P.O. Box 419210
      Kansas City, MO  64141-6210

Overnight mailings:

      BT Service Center
      210 West 10th Street, 8th Floor
      Kansas City, MO  64105-1716






If you already have money invested in a fund in the BT Family of Funds, you can:

o     Mail an account application with a check,
o     Wire money into your account,
o Open an account by exchanging from another fund in the BT Family of Funds, or
o Contact your Service Agent or 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 or BT Retirement Services Center at 1-800-677-7596 for more
information and a retirement account application.

ADDITIONAL INFORMATION ABOUT BUYING SHARES



             TO OPEN AN ACCOUNT                   TO ADD TO AN ACCOUNT
                                            
By Wire      Call  the  BT   Service   Center  at Call your  Investment  Professional
             1-800-730-1313   to   receive   wire or wire additional investment to:
             instructions       for       account
             establishment                          Routing No.:  021001033
                                                    Attn:  Bankers Trust/IFTC Deposit
                                                    DDA No.:  00-226-296
                                                    FBO:(Account name)
                                                        (Account number)

                                                    Credit:  Global Emerging Markets
                                                    Equity Fund - XXX

                                                  Specify the complete name of
                                                  the Fund, your account number
                                                  and your name.
By Phone     Contact    your    Service    Agent, Contact   your    Service    Agent,
             Investment  Professional,   or  call Investment  Professional,  or  call
             BT's      Service      Center     at BT's     Service      Center     at
             1-800-730-1313.   If   you   are  an 1-800-730-1313.   If  you   are  an
             existing   shareholder,    you   may existing   shareholder,   you   may
             exchange  from  another  BT  account exchange  from  another  BT account
             with    the    same    registration, with   the    same    registration,
             including,    name,   address,   and including,   name,   address,   and
             taxpayer ID number.                  taxpayer ID number.
By           Mail Complete and sign the account Make your check payable to the
             application. Make your check complete name of the Fund. payable to
             the complete name of the Indicate your Fund account number Fund of
             your choice. Mail to the on your check and mail to the appropriate
             address indicated on address printed on your account the
             application. statement.




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. Redemption
requests should be transmitted by customers in accordance with procedures
established by the Transfer Agent and the Shareholder's Service Agent.
Redemption requests for Shares of the Fund received by the Service Agent and
transmitted to the Transfer Agent prior to the Valuation Time on each Valuation
Day will be effective at that day's Valuation Time and the redemption proceeds
normally will be delivered to the shareholder's account the next day, but in any
event within seven calendar days following receipt of the request.

Service Agents may allow redemptions or exchanges by telephone and may disclaim
liability for following instructions communicated by telephone that the Service
Agent reasonably believes to be genuine. The Service Agent must provide the
investor with an opportunity to choose whether or not to utilize the telephone
redemption or exchange privilege. The Transfer Agent and the Service Agent must
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. If the Shareholder Servicing Agent does not do so, it may
be liable for any losses due to unauthorized or fraudulent instructions. Such
procedures may include, among others, requiring some form of personal
identification prior to acting upon instructions received by telephone,
providing written confirmation of such transactions and/or tape recording of
telephone instructions.

Redemption orders are processed without charge by the Trust. A Service Agent may
on at least 30 days' notice involuntarily redeem a shareholder's account with
the Fund having a balance below the minimum, but not if an account is below the
minimum due to a change in market value. See "Minimum Investments" above for
minimum balance amounts.

To sell Shares in a retirement account, your request must be made in writing,
except for exchanges to other eligible funds in the BT Family of Funds, which
can be requested by phone or in writing. For information on retirement
distributions, contact your Service Agent or call the BT Service Center at
1-800-730-1313.

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 to protect you and Bankers
Trust from fraud. Redemption requests in writing must include a signature
guarantee if any of the following situations apply:

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.

A signature guarantee is also required if you change the pre-designated bank
information for receiving redemption proceeds on your 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.

ADDITIONAL INFORMATION ABOUT SELLING SHARES

By Wire - You must sign up for the wire feature before using it. To verify that
it is in place, 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.

In Writing - Write a signed "letter of instruction" with your name, the Fund's
name and Fund's number, your Fund account number, the dollar amount or number of
Shares to be redeemed, and mail to one of the following addresses:

      BT Service Center
      P.O. Box 419210
      Kansas City, MO  64141-6210

Overnight mailings:

      BT Service Center
      210 West 10th Street, 8th Floor
      Kansas City, MO  64105-1716

For Trust accounts, 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 within the last 60 days.

For a Business or Organization account, at least one person authorized by
corporate resolution to act on the account must sign the letter.

Unless otherwise instructed, the Transfer Agent will send a check to the account
address of record. The Trust reserves the right to close investor accounts via
30 day notice in writing if the Fund account balance falls below the Fund
minimums.

INVESTOR SERVICES

BT Investment 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
may 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 (monthly)

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
or the BT Service Center at 1-800-730-1313 if you need additional copies of
financial reports.

EXCHANGE PRIVILEGE

Shareholders may exchange their Shares for shares of certain other funds in the
BT Family of Funds registered in their state. The Fund reserves the right to
terminate or modify the exchange privilege in the future. To make an exchange,
follow the procedures indicated in "How to Buy Shares" and "How to Sell Shares"
herein. Before making an exchange, please note the following:

     o Call your Service Agent for information and a prospectus. Read the
prospectus for relevant information.

o  Your new account will have the identical account registration including the
   same name, address and taxpayer identification number as your existing
   account(s).

o  Each exchange represents the sale of shares of one fund and the purchase of
   shares of another, which may produce a gain or loss for tax purposes. Your
   Service Agent will receive a written confirmation of each exchange
   transaction.

Note that exchanges out of the Fund may be limited to four per calendar year and
that they may have tax consequences for you.

SYSTEMATIC PROGRAMS

To move money from your bank account to BT Investment Funds



Minimum    Minimum     Frequency          Setting up or changing
Initial    Subsequent
                                 
$1,000     $100        Monthly,           For   a   new    account,    complete   the
                       bimonthly,         appropriate section on the application
                       quarterly or
                       semi- annually
                                          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 WITHDRAWAL PROGRAM lets you set up periodic redemptions from your
account.

Minimum     Frequency                   Setting up or changing
$100        Monthly, bimonthly,         To    establish,    call   your    Investment
            quarterly, semi-annually    Professional  or  call  1-800-730-1313  after
            or annually                 your account is open.
                                       The accounts from which the withdrawals will be processed
                                       must have a minimum balance of $10,000
other than                             retirement accounts subject to required minimum distributions.


TAX-SAVING RETIREMENT PLANS

Retirement plans offer significant tax savings and are available to individuals,
partnerships, small businesses, corporations, nonprofit organizations and other
institutions. Contact Bankers Trust for further information. Bankers Trust can
set up your new account in the Fund under a number of several tax-savings or
tax-deferred plans. Minimums may differ from those listed elsewhere in this
Prospectus.

     o INDIVIDUAL RETIREMENT ACCOUNTS (IRAS): personal savings plans that offer
tax advantages for individuals to set aside money for retirement and allow new
contributions of $2,000 per tax year.

     o ROLLOVER IRAS: tax-deferred retirement accounts that retain the special
tax advantages of lump sum distributions from qualified retirement plans and
transferred IRA accounts.

DIVIDENDS, DISTRIBUTIONS, AND TAXES

The Fund distributes substantially all of its net investment income and capital
gains to shareholders each year. The Fund distributes capital gains annually.
Income dividends are distributed annually. Unless a Shareholder instructs a
Trust to pay such dividends and distributions in cash, they will be
automatically reinvested in additional Shares of the Fund.

FEDERAL TAXES. The Fund intends to qualify as a regulated investment company, as
defined in the Internal Revenue Code of 1986, as amended (the "Code"). Provided
the Fund meets the requirements imposed by the Code and distributes all of its
income and gains, the Fund will not pay any federal income or excise taxes.

Distributions from the Fund's income and short-term capital gains are taxes as
dividends, and long-term capital gain distributions are taxes as long-term
capital gains. The Fund's capital gain distributions are taxable when they are
paid, whether you take them in cash or reinvest them in additional Shares.
Distributions declared to shareholders of record in November and December and
paid in January are taxable as if paid on December 31. The Fund will send each
shareholder a tax statement by January 31 showing the tax status of the
distributions received on the past year.

Interest on indebtedness incurred or continued by a shareholder (whether a
corporation or an individual) to purchase or carry Shares of these Fund is not
deductible. The U.S. Department of the Treasury has been given authority to
issue regulations which would disallow the interest deduction if incurred to
purchase or carry Share of the Fund owned by the taxpayer's spouse, minor child
or entity controlled by the taxpayer. Entities or persons who are "substantial
users" (or related persons) of facilities financed by tax-exempt bonds should
consult their tax advisers before purchasing Shares of the Fund.

CAPITAL GAINS. You may realize a capital gain or loss when you redeem (sell) or
exchange Shares. Because the tax treatment also depends on your purchase price
and your personal tax position, you should keep your regular account statements
to use in determining your tax.

"BUYING A DIVIDEND." On the ex-date for a distribution from capital gains, the
Fund's Share value is reduced by the amount of the distribution. If you buy
Shares just before the ex-date ("buying a dividend"), you will pay the full
price for the Shares and then receive a portion of the price back as a taxable
distribution.

OTHER TAX INFORMATION. You may be subject to state or local taxes on your
investment, depending on the laws in your area. You should consult with your own
tax adviser concerning the application of federal, state and local taxes to your
distributions from the Fund.

ORGANIZATION OF THE TRUST

The Trust was organized on July 21, 1986 under the laws of the Commonwealth of
Massachusetts. The Fund is a separate series of the Trust. The Trust offers
shares of beneficial interest of separate series, par value $0.001 per share.
The shares of the other series of the Trust are offered through separate
prospectuses. No series of shares has any preference over any other series.

The Trust is an entity 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.

When matters are submitted for shareholder vote, shareholders of the Fund will
have one vote for each full share held and proportionate, fractional votes for
fractional shares held. A separate vote of the Fund is required on any matter
affecting the Fund on which shareholders are entitled to vote. Shareholders of
the Fund are not entitled to vote on Trust matters that do not affect the Fund.
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 Portfolio is a subtrust (or "series") of BT Investment Portfolios, an
open-end management investment company. BT Investment Portfolios was organized
as a master trust fund under the laws of the State of New York. BT Investment
Portfolios' Declaration of Trust provides that the Fund and other entities
investing in the Portfolio (e.g., other investment companies, insurance company
separate accounts and common and commingled trust funds) will each be liable for
all obligations of the Portfolio. However, the risk of the Fund incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance existed and the Portfolio itself was unable to meet
its obligations. Accordingly, the Trustees of the Trust believe that nether the
Fund nor its shareholders will be adversely affected by reason of the Fund's
investing in the Portfolio. The interests in BT Investment Portfolios are
divided into separate series, such as the Portfolio. No series of BT Investment
Portfolios has any preference over any other series.

Each series in the Trust will not be involved in any vote involving a Portfolio
in which it does not invest is Assets. Shareholders of all 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 the BT Investment Portfolios will vote separately or together in
the same manner as the series of the Trust. Under certain circumstances, the
investors in one or more series of BT Investment Portfolios could control the
outcome of these votes.

The Trust and BT Investment Portfolios reserve the right to add additional
series in the future. The Trust also reserves the right to issue more than one
class of Shares in the Fund.

EXPENSES OF THE TRUST

The Fund bears its own expenses. Operating expenses for the Fund generally
consist of all costs not specifically borne by Bankers Trust or Edgewood,
including administration and services fees, fees for necessary professional
services, amortization of organizational expenses and costs associated with
regulatory compliance and maintaining legal existence and shareholder relations.
The Portfolio bears its own expenses. Operating expenses for the Portfolio
generally consist of all costs not specifically borne by Bankers Trust or
Edgewood, including investment advisory and administration and services fees,
fees for necessary professional services, amortization of organizational
expenses, the costs associated with regulatory compliance and maintaining legal
existence and investor relations.










1




BT INVESTMENT FUNDS

GLOBAL EMERGING MARKETS EQUITY FUND

INVESTMENT ADVISER OF THE PORTFOLIO AND ADMINISTRATOR

BANKERS TRUST COMPANY

130 Liberty Street
(One Bankers Trust Plaza)
New York, NY  10006

DISTRIBUTOR

EDGEWOOD SERVICES, INC.

Clearing Operations
P.O. Box 897
Pittsburgh, PA  15230-0897

CUSTODIAN AND TRANSFER AGENT

BANKERS TRUST COMPANY

130 Liberty Street
(One Bankers Trust Plaza)
New York, NY  10006

INDEPENDENT ACCOUNTANTS

COOPERS & LYBRAND L.L.P.
1100 Main Street, Suite 900
Kansas City, MO  64105-2175

COUNSEL

WILLKIE FARR & GALLAGHER

153 East 53rd Street
New York, NY  10022

No person has been authorized to give any information or to make any
representations other than those contained in the Trust's Prospectuses, the SAIs
or the Trust's official sales literature in connection with the offering of the
Trust's Shares and, if given or made, such other information or representations
must not be relied on as having been authorized by a Trust. This Prospectus does
not constitute an offer in any state in which, or to any person to whom, such
offer may not lawfully be made.

















Cusip #

INVGEMEF (2/98)






INFORMATION HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION
STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE
ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
STATEMENT OF ADDITIONAL INFORMATION SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

                  SUBJECT TO COMPLETION, DATED FEBRUARY 2, 1998

                                  STATEMENT OF
                             ADDITIONAL INFORMATION

                           ____________________, 1998

BT INVESTMENT FUNDS

 BT INVESTMENT GLOBAL EMERGING MARKETS EQUITY FUND

BT INSTITUTIONAL FUNDS

    GLOBAL EMERGING MARKETS EQUITY FUND

BT Investment Funds and BT Institutional Funds (each a "Trust" and collectively,
the "Trusts") are separate open-end management investment companies that offer
investors a selection of investment portfolios, each having distinct investment
objectives and policies. This Statement of Additional Information ("SAI")
relates to the BT Investment Funds' Global Emerging Markets Equity Fund and BT
Institutional Funds' Global Emerging Markets Equity Fund (each a "Fund" and
collectively the "Funds").

As described in the Funds' Prospectuses, each Trust seeks to achieve the
investment objective of the Fund by investing all the investable assets
("Assets") of the Funds in the Global Emerging Markets Equity Portfolio (the
"Portfolio"), a diversified open-end management investment company having the
same investment objectives as the Funds. The Portfolio is a series of the BT
Investment Portfolios.

Since the investment characteristics of the Funds will correspond directly to
those of the Portfolio, the following is a discussion of the various investments
of and techniques employed by the Portfolio. Shares of the Funds are sold by
Edgewood Services, Inc. ("Edgewood"), the Trust's Distributor, to clients and
customers (including affiliates and correspondents) of Bankers Trust Company
("Bankers Trust"), the Portfolio's investment adviser ("Adviser"), and to
clients and customers of other organizations

Each Funds' Prospectus is dated __________, 1998. Each Prospectus provides the
basic information investors should know before investing. You may obtain a
Prospectus or a paper copy of this SAI if you received your SAI electronically
by calling the Trust at the telephone number listed below or by contacting any
Service Agent. This SAI, 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 a Fund's Prospectus. This SAI is not an offer
of any Fund for which an investor has not received a prospectus. Capitalized
terms not otherwise defined in this SAI have the meanings accorded to them in
each Fund's Prospectus.

                              BANKERS TRUST COMPANY

              INVESTMENT ADVISER OF THE PORTFOLIO AND ADMINISTRATOR

                             EDGEWOOD SERVICES, INC.

                                   DISTRIBUTOR

CLEARING OPERATIONS  PITTSBURGH, PENNSYLVANIA 15230-0897       1-800-730-1313

P.O. BOX 897








                                TABLE OF CONTENTS



Investment Objectives, Policies and Restrictions.................1

Performance
Information......................................................21

Valuation of Securities; Redemptions and Purchases in Kind.......23

Management of the Trusts and Portfolio...........................25

Organization of the Trusts                                       30

Taxation.........................................................31








                                                                       32






                INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS

                              INVESTMENT OBJECTIVES

The investment objective of each Fund is described in each Fund's Prospectus.
There can, of course, be no assurance that either Fund will achieve its
investment objective.

                               INVESTMENT POLICIES

The Funds seek to achieve their investment objective by investing all of their
respective Assets in the Portfolio. A Trust may withdraw a Fund's 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 Fund to do so.

Since the investment characteristics of each Fund will correspond directly to
those of the Portfolio, the following is a discussion of the various investments
of and techniques employed by the 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.

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 remaining 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 (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 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 the
Portfolio's holdings under the supervision of the Portfolio's Board of Trustees.
In reaching liquidity decisions, the Adviser will consider, among other things,
the following factors: (1) the frequency of trades and quotes for the security;
(2) the number of dealers and other potential purchasers or sellers of the
security; (3) dealer undertakings to make a market in the security and (4) 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).

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, the
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.

FUTURES CONTRACTS. The 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. The Portfolio may enter into futures contracts which are based on debt
securities that are backed by the full faith and credit of the U.S. government,
such as long-term U.S. Treasury Bonds, Treasury Notes, Government National
Mortgage Association ("GNMA") modified pass-through mortgage-backed securities
and three-month U.S. Treasury Bills. The 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 the
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 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, the 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 the 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 Portfolio, if the Adviser's investment
judgment about the general direction of interest rates is incorrect, the
Portfolio's overall performance would be poorer than if it had not entered into
any such contract. For example, if the Portfolio has hedged against the
possibility of an increase in interest rates which would adversely affect the
price of debt securities held in its 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 the
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. The Portfolio may have to sell securities at a time when it may be
disadvantageous to do so.

OPTIONS ON FUTURES CONTRACTS. The 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 the 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, the 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,
the Portfolio may purchase a put option on a futures contract to hedge its
portfolio against the risk of rising interest rates.

The amount of risk the 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 the Portfolio has adopted a further 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 (other than those entered into for bona
fide hedging purposes) would exceed 5% of the market value of the net assets of
the Portfolio.

OPTIONS ON FOREIGN CURRENCIES. The 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, the 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 the 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.

The Portfolio may write options on foreign currencies for the same types of
hedging purposes. For example, where the 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,
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.

The Portfolio intends to write covered call options on foreign currencies. A
call option written on a foreign currency by the 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 liquid
securities in a segregated account with its custodian.

The 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 CONTRACTS AND OPTIONS
ON FOREIGN CURRENCIES. Unlike transactions entered into by the 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 the 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 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. The 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.

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. The 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 the 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 value of the underlying
security above the exercise price.

When the 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.

The 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 the 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 the Portfolio.

The 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.

The 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 holdings, 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 holdings. 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.

The 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.

The 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 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 Portfolio's Trustees.

OPTIONS ON SECURITIES INDICES. In addition to options on securities, the
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."

The 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 the Portfolio's holdings 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 the Portfolio may buy and
sell 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, the 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. The 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 the 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. The 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.

The 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, the 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.

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 the Portfolio's foreign currency denominated portfolio
securities and the use of such techniques will subject the 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, the
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 the
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 the
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.

SHORT-TERM INSTRUMENTS. When the 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 invest in
short-term instruments for a limited time pending availability of such portfolio
securities. Short-term instruments consist of foreign or 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 Standard & Poor's Rating Group ("S&P") or
Aa or higher by Moody's Investors Services, Inc. ("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.

LENDING OF PORTFOLIO SECURITIES. The Portfolio has the authority to lend
portfolio securities to brokers, dealers and other financial organizations. The
Portfolio will not lend securities to Bankers Trust, Edgewood or their
affiliates. By lending its securities, the Portfolio can increase its income by
continuing to receive interest on the loaned securities as well as by either
investing the cash collateral in short-term securities or obtaining yield in the
form of interest paid by the borrower when U.S. government obligations are used
as collateral. There may be risks of delay in receiving additional collateral or
risks of delay in recovery of the securities or even loss of rights in the
collateral should the borrower of the securities fail financially. The Portfolio
will adhere to the following conditions whenever its securities are loaned: (i)
the Portfolio must receive at least 100 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
must terminate the loan and regain the right to vote the securities.

BRADY BONDS. The Portfolio may invest in "Brady bonds," which have been issued
by the governments of Argentina, Brazil, Costa Rica, Mexico, Nigeria,
Philippines, Uruguay and Venezuela. Most Brady bonds are currently rated below
BBB by S&P or Baa by 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.

The Portfolio may invest in either collateralized or 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 EASTERN EUROPE. The
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 Portfolio's 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 Republics 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. 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 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 each Fund's shareholders.

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, the 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. Securities of issuers located in Latin America may have limited
marketability and may be subject to more abrupt or erratic price movements.

The 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.

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 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 arrearage 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.

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.

The securities markets in Asia 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 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 Asia 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 Asian securities markets may represent a disproportionately large percentage
of market capitalization and trading value. The limited liquidity of securities
markets in Asia 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 Asian 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 Asian securities markets are susceptible to being influenced by
large investors trading significant blocks of securities.

Many stock markets are 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.

The Portfolio invests in securities denominated in currencies of Asian
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.

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 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.

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 judgment 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 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.

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 domestic
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 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.

                                 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 the Portfolio, an
obligation may cease to be rated or its rating may be reduced below the minimum
required for purchase by the Portfolio. Neither event would require the
Portfolio to eliminate the obligation from its portfolio, but Bankers Trust will
consider such an event in its determination of whether the Portfolio should
continue to hold the obligation. A description of the ratings is included in
each Fund's Prospectus.

                             INVESTMENT RESTRICTIONS

The following investment restrictions are "fundamental policies" of the Fund and
the Portfolio and may not be changed with respect to each Fund or the Portfolio
without the approval of a "majority of the outstanding voting securities" of the
Funds 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 SAI and the Prospectuses, means, with respect to the
Funds (or the Portfolio), the lesser of (i) 67% or more of the outstanding
voting securities of each 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 each 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 each Fund (or of the total beneficial
interests of the Portfolio). Whenever the Trusts are requested to vote on a
fundamental policy of the Portfolio, each 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 each 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 (including through reverse repurchase agreements or
         dollar roll transactions) in excess of 5% of the Portfolio's total
         assets (taken at cost), except that the Portfolio may borrow for
         temporary or emergency purposes up to 1/3 of its total assets. The
         Portfolio may pledge, mortgage or hypothecate not more than 1/3 of such
         assets to secure such borrowings 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;

      (2)underwrite securities issued by other persons except insofar as the
         Portfolio (Trusts 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 (Funds') portfolio securities and provided that any such
         loans not exceed 30% of the Portfolio's (Funds') total assets (taken at
         market value); (b) through the use of repurchase agreements or the
         purchase of short-term obligations; or (c) by purchasing a portion of
         an issue of debt securities of types distributed publicly or privately;

      (4)purchase or sell real estate (including limited partnership interests
         but excluding securities secured by real estate or interests therein),
         interests in oil, gas or mineral leases, commodities or commodity
         contracts (except futures and option contracts) in the ordinary course
         of business (except that the Portfolio (Trust) may hold and sell, for
         the Portfolio's (Funds') portfolio, real estate acquired as a result of
         the Portfolio's (Funds') ownership of securities);

      (5)concentrate its investments in any particular industry (excluding U.S.
         government securities), but if it is deemed appropriate for the
         achievement of the Portfolio's (Funds') 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.

      (7)with respect to 75% of the Portfolio's (Funds') total assets, purchase
         securities of any issuer if such purchase at the time thereof would
         cause the Portfolio (Funds) 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;

      (8)with respect to 75% of the Portfolio's (Funds') total assets, invest
         more than 5% of its total assets in the securities (other than cash;
         cash items; securities issued or guaranteed by the government of the
         United States or its agencies or instrumentalities and repurchase
         agreements collateralized by such US government securities; and
         securities of other investment companies) of any one issuer.






ADDITIONAL RESTRICTIONS. The following are non-fundamental policies. In order to
comply with certain statutes and policies, the 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) 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;

            (ii) sell securities it does not own (short sales) such that the
            dollar amount of such short sales at any one time exceeds 25% of the
            net equity of the Portfolio (Funds), and the value of securities of
            any one issuer in which the Portfolio (Funds) is short exceeds the
            lesser of 2.0% of the value of the Portfolio's (Funds') 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
            that the Portfolio (Funds) contemporaneously owns or where the
            Portfolio has the right to obtain securities equivalent in kind and
            amount to those sold, i.e., short sales against the box.) (The
            Portfolio (Funds) currently do not engage in short selling);

      (iii) invest for the purpose of exercising control or management of
another company;

            (iv) purchase securities issued by any investment company (except
            when such purchase, though not made in the open market, is part of a
            plan of merger or consolidation); if such purchase at the time
            thereof would cause: (a) more than 10% of the Portfolio's (Funds')
            total assets (taken at the greater of cost or market value) (except
            the Portfolio may exceed the applicable percentage limits to the
            extent permitted by an exemptive order of the SEC) to be invested in
            the securities of such issuers; (b) more than 5% of the Portfolio's
            (Funds') total assets (taken at the greater of cost or market value)
            (except the Portfolio may exceed the applicable percentage limits to
            the extent permitted by an exemptive order of the SEC) 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 (Funds);

            (v) invest more than 15% of the Portfolio's (Funds') net assets
            (taken at the greater of cost or market value) in securities that
            are illiquid or not readily marketable (excluding Rule 144A
            securities deemed by the Board of Trustees of the Portfolio (Trust)
            to be liquid);

            (vi) 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 (Funds) and the
            option is issued by the OCC, 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 (Funds') net assets; (c) the securities
            subject to the exercise of the call written by the Portfolio (Funds)
            must be owned by the Portfolio (Funds) at the time the call is sold
            and must continue to be owned by the Portfolio (Funds) until the
            call has been exercised, has lapsed, or the Portfolio (Funds) has
            purchased a closing call, and such purchase has been confirmed,
            thereby extinguishing the Portfolio's (Funds') obligation to deliver
            securities pursuant to the call it has sold; and (d) at the time a
            put is written, the Portfolio (Funds) 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
            (Funds) will be obligated to pay upon exercise of the put (this
            account must be maintained until the put is exercised, has expired,
            or the Portfolio (Funds) has purchased a closing put, which is a put
            of the same series as the one previously written); and

            (vii) 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 (Funds') 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 (Funds') net 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 the market value of an investment, in net or total assets or in the
change of 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.

                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 the 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 the 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,
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 the 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 the
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,
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 the Portfolio and to the Adviser, it is the opinion of
the management of the Portfolio 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 Portfolio, and not
all such information is used by the Adviser in connection with the Portfolio.
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 Portfolio.

In certain instances there may be securities which are suitable for the
Portfolio as well as for one or more of the Adviser's other clients. Investment
decisions for the 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 the Portfolio is concerned. However, it is believed that
the ability of the Portfolio to participate in volume transactions will produce
better executions for the Portfolio.






                             PERFORMANCE INFORMATION

                        STANDARD PERFORMANCE INFORMATION

From time to time, quotations of the 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 the Fund used in advertising are computed by dividing a
      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 a 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 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 a Fund paid over the same period or the rate of
      income reported in a Fund's financial statements.

      TOTAL RETURN: The 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 the Fund
      should not be considered as representative of the performance of a Fund in
      the future since the net asset value and public offering price of shares
      of a 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 a
      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 the 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, the 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. Evaluations of the Fund's
performance made by independent sources may also be used in advertisements
concerning the Fund. Sources for the 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.

      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.

      ValueLine, 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.

                        ECONOMIC AND MARKET INFORMATION

Advertising and sales literature of a Fund may include discussions of economic,
financial and political developments and their effect on the securities market.
Such discussions may take the form of commentary on these developments by Fund
portfolio managers and their views and analysis on how such developments could
affect the Funds. In addition, advertising and sales literature may quote
statistics and give general information about the mutual fund industry,
including the growth of the industry, from sources such as the Investment
Company Institute ("ICI"). For example, according to the ICI, thirty-seven
percent of American households are pursuing their financial goals through mutual
funds. These investors, as well as businesses and institutions, have entrusted
over $3.5 trillion to the more than 6,000 funds available.

           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. Such market valuations may represent
the last quoted price on the securities major trading exchange or may be
determined through use of matrix pricing. In matrix pricing, pricing services
may use various pricing models, involving comparable securities, historic
relative price movements, economic factors and dealer quotations.
Over-the-counter securities will normally be valued at the bid price. Short-term
debt obligations and money market securities maturing in 60 days or less are
valued at amortized cost, which approximates market.

Securities for which market quotations are not readily available are valued by
Bankers Trust pursuant to procedures adopted by the 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 the Portfolio purchases securities which are restricted as to
resale or for which current market quotations are not readily available, the
Adviser of the Portfolio will value such securities based upon all relevant
factors as outlined in FRR 1.

The Trusts, on behalf of each Fund, and the Portfolio reserve the right, if
conditions exist which make cash payments undesirable, to honor any request for
redemption or withdrawal by making payment in whole or in part in readily
marketable securities chosen by a 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 Trusts, on behalf of each Fund, and the Portfolio have elected,
however, to be governed by Rule 18f-1 under the 1940 Act as a result of which
each Fund and the 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.

The Portfolio has agreed to make a redemption in kind to the corresponding Funds
whenever a 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 Portfolio and in no case will they receive a security issued by the
Portfolio. The Portfolio has advised the Trust a that the Portfolio will not
redeem in kind except in circumstances in which a Fund is permitted to redeem in
kind or unless requested by the Fund.

Each investor in the 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 may
be a taxable transaction to the shareholder. (Consult your tax adviser for
future tax guidance.) Securities may be accepted in payment for shares only if
they are, in the judgment of Bankers Trust, appropriate investments for the
Funds' Portfolio. In addition, securities accepted in payment for shares must:
(i) meet the investment objective and policies of the acquiring Fund's
Portfolio; (ii) be acquired by the applicable Fund for investment and not for
resale (other than for resale to the Fund's Portfolio); (iii) be liquid
securities which are not restricted as to transfer either by law or liquidity of
the 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 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 TRUSTS AND THE PORTFOLIO

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 Portfolio
they represent. In addition, the Trustees review contractual arrangements with
companies that provide services to the Funds/Portfolio and review the Funds'
performance.

The Trustees and officers of the Trusts and BT Investment Portfolios, their
birthdate and their principal occupations during the past five years are set
forth below. Their titles may have varied during that period. Unless otherwise
indicated, the address of each officer is Clearing Operations, P.O. Box 897,
Pittsburgh, Pennsylvania 05230-0897.

                         TRUSTEES OF BT INVESTMENT FUNDS

S. LELAND DILL (birthdate: March 28, 1930 ) -- Trustee; Retired; Director,
Coutts Group; Coutts (U.S.A.) International; Coutts Trust Holdings Ltd;
Director, Zweig Series Trust; formerly Partner of KPMG Peat Marwick; Director,
Vinters International Company Inc.; General Partner of Pemco (an investment
company registered under the 1940 Act). His address is 5070 North Ocean Drive,
Singer Island, Florida 33404.

     KELVIN J. LANCASTER (birthdate: December 10, 1924) -- Trustee; Professor,
Department of Economics, Columbia University. His address is 35 Claremont
Avenue, New York, New York 10027.

PHILIP SAUNDERS, JR. (birthdate: October 11, 1935) -- Trustee; Principal, Philip
Saunders Associates (Consulting); former Director of Financial Industry
Consulting, Wolf & Company; President, John Hancock Home Mortgage Corporation;
and Senior Vice President of Treasury and Financial Services, John Hancock
Mutual Life Insurance Company, Inc. His address is 445 Glen Road, Weston,
Massachusetts 02193.

                       TRUSTEES OF BT INSTITUTIONAL FUNDS

     RICHARD J. HERRING (birthdate: February 18, 1946) -- Trustee; Vice Dean and
Director, Wharton Undergraduate Division, Professor, Finance Department, The
Wharton School, University of Pennsylvania. His address is 3255 Roberts Road,
Bryn Mawr, Pennsylvania 19010.

     BRUCE E. LANGTON (birthdate: May 10, 1931) -- 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. CHARLES P. BIGGAR (birthdate: October 13, 1930) -- Trustee;
Retired; Director of Chase/NBW Bank Advisory Board; Director, Batemen, Eichler,
Hill Richards Inc.; formerly Vice President of International Business Machines
and President of the National Services and the Field Engineering Divisions of
IBM. His address is 12 Hitching Post Lane, Chappaqua, New York 10514.

                      TRUSTEES OF BT INVESTMENT PORTFOLIOS

CHARLES P. BIGGAR (birthdate: October 14, 1930) -- Trustee; Retired; Director of
Chase/NBW Bank Advisory Board; Director, Batemen, Eichler, Hill Richards Inc.;
formerly Vice President of International Business Machines and President of the
National Services and the Field Engineering Divisions of IBM. His address is 12
Hitching Post Lane, Chappaqua, New York 10514.

S. LELAND DILL (birthdate: March 28, 1930) -- Trustee; Retired; Director, Coutts
Group; Coutts (U.S.A.) International; Coutts Trust Holdings Ltd; Director, Zweig
Series Trust; formerly Partner of KPMG Peat Marwick; Director, Vinters
International Company Inc.; General Partner of Pemco (an investment company
registered under the 1940 Act). His address is 5070 North Ocean Drive, Singer
Island, Florida 33404.

PHILIP SAUNDERS, JR. (birthdate: October 11, 1935) -- Trustee; Principal, Philip
Saunders Associates (Consulting); former Director of Financial Industry
Consulting, Wolf & Company; President, John Hancock Home Mortgage Corporation;
and Senior Vice President of Treasury and Financial Services, John Hancock
Mutual Life Insurance Company, Inc. His address is 445 Glen Road, Weston,
Massachusetts 02193.

               OFFICERS OF THE TRUSTS AND BT INVESTMENT PORTFOLIOS

Unless otherwise specified, each officer listed below holds the same position
with the Trusts and BT Investment Portfolios.

RONALD M. PETNUCH (birthdate: February 27, 1960) -- President and Treasurer;
Senior Vice President, Federated Services Company ("FSC"); formerly, Director of
Proprietary Client Services, Federated Administrative Services ("FAS"), and
Associate Corporate Counsel, Federated Investors ("FI").

     CHARLES L. DAVIS, JR. (birthdate: March 23, 1960) -- Vice President and
Assistant Treasurer; Vice President, FAS.

JAY S. NEUMAN (birthdate: April 22, 1950) -- Secretary; Corporate Counsel, FI.

     Messrs. Petnuch, Davis, and Neuman also hold similar positions for other
investment companies for which Edgewood 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 a Trust or the Portfolio. No director, officer or employee of
Edgewood or any of its affiliates will receive any compensation from a Trust or
the Portfolio for serving as an officer or Trustee of the Trusts or the
Portfolio.

                           TRUSTEE COMPENSATION TABLE

                    AGGREGATE                      AGGREGATE
                  COMPENSATION                   COMPENSATION
                     FROM BT       AGGREGATE        FROM BT          TOTAL
                   INVESTMENT    COMPENSATION     INVESTMENT     COMPENSATION
NAME OF PERSON &     FUNDS*         FROM BT      PORTFOLIOS++      FROM FUND
    POSITION                     INSTITUTIONAL                   COMPLEX PAID
                                    FUNDS+                      TO TRUSTEES **
- --------------------------------------------------------------------------------
S. Leland Dill,
Trustee of BT        $13,125          N/A           $13,750         $27,500
Investment Funds
and Portfolio

Richard J.
Herring,               N/A            $0              N/A           $27,500
Trustee of BT
Institutional
Funds

Bruce E. Langton,
Trustee of BT          N/A            $0            $13,750         $27,500
Institutional
Funds

Kelvin J.
Lancaster,           $13,125          N/A             N/A           $27,500
Trustee of BT
Investment Funds

Philip Saunders,
Jr.,                 $13,125          N/A           $13,750         $27,500
Trustee of BT
Investment Funds
and Portfolio

Charles P.
Biggar,                N/A            $0            $13,750         $27,500
Trustee of BT
Institutional
Funds and
Portfolio

     
- --------------------------------------------------------------------------------
* The aggregate compensation is provided for the BT Investment Funds which is
comprised of 16 funds. Information is furnished for the Trust's most recent
fiscal year ended December 31, 1997.

+  The aggregate compensation is provided for the BT Institutional Funds which
   is comprised of 10 funds. Information is furnished for the Trust's most
   recent fiscal year ended December 31, 1997.

++ The compensation is provided for the Trust's most recent fiscal year ended
December 31, 1997.

** Aggregated information is furnished for the BT Family of Funds which consists
of the following: BT Investment Funds, BT Institutional Funds, BT Pyramid Mutual
Funds, BT Advisor Funds, BT Investment Portfolios, Cash Management Portfolio,
Treasury Money Portfolio, Tax Free Money Portfolio, NY Tax Free Money Portfolio,
International Equity Portfolio, Short Intermediate US Government Securities
Portfolio, Intermediate Tax Free Portfolio, Asset Management Portfolio, Equity
500 Index Portfolio, and Capital Appreciation Portfolio. The compensation is
provided for the calendar year ended December 31, 1997.

     As of January 1, 1998, the Trustees and Officers of the Trust and the
Portfolio 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 the 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 the 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 the Portfolio in accordance with the
Portfolio's investment objectives, restrictions and policies; (iii) make
investment decisions for the Portfolio; and (iv) place purchase and sale orders
for securities and other financial instruments on behalf of the Portfolio.

Bankers Trust bears all expenses in connection with the performance of services
under each Advisory Agreement. The Trusts and the Portfolio bear certain other
expenses incurred in their operation, including: taxes, interest, brokerage fees
and commissions, if any; fees of Trustees of the Trusts or the Portfolio who are
not officers, directors or employees of Bankers Trust, Edgewood 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 Trusts or the
Portfolio; and any extraordinary 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
Portfolio, 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 Portfolio 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
Portfolio, Bankers Trust will not inquire or take into consideration whether an
issuer of securities proposed for purchase or sale by the 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 Trust may
receive investment advice and research services with respect to companies in
which the Portfolio may invest 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
commenced 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 Trusts and the Portfolio reasonably deem necessary for the
proper administration of the Trusts or the Portfolio. Bankers Trust will
generally assist in all aspects of the Funds' and Portfolio's 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), 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"),
FSC performs such sub-administration duties for the Trusts and the Portfolio as
from time to time may be agreed upon by Bankers Trust and FSC. The
Sub-Administration Agreement provides that FSC will receive such compensation as
from time to time may be agreed upon by FSC and Bankers Trust. All such
compensation will be paid by Bankers Trust.

                          CUSTODIAN AND TRANSFER AGENT

Bankers Trust, 130 Liberty Avenue (One Bankers Trust Plaza), New York, New York
10006, serves as Custodian for the Trusts and for the Portfolio pursuant to the
administration and services agreements. As Custodian, it holds the Funds' and
the Portfolio's assets. Bankers Trust also serves as transfer agent of the
Trusts and of the Portfolio pursuant to the respective administration and
services agreement. Under its transfer agency agreement with the Trusts, Bankers
Trust maintains the shareholder account records for each Fund, handles certain
communications between shareholders and the Trusts and causes to be distributed
any dividends and distributions payable by the Trust. Bankers Trust may be
reimbursed by the Funds or the Portfolio 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

 Each Trust and Bankers Trust have agreed that the Trusts may use "BT" as part
of their names for so long as Bankers Trust serves as investment adviser to the
Portfolio. The Trusts have 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 Trusts may be required, on 60 days' notice from Bankers Trust at any time,
to abandon use of the acronym "BT" as part of their 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 Trusts, their 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 Portfolio contemplated by the Advisory
Agreements and other activities for the Trusts and the Portfolio described in
the Prospectuses and this SAI 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 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 Trusts and the Portfolio. 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 Trusts and the Portfolio. Coopers
& Lybrand L.L.P., 1100 Main Street, Suite 900, Kansas City, Missouri 64105 acts
as Independent Accountants of the Trusts and the Portfolio.

                            ORGANIZATION OF THE TRUST

BT Institutional Funds was organized on March 26, 1990. BT Investment Funds was
organized on July 21, 1986, under the name BT Tax-Free Investment Trust, and
assumed its current name on May 16, 1988. The shares of each series participate
equally in the earnings, dividends and assets of the particular series. The
Trusts may create and issue additional series of shares. Each Trust's
Declaration of Trust permits the Trustees to divide or combine the shares into a
greater or lesser number of shares without thereby changing the proportionate
beneficial interest in series. Each share represents an equal proportionate
interest in a series with each other share. Shares when issued are fully paid
and non-assessable, except as set forth below. Shareholders are entitled to one
vote for each share held.

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.

Whenever a Trust is requested to vote on matters pertaining to a Portfolio, the
Trust will vote its shares without a meeting of shareholders of the respective
Fund if the proposal is one, which if made with respect to the Fund, would not
require the vote of shareholders of the Fund as long as such action is
permissible under applicable statutory and regulatory requirements. For all
other matters requiring a vote, a Trust will hold a meeting of shareholders of
its respective Fund and, at the meeting of the investors in the Portfolio, the
Trust will cast all of its votes in the same proportion as votes in all its
shares at the Portfolio meeting, other investors with a greater pro rata
ownership of the Portfolio could have effective voting control of the operations
of the Portfolio.

                                    TAXATION

                              TAXATION OF THE FUNDS

Each Trust intend to qualify annually and to elect each Fund to be treated as a
regulated investment company under the Code.

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 Funds intend to distribute to
their shareholders, at least annually, substantially all of their investment
company taxable income and net capital gains, and therefore do not anticipate
incurring federal income tax liability.

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.

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.

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.

                            TAXATION OF THE PORTFOLIO

The Portfolio is not subject to federal income taxation. Instead, the Fund and
other investors investing in the 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 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 a 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 a 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 a
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 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.

                                 OTHER TAXATION

The Trusts are organized as Massachusetts business trusts and, under current
law, neither the Trusts nor any Fund is liable for any income or franchise tax
in the Commonwealth of Massachusetts, provided that the Funds continue to
qualify as regulated investment companies under Subchapter M of the Code. The
investment by each Fund in the Portfolio does not cause the Fund to be liable
for any income or franchise tax in the State of New York.

     The Portfolio is organized as a New York trust. The 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.






                                  STATEMENT OF
                             ADDITIONAL INFORMATION

                          ______________________, 1998



BT INVESTMENT FUNDS

    GLOBAL EMERGING MARKETS EQUITY FUND

BT INSTITUTIONAL FUNDS

    GLOBAL EMERGING MARKETS EQUITY FUND

INVESTMENT ADVISER OF THE PORTFOLIO AND ADMINISTRATOR

BANKERS TRUST COMPANY

DISTRIBUTOR

EDGEWOOD SERVICES, INC.

CUSTODIAN AND TRANSFER AGENT

BANKERS TRUST COMPANY

INDEPENDENT ACCOUNTANTS

COOPERS & LYBRAND L.L.P.

COUNSEL

WILLKIE FARR & GALLAGHER











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



No person has been authorized to give any information or to make any
representations other than those contained in the Trusts' Prospectuses, its SAI
or the Trusts' official sales literature in connection with the offering of the
Trusts' shares and, if given or made, such other information or representations
must not be relied on as having been authorized by the Trust. Neither the
Prospectuses nor this Statement of Additional Information constitutes an offer
in any state in which, or to any person to whom, such offer may not lawfully be
made.

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







CUSIP #
CUSIP #

GEMEF400 (2/98)




PART C        OTHER INFORMATION

ITEM 24.      Financial Statements and Exhibits:

      (a)     Financial Statements:
              To be filed by amendment.

      (b)     Exhibits:

      (1)     (i)    Conformed Copy of Declaration of Trust of the Trust; 9.
              (ii)   Supplement to Declaration of Trust; 9.
              (iii)  Second Supplement to Declaration of Trust; 9.
      (2)     Copy of By-Laws of the Trust; 9.
      (3)     Not applicable.
      (4)     Copy of Specimen stock certificates for shares of beneficial
              interest of the Trust; 1.
      (5)     Not applicable.
      (6)     Conformed Copy of Distributor's Contract; 10.
              (i) Schedule A of Exhibit A to the Distributor's Contract; 14.
      (7)     Not applicable.
      (8)     Conformed Copy of Custodian Agreement between the Registrant and
              Bankers Trust Company; 12.
              (i) Conformed Copy of Amendment #2 to Exhibit A of the Custodian
                   Agreement; 14.
      (9) (i) Administration and Services Agreement; 6.
              (ii) Schedule of Fees under Administration and Services Agreement;
              7 (iii) Exhibit D to the Administration and Services Agreement;
              12.
      (10) Not applicable. (11) Not applicable. (12) Not applicable. (13) Not
      applicable. (14) Not applicable.
      (15)    Conformed Copy of Plan of Distribution; 10.
      (16)    Copy of Schedules for Computation of Performance Quotations; 2.
      (17)    Not applicable.
      (18)    Not applicable.
      (19)    Conformed Copy of Power of Attorney of Registrant; 13
- -----------------------------------
+ All exhibits have been filed electronically.

1.   Incorporated by reference to the Registrant's registration statement on
     Form N-1A ("Registration Statement") as filed with the Securities and
     Exchange Commission ("Commission") on October 24, 1986.

2.   Incorporated by reference to Post-Effective Amendment No. 14 to
     Registrant's Registration Statement as filed with the Commission on
     February 13, 1992.

6.   Incorporated by reference to Post-Effective Amendment No. 23 to
     Registrant's Registration Statement as filed with the Commission on April
     30, 1993.

7.   Incorporated by reference to Post-Effective Amendment No. 29 to
     Registrant's Registration Statement as filed with the Commission on
     November 8, 1993.

9.   Incorporated by reference to Post-Effective Amendment No. 34 to
     Registrant's Registration Statement as filed with the Commission on July
     31, 1995.

10.  Incorporated by reference to Post-Effective Amendment No. 40 to
     Registrant's Registration Statement as filed with the Commission on January
     30, 1997.

12.  Incorporated by reference to Post-Effective Amendment No. 44 to
     Registrant's Registration Statement as filed with the Commission on July 1,
     1997.

13.  Incorporated by reference to Post-Effective Amendment No. 45 to
     Registrant's Registration Statement as filed with the Commission on
     September 10, 1997.

14.  Incorporated by reference to Post-Effective Amendment No. 46 to
     Registrant's Registration Statement as filed with the Commission on January
     28, 1998.





ITEM 25. Persons Controlled by or Under Common Control with Registrant:

         Not applicable.

ITEM 26.   Number of Holders of Securities:

Title of Class                      Number of Record Holders
                                    as of December 31, 1997

Tax Free Money Fund                       137
NY Tax Free Money Fund                    112
Cash Management Fund                      230
Treasury Money Fund                       701
100% Treasury Fund                        0
Intermediate Tax Free Fund                76
Utility Fund                              0
Small Cap Fund                            613
Pacific Basin Equity Fund                 181
BT Investment Lifecycle Short Range Fund  36
BT Investment Lifecycle Mid Range Fund    32
BT Investment Lifecycle Long Range Fund   36
Latin American Equity Fund                360
International Equity Fund                 3295
Global High Yield Securities Fund         152
Capital Appreciation Fund                 299
Global Emerging Markets Equity Fund       0
International Small Company Equity Fund   0

ITEM 27.    Indemnification; 11

ITEM 28.   Business and Other Connections of Investment Adviser:

Bankers Trust serves as investment adviser to the Fund's Portfolio. Bankers
Trust, a New York banking corporation, is a wholly owned subsidiary of Bankers
Trust New York Corporation. Bankers Trust conducts a variety of commercial
banking and trust activities and is a major wholesale supplier of financial
services to the international institutional market. To the knowledge of the
Trust, none of the directors or officers of Bankers Trust, except those set
forth below, is or has been at anytime during the past two fiscal years engaged
in any other business, profession, vocation or employment of a substantial
nature, except that certain directors and officers also hold various positions
with and engage in business for Bankers Trust New York Corporation. Set forth
below are the names and principal businesses of the directors and officers of
Bankers Trust who are or during the past two fiscal years have been engaged in
any other business, profession, vocation or employment of a substantial nature.
These persons may be contacted c/o Bankers Trust Company, 130 Liberty Street,
New York, New York 10006.

George B. Beitzel, International Business Machines Corporation, Old Orchard
Road, Armonk, NY 10504. Director, Bankers Trust Company; Retired senior vice
president and Director, International Business machines Corporation; Director,
Computer Task Group; Director, Phillips Petroleum Company; Director, Caliber
Systems, Inc. (formerly, Roadway Services Inc.); Director, Rohm and Haas
Company; Director, TIG Holdings; Chairman emeritus of Amherst College; and
Chairman of the Colonial Willimsburg Foundation.


     11. Incorporated by reference to Post-Effective Amendment No. 38 to
Registrant's Registration Statement as filed with the Commission on April 29,
1996.





Richard H. Daniel, Bankers Trust Company, 130 Liberty Street, New York, New York
10006. Vice chairman and chief financial officer, Bankers Trust Company and
Bankers Trust New York Corporation; Beneficial owner, general partner, Daniel
Brothers, Daniel Lingo & Assoc., Daniel Pelt & Assoc.; Beneficial owner, Rhea C.
Daniel Trust.

Philip A. Griffiths, Bankers Trust Company, 130 Liberty Street, New York, New
York 10006. Director, Institute for Advanced Study; Director, Bankers Trust
Company; Chairman, Committee on Science, Engineering and Public Policy of the
National Academies of Sciences and Engineering & the Institute of Medicine; and
Chairman and member, Nominations Committee and Committee on Science and
Engineering Indicators, National Science Board; Trustee, North Carolina School
of Science and Mathematics and the Woodward Academy.

     William R. Howell, J.C. Penney Company, Inc., P.O. Box 10001, Plano, TX
75301-0001. Chairman Emeritus, J.C. Penney Company, Inc.; Director, Bankers
Trust Company; Director, Exxon Corporation; Director, Halliburton Company;
Director, Warner-Lambert Corporation; Director, The Williams Companies, Inc.;
and Director, National Retail Federation.

Vernon E. Jordan, Jr., Akin, Gump, Strauss, Hauer & Feld, LLP, 1333 New
Hampshire Ave., N.W., Washington, DC 20036. Senior Partner, Akin, Gump, Strauss,
Hauer & Feld, LLP; Director, Bankers Trust Company; Director, American Express
Company; Director, Dow-Jones, Inc.; Director, J.C. Penney Company, Inc.;
Director, Revlon Group Incorporated; Director, Ryder System, Inc.; Director,
Sara Lee Corporation; Director, Union Carbide Corporation; Director, Xerox
Corporation; Trustee, Brookings Institution; Trustee, The Ford Foundation; and
Trustee, Howard University.

David Marshall, 130 Liberty Street, New York, New York 10006. Chief Information
Officer and Executive Vice President, Bankers Trust New York Corporation; Senior
Managing Director, Bankers Trust Company.

Hamish Maxwell, Philip Morris Companies Inc., 120 Park Avenue, New York, NY
10006. Retired Chairman and Chief Executive Officer, Philip Morris Companies
Inc.; Director, Bankers Trust Company; Director, The News Corporation Limited;
Director, Sola International Inc.; and Chairman, WWP Group pic.

Frank N. Newman, Bankers Trust Company, 130 Liberty Street, New York, New York
10006. Chairman of the Board, Chief Executive Officer and President, Bankers
Trust New York Corporation and Bankers Trust Company; Director, Bankers Trust
Company; Director, Dow-Jones, Inc.; and Director, Carnegie Hall.

     N.J. Nicholas Jr., 745 Fifth Avenue, New York, NY 10020. Director, Bankers
Trust Company; Director, Boston Scientific Corporation; and Director, Xerox
Corporation.

Russell E. Palmer, The Palmer Group, 3600 Market Street, Suite 530,
Philadelphia, PA 19104. Chairman and Chief Executive Officer of The Palmer
Group; Director, Bankers Trust Company; Director, Allied-Signal Inc.; Director,
Federal Home Loan Mortgage Corporation; Director, GTE Corporation; Director, The
May Department Stores Company; Director, Safeguard Scientifics, Inc.; and
Trustee, University of Pennsylvania.

Donald L. Staheli, Bankers Trust Company, 130 Liberty Street, New York, New York
10006. Chairman of the Board and Chief Executive Officer, Continental Grain
Company; Director, Bankers Trust Company; Director, ContiFinancial Corporation;
Director, Prudential Life Insurance Company of America; Director, Fresenius
Medical Care, A.g.; Director, America-China Society; Director, National
Committee on United States-China Relations; Director, New York City Partnership;
Chairman, U.S.-China Business Council; Chairman, Council on Foreign Relations;
Chairman, National Advisor Council of Brigham Young University's Marriott School
of Management; Vice Chairman, The Points of Light Foundation; and Trustee,
American Graduate School of International Management.

Patricia Carry Stewart, c/o Office of the Secretary, 130 Liberty Street, New
York, NY 10006. Director, Bankers Trust Company; Director, CVS Corporation;
Director, Community Foundation for Palm Beach and Martin Counties; Trustee
Emerita, Cornell University.

George J. Vojta, Bankers Trust Company, 130 Liberty Street, New York, NY 10006.
Vice Chairman, Bankers Trust New York Corporation and Bankers Trust Company;
Director, bankers Trust Company; Director; Alicorp S.A.; Director; Northwest
Airlines; Director, Private Export Funding Corp.; Director, New York State
Banking Board; Director, St. Lukes-Roosevelt Hospital Center; Partner, New York
City Partnership; and Chairman, Wharton Financial Services Center.

Paul A. Volcker, Bankers Trust Company, 130 Liberty Street, New York, New York
10006. Director, Bankers Trust Company; Director, American Stock Exchange;
Director, Nestle S.A.; Director, Prudential Insurance Company; Director, UAL
Corporation; Chairman, Group of 30; North American Chairman, Trilateral
Commission; Co-Chairman, Bretton Woods Committee; Co-Chairman, U.S./Hong Kong
Economic Cooperation Committee; Director, American Council on Germany; Director,
Aspen Institute; Director, Council on Foreign Relations; Director, The Japan
Society; and Trustee, The American Assembly.

Melvin A. Yellin, Bankers Trust Company, 130 Liberty Street, New York, New York
10006. Senior Managing Director and General Counsel of Bankers Trust New York
Corporation and Bankers Trust Company; Director, 1136 Tenants Corporation; and
Director, ABA Securities Association.

ITEM 29. Principal Underwriters

a) Edgewood Service, Inc., the principal underwriter for shares of the
Registrant, also acts as principal underwriter for the following open-end
investment companies: BT Pyramid Mutual Funds, BT Advisor Funds, BT
Institutional Funds, Excelsior Institutional Trust (formerly, UST Master Funds,
Inc.), Excelsior Tax-Exempt Funds, Inc. (formerly, UST Master Tax-Exempt Funds,
Inc.), Excelsior Institutional Trust, FTI Funds, FundManager Portfolios,
Marketvest Funds, Marketvest Funds, inc. and Old Westbury Funds, Inc.

      b)

         (1)                           (2)                        (3)
Name and Principal              Positions and Offices     Positions and Offices
Business Address                   With Distributor           With Registrant

Lawrence Caracciolo             Director, President,              --
Federated Investors Tower       Edgewood Services, Inc.
Pittsburgh, PA 15222-3779

Arthur L. Cherry                Director,                         --
Federated Investors Tower       Edgewood Services, Inc.
Pittsburgh, PA 15222-3779

J. Christopher Donahue          Director,                         --
Federated Investors Tower       Edgewood Services, Inc.
Pittsburgh, PA 15222-3779

Ronald M. Petnuch               Vice President,        President and Treasurer
Federated Investors Tower       Edgewood Services, Inc.
Pittsburgh, PA 15222-3779

Thomas P. Schmitt               Vice President,                   --
Federated Investors Tower       Edgewood Services, Inc.
Pittsburgh, PA 15222-3779



Ernest L. Linane                Assistant Vice President,         --
Federated Investors Tower       Edgewood Services, Inc.
Pittsburgh, PA 15222-3779

S. Elliott Cohan                Secretary,                Assistant Secretary
Federated Investors Tower       Edgewood Services, Inc.
Pittsburgh, PA 15222-3779

Thomas J. Ward                  Assistant Secretary,              --
Federated Investors Tower       Edgewood Services, Inc.
Pittsburgh, PA 15222-3779

Kenneth W. Pegher, Jr.          Treasurer,                        --
Federated Investors Tower       Edgewood Services, Inc.
Pittsburgh, PA 15222-3779

(c) Not Applicable.

ITEM 30. Location of Accounts and Records:

BT INVESTMENT FUNDS:          5800 Corporate Drive
(Registrant)                  Pittsburgh, PA 15237-7010

BANKERS TRUST COMPANY:        130 Liberty Street,
(Investment Adviser,          New York, NY 10006
Administrator, and
Custodian)

INVESTORS FIDUCIARY           127 West 10th Street,
TRUST COMPANY:                Kansas City, MO 64105
(Transfer Agent and Dividend
Disbursing Agent)

EDGEWOOD SERVICES, INC.:      Clearing Operations, P.O. Box 897,
(Distributor)                 Pittsburgh, PA 15230-0897

ITEM 31.    Management Services:

            Not applicable.

ITEM 32.    Undertakings:

            Registrant hereby undertakes to file a post-effective amendment,
            using financial statements on behalf of Global High Yield Securities
            Fund which need not be certified, within four to six months from the
            effective date of Post-Effective Amendment No. 47.

            Registrant hereby undertakes to file a post-effective amendment,
            using financial statements on behalf of International Small Company
            Equity Fund which need not be certified, within four to six months
            from the effective date of Post-Effective Amendment No.
            45.

            The Registrant undertakes to furnish to each person to whom a
            prospectus is delivered a copy of the Registrant's latest annual
            report, with respect to the respective series of the Trust, to
            shareholders upon request and without charge.

            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.





                                   SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, the Registrant, BT INVESTMENT FUNDS, has
duly caused this Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Pittsburgh
and the Commonwealth of Pennsylvania on the 2nd day of February, 1998.

                               BT INVESTMENT FUNDS

                              By:  /s/ Jay S. Neuman
                              Jay S. Neuman, Secretary
                              February 2, 1998

      Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following persons in
the capacity and on the date indicated:

NAME                          TITLE                   DATE

By:   /s/ Jay S. Neuman       Attorney in Fact        February 2, 1998
      Jay S. Neuman           For the Persons
      SECRETARY               Listed Below

/s/ RONALD M. PETNUCH*        President and Treasurer
Ronald M. Petnuch             (Chief Executive Officer,
                              Principal Financial and
                              Accounting Officer)

/s/ S. LELAND DILL*           Trustee
S. Leland Dill

/s/ KELVIN J. LANCASTER*      Trustee
Kelvin J. Lancaster

/s/ PHILIP SAUNDERS, JR.*     Trustee
Philip Saunders, Jr.



*By Power of Attorney