-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GtudvztIyTMVMz6rKRbDPVIhvS0QJJYYmdk/7UuyIZYAygQZTqcgSAI7MB6aQexw CBY1h/LB0ia5jDxurwyBIQ== 0000912057-97-018988.txt : 19970530 0000912057-97-018988.hdr.sgml : 19970530 ACCESSION NUMBER: 0000912057-97-018988 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970529 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BT INVESTMENT FUNDS CENTRAL INDEX KEY: 0000797657 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04760 FILM NUMBER: 97615824 BUSINESS ADDRESS: STREET 1: FEDERATED INVESTORS TOWERS CITY: PITTSBURGH STATE: PA ZIP: 15222-3770 BUSINESS PHONE: 412881401 FORMER COMPANY: FORMER CONFORMED NAME: BT TAX FREE INVESTMENT TRUST DATE OF NAME CHANGE: 19880530 N-30D 1 N-30D -BT INVESTMENT FUNDS- LATIN AMERICAN EQUITY FUND SEMI-ANNUAL REPORT ------------------ MARCH - 1997 - -------------------------------------------------------------------------------- LATIN AMERICAN EQUITY FUND TABLE OF CONTENTS - -------------------------------------------------------------------------------- LETTER TO SHAREHOLDERS . . . . . . . . . . . . . . . . . . 3 LATIN AMERICAN EQUITY FUND Statement of Assets and Liabilities. . . . . . . . . . . 5 Statement of Operations. . . . . . . . . . . . . . . . . 5 Statement of Changes in Net Assets . . . . . . . . . . . 6 Financial Highlights . . . . . . . . . . . . . . . . . . 7 Notes to Financial Statements. . . . . . . . . . . . . . 8 LATIN AMERICAN EQUITY PORTFOLIO Schedule of Portfolio Investments. . . . . . . . . . . . 9 Statement of Assets and Liabilities. . . . . . . . . . .10 Statement of Operations. . . . . . . . . . . . . . . . .10 Statement of Changes in Net Assets . . . . . . . . . . .11 Financial Highlights . . . . . . . . . . . . . . . . . .11 Notes to Financial Statements. . . . . . . . . . . . . .12 2 - -------------------------------------------------------------------------------- LATIN AMERICAN EQUITY FUND LETTER TO SHAREHOLDERS - -------------------------------------------------------------------------------- We are pleased to present you with this semi-annual report for the Latin American Equity Fund, providing a review of the market, the portfolio, and our outlook as well as a complete financial summary of the Fund's operations and a listing of the Portfolio's holdings. The Latin American Equity Fund (the "Fund") returned 14.78%* for the six months ended March 31, 1997, as compared to 16.47% for the IFCI Latin American Index** and 16.37% for the Lipper Latin American Average+. Since its inception on October 25, 1993, the Fund has returned 25.00% cumulatively, or 6.72% annualized. The Fund returned 32.46% for the year ended March 31, 1997. MARKET ACTIVITY In general, the Latin American markets posted strong positive performance during the six month period ended March 31, 1997. The bulk of Argentina's rise took place in the fourth calendar quarter of 1996, as the market began to discount a strong economic recovery in 1997. Consensus estimates for Argentine GDP growth are in the 4-5% range for this calendar year. The Brazilian market was strong despite expectations for continued deterioration in its external balance. Overcoming that was investor enthusiasm about the upcoming privatization program expected to be a catalyst for a significant re-rating of its electric utility and telecommunications sectors. In addition, investors in the Brazilian market are seeing improved political momentum and an increased likelihood that structural reform will once again return to the top of the political agenda. OBJECTIVE Seeks long-term capital appreciation through investment primarily in the equity securities (or other securities with equity characteristics) of companies domiciled in, or doing business in, Latin America++. The Mexican market appreciated during the period on the back of a stronger peso, lower interest rates, better than expected trade numbers, and strong fourth quarter of 1996 GDP. In the Andean Pact region, Venezuela and Colombia posted the highest returns. The Venezuelan market continued to benefit from higher oil revenues, lower interest rates, and a strong currency. The primary catalysts for the Colombian market's rise were a re-rating based on compelling valuations and expectations of economic growth acceleration in 1997. INVESTMENT REVIEW The Fund underperformed its benchmark and category average for the period, primarily due to its underweighted positions in the strongly performing Argentine and Brazilian equity markets. The most significant change in our strategy over the last six months was a notable increase in the Fund's exposure to the Chilean market during the first quarter of 1997. After underperforming in 1996, we believe that valuations of Chilean equities are now extremely attractive. Moreover, we anticipate that interest rates in Chile will decline further in the second quarter of 1997 and that the economy will begin accelerating in the second half of the year. The Fund should continue to be overweight in the Colombian and Venezuelan markets, as we expect to see an acceleration in economic growth in the second half of the year in both of these markets as well. INVESTMENT INSTRUMENTS Primarily common and preferred stocks, rights, warrants, American Depository Receipts ("ADRs") and convertible securities. In general, the theme driving the portfolio's current asset allocation is low correlation with the U.S. financial markets, where we could see increased volatility as a result of the recent shift in monetary policy by the Federal Reserve Board towards a tightening phase. MANAGER OUTLOOK Overall, our outlook for the Latin American equity markets remains optimistic and largely unchanged from that of our last shareholder report. We expect interest in the region to gain momentum, as valuations and fundamentals look very attractive. We also anticipate increased cash flows to the Latin American markets, as investors seek international diversification. This will be beneficial, since global investors have been virtually absent from the region for the past couple of years. - ---------------------------- TEN LARGEST STOCK HOLDINGS - ---------------------------- Telefonos de Mexico SA, ADR - L Centrais Electricas Brasileiras SA Electrobras Petroleo Brasileiro SA Petrobras PN - Pref. Telecommunicacoes Brasileiras - Telebras ON Chilgener SA, ADR Embottelladora Andina, ADR Corporacion Industrial Sanluis, SA de CV Fomento Economico Mexicano, SA de CV Chile Fund Banco Bradesco PN Even with this, for the near term, we do remain concerned about rising trade deficit numbers in Brazil, which are averaging about $1 billion per month. This suggests that the economy is overheating and increases the likelihood of credit restrictions and/or an increase in interest rates, either one or both of which would cool down the economy in the second half of the year. In Argentina, we believe that company valuations are stretched, and economic growth could show a deceleration in the second six months of 1997 as comparisons against a strong half of 1996 become more difficult. Moreover, given the Argentine currency peg to the U.S. dollar, this market is likely to be the one most adversely affected by an increase in U.S. interest - -------------------- * Performance quoted represents past performance. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. ** Indexes are unmanaged, and investments cannot be made in an index. + Lipper figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. These figures do not reflect sales charges. ++ Foreign investing involves special risks, including currency risk, increased volatility or foreign securities and differences in auditing and other financial standards. 3 - -------------------------------------------------------------------------------- LATIN AMERICAN EQUITY FUND LETTER TO SHAREHOLDERS - -------------------------------------------------------------------------------- DIVERSIFICATION OF PORTFOLIO INVESTMENTS BY COUNTRY AS OF MARCH 31, 1997 (PERCENTAGES ARE BASED ON MARKET VALUE) --------------------------------------------- --------------- [CHART] --------------- Colombia 7% United States 3% Venezuela 7% Peru 3% Chile 22% Brazil 30% Mexico 28% rates. We continue to find attractive values in the Venezuelan equity market and expect the Fund's holdings there to benefit from a strong recovery in domestic demand for the remainder of the year. We will, of course, continue monitoring economic conditions and how they affect the financial markets, as we seek long-term capital appreciation. We value your ongoing support of the Latin American Equity Fund and look forward to serving your investment needs in the years ahead. /x/Maria-Elena Carrion Maria-Elena Carrion Portfolio Manager of the LATIN AMERICAN EQUITY PORTFOLIO March 31, 1997 - -------------------------------------------------------------------------------- PERFORMANCE COMPARISON - -------------------------------------------------------------------------------- Comparison of Change in Value of a $10,000 Investment in the Latin American Equity Fund and the IFCI Latin American Index since October 31, 1993. - -------------------------------------------------------------------------------- TOTAL RETURN FOR THE PERIOD ENDED MARCH 31, 1997 Six months Since 10/25/93* 14.78% 25.00% * The Fund's inception date. Investment return and principal value may fluctuate so that shares, when redeemed, may be worth more or less than their original cost. - -------------------------------------------------------------------------------- [GRAPH] Latin American Equity IFCI Latin American Fund - $12,463 Index - $12,536 Oct-93 10000 10000 Dec-93 12433 12111 Mar-94 12822 12275 Jun-94 10917 11051 Sep-94 14526 14736 Dec-94 11071 11018 Mar-95 7350 7686 Jun-95 8476 9100 Sep-95 8618 9602 Dec-95 8384 9161 Mar-96 9408 9652 Jun-96 10706 10584 Sep-96 10838 10763 Dec-96 11134 10869 Mar-97 12463 12536 Past performance is not indicative of future performance. 4 - -------------------------------------------------------------------------------- LATIN AMERICAN EQUITY FUND STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1997 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS Investment in Latin American Equity Portfolio, at Value ....................................................... $ 24,610,204 Receivable for Shares of Beneficial Interest Subscribed ....................................................... 25,500 Prepaid Expenses and Other .................................................................................... 10,241 Deferred Organizational Expenses .............................................................................. 2,414 ------------ Total Assets ..................................................................................................... 24,648,359 ------------ LIABILITIES Due to Bankers Trust .......................................................................................... 18,503 Payable for Shares of Beneficial Interest Redeemed ............................................................ 333,355 Accrued Expense and Other ..................................................................................... 18,958 ------------ Total Liabilities ................................................................................................ 370,816 ------------ NET ASSETS ....................................................................................................... $ 24,277,543 ------------ ------------ COMPOSITION OF NET ASSETS Paid-in Capital ............................................................................................... $ 28,265,861 Accumulated Net Investment Loss ............................................................................... (21,456) Accumulated Net Realized Loss from Investment and Foreign Currency Transactions ............................... (6,664,140) Net Unrealized Appreciation on Investment and Foreign Currency Transactions ................................... 2,697,278 ------------ NET ASSETS ....................................................................................................... $ 24,277,543 ------------ ------------ NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE (net assets divided by shares outstanding) .............. $12.29 ------------ ------------ SHARES OUTSTANDING ($0.001 par value per share, unlimited number of shares of beneficial interest authorized) .... 1,976,175 ------------ ------------ - ---------------------------------------------------------------------------------------------------------------------------------- STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 1997 (UNAUDITED) - ---------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME Income Allocated from Latin American Equity Portfolio, net .................................................... $ 68,455 ------------ EXPENSES Administration and Services Fees .............................................................................. 103,957 Printing and Shareholder Reports .............................................................................. 7,000 Registration Fees ............................................................................................. 6,834 Professional Fees ............................................................................................. 5,123 Trustees Fees ................................................................................................. 1,375 Miscellaneous ................................................................................................. 2,779 ------------ Total Expenses ................................................................................................ 127,068 Less Expenses Absorbed by Bankers Trust ....................................................................... (17,639) ------------ Net Expenses ............................................................................................... 109,429 ------------ NET INVESTMENT LOSS .............................................................................................. (40,974) ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENY TRANSACTIONS Net Realized Gain (Loss) from: Investment Transactions .................................................................................... 1,947,018 Foreign Currency Transactions .............................................................................. (31,583) Net Change In Unrealized Appreciation on Investment and Foreign Curreny Transactions .......................... 1,192,392 ------------ NET REALIZED AND UNREALIZED GAIN ON INVESTMENT AND FOREIGN CURRENY TRANSACTIONS .................................. 3,107,827 ------------ NET INCREASE IN NET ASSETS FROM OPERATIONS ....................................................................... $ 3,066,853 ------------ ------------
See Notes to Financial Statements on Page 8 5 - -------------------------------------------------------------------------------- LATIN AMERICAN EQUITY FUND STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
For the For the six months ended year ended March 31, 1997+ September 30, 1996 -------------- ------------------ INCREASE (DECREASE) IN NET ASSETS FROM: OPERATIONS Net Investment Income (Loss) . . . . . . . . . . . . . . . . . . . . $ (40,974) $ 23,831 Net Realized Gain from Investment and Foreign Currency Transactions 1,915,435 938,638 Net Change in Unrealized Appreciation on Investment and Foreign Currency Transactions . . . . . . . . . . . . . . . . . . . . . . . 1,192,392 1,901,030 ------------ ------------ Net Increase in Net Assets from Operations . . . . . . . . . . . . . . 3,066,853 2,863,499 ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS Net Investment Income. . . . . . . . . . . . . . . . . . . . . . . . (4,313) - ------------ ------------ CAPITAL TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST Proceeds from Sales of Shares. . . . . . . . . . . . . . . . . . . . 21,526,953 24,344,592 Dividend Reinvestments . . . . . . . . . . . . . . . . . . . . . . . 2,063 - Cost of Shares Redeemed. . . . . . . . . . . . . . . . . . . . . . . (17,310,896) (23,835,412) ------------ ------------ NET INCREASE FROM CAPITAL TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST 4,218,120 509,180 ------------ ------------ TOTAL INCREASE IN NET ASSETS . . . . . . . . . . . . . . . . . . . . . 7,280,660 3,372,679 NET ASSETS Beginning of Period. . . . . . . . . . . . . . . . . . . . . . . . . . 16,996,883 13,624,204 ------------ ------------ End of Period (includes accumulated net investment loss of $21,456 and $0, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,277,543 $ 16,996,883 ------------ ------------ ------------ ------------
- --------------------------- + Unaudited See Notes to Financial Statements on Page 8 6 - -------------------------------------------------------------------------------- LATIN AMERICAN EQUITY FUND FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Contained below are selected data for a share outstanding, total investment return, ratios to average net assets and other supplemental data for the periods indicated for the Latin American Equity Fund.
FOR THE PERIOD FOR THE YEAR ENDED OCTOBER 25, 1993 FOR THE SEPTEMBER 30, (COMMENCEMENT OF SIX MONTHS ENDED --------------------- OPERATIONS) TO MARCH 31, 1997+ 1996 1995 SEPTEMBER 30, 1994 ------------------ ---- ---- ------------------ PER SHARE OPERATING PERFORMANCE: NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . $10.71 $8.50 $14.59 $ 10.00 ------- ------- ------- ------- INCOME FROM INVESTMENT OPERATIONS Net Investment Income (Loss) . . . . . . . . . . . (0.02) 0.02 0.03 - Net Realized and Unrealized Gain (Loss) on Investment and Foreign Currency Transactions . . 1.60 2.19 (5.92) 4.59 ------- ------- ------- ------- Total Income (Loss) from Investment Operations . . . 1.58 2.21 (5.89) 4.59 ------- ------- ------- ------- DISTRIBUTIONS TO SHAREHOLDERS Net Realized Gain from Investment Transactions . . 0.00** - (0.20) - ------- ------- ------- ------- NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . $12.29 $10.71 $8.50 $14.59 ------- ------- ------- ------- ------- ------- ------- ------- TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . 14.78% 26.00% (40.68)% 50.01%* SUPPLEMENTAL DATA AND RATIOS: Net Assets, End of Period (000s omitted) . . . . . $24,278 $16,997 $13,624 $27,489 Ratios to Average Net Assets: Net Investment Income (Loss) . . . . . . . . . . (0.37)%* 0.16% 0.29% 0.03%* Expenses, including Expenses of the Latin American Equity Portfolio. . . . . . . . 2.00%* 2.00% 2.00% 2.00%* Decrease Reflected in Above Expense Ratio Due to Absorption of Expenses by Bankers Trust. . . . . . . . . . . . . . . . . 0.48%* 0.66% 1.17% 1.27%*
- ---------------------- + Unaudited * Annualized ** Less than $0.01 See Notes to Financial Statements on Page 8 7 - -------------------------------------------------------------------------------- LATIN AMERICAN EQUITY FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES A. ORGANIZATION BT Investment Funds (the "Trust") is registered under the Investment Company Act of 1940 (the "Act"), as amended, as an open-end management investment company. The Trust was organized on July 21, 1986, as a business trust under the laws of the Commonwealth of Massachusetts. The Latin American Equity Fund (the "Fund") is one of the funds offered to investors by the Trust. The Fund commenced operations and began offering shares of beneficial interest on October 25, 1993. The Fund invests substantially all of its assets in the Latin American Equity Portfolio (the "Portfolio"). The Portfolio is an open-end management investment company registered under the Act. The Fund seeks to achieve its investment objective by investing all of its investable assets in the Portfolio. The value of such investment in the Portfolio reflects the Fund's proportionate interest in the net assets of the Portfolio. At March 31, 1997, the Fund's investment was approximately 99% of the Portfolio. The financial statements of the Portfolio, including the Schedule of Portfolio Investments, are contained elsewhere in this report. B. INVESTMENT INCOME The Fund earns income, net of expenses, daily on its investment in the Portfolio. All of the net investment income and realized and unrealized gains and losses from the security transactions of the Portfolio are allocated pro rata among the investors in the Portfolio at the time of such determination. C. ORGANIZATION EXPENSES Costs incurred by the Fund in connection with its organization and initial registration are being amortized evenly over a five year period. D. DIVIDENDS It is the Fund's policy to declare and distribute dividends annually to shareholders from net investment income, if any. Dividends and distributions payable to shareholders are recorded by the Fund on the ex-dividend date. Distributions of net realized short-term and long-term capital gains, if any, earned by the Fund will also be made annually. E. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to shareholders. Therefore, no federal income tax provision is required. F. OTHER The Trust accounts separately for the assets, liabilities, and operations of the Fund. Expenses directly attributable to the Fund are charged to that Fund, while expenses which are attributable to all of the Trust's Funds are allocated among them. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the financial statements. NOTE 2--FEES AND TRANSACTIONS WITH AFFILIATES The Fund has entered into an Administration and Services Agreement with Bankers Trust Company ("Bankers Trust"). Under this Administration and Services Agreement, Bankers Trust provides administrative, custody, transfer agency and shareholder services to the Fund in return for a fee computed daily and paid monthly at an annual rate of 0.95 of 1% of the Fund's average daily net assets. For the six months ended March 31, 1997, this fee aggregated $103,957. The Trust entered into a Distribution Agreement with Edgewood Services, Inc. ("Edgewood"). Under the Distribution Agreement with the Trust, pursuant to Rule 12b-1 of the 1940 Act, Edgewood may seek reimbursement, at an annual rate not exceeding 0.20 of 1% of the Fund's average daily net assets, for expenses incurred in connection with any activities primarily intended to result in the sale of the Fund's shares. For the six months ended March 31, 1997, there were no reimbursable expenses incurred under this agreement. Bankers Trust has voluntarily undertaken to waive and reimburse expenses of the Fund, to the extent necessary, to limit all expenses to 1.00 of 1% of the average daily net assets of the Fund, excluding expenses of the Portfolio and 2.00 of 1% of the average daily net assets of the Fund, including expenses of the Portfolio. For the six months ended March 31, 1997, expenses of the Fund have been reduced by $17,639. Certain trustees and officers of the Fund are also directors, officers and employees of Edgewood. None of the trustees so affiliated received compensation for services as trustee of the Fund. Similarly, none of the Fund's officers received compensation from the Fund. NOTE 3--SHARES OF BENEFICIAL INTEREST At March 31, 1997, there were an unlimited number of shares of beneficial interest authorized. Transactions in shares of beneficial interest were as follows:
FOR THE FOR THE SIX MONTHS ENDED YEAR ENDED MARCH 31, 1997 (UNAUDITED) SEPTEMBER 30, 1996 -------------------------- ------------------ SHARES AMOUNT SHARES AMOUNT ------ ------ ------ ------ Sold 1,874,353 $21,526,953 2,527,607 $24,344,592 Reinvested 190 2,063 - - Redeemed (1,485,608) (17,310,896) (2,542,427) (23,835,412) ---------- ------------ ----------- ------------ Net Increase (Decrease) 388,935 $4,218,120 (14,820) $509,180 ---------- ------------ ----------- ------------ ---------- ------------ ----------- ------------
8 - --------------------------------------------------------------------------------------------- LATIN AMERICAN EQUITY PORTFOLIO SCHEDULE OF PORTFOLIO INVESTMENTS MARCH 31, 1997 (UNAUDITED) - --------------------------------------------------------------------------------------------- Shares Description Value ------ ----------- ----- COMMON STOCKS - 78.53% BRAZIL - 14.43% 3,001,059 Centrais Eletricas Brasileiras SA Electrobras (Utility). . . . . . . . . . . . . . . . . . . . $1,222,612 25,800 Compania Vale de Rio Doce, ADR (Metals/Mining). . . . . . . . . . . . . . . . . 586,421 11,090,800 Telecommunicacoes Brasileiras-Telebras ON (Telecommunications) (a) . . . . . . . . . . . . 1,110,753 3,700 Telecommunicacoes Brasileiras SA Telebras, ADR (Telecommunications) (a) . . . . . .378,788 1,025,000 Telecomunicacoes de Sao Paulo SA (Telephone) (a). . . . . . . . . . . . . . . . . 251,330 ----------- 3,549,904 ----------- CHILE - 22.08% 13,000 Banco BHIF, ADR (Financial Services) . . . . . . 277,875 32,000 Banco de A. Edwards, ADR (Banks) (a) . . . . . . 672,000 37,495 Chile Fund (Country Fund). . . . . . . . . . . . 848,324 41,600 Chilgener SA, ADR (Utility). . . . . . . . . . . 1,071,200 25,100 Compania Telefonica de Chile SA, ADR (Telecommunications) . . . . . . . . . . . . . . 721,625 28,400 Embotelladora Andina, ADR (Beverages). . . . . . 1,054,350 30,500 Santa Isabel, ADR (Retail) (a) . . . . . . . . . 789,188 ----------- 5,434,562 ----------- COLOMBIA - 4.75% 20,000 Banco de Colombia, GDR (Financial Services) (b) 135,804 45,320 Carulla CIA SA, ADR-B (Retail) (b) . . . . . . . 181,280 5,300 Cementos Diamante SA (Building/Construction) . . 19,720 38,700 Cementos Diamante SA, ADR-B (Building/Construction) (b). . . . . . . . . . . 526,235 140,400 Gran Cadena Almacenes (Retail) . . . . . . . . . 116,383 18,794 Gran Cadena de Almacenes Colombiano, ADR (Retail) (a) . . . . . . . . . . . . . . . . 188,613 ----------- 1,168,035 ----------- MEXICO - 27.71% 57,700 Cemex SA de CV-B (Building Materials). . . . . . 233,544 19,100 Cemex SA de CV, ADR-B (Building Products) (a). . 154,129 24 Controladora de Farmacia (Retail) (a). . . . . . 38 148,600 Corporacion Industrial Sanluis, SA de CV (Diversified). . . . . . . . . . . . . . . . . . 892,803 42,000 Empresas La Moderna, SA de CV (Tobacco) (a). . . 210,372 10,000 Empresas La Moderna, ADR (Tobacco) (a) . . . . . 200,000 191,400 Fomento Economico Mexicano, SA de CV (Beverages) (a). . . . . . . . . . . . . . . . . 849,752 2,513 Gruma SA-B (Food) (a). . . . . . . . . . . . . . 12,397 800,000 Grupo Financiero Bancomer, SA de CV (Financial Services) (a) . . . . . . . . . . . . 286,365 1,447 Grupo Financiero Inbursa, SA de CV (Finance) (a). . . . . . . . . . . . . . . . . . 5,170 514,500 Grupo Posadas SA-Ser. L (Hotels) (a) . . . . . . 253,801 15,900 Grupo Televisa SA Spons, GDR (Media) (a) . . . . 395,513 170,500 Kimberly Clark De Mexico-A (Consumer Products) . 689,030 50,000 Kimberly Clark De Mexico-B (Consumer Products) . 212,497 12,000 Panamerican Beverages, Inc., ADR-A (Beverages) . 643,500 46,260 Telefonos de Mexico SA, ADR-L (Telecommunications) . . . . . . . . . . . . . . 1,781,010 ----------- 6,819,921 ----------- PERU - 2.70% 15,031 Compania de Minas Buenaventura SA-A (Metals/Mining). . . . . . . . . . . . . . . . . 141,128 9,000 Compania de Minas Buenaventura SA, ADR (Metals/Mining). . . . . . . . . . . . . . . . . 193,500 3,015 Compania de Minas Buenaventura-B (Metals/Mining). . . . . . . . . . . . . . . . . 31,639 102,950 Consorcio Alim Fabril Pacifico-C (Consumer Products) (a). . . . . . . . . . . . . 151,397 39,445 Consorcio Alim Fabril Pacifico-T (Consumer Products) (a). . . . . . . . . . . . . 59,495 3,736 Credicorp (Financial Services) . . . . . . . . . 87,329 ----------- 664,488 ----------- Shares Description Value ------ ----------- ----- VENEZUELA - 6.86% 18,427 Banco Provincial (Financial Services). . . . . . $30,882 3,900 Compania Anonima Nacional Telefonos de Venezuela, ADR (Telecom Services) (a). . . . . . 113,588 573,331 Electricidad de Caracas (Utility) (a). . . . . . 622,155 101,800 Mavesa SA, ADR (Consumer Products) . . . . . . . 674,425 1,638 Siderurgica Venezolana Sivensa, Saica SACA (Building/Construction) . . . . . . . . . . 470 379,358 Sudamtex-B (Textiles). . . . . . . . . . . . . . 26,146 167,475 Venaseta-A (Diversified) . . . . . . . . . . . . 8,420 33,495 Venaseta-B (Diversified) . . . . . . . . . . . . 1,747 108,000 Venepal GDR, 144A (Paper) (b). . . . . . . . . . 194,400 84,652 Venezolana Pulpa Y Papel (Paper/Pulp). . . . . . 16,138 ----------- 1,688,371 ----------- TOTAL COMMON STOCKS (Cost $17,236,945) . . . . . . . . . . . . . . . . . $19,325,281 ----------- OTHER SECURITIES - 0.00% PERU - 0.00% 14,000 Consorcio Alim Fabril Pacifico Rights (Consumer Products). . . . . . . . . . . . . . . ----------- PREFERRED STOCK CONVERTIBLE - 14.69% BRAZIL - 14.69% 100,910,449 Banco Bradesco PN (Financial Services) . . . . . $824,108 22,000 Compania Vale do Rio Doce PN (Steel) (a) . . . . 500,000 666,100 CRT Corp., PN (Telecommunications) (a) . . . . . 772,636 610,800 Mesbla PN (Retail) (a) (c) . . . . . . . . . . . - 5,598,600 Petroleo Brasileiro SA (Oil/Gas) . . . . . . . . 1,114,018 358,266,396 Usiminas PN (Steel). . . . . . . . . . . . . . . 405,431 ----------- TOTAL PREFERRED STOCK CONVERTIBLE (Cost $3,157,788). . . . . . . . . . . $3,616,193 ----------- PREFERRED STOCK NON-CONVERTIBLE - 2.15% COLOMBIA - 2.15% 20,800 Banco Ganadero SA, ADR (Financial Services) (Cost $377,610). . . . . . . . . . . . . . . . . $527,800 ----------- Principal Amount - --------- SHORT TERM INSTRUMENTS - 2.96% $ 735,000 U.S. Treasury Bills, 5.01%, 5/29/97 (Cost $728,836) . . . . . . . . . . . . . . . . $728,878 ----------- TOTAL INVESTMENTS (Cost $21,501,179) . . . . . . . . . . . . . . 98.33% $24,198,152 OTHER ASSETS LESS LIABILITIES. . . . . . . . . . . . . . . . . . 1.67% 412,061 ------- ----------- NET ASSETS . . . . . . . . . . . . . . . . . . . . 100.00% $24,610,213 ------- ----------- ------- -----------
(a) Non-Income Producing Security (b) Security exempt from registration under Rule 144A of the Securities Act of 1933. This Security may be resold in transactions exempt from registrations, normally to qualified institutional buyers. (c) Issuer in bankruptcy The following abbreviations are used in portfolio descriptions: ADR -- American Depository Receipt GDR -- Global Depository Receipt Industry Diversification (as a percentage of Total Investments): Banks........................................ 2.78% Beverages.................................... 10.53% Building/Construction........................ 2.26% Consumer Products............................ 7.38% Country Fund................................. 3.51% Diversified.................................. 3.73% Financial Services........................... 8.99% Metals/Mining................................ 3.94% Oil/Gas...................................... 4.60% Retail....................................... 5.27% Steel........................................ 3.74% Telecommunications........................... 20.16% Utility...................................... 12.05% Other*....................................... 11.06% ------- 100.00% ------- ------- * No one industry represents more than 2.00% of Portfolio holdings. See Notes to Financial Statements on Pages 12 and 13 9
- -------------------------------------------------------------------------------------------------------- LATIN AMERICAN EQUITY PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1997 (UNAUDITED) - -------------------------------------------------------------------------------------------------------- ASSETS Investment, at Value (Cost of $21,501,179) . . . . . . . . . . . . . . . . . . . . . . $24,198,152 Cash*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,795 Receivable for Securities Sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308,810 Dividends and Interest Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . 71,727 Prepaid Expenses and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 ---------- Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,640,538 ---------- LIABILITIES Due to Bankers Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,666 Accrued Expenses and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,659 ---------- Total Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,325 ---------- NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $24,610,213 ---------- ---------- COMPOSITION OF NET ASSETS Paid-in Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $21,913,310 Net Unrealized Appreciation on Investment and Foreign Currency Transactions. . . . . . 2,696,903 ---------- NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $24,610,213 ---------- ---------- - ------------------ * Includes foreign cash of $49,268 with a cost of $49,350. - --------------------------------------------------------------------------------------------------------- STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 1997 (UNAUDITED) - --------------------------------------------------------------------------------------------------------- INVESTMENT INCOME Dividends (net of foreign withholding tax of $4,941) . . . . . . . . . . . . . . . . . $154,074 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,971 ---------- TOTAL INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178,045 ---------- EXPENSES Advisory Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109,581 Administration and Services Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,916 Professional Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,650 Trustees Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,050 Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295 ---------- Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144,492 Less Expenses Absorbed by Bankers Trust. . . . . . . . . . . . . . . . . . . . . . . . (34,911) ---------- Net Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109,581 ---------- NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,464 ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS Net Realized Gain (Loss) from: Investment Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,947,300 Foreign Currency Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . (31,602) Net Change in Unrealized Appreciation on Investment and Foreign Currency Transactions. 1,192,042 ---------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS . . . . 3,107,740 ---------- NET INCREASE IN NET ASSETS FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . $3,176,204 ---------- ----------
See Notes to Financial Statements on Pages 12 and 13 10
- ------------------------------------------------------------------------------------------------------------------------ LATIN AMERICAN EQUITY PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS - ------------------------------------------------------------------------------------------------------------------------ FOR THE FOR THE SIX MONTHS ENDED YEAR ENDED MARCH 31, 1997 SEPTEMBER 30, 1996 --------------- ------------------ INCREASE IN NET ASSETS FROM: OPERATIONS Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 68,464 $ 182,531 Net Realized Gain from Investment and Foreign Currency Transactions . . . . . 1,915,698 938,670 Net Change in Unrealized Appreciation on Investment and Foreign Currency Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,912,042 1,901,005 ----------- ----------- Net Increase in Net Assets from Operations. . . . . . . . . . . . . . . . . . . 3,176,204 3,022,206 ----------- ----------- CAPITAL TRANSACTIONS Proceeds from Capital Invested. . . . . . . . . . . . . . . . . . . . . . . . 21,512,703 24,363,201 Value of Capital Withdrawn. . . . . . . . . . . . . . . . . . . . . . . . . . (17,129,891) (23,992,125) ----------- ----------- Net Increase in Net Assets from Capital Transactions. . . . . . . . . . . . . . 4,382,812 371,076 ----------- ----------- TOTAL INCREASE IN NET ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . 7,559,016 3,393,282 NET ASSETS Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,051,197 13,657,915 ----------- ----------- End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,610,213 $ 17,051,197 ----------- ----------- ----------- ----------- - -------------------------------------------------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------------------------------------------------- Contained below are selected data for a share outstanding, total investment return, ratios to average net assets and other supplemental data for the periods indicated for the Latin American Equity Portfolio. FOR THE PERIOD FOR THE YEAR ENDED OCTOBER 25, 1993 FOR THE SEPTEMBER 30, (COMMENCEMENT OF SIX MONTHS ENDED ---------------------- OPERATIONS) TO MARCH 31, 1997+ 1996 1995 SEPTEMBER 30, 1994 --------------- ---- ---- ------------------ SUPPLEMENTAL DATA AND RATIOS: Net Assets, End of Period (000s omitted). . . . $24,610 $17,051 $13,658 $27,366 Ratios to Average Net Assets: Net Investment Income. . . . . . . . . . . . 0.63% 1.21% 1.27% 1.03%* Expenses . . . . . . . . . . . . . . . . . . 1.00% 1.00% 1.00% 1.00%* Decrease Reflected in Above Expense Ratio Due to Absorption of Expenses by Bankers Trust. . . . . . . . . . . . . . . 0.32%* 0.31% 0.80% 0.79%* Portfolio Turnover Rate . . . . . . . . . . . . 60% 171% 161% 124% Average Commission Per Share**. . . . . . . . . $0.0002 $0.0001
- ----------------------- + Unaudited * Annualized ** For fiscal years beginning on or after September 1, 1995, the Portfolio is required to disclose its average commission rate per share for security trades on which commissions are charged. See Notes to Financial Statements on Pages 12 and 13 11 - -------------------------------------------------------------------------------- LATIN AMERICAN EQUITY PORTFOLIO NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES A. ORGANIZATION The Latin American Equity Portfolio (the "Portfolio") is registered under the Investment Company Act of 1940 (the "Act"), as amended, as open-end management investment company. The Portfolio was organized on August 6, 1993 as an unincorporated trust under the laws of New York and commenced operations on October 25, 1993. The Declaration of Trust permits the Board of Trustees (the "Trustees") to issue beneficial interests in the Portfolio. B. SECURITY VALUATION The Portfolio's investments listed or traded on National Stock Exchanges or other domestic or foreign exchanges are valued based on the closing price of the security traded on that exchange prior to the time when the Portfolio assets are valued. Short-term obligations with remaining maturities of 60 days or less are valued at amortized cost. Other short-term debt securities are valued on a mark-to-market basis until such time as they reach a remaining maturity of 60 days, whereupon they will be valued at amortized cost using their value on the 61st day. All other securities and other assets are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Trustees. C. SECURITY TRANSACTIONS AND INTEREST INCOME Security transactions are accounted for on a trade date basis. Dividend income, less foreign taxes withheld, if any, is recorded on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities. Interest income is recorded on the accrual basis and includes amortization of premium and discount on investments. Realized gains and losses from securities transactions are recorded on the identified cost basis. All of the net investment income and realized and unrealized gains and losses from the security and foreign currency transactions of the Portfolio are allocated pro rata among the investors in the Portfolio at the time of such determination. D. REPURCHASE AGREEMENTS The Portfolio may enter into repurchase agreements with financial institutions deemed to be creditworthy by the Portfolio's Investment Advisers, subject to the seller's agreement to repurchase such securities at a mutually agreed upon price. Securities purchased subject to repurchase agreements are deposited with the Portfolio's custodian, and pursuant to the terms of the repurchase agreement must have an aggregate market value greater than or equal to the repurchase price plus accrued interest at all times. If the value of the underlying securities falls below the value of the repurchase price plus accrued interest, the Portfolio will require the seller to deposit additional collateral by the next business day. If the request for additional collateral is not met, or the seller defaults on its repurchase obligation, the Portfolio maintains the right to sell the underlying securities at market value and may claim any resulting loss against the seller. However, in the event of default or bankruptcy by the seller, realization and/or retention of the collateral may be subject to legal proceedings. E. FOREIGN CURRENCY TRANSACTIONS The books and records of the Portfolio are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. F. FORWARD FOREIGN CURRENCY CONTRACTS The Portfolio may enter into forward foreign currency contracts for the purpose of settling specific purchases or sales of securities denominated in a foreign currency or with respect to the Portfolio's investments. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Portfolio and the resulting unrealized appreciation or depreciation are determined using prevailing exchange rates. With respect to forward foreign currency contracts, losses in excess of amounts recognized in the Statement of Assets and Liabilities may arise due to changes in the value of the foreign currency or if the counterparty does not perform under the contract. G. OPTION CONTRACTS Upon the purchase of a put option or a call option by a Portfolio, the premium paid is recorded as an investment and valued at mark-to-market daily to reflect the current market value. When a purchased option expires, the Portfolio will realize a loss in the amount of the cost of the option. When the Portfolio enters into a closing sale transaction, the Portfolio will realize a gain or loss depending on whether the sale proceeds from the closing sale transaction are greater or less than the cost of the option. When the Portfolio exercises a put option, it realizes a gain or loss from the sale of the underlying security and the proceeds from such sale will be decreased by the premium originally paid. When the Portfolio exercises a call option, the cost of the security which the Portfolio purchases upon exercise will be increased by the premium originally paid. H. FUTURES CONTRACTS The Portfolio may enter into financial futures contracts which are contracts to buy a standard quantity of securities at a specified price on a future date. The Portfolio is required to deposit either in cash or securities an amount equal to a certain percentage of the contract amount. Subsequent payments are made or received by the Portfolio each day, dependent on the daily fluctuations in the value of the underlying security, and are recorded for financial statement purposes as unrealized gains or losses by the Portfolio. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. I. FEDERAL INCOME TAXES It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code. Therefore, no federal income tax provision is required. J. OTHER The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the financial statements. 12 - -------------------------------------------------------------------------------- LATIN AMERICAN EQUITY PORTFOLIO NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 2--FEES AND TRANSACTIONS WITH AFFILIATES The Portfolio has entered into an Administration and Services Agreement with Bankers Trust Company ("Bankers Trust"). Under this Administration and Services Agreement, Bankers Trust provides administrative, custody, transfer agency and shareholder services to the Portfolio in return for a fee computed daily and paid monthly at an annual rate of 0.20 of 1% of the Portfolio's average daily net assets. For the six months ended March 31, 1997, this fee aggregated $21,916. The Portfolio has entered into an Advisory Agreement with Bankers Trust. Under this Advisory Agreement, the Portfolio pays Bankers Trust an advisory fee computed daily and paid monthly at an annual rate of 1.00 of 1% of the Portfolio's average daily net assets. For the six months ended March 31, 1997, this fee aggregated $109,581. Bankers Trust has voluntarily undertaken to waive and reimburse expenses of the Portfolio, to the extent necessary, to limit all expenses to 1.00 of 1% of the average daily net assets of the Portfolio. For the six months ended March 31, 1997, expenses of the Portfolio have been reduced $34,911. Certain trustees and officers of the Portfolio are also directors, officers and/or employees of Edgewood. None of the trustees so affiliated received compensation for services as trustee of the Portfolio. Similarly, none of the Portfolio's officers received compensation from the Portfolio. For the six months ended March 31, 1997, the Portfolio paid brokerage commissions of $82,855. NOTE 3--PURCHASES AND SALES OF INVESTMENT SECURITIES The aggregate cost of purchases and proceeds from sales of investments, other than short-term obligations, for the six months ended March 31, 1997, were $15,923,955 and $12,438,551, respectively. For federal income tax purposes, the tax basis of investments held at March 31, 1997 was $21,659,919. The aggregate gross unrealized appreciation for all investments was $3,056,488 and the aggregate gross unrealized depreciation for all investments was $518,255. 13 This page intentionally left blank. 14 This page intentionally left blank. 15 BT INVESTMENT FUNDS LATIN AMERICAN EQUITY FUND Investment Adviser of the Portfolio and Administrator BANKERS TRUST COMPANY 130 Liberty Street 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 New York, NY 10006 INDEPENDENT ACCOUNTANTS COOPERS & LYBRAND L.L.P 1100 Main Street, Suite 900 Kansas City, MO 64105 COUNSEL WILLKIE FARR & GALLAGHER 153 East 53rd Street New York, NY 10022 ------------------------- For information on how to invest, shareholder account information and current price and yield information, please contact your relationship manager or the BT Mutual Fund Service Center at (800) 730-1313. ------------------------- -----END PRIVACY-ENHANCED MESSAGE-----