-----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, CphOWH6dSrpTRR0KI4zw6ekVIw/s49f1rOIYnT8cSUZ9hwcLGABUTtKUSLTj30zx zko6EQ8e+JcIjJwL4Igl5g== 0001024739-99-000743.txt : 19991206 0001024739-99-000743.hdr.sgml : 19991206 ACCESSION NUMBER: 0001024739-99-000743 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991031 FILED AS OF DATE: 19991203 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: SEC FILE NUMBER: 811-04760 FILM NUMBER: 99768392 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 ANNUAL REPORT SEPTEMBER 30, 1999, AS UPDATED THROUGH OCTOBER 31, 1999 [Graphic Omitted] BT Mutual Funds Latin American Equity Fund Annual Report TRUST: BT INVESTMENT FUNDS INVESTMENT ADVISOR: BANKERS TRUST COMPANY - ------------------------------------------------------------------------------- Latin American Equity Fund Table of Contents - ------------------------------------------------------------------------------- Letter to Shareholders .................................................... 3 Latin American Equity Fund Statements of Assets and Liabilities ................................... 6 Statements of Operations ............................................... 7 Statements of Changes in Net Assets .................................... 8 Financial Highlights ................................................... 9 Notes to Financial Statements .......................................... 10 Report of Independent Accountants ...................................... 12 Tax Information ........................................................ 12 Latin American Equity Portfolio Schedules of Portfolio Investments ...................................... 13 Statements of Assets and Liabilities .................................... 15 Statements of Operations ................................................ 16 Statements of Changes in Net Assets ..................................... 17 Financial Highlights .................................................... 17 Notes to Financial Statements ........................................... 18 Report of Independent Accountants ....................................... 20 Proxy Results ............................................................. 21 ------------------ The Fund is not insured by the FDIC and is not a deposit, obligation of or guaranteed by Bankers Trust Company. The Fund is subject to investment risks, including possible loss of principal amount invested. ------------------ 2 - ------------------------------------------------------------------------------- Latin American Equity Fund Letter to Shareholders - ------------------------------------------------------------------------------- We are pleased to present you with this annual report for the Latin American Equity Fund (the "Fund"), providing a review of the markets, 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. Please note that the Fund's Board of Trustees approved a change in its fiscal year end from September 30, 1999 to October 31, 1999, thus, while this is an annual report, our review covers the most recent thirteen months and life of the Fund as of the end of October. MARKET ACTIVITY Like the rest of the emerging markets, the Latin American equity markets performed strongly, up 34.3% in US dollar terms over the fiscal period. o Investor sentiment on the whole was buoyed by the perception that the last shoe had dropped in the threat of emerging market collapse that had led to broad market downturns in the fall of 1998. There was wide agreement that emerging markets overall were due for a time of healing and recovery. o Given the export profile of Latin America, the region also benefited as global commodity prices troughed in the early spring of 1999. o The only real clouds over the region during the fiscal period were Brazil's currency devaluation in January, Ecuador's eurobond default in the last quarter, and US interest rate fears throughout. Mexico, up 54.9% in US dollar terms, led the region's equity markets as export and domestic demand improved, oil prices firmed, and the peso gained ground. o Better than expected inflation and economic data within the nation and a US economy that showed little sign of slowing down also boosted Mexico's market. o Still, the ride was not entirely smooth, as a volatile Wall Street plus election concerns within Mexico did weigh on its own equity market at times. Many of the other markets in the region also posted double-digit returns for the fiscal year. o Chile and Venezuela, both countries with large commodity exposures, advanced 32.0% and 36.9% in US dollar terms, respectively. The bulk of Venezuela's gains came in the second half of the fiscal year, as the market was relieved that its August constitutional crisis did not snowball into the formation of a military government and that fiscal pressures eased on the back of higher oil prices. o Despite the deeper than anticipated recession in Argentina, Repsol's bid for oil and gas company YPF Sociedad Anonima helped to re-rate the Argentine market. Argentina's equity market rose 36.9% during the period. o Initially, there was market euphoria in Brazil over positive developments following its currency devaluation. However, realism set in once President Cardoso's popularity plummeted to new lows and Supreme Court injunctions were passed, blocking several measures in its fiscal reform program. Brazil ended the fiscal year up 12.5% in US dollar terms. o Colombia had the poorest showing, down 2.0% in US dollars, following a series of setbacks, including deeper than expected economic contraction, credit downgrades by the leading rating agencies, and currency devaluation. INVESTMENT REVIEW The Fund outperformed its Lipper category average for the one year ended October 31, 1999, but underperformed its benchmark. The Fund's performance is well ahead of both its benchmark and its category average for the one month, three years, five years and life of the Fund as of October 31, 1999. Sector allocation was the primary factor impacting Fund performance. The Fund's returns were enhanced by its overweight position in Chile during the first half and subsequent underweight in the second half of the fiscal year. The Fund also benefited from the portfolio's initial underweighting of Brazil and Colombia. However, detracting from performance was the Fund's overweighting of Argentina in the first half of the period and its overweighting of Peru in the second half. Our move to underweight Argentina and Venezuela in the latter half of the fiscal year did not help, although our strategy was to take advantage of the strong market moves and increase the portfolio's exposure to a neutral position in the more liquid markets of Brazil and Mexico.
- --------------------------------------------------------------------------------------------------------------------------- Periods ended October 31, 1999 Cumulative Total Returns Average Annual Total Returns - --------------------------------------------------------------------------------------------------------------------------- Past 1 Past 1 Past 3 Past 5 Since Past 1 Past 3 Past 5 Since month year years years inception year years years inception - --------------------------------------------------------------------------------------------------------------------------- Latin American Equity Fund/1 (inception 10/25/93) 2.26% 20.81% 8.26% (15.53)% 17.24% 20.81% 2.68% (3.32)% 2.68% - --------------------------------------------------------------------------------------------------------------------------- IFCI Latin American Index/2 1.83% 23.39% 5.47% (20.84)% 11.40% 23.39% 1.79% (4.56)% 1.81% - --------------------------------------------------------------------------------------------------------------------------- Lipper Latin American Average/3 2.22% 16.19% (4.40)% (19.48)% (6.93)% 16.19% (1.79)% (4.58)% (1.39)% - ---------------------------------------------------------------------------------------------------------------------------
- ----------- 1/ 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. During the period the Fund waived certain fees and expenses. Had these fees and expenses not been waived, the Fund's return would have been lower. 2/ Indices are unmanaged, and investments cannot be made in an index. 3/ Lipper figures represent the average of the total returns reported by all of the mutual funds designated by Lipper, Inc. as falling into the respective categories indicated. These figures do not reflect sales charges. 3 - ------------------------------------------------------------------------------- Latin American Equity Fund Letter to Shareholders - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Ten Largest Stock Holdings - ------------------------------------------------------------------------------- Telefonos De Mexico Class L ADR 9.7% ............................................................................... Telenorte Leste Participation 4.7% ............................................................................... Grupo Televisa GDR 4.6% ............................................................................... Telesp Participacoes Pfd 4.1% ............................................................................... Telecentro Sul Participa 4.0% ............................................................................... Grupo Modelo Ser `C' 3.8% ............................................................................... Vale Rio Doce ADR 3.7% ............................................................................... Banco De Galicia 3.7% ............................................................................... Formento Economico Mexico 3.4% ............................................................................... Kimberly Clark De Mexico 3.3% - ------------------------------------------------------------------------------- During the second half of the fiscal period, we carried out several stock specific and sector allocation strategies for the Fund. o We increased the Fund's banking exposures via Argentina's Banco Galicia, Chile's Banco Santander, and Peru's Credicorp, with the view that the region's economy had troughed. o For similar reason, exporters like CVRD and Concha y Toro were reduced in favor of domestically-oriented company purchases. o Telecommunications should be a prime beneficiary of any economic recovery, and so we increased the portfolio's Brazilian holdings in Embratel, Telecentro Sul, and Telesp Cellular as well as in Chile's CTC. o Our holding in Argentine oil and gas company YPF Sociedad Anonima received a big boost when Spain's Repsol made a bid for the remaining shares it did not own. o The recovering oil price also lifted Petrobras shares in Brazil. o In Mexico, we added to the Fund's holdings in economic recovery plays, such as cement company Cemex, beverage firm Femsa, and media company Televisa. Upon the fiscal period end, we increased the cash position of the Fund to provide cushion for possible volatility of fund flows over Year 2000 issues. MANAGER OUTLOOK While Latin America continues to face numerous challenges, our outlook for the year 2000 will likely improve with ongoing recovery from this past year's economic slump. Within the emerging markets, we believe that Latin America actually has the best return potential next year if risk premiums and emerging market bond spreads can narrow. We expect this should happen once the US bond market stabilizes. Brazilian Diversification of Portfolio Investments By Country as of October 31, 1999 (percentages are based on market value) Argentina 5% Peru 5% Brazil 37% Mexico 44% Chile 8% Colombia 1% equities remain very inexpensive on numerous parameters, but the nation has to make further progress on tackling the fiscal front. In our view, Mexico remains the stable quality play within the region, with the potential for credit rating upgrades. As we approach the end of 1999, we expect increased volatility in the region's equity markets on Year 2000 concerns. However, we believe that Year 2000 will pose only limited and temporary setbacks to the region. We will, of course, continue monitoring economic conditions and how they affect the financial markets, as we seek long-term capital appreciation. /s/ Michaelle Levy /s/ Julie Wang Michael Levy and Julie Wang Portfolio Manager of the Latin American Equity Portfolio October 31, 1999 4 - ------------------------------------------------------------------------------- Latin American Equity Fund Performance Comparison - ------------------------------------------------------------------------------- Comparison of Change in As of October 31, 1999 Value of a $10,000 Investment in the Latin Latin American IFCI Latin American Equity Fund and Equity Fund - $11,724 American Index - $11,140 the IFCI Latin American --------------------- ------------------------- Index since October 31, Oct-93 10000 10000 1993. Mar-94 12822 12275 Sep-94 14526 14736 - --------------------------------------- Mar-95 7350 7686 Total Return for the Periods Sep-95 8618 9602 Ended October 31, 1999 Mar-96 9408 9652 Sep-96 10838 10763 One Five Since Mar-97 12463 12536 Year Year 10/25/93/1 Sep-97 15961 15933 20.81% (3.32)%/2 2.68%/2 Mar-98 15484 13922 Sep-98 8777 8000 Mar-99 11876 10292 Ended September 30, 1999 Sep-99 11465 10939 One Five Since Oct-99 11724 11140 Year Year 10/25/93/1 28.54% (4.68)%/2 2.33%/2 As of September 30, 1999 1/ The Fund's inception date. Latin American IFCI Latin 2/ Annualized. Equity Fund - $11,465 American Index - $10,939 --------------------- ------------------------- Investment return and principal Oct-93 10000 10000 value will fluctuate so that shares, Mar-94 12822 12275 when redeemed, may be worth more or Sep-94 14526 14736 less than their original cost. Mar-95 7350 7686 - --------------------------------------- Sep-95 8618 9602 Mar-96 9408 9652 Sep-96 10838 10763 Mar-97 12463 12536 Sep-97 15961 15933 Mar-98 15484 13922 Sep-98 8777 8000 Mar-99 11876 10292 Sep-99 11465 10939 Past performance is not indicative of future performance. Performance figures assume the reinvestment of dividends and capital gain distributions.
5 - ------------------------------------------------------------------------------- Latin American Equity Fund Statements of Assets and Liabilities - -------------------------------------------------------------------------------
October 31, 1999/1 September 30, 1999 ------------------- ------------------ Assets Investment in Latin American Equity Portfolio, at Value .................... $ 4,781,424 $ 4,743,190 Receivable for Shares of Beneficial Interest Subscribed .................... 250 250 Prepaid Expenses and Other ................................................. 12,291 12,303 Due from Bankers Trust ..................................................... 43,771 40,764 -------------- --------------- Total Assets .................................................................. 4,837,736 4,796,507 -------------- --------------- Liabilities Payable for Shares of Beneficial Interest Redeemed ......................... 6,358 4,333 Accrued Expenses and Other ................................................. 25,199 23,887 -------------- --------------- Total Liabilities ............................................................. 31,557 28,220 -------------- --------------- Net Assets .................................................................... $ 4,806,179 $ 4,768,287 ============== =============== Composition of Net Assets Paid-in Capital ............................................................ $ 12,848,260 $ 12,868,643 Undistributed Net Investment Income ........................................ 100,309 100,309 Accumulated Net Realized Loss from Investment, Foreign Currency and Forward Foreign Currency Transactions .................................... (8,039,358) (7,979,522) Net Unrealized Depreciation on Investment and Foreign Currencies ........... (103,032) (221,143) -------------- --------------- Net Assets .................................................................... $ 4,806,179 $ 4,768,287 ============== =============== Net Asset Value, Offering and Redemption Price Per Share (net assets divided by shares outstanding) ..................................................... $ 10.85 $ 10.61 ============== =============== Shares Outstanding ($0.001 par value per share, unlimited number of shares of beneficial interest authorized) ......................................... 443,019 449,622 ============== ===============
- ---------------- 1/ On September 8, 1999, the Board of Trustees approved the change of the fiscal year end from September 30 to October 31. See Notes to Financial Statements. 6 - ------------------------------------------------------------------------------- Latin American Equity Fund Statements of Operations - -------------------------------------------------------------------------------
For the period For the October 1, 1999 to year ended October 31, 1999/1 September 30, 1999 ------------------ ------------------ Investment Income Income (Expenses in Excess) Allocated from Latin American Equity Portfolio, net ........................................................ $ (332) $ 152,368 -------------- ---------------- Expenses Administration and Services Fees ......................................... 3,746 62,189 Professional Fees ........................................................ 4,839 30,832 Printing and Shareholder Reports ......................................... 1,018 23,095 Registration Fees ........................................................ 30 15,982 Trustees Fees ............................................................ 364 6,376 Miscellaneous ............................................................ 306 7,144 ------------- ---------------- Total Expenses ........................................................... 10,303 145,618 Less Fees Waived/Expenses Reimbursed by Bankers Trust .................... (6,754) (86,410) ------------- ---------------- Net Expenses .......................................................... 3,549 59,208 ------------- --------------- Net Investment (Expenses in Excess of) Income ............................... (3,881) 93,160 ------------- --------------- Realized and Unrealized Gain (Loss) on Investment, Foreign Currencies and Forward Foreign Currency Contracts Net Realized Gain (Loss) from: Investment Transactions ............................................... (59,836) (935,651) Foreign Currency Transactions ......................................... (2,042) (61,801) Forward Foreign Currency Transactions ................................. (1,159) 210,639 Net Change in Unrealized Appreciation/Depreciation on Investment and Foreign Currencies .................................................... 173,993 1,876,393 ------------- --------------- Net Realized and Unrealized Gain on Investment, Foreign Currencies, and Forward Foreign Currency Contracts ....................................... 110,956 1,089,580 ------------- --------------- Net Increase in Net Assets from Operations .................................. $ 107,075 $ 1,182,740 ============= ===============
- -------------- 1/ On September 8, 1999, the Board of Trustees approved the change of the fiscal year end from September 30 to October 31. See Notes to Financial Statements. 7 - ------------------------------------------------------------------------------- Latin American Equity Fund Statements of Changes in Net Assets - -------------------------------------------------------------------------------
For the period For the period For the October 1, 1999 to year ended year ended October 31, 1999/1 September 30, 1999 September 30, 1998 ---------------- ---------------------------------------- Increase (Decrease) in Net Assets from: Operations Net Investment (Expense in Excess of) Income ......... $ (3,881) $ 93,160 $ 362,238 Net Realized Loss from Investment, Foreign Currency and Forward Foreign Currency Transactions ....................................... (63,037) (786,813) (5,595,775) Net Change in Unrealized Appreciation/Depreciation on Investment and Foreign Currencies ............... 173,993 1,876,393 (7,638,638) ---------------- ---------------- ---------------- Net Increase (Decrease) in Net Assets from Operations ... 107,075 1,182,740 (12,872,175) ---------------- ---------------- ---------------- Distributions to Shareholders Net Investment Income ................................ -- (378,358) (68,996) ---------------- ---------------- ---------------- Capital Transactions in Shares of Beneficial Interest Proceeds from Sales of Shares ........................ 26,125 16,499,619 45,435,848 Dividend Reinvestments ............................... -- 312,608 41,257 Cost of Shares Redeemed .............................. (95,308) (19,104,660) (63,692,767) ---------------- ---------------- ---------------- Net Decrease from Capital Transactions in Shares of Beneficial Interest ................................ (69,183) (2,292,433) (18,215,662) ---------------- ---------------- ---------------- Total Increase (Decrease) in Net Assets ................. 37,892 (1,488,051) (31,156,833) Net Assets .............................................. Beginning of Period ..................................... 4,768,287 6,256,338 37,413,171 ---------------- ---------------- ---------------- End of Period (Including undistributed net investment income of $100,309, $100,309 and $236,669, respectively) ......................................... $ 4,806,179 $ 4,768,287 $ 6,256,338 ================ ================ ================
- --------------- 1/ On September 8, 1999, the Board of Trustees approved the change of the fiscal year end from September 30 to October 31. See Notes to Financial Statements. 8 - ------------------------------------------------------------------------------- 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 years ended September 30, October 1, 1999 to -------------------------------------------- October 31, 1999/2 1999 1998 1997 1996 1995 ------------------ ---- ---- ---- ---- ---- Per Share Operating Performance: Net Asset Value, Beginning of Period .............. $10.61 $ 8.75 $15.74 $10.71 $ 8.50 $ 14.59 ------ ------ ------ ------ ------- ------- Income fromInvestment Operations Net Investment (Expenses in Excess of) Income .. (0.01) 0.08 0.44 0.001 0.02 0.03 Net Realized and Unrealized Gain (Loss) on Investment, Foreign Currencies and Forward Foreign Currency Transactions ................ 0.25 2.30 (7.40) 5.03 2.19 (5.92) ------ ------ ------ ------ ------- ------- Total from Investment Operations .................. 0.24 2.38 (6.96) 5.03 2.21 (5.89) ------ ------ ------ ------ ------- ------- Distributions to Shareholders Net Investment Income .......................... -- (0.52) (0.03) 0.001 -- -- Net Realized Gains -- -- -- -- -- (0.20) ------ ------ ------ ------ ------- ------- Total Distributions ............................... -- (0.52) (0.03) -- -- (0.20) ------ ------ ------ ------ ------- ------- Net Asset Value, End of Period .................... $10.85 $10.61 $ 8.75 $15.74 $ 10.71 $ 8.50 ====== ====== ====== ====== ======= ======= Total Investment Return ........................... 2.26% 28.54% (44.28)% 47.00% 26.00% (40.68)% Supplemental Data and Ratios: Net Assets, End of Period (000s omitted) $4,806 $4,768 $6,256 $37,413 $16,997 $13,624 Ratios to Average Net Assets: Net Investment (Expenses in Excess of) Income 1.00%/3 1.42% 1.42% 0.16% 0.16% 0.29% Expenses, Including Expenses of the Latin American Equity Portfolio ........... 1.90%/3 1.90% 2.00% 2.00% 2.00% 2.00% Decrease Reflected in Above Expense Ratio Due to Fees Waived/Expenses Reimbursed by Bankers Trust ............... 6.07%/3 2.38% 0.66% 0.44% 0.66% 1.17%
- --------------- 1/ Less than $0.01. 2/ On September 8, 1999, the Board of Trustees approved the change of the fiscal year end from September 30 to October 31. 3/ Annualized. See Notes to Financial Statements. 9 - ------------------------------------------------------------------------------- Latin American Equity Fund Notes to Financial Statements - ------------------------------------------------------------------------------- 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 began operations on October 25, 1993. The Fund seeks to achieve its investment objective by investing 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 value of the Fund's investment in the Portfolio reflects its proportionate interest in the net assets of the Portfolio. At September 30, 1999, the Fund's investment was approximately 100% of the Portfolio. At October 31, 1999, the Fund's investment was approximately 100% of the Portfolio. The financial statements of the Portfolio, including the schedule of portfolio investments, are contained elsewhere in this report and should be read in conjunction with the Fund's financial statements. B. Investment Valuation Valuation of securities by the Portfolio is discussed in Note 1B of the Portfolio's Notes to Financial Statements which are included elsewhere in this report. C. 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. D. Distributions 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 are also made annually to the extent they are offset by any capital loss carryforwards. 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 all of its taxable income to shareholders. Therefore, no federal income tax provision is required. The Fund may periodically make reclassifications among certain of its capital accounts as a result of the differences in the characterization and allocation of certain income and capital gain distributions determined annually in accordance with federal tax regulations which may differ from generally accepted accounting principles. The Fund has capital loss carryforwards in the amounts of $749,851, $6,200,128, and $661,170 expiring in 2003, 2006, and 2007, respectively. F. Other The Trust accounts separately for the assets, liabilities, and operations of each fund. Expenses directly attributable to a fund are charged to that fund, while expenses which are attributable to all of the Trust's funds are allocated among them. Investment transactions are accounted for on the trade date basis. Realized gains and losses are determined on the identified cost basis. 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. Actual results could differ from those estimates. 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 .95% of the Fund's average daily net assets. Bankers Trust has voluntarily undertaken to waive its fees and reimburse expenses of the Fund, to the extent necessary, to limit all expenses to .90% of the average daily net assets of the Fund, excluding expenses of the Portfolio and 1.90% of the average daily net assets of the Fund, including expenses of the Portfolio. ICC Distributors, Inc. provides distribution services to the Fund. Bankers Trust was a wholly owned subsidiary of Bankers Trust Corporation ("BT Corp."). On June 4, 1999, BT Corp. was acquired by Deutsche Bank AG ("Deutsche Bank"). As a result of the transaction, Bankers Trust became an indirect wholly-owned subsidiary of Deutsche Bank. 10 - ------------------------------------------------------------------------------- Latin American Equity Portfolio Notes to Financial Statements - ------------------------------------------------------------------------------- Note 3--Shares of Beneficial Interest At October 31, 1999, there were an unlimited number of shares of beneficial interest authorized. Transactions in shares of beneficial interest were as follows: For the period For the October 1,1999 to year ended October 31, 1999 September 30, 1999 ------------------- ---------------------- Shares Amount Shares Amount ------ ------ ------ ------ Sold 2,470 $ 26,125 1,615,521 $ 16,499,619 Reinvested -- -- 36,098 312,608 Redeemed (9,073) (95,308) (1,917,401) (19,104,660) ------ ---------- ---------- ------------ Net Decrease (6,603) $ (69,183) (265,782) $ (2,292,433) ====== ========== ========== ============ For the year ended September 30, 1998 ---------------------- Shares Amount ------ -------- Sold 3,404,954 $ 45,435,848 Reinvested 3,104 41,257 Redeemed (5,069,215) (63,692,767) ---------- ------------ Net Decrease (1,661,157) $(18,215,662) ========== ============ Note 4--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. Investment in securities of issuers based in underdeveloped emerging markets involves special risks and considerations not typically associated with investing in U.S. companies. These 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. Additionally, developments affecting emerging market investments can not always be foreseen. 11 - ------------------------------------------------------------------------------- Latin American Equity Fund Report of Independent Accountants - ------------------------------------------------------------------------------- To the Trustees of BT Investment Funds and Shareholders of Latin American Equity Fund: In our opinion, the accompanying statements of assets and liabilities and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the Latin American Equity Fund (one of the funds comprising BT Investment Funds, hereafter referred to as the "Fund") at October 31, 1999 and September 30, 1999, and the results of its operations, the changes in its net assets and the financial highlights for each of the fiscal periods presented, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 1999 and September 30, 1999 by correspondence with the transfer agent, provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP Baltimore, Maryland November 19, 1999 - ------------------------------------------------------------------------------- Tax Information (Unaudited For the Periods Ended October 31, 1999 and September 30, 1999) - ------------------------------------------------------------------------------- During the year ended September 30, 1999, the Fund received income from foreign sources in the amount of $187,224. The Fund has paid foreign taxes in the amount of $5,889 or $0.013 per share. Such amounts are eligible for the foreign tax credit. You should consult your tax advisor relating to the appropriate treatment of foreign taxes paid. 12 - ------------------------------------------------------------------------------- Latin American Equity Portfolio Schedule of Portfolio Investments October 31, 1999 - ------------------------------------------------------------------------------- Shares Security Value - ------ -------- ----- COMMON STOCK - 78.5% Argentina - 4.9% 8,300 Banco de Galicia y Buenos Aires SA de C.V. ADR ..................................... $ 175,337 4,982 Perez Companc SA ADR ................................. 60,511 ---------- 235,848 ---------- Brazil - 17.6% 4,904 Centrais Electricas Brasileiras SA ................... 84,415 9,000 Companhia Vale do Rio Doce ADR ....................... 175,524 5,700 Embratel Participacoes SA ADR ........................ 73,387 3,200 Tele Centro Sul Participacoes SA ADR ................. 191,200 13,313 Tele Norte Leste Participacoes SA ADR ................ 224,657 1,400 Telesp Celular Participacoes SA ADR .................. 34,475 2,500 Uniao de Bancos Brasileiros SA GDR ................... 57,812 ---------- 841,470 ---------- Chile - 8.1% 2,900 Banco Santander Chile ADR ............................ 47,488 3,709 Chilectra SA Chile ADR ............................... 65,956 4,634 Cia de Telecomunicaciones de Chile SA ADR ................................................ 77,330 4,800 Distribucion y Servicio D&S SA ADR ................... 78,300 4,400 Embotelladora Andina SA ADR .......................... 71,500 3,800 Empresa Nacional de Electricidad SA ADR ............................................. 48,450 ---------- 389,024 ---------- Colombia - 1.3% 19,500 Bavaria SA ........................................... 64,623 ---------- Mexico - 42.1% 40,000 Alfa Corp. SA ........................................ 153,231 6,779 Cemex SA de CV ADR (a) ............................... 152,528 175,000 Desc SA de CV Series B ............................... 141,707 4,900 Fomento Economico Mexicano SA de CV ADR ................................................ 160,781 23,192 Grupo Carso de CV Series 1A (a) ...................... 97,029 35,233 Grupo Financiero Banamex Accival, SA de CV "O" shares (a) ............................... 87,968 30,000 Grupo Industrial Saltillo SA de CV Series B ........................................... 78,017 75,000 Grupo Modelo SA de CV Series C ....................... 182,974 5,205 Grupo Televisa SA GDR (a) ............................ 221,213 48,771 Kimberly-Clark de Mexico SA de CV Series A ........................................... 155,945 30,807 Organizacion Soriana SA de CV Series B 114,177 5,446 Telefonos de Mexico SA ADR - Class L 465,633 ---------- 2,011,203 ---------- Peru - 4.5% 42,341 Cementos Lima SA ..................................... 49,047 7,200 Credicorp Ltd. ....................................... 76,500 75,000 Telefonica de Peru S.A.A. Series B ................... 87,951 ---------- 213,498 ---------- Total Common Stock (Cost $3,846,940) .............................. 3,755,666 ---------- Shares Security Value - ------ -------- ----- PREFERRED STOCK - 17.4% Brazil - 17.4% 1,831 Banco Estado de Sao Paolo SA ......................... 46,999 2,500 Banco Itau SA ........................................ 143,440 11,805 Companhia Cervejaria Brahma ADR ...................... 147,563 8,538 Gerdau SA ............................................ 154,413 906 Petroleo Brasileiro SA ............................... 144,261 12,206 Telesp Participacoes SA .............................. 195,718 ---------- Total Preferred Stock (Cost $846,015) ............................. 832,394 ---------- OTHER SECURITIES - 0.2% 14 Banco Hipotecario SA Warrants (a) (Cost $700) ........................................ 7,984 ---------- Total Investments (Cost $4,693,655)...................... 96.1% 4,596,044 Other Assets in Excess of Liabilities.................... 3.9% 185,387 ----- ---------- Net Assets .............................................. 100.0% $4,781,431 ===== ========== - --------------- (a) Non-Income Producing Security Abbreviations: ADR - American Depository Receipt GDR - Global Depository Receipt Industry Diversification (as a percentage of Total Investments): Telecommunications ............. 29.38% Banks .......................... 12.09% Brewery ........................ 8.60% Diversified .................... 8.53% Steel Producers ................ 5.06% Beverages ...................... 5.05% Broadcasting ................... 4.81% Oil ............................ 4.46% Utilities ...................... 4.33% Mining ......................... 3.82% Consumer Goods ................. 3.39% Building Materials ............. 3.32% Retail ......................... 2.48% Finance ........................ 1.91% Retail/Foods ................... 1.70% Building & Construction ........ 1.07% ------- 100.00% ====== See Notes to Financial Statements. 13 - ------------------------------------------------------------------------------- Latin American Equity Portfolio Schedule of Portfolio Investments September 30, 1999 - ------------------------------------------------------------------------------- Shares Security Value - ------ -------- ----- COMMON STOCK - 78.7% Argentina - 3.6% 4,982 Perez Companc SA ADR ................................. $ 60,592 4,231 Telefonica de Argentina SA ADR ....................... 111,593 ------------ 172,185 ------------ Brazil - 22.1% 1,889 Companhia Energetica de Minas Geras SA ADR ............................................. 28,542 14,805 Companhia Cervejaria Brahma ADR ...................... 177,660 11,592 Companhia Brasileira Distribuicao Grupo Pao Acucar ADR ............................... 229,666 11,400 Companhia Vale Rio Doce ADR .......................... 240,473 4,904 Centrais Electricas Brasileiras SA ................... 81,738 1,500 Tele Centro Sul Participacoes SA ADR ................. 83,250 13,313 Tele Norte Leste Participacoes SA ADR ................ 206,351 ------------ 1,047,680 ------------ Chile - 7.1% 3,709 Chilectra SA Chile ADR ............................... 70,311 4,634 Cia de Telecomunicaciones de Chile SA ADR ............................................. 83,702 4,836 Vina Concha Y Toro Chile SA ADR ...................... 182,559 ------------ 336,572 ------------ Colombia - 1.3% 19,500 Bavaria SA .......................................... 59,353 ------------ Mexico - 41.3% 40,000 Alfa Corp. SA ........................................ 169,266 4,680 Cemex SA de CV ADR (a) ............................... 112,905 45,802 Corporacion GEO SA de CV Series B (a) ....................................... 115,899 175,000 Desc SA de CV Series B ............................... 149,793 23,192 Grupo Carso de CV Series 1A (a) ...................... 96,776 35,233 Grupo Financiero Banamex Accival, SA de CV "O" shares (a) ............................ 63,407 30,000 Grupo Industrial Saltillo SA de CV Series B ........................................ 81,530 75,000 Grupo Modelo SA de CV Series C ....................... 190,184 5,005 Grupo Televisa SA GDR (a) ............................ 199,887 48,771 Kimberly-Clark de Mexico SA de CV Series A ........................................ 172,202 47,507 Organizacion Soriana SA de CV Series B 190,613 5,846 Telefonos de Mexico SA ADR Class L ................... 416,527 ------------ 1,958,989 ------------ Peru - 3.3% 42,341 Cementos Lima, SA .................................... 53,865 75,000 Telefonica de Peru S.A.A. Series B ................... 101,701 ------------ 155,566 ------------ Total Common Stock (Cost $3,946,891) .............................. 3,730,345 ------------ Shares Security Value - ------ -------- ----- PREFERRED STOCK - 15.0% Brazil - 15.0% 10,000 Banco Bradesco SA PN ................................. $ 47,865 1,831 Banco Estado de Sao Paolo SA ......................... 43,396 2,500 Banco Itau SA ........................................ 130,210 8,538 Gerdau SA Pfd ........................................ 133,421 1,492 Petroleo Brasileiro SA ............................... 223,151 8,750 Telesp Participacoes SA .............................. 134,911 ------------ Total Preferred Stock (Cost $772,961) ............................ 712,954 ------------ OTHER SECURITIES - 0.1% Argentina - 0.1% 14 Banco Hipotecario SA Warrants (Cost $700) ........................................ $ 6,021 ------------ Total Investments (Cost $4,720,552) ..................... 93.8% 4,449,320 Other Assets in Excess of Liabilities ................... 6.2% 293,878 ----- ------------ Net Assets .............................................. 100.0% $ 4,743,198 ===== ============ - --------------- (a) Non-Income Producing Security Abbreviations: ADR - American Depository Receipt GDR - Global Depository Receipt Industry Diversification (as a percentage of Total Investments): Telecommunications ............. 25.58% Brewery ........................ 9.60% Diversified .................... 9.35% Oil ............................ 6.38% Mining ......................... 5.40% Food-Retail .................... 5.16% Banks .......................... 5.11% Steel Producers ................ 4.83% Broadcasting ................... 4.49% Retail ......................... 4.28% Beverages ...................... 4.10% Utilities ...................... 4.06% Consumer Goods ................. 3.87% Real Estate .................... 2.60% Building Materials ............. 2.54% Finance ........................ 1.43% Building & Construction ........ 1.22% ------- 100.00% ====== See Notes to Financial Statements. 14 - ------------------------------------------------------------------------------- Latin American Equity Portfolio Statements of Assets and Liabilities - -------------------------------------------------------------------------------
October 31, 1999/2 September 30, 1999 ------------------ ------------------ Assets Investments, at Value (Cost $4,693,655 and $4,720,552, respectively) ...... $ 4,596,044 $ 4,449,320 Cash/1 .................................................................... 119,957 239,236 Dividends and Interest Receivable ......................................... 65,619 77,575 Due from Bankers Trust .................................................... 20,772 8,454 -------------- --------------- Total Assets ................................................................. 4,802,392 4,774,585 -------------- --------------- Liabilities Accrued Expenses and Other ................................................ 20,961 31,387 -------------- --------------- Total Liabilities ............................................................ 20,961 31,387 -------------- --------------- Net Assets ................................................................... $ 4,781,431 $ 4,743,198 ============== =============== Composition of Net Assets Paid-in Capital ........................................................... $ 4,884,836 $ 5,020,596 Net Unrealized Depreciation on Investments and Foreign Currency ........... (103,405) (277,398) -------------- --------------- Net Assets ................................................................... $ 4,781,431 $ 4,743,198 ============== ===============
- --------------- 1/ Includes foreign cash of $13,481 and $1,361, with a cost of $13,311 and $1,341, respectively. 2/ On September 8, 1999, the Board of Trustees approved the change of the fiscal year end from September 30 to October 31. See Notes to Financial Statements. 15 - ------------------------------------------------------------------------------- Latin American Equity Portfolio Statements of Operations - -------------------------------------------------------------------------------
For the period For the October 1, 1999 to year ended October 31, 1999/1 September 30, 1999 ------------------ ------------------ Investment Income Dividends (net of foreign withholding tax of $0 and $5,889, respectively) ............ $ 2,869 $ 190,402 Interest ............................................................................. 717 27,176 ------------ ----------- Total Investment Income ................................................................. 3,586 217,578 ------------ ----------- Expenses Advisory Fees ........................................................................ 3,918 65,209 Professional Fees .................................................................... 15,491 33,606 Custody Fees ......................................................................... 328 15,302 Administration and Services Fees ..................................................... 784 13,076 Trustees Fees ........................................................................ 276 6,228 Miscellaneous ........................................................................ 140 874 ------------ ----------- Total Expenses ....................................................................... 20,937 134,295 Less Fees Waived/Expenses Reimbursed by Bankers Trust ................................ (17,019) (69,086) ------------ ----------- Net Expenses ...................................................................... 3,918 65,209 ------------ ----------- Net Investment (Expenses in Excess of) Income ........................................... (332) 152,369 ------------ ----------- Realized and Unrealized Gain (Loss) on Investments, Foreign Currencies and Forward Foreign Currency Contracts ............................................... Net Realized Gain (Loss) from: ....................................................... Investment Transactions ........................................................... (59,836) (935,652) Foreign Currency Transactions ..................................................... (2,042) (61,801) Forward Foreign Currency Transactions ............................................. (1,159) 210,639 Net Change in Unrealized Appreciation/Depreciation on Investments and Foreign Currencies ................................................................ 173,993 1,876,394 ------------ ----------- Net Realized and Unrealized Gain on Investments, Foreign Currencies and Forward Foreign Currency Contracts ................................................... 110,956 1,089,580 ------------ ----------- Net Increase in Net Assets from Operations .............................................. $ 110,624 $ 1,241,949 ============ ============
- --------------- 1/ On September 8, 1999, the Board of Trustees approved the change of the fiscal year end from September 30 to October 31. 16 - ------------------------------------------------------------------------------- Latin American Equity Portfolio Statements of Changes in Net Assets - -------------------------------------------------------------------------------
For the period For the For the October 1, 1999 to year ended year ended October 31, 19991 September 30, 1999 September 30, 1998 ------------------ ------------------ ------------------ Increase (Decrease) in Net Assets from: Operations Net Investment (Expenses in Excess of) Income ................. $ (332) $ 152,369 $ 616,975 Net Realized Loss from Investments, Foreign Currency, and Forward Foreign Currency Transactions .................. (63,037) (786,814) (5,595,779) Net Change in Unrealized Appreciation/Depreciation on Investments and Foreign Currencies ...................... 173,993 1,876,394 (7,638,639) ------------- ------------- -------------- Net Increase (Decrease) in Net Assets from Operations ............ 110,624 1,241,949 (12,617,443) ------------- ------------- -------------- Capital Transactions Proceeds from Capital Invested ................................ 26,125 15,579,130 45,172,546 Value of Capital Withdrawn .................................... (98,516) (18,532,001) (63,505,446) ------------- ------------- -------------- Net Decrease in Net Assets from Capital Transactions .................................................. (72,391) (2,952,871) (18,332,900) ------------- ------------- -------------- Total Increase (Decrease) in Net Assets .......................... 38,233 (1,710,922) (30,950,343) Net Assets Beginning of Period .............................................. 4,743,198 6,454,120 37,404,463 ------------- ------------- -------------- End of Period .................................................... $ 4,781,431 $ 4,743,198 $ 6,454,120 ============= ============= ==============
- ------------------------------------------------------------------------------- Financial Highlights - ------------------------------------------------------------------------------- Contained below are selected ratios to average net assets and other supplemental data for the periods indicated for the Latin American Equity Portfolio.
For the period For the years ended September 30, October 1, 1999 to ----------------------------------------------------- October 31, 19991 1999 1998 1997 1996 1995 ------------------- ------- ------- -------- -------- ------- Supplemental Data and Ratios: Net Assets, End of Period (000s omitted) $4,781 $4,743 $6,454 $37,404 $17,051 $13,658 Ratios to Average Net Assets: Net Investment (Expenses in Excess of) Income (0.08)%/2 2.33% 2.41% 1.16% 1.21% 1.27% Expenses 1.00%/2 1.00% 1.00% 1.00% 1.00% 1.00% Decrease Reflected in Above Expense Ratio Due to Fees Waived/Expenses Reimbursed by Bankers Trust 4.35%/2 1.06% 0.53% 0.32% 0.31% 0.80% Portfolio Turnover Rate 23% 369% 92% 122% 171% 161%
- --------------- 1/ On September 8, 1999, the Board of Trustees approved the change of the fiscal year end from September 30 to October 31. 2/ Annualized. See Notes to Financial Statements. 17 - ------------------------------------------------------------------------------- Latin American Equity Portfolio Notes to Financial Statements - ------------------------------------------------------------------------------- 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 an open-end management investment company. The Portfolio was organized on August 6, 1993 as an unincorporated trust under the laws of New York and began 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. Short-term debt securities are valued at market value until such time as they reach a remaining maturity of 60 days, whereupon they are valued at amortized cost using their value on the 61st day. All other securities and other assets are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Trustees. C. 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. Expenses are recorded as incurred. 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. 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. E. 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. F. Federal Income Taxes The Portfolio is considered a Partnership under the Internal Revenue Code. Therefore, no federal income tax provision is necessary. G. 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. Actual results could differ from those estimates. 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 .20% of the Portfolio's average daily net assets. 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 the Portfolio's average daily net assets. Bankers Trust has voluntarily undertaken to waive its fees and reimburse expenses of the Portfolio, to the extent necessary, to limit all expenses to 1.00% of the average daily net assets of the Portfolio. The Portfolio may invest in the Institutional Cash Management Fund ("the Fund"), an open-end management investment company managed by Bankers Trust Company ("the Company"). The fund is offered as a cash management option to the Portfolio and other accounts managed by the Company. Distributions from the fund to the Portfolio as of October 31, 1999 and September 30, 1999 amounted to $0 and $9,067, respectively, and are included in dividend income. At September 30, 1999, the Portfolio was a participant with other affiliated entities in a revolving credit facility in the amount of $100,000,000, which expires April 29, 2000. A commitment fee of .10% per annum on the average daily amount of the available commitment is payable on a quarterly basis and apportioned equally among all participants. On October 8, 1999, the revolving credit facility was increased to $150,000,000. No amounts were drawn down or outstanding under the credit facility for the periods ended October 31, 1999 and September 30, 1999. 18 - ------------------------------------------------------------------------------- Latin American Equity Portfolio Notes to Financial Statements - ------------------------------------------------------------------------------- Bankers Trust was a wholly owned subsidiary of Bankers Trust Corporation ("BT Corp."). On June 4, 1999, BT Corp. was acquired by Deutsche Bank AG ("Deutsche Bank"). As a result of the transaction, Bankers Trust became an indirect wholly-owned subsidiary of Deutsche Bank. 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 period ended October 31, 1999, were $1,080,668 and $1,047,729, respectively. For the year ended September 30, 1999, the amounts were $22,305,513 and $24,652,243, respectively. For Federal income tax purposes, the tax basis of investments held at October 31, 1999 was $5,121,864. The aggregate gross unrealized appreciation for all investments at October 31, 1999 was $183,512, and the aggregate gross unrealized depreciation for all investments was $709,332. At September 30, 1999 the tax basis of investments held was $5,343,937. The aggregate gross unrealized appreciation for all investments at September 30, 1999 was $11,763 and the aggregate gross unrealized depreciation for all investments was $906,380. Note 4--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. Investment in securities of issuers based in underdeveloped emerging markets involves special risks and considerations not typically associated with investing in U.S. companies. These 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. Additionally, developments affecting emerging market investments can not always be foreseen. 19 - ------------------------------------------------------------------------------- Latin American Equity Portfolio Report of Independent Accountants - ------------------------------------------------------------------------------- To the Trustees and Holders of Beneficial Interest of Latin American Equity Portfolio: In our opinion, the accompanying statements of asset and liabilities, including the portfolios of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the Latin American Equity Portfolio (hereafter referred to as the "Portfolio") at October 31, 1999 and September 30, 1999 and the results of its operations, the changes in its net assets and the financial highlights for each of the fiscal periods presented, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Portfolio's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 1999 and September 30, 1999 by correspondence with the custodian and brokers, provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP Baltimore, Maryland November 19, 1999 20 - ------------------------------------------------------------------------------- Latin American Equity Fund Proxy Results (unaudited) - ------------------------------------------------------------------------------- For the year ended September 30, 1999, the Bankers Trust Funds shareholders voted on the following proposals at the annual meeting of shareholders on October 8, 1999 or as adjourned. The description of each proposal and number of shares voted are as follows: 1. To elect the Bankers Trust Funds Board of Trustees. Shares Shares Voted Voted Withheld For Authority ------ ------------ Messr Biggar 398,393 20,881 Messr Dill 398,393 20,881 Messr Hale 398,393 20,881 Messr Langton 398,393 20,881 Messr Saunders 398,393 20,881 Messr Van Benschoten 398,393 20,881 Dr. Gruber 398,393 20,881 Dr. Herring 398,393 20,881 2. To approve the New Investment Advisory Agreement with Bankers Trust Company. For Against Abstain --------- ------- ------- 415,302 2,560 1,412 3. To approve the New Investment Advisory Agreement with Morgan Grenfell, Inc. For Against Abstain --------- ------- ------- 414,849 2,778 1,647 4. To approve the New Investment Sub-advisory Agreement with Morgan Grenfell Investment Services Ltd. For Against Abstain --------- ------- ------- 414,849 2,778 1,647 5. To ratify the selection of PricewaterhouseCoopers LLP as the independent accountants of the Fund and its corresponding Portfolio. For Against Abstain --------- ------- ------- 415,497 2,813964 964 21 This page intentionally left blank. This page intentionally left blank. [GRAPHIC OMITTED] Bankers Trust Architects of Value For information on how to invest, shareholder account information and current price and yield information, please contact your relationship manager or write to us at: BT Service Center P.O. Box 419210 Kansas City, MO 64141-6210 or call our toll-free number: 1-800-730-1313 This report must be preceded or accompanied by a current prospectus for the Fund. Latin American Equity Fund CUSIP #055922785 BT Investment Funds 497ANN (9/99) Distributed by: ICC Distributors, Inc. Two Portland Square Portland, ME 04101 -----END PRIVACY-ENHANCED MESSAGE-----