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1998
SEMIANNUAL REPORT
October 31, 1998
National
Investors Cash
Management
Fund, Inc.
.................................................
Three money market portfolios to choose from:
Kennedy Cabot Money Market
Kennedy Cabot U.S. Government
Kennedy Cabot Municipal
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS
RICHARD W. DALRYMPLE
President of
Teamwork Mgmt., Inc.
CAROLYN B. LEWIS
President of
The CBL Group
ANTHONY J. PACE
President/CEO of
A.J. Pace & Co. Inc.
JAMES F. RITTINGER
Partner
Satterlee Stephens
Burke & Burke LLP
THEODORE ROSEN
Chairman
U.S. Energy Systems, Inc.
EXECUTIVE OFFICERS
GEORGE A. RIO*
President, Treasurer
and Chief Financial Officer
CHRISTOPHER J. KELLEY*
Vice President and Secretary
*Affiliated person of the Distributor
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TABLE OF CONTENTS
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Statements of Assets and Liabilities....................... 4
Statements of Operations................................... 5
Statements of Changes in Net Assets........................ 6
Financial Highlights....................................... 7
Notes to Financial Statements.............................. 8
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
KENNEDY KENNEDY
CABOT CABOT KENNEDY
MONEY U.S. CABOT
MARKET GOVERNMENT MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
ASSETS
Investments in securities, at value
(Note 4) $ 99,955 $ --- $ ---
Cash 517 996 996
------------- ------------- -------------
TOTAL ASSETS 100,472 996 996
LIABILITIES
Dividends payable to shareholders 30 --- ---
------------- ------------- -------------
TOTAL LIABILITIES 30 --- ---
------------- ------------- -------------
NET ASSETS $ 100,442 $ 996 $ 996
============= ============= =============
Net assets consist of:
Paid-in capital $ 100,442 $ 996 $ 996
------------- ------------- -------------
Net assets, at value $ 100,442 $ 996 $ 996
============= ============= =============
Shares outstanding ($.0001 par value
common stock, 60 billion, 20 billion,
and 20 billion shares authorized,
respectively) 100,442 996 996
============= ============= =============
Net asset value, redemption price and
offering price per share (Note 2) $ 1.00 $ 1.00 $ 1.00
============= ============= =============
</TABLE>
PLEASE SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
4
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED OCTOBER 31, 1998* (UNAUDITED)
<TABLE>
<CAPTION>
KENNEDY KENNEDY
CABOT CABOT KENNEDY
MONEY U.S. CABOT
MARKET GOVERNMENT MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income $ 2,163 $ 158 $ 158
------------- ------------- -------------
EXPENSES
Investment management fees (Note 3) 140 12 9
Shareholder servicing fees (Note 3) 80 6 4
Transfer agent fees (Note 3) 80 7 7
Administration fees (Note 3) 40 4 4
Registration fees 2,175 2,175 2,175
Professional fees 4,297 44 44
Directors' fees 6,306 6,306 6,306
Other expenses 307 307 307
------------- ------------- -------------
TOTAL EXPENSES 13,425 8,861 8,856
Fees waived / expenses reimbursed by the
Investment Manager and its affiliates
(Note 3) (13,425) (8,861) (8,856)
------------- ------------- -------------
NET EXPENSES 0 0 0
------------- ------------- -------------
NET INVESTMENT INCOME, REPRESENTING
NET INCREASE FROM OPERATIONS $ 2,163 $ 158 $ 158
============= ============= =============
</TABLE>
* Each portfolio commenced operations on May 20, 1998.
PLEASE SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
5
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED OCTOBER 31, 1998* (UNAUDITED)
<TABLE>
<CAPTION>
KENNEDY KENNEDY
CABOT CABOT KENNEDY
MONEY U.S. CABOT
MARKET GOVERNMENT MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
OPERATIONS:
Net investment income, representing net
increase in net assets from operations $ 2,163 $ 158 $ 158
-------------- -------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (2,163) (158) (158)
-------------- -------------- -------------
CAPITAL SHARE TRANSACTIONS
($1.00 PER SHARE):
Proceeds from shares sold 48,317 --- ---
Shares issued in reinvestment of dividends 2,133 158 158
Payments for shares redeemed (8) (24,162) (24,162)
-------------- -------------- -------------
Net increase (decrease) in net assets from
capital share transactions 50,442 (24,004) (24,004)
-------------- -------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 50,442 (24,004) (24,004)
NET ASSETS:
Beginning of period 50,000 25,000 25,000
-------------- -------------- -------------
End of period $ 100,442 $ 996 $ 996
============== ============== =============
</TABLE>
* Each portfolio commenced operations on May 20, 1998.
PLEASE SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
6
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
FINANCIAL HIGHLIGHTS
FOR THE PERIOD ENDED OCTOBER 31, 1998* (UNAUDITED)
Contained below is per share operating performance data for a share of common
stock outstanding, total investment return, ratios to average net assets and
other supplemental data for the period indicated. This information has been
derived from each Portfolio's financial statements
<TABLE>
<CAPTION>
KENNEDY CABOT KENNEDY CABOT KENNEDY CABOT
MONEY MARKET U.S. GOVERNMENT MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO
--------------- --------------- ---------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning
of period $ 1.000 $ 1.000 $ 1.000
--------------- --------------- ---------------
Net investment income 0.025 0.006 0.006
--------------- --------------- ---------------
Distributions from net
investment income (0.025) (0.006) (0.006)
--------------- --------------- ---------------
Net asset value, end
of period $ 1.000 $ 1.000 $ 1.000
--------------- --------------- ---------------
--------------- --------------- ---------------
RATIOS
Ratio of expenses to average
net assets ** --- --- ---
Ratio of net investment income
to average net assets** 5.51%(A) 4.91%(A) 4.91%(A)
Decrease reflected in above net
expense ratio due to waivers/
reimbursements by the
Investment Manager and
its affiliates (Note 3) 34.21%(A) 275.50%(A) 275.35%(A)
SUPPLEMENTAL DATA
Total investment return(B) 5.57%(A) 1.40%(A) 1.40%(A)
Net assets, end of period $ 100,442 $ 996 $ 996
=============== =============== ==============
</TABLE>
* Each portfolio commenced operations on May 20, 1998.
** The average net assets for the period ended October 31, 1998, were
$86,798 for the Money Market Portfolio; $7,115 for the U.S.
Government Portfolio; and $7,115 for the Municipal Portfolio.
(A) Annualized.
(B) Total investment return is calculated assuming a purchase of shares
on the first day and a sale on the last day of the period reported
and includes reinvestment of dividends.
PLEASE SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
7
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS - FOR THE PERIOD ENDED OCTOBER 31, 1998
(UNAUDITED)
NOTE 1 - ORGANIZATION
National Investors Cash Management Fund, Inc. (the "Fund") was organized as a
Maryland corporation on August 19, 1996. The Fund is registered as an
open-end, diversified management investment company with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended (the
"Act"), and the Securities Act of 1933, as amended, and currently has three
investment portfolios. The investment objective of each of the Kennedy Cabot
Money Market Portfolio ("Money Market Portfolio"), the Kennedy Cabot U.S.
Government Portfolio ("U.S. Government Portfolio") and the Kennedy Cabot
Municipal Portfolio ("Municipal Portfolio") is to seek maximum current income
to the extent consistent with liquidity and preservation of capital. The Money
Market Portfolio has the flexibility to invest broadly in U.S.
dollar-denominated securities of domestic and foreign issuers. The U.S.
Government Portfolio offers an added measure of safety by investing
exclusively in obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities. The Municipal Portfolio offers investors
federally tax-exempt income by investing primarily in municipal securities.
The Fund had no operations until May 20, 1998 (when operations commenced for
all Portfolios) other than matters relating to its organization and the sale
and issuance of 60,000 shares of the Money Market Portfolio and 20,000 shares
each of the U.S. Government Portfolio and the Municipal Portfolio to FDI
Distribution Services, Inc., an affiliate of the the Fund's distributor, Funds
Distributor, Inc.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Fund's significant accounting policies:
Computation of Net Asset Value -- It is each Portfolio's policy to maintain a
continuous net asset value of $1.00 per share. Each Portfolio has adopted
certain investment, portfolio valuation and dividend and distribution policies
to enable it to do so. There is no assurance, however, that each Portfolio
will be able to maintain a stable net asset value of $1.00 per share.
Securities Valuation -- Each Portfolio's securities are valued using the
amortized cost method, which approximates market value. The amortized cost
method involves initially valuing a security at its original cost and
thereafter assuming a constant amortization to maturity of any discount or
premium.
8
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS - FOR THE PERIOD ENDED OCTOBER 31, 1998
(CONTINUED) (UNAUDITED)
Repurchase Agreements -- The Fund may enter into repurchase agreements with
financial institutions deemed to be creditworthy by the Fund's Investment
Manager, subject to the seller's agreement to repurchase and the Fund's
agreement to resell such securities at a mutually agreed upon price.
Securities purchased subject to repurchase agreements are deposited with the
Fund's custodian and, pursuant to the terms of the repurchase agreement, must
have an aggregate market value greater than or equal to the repurchase price
plus accrued interest at all times. If the value of the underlying securities
falls below the value of the repurchase price plus accrued interest, the Fund
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 Fund maintains the right to sell
the underlying securities at market value and may claim any resulting loss
against the seller.
Investment Income -- Interest income is accrued as earned. Discounts and
premiums on securities purchased are amortized in accordance with income tax
regulations which approximate generally accepted accounting principles.
Distributions to Shareholders -- Dividends arising from net investment income
are declared daily and paid monthly. With respect to each Portfolio, net
realized short-term capital gains, if any, may be distributed during the year
and net realized long-term capital gains, if any, are distributed at least
once each year. Income distributions and capital gain distributions are
determined in accordance with income tax regulations.
Securities Transactions -- Securities transactions are accounted for on the
trade date. Realized gain and loss from securities transactions are recorded
on a specific identification basis.
Expenses -- Expenses directly attributable to each Portfolio are charged to
that Portfolio's operations. Expenses which are applicable to all Portfolios
are allocated on a pro rata basis.
Use of Estimates -- The Fund's financial statements are prepared in accordance
with generally accepted accounting principles, which may require the use of
management estimates and assumptions. Actual results could differ from these
estimates.
Federal Income Taxes -- It is each Portfolio's policy to comply with the
special provisions of the Internal Revenue Code available to regulated
investment companies. As provided therein, in any fiscal year in which a
Portfolio so qualifies, and distributes at least 90% of its taxable net
income, the Portfolio (not the shareholders) will be relieved of federal
income tax on the income distributed. Accordingly, no provision for income
taxes has been made.
9
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS - FOR THE PERIOD ENDED OCTOBER 31, 1998
(CONTINUED) (UNAUDITED)
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Portfolio's intention to declare as
dividends in each calendar year at least 98% of its net investment income
(earned during the calendar year) and 98% of its net realized capital gains
(earned during the twelve months ended April 30) plus undistributed amounts
from prior years.
NOTE 3 - INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES OF
THE INVESTMENT MANAGER
Under the terms of an Investment Management Agreement with Waterhouse Asset
Management, Inc. (the "Investment Manager"), an indirect wholly owned subsidiary
of The Toronto-Dominion Bank, for the investment management services furnished
to each Portfolio, such Portfolio pays the Investment Manager an annual
investment management fee, on a graduated basis, equal to .35 of 1% of the first
$1 billion of average daily net assets of each such Portfolio, .34 of 1% of the
next $1 billion, and .33 of 1% of average daily net assets of each such
Portfolio over $2 billion. The Investment Manager agreed to waive a portion of
its fee payable by the Municipal Portfolio through January 31, 2000, so
that the actual fee payable annually by such Portfolio during such
period will be equal to .25 of 1% of its average daily net assets. For the
period ended October 31, 1998, the Investment Manager voluntarily waived its
entire management fee of $140, $12 and $9 for the Money Market Portfolio, U.S.
Government Portfolio and Municipal Portfolio, respectively.
Waterhouse Securities, Inc. ("Waterhouse Securities"), an affiliate of the
Investment Manager, has been retained under an Administration Agreement to
perform certain administrative services for the Fund. For the administrative
services rendered to the Fund, each Portfolio pays Waterhouse Securities a
monthly fee at an annual rate of .10 of 1% of each Portfolio's average daily
net assets. For the period ended October 31, 1998, Waterhouse Securities
voluntarily waived its entire administration fee of $40, $4 and $4 for the
Money Market Portfolio, U.S. Government Portfolio and Municipal Portfolio,
respectively.
Waterhouse Securities has been retained under a Shareholder Services Agreement
to perform certain shareholder services necessary for the operation of the
Fund. The shareholder service plan adopted by the Fund provides that each
Portfolio pays Waterhouse Securities a monthly fee at an annual rate of up to
.25 of 1% of average daily net assets. Waterhouse
Securities has agreed to limit the annual fee payable through
January 31, 2000 under the Shareholder Servicing Plan so as not to exceed .20 of
1% of average daily net assets in the case of the Money Market Portfolio, .17 of
1% of average daily net assets in the case of the U.S. Government Portfolio, and
.11 of 1% of average daily net assets in the case of the Municipal Portfolio.
For the period ended October 31, 1998, Waterhouse Securities voluntarily waived
its entire shareholder service fee of $80, $6, and $4 for the Money Market
Portfolio, U.S. Government Portfolio, and the Municipal Portfolio, respectively.
10
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS - FOR THE PERIOD ENDED OCTOBER 31, 1998
(CONTINUED) (UNAUDITED)
The Fund has entered into a Transfer Agency and Dividend Disbursing Agency
Agreement with National Investor Services Corp. (the "Transfer Agent"), an
affiliate of the Investment Manager, to perform transfer and dividend
disbursing agency-related services. For such services, each Portfolio pays the
Transfer Agent a monthly fee at an annual rate of .20 of 1% of average daily
net assets. For the period ended October 31, 1998, the Transfer Agent
voluntarily waived its entire transfer agent fee of $80, $7 and $7 for the
Money Market Portfolio, U.S. Government Portfolio, and the Municipal
Portfolio, respectively.
Each Director who is not an "interested person" ("disinterested Director") as
defined in the Act is entitled to a base annual retainer of $12,000, payable
quarterly. Each disinterested Director who serves on the Board of Directors of
a "Fund Complex" (which includes the Fund and Waterhouse Investors Family of
Funds, Inc.), is entitled to a supplemental annual retainer of $5,000, payable
quarterly.
Additionally, each disinterested Director of the Fund Complex is entitled to a
fee of $2,000 for each meeting attended from the Fund Complex. In the event
that meetings of the Fund Complex are held on the same day or concurrently,
such meeting is considered a single meeting and the meeting fee is allocated
between the funds in the Fund Complex.
NOTE 4 - INVESTMENTS
At October 31, 1998, the Money Market Portfolio held the following security:
Federal Home Loan Mortgage Corporation, par value $100,000, 5.04%,
due November 4, 1998, value at amortized cost -- $99,955
The cost of this security for Federal income tax purposes was substantially
the same as the cost for financial reporting purposes.
NOTE 5 - SUBSEQUENT EVENT
The Investment Manager or its affiliates intend to waive fees and/or
reimburse expenses so that each Portfolio's annual expense ratio will
not exceed 0.75% for the Money Market Portfolio, 0.75% for the U.S.
Government Portfolio, and 0.74% for the Municipal Portfolio through
January 31, 2000.
11
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National [LOGO]
Investor
Services Corp.
Member New York Stock Exchange o SIPC
