2000
SHAREHOLDER REPORT
National Investors
Cash Management Fund, Inc.
TD Waterhouse Dow 30 Fund
[TD WATERHOUSE LOGO]
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2000
SEMIANNUAL REPORT
October 31, 2000
(Unaudited)
National Investors
Cash Management Fund, Inc.
Three money market portfolios to
choose from:
Money Market
o
US Government
o
Municipal
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
<S> <C> <C>
DIRECTORS EXECUTIVE OFFICERS
Richard W. Dalrymple James F. Rittinger George A. Rio*
President of Partner of President, Treasurer
Teamwork Management, Inc. Satterlee Stephens and Chief Financial Officer
Burke & Burke LLP
Carolyn B. Lewis
President of Theodore Rosen
The CBL Group Managing Director of Christopher J. Kelley*
Burnham Securities, Inc. Vice President and Secretary
Anthony J. Pace
President/CEO of
A.J. Pace & Co. Inc.
*Affiliated person of the Distributor
TD WATERHOUSE ASSET MANAGEMENT, INC.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS
Lawrence M. Waterhouse, Jr. Frank J. Petrilli Richard H. Neiman
Chairman Chairman, President and Executive Vice President,
TDWaterhouse Holdings, Inc. Chief Executive Officer General Counsel and Secretary
EXECUTIVE OFFICERS
David A. Hartman B. Kevin Sterns Michele R. Teichner
Senior Vice President Executive Vice President Senior Vice President
Chief Investment Officer Chief Financial Officer & Treasurer Compliance, Administration
& Operations
SERVICE PROVIDERS
INVESTMENT MANAGER TRANSFER AGENT INDEPENDENT AUDITORS
TD Waterhouse Asset Management, Inc. National Investor Services Corp. Ernst & Young LLP
100 Wall Street 55 Water Street 787 Seventh Avenue
New York, NY 10005 New York, NY 10041 New York, NY 10019
ADMINISTRATOR & CUSTODIAN LEGAL COUNSEL
SHAREHOLDER SERVICING The Bank of New York Swidler Berlin Shereff
TD Waterhouse Investor Services, Inc. 100 Church Street Friedman, LLP
100 Wall Street New York, NY 10286 405 Lexington Avenue
New York, NY 10005 New York, NY 10174
Customer Service Department DISTRIBUTOR
1-800-934-4448 Funds Distributor, Inc. INDEPENDENT TRUSTEES COUNSEL
60 State Street Willkie Farr & Gallagher
Boston, MA 02109 153 East 53rd Street
New York, NY 10022
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
DEAR SHAREHOLDER:
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I am pleased to provide you with the National Investors Cash Management Fund,
Inc. (the "Fund") semiannual report for the six months ended October 31, 2000.
During the period, each of the Money Market, U.S. Government and Municipal
Portfolios attempted to provide maximum current income from high quality money
market securities while maintaining a conservative investment portfolio to
ensure safety of principal. By October 31, 2000, assets in the three Portfolios
totaled approximately $1.3 billion.
PORTFOLIO RESULTS*
For the six months ended October 31, 2000, the three money market Portfolios had
the following yields and returns.**
o The Money Market Portfolio had a seven-day yield of 6.00% at October 31,
2000, a seven-day effective yield of 6.17% at October 31, 2000 and an
average annual return of 5.99%.
o The U. S. Government Portfolio had a seven-day yield of 5.87% at October
31, 2000, a seven-day effective yield of 6.03% at October 31, 2000 and an
average annual return of 5.88%.
o The Municipal Portfolio had a seven-day yield of 3.77% at October 31, 2000,
a tax equivalent seven-day yield of 5.89% at October 31, 2000(1), a
seven-day effective yield of 3.84% at October 31, 2000, a tax equivalent
seven-day effective yield of 6.00% at October 31, 2000(1), an average
annual return of 3.70% and a tax equivalent average annual return of
5.78%(1).
COMMENTARY
The year 2000 has been a difficult one for the financial markets. After a decade
of unprecedented economic growth, the stock market and the interest rate markets
have endured significant turmoil. Over the last twelve months the Federal
Reserve has raised the Fed Funds target rate 1.25 percentage points to 6.5%.
This was done in an attempt to provide a "soft landing" for an economy at risk
of expanding at an inflationary pace. During this period of tightening, various
economic indicators have vacillated, causing mixed signals to the financial
markets. The result has been volatility in interest rates and the stock market.
The Federal Reserve appears to be moving to a neutral stance regarding
inflation; a result of diminished concerns that a 4% unemployment rate will lead
to accelerating wage increases. In light of this, our current economic state
remains healthy, and there are reasonable odds that we can maintain a relatively
non-inflationary growth rate.
Our strategy for the Fund is to maintain a neutral maturity structure while
keeping a watchful eye on the economy. We are looking for specific economic
signs which would provide the basis to lengthen or shorten the portfolios'
maturity structure in order to maximize our shareholders' returns, while
maintaining a conservative bias. In short, liquidity and safety of principal
will continue as the overall guidelines for these Portfolios.
We look forward to continuing to meet your expanding investment needs in the
years to come.
Sincerely,
/s/Frank J. Petrilli
Frank J. Petrilli
Chairman
National Investor Services Corp.
December 12, 2000
*An investment in a money market portfolio is not insured nor guaranteed by the
Federal Deposit Insurance Corporation or any government agency. Although the
Portfolios seek to preserve the value of your investment at $1 per share, it is
possible to lose money by investing in the Portfolios.
**These returns are based on a constant investment throughout the period,
include reinvestment of dividends and reflect a net return to the shareholder
after all expenses, inclusive of fee waivers. For the six months ended October
31, 2000, the Investment Manager and its affiliates waived a portion of their
fees for the Money Market, U. S. Government, and Municipal Portfolios. Without
these fee waivers in effect, the seven-day yield at October 31, 2000, seven-day
effective yield at October 31, 2000 and average annual returns would have been
5.81%, 5.98%, and 5.80% for the Money Market Portfolio, 5.68%, 5.84%, and 5.69%
for the U.S Government Portfolio and 3.27%, 3.34%, and 3.20%, for the Municipal
Portfolio. The tax equivalent seven-day yield at October 31, 2000, tax
equivalent seven-day effective yield at October 31, 2000 and tax equivalent
average annual return for the Municipal Portfolio would have been 5.11%, 5.22%,
and 5.00%, respectively(1). The seven-day yield more closely reflects the
current earnings of a Portfolio than the average annual return.
(1) Taxable equivalent return and yield at 36% marginal federal income tax
rate.
Distributor: Funds Distributor, Inc.
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TABLE OF CONTENTS
Statements of Assets and Liabilities ...................................... 7
Statements of Operations .................................................. 8
Statements of Changes in Net Assets ....................................... 9
Financial Highlights ...................................................... 10
Notes to Financial Statements ............................................. 13
Money Market Portfolio
Schedule of Investments ................................................ 16
U.S. Government Portfolio
Schedule of Investments ................................................ 19
Municipal Portfolio
Schedule of Investments ................................................ 21
Notes to Schedules of Investments ......................................... 24
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 2000
(Unaudited)
Money U.S.
Market Government Municipal
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
ASSETS
Investments in securities, at value (including
repurchase agreements of $33,051,000,
$155,920,000, and $0, respectively) (Note 2) $ 652,619,058 $ 675,032,385 $ 32,309,307
Cash -- -- 37,407
Interest receivable 3,949,352 3,781,170 245,989
Receivable from Investment Manager
and its affiliates (Note 3) 22,156 -- --
------------------ ------------------ -----------------
TOTAL ASSETS 656,590,566 678,813,555 32,592,703
LIABILITIES
Bank overdraft 5,715 3,720 --
Dividends payable to shareholders 107,597 96,254 3,205
Payable for securities purchased -- 80,732,137 112,085
Payable to Investment Manager and its
affiliates (Note 3) 395,393 366,382 11,151
Accrued expenses and other liabilities -- 73,345 6,613
------------------ ------------------ -----------------
TOTAL LIABILITIES 508,705 81,271,838 133,054
------------------ ------------------ -----------------
NET ASSETS $ 656,081,861 $ 597,541,717 $ 32,459,649
================== ================== =================
Net assets consist of:
Paid-in capital $ 656,087,472 $ 597,543,436 $ 32,460,000
Accumulated net realized losses from security
transactions (5,611) (1,719) (351)
------------------ ------------------ -----------------
Net assets, at value $ 656,081,861 $ 597,541,717 $ 32,459,649
================== ================== =================
Shares outstanding ($.0001 par value common
stock, 60 billion, 20 billion, and 20 billion
shares authorized, respectively) 656,087,472 597,543,436 32,460,000
================== ================== =================
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.
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
STATEMENTS OF OPERATIONS
For the Six Months Ended October 31, 2000 (Unaudited)
Money U.S.
Market Government Municipal
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income $ 23,018,409 $ 20,347,584 $ 769,035
------------------ ------------------ -----------------
EXPENSES
Investment management fees (Note 3) 1,209,192 1,085,749 60,840
Shareholder servicing fees (Note 3) 863,709 775,535 43,457
Transfer agent fees (Note 3) 690,967 620,428 34,766
Administration fees (Note 3) 345,483 310,214 17,383
Custody fees (Note 2) 44,532 29,100 1,472
Shareholder reports and mailing 42,181 31,369 954
Professional fees 31,298 28,393 4,560
Registration fees 8,554 26,167 42,112
Directors' fees 7,954 7,954 7,954
Other expenses 12,927 5,346 2,481
------------------ ------------------ -----------------
TOTAL EXPENSES 3,256,797 2,920,255 215,979
Fees waived/expenses reimbursed by the
Investment Manager and its affiliates (Note 3) (665,680) (593,652) (87,346)
------------------ ------------------ -----------------
NET EXPENSES 2,591,117 2,326,603 128,633
------------------ ------------------ -----------------
NET INVESTMENT INCOME 20,427,292 18,020,981 640,402
------------------ ------------------ -----------------
NET REALIZED GAINS (LOSSES) FROM
SECURITY TRANSACTIONS 533 -- (22)
------------------ ------------------ -----------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 20,427,825 $ 18,020,981 $ 640,380
================== ================== =================
</TABLE>
Please see accompanying notes to financial statements.
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<CAPTION>
NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
Money U.S.
Market Government Municipal
Portfolio Portfolio Portfolio
Period Period Period
Ended Year Ended Year Ended Year
October 31, Ended October 31, Ended October 31, Ended
2000 April 30, 2000 April 30, 2000 April 30,
(Unaudited) 2000 (Unaudited) 2000 (Unaudited) 2000
--------------- --------------- --------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 20,427,292 $ 38,819,325 $ 18,020,981 $ 31,968,545 $ 640,402 $ 1,205,909
Net realized gains (losses)
from security transactions 533 (8,275) -- (1,719) (22) (329)
--------------- --------------- --------------- --------------- ------------- --------------
Net increase in net assets
from operations 20,427,825 38,811,050 18,020,981 31,966,826 640,380 1,205,580
--------------- --------------- --------------- --------------- ------------- --------------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment income (20,427,292) (38,819,325) (18,020,981) (31,968,545) (640,402) (1,205,909)
--------------- --------------- --------------- --------------- ------------- --------------
CAPITAL SHARE
TRANSACTIONS
($1.00 per share):
Proceeds from shares sold 1,770,108,475 5,237,525,350 1,321,750,085 3,623,096,576 73,424,148 193,033,440
Shares issued in reinvestment
of dividends 20,663,153 38,560,310 18,221,106 31,744,579 650,327 1,196,047
Payments for shares redeemed (1,906,207,480) (5,225,521,690) (1,422,625,810) (3,614,655,138) (80,842,496) (195,666,476)
--------------- --------------- --------------- --------------- ------------- --------------
Net increase (decrease) in net assets
from capital share transactions (115,435,852) 50,563,970 (82,654,619) 40,186,017 (6,768,021) (1,436,989)
--------------- --------------- --------------- --------------- ------------- --------------
TOTAL INCREASE (DECREASE) IN
NET ASSETS (115,435,319) 50,555,695 (82,654,619) 40,184,298 (6,768,043) (1,437,318)
NET ASSETS:
Beginning of period 771,517,180 720,961,485 680,196,336 640,012,038 39,227,692 40,665,010
--------------- --------------- --------------- --------------- ------------- --------------
End of period $ 656,081,861 $ 771,517,180 $ 597,541,717 $ 680,196,336 $ 32,459,649 $ 39,227,692
=============== =============== =============== =============== ============= ==============
</TABLE>
Please see accompanying notes to financial statements.
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
FINANCIAL HIGHLIGHTS
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 periods indicated. This information has been
derived from each Portfolio's financial statements.
<TABLE>
<CAPTION>
Money Market Portfolio
Period
Ended Year Period
October 31, Ended Ended
2000 April 30, April 30,
(Unaudited) 2000 1999*
------------------ ------------------ -----------------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000
------------------ ------------------ -----------------
Net investment income 0.030 0.049 0.049
------------------ ------------------ -----------------
Distributions from net investment income (0.030) (0.049) (0.049)
------------------ ------------------ -----------------
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000
================== ================== =================
Ratios
Ratio of expenses to average net assets 0.75% (A) 0.75% 0.75% (A)
Ratio of net investment income to
average net assets 5.90% (A) 4.89% 4.26% (A)
Decrease reflected in above expense
ratio due to waivers/reimbursements
by the Investment Manager and its
affiliates (Note 3) 0.19% (A) 0.20% 0.38% (A)
Supplemental Data
Total investment return (B) 5.99% (A) 5.00% 5.23% (A)
Net assets, end of period $ 656,081,861 $ 771,517,180 $ 720,961,485
================== ================== =================
Average net assets $ 687,211,574 $ 793,427,494 $ 128,275,220
================== ================== =================
</TABLE>
* The Fund commenced operations on May 20, 1998.
(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.
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
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 periods indicated. This information has been
derived from each Portfolio's financial statements.
<TABLE>
<CAPTION>
U.S. Government Portfolio
Period
Ended Year Period
October 31, Ended Ended
2000 April 30, April 30,
(Unaudited) 2000 1999*
------------------ ------------------ -----------------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000
------------------ ------------------ -----------------
Net investment income 0.029 0.048 0.014
------------------ ------------------ -----------------
Distributions from net investment income (0.029) (0.048) (0.014)
------------------ ------------------ -----------------
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000
================== ================== =================
Ratios
Ratio of expenses to average net assets 0.75% (A) 0.75% 0.75% (A)
Ratio of net investment income to
average net assets 5.79% (A) 4.77% 4.10% (A)
Decrease reflected in above expense
ratio due to waivers/reimbursements
by the Investment Manager and its
affiliates (Note 3) 0.19% (A) 0.20% 0.37% (A)
Supplemental Data
Total investment return (B) 5.88%(A) 4.88% 1.47% (A)
Net assets, end of period $ 597,541,717 $ 680,196,336 $ 640,012,038
================== ================== =================
Average net assets $ 617,056,155 $ 669,931,306 $ 117,827,697
================== ================== =================
</TABLE>
* The Fund commenced operations on May 20, 1998.
(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.
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
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 periods indicated. This information has been
derived from each Portfolio's financial statements.
<TABLE>
<CAPTION>
Municipal Portfolio
Period
Ended Year Period
October 31, Ended Ended
2000 April 30, April 30,
(Unaudited) 2000 1999*
------------------ ------------------ -----------------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000
------------------ ------------------ -----------------
Net investment income 0.018 0.028 0.010
------------------ ------------------ -----------------
Distributions from net investment income (0.018) (0.028) (0.010)
------------------ ------------------ -----------------
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000
================== ================== =================
Ratios
Ratio of expenses to average net assets 0.74% (A) 0.74% 0.74% (A)
Ratio of net investment income to
average net assets 3.67% (A) 2.82% 2.31% (A)
Decrease reflected in above expense
ratio due to waivers/reimbursements
by the Investment Manager and its
affiliates (Note 3) 0.50% (A) 0.39% 0.86% (A)
Supplemental Data
Total investment return (B) 3.70%(A) 2.87% 1.07% (A)
Net assets, end of period $ 32,459,649 $ 39,227,692 $ 40,665,010
================== ================== =================
Average net assets $ 34,576,777 $ 42,806,126 $ 7,448,507
================== ================== =================
</TABLE>
* The Fund commenced operations on May 20, 1998.
(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.
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000 (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").
Shares of the Fund are registered under the Securities Act of 1933, as amended.
The Fund currently has three investment portfolios. These financial statements
relate to three money market portfolios of the Fund (each a "Portfolio" and
collectively the "Portfolios"), each of which is a diversified investment
portfolio. The investment objective of each of the Money Market Portfolio, the
U.S. Government Portfolio and the 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.
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. At
April 30, 2000, the cost of investments of each Portfolio for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes.
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. Under
the terms of the custody agreement, each Portfolio receives net earnings credits
based on available cash balances left on deposit. Income earned under this
arrangement is included in interest income.
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.
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000 (UNAUDITED)
(CONTINUED)
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 that 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.
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 October 31) 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 TD Waterhouse Asset
Management, Inc. (the "Investment Manager"), a majority-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 waived a portion of its fee payable by the
Municipal Portfolio through September 1, 2000, so that the actual fee payable
annually by such Portfolio during such period equaled .25 of 1% of its average
daily net assets. For the period ended October 31, 2000, the Investment Manager
voluntarily waived management fees of $258,876, $230,865 and $17,383 for the
Money Market Portfolio, the U.S. Government Portfolio and the Municipal
Portfolio, respectively.
TD Waterhouse Investor Services, Inc. ("TD Waterhouse"), 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 TD Waterhouse 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, 2000, TD Waterhouse voluntarily waived
administration fees of $73,964, $65,961 and $12,721 for the Money Market
Portfolio, the U.S. Government Portfolio and the Municipal Portfolio,
respectively.
TD Waterhouse 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 TD Waterhouse a monthly fee at an annual rate of .25 of 1% of average daily
net assets. For the period ended October 31, 2000, TD Waterhouse voluntarily
waived shareholder services fees of $184,911, $164,903 and $31,802 for the Money
Market Portfolio, the U.S. Government Portfolio and the Municipal Portfolio,
respectively.
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000 (UNAUDITED)
(CONTINUED)
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, 2000, the Transfer Agent voluntarily waived
$147,929, $131,923 and $25,440 of its transfer agent fees for the Money Market
Portfolio, the U.S. Government Portfolio and the Municipal Portfolio,
respectively.
Each Director who is not an "interested person" as defined in the Act, who
serves on the Board of Directors/Trustees of one or more investment companies in
the "Fund Complex" (which includes the Fund, TD Waterhouse Trust and TD
Waterhouse Family of Funds, Inc.), receives:
1. a base annual retainer of $15,000, payable quarterly,
2. a supplemental annual retainer of $6,000, if serving on the Board of
Directors/Trustees of two investment companies in the Fund Complex,
3. an additional supplemental retainer of $2,500, if serving on the Board of
Directors/Trustees of three or more investment companies in the Fund
Complex, and
4. a meeting fee of $3,000 for each meeting attended.
Compensation is allocated among the companies and the respective portfolios.
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<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
MONEY MARKET PORTFOLIO o SCHEDULE OF INVESTMENTS
October 31, 2000 (Unaudited)
PRINCIPAL ANNUALIZED
AMOUNT YIELD (%) VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE OBLIGATIONS
ASSET-BACKED OBLIGATIONS--9.2%
$ 8,972,516 Americredit Automobile Receivables Trust, Ser. 2000C, Cl. A-1, 6.73%, due 9/7/01
(GTY: FSA) 6.73 $ 8,972,516
15,000,000 Corporate Receivables Corporation, due 1/10/01 (Note E) 6.67 14,808,667
2,341,710 Flagship Auto Receivables Owner Trust 2000-A, Cl. A-1, 6.93%, due 6/18/01 (GTY: MBIA) 6.93 2,341,710
3,934,409 IKON Receivables, LLC, Ser 2000-1, Cl. A-1, 7.00%, due 6/15/01 (GTY: AMBAC) 7.00 3,934,409
5,000,000 Liberty Lighthouse U.S. Capital Co., LLC, 6.61%, due 11/6/00 (Notes A, E) 6.62 4,999,592
25,000,000 Liberty Lighthouse U.S. Capital Co., LLC, 6.60%, due 11/20/00 (Notes A, E) 6.62 24,996,854
--------------
60,053,748
--------------
BROKER/DEALER OBLIGATIONS--7.9%
10,000,000 Bear Stearns Cos., Inc., 6.67%, due 11/6/00 (Note A) 6.62 10,000,881
7,000,000 Bear Stearns Cos., Inc., 6.80%, due 11/17/00 (Note A) 6.73 7,000,209
5,000,000 Bear Stearns Cos., Inc., 6.79%, due 11/21/00 (Note A) 6.83 4,999,899
5,000,000 Goldman Sachs Group, Inc., 6.90%, due 11/24/00 (Notes A, E) 6.69 5,000,746
15,000,000 Goldman Sachs Group, Inc., due 2/7/01 6.74 14,733,767
5,000,000 Merrill Lynch & Co., Inc., 6.74%, due 12/4/00 (Note A) 6.67 5,002,501
5,000,000 Salomon Smith Barney Holdings, Inc., 6.79%, due 11/1/00 (Notes A, E) 6.67 5,003,758
--------------
51,741,761
--------------
EXTENDIBLE COMMERCIAL NOTES--9.4%
15,000,000 ASAP Funding, Inc. Liquidity Notes, due 11/1/00 (Counterparty:
53% Bank of America NT & SA; 47% Citibank, N.A.) (Notes E, F) 6.59 15,000,000
7,000,000 ASAP Funding, Inc. Liquidity Notes, due 11/9/00 (Counterparty:
53% Bank of America NT & SA; 47% Citibank, N.A.) (Notes E, F) 6.69 6,989,764
10,000,000 ASAP Funding, Inc. Liquidity Notes, due 11/27/00 (Counterparty:
53% Bank of America NT & SA; 47% Citibank, N.A.) (Notes E, F) 6.59 9,952,694
30,000,000 Associates Corp. of N.A., due 1/24/01 (Notes E, F) 6.68 29,539,400
--------------
61,481,858
--------------
FINANCE & INSURANCE OBLIGATIONS--10.3%
15,000,000 CIT Group Holdings, Inc., 6.60%, due 12/6/00 (Note A) 6.65 14,995,659
5,000,000 CIT Group Holdings, Inc., 6.71%, due 1/16/01 (Note A) 7.00 4,990,422
5,000,000 Ford Motor Credit Co., 5.77%, due 2/12/01 6.61 4,988,912
7,200,000 General Motors Acceptance Corp., 6.91%, due 11/6/00 (Note A) 6.71 7,211,165
2,500,000 General Motors Acceptance Corp., 8.13%, due 3/1/01 6.80 2,510,847
25,000,000 Sigma Finance Inc., 6.64%, due 12/15/00 (Notes A, E) 6.64 25,000,000
8,000,000 Sigma Finance Inc., 6.85%, due 2/26/01 (Note E) 6.85 8,000,000
--------------
67,697,005
--------------
FUNDING AGREEMENTS--5.3%
35,000,000 Metropolitan Life Insurance Co., 6.89%, due 1/2/01 (Notes A, B) 6.89 35,000,000
--------------
</TABLE>
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16
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<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
MONEY MARKET PORTFOLIO o SCHEDULE OF INVESTMENTS
October 31, 2000 (Unaudited)
PRINCIPAL ANNUALIZED
AMOUNT YIELD (%) VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL & OTHER OBLIGATIONS--8.9%
$ 5,370,000 AT&T Capital Corp., 7.50%, due 11/15/00 (GTY: CIT Group Holdings, Inc.) (Note E) 6.59 $ 5,371,244
5,000,000 AT&T Capital Corp., 6.97%, due 1/9/01 (GTY: CIT Group Holdings, Inc.) (Note A) 7.00 4,999,908
15,000,000 AT&T Corp., 6.82%, due 1/15/01 (Note A) 6.88 14,995,368
13,500,000 AT&T Corp., 6.67%, due 3/8/01 6.75 13,483,168
20,000,000 Int'l. Lease Finance Corp., 6.77%, due 2/1/01 (Note A) 6.69 20,004,948
--------------
58,854,636
--------------
LOAN PARTICIPATIONS--1.1%
7,000,000 Four Times Square Partners, L.P., 6.70%, due 11/1/00 (GTY:
Prudential Ins. Co. of America; Other exposure: Chase Manhattan Bank) (Notes A, B) 6.62 7,000,000
--------------
TOTAL CORPORATE OBLIGATIONS--52.1% 341,829,008
--------------
BANK OBLIGATIONS
BANK NOTES--10.8%
9,000,000 Bank One, N.A., 6.23%, due 3/14/01 6.78 8,984,654
3,350,000 Branch Banking & Trust Co., 5.70%, due 2/1/01 6.68 3,339,923
3,500,000 First Chicago NBD (Bank One Corp.), 6.75%, due 11/17/00 6.71 3,500,063
5,000,000 First Union National Bank, 6.74%, due 11/13/00 (Note A) 6.66 5,001,058
5,000,000 First USA Bank, N.A., 6.74%, due 11/24/00 (Note A) 6.70 5,000,845
10,000,000 Fleet National Bank, 6.89%, due 11/3/00 (Note A) 6.76 10,002,944
5,000,000 Fleet National Bank, 6.56%, due 11/20/00 (Note A) 6.60 4,998,589
5,000,000 Fleet National Bank, 6.79%, due 2/1/01 6.69 5,001,175
5,000,000 Huntington National Bank, 6.77%, due 2/2/01 6.71 5,001,038
5,000,000 U.S. Bank, N.A., 6.82%, due 11/7/00 (Note A) 6.61 5,001,930
5,000,000 U.S. Bank, N.A., 6.69%, due 11/15/00 (Note A) 6.64 5,001,712
10,000,000 Westpac Banking Corp., 6.76%, due 1/30/01 (Note A) 6.79 9,998,447
--------------
70,832,378
--------------
DOMESTIC BANK CERTIFICATES OF DEPOSIT--1.5%
10,000,000 First Union National Bank, 7%, due 11/22/00 7.00 10,000,000
--------------
DOMESTIC BANK SUPPORTED OBLIGATIONS--4.2%
5,900,000 Bradford Capital Partners VRDN, Ser. 2000A, 6.70%, due 11/2/00 (LOC: 6.61 5,900,000
PNC Bank, N.A.) (Note C)
2,400,000 CEGW, Inc. Tax. Notes, Ser. 1999, 6.75%, due 11/1/00 (LOC: PNC Bank, N.A.) (Note A) 6.66 2,400,000
15,000,000 Provena Health CP Rev. Notes, Ser. 1998, due 11/14/00
(LOC: 75% Bank One, N.A.; 25% Bank of America, N.A.) 6.67 14,964,521
4,000,000 Yuengling Beer Co., Inc., Ser. 1999A, 6.75%, due 11/1/00 (LOC: PNC Bank, N.A.) (Note A) 6.66 4,000,000
--------------
27,264,521
--------------
</TABLE>
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17
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<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
MONEY MARKET PORTFOLIO o SCHEDULE OF INVESTMENTS
October 31, 2000 (Unaudited)
PRINCIPAL ANNUALIZED
AMOUNT YIELD (%) VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FOREIGN BANK SUPPORTED OBLIGATIONS--23.2%
$ 20,000,000 Banco de Galicia y Buenos Aires, S.A., due 2/23/01 6.68 $ 19,587,067
11,000,000 Banco Itau S.A., due 4/23/01 (LOC: Bayerische Hypo -und Vereinsbank AG) 6.61 10,661,689
25,000,000 Bank of Scotland Treasury Services, 6.77%, due 1/19/01 (GTY: Bank of Scotland) 6.77 24,998,954
30,000,000 CSN Overseas, Ser. C, due 12/4/00 (LOC: Banco Santander Central Hispano, S.A.) 6.57 29,820,975
19,661,000 Holy Cross Health System Corp., Ser. 1996 CP Notes, due 11/8/00
(LOC: 67% KBC Bank NV; 33% Northern Trust) 6.54 19,636,074
21,030,000 Mt. Sinai Medical Center Realty Corp., due 12/6/00 (LOC: Landesbank Hessen-Thueringen GZ) 6.61 20,896,898
17,000,000 PEMEX Capital, Inc., due 2/1/01 (LOC: Barclays Bank PLC) 6.64 16,717,611
10,000,000 Unibanco-Uniao de Bancos Brasileiros, Ser. C, due 4/11/01 (LOC: Barclays Bank PLC) 6.86 9,712,883
--------------
152,032,151
--------------
TOTAL BANK OBLIGATIONS--39.7% 260,129,050
--------------
TAXABLE MUNICIPAL OBLIGATIONS--2.7%
5,000,000 City of Olathe, KS Tax. IRB (Garmin Int'l, Inc. Proj.) Ser. 2000 VRDN, 6.67%, due 11/2/00
(LOC: Bank of America, N.A.) (Note C) 6.58 5,000,000
10,000,000 NY City Hsg. Dev. Corp. (Multi-family Mtg. Rev. Bonds) 2000 Ser. A, 6.65%, due 11/1/00
(LOC: Fleet Bank, N.A.) (Note A) 6.65 10,000,000
2,610,000 St. Francis Place LP Tax. MFH VRDN (St. Francis Place) Ser. 98, 6.70%, due 11/2/00
(LOC: Credit Suisse First Boston) (Notes C, E) 6.61 2,610,000
--------------
TOTAL TAXABLE MUNICIPAL OBLIGATIONS--2.7% 17,610,000
--------------
REPURCHASE AGREEMENT--5.0%
33,051,000 ABN Amro Bank, N.V.
~dated 10/31/00, due 11/1/00 in the amount of $33,057,069
~fully collateralized by $33,135,000 U.S. Government securities,
coupon 6.75%, maturity 2/15/02, value $33,712,127 6.62 33,051,000
--------------
TOTAL INVESTMENTS (cost $652,619,058)--99.5% 652,619,058
OTHER ASSETS AND LIABILITIES, NET--0.5% 3,462,803
--------------
NET ASSETS--100.0% $ 656,081,861
==============
</TABLE>
Please see accompanying notes to the schedules of investments and financial
statements.
--------------------------------------------------------------------------------
18
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
U.S.GOVERNMENT PORTFOLIO o SCHEDULE OF INVESTMENTS
October 31, 2000 (Unaudited)
PRINCIPAL ANNUALIZED
AMOUNT YIELD (%) VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FEDERAL FARM CREDIT BANK--1.2%
$ 5,433,000 Notes, 5.85%, due 12/1/00 6.90 $ 5,427,881
2,000,000 Notes, 5.12%, due 4/2/01 6.55 1,987,517
--------------
7,415,398
--------------
FEDERAL HOME LOAN BANK--24.8%
2,000,000 Notes, 6.20%, due 11/3/00 6.87 1,999,886
25,000,000 Notes, 6.42%, due 11/15/00 (Note A) 6.49 24,986,505
20,000,000 Notes, 6.46%, due 11/17/00 (Note A) 6.53 19,989,184
35,000,000 Notes, 6.46%, due 12/28/00 6.51 34,984,555
1,000,000 Notes, 5.15%, due 12/29/00 6.93 997,123
15,150,000 Notes, 4.95%, due 1/12/01 6.54 15,096,499
10,000,000 Notes, 4.87%, due 1/26/01 6.61 9,957,506
10,000,000 Notes, 6.37%, due 3/13/01 6.55 9,990,051
15,000,000 Notes, 5.62%, due 3/19/01 7.01 14,923,856
10,000,000 Notes, 6.66%, due 4/6/01 6.55 10,001,770
5,000,000 Notes, 6.89%, due 9/12/01 6.90 4,999,568
--------------
147,926,503
--------------
FEDERAL HOME LOAN MORTGAGE CORP.--10.0%
20,000,000 Notes, 5.20%, due 11/16/00 6.33 19,990,826
20,000,000 Notes, 6.41%, due 11/20/00 (Note A) 6.48 19,998,228
10,000,000 Notes, 6.40%, due 2/8/01 6.52 9,990,496
10,000,000 Notes, 5.38%, due 3/1/01 6.57 9,958,973
--------------
59,938,523
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--35.8%
10,000,000 Mortgage-backed Discount Notes, due 11/1/00 6.66 10,000,000
15,000,000 Mortgage-backed Discount Notes, due 11/1/00 6.62 15,000,000
26,560,000 Mortgage-backed Discount Notes, due 11/1/00 6.61 26,560,000
8,637,000 Mortgage-backed Discount Notes, due 11/7/00 6.60 8,627,658
22,681,000 Mortgage-backed Discount Notes, due 12/1/00 6.49 22,559,090
15,000,000 Mortgage-backed Discount Notes, due 1/2/01 6.54 14,833,633
25,000,000 Mortgage-backed Discount Notes, due 1/2/01 6.58 24,722,938
26,560,000 Mortgage-backed Discount Notes, due 1/30/01 6.57 26,131,056
22,362,000 Mortgage-backed Discount Notes, due 2/1/01 6.55 21,993,971
1,000,000 Notes, 5.54%, due 11/17/00 6.54 999,319
1,000,000 Notes, 5.90%, due 11/20/00 6.54 999,555
3,500,000 Notes, 5.10%, due 11/30/00 6.78 3,495,120
3,430,000 Notes, 5.00%, due 12/4/00 6.89 3,423,994
5,000,000 Notes, 4.87%, due 12/15/00 6.49 4,988,823
10,000,000 Notes, 5.23%, due 1/8/01 6.45 9,978,896
19,650,000 Notes, 5.25%, due 2/12/01 6.51 19,583,915
--------------
213,897,968
--------------
</TABLE>
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19
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
U.S. GOVERNMENT PORTFOLIO o SCHEDULE OF INVESTMENTS
October 31, 2000 (Unaudited)
PRINCIPAL ANNUALIZED
AMOUNT YIELD (%) VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
STUDENT LOAN MARKETING ASSOCIATION--15.1%
$ 29,945,000 Notes, 6.87%, due 11/7/00 (Note A) 6.72 $ 29,955,229
25,000,000 Notes, 6.82%, due 11/7/00 (Note A) 6.74 24,995,082
10,000,000 Notes, 7.07%, due 11/13/00 7.02 9,999,839
25,000,000 Notes, 5.90%, due 12/1/00 6.60 24,983,843
--------------
89,933,993
--------------
REPURCHASE AGREEMENTS--26.1%
105,920,000 ABN Amro Bank N.V.
~dated 10/31/00, due 11/1/00 in the amount of $105,939,448
~fully collateralized by $105,295,000 U.S. Government securities,
coupon range 6.75% to 7.12%, maturity range 11/15/01 to 2/15/02, value $108,040,067 6.61 105,920,000
50,000,000 Salomon Smith Barney
~dated 10/31/00, due 11/7/00, in the amount of $50,063,681
~fully collateralized by $58,585,815 U.S. Government securities,
coupon range 6.50% to 8.50%, maturity range 11/20/27 to 7/15/30, value $51,000,000 6.55 50,000,000
--------------
155,920,000
--------------
TOTAL INVESTMENTS (cost $675,032,385)--113.0% 675,032,385
OTHER ASSETS AND LIABILITIES, NET--(13.0%) (77,490,668)
--------------
NET ASSETS--100.0% $ 597,541,717
==============
</TABLE>
Please see accompanying notes to the schedules of investments and financial
statements.
--------------------------------------------------------------------------------
20
<PAGE>
<TABLE>
<CAPTION>
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
MUNICIPAL PORTFOLIO o SCHEDULE OF INVESTMENTS
October 31, 2000 (Unaudited)
PRINCIPAL ANNUALIZED
AMOUNT YIELD (%) VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL OBLIGATIONS:
ALASKA--0.6%
$ 190,000 Anchorage Port & Terminal Rev. Bonds, 6.00%, due 2/1/01 (Insured: MBIA) 4.30 $ 190,783
--------------
CALIFORNIA--0.9%
300,000 School Cash Reserve Prog. Auth., Ser. A, 5.25%, due 7/3/01 4.27 301,883
--------------
DISTRICT OF COLUMBIA--0.3%
110,000 GO Bonds, 4.55%, due 6/1/01 (Insured: AMBAC) 4.55 110,000
--------------
FLORIDA--6.5%
600,000 Indian River Cty. Hosp. Dist., Ser. 1988, 4.30%, due 11/7/00 (LOC: Kredietbank) 4.30 600,000
1,500,000 Sunshine St. Governmental Fin. Comm. Rev. Bonds, Ser. A, 4.30%, due 12/4/00 4.30 1,500,000
(SBPA: Bank of Nova Scotia)
--------------
2,100,000
--------------
GEORGIA--2.8%
894,000 Dekalb Cty. Hsg. Auth. SFM, Ser. 1997A, VRDN, 4.60% (LIQ: Bank of New York) (Note C) 4.60 894,000
--------------
ILLINOIS--10.2%
1,000,000 DFA (IL Power Co. Proj.) VRDN 4.45% (LOC: First National Bank Chicago) (Note C) 4.45 1,000,000
700,000 DFA (Kindlon Partners Proj.) VRDN, 4.44% (LOC: LaSalle National Bank) (Note C) 4.44 700,000
400,000 Lake Cty. Solid Waste Rev. Bonds (Countryside Landfill Inc.) VRDN, 4.55%
(LOC: Morgan Guaranty Trust) (Note C) 4.55 400,000
400,000 Southwestern IL Dev. Auth. Solid Waste Disp. (Shell Oil Co.-Wood River Proj.)
Ser. 95 VRDN, 4.75% (Note C) 4.75 400,000
800,000 Will Cty. Facs. Rev. Bonds (Amoco Chem. Co. Proj.) Ser. 2000 VRDN, 4.70% (Note C) 4.70 800,000
--------------
3,300,000
--------------
KENTUCKY--7.4%
400,000 Mayfield (KY League of Cities Pooled Lease Fin. Prog.) Ser. 1996 VRDN, 4.50% 4.50 400,000
(LOC: PNC Bank) (Note C)
1,000,000 Mayfield IDR Bonds (Seaboard Farms of KY Inc. Proj.) VRDN, 4.50% 4.50 1,000,000
(LOC: SunTrust Bank) (Note C)
1,000,000 Pulaski Cty. Solid Waste Rev. Bonds (National Rural - Eastern KY Power) 4.30 1,000,000
Ser. B, 4.30%, put 2/15/01
--------------
2,400,000
--------------
LOUISIANA--6.8%
1,300,000 Calcasieu Parish Pub. Trust Auth. Rev. Bonds (WPT Corp. Proj.) Ser. 1997, VRDN, 4.45%
(LOC: Morgan Guaranty Trust) (Note C) 4.45 1,300,000
900,000 St. Charles Parish (Shell Oil Co.) Ser. 1993 VRDN, 4.75% (Note C) 4.75 900,000
--------------
2,200,000
--------------
MAINE--0.6%
200,000 Educ. Loan Marketing Corp. Rev. Bonds (Student Loan) Ser. A4, 5.60%, due 11/1/00 4.40 200,000
--------------
MARYLAND--7.7%
1,500,000 Anne Arundel Cty. (Baltimore Gas & Elec. Proj.) Ser. 1988, 4.30%, due 12/5/00
(SBPA: Bank of New York, Chemical Bank) 4.30 1,500,000
1,000,000 Energy Fin. Administration (Cimenteries Proj.) VRDN Ser. 2000, 4.80% 4.80 1,000,000
(LOC: Deutsche Bank) (Note C)
--------------
2,500,000
--------------
</TABLE>
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21
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<TABLE>
<CAPTION>
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
MUNICIPAL PORTFOLIO o SCHEDULE OF INVESTMENTS
October 31, 2000 (Unaudited)
PRINCIPAL ANNUALIZED
AMOUNT YIELD (%) VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MASSACHUSETTS--2.3%
$ 360,000 IDA Rev. Bonds (Hazen Paper Co.) VRDN, 4.35% (LOC: Bank of Boston) (Note C) 4.35 $ 360,000
400,000 IDA Rev. Bonds (October Co. Inc. Proj.) VRDN, 4.60% (LOC: Bank of Boston) (Note C) 4.60 400,000
--------------
760,000
--------------
MICHIGAN--2.9%
955,000 Milan Area SD GO Bonds, Ser. B, 4.40%, put 11/1/00 4.32 955,000
--------------
MINNESOTA--3.1%
1,000,000 Waseca, Rice, & Steele Ctys. ISD Notes, 4.45%, due 3/30/01 4.40 1,000,193
--------------
MISSISSIPPI--1.7%
550,000 Jackson Cty. Sewer Fac. Rev. Bonds (Chevron USA Inc. Proj.) VRDN, 4.75% (Note C) 4.75 550,000
--------------
MONTANA--0.5%
165,000 Higher Educ. Student Assistance Corp. Rev. Bonds, Ser. 1993A, 5.05%, due 12/1/00 4.25 165,105
--------------
NEW HAMPSHIRE--3.2%
1,025,000 Business Fin. Auth. (Foundation for Seacoast Health) Ser. A VRDN, 4.40%
(LOC: Fleet Bank) (Note C) 4.40 1,025,000
--------------
NEW JERSEY--0.4%
145,000 Keyport SD GO Bonds, 5.50%, due 2/1/01 (Insured: FGIC) 4.45 145,369
--------------
NEW MEXICO--1.7%
545,000 Student Loan Rev. Bonds, Ser. IIA, 4.75%, due 12/1/00 4.10 545,280
--------------
OKLAHOMA--7.5%
140,000 Claremore Public Works Auth. Rev. Bonds, 5.50%, due 6/1/01 (Insured: FSA) 4.90 140,469
245,000 Tulsa IDA Rev. Bonds (St. Johns Med. Center) 4.40%, due 2/15/01 (Insured: MBIA) 4.40 245,000
500,000 Tulsa Parking Auth. Rev. Bonds (Williams Center Proj.) Ser. A , 4.75%, put 11/14/00 4.75 500,000
(LOC: Bank of America)
1,550,000 Water Resources Board, State Loan Prog. Rev. Bonds, Ser. 1999, 4.30%, put 3/1/01
(SBPA: Bayerische Landesbank GZ) 4.30 1,550,000
--------------
2,435,469
--------------
PENNSYLVANIA--4.6%
1,500,000 Venango IDA (Scrubgrass Proj.) Ser. 1990A, 4.35%, due 11/15/00
(LOC: National Westminster Bank) 4.35 1,500,000
--------------
SOUTH CAROLINA--4.3%
1,200,000 Florence Cty. Solid Waste Disp. Rev. Bonds (Roche Carolina, Inc.) Ser. 97 VRDN, 4.75%
(LOC: Union Bank of Switzerland) (Note C) 4.75 1,200,000
200,000 Florence Cty. Solid Waste Disp. Rev. Bonds (Roche Carolina, Inc.) Ser. 98 VRDN, 4.75%
(LOC: Deutsche Bank) (Note C) 4.75 200,000
--------------
1,400,000
--------------
TENNESSEE--4.9%
200,000 McKenzie Cty. IDB Rev. Bonds (Noma Outdoor Products Inc. Proj.) VRDN, 4.50%
(LOC: Wachovia Bank) (Note C) 4.50 200,000
1,400,000 Metropolitan Government Davidson Cty. (ABN-AMRO Munitops) Ser. 1999-1, 4.44%
(LIQ: ABN-AMRO) (Note C) 4.44 1,400,000
--------------
1,600,000
--------------
</TABLE>
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22
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<CAPTION>
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NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
MUNICIPAL PORTFOLIO o SCHEDULE OF INVESTMENTS
October 31, 2000 (Unaudited)
PRINCIPAL ANNUALIZED
AMOUNT YIELD (%) VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TEXAS--9.4%
$ 200,000 Brazos Higher Educ. Rev. Bonds, Ser. C-1, 6.20%, due 11/1/00 (GTY: Student Loans) 4.70 $ 200,000
850,000 Gulf Coast Waste Disposal Auth. Solid Waste Rev. Bonds (Citgo Petroleum Corp. Proj.)
Ser. 1995 VRDN, 4.80% (LOC: Nationsbank) (Note C) 4.80 850,000
1,200,000 Harris Cty. GO CP Notes, Ser. C, 4.25%, due 11/3/00 (LIQ: Union Bank of Switzerland) 4.25 1,200,000
100,000 South TX Higher Educ. Auth. Rev. Bonds, Ser. A1, 4.75%, due 12/1/00 4.50 100,019
700,000 TRANS, VRDN, 4.95% (Note C) 4.95 700,000
--------------
3,050,019
--------------
VARIOUS STATES--3.3%
911,180 Pitney Bowes Credit Corp. Leasetops Muni Trust, VRDN Ser. 1998-2, 4.67%,
(LIQ: Pitney Bowes Credit Corp.) (Notes C, E) 4.67 911,180
168,490 Pitney Bowes Credit Corp. Leasetops Muni Trust, VRDN Ser. 1999-2, 4.72%,
(LIQ: Pitney Bowes Credit Corp.) (Notes C, E) 4.72 168,490
--------------
1,079,670
--------------
VIRGINIA--2.2%
700,000 King George Cty. Rev. Bonds (Birchwood Power Proj.) Ser. 1995 VRDN, 4.75%
(LOC: Credit Suisse First Boston) (Note C) 4.75 700,000
--------------
WASHINGTON--3.7%
200,000 Motor Vehicle Fuel Tax GO Bonds, Ser. B, 6.00%, due 6/1/01 4.60 201,536
1,000,000 Port of Seattle Rev. Bonds, Ser. 1997 VRDN, 4.55%
(LOC: Canadian Imperial Bank of Commerce) (Note C) 4.55 1,000,000
--------------
1,201,536
--------------
TOTAL MUNICIPAL OBLIGATIONS (cost $32,309,307)--99.5% 32,309,307
OTHER ASSETS AND LIABILITIES, NET--0.5% 150,342
--------------
NET ASSETS--100.00% $ 32,459,649
==============
</TABLE>
Please see accompanying notes to the schedules of investments and financial
statements.
--------------------------------------------------------------------------------
23
<PAGE>
--------------------------------------------------------------------------------
NATIONAL INVESTORS CASH MANAGEMENT FUND, INC.
NOTES TO SCHEDULE OF INVESTMENTS
October 31, 2000 (Unaudited)
(A) Variable rate note securities. The rates shown are the current
rates on October 31, 2000. Dates shown represent the next interest
reset date.
(B) This obligation was acquired for investment, not with intent to
distribute or sell. It is restricted as to public resale. This
obligation was acquired at a cost of par. On October 31, 2000, the
value of this security, valued at amortized cost, is $42,000,000
representing 6.4% of net assets of the Money Market Portfolio.
(C) Securities payable on demand. The interest rate, which is subject
to change, is based upon bank prime rates or an index of market
rates.
(D) Bonds which are prerefunded or escrowed to maturity are
collateralized by U.S. Government Securities which are held in
escrow and are used to pay principal and interest on the municipal
issue and to retire the bonds in full at the earliest refunding
date.
(E) Security exempt from registration under the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At
October 31, 2000, these securities amounted to $157,272,719, or
24.0% of net assets of the Money Market Portfolio, and $1,079,670,
or 3.3% of net assets of the Municipal Portfolio.
(F) Security may be extended at issuer's option as a floating rate
note with a final maturity date no longer than 390 days from date
of purchase. Maturity date listed is the expected redemption date.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF ABBREVIATIONS
<S> <C>
AMBAC American Municipal Bond Assurance Corporation LIQ Liquidity Agreement
CP Commercial Paper LLC Limited Liability Corporation
DFA Developmental Finance Authority LOC Letter of Credit
FGIC Financial Guaranty Insurance Company LP Limited Partnership
FSA Financial Security Assurance Inc. MBIA Municipal Bond Investors Assurance Insurance
Corporation
GO General Obligation MFH Multi-Family Housing
GTY Guarantee SBPA Standby Bond Purchase Agreement
IDA Industrial Development Authority SD School District
IDB Industrial Development Bond SFM Single Family Mortgages
IDR Industrial Development Revenue Bond TRANS Tax Revenue Anticipation Notes
IRB Industrial Revenue Bond VRDN Variable Rate Demand Note
ISD Independent School District
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
This Report has been prepared for shareholders and may be distributed to others
only if preceded or accompanied by a current prospectus.
--------------------------------------------------------------------------------
<PAGE>
2000
Annual Report
October 31, 2000
[GRAPHIC OMITTED]
TD Waterhouse
Dow 30
Fund
[LOGO]
<PAGE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TD WATERHOUSE TRUST
BOARD OF TRUSTEES AND EXECUTIVE OFFICERS
<S> <C> <C>
TRUSTEES EXECUTIVE OFFICERS
George F. Staudter Carolyn B. Lewis George A. Rio*
Director of Koger Equity, Inc. President of President, Treasurer
Independent Financial Consultant The CBL Group and Chief Financial Officer
Richard W. Dalrymple Lawrence J. Toal Christopher J. Kelley*
President of Teamwork President and CEO of Vice President and Secretary
Management, Inc. Dime Bancorp, Inc.
*Affiliated person of the Distributor
TD WATERHOUSE ASSET MANAGEMENT, INC.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS
Lawrence M. Waterhouse, Jr. Frank J. Petrilli Richard H. Neiman
Chairman Chairman, President and Executive Vice President,
TDWaterhouse Holdings, Inc. Chief Executive Officer General Counsel and Secretary
SENIOR OFFICERS
David A. Hartman B. Kevin Sterns Michele R. Teichner
Senior Vice President Executive Vice President Senior Vice President
Chief Investment Officer Chief Financial Officer &Treasurer Compliance, Administration
& Operations
SERVICE PROVIDERS
INVESTMENT MANAGER TRANSFER AGENT INDEPENDENT AUDITORS
TD Waterhouse Asset Management, Inc. National Investor Services Corp. Ernst & Young LLP
100 Wall Street 55 Water Street 787 Seventh Avenue
New York, NY 10005 New York, NY 10041 New York, NY 10019
ADMINISTRATOR & CUSTODIAN LEGAL COUNSEL
SHAREHOLDER SERVICING The Bank of New York Swidler Berlin Shereff
TD Waterhouse Investor Services, Inc. 100 Church Street Friedman, LLP
100 Wall Street New York, NY 10286 405 Lexington Avenue
New York, NY 10005 New York, NY 10174
Customer Service Department DISTRIBUTOR
1-800-934-4448 Funds Distributor, Inc. INDEPENDENT TRUSTEES COUNSEL
60 State Street Willkie Farr & Gallagher
Boston, MA 02109 153 East 53rd Street
New York, NY 10022
</TABLE>
--------------------------------------------------------------------------------
26
<PAGE>
--------------------------------------------------------------------------------
TD WATERHOUSE DOW 30 FUND
Dear Shareholder:
--------------------------------------------------------------------------------
We are pleased to provide you with the annual report for the TD Waterhouse Dow
30 Fund (the "Fund") for the fiscal year ended October 31, 2000. Total net
assets for the Fund were approximately $160.7 million as of October 31, 2000.
The Dow Jones Industrial AverageSM ("DJIA"SM) ended the period up 2.25%,
starting at 10,729.86 on October 31, 1999 and finishing at 10,971.14 on October
31, 2000. Over the Fund's past fiscal year, the DJIA has largely remained in a
wide range between a low of about 10,000 and a high of about 11,500. On a total
return basis, which includes reinvested dividends, the annual return for the
DJIA was +3.78%.
Your Fund had a total return for the same period of +3.56%, after expenses.
Since the investment objective of the Fund is to match the performance of the
DJIA before Fund expenses, we are pleased with these results. As with any
investment, past performance is no guarantee of future results and there is no
guarantee that the Fund's investment objective will be achieved in the future.
We will continue to work diligently, seeking to achieve the objective of the
Fund and to provide our shareholders with an investment vehicle designed to
closely emulate the performance of the DJIA.
[GRAPHIC OMITTED]
--------------------------------------------------------------------------------
Dow 30 Fund Average Annual Return as of 10/31/00:
One Year: 3.56%
Since Inception (3/31/98): 10.54%
--------------------------------------------------------------------------------
Note: Performance data quoted represents past performance. As with all
investments, past performance is no guarantee of future results. The
return is based on a constant investment throughout the period,
includes reinvestment of dividends and reflects a net return to the
shareholders after all expenses, inclusive of fee waivers. Without
this waiver, the Fund's total return would have been lower. The
returns shown for the DJIA reflect the reinvestment of dividends but
do not include any expenses, since an index has none. It is not
possible to invest in an index.
The investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
The price performance of each of the DJIA stocks during the 12 months ended
October 31, 2000 is shown in the chart below. As can be seen in the chart, there
was an unusually wide disparity in performance among the individual stocks.
During the period, several companies executed stock splits, including Home Depot
Inc. (3-for-2), General Electric Co. (3-for-1), American Express Co. (3-for-1),
Alcoa Inc. (2-for-1), Intel Corp. (2-for-1), Citigroup Inc. (4-for-3), and
Hewlett-Packard Co. (2-for-1). In addition, Hewlett-Packard Co. spun off its
Agilent Technologies Inc. subsidiary.
--------------------------------------------------------------------------------
27
<PAGE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Price Price
Appreciation* DJIA Component Appreciation* DJIA Component
------------------------------------------------------------------------------------------------
<S> <C>
60.7% Hewlett-Packard Co. 0.1% Int'l Business Machines Corp.
------------------------------------------------------------------------------------------------
47.2% The Boeing Co. -5.5% Honeywell International
------------------------------------------------------------------------------------------------
45.4% Philip Morris Cos. Inc. -5.6% Alcoa Inc.
------------------------------------------------------------------------------------------------
35.8% The Walt Disney Co. -11.6% General Motors Corp.
------------------------------------------------------------------------------------------------
29.6% Citigroup Inc. -12.1% Johnson & Johnson
------------------------------------------------------------------------------------------------
26.5% J.P. Morgan & Co., Inc. -14.6% Home Depot Inc.
------------------------------------------------------------------------------------------------
21.3% General Electric Co. -20.0% Wal-Mart Stores, Inc.
------------------------------------------------------------------------------------------------
20.4% Exxon Mobil Corp. -24.9% McDonald's Corp.
------------------------------------------------------------------------------------------------
16.9% American Express Co. -25.6% Microsoft Corp.
------------------------------------------------------------------------------------------------
16.2% Intel Corp. -29.6% E.I. du Pont de Nemours and Co.
------------------------------------------------------------------------------------------------
15.4% United Technologies Corp. -30.4% International Paper Co.
------------------------------------------------------------------------------------------------
13.3% SBC Communications Inc. -31.9% The Proctor & Gamble Co.
------------------------------------------------------------------------------------------------
13.0% Merck & Co., Inc. -34.9% Eastman Kodak Co.
------------------------------------------------------------------------------------------------
2.3% The Coca-Cola Company -36.5% Caterpillar Inc.
------------------------------------------------------------------------------------------------
1.6% Minnesota Mining & Mfg. Co. -50.4% AT&T Corp.
------------------------------------------------------------------------------------------------
(C) 2000 Dow Jones & Company
</TABLE>
Notes: *Percentages reflect each stock's price appreciation only. They do not
include reinvested dividends. The stocks are listed from the best
performer to the worst over the most recent 12-month period.
Performance quoted represents past performance and is not a guarantee
of future results.
The U.S. stock market's performance over the Fund's most recent fiscal year was
marked by significant volatility. Most recently, investor sentiment has been
primarily influenced by valuation concerns, as surging oil prices and a falling
European currency - the "Euro" pressured the earnings of several companies.
Combined with several interest rate increases engineered by the Federal Reserve
Open Market Committee ("Federal Reserve"), investors were forced to consider
lowering their expectations for the economy's future growth rate and corporate
profits. While the U.S. economy expanded at a strong pace over the last four
calendar quarters, growing at an average annualized rate of over 5.0%, there are
signs that the growth rate could be adjusting to a slower, more sustainable
pace. This is largely due to the Federal Reserve's six interest rate increases
since June 1999. The ultimate impact of these rate adjustments on corporate
earnings, stock prices, economic growth and inflation are uncertain at this
point in time.
Looking forward to the next six months, the market's direction will likely be
primarily affected by how quickly and by how much the economy slows, as well as
by the impact of this slowing on corporate earnings, interest rates,
inflationary trends, and money investment flows. In light of today's economic
and market environments, we believe the overall quality and underlying financial
strength of the companies comprising the DJIA can provide a solid investment
foundation for our shareholders' investments in the Fund.
We welcome additional investments into the Fund, and provide a number of
attractive ways to invest or add to current positions. The minimum initial
investment is $1,000 and $100 for subsequent purchases, although these minimums
may be waived for existing customers of TD Waterhouse Investor Services, Inc.
("TD Waterhouse"). For TD Waterhouse IRA accounts, there are no minimum or
subsequent investment requirements. A periodic investment plan is also available
which requires a minimum investment of $100 monthly or $300 quarterly. Keep in
mind, however, that periodic investing neither guarantees a profit nor protects
against a loss in a declining market. You may contact TD Waterhouse's mutual
funds service department at 1-800-934-4448 and press option number 4 or your
local branch office for more information.
Sincerely,
/s/ Frank J. Petrilli
Frank J. Petrilli
President and Chief Operating Officer
TD Waterhouse Group, Inc.
December 12, 2000
An investment in the Fund is neither FDIC-Insured nor guaranteed by the U. S.
Government and is not a deposit or obligation guaranteed by any bank and is
subject to investment risk, including possible loss of the principal amount
invested.
Distributor: Funds Distributor, Inc.
--------------------------------------------------------------------------------
28
<PAGE>
--------------------------------------------------------------------------------
----------------------------
Table of Contents
----------------------------
Schedule of Investments ................................................... 6
Statement of Assets and Liabilities ....................................... 7
Statement of Operations ................................................... 8
Statement of Changes in Net Assets ........................................ 9
Financial Highlights ...................................................... 10
Notes to Financial Statements ............................................. 11
Report of Independent Auditors ............................................ 15
--------------------------------------------------------------------------------
29
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
TD WATERHOUSE DOW 30 FUND
Schedule of Investments
October 31, 2000
NUMBER OF
SHARES VALUE
-----------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS
Alcoa Inc. 87,925 $ 2,522,348
American Express Co. 87,925 5,275,500
AT&T Corp. 87,925 2,038,761
The Boeing Co. 87,925 5,962,414
Caterpillar Inc. 87,925 3,082,870
Citigroup Inc. 87,925 4,627,053
The Coca-Cola Company 87,925 5,308,472
E.I. du Pont de Nemours and Co. 87,925 3,989,597
Eastman Kodak Co. 87,925 3,945,634
Exxon Mobil Corp. 87,925 7,841,811
General Electric Co. 87,925 4,819,389
General Motors Corp. 87,925 5,462,341
Hewlett-Packard Co. 87,925 4,083,017
Home Depot Inc. 87,925 3,780,775
Honeywell International 87,925 4,731,464
Intel Corp. 87,925 3,956,625
International Business Machines Corp. 87,925 8,660,613
International Paper Co. 87,925 3,220,253
J.P. Morgan & Co., Inc. 87,925 14,551,588
Johnson & Johnson 87,925 8,100,091
McDonald's Corp. 87,925 2,725,675
Merck & Co., Inc. 87,925 7,907,755
Microsoft Corp.(A) 87,925 6,055,834
Minnesota Mining & Manufacturing Co. 87,925 8,495,753
Philip Morris Cos., Inc. 87,925 3,220,253
The Proctor & Gamble Co. 87,925 6,281,142
SBC Communications Inc. 87,925 5,072,173
United Technologies Corp. 87,925 6,138,264
Wal-Mart Stores, Inc. 87,925 3,989,597
The Walt Disney Co. 87,925 3,148,814
-----------
TOTAL COMMON STOCKS (cost $152,905,986)--98.9% 158,995,876
-----------
OTHER (cost $361,813)--0.2%
DiamondsSM Trust, Series 1 3,485 381,281
-----------
REPURCHASE AGREEMENT--0.6%
ABN AMRO Inc. (Par Value & Cost $900,000)
~dated 10/31/00, due 11/1/00, 6.61%, in the amount of $900,165
~fully collateralized by $890,000 U.S. Government Securities, 7.12%, 11/15/01,
value $922,736 900,000
-----------
U.S. GOVERNMENT OBLIGATIONS (cost $99,392)--0.1%
United States Treasury Bill, dated 12/9/00, matures 12/7/00,
par value $100,000, yield at time of purchase 6.18%(B) 99,390
-----------
TOTAL INVESTMENTS (cost $154,267,191)--99.8% 160,376,547
OTHER ASSETS AND LIABILITIES, NET--0.2% 327,639
-----------
NET ASSETS--100.0% $160,704,186
============
</TABLE>
(A) Non-income producing security
(B) Security pledged as collateral on open futures contracts
Please see accompanying notes to financial statements.
--------------------------------------------------------------------------------
30
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
TD WATERHOUSE DOW 30 FUND
Statement of Assets and Liabilities
October 31, 2000
<S> <C>
ASSETS
Investments in securities, at value (cost $154,267,191) $ 160,376,547
Dividend and interest receivable 107,341
Receivable for capital shares sold 361,878
Receivable for investment securities sold 4,109,148
Receivable from broker 155,589
Variation margin receivable 22,500
-------------
Total Assets 165,133,003
LIABILITIES
Bank overdraft 90,762
Payable for capital shares redeemed 127,892
Payable for investment securities purchased 4,140,923
Payable to Investment Manager and its affiliates (Note 3) 11,619
Other accrued expenses 57,621
-------------
Total Liabilities 4,428,817
-------------
NET ASSETS $160,704,186
=============
Net assets consist of:
Paid-in-capital 140,026,169
Accumulated net realized gains from security transactions 14,642,193
Net unrealized appreciation on investments and futures contracts 6,035,824
-------------
Net assets, at value $160,704,186
=============
Shares of beneficial interest outstanding 14,653,522
=============
Net asset value, redemption price and offering price per share (Note 2) $ 10.97
=============
Please see accompanying notes to financial statements.
----------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE>
--------------------------------------------------------------------------------
TD WATERHOUSE DOW 30 FUND
Statement of Operations
For the Year Ended October 31, 2000
INVESTMENT INCOME
Dividend income $ 2,682,335
Interest income 12,179
------------
Total Investment Income 2,694,514
------------
EXPENSES
Shareholder servicing fees (Note 3) 439,598
Investment management fees (Note 3) 351,678
Custody fees (Note 2) 91,928
Transfer agent fees (Note 3) 87,920
Professional fees 78,831
Registration fees 55,675
Shareholder reports and mailing 49,355
Trustees' fees 22,589
Other expenses 13,021
------------
Total Expenses 1,190,595
Fees waived/expenses reimbursed by the Investment Manager
and its affiliates (Note 3) (751,009)
------------
Net Expenses 439,586
------------
Net Investment Income 2,254,928
------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions 15,234,788
Net change in unrealized depreciation on investments (11,035,243)
Net change in unrealized depreciation on futures contracts (73,532)
------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 4,126,013
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 6,380,941
============
Please see accompanying notes to financial statements.
--------------------------------------------------------------------------------
32
<PAGE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TD WATERHOUSE DOW 30 FUND
Statement of Changes in Net Assets
Year Year
Ended Ended
October 31, October 31,
2000 1999
-------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,254,928 $ 1,622,456
Net realized gains from security transactions 15,234,788 2,545,555
Net change in unrealized appreciation/depreciation on investments (11,108,775) 17,310,316
-------------- -------------
Net increase in net assets from operations 6,380,941 21,478,327
-------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (2,264,934) (1,622,456)
In excess of net investment income -- (2,724)
From net realized gains on security transactions (3,057,262) --
-------------- -------------
Total distributions to shareholders (5,322,196) (1,625,180)
-------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 88,503,495 155,677,326
Reinvestment of dividends 5,322,196 1,625,180
Payments for shares redeemed (109,491,695) (64,055,262)
-------------- -------------
Net increase (decrease) in net assets from capital share transactions (15,666,004) 93,247,244
-------------- -------------
Total Increase (Decrease) in Net Assets (14,607,259) 113,100,391
Net Assets:
Beginning of period 175,311,445 62,211,054
-------------- -------------
End of period $160,704,186 $175,311,445
============== =============
CAPITAL STOCK TRANSACTIONS:
Shares sold 8,195,894 15,233,177
Shares issued for dividends reinvested 492,427 159,759
Shares redeemed (10,094,133) (6,294,226)
Effect of reverse stock split (281,516) --
-------------- -------------
Net increase (decrease) in shares outstanding (1,687,328) 9,098,710
============== =============
</TABLE>
Please see accompanying notes to financial statements.
--------------------------------------------------------------------------------
33
<PAGE>
--------------------------------------------------------------------------------
TD WATERHOUSE DOW 30 FUND
Financial Highlights
Contained below is per share operating performance data for a share of
beneficial interest outstanding, total investment return, ratios to average net
assets and other supplemental data for the periods indicated. This information
has been derived from the Fund's financial statements.
<TABLE>
<CAPTION>
Year Year Period
Ended Ended Ended
October 31, October 31, October 31,
2000 1999+ 1998*+
--------------- --------------- --------------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period $ 10.91 $ 8.74 $ 8.93
--------------- --------------- --------------
Investment Operations
Net investment income 0.13 0.14 0.08
Net realized and unrealized gains (losses) on
investments 0.25 2.17 (0.19)
--------------- --------------- --------------
Total From Investment Operations 0.38 2.31 (0.11)
Distributions to Shareholders
Distributions from net investment income (0.13) (0.14) (0.08)
Distributions from realized gains on investments (0.19) -- --
--------------- --------------- --------------
Total Distributions (0.32) (0.14) (0.08)
Net asset value, end of period $ 10.97 $ 10.91 $ 8.74
=============== =============== ==============
Ratios
Ratio of net expenses to average net assets 0.25% 0.25% 0.25%
(A)
Ratio of net investment income to average net assets 1.28% 1.37% 1.48%
(A)
Decrease reflected in above expense ratio due to
waivers/reimbursements by the Investment Manager
and its affiliates (Note 3) 0.43% 0.43% 0.55%
(A)
Supplemental Data
Portfolio turnover rate 38% 47% 8%
(A)
Total investment return (B) 3.56% 26.72% (1.19%)
Net assets, end of period $ 160,704,186 $ 175,311,445 $ 62,211,054
=============== =============== ==============
Average net assets $ 175,715,409 $ 118,399,466 $ 28,460,853
=============== =============== ==============
</TABLE>
* The Fund commenced operations on March 31, 1998.
+ Adjusted for a .983262 to 1 reverse stock split paid to shareholders of
record on December 2, 1999. (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.
--------------------------------------------------------------------------------
34
<PAGE>
--------------------------------------------------------------------------------
TD WATERHOUSE DOW 30 FUND
Notes to Financial Statements
For the Year Ended October 31, 2000
NOTE 1 -- ORGANIZATION
TD Waterhouse Trust (the "Trust") was organized as a Delaware business trust on
August 6, 1999. The Trust is registered as an open-end management investment
company with the Securities and Exchange Commission under the Investment Company
Act of 1940, as amended (the "Act") and currently consists of eight funds
including the TDWaterhouse Dow 30 Fund (the "Fund"). Shares of beneficial
interest of the Trust are registered under the Securities Act of 1933, as
amended. The investment objective of the Fund is to seek to track the total
return of the Dow Jones Industrial AverageSM before Fund expenses. The Fund
commenced operations on March 31, 1998 and became part of the Trust on November
5, 1999. It is a non-diversified portfolio.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Fund's significant accounting policies:
Share Valuation -- The net asset value per share of the Fund is calculated daily
by dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding. The offering price and redemption price per share
are equal to the net asset value per share.
Securities Valuation -- The Fund's portfolio securities are valued as of the
close of business of the regular session of the New York Stock Exchange
(normally 4:00 p.m., Eastern Time). Securities which are traded over-the-counter
are valued at the last sales price, if available, otherwise, at the last quoted
bid price. Securities traded on a national stock exchange are valued based upon
the closing price on the principal exchange where the security is traded.
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.
Futures Contracts -- The Fund may invest in stock index futures contracts. The
Fund is required to deposit with the broker an amount of cash equivalents equal
to a certain percentage of the contract amount. This is known as the "initial
margin." The "variation margin" represents the daily fluctuation in the value of
the contract. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the value of the contract at the time it
was opened and the time it was closed. The Fund may purchase index futures
contracts for several reasons: to simulate full investment in the underlying
index while retaining a cash balance for fund management purposes, to facilitate
trading, to reduce transactions costs, or to seek higher investment returns when
a futures contract is priced more attractively than securities in the index.
As of October 31, 2000, the Fund had the following open futures contracts: 18
DJIA Index Futures contracts expiring in December 2000, market value covered by
the contracts of $1,983,960, and unrealized depreciation of $73,532.
Investment Income -- Interest income is accrued as earned. Dividend income is
recorded on the ex-dividend date. Under the terms of the custody agreement, the
Fund receives net earnings credits based on available cash balances left on
deposit. Income earned under this arrangement is included in interest income.
--------------------------------------------------------------------------------
35
<PAGE>
--------------------------------------------------------------------------------
TD WATERHOUSE DOW 30 FUND
Notes to Financial Statements
For the Year Ended October 31, 2000
(continued)
Distributions to Shareholders -- Dividends arising from net investment income,
if any, are declared daily and paid monthly. 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 the Fund are charged to the Fund's
operations. Expenses which are applicable to all funds in the Trust are
allocated on a pro rata basis.
Use of Estimates -- The Fund's financial statements are prepared in accordance
with accounting principles generally accepted in the United States, which may
require the use of management estimates and assumptions. Actual results could
differ from these estimates.
Federal Income Taxes -- It is the Fund'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 the Fund so
qualifies, and distributes at least 90% of its taxable net income, the Fund (not
the shareholders) will be relieved of Federal income tax on the income
distributed. Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund'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 October 31) plus undistributed amounts from prior years.
Reclassification of Capital Components -- As of October 31, 2000, to reflect
permanent book to tax differences, the Fund reclassified $10,006 from
accumulated net realized gains from security transactions to undistributed net
investment income. This reclassification had no effect on net assets or net
asset value per share.
NOTE 3-- INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES OF
THE INVESTMENT MANAGER
Under the terms of an Investment Management Agreement with TD Waterhouse Asset
Management, Inc. (the "Investment Manager"), a majority-owned subsidiary of The
Toronto-Dominion Bank, for the investment management services furnished to the
Fund, the Fund pays the Investment Manager an annual investment management fee,
equal to .20 of 1% of the average daily net assets of the Fund. The Investment
Manager will limit the Fund's overall expense ratio to no more than 0.45% on an
annual basis; however, for the fiscal year ended October 31, 2000, the
investment manager limited expenses to 0.25%. All expense limitations are
voluntary. For the year ended October 31, 2000, the Investment Manager
voluntarily waived $300,404 of its investment management fee.
TD Waterhouse Investor Services, Inc. ("TD Waterhouse"), 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, the Investment Manager (not the Fund) pays TD
Waterhouse a monthly fee at an annual rate of .10 of 1% of the Fund's average
daily net assets.
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TD WATERHOUSE DOW 30 FUND
Notes to Financial Statements
For the Year Ended October 31, 2000
(continued)
TD Waterhouse 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 the Fund pay TD
Waterhouse a monthly fee at an annual rate of .25 of 1% of average daily net
assets. For the year ended October 31, 2000, TD Waterhouse voluntarily waived
$375,504 of its shareholder servicing fee for the Fund.
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, the Fund pays the Transfer Agent a
monthly fee at an annual rate of .05 of 1% of average daily net assets. For the
year ended October 31, 2000, the Transfer Agent voluntarily waived $75,101 of
its transfer agent fee for the Fund.
Each Trustee who is not an "interested person" as defined in the Act, who serves
on the Board of Trustees/Directors of one or more investment companies in the
"Fund Complex" (which includes the Trust, TD Waterhouse Family of Funds, Inc.
and National Investors Cash Management Fund, Inc.) receives:
1. a base annual retainer of $15,000, payable quarterly,
2. a supplemental annual retainer of $6,000, if serving on the Board of
Trustees/Directors of more than two companies in the Fund Complex,
3. an additional supplemental annual retainer of $2,500, if serving on the
Board of Trustees/Directors of three or more companies in the Fund Complex,
and
4. a meeting fee of $3,000 for each meeting attended.
Compensation is allocated among the companies and the respective funds.
The Fund placed all of its portfolio transactions with TD Waterhouse. There were
no commissions paid to TD Waterhouse for the year ended October 31, 2000.
NOTE 4 - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investment securities, other
than short-term investments, amounted to $66,208,252 and $82,263,317,
respectively, for the year ended October 31, 2000.
The cost of portfolio investments for Federal income tax purposes was
substantially the same as the cost for financial reporting purposes as of
October 31, 2000. Accordingly, net unrealized appreciation for Federal income
tax purposes aggregated $6,109,356, consisting of $21,009,271 gross unrealized
appreciation and $14,899,915 gross unrealized depreciation.
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37
<PAGE>
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TD WATERHOUSE DOW 30 FUND
Notes to Financial Statements -- October 31, 2000
(continued)
NOTE 5 -- SUBSEQUENT EVENT
On December 8, 2000, the Fund paid a capital gain distribution to shareholders
of record on December 7, 2000 in the amount of $1.20 per share (the short-term
capital gain distribution was $0.22 per share and the long-term capital gain
distribution was $0.98 per share). On the same day, the Fund declared a reverse
share split with a factor of 0.88674 in order to restore the Fund's net asset
value per share to at or near .001 (or 1/1000) of the closing value of the Dow
Jones Industrial Average.
NOTE 6-- FEDERAL TAX INFORMATION (UNAUDITED)
As required by Federal regulations, shareholders will receive notification of
their portion of the Fund's taxable ordinary dividends and capital gains
distributions paid, (if any), for the 2000 calendar year early in 2001.
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This Report has been prepared for shareholders and may be distributed to others
only if preceded or accompanied by a current prospectus.
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Report of Independent Auditors
Shareholders and Board of Trustees
TD Waterhouse Dow 30 Fund
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the TD Waterhouse Dow 30 Fund (one of the funds
comprising TD Waterhouse Trust) as of October 31, 2000, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended and financial
highlights for each of the periods indicated therein. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of October 31, 2000 by correspondence with
the custodian and others. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the TD
Waterhouse Dow 30 Fund at October 31, 2000, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for each of the indicated
periods, in conformity with accounting principles generally accepted in the
United States.
/s/Ernst & Young LLP
New York, New York
December 1, 2000
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