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[ZURICH LOGO]
Zurich YieldWise Funds
'99
Annual Report to Shareholders for the Year Ended July 31, 1999
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
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SUBJECT PAGE
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<S> <C>
FUND OBJECTIVES 1
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PERFORMANCE SUMMARY 2
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VARIABLES AFFECTING PERFORMANCE 5
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PERFORMANCE UPDATE 6
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TERMS TO KNOW 10
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PORTFOLIO COMPOSITION 12
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PORTFOLIO OF INVESTMENTS 13
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FINANCIAL STATEMENTS 27
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FINANCIAL HIGHLIGHTS 35
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</TABLE>
<PAGE> 3
1
FUND OBJECTIVES
Zurich YieldWise Funds (the "Trust") is an open-end, diversified, management
investment company offering a choice of three investment funds. Each fund is
designed for investors who are willing to make high minimum investments and to
pay for certain individual transactions in order to pursue higher yields through
lower costs.
Like all money market funds, an investment in these funds is not insured or
guaranteed by the FDIC or any other government agency. Although money funds seek
to preserve your investment at $1.00 per share, it is possible to lose money.
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ZURICH YIELDWISE MONEY FUND
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This fund seeks to provide maximum current income to the extent consistent with
stability of principal by investing primarily in commercial paper and bank
obligations.
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ZURICH YIELDWISE GOVERNMENT MONEY FUND
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This fund seeks maximum current income to the extent consistent with stability
of principal by investing primarily in obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.
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ZURICH YIELDWISE MUNICIPAL MONEY FUND
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This fund seeks maximum current income that is exempt from regular federal
income taxes to the extent consistent with stability of principal by investing
primarily in a portfolio of short-term, high quality tax-exempt municipal
securities.
<PAGE> 4
2
PERFORMANCE SUMMARY
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ZURICH YIELDWISE MONEY FUND
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YIELD COMPARISON
Zurich YieldWise Money Fund is compared to the First Tier Money Fund Average
which consists of all non-institutional taxable money market funds investing in
only first tier (highest rating) securities tracked by IBC Financial Data.
Returns are historical and do not guarantee future results. Fund yields
fluctuate.*
7-day average yield is the annualized net investment income per share for the
period shown. Gains or losses are not included.
[PERFORMANCE GRAPHS]
<TABLE>
<CAPTION>
FUND YIELD FIRST TIER MONEY FUND AVERAGE
---------- -----------------------------
<S> <C> <C>
8/4/98 5.42 4.92
8/11/98 5.39 4.81
8/18/98 5.40 4.92
8/25/98 5.39 4.91
9/1/98 5.33 4.82
9/8/98 5.37 4.90
9/15/98 5.31 4.92
9/22/98 5.33 4.89
9/29/98 5.29 4.87
10/06/98 5.25 4.83
10/13/98 5.24 4.76
10/20/98 5.12 4.71
10/27/98 5.08 4.64
11/3/98 5.07 4.67
11/10/98 5.04 4.62
11/17/98 5.04 4.63
11/24/98 5.05 4.54
12/1/98 5.00 4.56
12/8/98 5.00 4.53
12/15/98 5.02 4.56
12/22/98 5.02 4.54
12/29/98 5.09 4.52
1/5/99 5.06 4.56
1/12/99 4.97 4.47
1/19/99 4.92 4.44
1/26/99 4.86 4.37
2/2/99 4.78 4.34
2/9/99 4.74 4.31
2/16/99 4.68 4.28
2/23/99 4.69 4.26
3/2/99 4.67 4.27
3/9/99 4.65 4.25
3/16/99 4.72 4.24
3/23/99 4.85 4.22
3/30/99 4.64 4.22
4/6/99 4.67 4.25
4/13/99 4.63 4.21
4/20/99 4.85 4.20
4/27/99 4.68 4.19
5/4/99 4.59 4.21
5/11/99 4.62 4.19
5/18/99 4.66 4.18
5/25/99 4.64 4.18
6/1/99 4.59 4.22
6/8/99 4.66 4.21
6/15/99 4.68 4.22
6/22/99 4.75 4.22
6/29/99 4.80 4.26
7/6/99 4.79 4.31
7/13/99 4.83 4.33
7/20/99 4.84 4.38
7/27/99 4.76 4.38
</TABLE>
LIPPER RANKING
The Lipper, Inc. ranking is based upon changes in net asset value with all
dividends reinvested for the year ended 7/31/99. The ranking is historical and
does not guarantee future performance. The fund is compared to the Lipper Money
Market Instrument Fund category*.
[PERFORMANCE GRAPHS]
<TABLE>
<S> <C> <C>
Top 3% #10 of 320 funds 1 Year
</TABLE>
*Performance reflects a partial fee waiver and expense absorption during this
period which improved results. Otherwise, the 7-day average yield would have
been 4.65% on 7/27/99.
<PAGE> 5
3
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ZURICH YIELDWISE GOVERNMENT MONEY FUND
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YIELD COMPARISON
Zurich YieldWise Government Money Fund is compared to the IBC Government Money
Fund Average which consists of all non-institutional government money market
funds tracked by IBC Financial Data. Returns are historical, do not guarantee
future results, and will fluctuate.*
7-day average yield is the annualized net investment income per share for the
period shown. Gains or losses are not included.
[PERFORMANCE GRAPHS]
<TABLE>
<CAPTION>
FUND YIELD GOVERNMENT MONEY FUND AVERAGE
---------- -----------------------------
<S> <C> <C>
12/15/98 5.08 4.32
12/22/98 5.12 4.28
12/29/98 5.11 4.27
1/5/99 5.09 4.29
1/12/99 5.30 4.20
1/19/99 5.18 4.24
1/26/99 4.89 4.16
2/2/99 4.87 4.20
2/9/99 4.91 4.18
2/16/99 4.82 4.16
2/23/99 4.82 4.15
3/2/99 4.81 4.19
3/9/99 4.81 4.17
3/16/99 4.64 4.18
3/23/99 4.62 4.15
3/30/99 4.80 4.18
4/6/99 4.88 4.23
4/13/99 4.91 4.13
4/20/99 4.67 4.12
4/27/99 4.64 4.09
5/4/99 4.67 4.16
5/11/99 4.77 4.09
5/18/99 4.73 4.13
5/25/99 4.70 4.09
6/1/99 4.70 4.15
6/8/99 4.69 4.11
6/15/99 4.70 4.13
6/22/99 4.70 4.08
6/29/99 4.76 4.16
7/6/99 4.92 4.22
7/13/99 4.92 4.22
7/20/99 5.06 4.26
7/27/99 4.96 4.28
</TABLE>
IBC RANKING
The IBC Financial Data ranking is based upon average annualized net investment
income for the 7-day period ended as indicated. The fund is compared to the IBC
Government Money Fund category which consists of all non-institutional
government money market funds tracked by IBC Financial Data. Ranking is
historical and does not guarantee future results*.
[PERFORMANCE GRAPHS]
<TABLE>
<S> <C> <C>
Top fund #1 of 185 funds as of 7/27/99
</TABLE>
*Performance reflects partial fee waiver and expense absorption during this
period which improved results. Otherwise, the 7-day average yield would have
been 4.40% on 7/27/99.
<PAGE> 6
ZURICH YIELDWISE FUNDS PERFORMANCE SUMMARY, CONTINUED
ZURICH YIELDWISE MUNICIPAL MONEY FUND
YIELD COMPARISON
Zurich YieldWise Municipal Money Fund is compared to the IBC Tax-Free Money Fund
Average which consists of all non-institutional tax-free money market funds
tracked by IBC Financial Data. Returns are historical, do not guarantee future
results, and will fluctuate.* Income may be subject to state and local taxes and
the Alternative Minimum Tax.
7-day average yield is the annualized net investment income per share for the
period shown. Gains or losses are not included.
PERFORMANCE GRAPHS
<TABLE>
<CAPTION>
FUND YIELD TAX-FREE MONEY FUND AVERAGE
---------- ---------------------------
<S> <C> <C>
12/15/98 3.12 2.68
12/22/98 3.25 2.55
12/29/98 3.83 3.06
1/5/99 3.97 3.26
1/12/99 2.92 2.64
1/19/99 2.9 2.56
1/26/99 2.8 2.5
2/2/99 2.8 2.43
2/9/99 2.27 2.06
2/16/99 2.38 2.08
2/23/99 2.83 2.35
3/2/99 3.06 2.51
3/9/99 2.68 2.38
3/16/99 3.08 2.54
3/23/99 3.01 2.57
3/30/99 3.05 2.55
4/6/99 2.97 2.52
4/13/99 2.71 2.35
4/20/99 3.1 2.6
4/27/99 3.31 2.84
5/4/99 3.52 3.1
5/11/99 3.49 3
5/18/99 3.38 2.91
5/25/99 3.34 2.81
6/1/99 3.44 2.76
6/8/99 3.09 2.58
6/15/99 3.16 2.65
6/22/99 3.29 2.77
6/29/99 3.5 3.01
7/6/99 3.37 2.86
7/13/99 3.04 2.42
7/20/99 3.11 2.53
7/27/99 3.21 2.64
</TABLE>
IBC RANKING
The IBC Financial Data ranking is based upon average annualized net investment
income for the 7-day period ended as indicated. The fund is compared to the IBC
Tax-Free Money Fund category which consists of all non-institutional tax-free
money market funds tracked by IBC Financial Data. Ranking is historical and does
not guarantee future results*.
PERFORMANCE GRAPHS
<TABLE>
<CAPTION>
IBC RANKING
<S> <C> <C>
Top Fund #1 of 122 funds As of 7/27/99
</TABLE>
*Performance reflects 100% fee waiver and expense absorption during this period
which improved results. Otherwise, the 7-day average yield would have been 2.33%
on 7/27/99.
4
<PAGE> 7
5
VARIABLES AFFECTING PERFORMANCE
The investment manager invests in high-quality, short-term securities that are
consistent with each fund's specific objective.
Our primary goal is to provide competitive yields while maintaining preservation
of principal and a high degree of liquidity. The specific securities selected by
our portfolio managers have a major impact on reaching this goal. Additionally,
our portfolio managers must continuously analyze other variables which affect
share price stability and fund performance. Three of the most important
variables factored into the decision-making process are:
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MONETARY POLICY
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Monetary Policy is managed by the Federal Reserve Board (the "Fed") and has a
direct impact on short-term interest rates. If the Fed determines that inflation
is climbing, it will enact a policy to decrease or "tighten" the money supply.
With less money available, money lenders can command higher interest rates on
the money market securities they buy. On the other hand, if the Fed determines
the economy is heading toward a recession, it will increase or "ease" the money
supply. With more money for borrowers to access, the interest rates for money
market securities decline.
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INTEREST RATES
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Interest Rates will affect money fund yields because as investments mature, the
cash received will be reinvested at current money market rates which could be
either higher or lower. Reinvesting at higher interest rates generally means
higher yields for money funds and reinvesting at lower rates generally means
lower yields.
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AVERAGE LENGTH OF MATURITY
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Average Length of Maturity affects the timing of reinvesting cash from maturing
investments. If interest rates are expected to rise, decreasing the portfolio's
average length of maturity would enable the Fund to purchase higher-yielding
money market securities sooner. Conversely, if rates were expected to decrease,
the Fund would invest in money market securities with a longer length of
maturity in order to maintain higher yields longer.
(ALSO SEE "TERMS TO KNOW" SECTION)
<PAGE> 8
6
PERFORMANCE UPDATE
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AN INTERVIEW WITH PORTFOLIO MANAGER FRANK RACHWALSKI
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[RACHWALSKI PHOTO]
FRANK RACHWALSKI IS A MANAGING DIRECTOR OF SCUDDER KEMPER INVESTMENTS, INC. AND
LEAD PORTFOLIO MANAGER OF ZURICH YIELDWISE FUNDS. HE JOINED THE ORGANIZATION IN
1973.
As the fiscal year began, the Federal Reserve Board ("The Fed") took charge of
the financial markets with 0.25% cuts in the federal funds rate on September 29,
October 15 and November 17. These moves were intended to stimulate and stabilize
global economies. Below, lead portfolio manager Frank Rachwalski discusses the
effect of the Fed's actions on the financial markets and the funds.
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Q FRANK, COULD YOU PROVIDE A BROAD OVERVIEW OF THE MONEY MARKETS FOR THE
LAST YEAR AND THE FORCES THAT SHAPED THEM?
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A Certainly. We saw a little bit of everything from the markets in the
12-month period ended July 31, 1999. In the fourth quarter last year,
economic growth in the U.S. was increasing at a moderately strong pace.
However, economic problems in Russia and Latin America emerged, following on the
heels of similar distress in Asian countries. Eventually, the financial turmoil
overseas prompted investors to pour money into U.S. Treasury securities. In
fact, 30-year Treasury bonds were trading below the fed funds rate for the first
time since 1989. The Fed needed to take action to both stabilize financial
markets and provide some protection from slower economic growth. They responded
with the three rate cuts.
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The views expressed in this report reflect those of the portfolio manager only
through the end of the period of the report, as stated on the cover. The
manager's views are subject to change at any time, based on market and other
conditions.
<PAGE> 9
7
Q DID THIS MOVE WORK?
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A Yes, it did. In fact, it may have worked TOO well. Stock markets here
and abroad bounced back, but long-bond yields rose as investors exited
these securities in favor of higher potential returns elsewhere. This
created a tough environment for bond investors as yields rose and prices
fell on most types of fixed-income securities. Adding to the difficulty was a
slight uptick in inflation measures. This, coupled with tight labor markets,
prompted the Federal Reserve to raise the Federal Funds rate by 0.25% in late
June,partially rescinding the cuts they made earlier.
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Q HOW DID THESE EVENTS AFFECT SHORT-MATURITY INVESTMENTS SUCH AS MONEY
MARKET FUNDS AND T-BILLS?
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A Short-term investments reflected these developments as yields increased
toward the end of the 12-month period. The bottom line was that more
aggressive money market funds with long maturities did well in the
fourth quarter of 1998, but lagged as the market started reflecting upward rate
pressures in 1999.
It's been a difficult year for most areas of the fixed income market. However,
money market investments did what they are supposed to do: they provided
stability and liquidity.
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Q HOW WERE THE ZURICH YIELDWISE FUNDS POSITIONED?
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A We remained defensive through most of the year, so we kept the average
maturity of the funds relatively short (see page 12 for details). In our
experience, you don't want to be aggressive when conditions
Continued
<PAGE> 10
8
are unpredictable, like the last 12 months have been. This conservative
positioning caused us to underperform some peers slightly in the last quarter of
1998. But for most of the past year period, the yield curve on tax-free
securities was inverted, so the better return on shorter-maturity paper fit our
strategy and helped us outperform many other funds. Ultimately, shareholders
should be pleased because the funds continue to be among the top performers as
measured by Lipper, Inc. and IBC Financial Data (see pages 2-4 for details).
Q WHAT'S YOUR OUTLOOK FOR THE NEXT FEW MONTHS?
------------------------------------------------------------------------
A We think the Fed will raise rates but it will be "one and done" with no
additional increases. The Fed needs to maintain orderly financial
markets in the face of any potential irrational behavior sparked by Y2K
fears. In fact, Y2K behavior should make the last quarter of the year quite
interesting. As the end of the year draws close, we could see more people
transfer assets to money market funds for safety and liquidity reasons. That
could prompt T-bill prices to increase and yields to fall. Or we could see a
number of investors transfer out of investments altogether, and the resulting
lack of demand could spark a rise in yields and price decline.
Into next year, however, with Y2K concerns out of the way, we could see a
resurgence in inflation as spending picks up and assets are redistributed. The
Fed might then again be forced to boost the Fed Funds rate. Regardless, we'll
likely remain in our slightly defensive positioning, with shorter-than-typical
maturities to guard against an uptick in rates, and greater-than-normal cash
supplies that can accommodate investor needs as the millennium draws to a close.
As for the economy, there are no credit concerns right now. T-bills are at
normal spreads relative to longer maturity instruments. Our outlook is for a
good pace of economic growth coupled with modest inflationary pressures. If
that's the case, we would expect rates to move modestly upward.
Continued
<PAGE> 11
9
Q FRANK, YOU'VE BEEN MANAGING MONEY FUNDS FOR OVER TWENTY YEARS. DO YOU
HAVE ANY CONCERNS ABOUT Y2K?
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A Actually, I think it might present our team with some opportunities. Our
money market funds aren't a training ground for other areas of the firm,
which can be the case in some other companies. We have a staff dedicated
to money market funds who've seen enough to recognize potential trouble spots.
We also have the added advantage of our chief economist's analysis to help guide
our decision-making. A seasoned staff counts in volatile times, and gives you
the potential to spot opportunities and avoid potential pitfalls. We'll apply
these talents through Y2K and whatever lies beyond.
<PAGE> 12
10
TERMS TO KNOW
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7-DAY AVERAGE
YIELD Every money market fund calculates its yield daily
according to a standardized method prescribed by the
Securities and Exchange Commission. Each day's
standardized yield is an average taken over a 7-day
period. This average helps to minimize the effect of
daily fluctuation in fund income, and therefore yield.
MATURITY Maturity is the time remaining before an issuer is
scheduled to repay the principal amount on a debt
security. Money market instruments are debt securities.
FEDERAL FUNDS
("FED FUNDS") Commercial banks are required to keep these funds on
deposit at the Federal Reserve Bank in their district.
In order to meet these reserve requirements,
occasionally commercial banks need to borrow funds.
These funds are borrowed from banks that have an excess
of the required amount on hand in what is called the
"Fed Funds Market". The interest rate on these loans is
called the "Fed Funds Rate" and is the key money market
rate which influences all other short-term rates.
U.S. TREASURIES These debt securities are issued by the U.S. Treasury
and include Treasury bills, Treasury notes and Treasury
bonds. They are considered to be the safest of all
securities. Their safety rests in the power of the U.S.
government to obtain tax revenues in order to repay its
obligations, and in its historical record of always
having done so.
<PAGE> 13
11
Y2K Throughout the world there is an issue with computer
programs that may be unable to process data with dates
using "00" to signify the year 2000. Zurich YieldWise
Funds' investment advisor, Scudder Kemper Investments,
is among the millions of companies that are working to
correct this problem within their organizations and
suppliers. While these efforts are designed to fix the
problem, there are no guarantees that the Year 2000 will
not cause problems for computer systems around the
world.
This constitutes a Year 2000 Readiness Disclosure under
the Year 2000 Information and Readiness Disclosure Act
of 1998.
<PAGE> 14
12
PORTFOLIO COMPOSITION
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ZURICH YIELDWISE MONEY FUND
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<TABLE>
<CAPTION>
On 7/31/99*
<S> <C>
- - First Tier Commercial Paper 73%
- ------------------------------------------------
- - Domestic CDs and Bank
Acceptance Notes 26%
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- - U.S. Government Agency Notes 1%
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Total 100%
WEIGHTED AVERAGE MATURITY+
Zurich YieldWise Money Fund 30 days
- ------------------------------------------------
First Tier Money Fund Average 53 days
</TABLE>
[PIE CHART]
On 7/31/99*
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ZURICH YIELDWISE GOVERNMENT MONEY FUND
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<TABLE>
<CAPTION>
On 7/31/99*
<S> <C>
- - Federal Agency Notes 66%
- ------------------------------------------------
- - Repurchase agreements 34%
- ------------------------------------------------
Total 100%
WEIGHTED AVERAGE MATURITY+
Zurich YieldWise Government
Money Fund 29 days
- ------------------------------------------------
Government Money Fund Average 49 days
</TABLE>
[PIE CHART]
On 7/31/99*
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ZURICH YIELDWISE MUNICIPAL MONEY FUND
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<TABLE>
<CAPTION>
On 7/31/99*
<S> <C>
- - Variable Rate Demand Notes 51%
- ------------------------------------------------
- - Tax-exempt Commercial Paper 49%
- ------------------------------------------------
Total 100%
WEIGHTED AVERAGE MATURITY+
Zurich YieldWise Municipal Money
Fund 23 days
- ------------------------------------------------
Tax-Free Money Fund Average 41 days
</TABLE>
[PIE CHART]
On 7/31/99*
* Portfolio composition and holdings are subject to change.
+ The funds are compared to their respective IBC Financial Data category: The
First Tier Money Fund Average consists of all non-institutional taxable money
market funds investing in only first tier (highest rating) securities and
tracked by IBC Financial Data; Government Money Fund Average includes all
non-institutional government money market funds tracked by IBC Financial Data;
Tax-Free Money Fund Average consists of all non-institutional tax-free money
market funds tracked by IBC Financial Data. Weighted average maturity is as of
7/27/99.
<PAGE> 15
13
ZURICH YIELDWISE MONEY FUND
PORTFOLIO OF INVESTMENTS
July 31, 1999 (value in thousands)
<TABLE>
<CAPTION>
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COMMERCIAL PAPER RATE MATURITY VALUE
---------------------------------------------------------------------------
<S> <C> <C> <C>
Ace Overseas Corp. 5.15% 8/27/99 $ 4,981
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AES Shady Point, Inc. 5.12% 8/26/99 4,982
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Allstate Corp. 5.15% 8/2/99 3,500
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Alpine Securitization Corp. 5.14% 8/12/99 4,992
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American Express Credit Corp. 5.15% 9/14/99 9,938
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American General Finance Corp. 4.96% 8/23/99 9,970
---------------------------------------------------------------------------
American Home Products Corp. 4.96% 8/23/99 4,985
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(a)AMEX Centurian Bank 5.14% 8/21/99 10,000
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Amsterdam Funding Corp. 5.13% - 5.14% 8/12/99 - 8/17/99 14,969
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Asset Securitization
Cooperative Corp. 5.14% 8/30/99 4,979
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Atlantis One Funding Corp. 5.12% 8/19/99 4,987
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Barton Capital Corp. 5.15% 8/20/99 4,986
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Baxter International, Inc. 5.92% 1/27/00 9,714
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(a)Bear Stearns Cos., Inc. 5.15% - 5.35% 8/8/99 - 8/18/99 10,000
---------------------------------------------------------------------------
Beta Finance, Inc. 5.17% 9/15/99 4,968
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California Pollution Control
Financing Authority 4.88% 8/10/99 20,000
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(a)Caterpillar Financial
Services 5.00% 8/16/99 9,998
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Centric Capital Corp. 5.12% 8/23/99 9,969
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China Merchants, Inc. 4.96% 8/20/99 9,974
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(a)CIT Group Holdings 5.14% 8/1/99 5,000
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Citigroup 5.12% 8/25/99 9,966
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Coca-Cola Enterprises 4.95% 8/16/99 9,980
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(a)Countrywide Home Loans,
Inc. 5.56% 10/26/99 10,000
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CSW Credit, Inc. 5.14% 8/30/99 4,979
---------------------------------------------------------------------------
DaimlerChrysler N.A. 4.97% 8/23/99 9,970
---------------------------------------------------------------------------
Duke Capital Corp. 5.12% - 5.13% 8/5/99 - 8/18/99 14,973
---------------------------------------------------------------------------
</TABLE>
<PAGE> 16
14
ZURICH YIELDWISE MONEY FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(value in thousands)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
RATE MATURITY VALUE
----------------------------------------------------------------------------
<S> <C> <C> <C>
Enterprise Funding Corp. 5.12% - 5.14% 8/12/99 - 8/19/99 $ 9,979
----------------------------------------------------------------------------
Eureka Securitization, Inc. 5.15% 9/3/99 4,977
----------------------------------------------------------------------------
Fairway Finance Corp. 5.01% 11/17/99 9,854
----------------------------------------------------------------------------
Falcon Asset Securitization
Corp. 5.14% 8/20/99 9,973
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(a)FINOVA Capital Corp. 5.15% 9/13/99 15,000
----------------------------------------------------------------------------
Fountain Square Commercial
Funding 5.14% 8/9/99 9,989
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General Electric Co. 5.14% 8/31/99 9,958
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(b)GMAC Mortgage Corp. of
Pennsylvania 5.30% 8/2/99 9,999
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Giro Funding Corp. 5.13% 8/26/99 9,965
----------------------------------------------------------------------------
(a)Goldman Sachs Group, L.P. 5.18% 8/8/99 10,000
----------------------------------------------------------------------------
GTE Funding, Inc. 5.11% 8/12/99 4,992
----------------------------------------------------------------------------
(a)Heller Financial, Inc. 5.53% 10/7/99 5,005
----------------------------------------------------------------------------
(a)Household Finance Corp. 5.25% 8/10/99 10,004
----------------------------------------------------------------------------
Household International, Inc. 5.02% 8/30/99 9,960
----------------------------------------------------------------------------
International Securitization
Corp. 5.14% 8/26/99 9,964
----------------------------------------------------------------------------
Intrepid Funding Master Trust 4.93% 9/20/99 9,933
----------------------------------------------------------------------------
Kitty Hawk Funding Corp. 5.17% 9/7/99 9,947
----------------------------------------------------------------------------
Lehman Brothers Holdings, Inc. 5.27% 9/20/99 9,928
----------------------------------------------------------------------------
Lexington Parker Capital Co. 4.95% 8/24/99 9,969
----------------------------------------------------------------------------
(a)Merrill Lynch & Co. 5.16% 8/21/99 10,000
----------------------------------------------------------------------------
Moat Funding L.L.C. 5.18% - 5.21% 8/4/99 - 9/9/99 19,914
----------------------------------------------------------------------------
Mont Blanc Capital Corp. 5.13% 8/12/99 - 8/18/99 9,980
----------------------------------------------------------------------------
Monte Rosa Capital Corp. 5.14% 8/18/99 9,976
----------------------------------------------------------------------------
Moriarty L.L.C. 5.04% 9/7/99 9,949
----------------------------------------------------------------------------
(a)National Rural Utilities
Cooperative Finance Corp. 5.18% 8/2/99 - 9/25/99 10,000
----------------------------------------------------------------------------
New Center Asset Trust 5.16% 9/2/99 9,954
----------------------------------------------------------------------------
</TABLE>
<PAGE> 17
15
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
RATE MATURITY VALUE
---------------------------------------------------------------------------
<S> <C> <C> <C>
Oakland-Alameda County
Coliseum Authority 5.12% 8/18/99 $ 10,000
---------------------------------------------------------------------------
Old Line Funding Corp. 4.88% - 5.15% 8/11/99 - 8/16/99 14,972
---------------------------------------------------------------------------
Park Avenue Receivables Corp. 5.18% 9/22/99 9,926
---------------------------------------------------------------------------
Petrobras, Inc. Finance Co. 4.95% 8/9/99 9,989
---------------------------------------------------------------------------
Preferred Receivables Funding
Corp. 5.12% 8/24/99 4,984
---------------------------------------------------------------------------
Prudential Funding Corp. 4.92% 8/24/99 14,953
---------------------------------------------------------------------------
Receivables Capital Corp. 5.15% 8/19/99 9,974
---------------------------------------------------------------------------
(a)Sanwa Business Credit Co. 5.16% 9/14/99 7,000
---------------------------------------------------------------------------
Sears Roebuck Acceptance Corp. 5.14% 8/12/99 9,984
---------------------------------------------------------------------------
Sheffield Receivables Corp. 5.17% 8/2/99 9,999
---------------------------------------------------------------------------
Sigma Finance Corp. 4.89% 8/11/99 7,989
---------------------------------------------------------------------------
Skandinaviska Enskilda Banken 5.12% 8/9/99 9,989
---------------------------------------------------------------------------
Societe Generale N.A. 4.94% 8/17/99 4,989
---------------------------------------------------------------------------
Texas, Brazos River Authority 5.00% 8/17/99 10,000
---------------------------------------------------------------------------
Thunder Bay Funding, Inc. 5.04% - 5.14% 8/6/99 - 8/16/99 9,986
---------------------------------------------------------------------------
(a)TransAmerica Finance Corp. 5.56% 10/22/99 5,000
---------------------------------------------------------------------------
UBS Finance, Inc. 5.04% 12/22/99 9,806
---------------------------------------------------------------------------
Variable Funding Capital Corp. 5.12% 8/3/99 9,997
---------------------------------------------------------------------------
WCP Funding, Inc. 5.01% 10/9/99 9,905
---------------------------------------------------------------------------
Wood Street Funding Corp. 5.12% 8/9/99 9,989
---------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER -- 73.1%
(AVERAGE MATURITY: 32 DAYS) 671,360
---------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT
---------------------------------------------------------------------------
(a)American Honda Finance
Corp. 5.19% 8/24/99 9,499
---------------------------------------------------------------------------
(a)AMEX Centurian Bank 5.17% 8/15/99 5,000
---------------------------------------------------------------------------
(a)Barclays Bank, PLC 5.14% 8/12/99 7,496
---------------------------------------------------------------------------
(a)Comerica Bank 5.15% 8/1/99 9,997
---------------------------------------------------------------------------
</TABLE>
<PAGE> 18
16
ZURICH YIELDWISE MONEY FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(value in thousands)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
RATE MATURITY VALUE
---------------------------------------------------------------------------
<S> <C> <C> <C>
(a)Commerzbank AG 5.10% 8/12/99 $ 9,995
---------------------------------------------------------------------------
(a)CoreStates Bank, N.A 5.20% 8/25/99 15,000
---------------------------------------------------------------------------
(a)CS First Boston 5.14% - 5.22% 8/1/99 25,000
---------------------------------------------------------------------------
(a)Deutsche Bank 5.14% 8/1/99 9,996
---------------------------------------------------------------------------
(a)Dresdner Bank, NY 5.14% 8/26/99 14,994
---------------------------------------------------------------------------
(a)First Bank 5.23% 8/21/99 10,005
---------------------------------------------------------------------------
(a)First Union National Bank 5.23% 8/17/99 5,000
---------------------------------------------------------------------------
(a)Heller Financial, Inc. 5.20% 9/7/99 10,008
---------------------------------------------------------------------------
(a)Huntington National Bank 5.20% 8/7/99 14,999
---------------------------------------------------------------------------
(a)J.P. Morgan & Co., Inc. 5.03% 8/3/99 10,000
---------------------------------------------------------------------------
(a)John Deere Capital Corp. 5.15% 8/1/99 9,997
---------------------------------------------------------------------------
(a)Key Bank, N.A. 5.13% 8/29/99 9,999
---------------------------------------------------------------------------
(a)MBNA America Bank, N.A. 5.25% 9/10/99 9,990
---------------------------------------------------------------------------
(a)National City Bank of
Kentucky 5.39% 10/7/99 10,010
---------------------------------------------------------------------------
(a)Northern Trust Corp. 5.07% 8/8/99 9,999
---------------------------------------------------------------------------
(a)PNC Bank, N.A. 5.14% 8/28/99 10,001
---------------------------------------------------------------------------
Sears Roebuck Acceptance Corp. 5.78% 1/20/00 5,020
---------------------------------------------------------------------------
(a)Skandinaviska Enskilda
Banken 5.16% 8/22/99 9,997
---------------------------------------------------------------------------
(a)Wells Fargo & Co. 5.17% 9/29/99 4,997
---------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT -- 25.8%
(AVERAGE MATURITY: 20 DAYS) 236,999
---------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY NOTES -- 1.1%
Federal National Mortgage Association
(AVERAGE MATURITY: 207 DAYS) 5.05% 2/23/00 9,998
---------------------------------------------------------------------------
TOTAL INVESTMENTS PORTFOLIO -- 100%
(AVERAGE MATURITY: 29 DAYS) $918,357
</TABLE>
SEE ACCOMPANYING NOTES TO PORTFOLIOS OF INVESTMENTS.
<PAGE> 19
17
ZURICH YIELDWISE GOVERNMENT MONEY FUND
PORTFOLIO OF INVESTMENTS
July 31, 1999 (value in thousands)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
SHORT-TERM NOTES RATE MATURITY VALUE
--------------------------------------------------------------------------
<S> <C> <C> <C>
(a)Federal Farm Credit
Bank 5.10% 8/1/99 $ 1,500
--------------------------------------------------------------------------
Federal Home Loan Bank 5.05% - 5.12% 3/1/00 - 5/17/00 10,000
--------------------------------------------------------------------------
(a)Federal Home Loan Bank 5.02% - 5.10% 8/1/99 - 8/28/99 24,493
--------------------------------------------------------------------------
Federal Home Loan Mortgage
Corp. 4.81% - 5.00% 8/16/99 - 8/25/99 66,421
--------------------------------------------------------------------------
(a)Federal Home Loan
Mortgage Corp. 4.83% 8/18/99 3,997
--------------------------------------------------------------------------
Federal National Mortgage
Association 4.96% - 5.04% 8/18/99 - 2/23/00 28,434
--------------------------------------------------------------------------
(a)Student Loan Marketing
Association 5.05% - 5.30% 8/1/99 - 8/3/99 4,498
--------------------------------------------------------------------------
TOTAL SHORT-TERM NOTES -- 65.9%
(AVERAGE MATURITY: 35 DAYS) 139,343
<CAPTION>
--------------------------------------------------------------------------
(c)REPURCHASE AGREEMENTS RATE MATURITY VALUE
--------------------------------------------------------------------------
<S> <C> <C> <C>
(DATED 7/99, COLLATERALIZED BY FEDERAL HOME LOAN MORTGAGE
CORPORATION AND FEDERAL NATIONAL MORTGAGE ASSOCIATION
SECURITIES)
Lehman Brothers Holdings,
Inc. (held at The Chase
Manhattan Bank) 5.10% 8/2/99 $17,000
--------------------------------------------------------------------------
Merrill Lynch & Co. (held
at The Chase Manhattan
Bank) 4.99% 8/18/99 29,000
--------------------------------------------------------------------------
Salomon Smith Barney
Holdings, Inc. (held at
The Bank of New York) 5.03% 8/16/99 26,000
--------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS -- 34.1%
(AVERAGE MATURITY: 14 DAYS) 72,000
--------------------------------------------------------------------------
TOTAL INVESTMENTS PORTFOLIO -- 100%
(AVERAGE MATURITY: 28 DAYS) $211,343
</TABLE>
<PAGE> 20
18
ZURICH YIELDWISE MUNICIPAL MONEY FUND
PORTFOLIO OF INVESTMENTS
July 31, 1999 (value in thousands)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
(a) VARIABLE RATE DEMAND SECURITIES
--------------------------------------------------------------------------
ARIZONA RATE VALUE
--------------------------------------------------------------------------
<S> <C> <C>
Apache County,
Industrial Development Authority 3.15% - 3.20% $ 1,500
--------------------------------------------------------------------------
COLORADO
--------------------------------------------------------------------------
Health Facilities Authority 3.27% 1,500
--------------------------------------------------------------------------
Smith Creek Metropolitan District 3.20% 2,000
--------------------------------------------------------------------------
DISTRICT OF COLUMBIA
--------------------------------------------------------------------------
The Washington Home, Inc 3.20% 2,000
--------------------------------------------------------------------------
FLORIDA
--------------------------------------------------------------------------
Hillsborough County,
Industrial Development Authority 3.50% 300
--------------------------------------------------------------------------
Sarasota County,
Health Facilities Authority 3.25% 2,000
--------------------------------------------------------------------------
GEORGIA
--------------------------------------------------------------------------
Fayette County,
Educational Facilities Authority 3.15% 1,000
--------------------------------------------------------------------------
Fulton County,
General Motors Corp. Project 3.15% 500
--------------------------------------------------------------------------
Fulton County,
United Way Project 3.15% 1,000
--------------------------------------------------------------------------
Gainsville,
Redevelopment Authority 3.15% 2,000
--------------------------------------------------------------------------
ILLINOIS
--------------------------------------------------------------------------
Carol Stream,
MAAC Machinery Co. Project 3.30% 800
--------------------------------------------------------------------------
Chicago,
O'Hare International Airport Project 3.10% 400
--------------------------------------------------------------------------
Development Finance Authority 3.20% 700
--------------------------------------------------------------------------
Student Assistance Commission,
Student Loan Revenue 3.25% 800
</TABLE>
<PAGE> 21
19
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
KANSAS RATE VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
Kansas City,
General Motors Corp. Project 3.10% $ 1,335
- --------------------------------------------------------------------------
KENTUCKY
- --------------------------------------------------------------------------
Lexington-Fayette,
Industrial Building Revenue 3.25% 2,000
-------------------------------------------------------------------------
Mason County,
Pollution Control Revenue 3.20% 600
-------------------------------------------------------------------------
Mayfield,
Educational Facilities Authority 3.25% 1,000
- --------------------------------------------------------------------------
MARYLAND
- --------------------------------------------------------------------------
Baltimore County,
Oak Crest Village Project 3.15% 2,000
- --------------------------------------------------------------------------
MICHIGAN
- --------------------------------------------------------------------------
Educational Facilities Authority,
Higher Education Student Loans 3.10% 1,200
-------------------------------------------------------------------------
Hospital Finance Authority,
Clinton Memorial Hospital 3.08% 200
-------------------------------------------------------------------------
Strategic Fund,
General Motors Corp. Project 3.30% 200
- --------------------------------------------------------------------------
MINNESOTA
- --------------------------------------------------------------------------
Hospital Facilities Revenue 3.30% 600
- --------------------------------------------------------------------------
NORTH CAROLINA
- --------------------------------------------------------------------------
Wake County,
Industrial Financing Authority 3.05% 1,100
- --------------------------------------------------------------------------
NORTH DAKOTA
- --------------------------------------------------------------------------
Mercer County,
Pollution Control Revenue 3.20% 1,055
- --------------------------------------------------------------------------
NEW MEXICO
- --------------------------------------------------------------------------
Farmington,
El Paso Electric Co. Project 3.10% 1,500
</TABLE>
<PAGE> 22
20
ZURICH YIELDWISE MUNICIPAL MONEY FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(value in thousands)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
PENNSYLVANIA RATE VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
Delaware Valley,
Regional Finance Authority 3.05% $ 100
-------------------------------------------------------------------------
Higher Education Assistance Agency,
Student Loan Revenue 3.20% 1,000
-------------------------------------------------------------------------
Higher Education Assistance Agency,
University of Pennsylvania Health Services 3.30% 1,000
Project
-------------------------------------------------------------------------
Lancaster County,
Hospital Finance Authority 3.21% 1,000
-------------------------------------------------------------------------
Schuykill County,
Industrial Development Authority 3.05% 700
-------------------------------------------------------------------------
Washington County,
Educational Facilities Authority 3.10% 500
- --------------------------------------------------------------------------
TENNESSEE
- --------------------------------------------------------------------------
Clarksville,
Public Building Authority 3.20% 190
-------------------------------------------------------------------------
Maury County,
Saturn Corp. Project 3.35% 700
- --------------------------------------------------------------------------
TEXAS
- --------------------------------------------------------------------------
Austin County,
Justin Industries, Inc. Project 3.05% 1,000
-------------------------------------------------------------------------
Brazos River Authority 3.55% 300
-------------------------------------------------------------------------
Harris County,
Health Facilities Authority 3.45% 1,100
-------------------------------------------------------------------------
Texas Small Business Industrial Development
Corp. 3.20% 2,200
- --------------------------------------------------------------------------
WISCONSIN
- --------------------------------------------------------------------------
Eau Claire,
Pope & Talbot, Inc. Project 3.35% 600
-------------------------------------------------------------------------
Health and Education Facilities Authority 3.05% 100
-------------------------------------------------------------------------
Wausau,
Minnesota Mining & Manufacturing Project 3.40% 600
</TABLE>
<PAGE> 23
21
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
WEST VIRGINIA RATE VALUE
-------------------------------------------------------------------------
<S> <C> <C>
Preston County,
Allegheny Wood Products, Inc. Project 3.37% $ 475
-------------------------------------------------------------------------
TOTAL VARIABLE RATE DEMAND SECURITIES -- 50.9%
(AVERAGE MATURITY: 6 DAYS) 40,855
<CAPTION>
OTHER SECURITIES
-------------------------------------------------------------------------
ARKANSAS RATE MATURITY VALUE
-------------------------------------------------------------------------
<S> <C> <C> <C>
City of Valdez Arco 3.30% 9/13/99 $ 2,000
-------------------------------------------------------------------------
COLORADO
-------------------------------------------------------------------------
Platte River,
Power Authority 3.25% 8/17/99 - 8/19/99 1,000
-------------------------------------------------------------------------
FLORIDA
-------------------------------------------------------------------------
Municipal Power Agency 3.15% 8/12/99 600
-------------------------------------------------------------------------
Sunshine State Governmental
Financing Commission 3.25% - 3.30% 8/12/99 - 9/16/99 2,900
-------------------------------------------------------------------------
Hillsborough County,
Industrial Development
Authority 3.30% 9/15/99 1,500
-------------------------------------------------------------------------
Orlando,
Capital Improvements
Authority 3.20% - 3.30% 8/11/99 - 9/10/99 1,500
-------------------------------------------------------------------------
Pinellas County,
Educational Facilities
Authority 3.35% 10/7/99 1,300
-------------------------------------------------------------------------
West Orange County,
Hospital Financing Authority 3.40% 9/9/99 1,800
-------------------------------------------------------------------------
GEORGIA
-------------------------------------------------------------------------
Municipal Electric Authority 3.25% - 3.30% 8/12/99 - 9/15/99 2,000
-------------------------------------------------------------------------
ILLINOIS
-------------------------------------------------------------------------
Health Facilities Authority 3.25% 9/7/99 600
-------------------------------------------------------------------------
INDIANA
-------------------------------------------------------------------------
Jasper County,
Industrial Pollution Control
Revenue 3.25% 8/12/99 1,000
</TABLE>
<PAGE> 24
22
ZURICH YIELDWISE MUNICIPAL MONEY FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(value in thousands)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
KENTUCKY RATE MATURITY VALUE
-------------------------------------------------------------------------
<S> <C> <C> <C>
Danville,
Multi-County Lease Revenue 3.25% 9/15/99 $ 1,000
-------------------------------------------------------------------------
Pendleton City,
Multi-County Lease Revenue 3.25% - 3.30% 8/13/99 - 9/15/99 1,800
-------------------------------------------------------------------------
LOUISIANA
-------------------------------------------------------------------------
West Baton Rouge,
Industrial Development
Authority 3.25% 8/11/99 800
-------------------------------------------------------------------------
MARYLAND
-------------------------------------------------------------------------
Anne Arundel County,
Port Facilities Revenue 3.30% - 3.35 8/12/99 - 10/12/99 2,100
-------------------------------------------------------------------------
MISSISSIPPI
-------------------------------------------------------------------------
Claiborne County 3.20% 9/23/99 1,545
-------------------------------------------------------------------------
NEVADA
-------------------------------------------------------------------------
Las Vegas Valley,
Water & Power Authority 3.25% 8/12/99 - 8/19/99 2,000
-------------------------------------------------------------------------
NEW HAMPSHIRE
-------------------------------------------------------------------------
Business Finance Authority 3.25% 8/18/99 700
-------------------------------------------------------------------------
NEW YORK
-------------------------------------------------------------------------
Nassau County,
Tax Anticipation Note 3.50% 8/18/99 100
-------------------------------------------------------------------------
OHIO
-------------------------------------------------------------------------
Water Development Authority 3.25% 8/13/99 1,000
-------------------------------------------------------------------------
PENNSYLVANIA
-------------------------------------------------------------------------
Philadelphia,
Tax and Revenue Anticipation
Notes 4.25% 6/30/00 504
</TABLE>
<PAGE> 25
23
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
TEXAS RATE MATURITY VALUE
-------------------------------------------------------------------------
<S> <C> <C> <C>
Austin County,
Utility Revenue 3.30% 9/16/99 $ 2,000
-------------------------------------------------------------------------
Houston Water & Sewer,
Water and Sewer Revenue 3.30% 8/16/99 2,000
-------------------------------------------------------------------------
Municipal Power Agency 3.25% 8/25/99 1,000
-------------------------------------------------------------------------
Transportation Authority 4.50% 8/31/99 500
-------------------------------------------------------------------------
University of Texas 3.25% - 3.30% 8/11/99 - 8/24/99 1,500
-------------------------------------------------------------------------
UTAH
-------------------------------------------------------------------------
Intermountain Power Agency 3.30% - 3.35% 9/8/99 - 9/20/99 1,600
-------------------------------------------------------------------------
VIRGINIA
-------------------------------------------------------------------------
Chesapeake,
Industrial Development 3.30% 9/14/99 1,000
Authority
-------------------------------------------------------------------------
Louisa,
Industrial Development 3.35% 9/14/99 900
Authority
-------------------------------------------------------------------------
Prince County,
Industrial Development
Authority 3.30% 9/13/99 1,100
-----------------------------------------------------------------------------
TOTAL OTHER SECURITIES -- 49.1%
(AVERAGE MATURITY: 36 DAYS) 39,349
-----------------------------------------------------------------------------
TOTAL INVESTMENTS PORTFOLIO -- 100%
(AVERAGE MATURITY: 20 DAYS) $80,204
</TABLE>
SEE ACCOMPANYING NOTES TO PORTFOLIOS OF INVESTMENTS.
<PAGE> 26
24
NOTES TO PORTFOLIOS OF INVESTMENTS
Interest rates represent annualized yield to date of maturity, except for
variable rate securities described in Note (a). For each security, cost (for
financial reporting and federal income tax purposes) and carrying value are the
same. Likewise, carrying value approximates principal amount.
(a) Variable rate securities. The rates shown are the current rates at July 31,
1999. The dates shown represent the demand date or the next interest rate
change date. Securities in the Zurich YieldWise Municipal Money Fund shown
without a date are payable within five business days and are backed by
credit support agreements from banks or insurance institutions.
(b) Illiquid securities. At July 31, 1999, the aggregate value of illiquid
securities was $10,000,000 in the Zurich YieldWise Money Fund, which
represented 1.1% of net assets.
(c) Repurchase agreements are fully collateralized by U.S. Government or U.S.
Government agency securities. All collateral is held at the Funds' custodian
bank, State Street Bank and Trust Company, or at subcustodian banks, as
indicated. The collateral is monitored daily by the Funds so that its market
value exceeds the carrying value of the repurchase agreement.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE> 27
25
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES
AND SHAREHOLDERS
ZURICH YIELDWISE
FUNDS We have audited the accompanying statement of
assets and liabilities, including the portfolios of
investments, of Zurich YieldWise Money Fund, Zurich
YieldWise Government Money Fund and Zurich
YieldWise Municipal Money Fund, comprising Zurich
YieldWise Funds, as of July 31, 1999, and the
related statements of operations for the year then
ended and changes in net assets for each of the two
years in the period then ended, and the financial
highlights for each of the fiscal periods since
inception. These financial statements and financial
highlights are the responsibility of the Funds'
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
generally accepted auditing standards. 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. Our procedures included
confirmation of investments owned as of July 31,
1999, by correspondence with the custodian. 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.
<PAGE> 28
26
In our opinion, the financial statements and
financial highlights referred to above present
fairly, in all material respects, the financial
position of each of the Funds comprising Zurich
YieldWise Funds at July 31, 1999, the results of
their operations for the year then ended, the
changes in their net assets for each of the two
years in the period then ended and the financial
highlights for each of the fiscal periods since
inception, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
September 16, 1999
<PAGE> 29
27
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
July 31, 1999 (in thousands)
<TABLE>
<CAPTION>
---------------------------------------------------------------------
ASSETS MONEY GOVERNMENT MUNICIPAL
---------------------------------------------------------------------
<S> <C> <C> <C>
Investments, at amortized cost:
Short-term securities $918,357 139,343 80,204
---------------------------------------------------------------------
Repurchase agreements -- 72,000 --
---------------------------------------------------------------------
Cash 3,205 -- 238
---------------------------------------------------------------------
Receivable for:
Investments sold -- -- 50
---------------------------------------------------------------------
Fund shares sold -- 283 22
---------------------------------------------------------------------
Interest 2,318 376 247
---------------------------------------------------------------------
Reimbursement from adviser -- 47 78
---------------------------------------------------------------------
TOTAL ASSETS 923,880 212,049 80,839
---------------------------------------------------------------------
LIABILITIES AND NET ASSETS
---------------------------------------------------------------------
Cash overdraft -- 274 --
---------------------------------------------------------------------
Payable for:
Investments purchased 4,999 -- --
---------------------------------------------------------------------
Fund shares redeemed 3,108 358 37
---------------------------------------------------------------------
Dividends 938 239 57
---------------------------------------------------------------------
Management fee 366 -- --
---------------------------------------------------------------------
Custodian and transfer agent
fees and related expenses 16 4 10
---------------------------------------------------------------------
Trustees' fees and other 66 3 1
---------------------------------------------------------------------
TOTAL LIABILITIES 9,493 878 105
---------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $914,387 211,171 80,734
---------------------------------------------------------------------
THE PRICING OF SHARES
Shares outstanding 914,387 211,171 80,734
---------------------------------------------------------------------
Net asset value and redemption
price per share $1.00 1.00 1.00
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE> 30
28
ZURICH YIELDWISE FUNDS FINANCIAL STATEMENTS, CONTINUED
- ------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------
For the period ended July 31, 1999 (in thousands)
<TABLE>
<CAPTION>
---------------------------------------------------------------------
NET INVESTMENT INCOME MONEY GOVERNMENT (A) MUNICIPAL (A)
---------------------------------------------------------------------
<S> <C> <C> <C>
Interest income $55,033 3,841 686
---------------------------------------------------------------------
Expenses:
Management fee 3,811 390 107
---------------------------------------------------------------------
Custodian and
transfer agent fees
and related expenses 455 18 35
---------------------------------------------------------------------
Trustees' fees 37 1 1
---------------------------------------------------------------------
Reports to
shareholders 30 3 1
---------------------------------------------------------------------
Registration costs 357 58 40
---------------------------------------------------------------------
Audit 13 3 --
---------------------------------------------------------------------
Legal 13 -- --
---------------------------------------------------------------------
Other 2 1 1
---------------------------------------------------------------------
Total expenses
before expense
waiver and
absorption 4,718 474 185
---------------------------------------------------------------------
Less expenses waived
and absorbed by the
investment manager (1,195) (437) (185)
---------------------------------------------------------------------
Total expenses
absorbed by the
Fund 3,523 37 --
---------------------------------------------------------------------
Net investment income $51,510 3,804 686
</TABLE>
(a) For the period from December 1, 1998 (commencement of operations)
to July 31, 1999.
<PAGE> 31
29
(This page intentionally left blank)
<PAGE> 32
30
ZURICH YIELDWISE FUNDS FINANCIAL STATEMENTS, CONTINUED
- -----------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------------
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
----------------------------------------------------------------
<S> <C>
Net investment income
----------------------------------------------------------------
Dividends to shareholders from net investment income
----------------------------------------------------------------
Capital share transactions
(dollar amounts and number of shares are the same):
Shares sold
----------------------------------------------------------------
Shares issued in reinvestment of dividends
----------------------------------------------------------------
----------------------------------------------------------------
Shares redeemed
----------------------------------------------------------------
NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS AND
TOTAL INCREASE (DECREASE) IN NET ASSETS
----------------------------------------------------------------
NET ASSETS
----------------------------------------------------------------
Beginning of period
----------------------------------------------------------------
END OF PERIOD
</TABLE>
(a) Commencement of operations.
<PAGE> 33
31
<TABLE>
<CAPTION>
MONEY GOVERNMENT MUNICIPAL
- ------------------------------------------------------------
DECEMBER 1, DECEMBER 1,
YEAR ENDED JULY 31, 1998(A) TO 1998(A) TO
----------------------- JULY 31, JULY 31,
1999 1998 1999 1999
- ------------------------------------------------------------
<S> <C> <C> <C>
$ 51,510 47,511 3,804 686
- ------------------------------------------------------------
(51,510) (47,511) (3,804) (686)
- ------------------------------------------------------------
1,265,864 2,705,314 343,649 105,205
- ------------------------------------------------------------
49,606 43,882 3,475 619
- ------------------------------------------------------------
1,315,470 2,749,196 347,124 105,824
- ------------------------------------------------------------
(1,472,811) (1,922,532) (135,953) (25,090)
- ------------------------------------------------------------
(157,341) 826,664 211,171 80,734
- ------------------------------------------------------------
1,071,728 245,064 -- --
- ------------------------------------------------------------
$ 914,387 1,071,728 211,171 80,734
</TABLE>
<PAGE> 34
32
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. DESCRIPTION OF THE FUNDS
- --------------------------------------------------------------------------------
Zurich YieldWise Funds (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as an open-end diversified management
investment company organized as a Massachusetts business trust. The Trust
currently offers three investment funds ("Funds"). Zurich YieldWise Money Fund
invests primarily in short-term high quality obligations of major banks and
corporations. Zurich YieldWise Government Money Fund invests exclusively in
obligations issued or guaranteed by the U.S. Government or its agencies and
repurchase agreements thereon. Zurich YieldWise Municipal Money Fund invests in
short-term high quality municipal securities.
The Funds' financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Funds in the
preparation of its financial statements.
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
SECURITY VALUATION. The Funds value all portfolio securities utilizing the
amortized cost method permitted in accordance with Rule 2a-7 under the 1940 Act
and pursuant to which the Funds must adhere to certain conditions. Under this
method, which does not take into account unrealized gains or losses on
securities, an instrument is initially valued at its cost and thereafter assumes
a constant accretion/amortization to maturity of any discount/premium.
REPURCHASE AGREEMENTS. The Funds may enter into repurchase agreements with
certain banks and broker/dealers whereby the Funds, through its custodian or
sub-custodian bank, receives delivery of the underlying securities, the amount
of which at the time of purchase and each subsequent business day is required to
be maintained at such a level that the market value is equal to at least the
principal amount of the repurchase price plus accrued interest.
FEDERAL INCOME TAXES. Each Fund's policy is to comply with the requirements of
the Internal Revenue Code, as amended, which are applicable to regulated
investment companies and to distribute all of its taxable and tax-exempt income
to its shareholders. Accordingly, the Funds paid no federal income taxes and no
federal income tax provision was required.
<PAGE> 35
33
DISTRIBUTION OF INCOME AND GAINS. All of the net investment income of the Funds
are declared as a daily dividend and is distributed to shareholders monthly. Net
investment income includes all realized gains (losses) on portfolio securities.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME. Investment transactions are
accounted for on the trade date. Interest income is recorded on the accrual
basis. All discounts and premiums are accreted/amortized for both tax and
financial reporting purposes.
EXPENSES. Expenses arising in connection with a specific Fund are allocated to
that Fund. Other Trust expenses are allocated between the Funds in proportion to
their relative net assets.
- --------------------------------------------------------------------------------
3. TRANSACTIONS WITH AFFILIATES
- --------------------------------------------------------------------------------
MANAGEMENT AGREEMENT. Each Fund has a management agreement with Scudder Kemper
Investments, Inc. (Scudder Kemper) and pays a monthly investment management fee
of 1/12 of the annual rate of .50% of the first $215 million of average daily
net assets declining to .25% of average daily net assets in excess of $800
million. During the year ended July 31, 1999, the Funds incurred an aggregate
management fee of $2,616,000 after a fee waiver by Scudder Kemper.
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a services agreement with the Funds'
transfer agent, Kemper Service Company (KSvC) is the shareholder service agent
of the Trust. Under the agreement, KSvC received shareholder services fees of
$466,000 for the year ended July 31, 1999.
OFFICERS AND TRUSTEES. Certain officers or trustees of the Trust are also
officers or directors of Scudder Kemper. During the year ended July 31, 1999,
the Trust made no payments to its officers and incurred trustees' fees of 39,000
to independent trustees.
EXPENSE ABSORPTION. Scudder Kemper has agreed to temporarily waive its
management fee and reimburse or pay operating expenses of each fund as follows:
for Zurich YieldWise Money Fund, to the extent necessary to maintain the Fund's
total operating expenses at no more than .45% until January 1, 2000; for Zurich
YieldWise Government Money Fund, to the extent necessary to maintain the Fund's
total operating expenses at no more than .10% through at least June 1, 1999,
thereafter, to the extent necessary to maintain the Fund's
<PAGE> 36
34
total operating expenses at no more than .34% until June 1, 2000; for Zurich
YieldWise Municipal Money Fund, 100% of expenses were waived and absorbed until
June 1, 1999, thereafter, to the extent necessary to maintain the Fund's total
operating expenses at no more than .34% until June 1, 2000. For the year ended
July 31, 1999, Scudder Kemper absorbed expenses of $1,817,000.
<PAGE> 37
35
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
ZURICH YIELDWISE MONEY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
APRIL 17,
YEAR ENDED 1997 (A)
JULY 31, TO
-------------------- JULY 31,
1999 1998 1997
----------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $1.00 1.00 1.00
----------------------------------------------------------------------------
Net investment income .05 .06 .02
----------------------------------------------------------------------------
Less dividends declared .05 .06 .02
----------------------------------------------------------------------------
Net asset value, end of period $1.00 1.00 1.00
----------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 5.03% 5.81 1.69
----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
----------------------------------------------------------------------------
Expenses .34% .07 --
----------------------------------------------------------------------------
Net investment income 4.92% 5.63 5.66
----------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
----------------------------------------------------------------------------
Expenses .45% .44 .60
----------------------------------------------------------------------------
Net investment income 4.80% 5.26 5.06
----------------------------------------------------------------------------
SUPPLEMENTAL DATA
----------------------------------------------------------------------------
Net assets at end of period (in
thousands) $914,387 1,071,728 245,064
</TABLE>
(a) Commencement of operations.
Note: Scudder Kemper agreed to temporarily waive its management fee and absorb
all operating expenses of the Fund through March 31, 1998. In addition, Scudder
Kemper has agreed to gradually reinstate its management fee and other operating
expenses up to a maximum of .45% until January 1, 2000. The Other Ratios to
Average Net Assets are computed without these expense waivers.
<PAGE> 38
36
FINANCIAL HIGHLIGHTS, CONTINUED
- --------------------------------------------------------------------------------
ZURICH YIELDWISE GOVERNMENT MONEY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 1,
1998(A) TO
JULY 31,
PER SHARE OPERATING PERFORMANCE 1999
- -----------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $ 1.00
----------------------------------------------------------------------
Net investment income .03
----------------------------------------------------------------------
Less dividends declared .03
----------------------------------------------------------------------
Net asset value, end of period $ 1.00
----------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 3.30%
----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
----------------------------------------------------------------------
Expenses .05%
----------------------------------------------------------------------
Net investment income 4.92%
----------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
----------------------------------------------------------------------
Expenses .61%
----------------------------------------------------------------------
Net investment income 4.35%
----------------------------------------------------------------------
SUPPLEMENTAL DATA
----------------------------------------------------------------------
Net assets at end of period (in thousands) $211,171
</TABLE>
(a) Commencement of operations.
Note: Scudder Kemper has agreed to temporarily waive its management fee and
absorb certain operating expenses of the Fund to the extent necessary to
maintain the Fund's total operating expenses at no more than .10% through at
least June 1, 1999, thereafter, to the extent necessary to maintain the Fund's
total operating expenses at no more than .34% until June 1, 2000. The Other
Ratios to Average Net Assets are computed without these expense waivers.
<PAGE> 39
37
----------------------------------------------------------------------
ZURICH YIELDWISE MUNICIPAL MONEY FUND
----------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 1,
1998(A) TO
JULY 31,
PER SHARE OPERATING PERFORMANCE 1999
----------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $ 1.00
----------------------------------------------------------------------
Net investment income .02
----------------------------------------------------------------------
Less dividends declared .02
----------------------------------------------------------------------
Net asset value, end of period $ 1.00
----------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 2.09%
----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
----------------------------------------------------------------------
Expenses --
----------------------------------------------------------------------
Net investment income 3.25%
----------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
----------------------------------------------------------------------
Expenses .88%
----------------------------------------------------------------------
Net investment income 2.37%
----------------------------------------------------------------------
SUPPLEMENTAL DATA
----------------------------------------------------------------------
Net assets at end of period (in thousands) $80,734
</TABLE>
(a) Commencement of operations.
Note: Scudder Kemper has agreed to temporarily waive its management fee and
absorb all operating expenses of the Fund through June 1, 1999, thereafter, to
the extent necessary to maintain the Fund's total operating expenses at no more
than .34% until June 1, 2000. The Other Ratios to Average Net Assets are
computed without these expense waivers.
<PAGE> 40
38
FINANCIAL HIGHLIGHTS, CONTINUED
- --------------------------------------------------------------------------------
TAX INFORMATION
- --------------------------------------------------------------------------------
All of the dividends from Zurich YieldWise Money Fund and Zurich YieldWise
Government Money Fund are taxable as ordinary income. These dividends, whether
received in cash or reinvested in shares, must be included in your federal
income tax return and must be reported by the Fund to the Internal Revenue
Service in accordance with U.S. Treasury Department Regulations.
Of the dividends paid from Zurich YieldWise Municipal Money Fund for the taxable
year ended July 31, 1999, 100% are designated as exempt interest dividends for
federal income tax purposes. However, a portion of the dividends may be
includable in the alternative minimum tax calculation.
Please consult a tax adviser if you have questions about federal or state income
tax laws, or on how to prepare your tax returns. If you have specific questions
about your Zurich account, please call 1-888-ZURICH-1 (987-4241).
<PAGE> 41
TRUSTEES & OFFICERS
TRUSTEES OFFICERS
JOHN W. BALLANTINE MARK S. CASADY
Trustee President
LEWIS A. BURNHAM PHILIP J. COLLORA
Trustee Vice President and
Secretary
DONALD L. DUNAWAY
Trustee ANN M. MCCREARY
Vice President
ROBERT B. HOFFMAN
Trustee ROBERT C. PECK, JR.
Vice President
DONALD R. JONES
Trustee KATHRYN L. QUIRK
Vice President
THOMAS W. LITTAUER
Trustee and FRANK J. RACHWALSKI, JR.
Vice President Vice President
SHIRLEY D. PETERSON LINDA J. WONDRACK
Trustee Vice President
CORNELIA SMALL JOHN R. HEBBLE
Trustee Treasurer
WILLIAM P. SOMMERS MAUREEN E. KANE
Trustee Assistant Secretary
CAROLINE PEARSON
Assistant Secretary
BRENDA LYONS
Assistant Treasurer
- -------------------------------------------------------------------------------
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- -------------------------------------------------------------------------------
SHAREHOLDER SERVICE AGENT KEMPER SERVICE COMPANY
P.O. Box 419066
Kansas City, MO 64141-6066
- -------------------------------------------------------------------------------
TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
801 Pennsylvania
Kansas City, MO 64105
- -------------------------------------------------------------------------------
CUSTODIAN STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
Boston, MA 02109
- -------------------------------------------------------------------------------
INDEPENDENT ERNST & YOUNG LLP
AUDITORS 233 South Wacker Drive
Chicago, IL 60606
This report must be preceded or
accompanied by a Zurich YieldWise Funds prospectus.
[RECYCLE LOGO]
Printed in the U.S.A on recycled paper. [ZURICH LOGO]
ZYF-2 (9/30/99) 509643 1090210 Telephone: 1-888-ZURICH-1(987-4241)
