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ZURICH
Zurich YieldWise Funds
report
Zurich YieldWise Money Fund
Zurich YieldWise Government
Money Fund
Zurich YieldWise Municipal
Money Fund
Annual Report to Shareholders
for the Period Ended July 31, 2000
<PAGE>
table of contents
1 Fund objectives
2 Performance summary
5 Variables affecting performance
6 Performance review
9 Terms to know
10 Portfolio composition
11 Portfolio of investments
23 Financial statements
28 Financial highlights
31 Notes to financial statements
34 Report of independent auditors
35 Tax information
<PAGE>
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.
Zurich YieldWise Money Fund
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.
Zurich YieldWise Government
Money Fund
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.
Zurich YieldWise Municipal Money Fund
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.
1
<PAGE>
performance summary
Zurich YieldWise Money Fund
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 iMoneyNet, Inc. 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.
Fund Yield vs. First Tier Money Fund Average
-----------------------------------------------
Weekly 7-Day Average Yield
THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART DATA:
Fund Yield First Tier Money Fund Average
8/3/1999 4.74% 4.41%
4.81 4.41
4.92 4.45
4.95 4.48
5.04 4.55
5.04 4.58
5.11 4.60
5.19 4.63
5.21 4.65
5.18 4.67
5.32 4.70
5.30 4.73
5.30 4.76
5.30 4.80
5.47 4.80
5.50 4.86
5.55 4.91
5.59 4.97
5.58 5.00
5.66 5.06
5.80 5.12
5.86 5.15
5.80 5.05
5.80 5.15
5.73 5.13
5.69 5.10
5.58 5.11
5.70 5.12
5.63 5.16
5.64 5.16
5.67 5.19
5.66 5.18
5.70 5.20
5.73 5.23
5.80 5.29
5.80 5.35
5.94 5.35
5.92 5.37
5.96 5.39
5.92 5.39
5.89 5.42
6.00 5.48
6.08 5.61
6.18 5.69
6.21 5.73
6.33 5.78
6.35 5.81
6.41 5.85
6.33 5.91
6.39 5.87
6.38 5.89
7/25/2000 6.42 5.90
Lipper Ranking Lipper Ranking
-----------------------------------------------
The Lipper, Inc. ranking is
based upon changes in net Top Fund #1 of 286 funds 3 Year
asset value with all -----------------------------------------------
dividends reinvested for the Top 2% #6 of 362 funds 1 Year
year ended 7/31/00. The fund -----------------------------------------------
is compared to the Lipper
Money Market Instrument Fund
category. The ranking is
historical and does not
guarantee future performance.
* Performance reflects a partial fee waiver during this period which improved
results. Otherwise, the 7-day average yield would have been 6.29% on 7/25/00.
2
<PAGE>
Zurich YieldWise Government Money Fund
Yield Comparison
Zurich YieldWise Government Money Fund is compared to the Government Money Fund
Average, which consists of all non-institutional government money market funds,
tracked by iMoneyNet, Inc. 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.
Fund Yield vs. Government Money Fund Average
-----------------------------------------------
Weekly 7-Day Average Yield
THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART DATA:
Fund Yield Government Money Fund Average
8/3/1999 4.99% 4.30%
4.91 4.28
4.84 4.32
4.89 4.32
5.24 4.45
5.21 4.48
5.21 4.49
5.31 4.47
5.26 4.48
5.25 4.52
5.29 4.50
5.23 4.52
5.32 4.51
5.36 4.57
5.40 4.57
5.27 4.63
5.41 4.71
5.56 4.80
5.21 4.77
5.70 4.79
5.60 4.80
5.76 4.81
5.81 4.49
5.73 4.83
5.68 4.85
5.81 4.84
5.60 4.90
5.71 4.95
5.83 5.01
5.80 5.03
5.82 5.07
5.77 5.07
5.81 5.10
5.85 5.13
5.88 5.20
6.03 5.30
5.99 5.29
5.98 5.29
6.03 5.25
6.01 5.24
6.04 5.26
6.10 5.34
6.32 5.47
6.27 5.53
6.46 5.59
6.50 5.63
6.54 5.65
6.50 5.67
6.36 5.73
6.55 5.68
6.54 5.70
7/25/2000 6.50 5.73
Lipper Ranking Lipper Ranking
-----------------------------------------------
The Lipper, Inc. ranking is
based upon changes in net Top Fund #1 of 129 funds 1 Year
asset value with all -----------------------------------------------
dividends reinvested for the
year ended 7/31/00. The fund
is compared to the Lipper
Government Money Market Fund
category. The ranking is
historical and does not
guarantee future performance.
* Performance reflects partial fee waiver and expense absorption during this
period, which improved results. Otherwise, the 7-day average yield would have
been 5.97% on 7/25/00.
3
<PAGE>
Zurich YieldWise Municipal Money Fund
Yield Comparison
Zurich YieldWise Municipal Money Fund is compared to the Tax-Free Money Fund
Average, which consists of all non-institutional tax-free money market funds,
tracked by iMoneyNet Inc. 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.
Fund Yield vs. Tax-Free Money Fund Average
-----------------------------------------------------
Weekly 7-Day Average Yield
THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE
LINE CHART DATA:
Fund Yield Tax-Free Money Fund Average
8/3/1999 3.25% 2.50%
3.13 2.40
3.25 2.53
3.30 2.54
3.35 2.58
3.29 2.53
3.28 2.55
3.49 2.72
3.72 2.95
3.64 2.94
3.57 2.66
3.44 2.69
3.42 2.72
3.49 2.79
3.63 2.74
3.80 2.90
3.82 3.02
3.86 3.08
3.54 2.90
3.92 2.74
3.79 3.01
4.11 3.47
4.21 3.88
3.70 2.79
3.57 2.54
3.56 2.62
3.63 2.69
3.58 2.56
3.63 2.78
3.80 2.94
3.82 3.03
3.80 3.01
3.80 3.01
3.79 3.01
3.77 3.02
3.86 3.10
3.65 2.79
3.91 3.10
4.28 3.51
4.64 3.93
4.94 4.31
5.20 4.40
4.56 3.66
4.43 3.51
4.34 3.37
4.08 3.27
4.39 3.55
4.54 3.77
4.59 3.80
3.91 3.05
4.07 3.16
7/25/2000 4.37 3.46
Lipper Ranking Lipper Ranking
-----------------------------------------------
The Lipper, Inc. ranking is
based upon changes in net Top Fund #1 of 134 funds 1 year
asset value with all -----------------------------------------------
dividends reinvested for the
year ended 7/31/00. The fund
is compared to the Lipper
Tax-Free Money Market Fund
category. The ranking is
historical and does not
guarantee future performance.
* Performance reflects 100% fee waiver and expense absorption during this
period, which improved results. Otherwise, the 7-day average yield would have
been 3.68% on 7/25/00.
4
<PAGE>
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:
Monetary Policy
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.
Interest Rates
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.
Average Length of Maturity
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)
5
<PAGE>
performance review
An interview with portfolio manager Frank Rachwalski
Frank Rachwalski is a managing director of Scudder Kemper Investments, Inc. and
lead portfolio manager of Zurich Money Funds. Mr. Rachwalski holds a B.B.A. and
a M.B.A. degree from Loyola University. The following is Mr. Rachwalski's review
of the economic conditions and fund results during the report period and what
may happen in the months ahead
--------------------------------------------------------------------------------
The U.S. Stock and Bond markets winced with each increase in short-term interest
rates over the 12-month period ended 7/31/00. With the U.S. economy strong,
unemployment at an all time low, and consumer confidence high, concerns over an
acceleration of inflation took center stage. Over the year, the Federal Reserve
(the "Fed") raised short-term rates 125 basis points. The increases directly
benefited money market securities and the fund's yield, which rose significantly
over the period.
Despite rising rates over the 12 months, the resiliency of the U.S. economy
continued to be impressive. In the first half of this year gross domestic
product grew at roughly 5.0%. Reflecting signs that inflationary pressures have
been building, over the 12 months ended 7/31/00, the consumer price index rose
3.5%.
While we think the Fed is closer to achieving its objectives of slowing the
economy and controlling inflation, we believe another rate hike is possible.
With recent consumer confidence numbers suggesting that consumers are not afraid
and are continuing their buying sprees, we think the Fed will be biased toward a
policy of monetary restraint for the near term. However, the Fed should take a
cautious approach to raising rates prior to the November elections.
--------------------------------------------------------------------------------
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
considerations.
6
<PAGE>
Portfolio Strategy
We pursued two strategies, reflecting the two distinct environments over the
past 12 months -- the period leading up to the end of 1999 and the year-to-date
period. Toward the end of 1999, we focused on maintaining high levels of
liquidity in the portfolio while taking advantage of what the market was
offering. Generally, this meant maintaining a shorter average maturity than our
peers did. This strategy was driven by our cautious approach to the Y2K
changeover. We maintained a higher than normal level of liquidity in the
portfolio in order to be prepared for potentially high investor demand for cash.
However, by maintaining a shorter maturity in the rising rate environment, our
existing holdings matured more quickly, which enabled us to invest in higher
yielding securities sooner than if we had maintained a longer average maturity.
A limitation of this strategy is that we gave up a small amount of current yield
by maintaining a shorter maturity. The reason was the yield curve had a sizeable
income reward for extension.
As it turned out, the Fed pumped a great deal of money into the financial system
by allowing monetary reserves to grow rapidly in the fourth quarter of 1999.
Some speculated that this super-liquid market helped to fuel the strong market
rally.
As time progressed and Y2K concerns essentially evaporated, we viewed this as an
opportunity to pick up some higher yielding paper by extending the portfolio's
average maturity slightly. However, the portfolio's maturity still remained
shorter than its peers, given our expectations that rates would continue to
rise.
In the portfolio, we invest in "first-tier" short-term securities --
specifically, issues with top ratings according to major credit rating agencies,
such as Fitch Investors Service, Moody's Investors Service, or Standard and
Poor's. The top ratings have the lowest risk and, while not insured by FDIC or
guaranteed, these securities rank among the safest available outside of U.S.
Treasury bills. Basically, our philosophy is that it does not pay to take on
additional credit risk given the relatively small yield advantage.
Our investment strategy focuses on maintaining the average life of the portfolio
within a target range and selecting floating-rate securities that, given current
interest rate trends, should benefit the portfolio. As a result, we generally do
not make big asset allocation shifts within the portfolio. We attempt to
maintain exposure to a broad selection of securities, including high quality
commercial paper, variable- and floating-rate securities, U.S. government agency
obligations, certificates of deposit, and repurchase agreements. The majority of
the portfolio remained invested in high
7
<PAGE>
quality commercial paper, which we maintained because of its attractive yield
and high quality.
Outlook
As we mentioned earlier, we think the Fed may raise rates at least one more time
this year. However, we think the Fed may eventually be able to ease off its
current policy of incremental monetary restraint because of recent signs that
the economy may be slowing in reaction to the higher rate environment. Knowing
when to stop raising rates is a tough job for the Fed since the rate increases
take time to work their way through the economy. Typically, it takes six months
for the effects to begin showing up, so the braking effects on growth of this
year's rate hikes are still yet to come. In any event, this is a great
environment for money market fund investors because interest rates have risen
and real yields (after subtracting inflation) are still providing investors with
very attractive returns.
8
<PAGE>
terms to know
7-Day Average Every money market fund calculates its yield daily
Yield 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 Commercial banks are required to keep these funds on
("Fed Funds") 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.
9
<PAGE>
portfolio composition
Zurich YieldWise Money Fund
On 7/31/2000*
A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
Commercial paper 83%
Certificates of deposit 15%
Short-term and medium-term notes 2%
------------------------------------------------------------
Total 100%
------------------------------------------------------------
Weighted Average Maturity**
------------------------------------------------------------
Zurich YieldWise Money Fund 27 days
First Tier Money Fund Average 47 days
Zurich YieldWise Government Money Fund
On 7/31/2000*
A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
Short-term and medium-term notes 52%
Repurchase agreements 48%
------------------------------------------------------------
Total 100%
------------------------------------------------------------
Weighted Average Maturity**
------------------------------------------------------------
Zurich YieldWise Government Money Fund 35 days
Government Money Fund Average 41 days
Zurich YieldWise Municipal Money Fund
On 7/31/2000*
A GRAPH IN THE FORM OF A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA
POINTS IN THE TABLE BELOW.
Variable rate demand securities 65%
Tax-exempt commercial paper 35%
------------------------------------------------------------
Total 100%
------------------------------------------------------------
Weighted Average Maturity**
------------------------------------------------------------
Zurich YieldWise Municipal Money Fund 17 days
Tax-Free Money Fund Average 39 days
* Portfolio composition and holdings are subject to change.
** The Funds are compared to their respective iMoneyNet, Inc. category:
The First Tier Money Fund Average consists of all non-institutional
taxable money market funds investing in only first tier (highest
rating) securities; Government Money Fund Average includes all
non-institutional government money market funds; Tax-Free Money Fund
Average consists of all non-institutional tax-free money market funds.
Weighted average maturity is as of 7/25/00.
10
<PAGE>
portfolio of investments
July 31, 2000
Principal
Amount ($) Value ($)
--------------------------------------------------------------------------------
Zurich YieldWise Money Fund
--------------------------------------------------------------------------------
Commercial Paper 82.6%
--------------------------------------------------------------------------------
Alpine Securitization Corp., 6.59%, 9/15/2000 20,000,000 19,836,750
--------------------------------------------------------------------------------
American Honda Financing Corp., 6.7%*, 10/26/2000 10,000,000 10,000,000
--------------------------------------------------------------------------------
Amsterdam Funding Corp, 6.59%, 8/11/2000 10,000,000 9,981,806
--------------------------------------------------------------------------------
Asset Portfolio Funding Corp., 6.56%, 8/16/2000 15,000,000 14,959,187
--------------------------------------------------------------------------------
Associates Corp., 6.77%*, 9/15/2000 15,000,000 15,000,000
--------------------------------------------------------------------------------
Atlantis One Funding Corp., 6.67%, 8/17/2000 27,992,000 27,910,138
--------------------------------------------------------------------------------
Barton Capital Corp., 6.55%, 8/7/2000 17,859,000 17,839,592
--------------------------------------------------------------------------------
Bavaria Finance Funding Corp., 6.59%, 8/10/2000 20,000,000 19,967,250
--------------------------------------------------------------------------------
Bavaria Universal Funding Corp., 6.58%, 8/14/2000 20,000,000 19,952,767
--------------------------------------------------------------------------------
Caterpillar Financial Services Corp., 6.72%*,
8/14/2000 10,000,000 9,999,927
--------------------------------------------------------------------------------
Caterpillar Financial Services Corp., 6.86%*,
9/1/2000 3,700,000 3,700,000
--------------------------------------------------------------------------------
Centric Capital Corp., 6.56%, 8/14/2000 20,000,000 19,952,911
--------------------------------------------------------------------------------
CIT Group Inc., 6.65%*, 8/1/2000 10,000,000 9,996,047
--------------------------------------------------------------------------------
CIT Group Holdings Inc., 6.61%*, 8/1/2000 10,000,000 9,995,497
--------------------------------------------------------------------------------
CIT Group Holdings Inc., 6.64%*, 8/1/2000 10,000,000 9,996,235
--------------------------------------------------------------------------------
Coca-Cola Enterprises, 7.11%, 3/15/2001 5,000,000 4,966,887
--------------------------------------------------------------------------------
Cooper Industries Inc., 6.71%, 10/23/2000 20,000,000 19,695,667
--------------------------------------------------------------------------------
Countrywide Home Loan Corp., 6.82%*, 9/25/2000 30,000,000 29,994,750
--------------------------------------------------------------------------------
Ford Motor Credit Corp., 6.73%*, 8/18/2000 5,000,000 4,999,812
--------------------------------------------------------------------------------
Ford Motor Credit Corp., 6.77%*, 9/30/2000 5,000,000 4,999,173
--------------------------------------------------------------------------------
Forrestal Funding Corp., 6.6%, 9/5/2000 20,000,000 19,872,833
--------------------------------------------------------------------------------
Four Winds Funding Corp., 6.59%, 8/7/2000 10,000,000 9,989,100
--------------------------------------------------------------------------------
Four Winds Funding Corp, 6.59%, 8/31/2000 10,000,000 9,945,417
--------------------------------------------------------------------------------
Galaxy Funding Corp., 6.69%, 8/8/2000 15,000,000 14,980,692
--------------------------------------------------------------------------------
Galaxy Funding Corp., 6.69%, 8/21/2000 10,000,000 9,963,278
--------------------------------------------------------------------------------
General Motors Acceptance Corp., 7.03%*, 10/27/2000 25,000,000 25,052,054
--------------------------------------------------------------------------------
Giro Funding Corp., 6.58%, 8/28/2000 10,083,000 10,033,619
--------------------------------------------------------------------------------
Goldman Sachs Promissory Note, 6.64%*, 8/5/2000 10,000,000 10,000,000
--------------------------------------------------------------------------------
GTE Corp., 6.3%*, 9/10/2000 20,000,000 19,993,333
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Principal
Amount ($) Value ($)
--------------------------------------------------------------------------------
Heller Financial Inc., 6.9%, 3/1/2000 7,000,000 6,974,852
--------------------------------------------------------------------------------
Heller Financial Inc., 6.93%*, 10/17/2000 30,000,000 29,985,990
--------------------------------------------------------------------------------
Household Financial Corp., 6.72%*, 10/20/2000 15,000,000 14,990,139
--------------------------------------------------------------------------------
Industrial Development Authority of New Hampshire,
6.64%, 8/4/2000 4,500,000 4,500,000
--------------------------------------------------------------------------------
Kitty Hawk Funding Corp., 6.59%, 9/5/2000 9,141,000 9,082,967
--------------------------------------------------------------------------------
Merrill Lynch & Co., 6.61%*, 8/22/2000 20,000,000 19,998,595
--------------------------------------------------------------------------------
Moat Funding LLC, 6.56%, 8/14/2000 16,000,000 15,962,329
--------------------------------------------------------------------------------
Monte Rosa Capital Corp., 6.56%, 8/9/2000 20,000,000 19,970,978
--------------------------------------------------------------------------------
National Rural Utilities Corp., 6.64%*, 8/2/2000 5,000,000 4,999,999
--------------------------------------------------------------------------------
National Rural Utilities Corp., 6.71%*, 10/20/2000 15,000,000 15,000,000
--------------------------------------------------------------------------------
Norwest Financial Inc., 6.65%*, 8/7/2000 5,000,000 4,999,702
--------------------------------------------------------------------------------
Receivables Capital Corp., 6.66%, 8/10/2000 35,000,000 34,942,425
--------------------------------------------------------------------------------
Sheffield Receivables Corp., 6.56%, 8/23/2000 20,000,000 19,920,311
--------------------------------------------------------------------------------
Stellar Funding Group, 6.65%, 8/1/2000 7,000,000 7,000,000
--------------------------------------------------------------------------------
Stellar Funding Group, 6.6%, 8/2/2000 10,451,000 10,449,093
--------------------------------------------------------------------------------
Stellar Funding Group, 6.58%, 8/4/2000 10,000,000 9,994,542
--------------------------------------------------------------------------------
Superior Funding Capital, 6.58%, 8/4/2000 15,000,000 14,991,813
--------------------------------------------------------------------------------
Surrey Funding Corp, 6.59%, 8/7/2000 10,000,000 9,989,083
--------------------------------------------------------------------------------
Surrey Funding Corp, 6.56%, 8/16/2000 15,000,000 14,959,188
--------------------------------------------------------------------------------
Sweetwater Capital Corp., 6.57%, 8/18/2000 10,477,000 10,444,693
--------------------------------------------------------------------------------
Sweetwater Capital Corp., 6.59%, 8/30/2000 9,000,000 8,952,513
--------------------------------------------------------------------------------
Thunder Bay Funding, Inc., 6.58%, 8/11/2000 10,000,000 9,981,833
--------------------------------------------------------------------------------
Transamerica Financial Corp., 6.94%*, 9/1/2000 10,000,000 10,000,000
--------------------------------------------------------------------------------
Variable Funding Corp., 6.6%, 9/21/2000 20,000,000 19,814,983
--------------------------------------------------------------------------------
Wood Street Funding Corp., 6.55%, 8/22/2000 20,000,000 19,923,933
--------------------------------------------------------------------------------
Xerox Credit Corp., 6.63%*, 8/8/2000 5,000,000 4,999,351
--------------------------------------------------------------------------------
Total Commercial Paper
(Cost $766,404,034) 766,404,034
--------------------------------------------------------------------------------
Certificates of Deposit 15.1%
--------------------------------------------------------------------------------
Allfirst Bank, 6.85%*, 9/7/2000 10,000,000 9,999,606
--------------------------------------------------------------------------------
Bank of America, 6.67%*, 8/1/2000 10,000,000 10,000,000
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Principal
Amount ($) Value ($)
--------------------------------------------------------------------------------
Canadian Imperial Bank of Commerce, 6.65%*, 8/1/2000 10,000,000 9,995,167
--------------------------------------------------------------------------------
Comerica Bank, 6.64%*, 8/1/2000 15,000,000 14,995,129
--------------------------------------------------------------------------------
First Union National Bank, 6.69%*, 8/1/2000 15,000,000 15,000,000
--------------------------------------------------------------------------------
Key Bank North America, 6.62%*, 8/8/2000 10,000,000 9,998,377
--------------------------------------------------------------------------------
Key Bank North America, 6.76%*, 8/25/2000 10,000,000 9,997,067
--------------------------------------------------------------------------------
Mellon Bank, 6.82%*, 8/30/2000 10,000,000 9,999,762
--------------------------------------------------------------------------------
Merita Bank, 6.62%*, 8/29/2000 10,000,000 10,000,000
--------------------------------------------------------------------------------
National Bank of Canada, 6.8%*, 8/22/2000 10,000,000 9,998,490
--------------------------------------------------------------------------------
Old Kent Bank, 6.67%*, 8/1/2000 10,000,000 10,000,000
--------------------------------------------------------------------------------
Skandinaviska Enskilda Banken, 6.63%*, 8/29/2000 5,000,000 4,999,849
--------------------------------------------------------------------------------
U.S. Bank of Minnesota, 6.68%*, 8/1/2000 15,000,000 15,000,000
--------------------------------------------------------------------------------
Total Certificates of Deposit
(Cost $139,983,447) 139,983,447
--------------------------------------------------------------------------------
Short-Term and Medium-Term Notes 2.3%
--------------------------------------------------------------------------------
Bank One Corp., 6.65%*, 8/4/2000 5,000,000 4,999,914
--------------------------------------------------------------------------------
Bank One Corp., 6.8%*, 10/5/2000 5,000,000 4,999,566
--------------------------------------------------------------------------------
SMM Trust, 6.78%*, 9/13/2000 12,000,000 12,000,000
--------------------------------------------------------------------------------
Total Corporate Bond
(Cost $21,999,480) 21,999,480
--------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0%
(Cost $928,386,961) (a) $928,386,961
--------------------------------------------------------------------------------
Interest rates represent annualized yield to date of maturity, except for
floating rate securities described below.
* Floating rate notes are securities whose yields vary with a designated
market index or market rate, such as the coupon-equivalent of the U.S.
Treasury bill rate. These securities are shown at their current rate as
of July 31, 2000. The dates shown represent the demand date or next
interest rate change date.
(a) Cost for federal income tax purposes was $928,386,961.
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
portfolio of investments
July 31, 2000
Principal
Amount ($) Value ($)
--------------------------------------------------------------------------------
Zurich YieldWise Government Money Fund
--------------------------------------------------------------------------------
Repurchase Agreements 47.6%
--------------------------------------------------------------------------------
Chase Securities, Inc.
6.53%, to be repurchased at $35,012,697 on
8/2/2000 35,000,000 35,000,000
--------------------------------------------------------------------------------
Greenwich Capital Markets
6.5%, to be repurchased at $25,004,513 on 8/1/2000 25,000,000 25,000,000
--------------------------------------------------------------------------------
Lehman Brothers, Inc.
6.51%, to be repurchased at $35,025,316 on
8/4/2000 35,000,000 35,000,000
--------------------------------------------------------------------------------
Merrill Lynch, Inc.
6.5%, to be repurchased at $20,010,833 on 8/3/2000 20,000,000 20,000,000
--------------------------------------------------------------------------------
Morgan Stanley & Co.
6.5%, to be repurchased at $25,009,027 on 8/2/2000 25,000,000 25,000,000
--------------------------------------------------------------------------------
Salomon Brothers
6.65%, to be repurchased at $40,007,388 on
8/1/2000 40,000,000 40,000,000
--------------------------------------------------------------------------------
State Street Bank and Trust Co.
6.53%, to be repurchased at $1,852,335 on 8/1/2000 1,852,000 1,852,000
--------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $181,852,000)** 181,852,000
--------------------------------------------------------------------------------
Short-Term and Medium-Term Notes 52.4%
--------------------------------------------------------------------------------
Federal Agricultural Mortgage Corp., 6.59%*, 8/1/2000 7,000,000 7,000,000
--------------------------------------------------------------------------------
Federal Farm Credit Bank, 6.52%*, 8/1/2000 5,000,000 4,998,277
--------------------------------------------------------------------------------
Federal Farm Credit Bank, 6.67%*, 8/1/2000 2,000,000 1,999,656
--------------------------------------------------------------------------------
Federal Home Loan Bank, 6.49%*, 8/2/2000 10,000,000 10,000,000
--------------------------------------------------------------------------------
Federal Home Loan Bank, 6.49%*, 8/2/2000 4,500,000 4,500,000
--------------------------------------------------------------------------------
Federal Home Loan Bank, 6.57%*, 8/27/2000 8,000,000 8,000,000
--------------------------------------------------------------------------------
Federal Home Loan Bank, 6.57%, 2/9/2001 3,000,000 3,000,270
--------------------------------------------------------------------------------
Federal Home Loan Bank, 6.69%, 5/2/2001 4,000,000 3,955,599
--------------------------------------------------------------------------------
Federal Home Loan Bank, 6.95%, 5/8/2001 2,000,000 1,996,134
--------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., 6.53%*, 9/20/2000 20,000,000 19,992,350
--------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., 6.61%, 9/21/2000 10,000,000 9,907,917
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
Principal
Amount ($) Value ($)
--------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., 6.90%, 2/8/2001 5,000,000 4,983,900
--------------------------------------------------------------------------------
Federal National Mortgage Association, 6.47%*,
8/22/2000 25,000,000 24,993,825
--------------------------------------------------------------------------------
Federal National Mortgage Association, 6.49%*,
8/1/2000 5,000,000 4,996,479
--------------------------------------------------------------------------------
Federal National Mortgage Association, 6.53%*,
8/1/2000 5,000,000 5,000,000
--------------------------------------------------------------------------------
Federal National Mortgage Association, 6.55%,
3/20/2001 3,000,000 2,999,943
--------------------------------------------------------------------------------
Federal National Mortgage Association, 6.56%*,
8/1/2000 12,500,000 12,501,569
--------------------------------------------------------------------------------
Federal National Mortgage Association, 6.58%,
2/22/2001 3,500,000 3,496,605
--------------------------------------------------------------------------------
Federal National Mortgage Association, 6.62%*,
8/1/2000 10,000,000 9,999,891
--------------------------------------------------------------------------------
Federal National Mortgage Association, 6.66%*,
9/6/2000 3,000,000 2,999,968
--------------------------------------------------------------------------------
Federal National Mortgage Association, 6.78%,
7/13/2001 2,700,000 2,701,689
--------------------------------------------------------------------------------
Federal National Mortgage Association, 6.89%*,
8/1/2000 5,000,000 5,000,290
--------------------------------------------------------------------------------
Federal National Mortgage Association, 7.26%,
5/24/2001 8,000,000 8,000,000
--------------------------------------------------------------------------------
Hainan Airlines, 6.82%*, 9/21/2000 6,000,000 6,000,000
--------------------------------------------------------------------------------
Student Loan Marketing Association, 6.84%*, 8/1/2000 6,500,000 6,500,000
--------------------------------------------------------------------------------
Student Loan Marketing Association, 6.94%*, 8/1/2000 25,000,000 24,997,125
--------------------------------------------------------------------------------
Total Short-Term and Medium-Term Notes
(Cost $200,521,487) 200,521,487
--------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0%
(Cost $382,373,487) (a) $382,373,487
--------------------------------------------------------------------------------
Interest rates represent annualized yield to date of maturity, except for
floating rate securities described below.
* Floating rate notes are securities whose yields vary with a designated
market index or market rate, such as the coupon-equivalent of the U.S.
Treasury bill rate. These securities are shown at their current rate as
of July 31, 2000. The date shown represents the demand date or next
interest rate change date.
** Repurchase agreements are fully collateralized by U.S. Treasury or
Government agency securities.
(a) Cost for federal income tax purposes is $382,373,487.
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
portfolio of investments
Principal
Amount ($) Value ($)
--------------------------------------------------------------------------------
Zurich YieldWise Municipal Money Fund
--------------------------------------------------------------------------------
Variable Rate Demand Securities* 65.1%
--------------------------------------------------------------------------------
Alabama
--------------------------------------------------------------------------------
Birmingham
Special Care Facilities Finance Authority, 4.5% 5,000,000 5,000,000
--------------------------------------------------------------------------------
Mobile
Special Care Facilities Finance Authority, 4.5% 5,000,000 5,000,000
--------------------------------------------------------------------------------
Arkansas
--------------------------------------------------------------------------------
Pocahontas
Maclean Esna LP Project, 4.35% 2,500,000 2,500,000
--------------------------------------------------------------------------------
Colorado
--------------------------------------------------------------------------------
Denver City and County
Western Stock Show Project, 4.4% 4,760,000 4,760,000
--------------------------------------------------------------------------------
Worldport Denver International Airport
Project, 4.45% 4,000,000 4,000,000
--------------------------------------------------------------------------------
Health Facilities Authority
Frasier Meadows Manor Project, 4.33% 2,480,000 2,480,000
--------------------------------------------------------------------------------
Delaware
--------------------------------------------------------------------------------
Sussex County
Perdue Agrirecycle LLC Project, 4.45% 5,000,000 5,000,000
--------------------------------------------------------------------------------
Florida
--------------------------------------------------------------------------------
Hillsborough County
National Gypsum Co. Project, 4.3% 2,000,000 2,000,000
--------------------------------------------------------------------------------
Housing Finance Agency
Hampton Lakes Project, 4.3% 2,000,000 2,000,000
--------------------------------------------------------------------------------
Indian River County
Hospital Revenue, 4.4% 3,000,000 3,000,000
--------------------------------------------------------------------------------
Miami-Dade County
Gulliver Schools Project, 4.3% 3,000,000 3,000,000
--------------------------------------------------------------------------------
Sarasota County
Bay Village Project, 4.3% 1,900,000 1,900,000
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
Principal
Amount ($) Value ($)
--------------------------------------------------------------------------------
University of N. Florida Capital Improvement Revenue
1994 Series, 4.35% 2,000,000 2,000,000
--------------------------------------------------------------------------------
2000 Series, 4.35% 4,000,000 4,000,000
--------------------------------------------------------------------------------
Georgia
--------------------------------------------------------------------------------
Fayette County
Educational Facilities Authority, 4.3% 1,000,000 1,000,000
--------------------------------------------------------------------------------
Fulton County
General Motors Corp. Project, 4.25% 2,000,000 2,000,000
--------------------------------------------------------------------------------
United Way Project, 4.3% 1,000,000 1,000,000
--------------------------------------------------------------------------------
Willacoochie
Development Authority Pollution Control
Revenue, 4.4% 2,000,000 2,000,000
--------------------------------------------------------------------------------
Illinois
--------------------------------------------------------------------------------
Carol Stream
MAAC Machinery Co. Project, 4.35% 800,000 800,000
--------------------------------------------------------------------------------
Industrial Development Revenue
Whiting Corp. Project, 4.5% 3,000,000 3,000,000
--------------------------------------------------------------------------------
Indiana
--------------------------------------------------------------------------------
Rockport
Pollution Control Revenue, 4.35% 5,000,000 5,000,000
--------------------------------------------------------------------------------
Kentucky
--------------------------------------------------------------------------------
Jeffersontown
Lease Program Revenue, 4.3% 3,000,000 3,000,000
--------------------------------------------------------------------------------
Lexington-Fayette County
YMCA Central Kentucky Project, 4.4% 1,900,000 1,900,000
--------------------------------------------------------------------------------
Mason County
Pollution Control Revenue, 4.35% 600,000 600,000
--------------------------------------------------------------------------------
Mayfield
Educational Facilities Authority, 4.4% 660,000 660,000
--------------------------------------------------------------------------------
Michigan
--------------------------------------------------------------------------------
Farmington Hills
Brookfield Building Association Project, 4.6% 900,000 900,000
--------------------------------------------------------------------------------
Genesee County
Atlas Technologies, Inc. Project, 4.5% 400,000 400,000
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
Principal
Amount ($) Value ($)
--------------------------------------------------------------------------------
Hospital Finance Authority
Hospital Equipment Loan Project, 4.2% 4,000,000 4,000,000
--------------------------------------------------------------------------------
Oakland County
Economic Development Authority, 4.5% 3,800,000 3,800,000
--------------------------------------------------------------------------------
Strategic Fund
Continental Aluminum Project, 4.45% 900,000 900,000
--------------------------------------------------------------------------------
Creative Foam Corp. Project, 4.5% 800,000 800,000
--------------------------------------------------------------------------------
Hope Network Project, 4.35% 600,000 600,000
--------------------------------------------------------------------------------
Missouri
--------------------------------------------------------------------------------
Kansas City
Baptist Health Facilities 1988A, 4.45% 1,530,000 1,530,000
--------------------------------------------------------------------------------
St. Louis
Air Cargo Facility Revenue, 4.43% 2,000,000 2,000,000
--------------------------------------------------------------------------------
New Jersey
--------------------------------------------------------------------------------
Salem County
Dupont Project, 4.4% 3,500,000 3,500,000
--------------------------------------------------------------------------------
New Mexico
--------------------------------------------------------------------------------
Farmington
Arizone Public Services Co. Project, 4.35% 3,900,000 3,900,000
--------------------------------------------------------------------------------
New York
--------------------------------------------------------------------------------
Nassau County
Tax Anticipation Notes, 4.05% 500,000 501,114
--------------------------------------------------------------------------------
North Dakota
--------------------------------------------------------------------------------
Mercer County
Pollution Control Revenue, 4.35% 3,805,000 3,805,000
--------------------------------------------------------------------------------
Ohio
--------------------------------------------------------------------------------
Higher Education Facilities Authority, 4.4% 4,000,000 4,000,000
--------------------------------------------------------------------------------
Pennsylvania
--------------------------------------------------------------------------------
Bucks County
Oxford Falls Project, 4.46% 1,500,000 1,500,000
--------------------------------------------------------------------------------
Emmaus
General Authority Revenue, 4.31% 4,000,000 4,000,000
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
Principal
Amount ($) Value ($)
--------------------------------------------------------------------------------
Higher Education Assistance Agency
Student Loan Revenue, 4.35% 3,700,000 3,700,000
--------------------------------------------------------------------------------
University of Pennsylvania Health Facilities, 4.3% 3,865,000 3,865,000
--------------------------------------------------------------------------------
Lancaster County
Hospital Finance Authority, 4.33% 3,000,000 3,000,000
--------------------------------------------------------------------------------
Tennessee
--------------------------------------------------------------------------------
Maury County
Saturn Corp. Project, 4.5% 1,650,000 1,650,000
--------------------------------------------------------------------------------
Texas
--------------------------------------------------------------------------------
Brazos River Authority
Pollution Control Revenue, 4.4% 10,000,000 10,000,000
--------------------------------------------------------------------------------
Harris County
Health Facilities Authority, 4.4% 4,000,000 4,000,000
--------------------------------------------------------------------------------
Panhandle Plains
Higher Education Authority, Student Loan
Revenue, 4.3% 2,200,000 2,200,000
--------------------------------------------------------------------------------
Small Business Industrial Development Corp.
Industrial Development Revenue, 4.35% 4,000,000 4,000,000
--------------------------------------------------------------------------------
Tarrant County
Adventist Health Systems Project, 4.33% 3,555,000 3,555,000
--------------------------------------------------------------------------------
Tax Anticipation Notes, 3.7%-3.73% 4,300,000 4,302,647
--------------------------------------------------------------------------------
Vermont
--------------------------------------------------------------------------------
Economic Development Authority
Student Association Corp., 4.45% 7,680,000 7,680,000
--------------------------------------------------------------------------------
Tsubaki Inc. Project, 4.35% 5,000,000 5,000,000
--------------------------------------------------------------------------------
Virgina
--------------------------------------------------------------------------------
Chesterfield County
Tidewater Fibre Corp. Project, 4.4% 6,200,000 6,200,000
--------------------------------------------------------------------------------
Wisconsin
--------------------------------------------------------------------------------
Eau Claire
Pope & Talbot, Inc. Project, 4.5% 600,000 600,000
--------------------------------------------------------------------------------
Wausau
Minnesota Mining & Manufacturing Project, 4.64% 600,000 600,000
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
Principal
Amount ($) Value ($)
--------------------------------------------------------------------------------
West Virginia
--------------------------------------------------------------------------------
Preston County
Allegheny Wood Project, 4.5% 420,000 420,000
--------------------------------------------------------------------------------
Wyoming
--------------------------------------------------------------------------------
Platte County
Pollution Control Revenue, 4.35% 1,400,000 1,400,000
--------------------------------------------------------------------------------
Total Variable Rate Demand Securities
(Cost $165,908,761) 165,908,761
--------------------------------------------------------------------------------
Other Securities 34.9%
--------------------------------------------------------------------------------
Alabama
--------------------------------------------------------------------------------
Montgomery
General Electric Co. Project, 4.2%, 8/17/2000 1,000,000 1,000,000
--------------------------------------------------------------------------------
Alaska
--------------------------------------------------------------------------------
City of Valdez
Atlantic Richfield Project, 4.1%, 8/8/2000 2,500,000 2,500,000
--------------------------------------------------------------------------------
Arizona
--------------------------------------------------------------------------------
Agricultural Improvement and Power District
Salt River Project, 4.25%, 8/11/2000 2,600,000 2,600,000
--------------------------------------------------------------------------------
Colorado
--------------------------------------------------------------------------------
Platte River Power Authority, 4.25%-4.3%,
8/16/2000-8/24/2000 5,000,000 5,000,000
--------------------------------------------------------------------------------
Florida
--------------------------------------------------------------------------------
Municipal Power Agency, 4.15%, 8/28/2000 6,000,000 6,000,000
--------------------------------------------------------------------------------
Orange County
Health Facilities Authority, 4.1%, 8/7/2000 2,000,000 2,000,000
--------------------------------------------------------------------------------
Orlando
Capital Improvements Authority, 4.25%, 8/7/2000 3,600,000 3,600,000
--------------------------------------------------------------------------------
Pinellas
Educational Facilities Authority, 4.35%, 8/15/2000 2,000,000 2,000,000
--------------------------------------------------------------------------------
Sarasota County
Sarasota Memorial Hospital Project, 4.25%,
8/9/2000 2,000,000 2,000,000
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
Principal
Amount ($) Value ($)
--------------------------------------------------------------------------------
Illinois
--------------------------------------------------------------------------------
Health Facilities Authority, 4.4%, 10/2/2000 2,000,000 2,000,000
--------------------------------------------------------------------------------
Indiana
--------------------------------------------------------------------------------
Jasper County
Industrial Pollution Control Revenue, 4.3%-4.5%,
8/7/2000 4,900,000 4,900,000
--------------------------------------------------------------------------------
Sullivan
Hoosier Energy Rural Electric Co. Project, 4.7%,
9/7/2000 2,000,000 2,000,000
--------------------------------------------------------------------------------
Kentucky
--------------------------------------------------------------------------------
Danville County
Multi-City Lease Revenue, 4.25%-4.35%,
8/11/2000-10/10/2000 7,240,000 7,240,000
--------------------------------------------------------------------------------
Pendleton County
Multi-City Lease Revenue, 4.15%, 9/8/2000 3,000,000 3,000,000
--------------------------------------------------------------------------------
Louisiana
--------------------------------------------------------------------------------
Industrial District of West Baton Rouge
Pollution Control Revenue, 4.7%, 8/14/2000 4,150,000 4,150,000
--------------------------------------------------------------------------------
Public Finance Authority, 4.3%, 9/7/2000 3,000,000 3,000,000
--------------------------------------------------------------------------------
Maryland
--------------------------------------------------------------------------------
Anne Arundel County
Baltimore Gas and Electric Co., 4.85%, 8/11/2000 2,150,000 2,150,000
--------------------------------------------------------------------------------
Michigan
--------------------------------------------------------------------------------
Strategic Fund, 4.3%, 8/24/2000 3,000,000 3,000,000
--------------------------------------------------------------------------------
New Hampshire
--------------------------------------------------------------------------------
State Tax Exempt Commercial Paper Program, 4.7%,
8/14/2000 3,000,000 3,000,000
--------------------------------------------------------------------------------
Ohio
--------------------------------------------------------------------------------
Air Quality Development Authority
The Mead Corp. Project, 4.25%, 10/11/2000 3,400,000 3,400,000
--------------------------------------------------------------------------------
South Carolina
--------------------------------------------------------------------------------
Public Service Authority, 4.25%, 8/9/2000 4,000,000 4,000,000
--------------------------------------------------------------------------------
Texas
--------------------------------------------------------------------------------
Harris County
Health Facilities Authority, 4.1%, 9/13/2000 2,494,000 2,494,000
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
Principal
Amount ($) Value ($)
--------------------------------------------------------------------------------
Houston
Water and Sewer Authority, 4.25%, 8/16/2000 3,000,000 3,000,000
--------------------------------------------------------------------------------
San Antonio
Electric and Gas Revenue, 4.35%, 9/12/2000 2,000,000 2,000,000
--------------------------------------------------------------------------------
Municipal Power Agency, 4.7%, 9/13/2000 2,900,000 2,900,000
--------------------------------------------------------------------------------
Utah
--------------------------------------------------------------------------------
Intermountain Power Agency, 4.6%, 8/21/2000 2,000,000 2,000,000
--------------------------------------------------------------------------------
Virginia
--------------------------------------------------------------------------------
Chesterfield
VEPCO -- Series 1985, 4.25%, 8/11/2000 3,100,000 3,100,000
--------------------------------------------------------------------------------
Louisa County
Industrial Development Authority, 4.25%-4.4%,
8/25/2000-9/27/2000 5,000,000 5,000,000
--------------------------------------------------------------------------------
Total Other Securities
(Cost $89,034,000) 89,034,000
--------------------------------------------------------------------------------
Total Investment Portfolio -- 100.0%
(Cost $254,942,761) (a) $254,942,761
--------------------------------------------------------------------------------
Interest rates represent annualized yield to date of maturity, except for
variable rate demand securities described below.
* Variable rate demand securities are securities whose yields vary with a
designated market index or market rate such as the coupon equivalent of
the U.S. Treasury bill rate. These securities are shown at their
current rate as of July 31, 2000, and are payable within five business
days.
(a) Cost for federal income tax purposes is $254,942,761.
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
financial statements
Statement of Assets and Liabilities
July 31, 2000 Money Government Municipal
--------------------------------------------------------------------------------
Assets
-------------------------------------------------------------------------------
Investments in securities,
at amortized cost:
Short-term securities $928,386,961 $200,521,487 $254,942,761
-------------------------------------------------------------------------------
Repurchase agreements -- 181,852,000 --
-------------------------------------------------------------------------------
Cash 1,833,333 838,580 445,668
-------------------------------------------------------------------------------
Receivable for investments
sold -- -- 150,229
-------------------------------------------------------------------------------
Interest receivable 3,533,223 2,005,089 1,293,879
-------------------------------------------------------------------------------
Receivable for Fund shares
sold 1,687,476 1,237,464 410,850
-------------------------------------------------------------------------------
Due from Adviser -- 76,090 301,661
-------------------------------------------------------------------------------
Total Assets 935,440,993 386,530,710 257,545,048
-------------------------------------------------------------------------------
Liabilities
-------------------------------------------------------------------------------
Dividends payable 977,938 402,342 182,668
-------------------------------------------------------------------------------
Payable for Fund shares
redeemed 3,940,151 1,043,169 162,280
-------------------------------------------------------------------------------
Accrued management fee 447,968 -- --
-------------------------------------------------------------------------------
Other accrued expenses and
payables 204,733 93,698 99,042
-------------------------------------------------------------------------------
Total Liabilities 5,570,790 1,539,209 443,990
-------------------------------------------------------------------------------
Net assets, at value $929,870,203 $384,991,501 $257,101,058
-------------------------------------------------------------------------------
Net Assets
-------------------------------------------------------------------------------
Shares outstanding 929,870,203 384,991,501 257,101,058
-------------------------------------------------------------------------------
Net asset value, offering
and redemption price per
share (Net asset value /
outstanding shares of
beneficial interest, no
par value, unlimited
number of shares
authorized) $ 1.00 $ 1.00 $ 1.00
-------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
Statement of Operations
Year ended July 31, 2000 Money Government Municipal
--------------------------------------------------------------------------
Investment Income
--------------------------------------------------------------------------
Income:
Interest $ 55,810,710 $ 16,176,557 $ 6,820,594
--------------------------------------------------------------------------
Expenses:
Management fee 3,335,656 1,288,103 857,334
--------------------------------------------------------------------------
Services to shareholders 728,368 145,908 168,324
--------------------------------------------------------------------------
Custodian 55,041 40,518 13,935
--------------------------------------------------------------------------
Auditing 44,469 10,150 10,428
--------------------------------------------------------------------------
Legal 12,579 6,435 6,323
--------------------------------------------------------------------------
Trustees' fees and expenses 23,006 11,968 6,250
--------------------------------------------------------------------------
Reports to shareholders 57,121 8,853 4,125
--------------------------------------------------------------------------
Registration fees 88,400 148,737 114,842
--------------------------------------------------------------------------
Other 12,381 44,116 6,782
--------------------------------------------------------------------------
Total expenses, before
expense reductions 4,357,021 1,704,788 1,188,343
--------------------------------------------------------------------------
Expense reductions (1,228,751) (1,432,751) (1,188,343)
--------------------------------------------------------------------------
Total expenses, after
expense reductions 3,128,270 272,037 --
--------------------------------------------------------------------------
Net investment income 52,682,440 15,904,520 6,820,594
--------------------------------------------------------------------------
Net increase in net assets
resulting from operations $ 52,682,440 $ 15,904,520 $ 6,820,594
--------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
Statements of Changes in Net Assets
Money
<TABLE>
<CAPTION>
Year ended July 31,
2000 1999
------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income $ 52,682,440 $ 51,509,952
------------------------------------------------------------------------------------------------
Distributions to shareholders from net
investment income (52,682,440) (51,509,952)
------------------------------------------------------------------------------------------------
Fund share transactions at net asset value of $1 per share:
Proceeds from shares sold 1,455,566,925 1,265,864,367
------------------------------------------------------------------------------------------------
Reinvestment of distributions 50,312,123 49,605,674
------------------------------------------------------------------------------------------------
Cost of shares redeemed (1,490,396,213) (1,472,810,799)
------------------------------------------------------------------------------------------------
Net increase (decrease) from Fund share
transactions and total increase (decrease)
in net assets 15,482,835 (157,340,758)
------------------------------------------------------------------------------------------------
Net Assets
------------------------------------------------------------------------------------------------
Beginning of period 914,387,368 1,071,728,126
------------------------------------------------------------------------------------------------
End of period $ 929,870,203 $ 914,387,368
------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
Statements of Changes in Net Assets
Government
<TABLE>
<CAPTION>
December 1, 1998
(commencement of
Year ended operations) to
July 31, 2000 July 31, 1999
--------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
--------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income $ 15,904,520 $ 3,803,698
--------------------------------------------------------------------------------------------
Distributions to shareholders from net
investment income (15,904,520) (3,803,698)
--------------------------------------------------------------------------------------------
Fund share transactions at net asset value of $1 per share:
Proceeds from shares sold 554,427,155 343,648,626
--------------------------------------------------------------------------------------------
Reinvestment of distributions 15,016,786 3,475,455
--------------------------------------------------------------------------------------------
Cost of shares redeemed (395,623,208) (135,953,313)
--------------------------------------------------------------------------------------------
Net increase (decrease) from Fund share
transactions and total increase (decrease)
in net assets 173,820,733 211,170,768
--------------------------------------------------------------------------------------------
Net Assets
--------------------------------------------------------------------------------------------
Beginning of period 211,170,768 --
--------------------------------------------------------------------------------------------
End of period $ 384,991,501 $ 211,170,768
--------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
Statements of Changes in Net Assets
Municipal
<TABLE>
<CAPTION>
December 1, 1998
(commencement of
Year ended operations) to
July 31, 2000 July 31, 1999
--------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
--------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income $ 6,820,594 $ 685,537
--------------------------------------------------------------------------------------------
Distributions to shareholders from net
investment income (6,820,594) (685,537)
--------------------------------------------------------------------------------------------
Fund share transactions at net asset value of $1 per share:
Proceeds from shares sold 492,746,087 105,204,719
--------------------------------------------------------------------------------------------
Reinvestment of distributions 6,212,875 619,244
--------------------------------------------------------------------------------------------
Cost of shares redeemed (322,592,056) (25,089,811)
--------------------------------------------------------------------------------------------
Net increase (decrease) from Fund share
transactions and total increase (decrease)
in net assets 176,366,906 80,734,152
--------------------------------------------------------------------------------------------
Net Assets
--------------------------------------------------------------------------------------------
Beginning of period 80,734,152 --
--------------------------------------------------------------------------------------------
End of period $ 257,101,058 $ 80,734,152
--------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
27
<PAGE>
financial highlights
The following tables include selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
Zurich Yieldwise Money Fund
<TABLE>
<CAPTION>
Year ended July 31, 2000 1999 1998 1997(a)
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 1.00 1.00 1.00
---------------------------------------------------------------------------------------
Net investment income 0.06 0.05 0.06 0.02
---------------------------------------------------------------------------------------
Less distributions from net investment
income (0.06) (0.05) (0.06) (0.02)
---------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 1.00 1.00 1.00
---------------------------------------------------------------------------------------
Total Return (%) (b) 5.88 5.03 5.81 1.69**
---------------------------------------------------------------------------------------
Ratios to Average Net Assets and Supplemental Data
---------------------------------------------------------------------------------------
Net assets, end of period ($ millions) 930 914 1,072 245
---------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) 0.47 0.45 0.44 0.60*
---------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) 0.34 0.34 0.07 0.00
---------------------------------------------------------------------------------------
Ratio of net investment income (%) 5.72 4.92 5.63 5.66*
---------------------------------------------------------------------------------------
</TABLE>
(a) For the period April 17, 1997 (commencement of operations) to July 31,
1997.
(b) Total returns would have been lower had certain expenses not been
reduced.
* Annualized
** Not annualized
28
<PAGE>
Zurich Yieldwise Government Fund
Year ended July 31, 2000 1999(a)
---------------------------------------------------------------------------
Net asset value, beginning of period $ 1.00 1.00
---------------------------------------------------------------------------
Net investment income 0.06 0.03
---------------------------------------------------------------------------
Less distributions from net investment income (0.06) (0.03)
---------------------------------------------------------------------------
Net asset value, end of period $ 1.00 1.00
---------------------------------------------------------------------------
Total Return (%) (b) 5.94 3.30**
---------------------------------------------------------------------------
Ratios to Average Net Assets and Supplemental Data
---------------------------------------------------------------------------
Net assets, end of period ($ millions) 385 211
---------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 0.63 0.61*
---------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 0.10 0.05*
---------------------------------------------------------------------------
Ratio of net investment income (%) 5.87 4.92*
---------------------------------------------------------------------------
(a) For the period December 1, 1998 (commencement of operations) to July
31, 1999.
(b) Total returns would have been lower had certain expenses not been
reduced.
* Annualized
** Not annualized
29
<PAGE>
Zurich YieldWise Municipal Money Fund
Year ended July 31, 2000 1999(a)
------------------------------------------------------------------------
Net asset value, beginning of period $ 1.00 1.00
------------------------------------------------------------------------
Net investment income 0.04 0.02
------------------------------------------------------------------------
Less distributions from net investment income (0.04) (0.02)
------------------------------------------------------------------------
Net asset value, end of period $ 1.00 1.00
------------------------------------------------------------------------
Total Return (%) (b) 3.96 2.09**
------------------------------------------------------------------------
Ratios to Average Net Assets and Supplemental Data
------------------------------------------------------------------------
Net assets, end of period ($ millions) 257 81
------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 0.69 0.88*
------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 0.00 0.00
------------------------------------------------------------------------
Ratio of net investment income (%) 3.98 3.25*
------------------------------------------------------------------------
(a) For the period December 1, 1998 (commencement of operations) to July
31, 1999.
(b) Total returns would have been lower had certain expenses not been
reduced.
* Annualized
** Not annualized
30
<PAGE>
notes to financial statements
1. Significant Accounting Policies
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 accounting
principles generally accepted in the United States which require the use of
management estimates. The policies described below are followed consistently by
the Funds in the preparation of their financial statements.
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 their custodian or
sub-custodian bank, receive 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 income to its
shareholders. Accordingly, the Funds paid no federal income taxes and no federal
income tax provision was required.
Distribution of Income and Gains. All of the net investment income of the Funds
is declared as a daily dividend and is distributed to shareholders monthly. Net
investment income includes all realized gains (losses) on portfolio securities.
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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.
2. 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 0.50% of the first $215 million of average daily
net assets declining to 0.25% of average daily net assets in excess of $800
million. For the year ended July 31, 2000, the Funds incurred the following
management fees:
Management fee Management fee Effective
Fund imposed ($) waived ($) rate (%)
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Zurich YieldWise Money Fund 2,142,078 1,193,578 0.23
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Zurich YieldWise Government Money Fund -- 1,288,103 --
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Zurich YieldWise Municipal Money Fund -- 857,334 --
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Scudder Kemper has agreed to temporarily waive all or a portion of its
management fee and reimburse or pay operating expenses of each fund as follows:
for Zurich YieldWise Money Fund, to the extent necessary to maintain the Fund's
total operating expenses at no more than 0.38% until November 30, 2000; for
Zurich YieldWise Government Money Fund, to the extent necessary to maintain the
Fund's total operating expenses at no more than 0.34% through at least June 1,
2000, thereafter, to the extent necessary to maintain the Fund's total operating
expenses at no more than 0.37% until November 30, 2000; for Zurich YieldWise
Municipal Money Fund, to the extent necessary to maintain the Fund's total
operating expenses at no more than 0.30% until November 30, 2000. In addition,
during the period Scudder Kemper agreed to voluntarily limit expenses of each
fund as follows: for Zurich YieldWise Money Fund, 0.34%; for Zurich YieldWise
Government Fund, 0.10%; for Zurich YieldWise Municipal Money Fund, 0.00%.
Shareholder Services Agreement. Pursuant to a services agreement with the Funds'
transfer agent, Kemper Service Company ("KSvC") is the shareholder service agent
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of the Trust. For the year ended July 31, 2000, KSvC received shareholder
services fees as follows:
Unpaid at
Fund Fee imposed ($) July 31, 2000 ($)
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Zurich YieldWise Money Fund 554,339 158,277
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Zurich YieldWise Government Money Fund 102,130 34,105
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Zurich YieldWise Municipal Money Fund 137,988 36,316
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Officers and Trustees. Certain officers or trustees of the Trust are also
officers or directors of Scudder Kemper. For the year ended July 31, 2000, the
Trust made no payments to its officers and incurred trustees' fees of $41,224 to
independent trustees.
3. Expense Off-Set Arrangements
Each Fund has entered into arrangements with their custodian and transfer agent
whereby credits realized as a result of uninvested cash balances were used to
reduce a portion of each Fund's expenses. For the year ended July 31, 2000, the
Funds' custodian and transfer agent fees were reduced as follows:
Transfer agent
Fund Custodian fee ($) fee ($)
--------------------------------------------------------------------------------
Zurich YieldWise Money Fund 6,363 28,810
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Zurich YieldWise Government Money Fund 3,166 18,756
--------------------------------------------------------------------------------
Zurich YieldWise Municipal Money Fund 7,613 11,193
--------------------------------------------------------------------------------
4. Line of Credit
The Funds and several Kemper funds (the "Participants") share in a $750 million
revolving credit facility with Chase Manhattan Bank for temporary or emergency
purposes, including the meeting of redemption requests that otherwise might
require the untimely disposition of securities. The Participants are charged an
annual commitment fee which is allocated, pro rata based on net assets, among
each of the Participants. Interest is calculated based on the market rates at
the time of the borrowing. The Funds may borrow up to a maximum of 33 percent of
its net assets under the agreement.
33
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report of independent auditors
The Board of Trustees and Shareholders of Zurich YieldWise Funds
We have audited the accompanying statements 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, 2000, and the related statements of
operations for the year then ended and changes in net assets and financial
highlights for the periods indicated herein. 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 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. Our procedures included confirmation of investments
owned as of July 31, 2000, 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.
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, 2000, the results of
their operations for the year then ended, the changes in their net assets and
the financial highlights for the periods indicated herein, in conformity with
accounting principles generally accepted in the United States.
Chicago, Illinois /s/Ernst & Young LLP
September 7, 2000
34
<PAGE>
tax information (unaudited)
Of the dividends paid from net investment income for the Zurich YieldWise
Municipal Money Fund for the taxable year ended July 31, 2000, 100% are
designated as exempt interest dividends for federal income tax purposes.
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 account, please call 1-888-ZURICH-1 (987-4241).
The accompanying notes are an integral part of the financial statements.
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trustees and officers
Trustees
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John W. Ballantine Donald L. Dunaway Thomas W. Littauer
Trustee Trustee Trustee and Vice
President
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Lewis A. Burnham Robert B. Hoffman Shirley D. Peterson
Trustee Trustee Trustee
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Linda C. Coughlin Donald R. Jones William P. Sommers
Trustee Trustee Trustee
Officers
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Mark S. Casady Frank J. Rachwalski, Jr. Maureen E. Kane
President Vice President Assistant Secretary
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Philip J. Collora Linda J. Wondrack Caroline Pearson
Vice President and Vice President Assistant Secretary
Secretary
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Ann M. McCreary John R. Hebble Brenda Lyons
Vice President Treasurer Assistant Treasurer
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Kathryn L. Quirk
Vice President
Legal Counsel Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, IL 60601
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Shareholder Service Kemper Service Company
Agent P.O. Box 219151
Kansas City, MO 64121-9151
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Custodian State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
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Transfer Agent State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
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Independent Auditors Ernst & Young LLP
233 South Wacker Drive
Chicago, IL 60606
[LOGO]
ZURICH
This report must be preceded or accompanied by
a Zurich YieldWise Funds prospectus. Scudder Kemper Investments, Inc.
222 South Riverside Plaza
Chicago, IL 60606-5808
1-888-987-4241
