<PAGE> 1
Annual Report to
Shareholders for the Year
Ended July 31, 1998
[ZURICH LOGO]
Zurich Money Funds
<PAGE> 2
TABLE OF CONTENTS
SUBJECT PAGE
1
Fund objectives
2
Performance summary
5
Variables affecting performance
6
Performance update
9
Terms to know
10
Portfolio composition
11
Portfolio of investments
28
Report of independent auditors
30
Financial statements
36
Financial highlights
<PAGE> 3
1
FUND OBJECTIVES
Zurich Money Funds is an open-end, diversified, management investment company
offering a choice of three investment funds. Each fund invests in high quality
short-term money market instruments consistent with its specific objective as
outlined below. Each Fund seeks to maintain a net asset value of $1.00 per
share, however there is no assurance that a $1.00 value will be maintained. An
investment in money market funds is neither insured nor guaranteed by the U.S.
Government.
ZURICH MONEY MARKET FUND
This fund seeks maximum current income to the extent consistent with stability
of principal by investing primarily in commercial paper, securities of the U.S.
Government, its agencies, and bank certificates of deposit.
ZURICH GOVERNMENT MONEY FUND
This fund seeks maximum current income to the extent consistent with stability
of principal by investing exclusively in obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities.
ZURICH TAX-FREE MONEY FUND
This fund seeks maximum current income that is exempt from federal income taxes
to the extent consistent with stability of principal from a portfolio of
short-term, high quality tax-exempt municipal securities.
<PAGE> 4
2
PERFORMANCE SUMMARY
ZURICH MONEY MARKET FUND
<TABLE>
<CAPTION>
<S> <C>
YIELD COMPARISON FUND YIELD VS. FIRST TIER MONEY MARKET FUNDS
Zurich Money Market
Fund is compared to [WEEKLY 7-DAY AVERAGE YIELD BAR GRAPH]
its IBC Financial Data
category -- The First
Tier Money Market Fund FUND YIELD FIRST TIER
Average which consists MONEY MARKET FUNDS
of all
non-institutional 8/8/97 5.27% 4.95%
taxable money market 9/5/97 5.24% 4.95%
funds investing in 10/3/97 5.25% 4.95%
only first tier 11/7/97 5.22% 4.95%
(highest rating) 12/05/97 5.31% 5.00%
securities tracked by 1/02/98 5.47% 5.07%
IBC Financial Data. 2/06/98 5.30% 4.99%
Returns are historical 3/06/98 5.21% 4.96%
and do not guarantee 4/03/98 5.21% 4.93%
future results. Fund 5/01/98 5.21% 4.90%
yields fluctuate. 6/05/98 5.18% 4.92%
7/03/98 5.18% 4.94%
7-day yield is the 7/31/98 5.20% 4.92%
annualized net
investment income per
share for the period
shown. Gains or losses
are not included.
LIPPER RANKING LIPPER RANKING
Lipper Analytical
Services, Inc. TOP 10% #31 OF 302 FUNDS 1 YEAR
rankings are based -----------------------------------------------------
upon changes in net TOP 11% #21 OF 189 FUNDS 5 YEARS
asset value with all -----------------------------------------------------
dividends reinvested TOP 8% #10 OF 121 FUNDS 10 YEARS
for the periods -----------------------------------------------------
indicated as of TOP FUND #1 OF 33 FUNDS 20 YEARS
7/31/98. Rankings are
historical and do not
guarantee future
performance. The
Lipper category used
for comparison is the
Lipper Money Market
Instrument Fund
category.
10-YEAR PERFORMANCE 10-YEAR PERFORMANCE
This chart shows the
value of a [PERFORMANCE OF A $10,000 HYPOTHETICAL INVESTMENT BAR GRAPH]
hypothetical $10,000
investment in Zurich 8/1/88 $10,000
Money Market Fund over 7/31/89 $10,903
the past 10 fiscal 7/31/90 $11,830
years with all 7/31/91 $12,680
dividends reinvested. 7/31/92 $13,243
The returns shown are 7/31/93 $13,635
historical and do not 7/31/94 $14,071
represent future 7/31/95 $14,822
performance. 7/31/96 $15,618
7/31/97 $16,442
7/31/98 $17,323
</TABLE>
<PAGE> 5
3
ZURICH GOVERNMENT MONEY FUND
<TABLE>
<CAPTION>
<S><C>
YIELD COMPARISON FUND YIELD VS. GOVERNMENT MONEY MARKET FUNDS
Zurich Government
Money Fund is compared [WEEKLY 7-DAY AVERAGE YIELD BAR GRAPH]
to its IBC Financial
Data category -- The FUND YIELD GOVERNMENT MONEY
Government Money MARKET FUNDS
Market Fund Average 8/8/97 5.27% 4.90%
which consists of all 9/5/97 5.24% 4.90%
non-institutional 10/3/97 5.16% 4.90%
government money 11/7/97 5.18% 4.92%
market funds tracked 12/05/97 5.29% 4.95%
by IBC Financial Data. 1/02/98 5.40% 4.97%
Returns are historical 2/06/98 5.22% 4.94%
and do not guarantee 3/06/98 5.21% 4.94%
future results. Fund 4/03/98 5.16% 4.92%
yields fluctuate. 5/01/98 5.16% 4.87%
6/05/98 5.20% 4.90%
7-day yield is the 7/03/98 5.15% 4.92%
annualized net 7/31/98 5.15% 4.89%
investment income per
share for the period
shown. Gains or losses
are not included.
LIPPER RANKING LIPPER RANKING
Lipper Analytical
Services, Inc. TOP 9% #10 OF 112 1 YEAR
rankings are based ----------------------------------------------
upon changes in net TOP 6% #5 OF 83 FUNDS 5 YEARS
asset value with all ----------------------------------------------
dividends reinvested TOP 7% #3 OF 46 FUNDS 10 YEARS
for the periods
indicated as of
7/31/98. Rankings are
historical and do not
guarantee future
performance. The
Lipper category used
for comparison is the
Lipper Government
Money Market Fund
category.
10-YEAR PERFORMANCE 10-YEAR PERFORMANCE
This chart shows the
value of a [PERFORMANCE OF A $10,000 HYPOTHETICAL INVESTMENT]
hypothetical $10,000
investment in Zurich 8/1/88 $10,000
Government Money Fund 7/31/89 $10,896
over the past 10 7/31/90 $11,817
fiscal years, with all 7/31/91 $12,637
dividends reinvested. 7/31/92 $13,207
The returns shown are 7/31/93 $13,599
historical and do not 7/31/94 $14,035
represent future 7/31/95 $14,787
performance. 7/31/96 $15,581
7/31/97 $16,401
7/31/98 $17,276
</TABLE>
<PAGE> 6
4
ZURICH MONEY FUNDS PERFORMANCE SUMMARY, CONTINUED
ZURICH TAX-FREE MONEY FUND
<TABLE>
<CAPTION>
<S> <C>
YIELD COMPARISON FUND YIELD VS. TAX-FREE MONEY MARKET FUNDS
Zurich Tax-Free Money
Fund is compared to [WEEKLY 7-DAY AVERAGE YIELD BAR GRAPH]
its IBC Financial Data
category -- The TAX-FREE
Tax-Free Money Market FUND YIELD MONEY MARKET FUNDS
Fund Average which
consists of all 8/4/97 3.45% 3.04%
non-institutional 9/5/97 3.31% 2.9%
tax-free money market 10/3/97 3.55% 3.29%
funds tracked by IBC 11/7/97 3.43% 3.09%
Financial Data. 12/05/97 3.61% 3.23%
Returns are historical 1/02/98 3.67% 3.34%
and do not guarantee 2/06/98 3.42% 3.00%
future results. Fund 3/06/98 3.29% 2.91%
yields fluctuate. 4/03/98 3.39% 3.03%
Income from Zurich 5/01/98 3.73% 3.42%
Tax-Free Money Fund 6/05/98 3.51% 3.18%
may be subject to 7/03/98 3.40% 3.03%
state and local taxes 7/27/98 3.37% 2.99%
and the alternative
minimum tax.
7-day yield is the
annualized net
investment income per
share for the period
shown. Gains or losses
are not included.
LIPPER RANKING LIPPER RANKING
Lipper Analytical
Services, Inc. TOP 4% #5 OF 131 FUNDS 1 YEAR
rankings are based ---------------------------------------------------
upon changes in net TOP 8% #8 OF 102 FUNDS 5 YEARS
asset value with all ---------------------------------------------------
dividends reinvested TOP 7% #5 OF 68 FUNDS 10 YEARS
for the periods ---------------------------------------------------
indicated as of
7/31/98. Rankings are
historical and do not
guarantee future
performance. The
Lipper category used
for comparison is the
Lipper Tax-Free Money
Market Fund category.
10-YEAR PERFORMANCE [10 YEAR PERFORMANCE BAR GRAPH]
This chart shows the
value of a 8/1/88 7/31/89 7/31/90 7/31/91 7/31/92 7/31/93 7/31/94 7/31/95 7/31/96 7/31/97 7/31/98
hypothetical $10,000 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
investment in Zurich $10,000 $10,621 $11,238 $11,808 $12,230 $12,523 $12,814 $13,267 $13,726 $14,191 $14,683
Tax-Free Money Fund
over the past 10
fiscal years, with all
dividends reinvested.
The returns shown are
historical and do not
represent future
performance.
</TABLE>
<PAGE> 7
5
VARIABLES AFFECTING
PERFORMANCE
The investment manager invests in high-quality, short-term securities that are
consistent with each fund's specific objectives.
Our primary goal is to provide competitive yields while maintaining preservation
of principal and a high degree of liquidity. The specific securities portfolio
managers select have a major impact on reaching our goal. However, they must
continuously analyze other variables which affect share price stability and fund
performance. Traditionally, there are three important variables which are
factored into the decision-making process:
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 sell. 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)
<PAGE> 8
6
PERFORMANCE UPDATE
[RACHWALSKI PHOTO]
AN INTERVIEW WITH PORTFOLIO MANAGER FRANK RACHWALSKI
Although the U.S. economy sustained its healthy
growth trend throughout the entire report period
(8/1/97 to 7/31/98), the economic crisis in Asia
extinguished many signs of inflation. The Federal
Reserve Board held their position on interest rates
as they maintained their "wait and see" policy.
Lead portfolio manager Frank Rachwalski discusses
the market and Zurich Money Funds' performance
during that time.
---------------------------------------------------
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
AN M.B.A. DEGREE FROM LOYOLA UNIVERSITY.
Q FRANK, IN LOOKING BACK OVER THE LAST 12 MONTHS, WE SAW STEADY ECONOMIC
GROWTH WITH MINIMAL INFLATION. WHAT FACTORS HELPED MAINTAIN THIS HEALTHY
FINANCIAL CLIMATE?
-------------------------------------------------------------------------
A Employment levels remained high throughout this period giving more
people money to spend. While this fueled the U.S. economy, the economic problems
in Asia that surfaced in October 1997 continued well into 1998, with the
Japanese Yen falling relative to the U.S. Dollar. Consequently, low-priced
exports from Asia minimized demand for American-made products causing increased
inventories. Production slowed as manufacturers sold product from existing
inventories and this, in turn, slowed the economy just enough to keep inflation
in check.
- --------------------------------------------------------------------------------
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 HOW DID THE FEDERAL RESERVE (THE FED) REACT TO THIS CONTINUED RUN OF
ECONOMIC GROWTH?
------------------------------------------------------------------------
A Well, ordinarily the Board of Governors (of the Federal Reserve) would
have increased the Fed Funds rate. But, with the Asian problems and low
inflation, they were content to maintain their prevailing policy. In fact, we
haven't seen them raise rates in over a year.
Q WITH ALL THESE FACTORS COMING INTO PLAY, WHAT WAS YOUR STRATEGY FOR
MANAGING THE FUNDS?
------------------------------------------------------------------------
A With no change in monetary policy, we saw a continued flattening in the
yield curve, which meant long-term interest rates fell relative to short-term
interest rates. Since we had no yield incentive to invest in securities with
longer maturities, we kept our average maturity at approximately 30 days.
Q A 30-DAY AVERAGE MATURITY IS SHORTER THAN THE INDUSTRY AVERAGE WHICH IS
APPROXIMATELY 51 DAYS FOR GENERAL PURPOSE MONEY MARKET FUNDS. WHY DID YOU STAY
IN THAT RANGE AND HOW DID THIS STRATEGY AFFECT PERFORMANCE?
-------------------------------------------------------------------------
A When there's not a big difference in yields among the investments we're
considering for the portfolio, the challenge is trying to maximize returns. With
a very short average maturity, we had the flexibility to react and take
advantage of whatever fluctuations in short-term interest rates occurred during
that time. This strategy worked well for us because we were able to invest in
the best issues possible, as they became available.
Continued
<PAGE> 10
8
Q WHERE DO YOU THINK THE ECONOMY IS GOING FROM HERE AND HOW WILL THAT
INFLUENCE YOUR INVESTMENT MANAGEMENT CHOICES?
------------------------------------------------------------------------
A I think the inventory correction we saw during the second quarter of
1998 is ending and production schedules will begin increasing. So, although we
saw a bit of a slow-down during this last quarter, I expect the second half of
1998 to be back on a stronger growth trend. Another concern is that the core CPI
(Consumer Price Index), which includes consumer products except food and energy,
increased over 2% during the last 6 months. This means we've started to see
price increases. If this trend continues, the Fed would certainly have some
concern about inflation taking hold and most likely would raise interest rates.
Based on this trend we will continue to keep the average maturity of securities
held by the Funds short in order to respond quickly to changing rates. We want
to provide the best yield possible for our shareholders, and to maintain the
flexibility to be in a position to take advantage of opportunities.
<PAGE> 11
9
TERMS TO KNOW
7-DAY AVERAGE
YIELD Every money market fund calculates its yield according
to a standardized method prescribed by the Securities
and Exchange Commission. Each day's yield is an average
taken over a 7-day period. This average helps to
minimize the effect of daily fluctuation in fund income.
YIELD CURVE Yields tend to vary directly with a security's length of
time to maturity. When the relationship between yield
and maturity is plotted on a graph it is called the
YIELD CURVE. If yields for long-term investments drop
relative to yields on short-term investments, the YIELD
CURVE will "flatten" since there will be less of a
difference in yield between shorter-term and longer-term
investments. When this happens, it also means
longer-term securities are relatively less attractive.
When long-term yields increase relative to short-term
yields and the curve steepens, longer-term securities
become relatively more desirable.
*The yield curve [SAMPLE YIELD CURVE* GRAPH]
shown is
hypothetical and 1 MO. 5.00%
does not 3 MO. 5.50%
represent the 6 MO. 5.85%
past or future 1 YR. 6.05%
performance of 5 MO. 6.17%
any security 10 MO. 6.23%
held by the 30 MO. 6.25%
Zurich Money
Funds.
CONSUMER
PRICE INDEX
(CPI) The CPI is a measure of inflation based on the cost of a
typical "market basket" of goods and services that
reflect the current lifestyle of the typical American
consumer. The Bureau of Labor Statistics compiles the
CPI every month in order to track changes in the total
cost from month to month and year to year.
<PAGE> 12
10
PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
ZURICH MONEY MARKET FUND On 7/31/98*
<S> <C> <C>
Commercial paper 78%
------------------------------------------------
[PIE CHART] Domestic CD's 16
------------------------------------------------
Repurchase agreements 2
------------------------------------------------
U.S. Government agency notes 2
------------------------------------------------
Foreign CD's 2
------------------------------------------------
100%
WEIGHTED AVERAGE MATURITY+
Zurich Money Market Fund 27 days
------------------------------------------------
First Tier Money Fund Average 64 days
ZURICH GOVERNMENT MONEY FUND On 7/31/98*
Repurchase agreements 59%
------------------------------------------------
Federal agencies 41
[PIE CHART] ------------------------------------------------
100%
WEIGHTED AVERAGE MATURITY+
Zurich Government Money Fund 31 days
------------------------------------------------
Government Money Fund Average 51 days
ZURICH TAX-FREE MONEY FUND On 7/31/98*
Tax-exempt commercial paper 52%
------------------------------------------------
Variable rate demand notes 45
[PIE CHART] ------------------------------------------------
Tender securities 2
------------------------------------------------
General market obligations 1
------------------------------------------------
100%
WEIGHTED AVERAGE MATURITY+
Zurich Tax-Free Money Fund 31 days
------------------------------------------------
Tax-Free Money Fund Average 42 days
</TABLE>
* Portfolio composition and holdings are subject to change.
+ The Funds are compared to their respective IBC Financial Data category: The
First Tier Money Market 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 Market Fund Average includes all
non-institutional government money market funds tracked by IBC Financial Data;
Tax-Free Money Market Fund Average consists of all non-institutional tax-free
money market funds tracked by IBC Financial Data.
Weighted average maturity for Zurich Money Market Fund and Zurich Government
Money Fund data is as of 7/28/98, Zurich Tax-Free Money Fund is as of 7/27/98.
<PAGE> 13
11
PORTFOLIO OF INVESTMENTS
ZURICH MONEY MARKET FUND
JULY 31, 1998 (VALUE IN THOUSANDS)
<TABLE>
<CAPTION>
CORPORATE OBLIGATIONS
BANKING -- 2.7% RATE MATURITY VALUE
<S> <C> <C> <C>
Banco Real, S.A. 5.60% 10/16/98 $ 9,884
--------------------------------------------------------------------------
Merita, N.A. 5.58% 9/21/98 - 9/22/98 54,566
--------------------------------------------------------------------------
Nordbanken N.A., Inc. 5.57% 9/8/98 59,650
--------------------------------------------------------------------------
124,100
BUSINESS LOANS -- 19.8%
APEX Funding Corp. 5.72% 9/30/98 24,764
--------------------------------------------------------------------------
Asset Securitization
Cooperative Corp. 5.57% - 5.60% 9/2/98 - 9/21/98 74,558
--------------------------------------------------------------------------
Banner Receivables Corp. 5.78% - 5.80% 10/19/98 64,186
--------------------------------------------------------------------------
Broadway Capital Corp. 5.68% - 5.78% 8/5/98 - 10/28/98 59,306
--------------------------------------------------------------------------
Corporate Asset Funding 5.58% - 5.59% 8/21/98 - 9/18/98 59,708
--------------------------------------------------------------------------
Corporate Receivables
Corp. 5.59% - 5.60% 8/18/98 - 9/24/98 44,740
--------------------------------------------------------------------------
Falcon Asset
Securitization Corp. 5.59% 9/11/98 24,842
--------------------------------------------------------------------------
Gotham Capital Corp. 5.77% - 5.79% 10/13/98 - 10/26/98 59,276
--------------------------------------------------------------------------
International
Securitization Corp. 5.56% - 5.60% 8/20/98 - 10/15/98 74,619
--------------------------------------------------------------------------
Madison Funding Corp. 5.57% 8/17/98 24,938
--------------------------------------------------------------------------
Monte Rosa Capital Corp. 5.58% - 5.65% 8/18/98 - 8/21/98 74,783
--------------------------------------------------------------------------
Old Line Funding Corp. 5.58% - 5.60% 8/19/98 - 9/3/98 49,811
--------------------------------------------------------------------------
Preferred Receivables
Funding Corp. 5.59% - 5.61% 8/18/98 - 9/23/98 59,700
--------------------------------------------------------------------------
Quincy Capital Corp. 5.58% - 5.60% 9/18/98 - 9/21/98 59,545
--------------------------------------------------------------------------
Receivables Capital Corp. 5.57% 8/25/98 9,963
--------------------------------------------------------------------------
Sheffield Receivables
Corp. 5.56% - 5.65% 8/10/98 - 8/28/98 64,840
--------------------------------------------------------------------------
WCP Funding, Inc. 5.59% - 5.60% 8/4/98 - 8/13/98 49,942
--------------------------------------------------------------------------
Wood Street Funding Corp. 5.59% 8/11/98 19,969
--------------------------------------------------------------------------
899,490
</TABLE>
<PAGE> 14
12
ZURICH MONEY MARKET FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(VALUE IN THOUSANDS)
<TABLE>
<CAPTION>
CAPITAL AND EQUIPMENT
LENDING -- 9.8% RATE MATURITY VALUE
<S> <C> <C> <C>
Ace Overseas Corp. 5.60% - 5.66% 8/6/98 - 9/28/98 $ 49,752
--------------------------------------------------------------------------
(a)American Honda Finance
Corp. 5.63% - 5.64% 8/10/98 - 8/26/98 60,494
--------------------------------------------------------------------------
(a)Caterpillar Financial
Services Corp. 5.63% 8/17/98 25,000
--------------------------------------------------------------------------
Centric Capital Corp. 5.60% - 5.61% 10/1/98 - 10/5/98 39,614
--------------------------------------------------------------------------
(a)Ford Motor Credit Co. 5.70% 8/3/98 59,996
--------------------------------------------------------------------------
(a)IBM Credit Corp. 5.56% - 5.63% 8/3/98 - 8/28/98 54,995
--------------------------------------------------------------------------
(a)John Deere Capital
Corp. 5.56% - 5.68% 8/10/98 - 9/14/98 59,988
--------------------------------------------------------------------------
Sanwa Business Credit
Corp. 5.68% - 5.81% 8/6/98 - 10/13/98 49,690
--------------------------------------------------------------------------
(a)Sigma Finance, Inc. 5.63% 8/3/98 45,000
--------------------------------------------------------------------------
444,529
CAPTIVE BUSINESS LENDING -- 5.3%
CSW Credit, Inc. 5.56% - 5.58% 8/19/98 - 9/24/98 19,889
--------------------------------------------------------------------------
Enterprise Capital Funding
Corp. 5.59% - 5.62% 8/11/98 - 9/18/98 69,720
--------------------------------------------------------------------------
(a)FINOVA Capital Corp. 5.74% 9/11/98 55,000
--------------------------------------------------------------------------
Golden Manager's
Acceptance Corp. 5.58% 8/14/98 34,930
--------------------------------------------------------------------------
Oakland-Alameda County
Coliseum, California 5.58% - 5.60% 8/12/98 - 8/13/98 50,000
--------------------------------------------------------------------------
(a)Prudential Funding
Corp. 5.65% 8/10/98 10,000
--------------------------------------------------------------------------
239,539
CONSUMER LENDING -- 6.4%
(a)Beneficial Corp. 5.63% 8/12/98 30,000
--------------------------------------------------------------------------
Countrywide Home Loans
5.60% - 5.63% 8/11/98 - 8/31/98 44,868
(a)5.66% - 5.69% 8/26/98 - 10/26/98 35,000
--------------------------------------------------------------------------
(a)(b)GMAC Mortgage
Corporation of
Pennsylvania 5.82% 8/3/98 59,981
--------------------------------------------------------------------------
</TABLE>
<PAGE> 15
13
<TABLE>
<CAPTION>
RATE MATURITY VALUE
<S> <C> <C> <C>
(a)Household Finance Corp. 5.56% - 5.69% 8/28/98 - 8/31/98 $ 39,990
--------------------------------------------------------------------------
Household International,
Inc. 5.61% 8/14/98 14,970
--------------------------------------------------------------------------
Sears Roebuck Acceptance
Corp. 5.60% 9/4/98 64,659
--------------------------------------------------------------------------
289,468
CONSUMER PRODUCTS AND SERVICES -- 1.5%
Coca-Cola Enterprises,
Inc. 5.59% - 5.61% 8/3/98 - 8/20/98 49,904
--------------------------------------------------------------------------
Tribune Co. 5.61% - 5.63% 8/26/98 - 9/9/98 19,901
--------------------------------------------------------------------------
69,805
DIVERSIFIED FINANCE -- 14.6%
Alpine Securitization
Corp. 5.57% - 5.58% 8/11/98 - 8/25/98 59,832
--------------------------------------------------------------------------
Barton Capital Corp. 5.60% - 5.61% 8/31/98 - 10/5/98 49,634
--------------------------------------------------------------------------
(a)CIT Group Holdings,
Inc. 5.59% 8/3/98 39,992
--------------------------------------------------------------------------
CXC, Inc. 5.59% - 5.60% 9/23/98 - 9/25/98 74,372
--------------------------------------------------------------------------
Clipper Receivables Corp. 5.57% - 5.59% 8/17/98 - 8/19/98 39,894
--------------------------------------------------------------------------
Commercial Credit Co. 5.55% - 5.59% 8/20/98 - 10/8/98 39,695
--------------------------------------------------------------------------
Eksportfinans ASA 5.57% 8/10/98 39,944
--------------------------------------------------------------------------
Eureka Securitization,
Inc. 5.59% - 5.60% 8/10/98 - 10/23/98 49,647
--------------------------------------------------------------------------
General Electric Capital
Corp. 5.57% 9/17/98 49,639
--------------------------------------------------------------------------
Heller Financial, Inc. 5.83% 8/18/98 - 8/27/98 49,828
--------------------------------------------------------------------------
Thunder Bay Funding, Inc. 5.59% - 5.60% 8/20/98 - 9/1/98 54,783
--------------------------------------------------------------------------
Twin Towers, Inc. 5.60% - 5.63% 8/10/98 - 8/25/98 39,886
--------------------------------------------------------------------------
Windmill Funding Corp. 5.59% - 5.61% 8/21/98 - 10/14/98 74,430
--------------------------------------------------------------------------
661,576
FINANCIAL SERVICES -- 8.5%
(a)Bear Stearns Cos., Inc. 5.63% - 5.64% 8/6/98 - 8/18/98 55,000
--------------------------------------------------------------------------
(a)CS First Boston, Inc. 5.61% 8/3/98 54,994
--------------------------------------------------------------------------
(a)Goldman Sachs Group,
L.P. 5.60% 8/7/98 55,000
--------------------------------------------------------------------------
</TABLE>
<PAGE> 16
14
ZURICH MONEY MARKET FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(VALUE IN THOUSANDS)
<TABLE>
<CAPTION>
RATE MATURITY VALUE
<S> <C> <C> <C>
(a)Lehman Brothers
Holdings, Inc. 5.71% 8/20/98 $ 58,000
--------------------------------------------------------------------------
(a)Merrill Lynch & Co.,
Inc. 5.62% 8/4/98 25,000
--------------------------------------------------------------------------
(a)Morgan Stanley, Dean
Witter & Co. 5.61% - 5.76% 9/10/98 - 9/18/98 51,010
--------------------------------------------------------------------------
Salomon Smith Barney
Holdings, Inc.
(a)5.74% 8/4/98 30,000
5.58% - 5.59% 8/10/98 - 8/11/98 54,936
--------------------------------------------------------------------------
383,940
HEALTH CARE -- 1.0%
Baxter International, Inc. 5.58% - 5.63% 8/3/98 - 9/22/98 44,749
--------------------------------------------------------------------------
MANUFACTURING/INDUSTRIAL -- 2.4%
Cooper Industries, Inc. 5.68% 8/3/98 9,997
--------------------------------------------------------------------------
E.I. du Pont de Nemours 5.59% 8/13/98 - 8/14/98 74,855
--------------------------------------------------------------------------
Monsanto Co. 5.57% 9/16/98 24,823
--------------------------------------------------------------------------
109,675
MUNICIPAL OBLIGATION -- 1.2%
California, Pollution
Control Revenue 5.62% 9/11/98 55,000
--------------------------------------------------------------------------
UTILITIES -- 3.3%
Brazos River Authority,
Texas 5.62% 9/10/98 45,000
--------------------------------------------------------------------------
GTE Corp. 5.59% - 5.63% 8/24/98 - 8/26/98 79,697
--------------------------------------------------------------------------
New Hampshire Industrial
Development Authority 5.61% 9/9/98 25,000
--------------------------------------------------------------------------
149,697
--------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS -- 76.5%
(AVERAGE MATURITY: 30 DAYS) 3,471,568
</TABLE>
<PAGE> 17
15
<TABLE>
<CAPTION>
RATE MATURITY VALUE
<S> <C> <C> <C> <C>
BANK OBLIGATIONS
CERTIFICATES OF DEPOSIT AND BANK NOTES --
U.S. BANKS -- 16.0% RATE MATURITY VALUE
(a)Amex Centurian Bank 5.62% 8/5/98 $ 25,000
--------------------------------------------------------------------------
(a)AmSouth Bank of Alabama 5.54% 8/24/98 19,998
--------------------------------------------------------------------------
Bank of America N.A. 5.58% 8/24/98 65,000
--------------------------------------------------------------------------
(a)Bank One 5.60% 8/4/98 54,994
--------------------------------------------------------------------------
(a)Bankers Trust Co. 5.59% 8/3/98 49,982
--------------------------------------------------------------------------
(a)Comerica Bank 5.55% 9/22/98 14,998
--------------------------------------------------------------------------
(a)FCC National Bank 5.55% 8/3/98 54,968
--------------------------------------------------------------------------
(a)First USA Bank 5.99% 9/16/98 20,027
--------------------------------------------------------------------------
Harris Trust & Savings
Bank 5.56% 9/9/98 60,000
--------------------------------------------------------------------------
(a)Key Bank, N.A. 5.57% 8/3/98 59,996
--------------------------------------------------------------------------
MBNA America Bank, N.A. 5.65% 9/14/98 65,000
--------------------------------------------------------------------------
(a)Mellon Bank Corp. 5.60% 8/7/98 54,997
--------------------------------------------------------------------------
(a)J. P. Morgan & Co.,
Inc. 5.55% 8/7/98 54,970
--------------------------------------------------------------------------
Nationsbank, N.A.
5.62% 8/3/98 24,991
(a)5.58% 11/2/98 35,000
--------------------------------------------------------------------------
(a)Old Kent Bank 5.59% 10/13/98 24,997
--------------------------------------------------------------------------
(a)PNC Bank, N.A. 5.57% 8/3/98 39,984
--------------------------------------------------------------------------
724,902
CERTIFICATES OF DEPOSIT --
FOREIGN BANKS -- 1.5%
(a)National Bank of Canada 5.60% 8/5/98 14,998
--------------------------------------------------------------------------
(a)Royal Bank of Canada 5.55% 8/3/98 19,987
--------------------------------------------------------------------------
(a)Svenska Handelsbanken 5.64% 8/18/98 34,990
--------------------------------------------------------------------------
69,975
--------------------------------------------------------------------------
TOTAL BANK OBLIGATIONS -- 17.5%
(AVERAGE MATURITY: 32 DAYS) 794,877
</TABLE>
<PAGE> 18
16
ZURICH MONEY MARKET FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(VALUE IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(c) REPURCHASE
AGREEMENTS -- 2.2% RATE MATURITY VALUE
(AVERAGE MATURITY: 40 DAYS)
(DATED 7/98, COLLATERALIZED BY FEDERAL HOME LOAN MORTGAGE
CORPORATION AND FEDERAL NATIONAL MORTGAGE ASSOCIATION
SECURITIES)
Goldman Sachs Group, L.P.
(held at The Bank of
New York) 5.55% 9/3/98 - 9/15/98 $ 100,000
------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY NOTES
(a)Federal National
Mortgage Association 5.22% 8/4/98 54,837
--------------------------------------------------------------------------
(a)Student Loan Marketing
Association 5.29% 8/4/98 43,930
------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY NOTES -- 2.2%
(AVERAGE MATURITY: 4 DAYS) 98,767
------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 98.4%
(AVERAGE MATURITY: 30 DAYS) 4,465,212
------------------------------------------------------------------------------
CASH AND OTHER ASSETS, LESS
LIABILITIES -- 1.6% 73,415
------------------------------------------------------------------------------
NET ASSETS -- 100% $4,538,627
</TABLE>
SEE ACCOMPANYING NOTES TO PORTFOLIOS OF INVESTMENTS.
<PAGE> 19
ZURICH GOVERNMENT MONEY FUND
PORTFOLIO OF INVESTMENTS
July 31, 1998 (value in thousands)
<TABLE>
<CAPTION>
SHORT-TERM NOTES RATE MATURITY VALUE
-------------------------------------------------------------------------
<S> <C> <C> <C>
(ISSUED OR GUARANTEED BY U.S. GOVERNMENT AGENCIES OR
INSTRUMENTALITIES)
(a)Agency for
International Development
Government of Israel 5.63% 8/4/98 $ 3,765
-------------------------------------------------------------------------
(a)Export-Import Bank of
the United States
Cathay Pacific Airways
Ltd. 5.75% 10/16/98 2,320
KA Leasing, Ltd. 5.81% 8/13/98 13,698
Kuwait Investment
Authority 5.72% 8/13/98 11,420
VARIG Brazilian Airlines 5.81% 10/15/98 1,937
-------------------------------------------------------------------------
(a)Federal Farm Credit
Banks 5.61% 8/3/98 18,000
-------------------------------------------------------------------------
(a)Federal Home Loan Bank 5.67% 8/2/98 14,100
-------------------------------------------------------------------------
(a)Federal National
Mortgage Association 5.22% 8/4/98 47,877
-------------------------------------------------------------------------
(a)Overseas Private
Investment Corp.
International Paper Co. 5.64% 10/15/98 4,200
Omolon 5.55% 8/4/98 - 12/15/98 21,584
-------------------------------------------------------------------------
(a)Student Loan Marketing
Association 5.27% 8/4/98 141,749
-------------------------------------------------------------------------
TOTAL SHORT-TERM NOTES -- 40.8%
(AVERAGE MATURITY: 14 DAYS) 280,650
</TABLE>
17
<PAGE> 20
ZURICH GOVERNMENT MONEY FUND PORTFOLIO OF INVESTMENTS, CONTINUED
<TABLE>
<CAPTION>
(c) REPURCHASE AGREEMENTS RATE MATURITY VALUE
-------------------------------------------------------------------------
<S> <C> <C> <C>
(DATED 6/98 - 7/98, COLLATERALIZED BY FEDERAL HOME LOAN
MORTGAGE CORPORATION, FEDERAL NATIONAL MORTGAGE ASSOCIATION AND
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION SECURITIES)
Bear Stearns Cos., Inc.
(held at The Bank of
New York) 5.56% - 5.58% 8/12/98 - 10/14/98 $ 95,000
-------------------------------------------------------------------------
CS First Boston, Inc.
(held at The Chase
Manhattan Bank) 5.63% 8/5/98 20,000
-------------------------------------------------------------------------
Chase Securities, Inc.
(held at The Chase
Manhattan Bank) 5.56% - 5.59% 8/12/98 - 10/14/98 97,000
-------------------------------------------------------------------------
Goldman, Sachs Group, L.P.
(held at The Bank of
New York) 5.55% - 5.56% 8/12/98 - 8/26/98 30,000
-------------------------------------------------------------------------
Lehman Government Securities, Inc.
(held at The Chase
Manhattan Bank) 5.65% 8/3/98 17,000
-------------------------------------------------------------------------
Morgan Stanley, Dean
Witter & Co.
(held at The Bank of
New York) 5.56% 8/10/98 - 8/11/98 33,000
-------------------------------------------------------------------------
Nomura Securities International, Inc.
(held at The Bank of
New York) 5.55% - 5.60% 9/2/98 - 10/21/98 95,000
-------------------------------------------------------------------------
Salomon Smith Barney
Holdings, Inc.
(held at The Bank of
New York) 5.55% 10/1/98 12,000
-------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS -- 58.1%
(AVERAGE MATURITY: 46 DAYS) 399,000
-------------------------------------------------------------------------
TOTAL INVESTMENTS -- 98.9%
(AVERAGE MATURITY: 33 DAYS)
679,650
-------------------------------------------------------------------------
CASH AND OTHER ASSETS, LESS LIABILITIES -- 1.1% 7,221
-------------------------------------------------------------------------
NET ASSETS -- 100% $ 686,871
</TABLE>
SEE ACCOMPANYING NOTES TO PORTFOLIOS OF INVESTMENTS.
18
<PAGE> 21
ZURICH TAX-FREE MONEY FUND
PORTFOLIO OF INVESTMENTS
July 31, 1998 (value in thousands)
<TABLE>
<CAPTION>
(A) VARIABLE RATE DEMAND SECURITIES
ARIZONA RATE VALUE
---------------------------------------------------------------------
<S> <C> <C>
Apache County,
Industrial Development Authority 3.55% $10,000
---------------------------------------------------------------------
Maricopa County,
Pollution Control Revenue 3.50% 9,000
CALIFORNIA
---------------------------------------------------------------------
Los Angeles,
Harbor Improvement Corp. 3.75% 11,500
---------------------------------------------------------------------
Statewide Communities
Development Authority,
Multi-Family Revenue 4.70% 5,000
DISTRICT OF COLUMBIA
---------------------------------------------------------------------
American Public
Health Association 3.50% 6,000
---------------------------------------------------------------------
General Obligation 3.80% 5,200
FLORIDA
St. Lucie County,
Pollution Control Revenue 3.70% 2,600
GEORGIA
---------------------------------------------------------------------
Cartersville,
Industrial Development Revenue 3.85% 3,600
---------------------------------------------------------------------
Fulton County
Development Authority 3.55% 7,145
Morehouse College 3.50% 6,695
---------------------------------------------------------------------
Gainesville,
Redevelopment Authority Revenue 3.60% 8,000
ILLINOIS
---------------------------------------------------------------------
Chicago,
Industrial Development Revenue 3.80% 4,000
---------------------------------------------------------------------
Cicero,
Industrial Development Revenue 3.80% 3,130
---------------------------------------------------------------------
Development Finance Authority 3.69% 35,315
---------------------------------------------------------------------
Health Facilities Authority 3.60% 8,285
</TABLE>
19
<PAGE> 22
ZURICH TAX-FREE MONEY FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(value in thousands)
<TABLE>
<CAPTION>
RATE VALUE
<S> <C> <C>
Hillside,
Economic Development Authority 3.65% $ 6,000
McHenry,
Industrial Project Revenue 3.65% 5,500
---------------------------------------------------------------------
Mundelein,
Industrial Development Revenue 3.65% 6,500
---------------------------------------------------------------------
Springfield,
Industrial Development Revenue 3.70% 6,500
---------------------------------------------------------------------
Student Assistance Commission 3.55% 6,500
---------------------------------------------------------------------
Woodridge,
Industrial Development Revenue 3.80% 5,100
---------------------------------------------------------------------
Woodstock,
Industrial Development Revenue 3.70% 5,500
INDIANA
---------------------------------------------------------------------
Health Facility
Financing Authority 3.60% 5,000
---------------------------------------------------------------------
Ossian,
Economic Development Revenue 3.70% 4,000
---------------------------------------------------------------------
Rockport,
Pollution Control Revenue 3.60% 10,000
KANSAS
KANSAS CITY,
---------------------------------------------------------------------
Pollution Control Revenue 3.70% 4,350
KENTUCKY
---------------------------------------------------------------------
Development Finance Authority 3.65% 7,720
---------------------------------------------------------------------
Lexington-Fayette,
Urban County Government Industrial
Building Revenue 3.80% 4,500
---------------------------------------------------------------------
Mayfield,
Multi-City Lease Revenue 3.65% 6,000
LOUISIANA
---------------------------------------------------------------------
Caddo Parish,
Industrial Development Board 3.70% 8,500
</TABLE>
20
<PAGE> 23
<TABLE>
<CAPTION>
MINNESOTA RATE VALUE
---------------------------------------------------------------------
<S> <C> <C>
Minneapolis,
Community Development Agency 4.30% $ 5,000
NEVADA
---------------------------------------------------------------------
Department of Commerce 3.90% 4,650
NEW MEXICO
---------------------------------------------------------------------
Belen,
Industrial Development Revenue 3.70% 4,765
---------------------------------------------------------------------
Farmington,
Pollution Control Revenue 3.50% 6,300
NEW YORK
---------------------------------------------------------------------
Energy Research and Development
Authority 3.65% 4,965
NORTH CAROLINA
---------------------------------------------------------------------
Medical Care Commission,
Retirement Community Revenue 3.55% 5,000
---------------------------------------------------------------------
Wake County,
Industrial Financial Authority 4.25% 3,900
PENNSYLVANIA
---------------------------------------------------------------------
Berks County,
Redevelopment Authority 4.27% 8,000
---------------------------------------------------------------------
Delaware County,
Industrial Development Authority 3.75% 5,700
---------------------------------------------------------------------
Emmaus,
General Authority Revenue 3.60% 8,000
---------------------------------------------------------------------
Philadelphia
Authority for Industrial Development 4.20% 7,670
Industrial Development Authority 3.70% 6,800
---------------------------------------------------------------------
Schuylkill County,
Industrial Development Authority 3.50% 6,200
</TABLE>
21
<PAGE> 24
ZURICH TAX-FREE MONEY FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(value in thousands)
<TABLE>
<CAPTION>
TENNESSEE RATE VALUE
--------------------------------------------------------------------------
<S> <C> <C>
Clarksville,
Public Building Authority 3.55% $ 9,000
--------------------------------------------------------------------------
Maury County,
Industrial Development Board 3.75% 2,500
TEXAS
--------------------------------------------------------------------------
Bexar County,
Housing Finance Corp. 4.42% 5,500
--------------------------------------------------------------------------
Brazos River Authority 3.95% 12,600
--------------------------------------------------------------------------
Harris County,
Health Facilities Development Corp. 3.55% 9,400
--------------------------------------------------------------------------
Trinity River Authority 3.70% 9,200
VIRGINIA
--------------------------------------------------------------------------
Loudoun County,
Industrial Development Authority 3.65% 6,170
WASHINGTON
--------------------------------------------------------------------------
Port of Vancouver 3.55% 8,850
WISCONSIN
Eau Claire,
Solid Waste Disposal Revenue 3.75% 9,000
--------------------------------------------------------------------------
Manitowoc,
Industrial Development Revenue 3.70% 4,300
--------------------------------------------------------------------------
TOTAL VARIABLE RATE DEMAND SECURITIES--45.4% 370,610
(AVERAGE MATURITY: 6 DAYS)
</TABLE>
22
<PAGE> 25
<TABLE>
<CAPTION>
OTHER SECURITIES
--------------------------------------------------------------------------
ALASKA RATE MATURITY VALUE
--------------------------------------------------------------------------
<S> <C> <C> <C>
Valdez,
Marine Terminal Revenue 3.75% - 3.80% 9/14/98 $ 11,300
ARIZONA
--------------------------------------------------------------------------
Salt River Project,
Agricultural Improvement and
Power District 3.55% - 3.65% 9/22/98 - 11/13/98 15,415
FLORIDA
--------------------------------------------------------------------------
Jacksonville,
Electric Authority 3.55% - 3.80% 8/12/98 - 9/17/98 21,950
--------------------------------------------------------------------------
Orlando,
Capital Improvement Revenue 3.55% - 3.80% 8/12/98 - 8/13/98 6,500
--------------------------------------------------------------------------
Palm Beach County,
Health Facilities Authority 3.80% 8/11/98 4,700
--------------------------------------------------------------------------
Sunshine State,
Governmental Financing
Commission 3.60% - 3.80% 8/12/98 - 9/22/98 27,500
GEORGIA
--------------------------------------------------------------------------
Municipal Electric Authority 3.55% - 3.60% 8/13/98 - 9/18/98 14,650
--------------------------------------------------------------------------
Municipal Gas Authority 3.75% 8/17/98 5,000
ILLINOIS
--------------------------------------------------------------------------
Decatur,
Water Revenue 4.25% 8/20/98 7,700
--------------------------------------------------------------------------
Development Finance
Authority 4.05% 2/1/99 4,615
--------------------------------------------------------------------------
Educational Facilities
Authority 3.60% - 3.65% 8/12/98 - 10/20/98 15,260
--------------------------------------------------------------------------
Health Facilities Authority 3.80% 8/14/98 8,000
</TABLE>
23
<PAGE> 26
ZURICH TAX-FREE MONEY FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(value in thousands)
<TABLE>
<CAPTION>
INDIANA RATE MATURITY VALUE
--------------------------------------------------------------------------
<S> <C> <C> <C>
Jasper County,
Pollution Control Revenue 3.60% - 3.65% 10/20/98 - 11/13/98 $ 31,450
--------------------------------------------------------------------------
Sullivan,
Pollution Control Revenue 3.60% - 3.75% 9/14/98 - 11/13/98 13,765
KANSAS
--------------------------------------------------------------------------
Burlington,
Pollution Control Revenue 3.60% - 3.75% 8/13/98 - 10/20/98 15,365
KENTUCKY
--------------------------------------------------------------------------
Danville,
Multi-City Lease Revenue 3.55% - 3.70% 8/13/98 - 10/14/98 13,170
--------------------------------------------------------------------------
Pendleton County,
Multi-County Lease Revenue 3.60% - 3.75% 8/12/98 - 9/22/98 14,540
MARYLAND
--------------------------------------------------------------------------
Anne Arundel County,
Port Facilities Revenue 3.55% - 3.70% 8/13/98 - 11/10/98 25,220
MISSOURI
Independence,
Water Utility Revenue 3.60% 9/22/98 10,050
NEBRASKA
--------------------------------------------------------------------------
Omaha, Public Power District 3.75% 9/11/98 5,000
--------------------------------------------------------------------------
Public Power District 3.70% 9/14/98 6,000
NEW YORK
--------------------------------------------------------------------------
Long Island Power Authority 3.70% 9/9/98 5,000
--------------------------------------------------------------------------
Power Authority of New York 3.60% 10/14/98 9,500
OHIO
--------------------------------------------------------------------------
Air Quality Development
Authority 3.60% 11/10/98 3,000
--------------------------------------------------------------------------
Water Development Authority 3.70% 8/11/98 6,550
</TABLE>
24
<PAGE> 27
<TABLE>
<CAPTION>
OKLAHOMA RATE MATURITY VALUE
<S> <C> <C> <C>
Oklahoma County, Industrial
Authority 4.30% 9/1/98 $ 7,400
PENNSYLVANIA
Delaware County,
Industrial Development Authority 3.60% 9/23/98 7,300
TEXAS
Dallas, Area Rapid Transit 3.65% -3.75% 8/13/98 - 9/15/98 16,000
- ---------------------------------------------------------------------------------------
Harris County, Health Facilities
Development Corp. 4.20% 8/19/98 - 8/20/98 15,000
- ---------------------------------------------------------------------------------------
Houston, Water and Sewer System 3.70% - 3.75% 8/12/98 - 9/17/98 15,230
- ---------------------------------------------------------------------------------------
Municipal Power Agency 3.60% - 3.70% 8/12/98 - 10/22/98 25,700
- ---------------------------------------------------------------------------------------
Public Finance Authority 3.60% 10/19/98 3,600
- ---------------------------------------------------------------------------------------
San Antonio,
Electric and Gas Systems 3.65% 8/14/98 7,600
Water Systems Notes 3.75% 9/15/98 9,000
- ---------------------------------------------------------------------------------------
Tax and Revenue Anticipation Notes 3.69% 8/31/98 11,008
UTAH
General Obligation 3.75% 9/11/98 7,500
<CAPTION>
VIRGINIA
<S> <C> <C> <C>
Chesterfield County, Industrial
Development Authority 3.55% - 3.70% 8/13/98 - 11/10/98 13,650
</TABLE>
--
25
<PAGE> 28
ZURICH TAX-FREE MONEY FUND PORTFOLIO OF INVESTMENTS, CONTINUED
(value in thousands)
<TABLE>
<CAPTION>
WISCONSIN RATE MATURITY VALUE
--------------------------------------------------------------------------
<S> <C> <C> <C>
Health and Education
Facilities Authority Revenue 4.25% 8/20/98 $ 4,000
--------------------------------------------------------------------------
TOTAL OTHER SECURITIES -- 54.5%
(AVERAGE MATURITY: 47 DAYS) 444,188
--------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.9%
(AVERAGE MATURITY: 29 DAYS) 814,798
--------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES -- .1% 1,096
--------------------------------------------------------------------------
NET ASSETS -- 100% $ 815,894
</TABLE>
SEE ACCOMPANYING NOTES TO PORTFOLIOS OF INVESTMENTS.
26
<PAGE> 29
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,
1998. The dates shown represent the demand date or the next interest rate
change date. Securities in the Zurich Tax-Free 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, 1998, the value of illiquid securities was
$59,981,000 in the Zurich Money Market Fund, which represented 1.3% of net
assets.
(c) Repurchase agreements are fully collateralized by U.S. Government
securities. All collateral is held at the Funds' custodian bank, Investors
Fiduciary 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.
27
<PAGE> 30
REPORT OF
INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES We have audited the accompanying statement of
AND SHAREHOLDERS assets and liabilities, including the portfolios
ZURICH MONEY FUNDS of investments, of Zurich Money Market Fund,
Zurich Government Money Fund and Zurich Tax-Free
Money Fund, comprising Zurich Money Funds, as of
July 31, 1998, 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 1994. 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,
1998, 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.
28
<PAGE> 31
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
Money Funds at July 31, 1998, 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 1994, in
conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Chicago, Illinois
September 17, 1998
29
<PAGE> 32
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1998 (in thousands)
<TABLE>
<CAPTION>
ASSETS MONEY MARKET GOVERNMENT TAX-FREE
--------------------------------------------------------------------
<S> <C> <C> <C>
Investments, at amortized
cost:
Short-term securities $4,365,212 280,650 814,798
--------------------------------------------------------------------
Repurchase agreements 100,000 399,000 --
--------------------------------------------------------------------
Cash 25,326 4,127 --
--------------------------------------------------------------------
Receivable for:
Interest 12,812 4,411 4,029
--------------------------------------------------------------------
Fund shares sold 55,932 1,177 2,023
--------------------------------------------------------------------
TOTAL ASSETS 4,559,282 689,365 820,850
LIABILITIES AND NET ASSETS
--------------------------------------------------------------------
Cash overdraft -- -- 1,454
--------------------------------------------------------------------
Payable for:
Dividends 4,469 676 527
--------------------------------------------------------------------
Fund shares redeemed 13,385 1,458 2,564
--------------------------------------------------------------------
Management fee 1,042 156 158
--------------------------------------------------------------------
Custodian and transfer agent
fees and related expenses 1,224 101 141
--------------------------------------------------------------------
Trustees' fees and other 535 103 112
--------------------------------------------------------------------
TOTAL LIABILITIES 20,655 2,494 4,956
--------------------------------------------------------------------
NET ASSETS APPLICABLE TO
SHARES OUTSTANDING $4,538,627 686,871 815,894
THE PRICING OF SHARES
--------------------------------------------------------------------
Shares outstanding 4,538,627 686,871 815,894
--------------------------------------------------------------------
Net asset value and redemption
price per share $1.00 1.00 1.00
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30
<PAGE> 33
STATEMENT OF OPERATIONS
Year ended July 31, 1998 (in thousands)
<TABLE>
<CAPTION>
NET INVESTMENT INCOME MONEY MARKET GOVERNMENT TAX-FREE
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Interest income $256,988 37,988 30,083
--------------------------------------------------------------------
Expenses:
Management fee 12,086 1,815 2,156
--------------------------------------------------------------------
Custodian and transfer agent
fees and related expenses 8,646 871 520
--------------------------------------------------------------------
Reports to shareholders 431 69 65
--------------------------------------------------------------------
Registration costs 91 80 80
--------------------------------------------------------------------
Professional fees 98 16 19
--------------------------------------------------------------------
Trustees' fees and other 101 24 29
--------------------------------------------------------------------
Total expenses 21,453 2,875 2,869
--------------------------------------------------------------------
Net investment income $235,535 35,113 27,214
</TABLE>
31
<PAGE> 34
ZURICH MONEY FUNDS FINANCIAL STATEMENTS, CONTINUED
Years ended July 31, 1998 and 1997 (in thousands)
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 year
----------------------------------------------------------------
END OF YEAR
</TABLE>
32
<PAGE> 35
<TABLE>
<CAPTION>
MONEY MARKET GOVERNMENT TAX-FREE
- ------------------------------------------------------------------------
1998 1997 1998 1997 1998 1997
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 235,535 223,327 35,113 36,194 27,214 25,635
- ------------------------------------------------------------------------
(235,535) (223,327) (35,113) (36,194) (27,214) (25,635)
- ------------------------------------------------------------------------
7,670,002 6,067,490 646,450 704,736 851,664 861,149
- ------------------------------------------------------------------------
227,005 215,732 33,991 34,766 26,435 25,063
- ------------------------------------------------------------------------
7,897,007 6,283,222 680,441 739,502 878,099 886,212
- ------------------------------------------------------------------------
(7,720,315) (6,147,062) (664,709) (740,404) (833,520) (843,915)
- ------------------------------------------------------------------------
176,692 136,160 15,732 (902) 44,579 42,297
4,361,935 4,225,775 671,139 672,041 771,315 729,018
- ------------------------------------------------------------------------
$ 4,538,627 4,361,935 686,871 671,139 815,894 771,315
</TABLE>
33
<PAGE> 36
NOTES TO
FINANCIAL STATEMENTS
1. DESCRIPTION OF THE FUNDS
Zurich Money Funds (the Trust) is an open-end management investment company
organized as a business trust under the laws of Massachusetts currently offering
three investment funds ("Funds"). Zurich Money Market Fund invests primarily in
short-term high quality obligations of major banks and corporations. Zurich
Government Money Fund invests exclusively in obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities and repurchase agreements
thereon. Zurich Tax-Free Money Fund invests in short-term high quality municipal
securities.
2. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION. Investments are stated at amortized cost, which
approximates market value. In the event that a deviation of 1/2 of 1% or more
exists between a Fund's $1.00 per share net asset value, calculated at amortized
cost, and the net asset value calculated by reference to market-based values, or
if there is any other deviation that the Board of Trustees believes would result
in a material dilution to shareholders or purchasers, the Board of Trustees will
promptly consider what action should be initiated.
INVESTMENT TRANSACTIONS AND INTEREST INCOME. Investment transactions are
accounted for on the trade date (date the order to buy or sell is executed).
Interest income is recorded on the accrual basis and includes amortization of
premium and discount on investments.
EXPENSES. Expenses arising in connection with a Fund are allocated to that Fund.
Other Trust expenses are allocated among the Funds in proportion to their
relative net assets.
FUND SHARE VALUATION AND DIVIDENDS TO SHAREHOLDERS. Fund shares are sold and
redeemed on a continuous basis at net asset value. On each day that the New York
Stock Exchange is open for trading, each Fund determines its net asset value per
share (NAV) by dividing the total value of the Fund's investments and other
assets, less liabilities, by the number of Fund shares outstanding. The NAV is
determined at 11:00 a.m., 1:00 p.m. and 3:00 p.m. Central time for Zurich Money
Market Fund and Zurich Government Money Fund and at 11:00 a.m. and 3:00 p.m.
Central time for Zurich Tax-Free Money Fund. Each Fund declares a daily
dividend, equal to its net investment income for that day, payable monthly. Net
investment income consists of all
34
<PAGE> 37
interest income plus (minus) all realized gains (losses) on portfolio
securities, minus all expenses of the Fund.
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, each Fund paid no federal income taxes and no federal
income tax provision was required.
3. TRANSACTIONS WITH AFFILIATES
MANAGEMENT AGREEMENT. The Funds have a management agreement with Scudder Kemper
Investments, Inc. (Scudder Kemper) and pay a monthly investment management fee
of 1/12 of the annual rate of .50% of the first $215 million of combined average
daily net assets declining to .25% of combined average daily net assets in
excess of $800 million. During the year ended July 31, 1998, the Funds incurred
management fees of $16,057,000.
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
$6,375,000 for the year ended July 31, 1998.
OFFICERS AND TRUSTEES. Certain officers or trustees of the Trust are also
officers or directors of Scudder Kemper. During the year ended July 31, 1998,
the Trust made no payments to its officers and incurred trustees' fees of
$70,000 to independent trustees.
35
<PAGE> 38
FINANCIAL HIGHLIGHTS
ZURICH MONEY MARKET FUND
<TABLE>
<CAPTION>
PER SHARE OPERATING PERFORMANCE
YEAR ENDED JULY 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $1.00 1.00 1.00 1.00 1.00
-------------------------------------------------------------------------------------
Net investment income .05 .05 .05 .05 .03
-------------------------------------------------------------------------------------
Less dividends
declared .05 .05 .05 .05 .03
-------------------------------------------------------------------------------------
Net asset value, end
of year $1.00 1.00 1.00 1.00 1.00
-------------------------------------------------------------------------------------
TOTAL RETURN 5.38% 5.27 5.34 5.34 3.20
RATIOS TO AVERAGE NET ASSETS
-------------------------------------------------------------------------------------
Expenses .48% .45 .50 .52 .52
-------------------------------------------------------------------------------------
Net investment income 5.24% 5.14 5.20 5.19 3.14
-------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets at end of
year (in thousands) $4,538,627 4,361,935 4,225,775 4,025,098 4,148,789
</TABLE>
Note: Zurich Money Market Fund's total return for the year ended July 31, 1995
includes the effect of a capital contribution from the investment manager.
Without the capital contribution, the total return would have been 4.62%.
36
<PAGE> 39
ZURICH GOVERNMENT MONEY FUND
<TABLE>
<CAPTION>
PER SHARE OPERATING PERFORMANCE
YEAR ENDED JULY 31,
----------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------------------
Net investment income .05 .05 .05 .05 .03
----------------------------------------------------------------------------
Less dividends
declared .05 .05 .05 .05 .03
----------------------------------------------------------------------------
Net asset value, end
of year $1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------------------
TOTAL RETURN 5.33% 5.26 5.34 5.36 3.20
RATIOS TO AVERAGE NET ASSETS
Expenses .43% .44 .46 .46 .47
----------------------------------------------------------------------------
Net investment income 5.20% 5.13 5.20 5.21 3.15
SUPPLEMENTAL DATA
Net assets at end of
year (in thousands) $686,871 671,139 672,041 603,601 707,368
</TABLE>
37
<PAGE> 40
FINANCIAL HIGHLIGHTS, CONTINUED
ZURICH TAX-FREE MONEY FUND
<TABLE>
<CAPTION>
PER SHARE OPERATING PERFORMANCE
YEAR ENDED JULY 31,
----------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------------------
Net investment income .03 .03 .03 .03 .02
----------------------------------------------------------------------------
Less dividends
declared .03 .03 .03 .03 .02
----------------------------------------------------------------------------
Net asset value, end
of year $1.00 1.00 1.00 1.00 1.00
----------------------------------------------------------------------------
TOTAL RETURN 3.46% 3.39 3.44 3.53 2.33
RATIOS TO AVERAGE NET ASSETS
Expenses .36% .37 .39 .40 .41
----------------------------------------------------------------------------
Net investment income 3.39% 3.33 3.38 3.46 2.30
SUPPLEMENTAL DATA
Net assets at end of
year (in thousands) $815,894 771,315 729,018 760,143 792,131
</TABLE>
38
<PAGE> 41
TAX INFORMATION
All of the dividends from Zurich Money Market Fund and Zurich 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 Tax-Free Money Fund for the taxable year ended
July 31, 1998, 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 1-888-987-4241.
39
<PAGE> 42
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<PAGE> 43
TRUSTEES AND OFFICERS
TRUSTEES OFFICERS
DANIEL PIERCE MARK S. CASADY
Chairman and Trustee President
DAVID W. BELIN PHILIP J. COLLORA
Trustee Vice President and
Secretary
LEWIS A. BURNHAM
Trustee JERARD K. HARTMAN
Vice President
DONALD L. DUNAWAY
Trustee THOMAS W. LITTAUER
Vice President
ROBERT B. HOFFMAN
Trustee ANN M. MCCREARY
Vice President
DONALD R. JONES
Trustee ROBERT C. PECK, JR.
Vice President
SHIRLEY D. PETERSON
Director KATHRYN L. QUIRK
Vice President
WILLIAM P. SOMMERS
Trustee FRANK J. RACHWALSKI, JR.
Vice President
EDMOND D. VILLANI
Trustee LINDA J. WONDRACK
Vice President
JOHN R. HEBBLE
Treasurer
MAUREEN E. KANE
Assistant Secretary
CAROLINE PEARSON
Assistant Secretary
ELIZABETH C. WERTH
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
- --------------------------------------------------------------------------------
CUSTODIAN AND TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
801 Pennsylvania
Kansas City, MO 64105
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, IL 60606
This report must be preceded
or accompanied by a Zurich Money
Funds prospectus.
[RECYCLED LOGO]
Printed in the U.S.A. on recycled paper.
ZMF-2 (9/98) 1055260 [ZURICH LOGO]
