<PAGE>
(ICON)
Cash
Accumulation
Trust
Liquid Assets Fund
ANNUAL
REPORT
Sept. 30, 1999
(LOGO)
<PAGE>
A Message from the Fund's President November 18, 1999
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(PHOTO)
Dear Shareholder,
Liquid Assets Fund--one of two series of Cash Accumulation Trust--provided a
competitive yield and a stable $1.00 net asset value during the 12-month
reporting period that ended on September 30, 1999. On that date, its seven-day
current yield was 5.04%, which was above the 4.66% for the average comparable
money market fund tracked by IBC Financial Data.
The following report takes a closer look at developments in the money markets
during our fiscal year, and explains how the Fund was positioned accordingly.
One integrated and expanded team
I would like to take this opportunity to tell you about some changes we've made
to our Fixed Income Group. Earlier in the year, we combined our fixed-income
areas into one integrated group that will manage money for Prudential's
investors and policyholders. This group now manages approximately $135 billion
in assets, making it one of the three largest fixed-income money managers in the
country. Our expanded depth, breadth, and scale also allow us to tap the best
talent and share investment ideas, proprietary research, and analytical tools.
To utilize these resources effectively, we recently organized the group into
teams, each specializing in a different sector of the fixed-income market. The
one team that was already in place is the Money Markets Sector team, which has
been headed by Joseph Tully since 1995. This team will continue to be
responsible for the day-to-day management of your Liquid Assets Fund. Many of
the investment professionals who supported the management of the Fund in the
past, including Michelle Errico Gonnella, will work together to share their
knowledge and strive to enhance performance.
Thank you for your continued confidence in Prudential mutual funds. I firmly
believe that the group's combined resources and our new team approach will
make us a powerhouse in the world of fixed-income investing across all sectors.
Sincerely,
John R. Strangfeld
President
Cash Accumulation Trust--Liquid Assets Fund
<PAGE>
Performance Review
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(PHOTOS)
Joseph Tully, team leader of the Money Markets Sector team, and Michelle
Errico Gonnella, a team member.
Investment Goals and Style
Liquid Assets Fund--one of two series of Cash Accumulation Trust--seeks current
income to the extent consistent with preservation of capital and liquidity. The
Fund is a diversified portfolio of high-quality, U.S. dollar-denominated money
market securities issued by the U.S. government and its agencies, major
corporations, and commercial banks of the United States and foreign countries.
Maturities can range from one day to 13 months. We purchase securities rated
in one of the two highest rating categories by at least two major independent
rating agencies or, if not rated, deemed to be of equivalent quality by our
credit research staff. There can be no assurance that the Fund will achieve
its investment objective.
Fiscal 1999's volatile beginning created good buying opportunities
Concern about a global financial crisis that had spread beyond Asia dominated
the first few months of our fiscal year, which began on October 1, 1998.
Market sentiment turned increasingly negative, and some investors purchased the
safest securities--such as U.S. Treasury bills--and avoided assets with greater
credit risk. The growing demand for Treasury bills drove their prices higher
and their yields lower, causing Treasury bills to become overvalued relative to
other money market securities.
The Fund took advantage of this anomaly by purchasing money market securities
of highly rated banks and corporations at relatively attractive yields.
However, we avoided one-year securities and instead purchased shorter-term
money market securities that were a more prudent buy during this period of
increased market volatility.
Fed repeatedly cut rates to reassure financial markets
To help calm global financial markets and stimulate U.S. economic growth, the
Federal Reserve cut the Federal funds rate (the rate U.S. banks charge each
other for overnight loans) three times by a quarter of a percentage point,
leaving the rate at 4.75% in the autumn of 1998. The changes in monetary policy
were so effective
Money market fund yield comparison
(GRAPH)
<PAGE>
that the flight-to-quality trend began to reverse. That is, some investors
began to sell Treasury bills and purchase riskier assets as the autumn
continued. Although money market yields generally lingered at low levels in
early December 1998, we were able to purchase securities with attractive yields
as companies, anxious to borrow money over year end, were willing to pay higher
interest rates to do so.
Strong U.S. economic growth fuels rate-hike fears
As stability returned to international financial markets in 1999, many
investors worried that the Fed would soon boost the Federal funds rate to
prevent the surprisingly powerful U.S. economy from overheating and sparking
higher inflation. In anticipation of a short-term rate hike, investors began to
push money market yields higher and their prices lower. We viewed this rise in
yields as a buying opportunity because we expected U.S. monetary policy to
remain unchanged. After all, inflation was still subdued and the global
economy was weak. We bought one-year securities in January and February that
significantly extended the Fund's WAM.
Performance at a Glance
Fund Facts As of 9/30/99
<TABLE>
<CAPTION>
7-Day Net Asset Weighted Avg. Net Assets
Current Yld. Value (NAV) Mat. (WAM) (Millions)
<S> <C> <C> <C> <C>
Liquid Assets Fund 5.04% $1.00 56 Days $394.6
IBC Financial Data
Money Fund Avg.
(General Purpose*) 4.66% $1.00 62 Days N/A
</TABLE>
Note: Yields will fluctuate from time to time, and past performance is not
indicative of future results. An investment in the Fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund.
*IBC Financial Data reports a seven-day current yield, NAV, and WAM on
Tuesdays. This is the data of all funds in the International Business
Communications (IBC) Financial Data Money Fund Average (General Purpose)
category as of September 28, 1999.
Sidelined during brief dip in money market yields
Meanwhile, we avoided purchasing securities that would mature between mid-April
and early May 1999 when the federal government was scheduled to retire billions
of dollars in Treasury bills. Investors scurried about during that time in
search of alternative investments, which left money market yields hovering at
low levels. Fortunately, we anticipated this development and did not have to
reinvest significant amounts of cash with yields at such unattractive levels.
Looking back, we also should have purchased fewer one-year securities in
January and February 1999 because money market yields rose sharply in the
summer. Investors drove yields higher as it became clear the Fed would boost
the Federal funds rate to curb U.S. economic growth. On June 30, 1999, the Fed
increased the key rate by a quarter of a percentage point to 5.00%. That move
was followed by a second of the same magnitude on August 24, 1999 that left the
Federal funds rate at 5.25%. This time the Fed also hiked its discount rate
(the rate it charges member banks to borrow at the discount window) to 4.75%
from 4.50%.
Summer buying opportunities enhanced Fund's performance
As money market yields climbed in the summer of 1999, we purchased
floating-rate securities of banks and corporations whose coupons
1
<PAGE>
Review Cont'd.
- -------------------------------------------------------------------------------
reset periodically based on the London Interbank Offered Rate or LIBOR. (LIBOR
is a widely quoted interbank lending rate.) These securities helped lengthen
the Fund's WAM and provided some protection against any further increase in
money market yields since their coupons will reset to higher levels if yields
continue to climb. We also bought securities of banks and corporations that pay
fixed interest rates and mature in February or March 2000. Our purchases
represented good value because both floating- and fixed-rate money market
securities of banks and corporations had cheapened relative to comparable
Treasuries. We believe this development marked the resumption of the
flight-to-quality trend. In this case, however, the trend is being driven by
overblown concerns about potential computer problems that may occur at the
beginning of the year 2000.
Weighted average maturity compared to the average money market fund
(GRAH)
Looking Ahead
We are closely managing the Fund's investment flows through the end of 1999.
This will enable us to maximize shareholder returns and provide for shareholder
liquidity needs in late December 1999 when we believe money market trading
volume will be quite low.
As for U.S. monetary policy, the Fed increased the Federal funds rate by a
quarter of a percentage point to 5.50% on November 16, 1999. The discount rate
was raised to 5.00% from 4.75%. This short-term rate hike took back the last
quarter-point rate cut of three made in 1998 during the global financial
crisis.
The Fed noted that its latest rate increase, along with the two rate
hikes in the summer of 1999 and the general rise in yields on fixed-income
securities in 1999, should "markedly diminish" the risk of inflation going
forward. We believe the U.S. central bank will leave monetary policy unchanged
for the remainder of this calendar year.
2
<PAGE>
Portfolio of Investments as CASH ACCUMULATION TRUST
of September 30, 1999 LIQUID ASSETS FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Bank Notes--8.1%
American Express Centurion Bank
$ 4,000 5.51%, 10/1/99(b) $ 4,000,000
FCC National Bank
5,000 5.12%, 2/23/00 4,999,330
2,000 5.14%, 3/22/00 1,999,682
First Union National Bank
3,000 5.29%, 10/23/99(b) 3,000,000
4,000 5.35%, 6/14/00(b) 4,000,000
5,000 5.41%, 6/2/00(b) 5,000,000
Harris Trust & Savings
4,899 5.05%, 2/14/00 4,898,472
U.S. Bank NA
4,000 5.13%, 6/26/00(b) 3,998,552
------------
31,896,036
- ------------------------------------------------------------
Certificates of Deposit - Domestic--1.3%
Chase Manhattan Bank
5,000 5.37%, 5/22/00 4,997,513
- ------------------------------------------------------------
Certificates of Deposit - Eurodollar--1.0%
National Westminster Bank PLC
4,000 5.43%, 12/21/99 3,999,934
- ------------------------------------------------------------
Certificates of Deposit - Yankee--14.9%
ABN-Amro Bank N.A.
5,000 4.92%, 12/23/99 4,999,451
Bayerische Landesbank Girozentrale
5,000 4.89%, 12/20/99 4,999,313
Credit Communal De Belgique S.A.
2,000 5.32%, 10/12/99 2,000,000
2,000 5.32%, 10/13/99 2,000,000
Deutsche Bank
5,000 5.06%, 1/18/00 4,999,569
5,000 4.98%, 2/2/00 4,999,508
3,000 5.60%, 6/14/00 2,998,987
Societe Generale
13,000 5.38%, 10/4/99 13,000,000
Toronto Dominion Bank
$5,000 5.02%, 2/4/00 $ 4,999,501
2,000 5.06%, 2/10/00 1,999,721
2,000 5.13%, 2/17/00 2,000,000
UBS AG
5,000 5.16%, 2/28/00 4,999,209
5,000 5.29%, 5/18/00 4,998,182
------------
58,993,441
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Commercial Paper--39.9%
Alliance & Leicester
1,000 5.37%, 12/22/99 987,768
Allianz of America Finance
2,500 5.35%, 10/20/99 2,492,941
American General Finance Corp.
2,000 5.32%, 10/25/99 1,992,907
AON Corp.
8,604 5.39%, 10/26/99 8,571,795
Banc One Financial Corp.
3,207 5.36%, 11/10/99 3,187,900
Bank of Scotland Treasury Services
2,000 5.36%, 12/23/99 1,975,284
BankAmerica Corp.
3,000 4.94%, 11/22/99 2,978,593
Barclays Bank
295 5.30%, 10/18/99 294,262
Barton Capital Corp.
1,475 5.38%, 10/8/99 1,473,457
2,009 5.37%, 10/15/99 2,004,804
1,803 5.43%, 10/22/99 1,797,289
1,000 5.40%, 11/12/99 993,700
Blue Ridge Asset Funding Corp.
2,802 5.37%, 10/7/99 2,799,492
1,850 5.40%, 10/29/99 1,842,230
Countrywide Home Loan, Inc.
1,000 5.40%, 10/29/99 995,800
4,000 5.41%, 10/29/99 3,983,169
Daimler-Chrysler N.A. Holding Corp.
6,000 5.32%, 10/7/99 5,994,680
4,000 5.76%, 3/20/00 3,890,560
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3
<PAGE>
Portfolio of Investments as CASH ACCUMULATION TRUST
of September 30, 1999 LIQUID ASSETS FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Commercial Paper (cont'd.)
Delaware Funding Corp.
$1,599 5.40%, 10/25/99 $ 1,593,244
3,696 5.40%, 11/10/99 3,673,824
Deutsche Bank
2,000 5.31%, 10/8/99 1,997,935
Enterprise Funding Corp.
6,000 5.39%, 11/10/99 5,964,067
1,642 5.40%, 11/17/99 1,630,424
Falcon Asset Securitization Corp.
2,450 5.42%, 10/7/99 2,447,787
1,437 5.43%, 10/20/99 1,432,882
Finova Capital Corp.
6,726 5.38%, 10/13/99 6,713,938
12,530 5.38%, 10/14/99 12,505,657
Ford Motor Credit Corp.
2,100 5.35%, 10/14/99 2,095,943
FPL Group Capital, Inc.
1,665 5.37%, 10/22/99 1,659,784
1,416 5.32%, 10/27/99 1,410,560
General Electric Capital Corp.
2,400 5.35%, 10/18/99 2,393,937
5,000 5.28%, 2/14/00 4,900,267
10,000 5.78%, 2/18/00 9,775,222
General Motors Acceptance Corp.
5,000 5.77%, 3/3/00 4,876,586
GTE Corp.
5,000 5.40%, 10/29/99 4,979,000
Hertz Corp.
1,673 5.38%, 10/7/99 1,671,500
ING America Insurance Holdings, Inc.
2,000 5.23%, 10/25/99 1,993,027
John Hancock Capital Corp.
1,000 5.35%, 10/18/99 997,474
Market Street Funding Corp.
2,000 5.37%, 10/20/99 1,994,332
Old Line Funding Corp.
5,000 5.37%, 10/21/99 4,985,083
Safeco Corp.
$6,000 5.45%, 11/4/99 $ 5,969,117
Salomon Smith Barney Inc.
5,000 5.59%, 2/3/00 4,902,951
3,000 5.73%, 2/10/00 2,936,970
Shell Finance Corp.
4,178 5.31%, 10/15/99 4,169,372
Skandinaviska Enskilda Banken
1,000 5.31%, 10/15/99 997,935
Thunder Bay Funding, Inc.
2,600 5.39%, 11/4/99 2,586,765
Triple A One Funding Corp.
3,000 5.40%, 11/12/99 2,981,100
Windmill Funding Corp.
1,000 5.37%, 10/22/99 996,867
Wood Street Funding Corp
2,000 5.39%, 10/25/99 1,992,813
------------
157,482,994
- ------------------------------------------------------------
Loan Participations--3.5%
GTE Funding, Inc.
13,853 5.38%, 10/12/99(c) 13,853,000
- ------------------------------------------------------------
U. S. Treasury Obligations - Non-Discount--2.3%
Federal Home Loan Bank
5,000 4.95%, 2/17/00 4,998,981
4,000 5.04%, 2/25/00 3,998,744
------------
8,997,725
- ------------------------------------------------------------
Other Corporate Obligations--30.7%
Abbey National Treasury Services PLC
8,000 5.24%, 10/22/99(b) 7,996,182
Associates Corp. of North America
10,000 5.31%, 6/29/00(b) 9,994,798
Bank One Corp.
4,000 5.39%, 11/9/99(b) 4,000,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4
<PAGE>
Portfolio of Investments as CASH ACCUMULATION TRUST
of September 30, 1999 LIQUID ASSETS FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Other Corporate Obligations (cont'd.)
Bishops Gate Residential Mortgage
Trust
$3,000 5.57%, 11/22/99(b) $ 3,000,000
Citicorp Medium Term Note Bank Entry
3,000 5.69%, 10/25/99(b) 3,000,776
1,000 5.41%, 8/2/00(b) 1,000,000
Comerica, Inc.
6,000 5.38%, 9/1/00(b) 5,996,128
Corporate Asset Funding Co., Inc.
6,000 5.47%, 3/20/00(b) 5,999,439
Daimler-Chrysler N.A. Holding Corp.
4,000 5.26%, 7/6/00(b) 3,996,025
Ford Motor Credit Medium Term Note
9,000 5.50%, 12/30/99(b) 8,991,186
7,000 5.44%, 8/18/00(b) 6,995,010
General Electric Capital Corp.
Medium Term Note
1,000 5.39%, 5/12/00(b) 1,000,000
John Hancock Mutual Life
Insurance(c)
2,000 5.39%, 10/14/99 2,000,000
Key Bank N. A.
3,000 5.42%, 6/14/00(b) 2,998,756
1,500 5.36%, 7/17/00(b) 1,500,878
Morgan Stanley Group, Inc.
5,000 5.51%, 10/1/99(b) 5,000,000
Restructured Asset Certificates
7,000 5.48%, 1/21/00(b) 7,000,000
8,000 5.46%, 9/6/00(c) 8,000,000
Security Life Of Denver
$ 1,000 5.38%, 10/12/99(b)(c) $ 1,000,000
Strategic Money Market Trust
9,000 5.30%, 10/6/99(b) 9,000,000
4,000 5.57%, 3/15/00(b) 4,000,000
Short Term Repack Asset Trust
6,000 5.48%, 8/18/00(b)(c) 6,000,000
Travelers Insurance Co.
1,000 5.34%, 7/6/00(b)(c) 1,000,000
U.S. Bank NA
3,000 5.29%, 6/21/00(b) 2,998,506
1,000 5.43%, 9/20/00(b) 999,875
Wells Fargo & Co.
1,578 5.33%, 10/28/99(b) 1,577,829
Westpac Banking Corp.
6,000 5.51%, 11/4/99(b) 5,995,500
------------
121,040,888
- ------------------------------------------------------------
Total Investments--101.7%
(amortized cost $401,261,531(a)) 401,261,531
Liabilities in excess of other
assets--(1.7%) (6,649,770)
------------
Net Assets--100% $394,611,761
------------
------------
</TABLE>
(a) The cost of securities for federal income tax purposes is substantially the
same as for financial reporting purposes.
(b) Variable rate instrument. The maturity date presented for these instruments
is the later of the next date on which the security can be redeemed at par
or the next date on which the rate of interest is adjusted.
(c) Private placement restricted as to resale and does not have a readily
available market; the aggregate cost of such securities is $31,853,000. The
aggregate value $31,853,000 is approximately 8.1% of net assets.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5
<PAGE>
CASH ACCUMULATION TRUST
LIQUID ASSETS FUND
Portfolio of Investments as of September 30, 1999
- ------------------------------------------------------------
The industry classification of portfolio holdings and liabilities in excess of
other assets shown as a percentage of net assets as of September 30, 1999
was as follows:
Commercial Banks.................................... 43.2%
Asset Backed Securities............................. 14.3
Motor Vehicles...................................... 9.7
Business Credit (Finance)........................... 9.4
Telephone & Communications.......................... 4.8
Personal Credit Institutions........................ 3.4
Securities Brokers & Dealers........................ 3.3
Bank Holding Companies.............................. 2.9
Federal Credit Agencies............................. 2.3
Accidental & Health Insurance....................... 2.2
Mortgage Banks...................................... 2.0
Fire Insurance...................................... 1.8
Petroleum Refining.................................. 1.0
Life Insurance...................................... 1.0
Automobile Renting & Lease.......................... 0.4
-----
101.7
Liabilities in excess of other assets............... (1.7)
-----
100.0%
-----
-----
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6
<PAGE>
CASH ACCUMULATION TRUST
Statement of Assets and Liabilities LIQUID ASSETS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets September 30, 1999
<S> <C>
Investments, at amortized cost which approximates market value......................................... $401,261,531
Receivable for Fund shares sold........................................................................ 11,509,316
Interest receivable.................................................................................... 2,628,604
Prepaid expenses and other assets...................................................................... 7,513
------------------
Total assets........................................................................................ 415,406,964
------------------
Liabilities
Payable for Fund shares reacquired..................................................................... 14,124,786
Payable for investments purchased...................................................................... 5,995,500
Dividends payable...................................................................................... 382,846
Management fee payable................................................................................. 162,947
Accrued expenses....................................................................................... 129,124
------------------
Total liabilities................................................................................... 20,795,203
------------------
Net Assets............................................................................................. $394,611,761
------------------
------------------
Net assets were comprised of:
Shares of beneficial interest, at $.00001 par value................................................. $ 3,946
Paid-in capital in excess of par.................................................................... 394,607,815
------------------
Net assets, September 30, 1999......................................................................... $394,611,761
------------------
------------------
Net asset value, offering and redemption price per share
($394,611,761 / 394,611,761 shares of beneficial interest issued and outstanding)................... $1.00
------------------
------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7
<PAGE>
CASH ACCUMULATION TRUST
LIQUID ASSETS FUND
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
September 30,
Net Investment Income 1999
<S> <C>
Income
Interest................................... $20,116,805
-------------
Expenses
Management fee............................. 285,000
Transfer agent's fees and expenses......... 250,000
Registration fees.......................... 235,000
Custodian's fees and expenses.............. 83,000
Reports to shareholders.................... 80,000
Legal fees and expenses.................... 69,000
Audit fee and expenses..................... 27,000
Trustees' fees............................. 10,500
Miscellaneous.............................. 8,422
-------------
Total expenses.......................... 1,047,922
-------------
Net investment income......................... 19,068,883
-------------
Realized Gain on Investments
Net realized gain on investment
transactions............................... 10,652
-------------
Net Increase in Net Assets
Resulting from Operations..................... $19,079,535
-------------
-------------
</TABLE>
CASH ACCUMULATION TRUST
LIQUID ASSETS FUND
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
December 22,
Year Ended 1997(a)
Increase (Decrease) September 30, September 30,
in Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment income..... $ 19,068,883 $ 16,036,653
Net realized gain on
investment
transactions........... 10,652 7,050
--------------- ---------------
Net increase in net assets
resulting from
operations............. 19,079,535 16,043,703
--------------- ---------------
Dividends and distributions
(Note 1).................. (19,079,535) (16,043,703)
--------------- ---------------
Fund share transactions (at
$1 per share)
Net proceeds from shares
sold................... 4,047,261,454 3,011,683,905(b)
Net asset value of shares
issued
in reinvestment of
dividends
and distributions...... 18,772,289 15,377,615
Cost of shares
reacquired............. (4,113,366,470) (2,585,117,032)
--------------- ---------------
Net increase (decrease) in
net assets from Fund
share transactions..... (47,332,727) 441,944,488
--------------- ---------------
Total increase
(decrease)............. (47,332,727) 441,944,488
Net Assets
Beginning of period.......... 441,944,488 --
--------------- ---------------
End of period................ $ 394,611,761 $ 441,944,488
--------------- ---------------
--------------- ---------------
(a) Commencement of investment operations.
(b) Includes $295,683,132 that was transferred from the National
Market Fund (see Note 4).
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 8
<PAGE>
CASH ACCUMULATION TRUST
Notes to Financial Statements LIQUID ASSETS FUND
- --------------------------------------------------------------------------------
Cash Accumulation Trust (the 'Trust') is registered under the Investment Company
Act of 1940 as an open-end, diversified management investment company. The Trust
consists of two series - the National Money Market Fund and the Liquid Assets
Fund (the 'Fund'). The Fund commenced investment operations on December 22,
1997, when $295,683,132 was transferred from the National Money Market Fund to
the Fund. The investment objective of the Fund is current income to the extent
consistent with the preservation of capital and liquidity. The Fund invests
primarily in a portfolio of U.S. Government obligations, financial institution
obligations and other high quality money market instruments maturing in thirteen
months or less whose ratings are within the two highest ratings categories by a
nationally recognized statistical rating organization or, if not rated, are of
comparable quality. The ability of the issuers of the securities held by the
Fund to meet its obligations may be affected by economic developments in a
specific industry or region.
- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the
Trust and the Fund in the preparation of its financial statements.
Securities Valuations: Portfolio securities are valued at amortized cost, which
approximates market value. The amortized cost method involves valuing a security
at its cost on the date of purchase and thereafter assuming a constant
amortization to maturity of any discount or premium.
Securities Transactions and Net Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses on sales of investments
are calculated on the identified cost basis. Interest income is recorded on the
accrual basis. Expenses are recorded on the accrual basis which may require the
use of certain estimates by management.
Federal Income Taxes: For Federal income tax purposes, each fund in the Trust is
treated as a separate tax paying entity. It is the intent of the Fund to
continue to meet the requirements of the Internal Revenue Code applicable to
regulated investment companies and to distribute all of its taxable net income
to its shareholders. Therefore, no federal income tax provision is required.
Dividends and Distributions: The Fund declares all of its net investment income
and net realized short-term capital gains or losses, if any, as dividends daily
to its shareholders of record at the time of such declaration. Net investment
income for dividend purposes includes interest accrued or discount earned less
amortization of premium and the estimated expenses applicable to the dividend
period. Payment of dividends is made monthly. The Fund does not expect to
realize long-term capital gains or losses.
- ------------------------------------------------------------
Note 2. Agreements
The Trust has a management agreement with Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PIFM has entered into a subadvisory agreement with The Prudential
Investment Corporation ('PIC'), doing business as Prudential Investments ('PI',
the Subadviser or the investment adviser). PI furnishes investment advisory
services in connection with the management of the Trust. PIFM pays for the cost
of the subadviser's services, the compensation of officers of the Trust,
occupancy and certain clerical and bookkeeping costs of the Trust. The Trust
bears all other costs and expenses.
Under the management agreement, PIFM is reimbursed by the Fund for its direct
administrative costs and expenses, excluding overhead and profit incurred in
providing services to the Fund up to a maximum of .39% of the average daily net
assets. For the year ended September 30, 1999, the management costs were .07% of
the Fund's average daily net assets.
The Trust has a distribution agreement with Prudential Investment Management
Services LLC ('PIMS'). No distribution or service fees are paid to PIMS as
distributor of the Fund.
PIFM, PIC and PIMS are wholly owned subsidiaries of The Prudential Insurance
Company of America.
- ------------------------------------------------------------
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent. During the year ended September 30, 1999,
the Fund incurred fees of approximately $216,000 for the services of PMFS. As of
September 30, 1999 $22,000 of such fees were due to PMFS. Transfer agent fees
and expenses in the Statement of Operations include certain out-of-pocket
expenses paid to nonaffiliates.
- ------------------------------------------------------------
Note 4. Capital
On December 22, 1997, $295,683,132 was transferred from the National Money
Market Fund to the Liquid Assets Fund. The transfer established the Liquid
Assets Fund as the primary money sweep fund for certain investment advisory
clients of Prudential Securities enrolled in Prudential Securities' automatic
investment procedures (Autosweep) program.
- --------------------------------------------------------------------------------
9
<PAGE>
CASH ACCUMULATION TRUST
Financial Highlights LIQUID ASSETS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 22,
1997(a)
Year Ended Through
September 30, September 30,
1999 1998
<S> <C> <C>
------------- -------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................................................... $ 1.00 $ 1.00
------------- -------------
Net investment income and net realized gains........................................... .05 .04
Dividends and distributions to shareholders............................................ (.05) (.04)
------------- -------------
Net asset value, end of period......................................................... $ 1.00 $ 1.00
------------- -------------
------------- -------------
TOTAL RETURN(b):....................................................................... 5.05% 4.52%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................................................ $ 394,612 $ 441,944
Average net assets (000)............................................................... $ 386,144 $ 374,141
Ratios to average net assets:
Expenses............................................................................ .27% .21%(c)
Net investment income............................................................... 4.94% 5.53%(c)
</TABLE>
- ---------------
(a) Commencement of investment operations.
(b) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each period reported and includes reinvestment
of dividends and distributions. Total returns for less than a full year are
not annualized.
(c) Annualized.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 10
<PAGE>
CASH ACCUMULATION TRUST
Report of Independent Accountants LIQUID ASSETS FUND
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
Cash Accumulation Trust--Liquid Assets Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Cash Accumulation Trust--Liquid
Assets Fund (the 'Fund', one of the portfolios constituting Cash Accumulation
Trust) at September 30, 1999, the results of its operations for the year then
ended, and the changes in its net assets and the financial highlights for the
year then ended and for the period December 22, 1997 (commencement of
operations) through September 30, 1998, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as 'financial statements') are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at September 30, 1999 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
November 15, 1999
- --------------------------------------------------------------------------------
11
<PAGE>
Getting the Most from Your Prudential Mutual Fund
How many times have you read these reports--or other financial materials--and
stumbled across a word that you don't understand?
Many shareholders have run into the same problem. We'd like to help. So we'll
use this space from time to time to explain some of the words you might have
read, but not understood. And if you have a favorite word that no one can
explain to your satisfaction, please write to us.
Basis Point: 1/100th of 1%. For example, one-half of one percent is 50 basis
points.
Collateralized Mortgage Obligations (CMOs): Mortgage-backed bonds that separate
mortgage pools into different maturity classes, called tranches. These
instruments are sensitive to changes in interest rates and homeowner
refinancing activity. They are subject to prepayment and maturity extension
risk.
Derivatives: Securities that derive their value from other securities. The rate
of return of these financial instruments rises and falls--sometimes very
suddenly--in response to changes in some specific interest rate, currency,
stock, or other variable.
Discount Rate: The interest rate charged by the Federal Reserve on loans to
member banks.
Federal Funds Rate: The interest rate charged by one bank to another on
overnight loans.
Futures Contract: An agreement to purchase or sell a specific amount of a
commodity or financial instrument at a set price at a specified date in the
future.
Leverage: The use of borrowed assets to enhance return. The expectation is that
the interest rate charged on borrowed funds will be lower than the return on
the investment. While leverage can increase profits, it can also magnify
losses.
Liquidity: The ease with which a financial instrument (or product) can be
bought or sold (converted into cash) in the financial markets.
Price/Earnings Ratio: The price of a share of stock divided by the earnings per
share for a 12-month period.
Option: An agreement to purchase or sell something, such as shares of stock, by
a certain time for a specified price. An option need not be exercised.
Spread: The difference between two values; often used to describe the
difference between "bid" and "asked" prices of a security, or between the
yields of two similar maturity bonds.
Yankee Bond: A bond sold by a foreign company or government in the U.S. market
and denominated in U.S. dollars.
<PAGE>
Getting The Most From Your Prudential Mutual Fund
When you invest through Prudential Mutual Funds, you receive financial advice
from a Prudential Securities Financial Advisor or Prudential/Pruco Securities
registered representative. Your advisor or representative can provide you with
the following services:
- -------------------------------------------------------------------------------
There's No Reward Without Risk; but Is This Risk Worth It?
Your financial advisor or registered representative can help you match the
reward you seek with the risk you can tolerate. Risk can be difficult to
gauge--sometimes even the simplest investments bear surprising risks. The
educated investor knows that markets seldom move in just one direction. There
are times when a market sector or asset class will lose value or provide little
in the way of total return. Managing your own expectations is easier with help
from someone who under-stands the markets and who knows you!
- -------------------------------------------------------------------------------
Keeping Up With the Joneses
A financial advisor or registered representative can help you wade through the
numerous available mutual funds to find the ones that fit your own individual
investment profile and risk tolerance. While the newspapers and popular
magazines are full of advice about investing, they are aimed at generic groups
of people or representative individuals--not at you personally. Your financial
advisor or registered representative will review your investment objectives
with you. This means you can make financial decisions based on the assets and
liabilities in your current portfolio and your risk tolerance--not just based
on the current investment fad.
- -------------------------------------------------------------------------------
Buy Low, Sell High
Buying at the top of a market cycle and selling at the bottom are among the
most common investor mistakes. But, sometimes it's difficult to hold on to an
investment when it's losing value every month. Your financial advisor or
registered representative can answer questions when you're confused or worried
about your investment, and should remind you that you're investing for the
long haul.
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Cusip
147541502
Trustees
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Robert E. LaBlanc
Robin B. Smith
Stephen Stoneburn
John R. Strangfeld
Nancy H. Teeters
Clay T. Whitehead
Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Robert C. Rosselot, Secretary
Stephen M. Ungerman, Assistant Treasurer
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street, Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza, Newark, NJ 07102-3777
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street, Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive, North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005, New Brunswick, NJ 08906
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas, New York, NY 10036
Legal Counsel
Sullivan & Cromwell
125 Broad Street, New York, NY 10004
Prudential Investments is a unit of The Prudential Insurance Company of
America, 751 Broad Street, Newark, NJ 07102.
The views expressed in this report and information about the Fund's portfolio
holdings are for the period covered by this report and are subject to change
thereafter.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
MF175E
<PAGE>
(ICON)
Cash
Accumulation
Trust
- ----------------------
National Money
Market Fund
ANNUAL
REPORT
Sept. 30, 1999
(LOGO)
<PAGE>
A Message from the Fund's President November 18, 1999
(PHOTO)
Dear Shareholder,
National Money Market Fund--one of two series of Cash Accumulation Trust--
provided a competitive yield and a stable $1.00 net asset value during the 12-
month reporting period that ended on September 30, 1999. On that date, its
seven-day current yield was 4.71%, which was above the 4.66% for the average
comparable money market fund tracked by IBC Financial Data.
The following report takes a closer look at developments in the money markets
during our fiscal year, and explains how the Fund was positioned accordingly.
One integrated and expanded team
I would like to take this opportunity to tell you about some changes we've
made to our Fixed Income Group. Earlier in the year, we combined our fixed-
income areas into one integrated group that will manage money for Prudential's
investors and policyholders. This group now manages approximately $135 billion
in assets, making it one of the three largest fixed-income money managers in
the country. Our expanded depth, breadth, and scale also allow us to tap the
best talent and share investment ideas, proprietary research, and analytical
tools.
To utilize these resources effectively, we recently organized the group into
teams, each specializing in a different sector of the fixed-income market. The
one team that was already in place is the Money Markets Sector team, which has
been headed by Joseph Tully since 1995. This team will continue to be
responsible for the day-to-day management of your National Money Market Fund.
Many of the investment professionals who supported the management of the Fund
in the past, including Robert Browne, will work together to share their
knowledge and strive to enhance performance.
Thank you for your continued confidence in Prudential mutual funds. I firmly
believe that the group's combined resources and our new team approach will
make us a powerhouse in the world of fixed-income investing across all
sectors.
Sincerely,
John R. Strangfeld
President
Cash Accumulation Trust--National Money Market Fund
<PAGE>
Performance Review
(PHOTO) (PHOTO)
Joseph Tully, team leader of the Money Markets Sector team, and Robert Browne,
a team member.
Investment Goals and Style
The National Money Market Fund--one of two series of Cash Accumulation Trust--
seeks current income to the extent consistent with preservation of capital and
liquidity. The Fund is a diversified portfolio of high-quality, U.S. dollar-
denominated money market securities issued by the U.S. government and its
agencies, major corporations, and commercial banks of the United States and
foreign countries. Maturities can range from one day to 13 months. We purchase
securities rated in one of the two highest rating categories by at least two
major independent rating agencies or, if not rated, deemed to be of equivalent
quality by our credit research staff. There can be no assurance that the Fund
will achieve its investment objective.
Fiscal 1999's volatile beginning created good buying opportunities
Concern about a global financial crisis that had spread beyond Asia dominated
the first few months of our fiscal year, which began on October 1, 1998.
Market sentiment turned increasingly negative, and some investors purchased
the safest securities--such as U.S. Treasury bills--and avoided assets with
greater credit risk. The growing demand for Treasury bills drove their prices
higher and their yields lower, causing Treasury bills to become overvalued
relative to other money market securities. The Fund took advantage of this
anomaly by purchasing money market securities of highly rated banks and
corporations at relatively attractive yields. However, we avoided one-year
securities and instead purchased shorter-term money market securities that
were a more prudent buy during this period of increased market volatility.
Fed repeatedly cut rates to reassure financial markets
To help calm global financial markets and stimulate U.S. economic growth, the
Federal Reserve cut the Federal funds rate (the rate U.S. banks charge each
other for overnight loans) three times by a quarter of a percentage point,
leaving the rate at 4.75% in the autumn of 1998. The changes in monetary
policy were so effective that the flight-to-quality trend began to reverse.
That is, some
Money market fund yield comparison
(GRAPH)
<PAGE>
investors began to sell Treasury bills and purchase riskier assets as the
autumn continued. Although money market yields generally lingered at low
levels in early December 1998, we were able to purchase securities with
attractive yields as companies, anxious to borrow money over year end, were
willing to pay higher interest rates to do so.
Strong U.S. economic growth fuels rate-hike fears
As stability returned to international financial markets in 1999, many
investors worried that the Fed would soon boost the Federal funds rate to
prevent the surprisingly powerful U.S. economy from overheating and sparking
higher inflation. In anticipation of a short-term rate hike, investors began
to push money market yields higher and their prices lower. We viewed this rise
in yields as a buying opportunity because we expected U.S. monetary policy to
remain unchanged. After all, inflation was still subdued and the global
economy was weak. We bought one-year securities in January and February that
significantly extended the Fund's weighted average maturity (WAM). The WAM
takes into account the maturity of each security held in a portfolio. It is
the measurement tool that determines a portfolio's sensitivity to fluctuations
in interest rates.
Sidelined during brief dip in money market yields
Meanwhile, we avoided purchasing securities that would mature between mid-
April and early May 1999 when the federal government was scheduled to retire
billions of dollars of Treasury bills. Investors scurried about during that
time in search of alternative investments, which left money market yields
hovering at low levels. Fortunately, we anticipated this development and did
not have to reinvest significant amounts of cash with yields at such
unattractive levels. Looking back, we also should have purchased fewer
one-year securities in January and February 1999 because money market yields
climbed sharply later in the summer. Investors drove yields higher as it
became clear the Fed would boost the Federal funds rate to curb U.S. economic
growth. On June 30, 1999, the Fed increased the key rate by a quarter of a
percentage point to 5.00%. That move was followed by a second of the same
magnitude on August 24, 1999 that left the Federal funds rate at 5.25%. This
time the Fed also hiked its discount rate (the rate it charges member banks to
borrow at the discount window) to 4.75% from 4.50%.
Performance at a Glance
<TABLE>
<CAPTION>
Fund Facts As of 9/30/99
7-Day Net Asset Weighted Avg. Net Assets
Current Yld. Value (NAV) Mat. (WAM) (Millions)
<S> <C> <C> <C> <C>
National Money Market Fund 4.71% $1.00 65 Days $403.6
IBC Financial Data Money
Fund Avg. (General Purpose*) 4.66% $1.00 62 Days N/A
</TABLE>
Note: Yields will fluctuate from time to time, and past performance is not
indicative of future results. An investment in the Fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the Fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in
the Fund.
*IBC Financial Data reports a seven-day current yield, NAV, and WAM on
Tuesdays. This is the data of all funds in the International Business
Communications (IBC) Financial Data Money Fund Average (General Purpose)
category as of September 28, 1999.
- -------------------------------------------------------------------------------
1
<PAGE>
Review Cont'd.
Summer bargains enhanced Fund's performance
As money market yields climbed in the summer of 1999, we purchased floating-
rate securities of banks and corporations whose coupons reset periodically
based on the London Interbank Offered Rate or LIBOR. (LIBOR is a widely quoted
interbank lending rate.) These securities provided some protection against any
further increase in money market yields since their coupons will reset to
higher levels if yields continue to climb. Our purchases also represented good
value because floating-rate money market securities of banks and corporations
had cheapened relative to comparable Treasuries. We believe this development
marked the resumption of the flight-to-quality trend. In this case, however,
the trend is being driven by overblown concerns about potential computer
problems that may occur at the beginning of the year 2000.
Looking Ahead
We are closely managing the Fund's investment flows through the end of 1999.
This will enable us to maximize shareholder returns and provide for
shareholder liquidity needs in late December 1999 when we believe money market
trading volume will be quite low.
As for U.S. monetary policy, the Fed increased the Federal funds
rate by a quarter of a percentage point to 5.50% on November
16, 1999. The discount rate was raised to 5.00% from 4.75%. This
short-term rate hike took back the last quarter-point rate cut of three made
in 1998 during the global financial crisis.
The Fed noted that its latest rate increase, along with the two rate hikes in
the summer of 1999 and the general rise in yields on fixed-income securities
in 1999, should "markedly diminish" the risk of inflation going forward. We
believe the U.S. central bank will decide to leave monetary policy unchanged
for the remainder of this calendar year.
Weighted average maturity compared to the average money market fund
(GRAPH)
- -------------------------------------------------------------------------------
2
<PAGE>
CASH ACCUMULATION TRUST
Portfolio of Investments as
of September 30, 1999 NATIONAL MONEY MARKET FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Bank Notes--16.7%
American Express Centurion Bank
$2,000 5.3525%, 10/8/99(b) $ 2,000,000
2,000 5.51%, 10/12/99(b) 2,000,000
Bank One Corp.
4,000 5.52%, 11/22/99(b) 4,000,000
Banc One Financial Corp.
5,000 5.36%, 11/10/99 4,970,222
Comerica Bank N.A.
1,000 5.37875%, 10/1/99(b) 999,355
5,000 5.28%, 10/13/99(b) 4,997,752
First Union National Bank
4,000 5.4125%, 11/17/99(b) 4,000,000
11,900 5.4875%, 11/17/99(b) 11,900,000
Key Bank N.A.
1,000 5.36%, 10/18/99(b) 1,000,585
3,000 5.4225%, 12/14/99(b) 2,998,756
1,000 5.435%, 12/24/99(b) 999,640
National City Bank of Cleveland
4,700 5.57%, 10/8/99(b) 4,706,611
7,000 5.39%, 10/14/00(b) 6,996,663
Northern Trust Co.
8,000 5.10%, 2/22/00 7,998,784
U.S. Bank, N.A.
8,000 5.3225%, 10/8/99(b) 7,999,970
------------
67,568,338
- ------------------------------------------------------------
Certificates Of Deposit - Domestic--2.1%
Chase Manhattan Bank (USA), DEL
6,000 5.365%, 5/22/00 5,997,783
U.S. Bank, N.A.
2,500 5.40%, 7/19/00 2,500,741
------------
8,498,524
- ------------------------------------------------------------
Certificates Of Deposit - Yankee--13.2%
Bank Brussels Lambert
10,000 5.45%, 12/15/99 10,000,259
Credit Communal De Belgique SA
$4,000 5.315%, 10/13/99 $ 4,000,000
Deutsche Bank
6,000 4.98%, 2/2/00 5,999,410
National Westminster Bank, PLC
8,800 5.0475%, 2/9/00 8,798,858
Ontario Province Canada
1,000 6.125%, 6/28/00 1,003,000
Royal Bank of Canada
3,500 4.97%, 2/4/00 3,499,534
Toronto Dominion Bank
13,000 5.02%, 2/4/00 12,998,702
UBS AG
7,100 5.18%, 2/28/00 7,099,157
------------
53,398,920
- ------------------------------------------------------------
Commercial Paper--46.2%
Aegon Funding Corp.
4,300 5.34%, 10/28/99 4,282,779
7,000 5.17%, 11/18/99 6,951,747
1,130 5.17%, 11/23/99 1,121,399
Allianz of America Finance Corp.
14,900 5.36%, 12/1/99 14,764,675
5,200 5.35%, 12/3/99 5,151,315
Associates First Capital BV
10,000 5.33%, 11/23/99 9,921,531
Centric Capital Corp.
10,000 5.41%, 10/29/99 9,957,922
4,200 5.40%, 12/29/99 4,143,930
Colonial Pipeline Co.
2,321 5.33%, 11/9/99 2,307,598
Countrywide Home Loan, Inc.
6,000 5.41%, 10/29/99 5,974,753
Cregem N.A., Inc.
2,700 5.36%, 12/22/99 2,667,036
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3
<PAGE>
CASH ACCUMULATION TRUST
Portfolio of Investments as
of September 30, 1999 NATIONAL MONEY MARKET FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Commercial Paper (cont'd.)
DaimlerChrysler N.A. Holdings, Inc.
$9,000 5.2555%, 10/6/99(b) $ 8,991,057
Den Denske Corp.
3,500 5.33%, 10/25/99 3,487,563
Eastman Kodak Co.
2,000 5.05%, 10/7/99 1,998,317
Enterprise Funding Corp.
3,200 5.48%, 10/15/99 3,193,180
3,900 5.25%, 10/20/99 3,889,194
GTE Corp.
5,000 5.40%, 10/29/99 4,979,000
Hertz Corp.
7,200 5.38%, 11/4/99 7,163,416
ING America Insurance Holdings, Inc.
2,000 5.29%, 11/12/99 1,987,657
Market Street Funding Corp.
3,770 5.50%, 10/12/99 3,763,664
National Rural Utilities
Cooperative Fin. Co.
10,000 5.35%, 11/16/99 9,931,639
Old Line Funding Corp.
4,200 5.40%, 10/27/99 4,183,620
3,500 5.40%, 11/4/99 3,482,150
5,900 5.39%, 11/5/99 5,869,082
Royal Bank Of Scotland
8,500 5.35%, 10/27/99 8,467,157
Santander Finance (Delaware), Inc.
3,800 5.35%, 11/23/99 3,770,070
UBS Finance, (Delaware) LLC
8,949 5.65%, 10/1/99 8,949,000
Vodafone Airtouch PLC
5,000 5.40%, 11/29/99 4,955,750
Wal Mart Stores Inc.
10,000 5.35%, 11/22/99 9,922,722
Wood Street Funding Corp.
$10,700 5.42%, 11/9/99 $ 10,637,173
9,500 5.40%, 11/23/99 9,424,475
------------
186,290,571
- ------------------------------------------------------------
Other Corporate Obligations--21.7%
Associates Corporation N.A.
9,700 5.309%, 10/29/99(b) 9,694,954
BankAmerica Corp.
8,000 5.7625%, 11/1/99(b) 8,002,972
3,000 5.9025%, 12/1/99(b) 3,005,108
2,500 5.91%, 12/15/99(b) 2,504,346
Bishops Gate Residental Mortgage
Trust
3,000 5.57063%, 10/1/99(b) 3,000,000
Caterpillar Financial Services Corp.
1,000 6.16%, 11/1/99 1,000,854
Chrysler Financial Co., LLC
2,000 6.375%, 1/28/00 2,008,345
Citicorp
1,000 5.405%, 10/4/99(b) 1,000,000
Commercial Credit Co.
900 6.00%, 4/15/00 901,350
9,098 5.75%, 7/15/00(b) 9,098,568
First Union Corp.
3,500 6.60%, 6/15/00 3,523,169
Ford Motor Credit Co.
9,000 5.435%, 11/18/99(b) 8,993,585
3,800 5.49875%, 12/30/99(b) 3,796,279
International Lease Finance Corp.
3,000 6.20%, 5/1/00 3,009,341
John Hancock Mutual Life Insurance
2,000 5.39%, 2/13/00(b)
(cost $2,000,000; date purchased
1/12/99)(a) 2,000,000
National Rural Utilities
Cooperative Fin. Co.
3,000 5.32%, 10/28/99(b) 3,000,203
Paccar Financial Corp.
3,000 6.08%, 7/12/00 3,007,475
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4
<PAGE>
CASH ACCUMULATION TRUST
Portfolio of Investments as
of September 30, 1999 NATIONAL MONEY MARKET FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Other Corporate Obligations (cont'd.)
Restructured Asset Securities
Enhanced Return 98 MM12-3
$8,000 5.48%, 10/12/99(b) $ 8,000,000
Strategic Money Market Trust 1998-A
8,000 5.61%, 12/15/99(b) 8,000,000
Strategic Money Market Trust 1999-B
4,000 5.57%, 12/15/99(b) 4,000,000
------------
87,546,549
- ------------------------------------------------------------
Total Investments--99.9%
(amortized cost $403,302,902(c)) 403,302,902
Other assets in excess of
liabilities--0.1% 262,810
------------
Net Assets--100% 403,565,712
------------
------------
</TABLE>
- ---------------
(a) Private placement restricted as to resale and does not have a readily
available market; the aggregate cost of such securities is $2,000,000. The
aggregate value ($2,000,000) is approximately 0.5% of net assets.
(b) Variable rate instrument. The maturity date presented for these instruments
is the later of the next date on which the security can be redeemed at par
or the next date on which the rate of interest is adjusted.
(c) The cost for federal income tax purposes is substantially the same as for
financial reporting purposes.
The industry classification of portfolio holdings and other assets in excess of
liabilities shown as a percentage of net assets as of September 30, 1999 was as
follows:
Commercial Banks 42.8%
Asset-Backed Securities 22.8
Life Insurance 6.6
Personal Credit Institutions 5.4
Short-Term Business Credit 5.1
Utilities 3.2
Telecommunications 2.5
Retail 2.4
Automobiles 2.2
Auto Rental & Leasing 1.8
Bank Holding Companies-Domestic 1.8
Mortgage Banking 1.5
Equipment Rental & Leasing 0.7
Oil Pipelines 0.6
Photo Equipment 0.5
Other assets in excess of liabilities 0.1
-----
100.0%
-----
-----
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5
<PAGE>
CASH ACCUMULATION TRUST
Statement of Assets and Liabilities NATIONAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets September 30, 1999
<S> <C>
Investments, at amortized cost which approximates market value......................................... $403,302,902
Cash................................................................................................... 50,294
Receivable for Fund shares sold........................................................................ 9,154,861
Interest receivable.................................................................................... 2,634,986
Prepaid expenses and other assets...................................................................... 80,730
------------------
Total assets........................................................................................ 415,223,773
------------------
Liabilities
Payable for Fund shares reacquired..................................................................... 11,033,167
Dividends payable...................................................................................... 364,950
Management fee payable................................................................................. 128,095
Accrued expenses....................................................................................... 99,004
Distribution fee payable............................................................................... 32,845
------------------
Total liabilities................................................................................... 11,658,061
------------------
Net Assets............................................................................................. $403,565,712
------------------
------------------
Net assets were comprised of:
Shares of beneficial interest, at $.00001 par value................................................. $ 4,036
Paid-in capital in excess of par.................................................................... 403,561,676
------------------
Net assets, September 30, 1999......................................................................... $403,565,712
------------------
------------------
Net asset value, offering price and redemption price per share
($403,565,712 / 403,565,712 shares of beneficial interest issued and outstanding)................... $1.00
------------------
------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6
<PAGE>
CASH ACCUMULATION TRUST
NATIONAL MONEY MARKET FUND
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
Net Investment Income September 30, 1999
<S> <C>
Income
Interest.............................. $ 21,583,266
------------------
Expenses
Management fee........................ 1,608,899
Distribution fee...................... 412,538
Transfer agent's fees and expenses.... 257,000
Registration fees..................... 231,000
Reports to shareholders............... 104,000
Custodian's fees and expenses......... 90,000
Legal fees and expenses............... 31,000
Audit fees and expenses............... 27,000
Trustees' fees........................ 12,000
Miscellaneous......................... 14,065
------------------
Total expenses..................... 2,787,502
------------------
Net investment income.................... 18,795,764
------------------
Realized Gain on Investments
Net realized gain on investment
transactions.......................... 21,374
------------------
Net Increase in Net Assets
Resulting from Operations................ $ 18,817,138
------------------
------------------
</TABLE>
CASH ACCUMULATION TRUST
NATIONAL MONEY MARKET FUND
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Decrease in Year Ended September 30,
Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment income........ $ 18,795,764 $ 27,769,453
Net realized gain on
investment transactions... 21,374 --
--------------- ---------------
Net increase in net assets
resulting from
operations................ 18,817,138 27,769,453
--------------- ---------------
Dividends and distributions
to shareholders (Note
1)........................ (18,817,138) (27,769,453)
--------------- ---------------
Fund share transactions (at
$1 per share)
Net proceeds from shares
sold...................... 3,676,378,022 5,056,612,846
Net asset value of shares
issued in reinvestment of
dividends and
distributions............. 18,433,584 24,443,399
Cost of shares reacquired.... (3,798,533,694) (5,275,771,195)(a)
--------------- ---------------
Net decrease in net assets
from Fund share
transactions.............. (103,722,088) (194,714,950)
--------------- ---------------
Total decrease............... (103,722,088) (194,714,950)
Net Assets
Beginning of year............ 507,287,800 702,002,750
--------------- ---------------
End of year.................. $ 403,565,712 $ 507,287,800
--------------- ---------------
--------------- ---------------
- ---------------
(a) Includes $295,683,132 that was transferred into Liquid Assets
Fund (see Note 4).
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7
<PAGE>
CASH ACCUMULATION TRUST
Notes to Financial Statements NATIONAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
Cash Accumulation Trust (the 'Trust') is registered under the Investment Company
Act of 1940 as an open-end, diversified management investment company. The Trust
consists of two series--the National Money Market Fund (the 'Fund') and the
Liquid Assets Fund. The investment objective of the Fund is current income to
the extent consistent with the preservation of capital and liquidity. The Fund
invests primarily in a portfolio of U.S. Government obligations, financial
institution obligations and other high quality money market instruments maturing
in thirteen months or less whose ratings are within the two highest ratings
categories by a nationally recognized statistical rating organization or, if not
rated, are of comparable quality. The ability of the issuers of the securities
held by the Fund to meet their obligations may be affected by economic
developments in a specific industry or region.
- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the
Trust and the Fund in the preparation of its financial statements.
Securities Valuations: Portfolio securities are valued at amortized cost, which
approximates market value. The amortized cost method involves valuing a security
at its cost on the date of purchase and thereafter assuming a constant
amortization to maturity of any discount or premium.
Securities Transactions and Net Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses on sales of investments
are calculated on the identified cost basis. Interest income is recorded on the
accrual basis. Expenses are recorded on the accrual basis, which may require the
use of certain estimates by management.
Federal Income Taxes: For federal income tax purposes, each fund in the Trust is
treated as a separate taxpaying entity. It is the intent of the Fund to continue
to meet the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable net income to its
shareholders. Therefore, no federal income tax provision is required.
Dividends and Distributions: The Fund declares all of its net investment income
and net realized short-term capital gains or losses, if any, as dividends daily
to its shareholders of record at the time of such declaration. Net investment
income for dividend purposes includes interest accrued or discount earned less
amortization of premium and the estimated expenses applicable to the dividend
period. The Fund does not expect to realize long-term capital gains or losses.
Note 2. Agreements
The Trust has a management agreement with Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PIFM has entered into a subadvisory agreement with The Prudential
Investment Corporation ('PIC'); PIC furnishes investment advisory services in
connection with the management of the Trust. PIFM pays for the cost of the
subadviser's services, the compensation of officers of the Trust, occupancy and
certain clerical and bookkeeping costs of the Fund. The Trust bears all other
costs and expenses.
The management fee paid PIFM is computed daily and payable monthly, at an annual
rate of .39% of the Fund's average daily net assets up to and including $1
billion, .375% of the next $500 million, .35% of the next $500 million and .325%
of the Fund's average daily net assets in excess of $2 billion.
The Trust has a distribution agreement with Prudential Investment Management
Services LLC ('PIMS'). The Fund compensates PIMS for distributing and servicing
the Fund's shares pursuant to the plan of distribution at an annual rate of .10
of 1% of the average daily net assets of the shares, regardless of expenses
actually incurred by them. The distribution fees are accrued daily and payable
monthly.
PIFM, PIC and PIMS are wholly owned subsidiaries of The Prudential Insurance
Company of America ('Prudential').
- ------------------------------------------------------------
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent and during the year ended September 30,
1999, the Fund incurred fees of approximately $242,000 for the services of PMFS.
As of September 30, 1999, approximately $20,000 of such fees were due to PMFS.
Transfer agent fees and expenses in the Statement of Operations include certain
out-of-pocket expenses paid to nonaffiliates.
- ------------------------------------------------------------
Note 4. Capital
On December 22, 1997, $295,683,132, was transferred from the Fund to the Liquid
Assets Fund. The transfer established the Liquid Assets Fund as the primary
money sweep fund for certain investment advisory clients of Prudential
Securities enrolled in Prudential Securities' automatic investment procedures
(Autosweep) program.
- --------------------------------------------------------------------------------
8
<PAGE>
CASH ACCUMULATION TRUST
Financial Highlights NATIONAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------------------------------
1999 1998 1997 1996
----------- -------- -------- --------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income.............................................. 0.05 0.05 0.05 0.05
Dividends and distributions to shareholders........................ (0.05) (0.05) (0.05) (0.05)
----------- -------- -------- --------
Net asset value, end of year....................................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- -------- -------- --------
----------- -------- -------- --------
TOTAL RETURN(a):................................................... 4.6% 5.2% 5.0% 5.0%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)...................................... $ 403,566 $507,288 $702,003 $652,327
Ratios to average net assets:
Expenses, including distribution fee............................ 0.68% 0.62% 0.65% 0.69%
Expenses, excluding distribution fee............................ 0.58% 0.52% 0.55% 0.59%
Net investment income........................................... 4.56% 5.05% 4.89% 4.86%
<CAPTION>
1995
--------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year................................. $ 1.00
Net investment income.............................................. 0.05
Dividends and distributions to shareholders........................ (0.05)
--------
Net asset value, end of year....................................... $ 1.00
--------
--------
TOTAL RETURN(a):................................................... 5.2%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)...................................... $685,228
Ratios to average net assets:
Expenses, including distribution fee............................ 0.69%
Expenses, excluding distribution fee............................ 0.59%
Net investment income........................................... 5.15%
</TABLE>
- ---------------
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each year reported and includes reinvestment
of dividends and distributions.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 9
<PAGE>
CASH ACCUMULATION TRUST
Report of Independent Accountants NATIONAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
Cash Accumulation Trust
National Money Market Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Cash Accumulation Trust--National
Money Market Fund (the 'Fund', one of the portfolios constituting Cash
Accumulation Trust) at September 30, 1999, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the three years in
the period then ended, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as 'financial statements') are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at September 30, 1999 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above. The
accompanying financial highlights for each of the two years in the period ended
September 30, 1996 were audited by other independent accountants, whose opinion
dated October 23, 1996 was unqualified.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
November 15, 1999
- --------------------------------------------------------------------------------
10
<PAGE>
Getting the Most from Your Prudential Mutual Fund
How many times have you read these reports--or other financial materials--
and stumbled across a word that you don't understand?
Many shareholders have run into the same problem. We'd like to help. So we'll
use this space from time to time to explain some of the words you might have
read, but not understood. And if you have a favorite word that no one can
explain to your satisfaction, please write to us.
Basis Point: 1/100th of 1%. For example, one-half of one percent is 50 basis
points.
Collateralized Mortgage Obligations (CMOs): Mortgage-backed bonds that
separate mortgage pools into different maturity classes, called tranches.
These instruments are sensitive to changes in interest rates and homeowner
refinancing activity. They are subject to prepayment and maturity extension
risk.
Derivatives: Securities that derive their value from other securities. The
rate of return of these financial instruments rises and falls--sometimes very
suddenly--in response to changes in some specific interest rate, currency,
stock, or other variable.
Discount Rate: The interest rate charged by the Federal Reserve on loans to
member banks.
Federal Funds Rate: The interest rate charged by one bank to another on
overnight loans.
Futures Contract: An agreement to purchase or sell a specific amount of a
commodity or financial instrument at a set price at a specified date in the
future.
Leverage: The use of borrowed assets to enhance return. The expectation is
that the interest rate charged on borrowed funds will be lower than the return
on the investment. While leverage can increase profits, it can also magnify
losses.
Liquidity: The ease with which a financial instrument (or product) can be
bought or sold (converted into cash) in the financial markets.
Price/Earnings Ratio: The price of a share of stock divided by the earnings
per share for a 12-month period.
Option: An agreement to purchase or sell something, such as shares of stock,
by a certain time for a specified price. An option need not be exercised.
Spread: The difference between two values; often used to describe the
difference between "bid" and "asked" prices of a security, or between the
yields of two similar maturity bonds.
Yankee Bond: A bond sold by a foreign company or government in the U.S. market
and denominated in U.S. dollars.
<PAGE>
Getting the Most from Your Prudential Mutual Fund
Some mutual fund shareholders won't ever read this--they don't read annual and
semiannual reports. It's quite understandable. These annual and semi-annual
reports are prepared to comply with federal regulations, and are often written
in language that is difficult to understand. So, when most people run into
those particularly daunting sections of these reports, they don't read them.
We think that's a mistake.
At Prudential Mutual Funds, we've made some changes to our report to make it
easier to understand and more pleasant to read. We hope you'll find it
profitable to spend a few minutes familiarizing yourself with your investment.
Here's what you'll find in the report:
Performance at a Glance
Since an investment's performance is often a shareholder's primary concern, we
present performance information in two different formats. You'll find it first
on the "Performance at a Glance" page where we compare the Fund and the
comparable average calculated by Lipper, Inc., a nationally recognized mutual
fund rating agency. We report both the cumulative total returns and the
average annual total returns. The cumulative total return is the total amount
of income and appreciation the Fund has achieved in various time periods. The
average annual total return is an annualized representation of the Fund's
performance. It gives you an idea of how much the Fund has earned in an
average year for a given time period. Under the performance box, you'll see
legends that explain the performance information, whether fees and sales
charges have been included in returns, and the inception dates for the Fund's
share classes.
See the performance comparison charts at the back of the report for more
performance information. Please keep in mind that past performance is not
indicative of future results.
Portfolio Manager's Report
The portfolio manager, who invests your money for you, reports on successful--
and not-so-successful--strategies in this section of your report. Look for
recent purchases and sales here, as well as information about the sectors the
portfolio manager favors, and any changes that are on the drawing board.
Portfolio of Investments
This is where the report begins to appear technical, but it's really just a
listing of each security held at the end of the reporting period, along with
valuations and other information. Please note that sometimes we discuss a
security in the Portfolio Manager's Report that doesn't appear in this listing
because it was sold before the close of the reporting period.
<PAGE>
Statement of Assets and Liabilities
The balance sheet shows the assets (the value of the Fund's holdings),
liabilities (how much the Fund owes), and net assets (the Fund's equity, or
holdings after the Fund pays its debts) as of the end of the reporting period.
It also shows how we calculate the net asset value per share for each class of
shares. The net asset value is reduced by payment of your dividend, capital
gain, or other distribution, but remember that the money or new shares are
being paid or issued to you. The net asset value fluctuates daily, along with
the value of every security in the portfolio.
Statement of Operations
This is the income statement, which details income (mostly interest and
dividends earned) and expenses (including what you pay us to manage your
money). You'll also see capital gains here--both realized and unrealized.
Statement of Changes in Net Assets
This schedule shows how income and expenses translate into changes in net
assets. The Fund is required to pay out the bulk of its income to shareholders
every year, and this statement shows you how we do it--through dividends and
distributions--and how that affects the net assets. This statement also shows
how money from investors flowed into and out of the Fund.
Notes to Financial Statements
This is the kind of technical material that can intimidate readers, but it
does contain useful information. The Notes provide a brief history and
explanation of your Fund's objectives. In addition, they outline how
Prudential Mutual Funds prices securities. The Notes also explain who manages
and distributes the Fund's shares and, more importantly, how much they are
paid for doing so. Finally, the Notes explain how many shares are outstanding
and the number issued and redeemed over the period.
Financial Highlights
This information contains many elements from prior pages, but on a per-share
basis. It is designed to help you understand how the Fund performed, and to
compare this year's performance and expenses to those of prior years.
Independent Auditor's Report
Once a year, an outside auditor looks over our books and certifies that the
information is fairly presented and complies with generally accepted
accounting principles.
Tax Information
This is information which we report annually about how much of your total
return is taxable. Should you have any questions, you may want to consult a
tax adviser.
Performance Comparison
These charts are included in the annual report and are required by the
Securities Exchange Commission. Performance is presented here as a
hypothetical $10,000 investment in the Fund since its inception or for 10
years (whichever is shorter). To help you put that return in context, we are
required to include the performance of an unmanaged, broad-based securities
index as well. The index does not reflect the cost of buying the securities
it contains or the cost of managing a mutual fund. Of course, the index
holdings do not mirror those of the Fund--the index is a broad-based reference
point commonly used by investors to measure how well they are doing. A
definition of the selected index is also provided. Investors cannot invest
directly in an index.
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Cusip
147541106
Trustees
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Robert E. LaBlanc
Robin B. Smith
Stephen Stoneburn
John R. Strangfeld
Nancy H. Teeters
Clay T. Whitehead
Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Robert C. Rosselot, Secretary
Stephen M. Ungerman, Assistant Treasurer
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street, Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza, Newark, NJ 07102-3777
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street, Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive, North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005, New Brunswick, NJ 08906
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas, New York, NY 10036
Legal Counsel
Sullivan & Cromwell
125 Broad Street, New York, NY 10004
Prudential Investments is a unit of The Prudential Insurance Company of
America, 751 Broad Street, Newark, NJ 07102.
The views expressed in this report and information about the Fund's portfolio
holdings are for the period covered by this report and are subject to change
thereafter.
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
MF178E