<PAGE>
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1997
ANNUAL REPORT
October 31, 1997
Waterhouse
Investors Cash
Management
Funds
Three money market portfolios to choose from:
Money Market o U.S. Government o Municipal
[LOGO]
WATERHOUSE
Investors Services
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WATERHOUSE INVESTORS CASH MANAGEMENT FUNDS
Board of Directors and Executive Officers
Directors
George F. Staudter
Director of Koger Equity, Inc.
Independent Financial Consultant
Richard W. Dalrymple
President of Teamwork Mgmt., Inc.
Theodore Rosen
Chairman
U.S. Energy Systems, Inc.
Lawrence J. Toal
Chairman/President/CEO of
Dime Savings Bank of N.Y., FSB
Executive Officers
Richard W. Ingram*
President, Treasurer
and Chief Financial Officer
Christopher J. Kelley*
Vice President and Secretary
* Affiliated person of the Distributor
WATERHOUSE ASSET MANAGEMENT, INC.
Board of Directors and Executive Officers
Directors
Lawrence M. Waterhouse, Jr.
Chairman and
Chief Executive Officer
Waterhouse Investor Services, Inc.
Frank J. Petrilli
President and
Chief Operating Officer
Waterhouse Investor Services, Inc.
Richard H. Neiman
Executive Vice President
General Counsel and Secretary
Waterhouse Investor Services, Inc.
Senior Officers
David A. Hartman
Senior Vice President
Chief Investment Officer
M. Bernard Siegel
Senior Vice President
Chief Financial Officer & Treasurer
Michele R. Teichner
Senior Vice President
Operations & Compliance
Service Providers
Investment Manager
Waterhouse Asset Management, Inc.
100 Wall Street
New York, NY 10005
Administrator &
Shareholder Servicing
Waterhouse Securities, Inc.
100 Wall Street
New York, NY 10005
Customer Service Department
(800) 934-4410
Transfer Agent
Waterhouse National Bank
One North Lexington Avenue
White Plains, NY 10601
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Distributor
Funds Distributor, Inc.
60 State Street
Boston, MA 02109
Independent Auditors
Ernst & Young LLP
787 Seventh Avenue
New York, NY 10019
Legal Counsel
Shereff, Friedman, Hoffman, & Goodman LLP
919 Third Avenue
New York, NY 10022
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WATERHOUSE INVESTORS FAMILY OF FUNDS, INC.
formerly Waterhouse Investors Cash Management Fund, Inc. (A)
Dear Shareholder:
I am pleased to provide you with the Waterhouse Investors Family of Funds (the
"Fund") annual report for the fiscal year ended October 31, 1997.
The Fund is currently comprised of the Waterhouse Investors Cash Management
Funds having three money market portfolios: Money Market, U.S. Government and
Municipal.
During the year, each of the Fund's Portfolios attempted to provide maximum
current income from high quality money market securities while maintaining a
conservative investment portfolio to ensure safety of principal. By the fiscal
year end, assets in the three portfolios increased to a total of $2.46 billion.
Portfolio Results*
For the fiscal year ended October 31, 1997, the Fund's three money market
portfolios had the following annualized returns.**
o The Money Market Portfolio had an annualized return of 4.89%.
o The U.S. Government Portfolio had an annualized return of 4.79%.
o The Municipal Portfolio had an annualized return of 3.01% and a tax
equivalent return of 4.70%.(1)
Over the past year, the economy has continued on a moderate-to-strong growth
path while maintaining a low inflation rate. The recent correction in the global
stock markets appears to have put the Federal Reserve on hold for any near term
increases in short-term interest rates. We anticipate a relatively stable
environment for short-term money market instruments which should bode well for
our shareholders, providing an attractive yield in a low inflation environment.
Thank you for investing in the Fund and for your confidence in us. Waterhouse
Securities was ranked the best discount broker in the July 1997 Wall Street
Journal's SmartMoney magazine.(2) SmartMoney magazine "...went looking for 17
perks everything from free research materials to free check writing - and
Waterhouse had a perfect score".
We look forward to continuing to meet your expanding investment needs in the
years to come.
Sincerely,
/s/ Lawrence M. Waterhouse, Jr.
Lawrence M. Waterhouse, Jr.
Chairman and Chief Executive Officer
Waterhouse Investor Services, Inc.
(A) As of December 18, 1997, Waterhouse Investors Cash Management Fund, Inc.
changed its name to Waterhouse Investors Family of Funds, Inc.
* An investment in the Fund is neither FDIC insured nor guaranteed by the U.S.
Government and is not a deposit or obligation of, or guaranteed by, any bank.
There can be no assurance that a Portfolio of the Fund will be able to maintain
a stable net asset value of $1 per share.
** These returns are based on a constant investment throughout the fiscal year,
include reinvestment of dividends and reflect a net return to the shareholder
after all expenses, inclusive of fee waivers. For the fiscal year ended October
31, 1997, the Investment Manager and its affiliates waived a portion of their
fee for the Money Market, U.S. Government and Municipal Portfolios. Without
these fee waivers in effect, the annualized returns would have been 4.81%, 4.72%
and 2.91%, respectively. The annualized tax equivalent return for the Municipal
Portfolio would have been 4.55%.(1)
(1) Taxable equivalent yield at 36% marginal federal income tax rate.
(2) This rating is based on the best combination of price, products and services
as compared to 21 discount brokerage firms in the SmartMoney Magazine, July 1997
issue.
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Table of Contents
Statements of Assets and Liabilities .................................. 5
Statements of Operations .............................................. 6
Statements of Changes in Net Assets ................................... 7
Financial Highlights .................................................. 8
Notes to Financial Statements ......................................... 9-11
Money Market Portfolio
Schedule of Investments ............................................ 12-16
U.S. Government Portfolio
Schedule of Investments ............................................ 17-18
Municipal Portfolio
Schedule of Investments ............................................ 19-24
Notes to
Schedules of Investments ........................................... 25
Report of
Independent Auditors ............................................... 26
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WATERHOUSE INVESTORS CASH MANAGEMENT FUNDS
Statements of Assets and Liabilities
October 31, 1997
<TABLE>
<CAPTION>
Money Market U.S. Government Municipal
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
Assets
Investments in securities, at value (including
repurchase agreements of $27,972,000,
$73,432,000, and $0, respectively) (Note 2) $ 1,813,994,290 $ 459,968,854 $ 265,440,650
Cash 1,258 3,055,316 4,494
Interest receivable 11,317,609 4,982,310 1,575,575
Other assets 4,007 1,030 687
------------------ ------------------ ------------------
Total Assets 1,825,317,164 468,007,510 267,021,406
Liabilities
Dividends payable to shareholders 244,257 52,951 21,592
Payable for securities purchased 36,007,480 64,980,400 1,197,465
Payable to Investment Manager and
its affiliates (Note 3) 1,147,378 263,108 154,539
Accrued expenses and other liabilities 131,272 25,740 24,114
------------------ ------------------ ------------------
Total Liabilities 37,530,387 65,322,199 1,397,710
------------------ ------------------ ------------------
Net Assets $ 1,787,786,777 $ 402,685,311 $ 265,623,696
================== ================== ==================
Net assets consist of:
Paid-in capital $ 1,787,789,596 $ 402,685,073 $ 265,627,109
Accumulated net realized gains (losses)
from security transactions/distributions
in excess of net realized gains (2,819) 238 (3,413)
------------------ ------------------ ------------------
Net assets, at value $ 1,787,786,777 $ 402,685,311 $ 265,623,696
================== ================== ==================
Shares outstanding ($.0001 par value common
stock, 60 billion, 20 billion, and 20
billion shares authorized, respectively) 1,787,789,596 402,685,073 265,627,109
================== ================== ==================
Net asset value, redemption price and offering
price per share (Note 2) $ 1.00 $ 1.00 $ 1.00
================== ================== ==================
</TABLE>
Please see accompanying notes to financial statements.
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WATERHOUSE INVESTORS CASH MANAGEMENT FUNDS
Statements of Operations
For the year ended October 31, 1997
<TABLE>
<CAPTION>
Money Market U.S. Government Municipal
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
Investment Income
Interest income $ 89,563,425 $ 21,919,970 $ 9,370,922
----------------- ------------------ ------------------
Expenses
Investment management fees (Note 3) 5,512,519 1,394,481 883,242
Administration fees (Note 3) 1,591,931 398,423 252,319
Transfer agent fees (Note 3) 3,183,862 796,847 504,638
Shareholder servicing fees (Note 3) 3,183,862 677,320 277,561
Registration fees 463,458 129,842 91,576
Shareholder reports and mailing 325,071 65,014 43,343
Custody fees 96,995 22,351 30,189
Professional fees 38,702 13,895 9,785
Directors' fees 15,384 15,384 15,384
Other expenses 54,831 6,857 22,652
----------------- ------------------ ------------------
Total Expenses 14,466,615 3,520,414 2,130,689
Fees waived by the
Investment Manager and certain of its
affiliates (Note 3) (1,199,480) (291,674) (252,458)
----------------- ------------------ ------------------
Net Expenses 13,267,135 3,228,740 1,878,231
----------------- ------------------ ------------------
Net Investment Income 76,296,290 18,691,230 7,492,691
----------------- ------------------ ------------------
NET REALIZED GAINS (LOSSES) FROM
SECURITY TRANSACTIONS 21,960 449 (2,642)
----------------- ------------------ ------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 76,318,250 $ 18,691,679 $ 7,490,049
================= ================== ==================
</TABLE>
Please see accompanying notes to financial statements.
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WATERHOUSE INVESTORS CASH MANAGEMENT FUNDS
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Money Market U.S. Government Municipal
Portfolio Portfolio Portfolio
Year Period Year Period Year Period
Ended Ended Ended Ended Ended Ended
October 31, October 31, October 31, October 31, October 31, October 31,
1997 1996* 1997 1996* 1997 1996*
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 76,296,290 $ 44,429,799 $ 18,691,230 $ 11,802,638 $ 7,492,691 $ 4,935,546
Net realized gain (loss)
from security transactions 21,960 (795) 449 (211) (2,642) (771)
--------------- --------------- -------------- -------------- -------------- --------------
Net increase in net assets
from operations 76,318,250 44,429,004 18,691,679 11,802,427 7,490,049 4,934,775
--------------- --------------- -------------- -------------- -------------- --------------
DISTRIBUTIONS TO
SHAREHOLDERS
From net investment income (76,296,290) (44,429,799) (18,691,230) (11,802,638) (7,492,691) (4,935,546)
From net realized gains (23,984) - - - - -
--------------- --------------- -------------- -------------- -------------- --------------
Decrease in net assets from
distributions to shareholders (76,320,274) (44,429,799) (18,691,230) (11,802,638) (7,492,691) (4,935,546)
--------------- --------------- -------------- -------------- -------------- --------------
CAPITAL SHARE
TRANSACTIONS
($1.00 per share)
Proceeds from shares sold 5,645,355,075 4,317,083,085 1,215,495,738 1,126,273,406 742,968,364 711,316,179
Shares issued in reinvestment
of dividends 78,797,634 41,684,198 19,383,642 11,057,275 7,760,110 4,646,535
Payments for shares
redeemed (5,278,973,994) (3,016,216,402) (1,203,241,288) (766,303,700) (711,355,530) (489,728,549)
--------------- --------------- -------------- -------------- -------------- --------------
Net increase in net assets from
capital share transactions 445,178,715 1,342,550,881 31,638,092 371,026,981 39,372,944 226,234,165
--------------- --------------- -------------- -------------- -------------- --------------
Total Increase In Net Assets 445,176,691 1,342,550,086 31,638,541 371,026,770 39,370,302 226,233,394
Net Assets
Beginning of period 1,342,610,086 60,000 371,046,770 20,000 226,253,394 20,000
--------------- --------------- -------------- -------------- -------------- --------------
End of period $ 1,787,786,777 $ 1,342,610,086 $ 402,685,311 $ 371,046,770 $ 265,623,696 $ 226,253,394
=============== ================ ============== ============== ============== ==============
</TABLE>
* The Portfolio commenced operations on December 20, 1995.
Please see accompanying notes to financial statements.
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WATERHOUSE INVESTORS CASH MANAGEMENT FUNDS
Financial Highlights
Contained below is per share operating performance data for a share of
common stock outstanding, total investment return, ratios to average
net assets and other supplemental data for each period indicated. This
information has been derived from each Portfolio's financial
statements.
<TABLE>
<CAPTION>
Money Market U.S. Government Municipal
Portfolio Portfolio Portfolio
Year Period Year Period Year Period
Ended Ended Ended Ended Ended Ended
October 31, October 31, October 31, October 31, October 31, October 31,
1997 1996* 1997 1996* 1997 1996*
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning
of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
--------------- --------------- --------------- -------------- -------------- --------------
Net investment income 0.048 0.041 0.047 0.041 0.030 0.026
--------------- --------------- --------------- -------------- -------------- --------------
Distributions from net
investment income (0.048) (0.041) (0.047) (0.041) (0.030) (0.026)
--------------- --------------- --------------- -------------- -------------- --------------
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
=============== =============== =============== ============== ============== ==============
Ratios
Ratio of net expenses to average
net assets** 0.83% 0.79% (A) 0.81% 0.73% (A) 0.74% 0.62% (A)
Ratio of net investment income
to average net assets** 4.79% 4.64% (A) 4.69% 4.64% (A) 2.97% 2.90% (A)
Decrease reflected in above net
expense ratio due to waivers/
reimbursements by the
Investment Manager and
its affiliates (Note 3) 0.08% 0.13% (A) 0.07% 0.18% (A) 0.10% 0.23% (A)
Supplemental Data
Total investment return (B) 4.89% 4.82% (A) 4.79% 4.82% (A) 3.01% 3.05% (A)
Net assets, end of period $1,787,786,777 $1,342,610,086 $ 402,685,311 $ 371,046,770 $ 265,623,696 $ 226,253,394
============== ============== =============== =============== ============== ==============
</TABLE>
* The Portfolio commenced operations on December 20, 1995.
** The average net assets for the periods ended October 31, 1997 and
October 31, 1996, were $1,592,722,254 and $1,104,558,438 for the
Money Market Portfolio; $398,635,777 and $293,708,330 for the
U.S. Government Portfolio; and $252,444,536 and $196,592,413
for the Municipal Portfolio.
(A) Annualized.
(B) Total investment return is calculated assuming a purchase of shares on
the first day and a sale on the last day of the period reported and
includes reinvestment of dividends.
Please see accompanying notes to financial statements.
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WATERHOUSE INVESTORS CASH MANAGEMENT FUNDS
Notes to Financial Statements - October 31, 1997
Note 1 - Organization
The Waterhouse Investors Family of Funds, Inc. (the "Fund") was organized as a
Maryland corporation on August 16, 1995. On December 18, 1997, Waterhouse
Investors Cash Management Fund, Inc. changed its name to Waterhouse Investors
Family of Funds, Inc. The Fund is registered as an open-end, diversified
management investment company with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended (the "Act") and the Securities
Act of 1933, as amended. The investment objective of the Money Market Portfolio,
the U.S. Government Portfolio and the Municipal Portfolio is to seek maximum
current income to the extent consistent with liquidity and preservation of
capital. The Money Market Portfolio has the flexibility to invest broadly in
U.S. dollar-denominated securities of domestic and foreign issuers. The U.S.
Government Portfolio offers an added measure of safety by investing exclusively
in obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities. The Municipal Portfolio offers investors federally tax-exempt
income by investing primarily in municipal securities.
Waterhouse Securities, Inc. ("Waterhouse Securities") absorbed all
organizational expenses other than securities registration fees. The securities
registration fees were deferred and amortized from the date operations
commenced, December 20, 1995 through October 31, 1997.
Note 2 - Significant Accounting Policies
The following is a summary of the Fund's significant accounting policies:
Computation of Net Asset Value - It is the Fund's policy to maintain a
continuous net asset value of $1.00 per share for each Portfolio. The Fund has
adopted certain investment, portfolio valuation and dividend and distribution
policies to enable it to do so. There is no assurance, however, that each
Portfolio will be able to maintain a stable net asset value of $1.00 per share.
Securities Valuation - Each Portfolio's securities are valued using the
amortized cost method, which approximates market value. The amortized cost
method involves initially valuing a security at its original cost and thereafter
assuming a constant amortization to maturity of any discount or premium.
Repurchase Agreements - The Fund may enter into repurchase agreements with
financial institutions, deemed to be creditworthy by the Fund's Investment
Manager, subject to the seller's agreement to repurchase and the Fund's
agreement to resell such securities at a mutually agreed upon price. Securities
purchased subject to repurchase agreements are deposited with the Fund's
custodian and, pursuant to the terms of the repurchase agreement, must have an
aggregate market value greater than or equal to the repurchase price plus
accrued interest at all times. If the value of the underlying securities falls
below the value of the repurchase price plus accrued interest, the Fund will
require the seller to deposit additional collateral by the next business day. If
the request for additional collateral is not met, or the seller defaults on its
repurchase obligation, the Fund maintains the right to sell the underlying
securities at market value and may claim any resulting loss against the seller.
Investment Income - Interest income is accrued as earned. Discounts and premiums
on securities purchased are amortized in accordance with income tax regulations
which approximate generally accepted accounting principles.
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Distributions to Shareholders - Dividends arising from net investment income are
declared daily and paid monthly. With respect to each Portfolio, net realized
short-term capital gains, if any, may be distributed during the year and net
realized long-term capital gains, if any, are distributed at least once each
year. Income distributions and capital gain distributions are determined in
accordance with income tax regulations.
Securities Transactions - Securities transactions are accounted for on the trade
date. Realized gain and loss from securities transactions are recorded on a
specific identification basis.
Expenses - Expenses directly attributable to each Portfolio are charged to that
Portfolio's operations. Expenses which are applicable to all Portfolios are
allocated on a pro rata basis.
Use of Estimates - The Fund's financial statements are prepared in accordance
with generally accepted accounting principles, which may require the use of
management estimates and assumptions. Actual results could differ from these
estimates.
Federal Income Taxes - It is each Portfolio's policy to comply with the special
provisions of the Internal Revenue Code available to regulated investment
companies. As provided therein, in any fiscal year in which a Portfolio so
qualifies, and distributes at least 90% of its taxable net income, the Portfolio
(but not the shareholders) will be relieved of federal income tax on the income
distributed. Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Portfolio's intention to declare as
dividends in each calendar year at least 98% of its net investment income
(earned during the calendar year) and 98% of its net realized capital gains plus
undistributed amounts from prior years.
Note 3 - Investment Management Fees and Other Transactions with Affiliates
of the Investment Manager
Under the terms of an Investment Management Agreement with Waterhouse Asset
Management, Inc. (the "Investment Manager"), an indirect wholly owned subsidiary
of The Toronto-Dominion Bank, for the investment management services furnished
to each Portfolio, such Portfolio pays the Investment Manager a monthly
investment management fee at an annual rate, on a graduated basis, equal to .35
of 1% of the first $1 billion of average daily net assets of each such
Portfolio, .34 of 1% of the next $1 billion, and .33 of 1% of average daily net
assets of each such Portfolio over $2 billion. The Investment Manager has agreed
to waive a portion of its fee payable by the Municipal Portfolio through October
15, 1998, so that the actual fee payable annually by such Portfolio during such
period will be equal to .25 of 1% of its average daily net assets. For the year
ended October 31, 1997, the Investment Manager voluntarily waived $252,458 of
its investment management fee for the Municipal Portfolio.
Until June 11, 1997, the Investment Manager was retained under an Administration
Agreement to perform certain administrative services for the Fund. For the
administrative services rendered to the Fund, each Portfolio paid the Investment
Manager a monthly fee at an annual rate of .10 of 1% of each Portfolio's average
net assets. Effective June 11, 1997, the Fund retained Waterhouse Securities, an
affiliate of the Investment Manager, to provide the administrative services
formerly provided by the Investment Manager on substantially identical terms.
Waterhouse Securities has been retained under a Shareholder Services Agreement
to perform shareholder servicing necessary for the operation of the Fund. The
shareholder service plan adopted by the Fund provides that each Portfolio pay
Waterhouse Securities a monthly fee at an annual rate of up to .25 of 1% of
average daily net assets. The Fund's Board has determined to limit the annual
fee payable through October 15, 1998 under the Shareholder Servicing Plan so as
not to exceed .20 of 1% of average daily net assets in the case of the Money
Market Portfolio, .17 of 1% of average daily net assets in the case of the U.S.
Government Portfolio and .11 of 1% of average daily net assets in the case of
the Municipal Portfolio (the "Current Servicing Rates"). For the fiscal year
ended October 31, 1997, Waterhouse Securities voluntarily waived from the
Current Servicing Rates $1,199,480 and $291,674 of its shareholder servicing fee
for the Money Market Portfolio and the U.S. Government Portfolio, respectively.
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The Fund has entered into a Transfer Agency and Dividend Disbursing Agency
Agreement with Waterhouse National Bank (the "Bank"), an affiliate of the
Investment Manager, to perform transfer and dividend disbursing agency-related
services. For such services each Portfolio pays the Bank a monthly fee at an
annual rate of .20 of 1% of average daily net assets.
Each Director who is not an "interested person" as defined in the Act receives
from the Fund $3,000 per quarter and $2,000 for each meeting attended.
Note 4 - Federal tax Information (Unaudited)
In accordance with Federal tax requirements, the Municipal Portfolio designates
substantially all the dividends paid from net investment income during the
fiscal year ended October 31, 1997 as "exempt - interest dividends". As required
by Federal regulations, shareholders will receive notification of their portion
of the Fund's taxable ordinary dividends and capital gains distributions paid
(if any) for the 1997 calendar year early in 1998.
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WATERHOUSE INVESTORS CASH MANAGEMENT FUNDS
Money Market Portfolio o Schedule of Investments
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL ANNUALIZED
AMOUNT YIELD(%) VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE OBLIGATIONS:
ASSET-BACKED COMMERCIAL PAPER -- 6.1%
$ 32,000,000 Asset-Backed Securities Investment Trust Ser. 97-F, Variable Rate Notes,
5.585%, due 11/17/97 (Insured: MBIA)(Note A) 5.59 $ 32,000,000
12,500,000 Corporate Asset Funding Co., Inc., due 12/12/97 5.76 12,420,278
30,500,000 Corporate Asset Funding Co., Inc., due 1/8/98 5.69 30,181,410
10,000,000 Corporate Receivables Corp., due 2/11/98 5.71 9,843,317
25,000,000 CXC, Inc., due 11/13/97 5.58 24,954,000
------------
109,399,005
------------
BROKER/DEALER OBLIGATIONS -- 11.7%
45,000,000 Bear Stearns Cos., Inc., Variable Rate Notes, 5.665%, due 11/3/97 (Note A) 5.67 45,000,000
5,000,000 Bear Stearns Cos., Inc., Variable Rate Notes, 5.775%, due 11/14/97 (Note A) 5.60 5,004,701
7,000,000 Bear Stearns Cos., Inc., Variable Rate Notes, 5.636%, due 11/28/97 (Note A) 5.64 7,000,000
20,000,000 Bear Stearns Cos., Inc., Variable Rate Notes, 5.669%, due 12/1/97 (Note A) 5.67 20,000,000
2,630,000 Bear Stearns Cos., Inc., 9.125%, due 4/15/98 5.73 2,668,562
55,000,000 Merrill Lynch & Co., Inc., Variable Rate Notes, 5.67%, due 11/3/97 (Note A) 5.67 55,000,000
15,000,000 Merrill Lynch & Co., Inc., Variable Rate Notes, 5.66%, due 11/3/97 (Note A) 5.66 14,999,248
20,000,000 Merrill Lynch & Co., Inc., Variable Rate Notes, 5.616%, due 11/26/97 (Note A) 5.62 20,000,000
40,000,000 Morgan Stanley Group, LP, Variable Rate Notes, 5.616%, due 11/28/97 (Note A) 5.59 40,000,000
------------
209,672,511
------------
FINANCE & INSURANCE CO. OBLIGATIONS -- 9.2%
10,000,000 Advanta Corp., Variable Rate Notes, 6.0725%, due 1/26/98
(Insured: MBIA) (Note A) 5.80 10,006,197
3,600,000 Avco Financial Services, Inc., 5.50%, due 5/1/98 5.76 3,594,438
5,000,000 CIT Group Holdings, Inc., 5.625%, due 4/1/98 5.74 4,996,000
4,500,000 CIT Group Holdings, Inc., 8.75%, due 4/15/98 5.75 4,557,921
2,000,000 Ford Motor Credit Co., 6.25%, due 2/26/98 5.75 2,002,319
2,455,000 Ford Motor Credit Co., 9.10%, due 5/4/98 5.75 2,494,976
6,000,000 Ford Motor Credit Co., 5.83%, due 6/29/98 5.74 6,002,707
2,000,000 Ford Motor Credit Co., 9.70%, due 10/5/98 5.95 2,066,457
5,000,000 Ford Motor Credit Co., Variable Rate Notes, 5.899%, due 11/3/97 (Note A) 5.70 5,000,069
2,055,000 General Electric Capital Co., 7.875%, due 12/29/97 5.90 2,060,329
5,000,000 General Electric Capital Co., 8.625%, due 3/12/98 5.65 5,046,835
5,000,000 General Motors Acceptance Corp. CP, due 11/12/97 6.01 4,991,093
10,000,000 General Motors Acceptance Corp. CP, due 11/19/97 5.96 9,971,100
15,000,000 General Motors Acceptance Corp., Variable Rate Notes, 5.74%, due 11/3/97 (Note A) 5.71 15,002,301
15,000,000 General Motors Acceptance Corp., Variable Rate Notes, 5.74%, due 11/3/97 (Note A) 5.69 15,002,301
5,000,000 General Motors Acceptance Corp., Variable Rate Notes, 5.794%, due 11/7/97 (Note A) 5.68 5,000,093
10,000,000 General Motors Acceptance Corp., Variable Rate Notes, 5.599%, due 12/22/97 (Note A) 5.66 9,994,240
5,000,000 GMAC Australia Finance, Variable Rate Notes, 5.969%, due 11/23/97 (Note A) 5.70 5,004,357
30,000,000 Household Finance Co., Variable Rate Notes, 5.79%, due 11/3/97 (Note A) 5.71 29,996,526
14,000,000 International Lease Finance Corp., 7.00%, due 6/1/98 5.80 14,090,839
7,000,000 Xerox Credit Corp. CP, due 3/17/98 5.81 6,852,440
------------
163,733,538
------------
TOTAL CORPORATE OBLIGATIONS--27.0% 482,805,054
------------
</TABLE>
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<PAGE>
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WATERHOUSE INVESTORS CASH MANAGEMENT FUNDS
Money Market Portfolio o Schedule of Investments
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL ANNUALIZED
AMOUNT YIELD (%) VALUE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BANK OBLIGATIONS:
BANKERS' ACCEPTANCES -- 0.7%
$ 6,600,000 Chase Manhattan Bank, N.A., due 12/1/97 5.63 $ 6,569,475
5,000,000 First National Bank of Boston, due 11/3/97 5.90 4,998,408
------------
11,567,883
------------
BANK NOTES -- 8.2%
19,500,000 American Express Centurion Bank, Variable Rate Notes,
5.695%, due 11/17/97 (Note A) 5.58 19,504,809
10,000,000 BankBoston, N.A., 5.69%, due 4/14/98 5.69 10,000,000
25,000,000 FCC National Bank, Variable Rate Notes, 5.536%, due 11/3/97 (Note A) 5.71 24,988,520
5,000,000 First Bank, N.A., Variable Rate Notes, 5.545%, due 11/19/97 (Note A) 5.57 4,999,554
2,000,000 First USA Bank, Variable Rate Notes, 6.019%, due 11/19/97 (Note A) 5.69 2,003,391
3,000,000 First USA Bank, Variable Rate Notes, 6.058%, due 1/21/98 (Note A) 5.73 3,004,416
15,000,000 LaSalle National Bank, 5.74%, due 4/20/98 5.74 15,000,000
15,000,000 LaSalle National Bank, 5.76%, due 7/10/98 5.76 15,000,000
20,000,000 PNC Bank, N.A., Variable Rate Notes, 5.59%, due 11/3/97 (Note A) 5.68 19,987,403
20,000,000 PNC Bank, N.A., Variable Rate Notes, 5.59%, due 11/3/97 (Note A) 5.66 19,988,948
5,000,000 PNC Bank, N.A., Variable Rate Notes, 5.652%, due 11/5/97 (Note A) 5.63 5,000,577
2,500,000 Wachovia Bank, 6.19%, due 4/27/98 5.83 2,503,320
5,000,000 Wells Fargo Bank, N.A., Variable Rate Notes, 5.875%, due 11/28/97 (Notes A, E) 5.70 5,006,871
------------
146,987,809
------------
BANK SUPPORTED OBLIGATIONS -- 20.4%
9,250,000 Adult Community Total Services, Inc., Ser. 1996 VRDN, 5.70%
(LOC: LaSalle National Bank) (Note C) 5.70 9,250,000
10,000,000 Assisted Living Funding, LLC Ser. 1997 VRDN, 5.65%
(LOC: First Union National Bank) (Note C) 5.65 10,000,000
15,000,000 Banco Bandeirantes S.A. CP, due 6/18/98 (LOC: Barclays Bank, PLC) 5.90 14,465,667
9,000,000 Banco de Colombia S.A. CP, due 12/10/97 (LOC: Barclays Bank, PLC) 5.64 8,945,887
5,000,000 Banco de Colombia S.A. CP, due 3/25/98 (LOC: Barclays Bank, PLC) 5.69 4,889,200
10,000,000 Bavaria Asset Corp. CP, due 12/22/97 (LOC: Bayerische Vereinsbank AG) 5.60 9,921,517
10,000,000 Bavaria Asset Corp. CP, due 12/22/97 (LOC: Bayerische Vereinsbank AG) 5.62 9,921,517
3,100,000 Baylis Group Partnership Ser. 1992 VRDN, 5.75% (LOC: Kredietbank) (Note C) 5.70 3,100,000
3,355,000 Benedictine Health System CP, due 1/5/98 (LOC: LaSalle National Bank) 5.76 3,320,653
5,000,000 China International Marine Containers Co. Ltd. CP, due 2/13/98 (LOC: Socie 5.66 4,919,833
5,000,000 Comision Federal de Electricidad, Series A CP, due 11/17/97
(LOC: Westdeutsche Landesbank GZ) 5.59 4,987,622
10,000,000 Daewoo Int'l. (America) Corp. CP, due 2/26/98 (LOC: Credit Suisse First Boston) 5.70 9,819,300
13,000,000 Dean Health Systems, Inc. CP, due 11/21/97 (LOC: Rabobank Nederland) 5.70 12,959,050
15,000,000 Demir Funding Corp. I CP, due 1/12/98 (LOC: Bayerische Vereinsbank AG) 5.68 14,831,700
15,000,000 Demir Funding Corp. I CP, due 3/16/98 (LOC: Bayerische Vereinsbank AG) 5.71 14,686,687
9,600,000 Edward Obligated Grp., Ser. 1997B VRDN, 5.60% (Insured: AMBAC;
LIQ: Harris Trust & Savings Bank) (Note C) 5.60 9,600,000
7,400,000 Formosa Plastics Corp., USA - Ser. A CP, due 12/5/97 (LOC: ABN Amro, N.V.) 5.63 7,361,212
15,000,000 Formosa Plastics Corp., USA - Ser. A CP, due 2/13/98 (LOC: Bank of America NT & SA) 5.72 14,759,067
20,000,000 Galicia Funding Corp. CP, due 12/3/97 (LOC: Bayerische Vereinsbank AG) 5.85 19,899,022
2,000,000 Galicia Funding Corp. CP, due 12/5/97 (LOC: Bayerische Vereinsbank AG) 5.74 1,989,422
15,000,000 Garanti Funding Corp. I CP, due 3/25/98 (LOC: Bayerische Vereinsbank AG) 5.79 14,665,200
10,000,000 KOC Funding Corp. CP, due 2/13/98 (LOC: Credit Suisse First Boston) (Note B) 6.06 9,832,444
11,000,000 Long Lane Master Trust II, Ser. 1997-B, 5.769%, due 12/26/97
(Counter Party: BankBoston, N.A.) (Notes A, B) 5.77 11,000,000
20,000,000 Long Lane Master Trust III, Ser. 1997-C, 5.78%, due 2/2/98
(Counter Party: BankBoston, N.A.) (Notes A, B) 5.78 20,000,000
31,550,000 Metrocrest Hospital Authority, Series A CP, due 11/3/97 (LOC: Bank of New York) 5.65 31,540,241
9,900,000 NuFunding Inc. VRDN, 5.725% (LOC: LaSalle National Bank) (Note C) 5.73 9,900,000
15,000,000 Petroleo Brasileiro S.A. II Ser. D CP, due 12/1/97 (LOC: Barclays Bank, PL 5.63 14,930,625
15,000,000 Petroleo Brasileiro S.A. Ser. B CP, due 5/26/98 (LOC: Barclays Bank, PLC) 5.80 14,521,908
</TABLE>
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<PAGE>
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WATERHOUSE INVESTORS CASH MANAGEMENT FUNDS
Money Market Portfolio o Schedule of Investments
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL ANNUALIZED
AMOUNT YIELD (%) VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 4,000,000 Rockland Industries, Inc. Ser. 1997 VRDN, 5.60%
(LOC: First Union National Bank) (Note C) 5.60 $ 4,000,000
4,050,000 Senior Systems Technology LLC VRDN, 5.65% (LOC: Comerica Bank) (Note C) 5.65 4,050,000
8,400,000 Sinochem America C.P. Inc. CP, due 11/6/97 (LOC: Credit Suisse First Boston) 5.61 8,393,548
24,995,000 The Society of New York Hospital Fund, Inc. CP, due 11/13/97
(LOC: Chase Manhattan Bank N.A.) 5.61 24,948,687
3,584,000 The Society of New York Hospital Fund, Inc. CP, due 11/13/97
(LOC: Chase Manhattan Bank N.A.) 5.59 3,577,359
4,000,000 Trap Rock Industries, Inc. Ser. 1997 VRDN, 5.75%
(LOC: CoreStates Bank, N.A.) (Note C) 5.75 4,000,000
------------
364,987,368
------------
BANK TIME DEPOSITS -- 2.2%
15,000,000 Societe Generale, 5.70%, due 4/10/98 5.70 15,000,000
25,000,000 Svenska Handelsbanken AB, 5.59%, due 12/31/97 5.59 25,000,000
------------
40,000,000
------------
DOMESTIC CERTIFICATES OF DEPOSIT -- 6.2%
10,000,000 Bankers Trust Co., NY, 5.94%, due 9/10/98 6.00 9,995,112
15,000,000 Bankers Trust Co., NY, Variable Rate Notes, 5.59%, due 11/3/97 (Note A) 5.69 14,990,155
40,000,000 Bankers Trust Co., NY, Variable Rate Notes, 5.62%, due 11/3/97 (Note A) 5.68 39,987,077
25,000,000 Bankers Trust Co., NY, Variable Rate Notes, 5.67%, due 11/3/97 (Note A) 5.68 24,997,959
10,000,000 LaSalle National Bank, 5.96%, due 2/13/98 5.96 10,000,000
10,000,000 LaSalle National Bank, 5.96%, due 2/26/98 5.96 10,000,000
------------
109,970,303
------------
EURODOLLAR BANK CERTIFICATES OF DEPOSIT -- 2.2%
40,000,000 Credit Agricole Indosuez S.A., 5.69%, due 2/20/98 5.70 39,999,268
------------
YANKEE BANK CERTIFICATES OF DEPOSIT -- 9.1%
21,000,000 Banque Nationale de Paris, 5.87%, due 12/8/97 5.73 21,002,744
11,000,000 Banque Nationale de Paris, 5.78%, due 2/4/98 5.75 10,996,823
20,000,000 Banque Nationale de Paris, 5.96%, due 6/30/98 5.90 20,006,356
10,000,000 Barclays Bank PLC, 5.845%, due 1/21/98 5.77 10,000,000
20,000,000 Dresdner Bank AG, 5.95%, due 4/10/98 5.88 20,005,766
10,000,000 Rabobank Nederland, 6.05%, due 3/27/98 6.16 9,995,801
10,000,000 Societe Generale, Variable Rate Notes, 5.625%, due 11/3/97 (Note A) 5.69 9,994,581
15,000,000 Societe Generale, Variable Rate Notes, 5.63%, due 11/3/97 (Note A) 5.67 14,998,537
25,000,000 Societe Generale, Variable Rate Notes, 5.66%, due 11/3/97 (Note A) 5.68 24,997,526
20,000,000 Svenska Handelsbanken AB, 5.86%, due 9/18/98 5.89 19,994,789
------------
161,992,923
------------
TOTAL BANK OBLIGATIONS 49.0% 875,505,554
------------
MUNICIPAL OBLIGATIONS:
TAXABLE OBLIGATIONS -- 23.9%
2,270,000 Berks Co., PA IDA VRDN, 5.75% (LOC: CoreStates Bank, N.A.) (Note C) 5.75 2,270,000
20,000,000 Brazos River Auth., TX, Collateralized PCR (TX Utilities Elect. Co. Proj.)
Ser. 1991D, 5.61%, due 12/8/97 (LOC: Morgan Guaranty Trust Co. of NY) 5.61 20,000,000
20,000,000 Broward Cty., FL Pro. Sports Fac. Tax & Rev. Bonds (Broward Cty. Civic Arena Proj.)
Ser. 1996B, (TTR 14), 5.648%, Optional Put 11/3/97
(Insured: MBIA; LIQ: Citibank, N.A. 5.65 20,000,000
5,000,000 Calif. Pollution Control Fin. Auth. Env. Imp. Rev. Bonds (Shell Oil Co. Proj.)
Ser. 1996, 5.63%, due 11/5/97 5.63 5,000,000
35,000,000 Calif. Pollution Control Fin. Auth. Solid Waste Disp. Rev. Bonds (Browning Ferris
Industries) Ser. 1997A, 5.63%, due 11/18/97 (LOC: Texas Commerce Bank, N.A.) 5.63 35,000,000
</TABLE>
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<PAGE>
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WATERHOUSE INVESTORS CASH MANAGEMENT FUNDS
Money Market Portfolio o Schedule of Investments
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL ANNUALIZED
AMOUNT YIELD (%) VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$19,120,000 City of New York, NY G.O. Fiscal 1996 SubSer. A-2, 5.70%, due 11/5/97
(LOC: Societe Generale) 5.62 $ 19,120,000
3,000,000 City of New York, NY G.O. Ser. 1992B, 5.65%, due 11/6/97 (Insured: FGIC) 5.57 3,000,000
4,300,000 City of New York, NY G.O. Ser. 1993E, 5.66%, due 11/12/97 (Insured: FGIC) 5.58 4,300,000
10,000,000 City of New York, NY G.O. Ser. 1993E, 5.68%, due 11/12/97 (Insured: FGIC) 5.60 10,000,000
24,075,000 City of New York, NY G.O. Ser. 1993E, 5.73%, due 11/13/97 (Insured: FGIC) 5.65 24,075,000
11,695,000 City of New York, NY G.O. Ser. 1993E, 5.73%, due 12/17/97 (Insured: FGIC) 5.65 11,695,000
3,000,000 City of New York, NY, Ser. H, Subseries H-7, 5.70%, due 11/4/97 (Insured: FGIC) 5.62 3,000,000
8,000,000 City of New York, NY, Ser. H, Subseries H-7, 5.70%, due 11/5/97 (Insured: FGIC) 5.62 8,000,000
5,000,000 City of New York, NY, Ser. H, Subseries H-7, 5.65%, due 11/6/97 (Insured: FGIC) 5.57 5,000,000
23,500,000 City of Whiting, IN Indus. Sewage and Solid Waste Disp. Rev. Bonds
(Amoco Corp. Proj.) Ser. 1995 5.60%, due 12/10/97 (LOC: Nationsbank, N.A.) 5.60 23,500,000
30,800,000 City of Worcester, MA BAN, 5.68%, due 12/1/97 5.65 30,800,682
6,490,000 Denver City & County COP (Commons Open Space & Rec. Area Proj.) Ser. 1996
VRDN, 5.65% (LOC:Canadian Imperial Bank of Commerce) (Note C) 5.65 6,490,000
12,420,000 Downtown Marietta, GA Dev. Auth. (Marietta Conference Center) Ser. B VRDN,
5.57% (LOC: Canadian Imperial Bank of Commerce) (Note C) 5.56 12,420,000
10,000,000 Gulf Coast Waste Disp. Auth. PCR (Amoco Corp. Proj.) Ser. 1995,
5.64%, due 11/13/97 5.64 10,000,000
26,000,000 Ill. Dev. Auth. Rev. Bonds Ser. 1996 VRDN, 5.70%
(LOC: Northern Trust Co.) (Note C) 5.70 26,000,000
6,295,000 Ill. Health Facilities Auth. Ser. 1996F VRDN, 5.70%
(LOC: LaSalle National Bank) (Note C) 5.75 6,295,000
20,000,000 Ill. Student Asst. Comm. Student Loan Rev. Bonds Ser. 1997B, VRDN, 5.61%
(LOC: First Nat'l Bank of Chicago) (Note C) 5.61 20,000,000
4,000,000 Miss. Bus. Fin. Corp. Rev. Bonds (AB Co. Inc. Proj.) Ser. B VRDN, 5.60%
(LOC: First Union National Bank) (Note C) 5.60 4,000,000
3,800,000 NJ EDA (The Morey Organization, Inc. Proj.) Ser. 1997 VRDN, 5.75%
(LOC: CoreStates Bank, N.A.) (Note C) 5.75 3,800,000
6,000,000 NJ EDA State Pension Fdg. Bonds Ser. 1997A, 5.64%, Optional Put
11/3/97 (Insured: MBIA; LIQ: Citibank, N.A.) 5.64 6,000,000
10,000,000 NY State Housing Fin. Agy. Svc. Contract Obligation Rev. Ser. 1997B VRDN,
5.65% (LOC: Commerzbank AG) (Note C) 5.58 10,000,000
20,000,000 Oakland-Alameda Cty., CA, Coliseum Auth. Lease Rev. Bonds Ser. 1996 A1,
5.57%, due 11/10/97 (LOC: Canadian Imperial Bank of Commerce) 5.57 20,000,000
5,000,000 Oakland-Alameda Cty., CA, Coliseum Auth. Lease Rev. Bonds Ser. 1995 B1,
5.58%, due 11/19/97 (LOC: Canadian Imperial Bank of Commerce) 5.58 5,000,000
11,000,000 Oakland-Alameda Cty., CA, Coliseum Auth. Lease Rev. Bonds Ser. 1995 B2,
5.59%, due 11/17/97 (LOC: Canadian Imperial Bank of Commerce) 5.59 11,000,000
10,000,000 Oakland-Alameda Cty., CA, Coliseum Auth. Lease Rev. Bonds Ser. 1995 B2,
5.61%, due 12/17/97 (LOC: Canadian Imperial Bank of Commerce) 5.63 10,000,000
6,400,000 Oakland-Alameda Cty., CA, Coliseum Auth. Lease Rev. Bonds Ser. 1996 A2,
5.62%, due 11/13/97 (LOC: Canadian Imperial Bank of Commerce) 5.62 6,400,000
4,000,000 PA Econ. Dev. Fin. Auth. Dev. Rev. Bonds (Country Meadows of Allentown Proj.)
Ser. 1996B VRDN, 5.65% (LOC: Mellon Bank, N.A.) (Note C) 5.75 4,000,000
5,046,000 Passaic Cty., NJ Utilities Auth. Proj. Notes Ser. 1997A, 5.95%, due 8/4/98
(Insured: MBIA) 5.87 5,046,000
13,500,000 State of Ohio, Taxable Dev. Asst. Ser. 1996; Optional Put 11/3/97, 5.656%
(Insured: AMBAC; LIQ: Citibank, N.A.) 5.63 13,500,000
20,000,000 State of Ohio, Taxable Dev. Asst. Ser. CR16T; Optional Put 11/3/97, 5.656%
(Insured: AMBAC; LIQ: Citibank, N.A.) 5.63 20,000,000
3,000,000 Westchester County NY IDA (BWP Distributors Inc. Proj.) Ser. 1997 VRDN,
5.60% (LOC: First Union National Bank) (Note C) 5.60 3,000,000
-------------
TOTAL MUNICIPAL OBLIGATIONS 23.9% 427,711,682
-------------
</TABLE>
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<PAGE>
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WATERHOUSE INVESTORS CASH MANAGEMENT FUNDS
Money Market Portfolio o Schedule of Investments
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL ANNUALIZED
AMOUNT YIELD (%) VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS -- 1.6%
$ 27,972,000 Smith Barney Securities Inc.,
-dated 10/31/97, due 11/3/97, in the amount of $27,985,403,
-fully collateralized by $28,458,459 U.S. Gov't. Securities, value $28,531,440 5.75 $ 27,972,000
---------------
TOTAL INVESTMENTS -- 101.5% 1,813,994,290
OTHER ASSETS AND LIABILITIES, NET -- (1.5%) (26,207,513)
--------------
NET ASSETS -- 100.0% $ 1,787,786,777
===============
</TABLE>
Please see accompanying notes to the schedules of investments
and financial statements.
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<PAGE>
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WATERHOUSE INVESTORS CASH MANAGEMENT FUNDS
U.S. Government Portfolio o Schedule of Investments
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL ANNUALIZED
AMOUNT YIELD (%) VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AGENCY FOR INTERNATIONAL DEVELOPMENT -- 1.1%
4,300,000 Notes, 5.25%, due 3/15/98 5.64 $ 4,292,908
------------
FEDERAL FARM CREDIT BANK -- 14.0%
1,715,000 Notes, 5.60%, due 11/3/97 5.49 1,715,010
3,170,000 Notes, 5.40%, due 12/2/97 5.55 3,169,560
1,605,000 Notes, 6.25%, due 1/30/98 5.63 1,606,869
10,000,000 Variable Rate Notes, 5.426%, due 11/1/97 (Note A) 5.51 9,993,064
15,000,000 Variable Rate Notes, 5.35%, due 11/3/97 (Note A) 5.32 15,000,024
25,000,000 Variable Rate Notes, 5.49%, due 11/3/97 (Note A) 5.55 24,990,282
-------------
56,474,809
-------------
FEDERAL HOME LOAN BANK -- 53.0%
5,000,000 Discount Notes, due 12/2/97 5.62 4,976,449
5,000,000 Discount Notes, due 12/4/97 5.55 4,975,525
2,000,000 Notes, 8.15%, due 11/17/97 5.51 2,002,073
6,000,000 Notes, 5.54%, due 11/26/97 5.59 5,998,690
9,410,000 Notes, 5.655%, due 11/26/97 5.60 9,408,400
3,150,000 Notes, 6.32%, due 12/4/97 5.55 3,151,765
1,000,000 Notes, 7.87%, due 12/15/97 5.54 1,002,566
1,000,000 Notes, 5.63%, due 12/17/97 5.51 999,778
4,000,000 Notes, 5.65%, due 12/26/97 (Note E) 5.81 3,997,852
3,300,000 Notes, 5.595%, due 1/22/98 5.62 3,299,879
10,600,000 Notes, 5.81%, due 1/30/98 (Note E) 5.60 10,598,754
4,000,000 Notes, 5.875%, due 1/30/98 (Note E) 5.60 4,000,000
5,000,000 Notes, 5.805%, due 2/13/98 (Note E) 5.62 4,998,366
1,000,000 Notes, 5.87%, due 2/13/98 5.64 999,987
5,105,000 Notes, 5.875%, due 3/18/98 5.64 5,105,980
1,055,000 Notes, 5.82%, due 6/16/98 5.62 1,055,916
4,000,000 Notes, 6.02%, due 7/24/98 (Note E) 5.76 4,000,000
8,600,000 Notes, 5.85%, due 10/15/98 (Note E) 5.75 8,600,000
10,000,000 Variable Rate Notes, 5.657%, due 11/2/97 (Note A) 5.54 10,011,186
5,450,000 Variable Rate Notes, 5.55%, due 11/4/97 (Note A) 5.49 5,451,500
9,000,000 Variable Rate Notes, 5.552%, due 11/4/97 (Note A) 5.51 9,005,199
25,000,000 Variable Rate Notes, 5.418%, due 11/7/97 (Note A) 5.51 24,984,116
50,000,000 Variable Rate Notes, 5.73%, due 11/11/97 (Note A) 5.76 49,985,500
15,000,000 Variable Rate Notes, 5.40%, due 11/17/97 (Note A) 5.48 14,989,611
20,000,000 Variable Rate Notes, 5.459%, due 12/30/97 (Note A) 5.55 19,983,943
-------------
213,583,035
-------------
FEDERAL HOME LOAN MORTGAGE CORP. -- 0.7%
1,755,464 Mortgage Pool L90042, 6.00%, due 8/1/98 5.82 1,755,263
1,000,000 Notes, 5.40%, due 3/16/98 (Note E) 5.65 998,897
-------------
2,754,160
-------------
FEDERAL NATIONAL MORTGAGE ASSOC. -- 18.1%
5,000,000 Discount Notes, due 11/17/97 5.66 4,987,778
1,000,000 Notes, 7.68%, due 12/1/97 5.53 1,001,582
3,720,000 Notes, 9.55%, due 12/10/97 5.55 3,734,888
1,000,000 Notes, 5.59%, due 12/18/97 5.58 999,722
5,000,000 Notes, 5.375%, due 1/13/98 (Note E) 5.57 4,996,117
6,000,000 Notes, 5.375%, due 1/13/98 (Note E) 5.58 5,995,341
2,400,000 Notes, 5.625%, due 2/12/98 5.56 2,399,099
2,000,000 Notes, 5.00%, due 2/25/98 (Note E) 5.61 1,995,508
2,010,000 Notes, 5.69%, due 3/13/98 5.64 2,009,761
2,950,000 Notes, 5.71%, due 3/18/98 5.64 2,950,272
7,210,000 Notes, 5.79%, due 3/25/98 5.83 7,208,032
5,000,000 Notes, 6.02%, due 4/15/98 5.65 5,006,759
1,300,000 Notes, 5.25%, due 5/13/98 (Note E) 5.69 1,296,793
</TABLE>
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<PAGE>
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WATERHOUSE INVESTORS CASH MANAGEMENT FUNDS
U.S. Government Portfolio o Schedule of Investments
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL ANNUALIZED
AMOUNT YIELD (%) VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 1,875,000 Notes, 5.22%, due 7/10/98 (Note E) 5.83 $ 1,867,203
1,250,000 Notes, 5.35%, due 8/12/98 (Note E) 5.82 1,245,455
15,000,000 Variable Rate Notes, 5.635%, due 11/11/97 (Note A) 5.67 14,994,900
10,000,000 Variable Rate Notes, 5.503%, due 1/5/98 (Note A) 5.59 9,992,293
------------
72,681,503
-------------
STUDENT LOAN MARKETING ASSOC. -- 9.1%
5,000,000 Notes, 5.71%, due 11/18/97 5.60 4,999,542
3,800,000 Notes, 5.71%, due 2/19/98 (Note E) 5.60 3,798,151
5,000,000 Notes, 5.60%, due 8/11/98 5.77 4,993,681
23,000,000 Variable Rate Notes, 5.30%, due 11/4/97 (Note A) 5.44 22,959,065
-------------
36,750,439
------------
REPURCHASE AGREEMENTS -- 18.2%
38,432,000 Smith Barney Securities, Inc., 5.75 38,432,000
~dated 10/31/97, due 11/3/97, in the amount of $38,450,415
~fully collateralized by $39,228,639 U.S. Gov't. Securities, value $39,200,640
Morgan Stanley & Co., Inc.,
20,000,000 ~dated 10/29/97, due 11/5/97, in the amount of $20,021,739 5.59 20,000,000
15,000,000 ~dated 10/22/97, due 11/12/97, in the amount of $15,048,388 5.53 15,000,000
~both fully collateralized by $191,669,208 U.S. Gov't. Securities, value $35,962,592
------------
73,432,000
------------
TOTAL INVESTMENTS -- 114.2% 459,968,854
OTHER ASSETS AND LIABILITIES, NET -- (14.2%) (57,283,543)
--------------
NET ASSETS -- 100.0% $402,685,311
==============
</TABLE>
Please see accompanying notes to the schedules of investments
and financial statements.
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<PAGE>
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WATERHOUSE INVESTORS CASH MANAGEMENT FUNDS
Municipal Portfolio o Schedule of Investments
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL ANNUALIZED
AMOUNT YIELD (%) VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL OBLIGATIONS:
ALABAMA -- 0.8%
$ 2,200,000 Decatur IDR Solid Waste Disp. Rev. (Amoco Chem. Co.) Ser. 1995, VRDN,
4.25% (Note C) 4.25 $ 2,200,000
-----------
ALASKA -- 0.2%
100,000 Anchorage Elec. Util. Rev. Bonds, 4.70%, due, 12/1/97 (Insured: MBIA) 3.75 100,075
455,000 Anchorage Elec. Util. Rev. Bonds, Ser. B, 4.75%, due 2/1/98 (Insured: MBIA) 3.86 455,958
100,000 North Slope Boro, Ser. A, 4.85%, due 6/30/98 (Insured: MBIA) 4.00 100,544
-----------
656,577
-----------
ARIZONA -- 1.3%
3,500,000 Salt River Proj. Agricultural Imp. & Power Dist., 3.60%, due 11/12/97 3.60 3,500,000
-----------
ARKANSAS -- 1.9%
5,100,000 Pulaski Cty. (Chenel Park Apts. Proj.) VRDN, 3.80% (LOC: PNC Bank) (Note C) 3.80 5,100,000
-----------
CALIFORNIA -- 3.1%
300,000 California Alternative Energy Source Fin. Auth., Ser. 1986 VRDN,
3.55% (LOC: Banque Nationale de Paris) (Note C) 3.55 300,000
3,800,000 California RANS, VRDN, 4.00% (LIQ: Bank of New York) (Note C) 4.00 3,800,000
4,000,000 California School Cash Reserve Notes, Ser. 1997A, 4.75%, due 7/2/98 3.85 4,023,062
-----------
8,123,062
-----------
COLORADO -- 5.4%
3,000,000 Denver City & County Airport Rev. Bonds, Ser. 1997A, 3.80%, due 11/6/97
(LOC: Bayerische Landesbank) 3.80 3,000,000
5,000,000 Denver City & County Airport Rev. Bonds, Ser. 1997A, 3.65%, due 11/13/97
(LOC: Bayerische Landesbank) 3.65 5,000,000
6,200,000 Pueblo Cty. IDR (Kaiser Aero Space & Elec. Proj.) VRDN, 3.85%
(LOC: ABN-AMRO Bank) (Note C) 3.85 6,200,000
175,000 Westminster Special Purpose Sales & Use Tax Rev. Bonds (Post Project)
Ser. B, 3.65%, due 12/1/97 (Insured: FGIC) 3.65 175,000
-----------
14,375,000
-----------
CONNECTICUT-- 0.1%
105,000 Hebron G.O. Bonds, 6.10%, due 11/15/98 (Insured: MBIA) 4.00 107,214
-----------
DISTRICT OF COLUMBIA -- 1.2%
100,000 Washington D.C. G.O. Bonds, Ser. C, 7.30%, due 6/1/98 (Insured: AMBAC) 4.00 101,869
100,000 Washington D.C. G.O. Bonds, Ser. B-3, 4.40%, due 6/1/98 (Insured: MBIA) 4.00 100,223
3,000,000 Washington D.C. G.O. Notes, Ser. 1997, VRDN, 3.70%
(LOC: First Union National Bank) (Note C) 3.70 3,000,000
-----------
3,202,092
-----------
FLORIDA -- 8.2%
2,000,000 Dade Cty. G.O.Bonds, 12.00%, due 10/1/98 (Insured: FGIC) 3.95 2,142,924
365,000 Florida Board of Educ. G.O. Bonds, Ser. 1988B1, 7.875%, due 6/1/98,
Prerefunded @ 102 (Note D) 3.90 380,328
120,000 Florida Board of Educ. G.O. Bonds, 5.40%, due 5/1/98, (Escrow to Maturity)
(Note D) 4.00 120,819
140,000 Florida HFA, SFM, Ser. A, 5.40%, due 1/1/98 (Collateralized: GNMA/FNMA) 4.50 140,201
5,000,000 Indian River Cty. Hosp. Dist., Ser. 1990, 3.75%, due 12/3/97 (LOC: Kredietbank) 3.75 5,000,000
800,000 Jacksonville Elec. Auth. Tax Exempt CP Notes, 3.60%, due 11/13/97
(RCA: Morgan Guaranty) 3.60 800,000
6,000,000 Lee Cty. Hosp. Board of Dir. (Lee Memorial Hosp. Proj.) Ser. 1995A, 3.90%,
due 11/21/97 (LINE: SunBank) 3.90 6,000,000
4,700,000 Lee Cty. Hosp. Board of Dir. (Lee Memorial Hosp. Proj.) Ser. 1995A, 3.75%,
due 12/2/97 (LINE: SunBank) 3.75 4,700,000
100,000 Ocala Power Supply Rev. Bonds, 6.75%, due 10/1/98 (Insured: MBIA) 5.76 100,861
2,500,000 Orlando Cap. Imp. CP Notes, Ser. 1994A, 3.85%, due 1/15/98
(LOC: Morgan Guaranty) 3.85 2,500,000
-----------
21,885,133
-----------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
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WATERHOUSE INVESTORS CASH MANAGEMENT FUNDS
Municipal Portfolio o Schedule of Investments
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL ANNUALIZED
AMOUNT YIELD (%) VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GEORGIA -- 0.9%
$ 2,000,000 Burke Cty. Dev. Auth. PCR (Oglethorpe Power Corp.- Vogtle Proj.) Ser. A,
3.60%, due 12/1/97 (Insured: AMBAC) 3.60 $ 2,000,000
150,000 Cobb Cty. Hosp. Auth. Rev. Bonds (Kennestone Hospital), 7.30%,
due 8/1/98 (Insured: MBIA) 4.00 153,595
200,000 Gwinnett Cty. Water & Sewer COP Rev. Bonds, 8.05%, due 8/1/98 4.00 205,862
-----------
2,359,457
-----------
HAWAII -- 0.7%
100,000 Department of Budget & Fin. (Queens Med. Ctr. Proj.), 6.80%, due 7/1/98,
Prerefunded @ 102 (Note D) 4.00 103,752
1,700,000 Honolulu City & Cty. CP, 3.70%, due 12/8/97
(LINE: Canadian Imperial Bank of Commerce) 3.70 1,700,000
-----------
1,803,752
-----------
ILLINOIS -- 9.7%
2,500,000 Arcola IDR (Herff Jones, Inc. Proj.) VRDN, 3.90%
(LOC: Wachovia Bank & Trust Co.) (Note C) 3.90 2,500,000
2,900,000 Chicago (Muni. Sec. Trust Receipts) Ser. A2 VRDN, 3.80%
(Insured: AMBAC; LIQ: Credit Suisse) (Note C) 3.80 2,900,000
7,000,000 Chicago O'Hare Intl. Airport (Northwest Airlines) Ser. A VRDN, 3.90%
(LOC: Bank of Tokyo-Mitsubishi) (Note C) 3.90 7,000,000
600,000 Illinois COP, Ser. 1995A, 4.30%, due 7/1/98 (Insured: MBIA) 4.30 600,000
3,000,000 Illinois Dev. Fin. Auth. (Citizens Util. Co. Proj.) VRDN, 3.80% (Note C) 3.80 3,000,000
375,000 Illinois Dev. Fin. Auth. (D.E. Akin Seed Proj.) VRDN, 3.90%
(LOC: Bank One) (Note C) 3.90 375,000
1,850,000 Illinois Dev. Fin. Auth. (Emtech Machining & Grinding Inc., Proj.) VRDN, 3.90%
(LOC: LaSalle National Bank) (Note C) 3.90 1,850,000
3,100,000 Illinois Hlth. Fac. Auth. Rev. Bonds (Rush Presbyterian-St. Luke's Med.
Ctr. Group) Ser. 1996B, 3.70%, due 11/20/97 (LOC: Northern Trust) 3.70 3,100,000
1,800,000 North Aurora IDA (Oberweiss Dairy, Inc. Proj.) VRDN, 3.90%
(LOC: LaSalle National Bank) (Note C) 3.90 1,800,000
2,470,000 Oak Lawn IDR (Lavergne Partners Proj.) VRDN, 3.90%
(LOC: LaSalle National Bank) (Note C) 3.90 2,470,000
100,000 Rosemont G.O. Bonds, 5.70%, due 2/1/98 (Insured: FGIC) 3.95 100,426
-----------
25,695,426
INDIANA -- 1.1%
3,000,000 Newton Cty. IDR (Intec Group, Inc. Proj.) VRDN, 3.90%
(LOC: LaSalle National Bank) (Note C) 3.90 3,000,000
-----------
IOWA -- 1.9%
4,500,000 Dubuque (Jeld-Wen, Inc. Proj.) Ser. 1988 VRDN, 4.10%
(LOC: ABN-AMRO Bank) (Note C) 4.10 4,500,000
500,000 Iowa Student Loan Ser. C, 6.30%, due 12/1/97 (Insured: AMBAC) 4.05 500,896
100,000 North Central Iowa Community Sch. Dist., 4.50%, due 5/1/98 (Insured: AMBAC) 4.00 100,240
-----------
5,101,136
-----------
KANSAS -- 1.1%
1,500,000 Burlington PCR (Kansas City Power & Light) Ser. 1985B, 3.85%, due 1/15/98
(LOC: Societe Generale) 3.85 1,500,000
1,500,000 Burlington PCR (Kansas City Power & Light) Ser. 1985B, 3.70%, due 11/19/97
(LOC: Societe Generale) 3.70 1,500,000
-----------
3,000,000
-----------
KENTUCKY -- 7.1%
4,915,000 Danville Multi-City Lease Rev. Bonds, 3.80%, due 11/18/97 (LOC: PNC Bank) 3.80 4,915,000
700,000 Daviess Cty. Solid Waste Disp. Rev. Bonds (Scott Paper Co. Proj.)
Ser. 1993A VRDN, 4.05% (Note C) 4.05 500,000
500,000 Daviess Cty. Solid Waste Disp. Rev. Bonds (Scott Paper Co. Proj.)
Ser. 1994A VRDN, 4.05% (Note C) 4.05 700,000
800,000 Daviess Cty. Solid Waste Disp. Rev. Bonds (Scott Paper Co. Proj.)
Ser. 1994B VRDN, 4.05% (Note C) 4.05 800,000
</TABLE>
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<PAGE>
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WATERHOUSE INVESTORS CASH MANAGEMENT FUNDS
Municipal Portfolio o Schedule of Investments
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL ANNUALIZED
AMOUNT YIELD (%) VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$ 1,200,000 Mayfield (Kentucky League of Cities Pooled Lease Fin. Prog.) Ser. 1996 VRDN,
3.80% (LOC: PNC Bank) (Note C) 3.80 $ 1,200,000
8,800,000 Pendleton Cty. (Kentucky Assoc. of Counties Lease Trust Prog.) Ser. 1989,
3.85%, due 11/7/97 (LOC: Commonwealth Bank of Australia) 3.85 8,800,000
2,000,000 Pulaski Cty. Solid Waste Disp. (National Rural CFC, Eastern Kentucky) Ser. B,
3.70%, Mandatory Put 2/15/98 3.70 2,000,000
-----------
18,915,000
-----------
LOUISIANA -- 0.6%
1,300,000 Calcasieu Parish (Citgo Petroleum Corp.) Ser. 1994 VRDN, 4.30%
(LOC: Banque Nationale de Paris) (Note C) 4.30 1,300,000
250,000 Louisiana Gas & Fuels Tax Rev. Bonds, Ser. A, 6.80%, due 11/15/97,
(Insured: FGIC) 4.00 250,258
-----------
1,550,258
-----------
MARYLAND -- 4.9%
500,000 Anne Arundel Cty. (Baltimore Gas & Electric Proj.) Ser. 1988, 3.75%, due 11/10/97
(SPBA: Bank of New York, Chemical Bank) 3.75 500,000
8,100,000 Anne Arundel Cty. (Baltimore Gas & Electric Proj.) Ser. 1988, 3.75%, due 12/10/97
(SPBA: Bank of New York, Chemical Bank) 3.75 8,100,000
4,100,000 Anne Arundel Cty. (Baltimore Gas & Electric Proj.) Ser. 1988, 3.75%, due 12/15/97
(SPBA: Bank of New York, Chemical Bank) 3.75 4,100,000
170,000 Maryland Community Dev. Auth. Ser. 1992, 5.75%, due 4/1/98 4.00 171,193
250,000 Maryland G.O., 8.20%, due 3/1/98 4.10 253,271
-----------
13,124,464
-----------
MASSACHUSETTS -- 2.3%
6,000,000 Worcester BANS, 4.25%, due 8/28/98 3.87 6,018,000
-----------
MICHIGAN -- 3.1%
3,670,000 Michigan Hsg. Dev. Auth., Ser. 1988A, 3.70%, due 11/24/97 (LOC: Credit Suisse) 3.70 3,670,000
1,700,000 Michigan Strategic Fund (United Fixtures Co. Proj.) Ser. 1995 VRDN, 3.90%
(LOC: Bankers Trust) 3.90 1,700,000
2,750,000 Michigan Underground Storage Tank Fin. Assurance Auth., CP Notes, Ser. 1, 3.70%,
due 12/1/97 (LOC: Canadian Imperial Bank of Commerce) (Note C) 3.70 2,750,000
-----------
8,120,000
-----------
MINNESOTA -- 0.2%
205,000 Dakota Cty. Hsg. & Redev. Auth. (Ind. Sch. Dist. #196 Proj.) 3.90%,
due 2/1/98 (Insured: MBIA) 3.90 205,000
200,000 Minnesota G.O.Bonds, 6.60%, due 8/1/98, Prerefunded @ 100 (Note D) 4.00 203,778
-----------
408,778
-----------
MISSISSIPPI -- 2.9%
5,325,000 Clairborne Cty. PCR (South Mississippi Elec. Power Assoc. - National Rural CFC )
Ser. 1985G-2, 3.75%, due 12/4/97 3.75 5,325,000
1,000,000 Clairborne Cty. PCR (South Mississippi Elec. Power Assoc. - National Rural CFC )
Ser. 1985G-2, 3.75%, due 12/16/97 3.75 1,000,000
645,000 Dept. of Corrections COP (Wilkinson Cty. Correctional Fac.) Ser. A, 4.00%,
due 2/1/98 (Insured: MBIA) 4.00 645,000
700,000 Jackson Cty. Sewer Fac. Rev. Bonds (Chevron USA Inc. Proj.) VRDN, 4.25% (Note C) 4.25 700,000
-----------
7,670,000
-----------
MISSOURI -- 0.2%
500,000 Missouri Hlth. & Educ. Facs. Auth. (SSM Hlth. Care) Ser. AA, 4.90%, due 6/1/98
(Insured: MBIA) 4.00 502,527
-----------
NEBRASKA -- 1.5%
4,000,000 Lincoln (Lincoln Elec. Sys.) 3.70%, due 11/5/97 (LIQ: Morgan Guaranty) 3.70 4,000,000
-----------
</TABLE>
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<PAGE>
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WATERHOUSE INVESTORS CASH MANAGEMENT FUNDS
Municipal Portfolio o Schedule of Investments
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL ANNUALIZED
AMOUNT YIELD (%) VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NEVADA -- 2.2%
$ 5,000,000 Clark Cty. IDR (Nevada Power Co. Proj.) VRDN, 3.80%
(LOC: Barclays Bank) (Note C) 3.80 $ 5,000,000
800,000 Washoe Cty. Water Fac. Rev. Bonds (Sierra Pacific Power Co. Proj.) VRDN, 4.25%
(LOC: Union Bank of Switzerland) (Note C) 4.25 800,000
-----------
5,800,000
-----------
NEW JERSEY -- 0.3%
175,000 Camden Cty. G.O., Ser. A, 5.00%, due 2/1/98 (Insured: FGIC) 3.80 175,510
500,000 Jersey City Incinerator Auth. Rev. Bonds, 6.90%, due 11/15/98 (Insured: FGIC) 4.10 513,940
100,000 New Jersey Transportation Fund Auth. (Transportation Sys.) Ser. A, 5.00%,
due 12/15/97 (Escrow to Maturity) (Note D) 3.90 100,127
-----------
789,577
-----------
NEW MEXICO -- 0.1%
205,000 New Mexico Educ. Asst. Fund, Ser. IIA, 4.20%, due 12/1/97 3.75 205,072
-----------
NEW YORK -- 0.2%
100,000 Brookhaven G.O. Bonds, Ser. B, 7.00%, due 5/1/98 (Insured: MBIA) 4.00 101,453
150,000 New York State Dorm. Auth. Rev. Bonds (Spec. Obl.) Ser. A, 6.55%, due 5/1/98
(Escrow to Maturity) (Note D) 4.05 151,801
250,000 New York State Thruway Auth. (Highway & Bridge Fund) Ser. A, 5.00%,
due 4/1/98 (Insured: AMBAC) 4.05 250,952
-----------
504,206
-----------
NORTH CAROLINA -- 0.1%
175,000 Concord COP, Ser. A, 4.60%, due 6/1/98 (Insured: MBIA) 4.00 175,588
-----------
OHIO -- 1.1%
2,500,000 Ohio Air Quality Dev. Auth. PCR (Ohio Edison Co. Proj.) Ser. B, 4.10%,
Optional Put 5/1/98 (LOC: Union Bank of Switzerland) 4.11 2,499,750
100,000 Ohio G.O. Bonds, 5.50%, due 8/1/98 (LOC: Wachovia Bank & Trust Co.) 4.00 101,086
315,000 Toledo G.O. Bonds, 4.50%, due 12/1/97 (Insured: AMBAC) 3.80 315,170
-----------
2,916,006
-----------
OREGON -- 0.9%
500,000 Klamath Falls Elec. Rev. Bonds (Salt Caves Hydro-Electric Project) Ser. B, 4.50%,
Mandatory Put 5/1/98 (Escrow to Maturity) (Note D) 4.00 500,000
2,000,000 Oregon G.O. Vet. Welfare Bonds, Ser. 76C, 4.05%, Mandatory Put 2/2/98 4.05 2,000,000
-----------
2,500,000
-----------
PENNSYLVANIA -- 4.7%
1,000,000 Beaver Cty. IDA (Duquesne Light Co. Proj.) Ser.1993A, 3.80%, due 12/18/97
(LOC: Union Bank of Switzerland) 3.80 1,000,000
2,000,000 Carbon Cty. IDA Res. Rec. Rev. (Panther Creek Proj.) Ser. 1990A, 3.80%,
due 11/4/97 (LOC: National Westminster Bank) 3.80 2,000,000
385,000 Dauphin Cty. Gen. Hlth. Sys. Rev. Bonds (Pinnacle Hlth. Sys. Proj.) 4.00%,
due 5/15/98 (Insured: MBIA) 4.00 385,000
225,000 Luzerne Cty. G.O., 3.75%, due 12/15/97 (Insured: FGIC) 3.75 225,000
100,000 Montgomery Cty. Higher Educ. & Hlth. Auth. Hosp. Rev. Bonds (Bryn Mawr
Hosp. Proj.) 9.375%, due 12/1/97, Prerefunded @ 102 (Note D) 4.00 102,423
255,000 Norristown G.O., 5.45%, due 12/15/97 (Insured: FGIC) 4.00 255,431
100,000 Pennsylvania COP, Ser. A, 4.25%, due 7/1/98 (Insured: AMBAC) 4.00 100,158
160,000 Pennsylvania G.O., 4.75%, due 6/15/98 4.00 160,711
200,000 Pennsylvania Higher Educ. Facs. Auth. Rev. Bonds, Ser. K, 4.00%,
due 6/15/98 (Insured: AMBAC) 4.00 200,000
7,900,000 Venango IDA (Scrubgrass Proj.) Ser. 1990A, 3.75%, due 12/19/97
(LOC: National Westminster Bank) 3.75 7,900,000
285,000 Williams Valley Sch. Dist. G.O. Bonds, 3.85%, due 9/1/98 (Insured: FSA) 3.85 284,644
-----------
12,613,367
-----------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
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WATERHOUSE INVESTORS CASH MANAGEMENT FUNDS
Municipal Portfolio o Schedule of Investments
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL ANNUALIZED
AMOUNT YIELD (%) VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RHODE ISLAND -- 0.8%
$ 100,000 Pawtucket G.O. Bonds, 5.20%, due 6/15/98 (Insured: MBIA) 4.00 $ 100,721
1,900,000 Rhode Island Ind. Fac. Corp. IDR (NFA Corp. Proj.) VRDN, 4.00%
(LOC: Bank of Boston) (Note C) 4.00 1,900,000
-----------
2,000,721
-----------
SOUTH CAROLINA -- 4.7%
2,800,000 Florence Cty. Solid Waste Disp. Rev. Bonds (Roche Carolina, Inc.) Ser. 97, VRDN,
4.25% (LOC: Swiss Bank) (Note C) 4.25 2,800,000
6,700,000 South Carolina Jobs EDA (Zeuna Starker USA, Inc. Proj.) VRDN, 3.80%
(LOC: Bayerische Landesbank) (Note C) 3.80 6,700,000
3,000,000 South Carolina Public Service Auth., 3.70%, due 12/3/97 (RCA: Nationsbank) 3.70 3,000,000
50,000 South Carolina Public Service Auth., Ser. B, 5.00%, due 1/1/98 (Insured: FGIC) 4.50 50,040
-----------
12,550,040
-----------
SOUTH DAKOTA -- 3.5%
1,345,000 South Dakota Hsg. Dev. Auth. (Homeownership Mortgage Bds.)
Ser. 1997G, 3.95%, due 8/13/98 3.95 1,345,000
2,145,000 South Dakota Hsg. Dev. Auth. (Homeownership Mortgage Bds.)
Ser. 1997H, 3.95%, due 8/13/98 3.95 2,145,000
5,800,000 South Dakota Hsg. Dev. Auth. (Homeownership Mortgage Bds.)
Ser. 1997E, VRDN, 3.90% (GIC: Westdeutsche Landesbank GZ) 3.90 5,800,000
-----------
9,290,000
-----------
TENNESSEE -- 1.0%
2,650,000 Franklin Cty. IDR (Franklin Ind. Inc. Proj.) VRDN, 3.80%
(LOC: Nationsbank) (Note C) 3.80 2,650,000
100,000 Shelby Cty. Hlth., Educ., & Hsg. Fac. Rev. Bonds (Methodist Hlth. Systems)
Ser. 1989A, 7.10%, due 6/1/98 (Insured: MBIA) 4.00 101,746
-----------
2,751,746
-----------
TEXAS -- 14.2%
135,000 Arlington Ind. Sch. Dist., 7.00%, due 8/15/98 (Escrow to Maturity) (Note D) 4.00 138,093
240,000 Arlington Ind. Sch. Dist., 7.00%, due 8/15/98, Prerefunded @ 100 (Note D) 4.00 245,496
2,500,000 Brazos River Auth. (Texas Util. Elec. Co. Proj.) Ser. 1994A, 3.75%,
due 12/9/97 (LOC: Canadian Imperial Bank of Commerce) 3.75 2,500,000
600,000 Brazos River Auth. (Texas Util. Elec. Co. Proj.) Ser. 1995C VRDN, 4.25%,
(LOC: Swiss Bank) (Note C) 4.25 600,000
1,500,000 Brazos River Auth. (Texas Util. Elec. Co. Proj.) Ser. 1996A VRDN, 4.25%,
(Insured: AMBAC; LIQ: Bank of New York) (Note C) 4.25 1,500,000
1,800,000 Brazos River Auth. (Texas Util. Elec. Co. Proj.) Ser. 1997B VRDN, 4.05%,
(Insured: MBIA; LIQ: Bank of New York) (Note C) 4.05 1,800,000
2,000,000 Dallas Area Rapid Transit, Sales Tax Rev. CP Notes, Ser. A, 3.75%, due 11/3/97
(LOC: Credit Suisse, Swiss Bank) 3.75 2,000,000
2,500,000 Dallas Area Rapid Transit, Sales Tax Rev. CP Notes, Ser. A, 3.75%, due 11/5/97
(LOC: Credit Suisse, Swiss Bank) 3.75 2,500,000
100,000 Dallas - Fort Worth Airport Rev. Bonds, Ser. A, 4.60%, due 11/1/97 (Insured: MBIA) 4.00 100,000
500,000 Gulf Coast Waste Disposal Auth. Solid Waste Rev. Bonds (Amoco Oil Proj.)
Ser. 1993, VRDN 4.25% (Note C) 4.25 500,000
200,000 Gulf Coast Waste Disposal Auth. Solid Waste Rev. Bonds (Amoco Oil Proj.)
Ser. 1995, VRDN 4.25% (Note C) 4.25 200,000
700,000 Gulf Coast Waste Disposal Auth. Solid Waste Rev. Bonds (Citgo Petroleum
Corp. Proj.) Ser. 1994, VRDN 4.30%, (LOC: Wachovia Bank) (Note C) 4.30 700,000
250,000 Harris Cty., Rev. Bonds (Toll Road) 8.10%, due 8/1/98, Prerefunded @ 102 (Note D) 4.00 262,296
250,000 Harris Cty., Rev. Bonds (Toll Road) 8.125%, due 8/1/98, Prerefunded @ 102 (Note D) 4.00 262,341
2,200,000 Houston Airport CP Notes Ser. A, 3.75%, due 12/9/97
(LOC: Canadian Imperial Bank of Commerce, Commerzbank) 3.75 2,200,000
200,000 Houston Water & Sewer Rev. Bonds, 8.125%, due 12/1/97,
Prerefunded @ 102 (Note D) 4.00 204,644
1,200,000 Matagorda Cty. Nav. Dist. Rev. Bonds (Houston Power & Light Co.) VRDN, 4.05%
(Insured: AMBAC; LIQ: Union Bank of Switzerland) (Note C) 4.05 1,200,000
3,000,000 San Antonio Water System CP Notes Ser. 1995, 3.75%, due 12/2/97
(RCA: Westdeutsche Landesbank GZ) 3.75 3,000,000
3,000,000 San Antonio Water System CP Notes Ser. 1995, 3.75%, due 12/4/97
(RCA: Westdeutsche Landesbank GZ) 3.75 3,000,000
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
WATERHOUSE INVESTORS CASH MANAGEMENT FUNDS
Municipal Portfolio o Schedule of Investments
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL ANNUALIZED
AMOUNT YIELD (%) VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$ 2,000,000 Texas Municipal Power Agency, BANS, 3.70%, due 11/17/97
(RCA: Morgan Guaranty, Bank of America, Canadian Imperial Bank of Commerce) 3.70 $ 2,000,000
1,000,000 Texas Municipal Power Agency, BANS, 3.70%, due 12/19/97
(RCA: Morgan Guaranty, Bank of America, Canadian Imperial Bank of Commerce) 3.70 1,000,000
100,000 Texas Pub. Bldg. Auth. Rev. Bonds, 6.25%, due 8/1/98 (Insured: MBIA) 4.00 101,632
5,000,000 Texas TRANS, CP Ser. 1997B, 3.60%, due 12/29/97 3.60 5,000,000
300,000 University of Houston, Ser. B, 7.00%, due 2/15/98 (Insured: MBIA) 3.85 302,655
5,500,000 University of Texas Board of Regents, Ser. A, 3.80%, due 11/14/97 3.80 5,500,000
900,000 West Side Calhoun Cty. (BP Chemicals) VRDN, 4.25% (Note C) 4.25 900,000
-----------
37,717,157
-----------
VERMONT -- 0.2%
400,000 Vermont G.O. Bonds, 6.40%, due 2/1/98 3.87 402,468
-----------
VIRGINIA -- 1.3%
1,000,000 King George Cty. (Birchwood Power Proj.) Ser. 1997, VRDN, 4.25%
(LOC: Credit Suisse) (Note C) 4.25 1,000,000
600,000 King George Cty. (Birchwood Power Proj.) Ser. 1995, VRDN, 4.25%
(LOC: Credit Suisse) (Note C) 4.25 600,000
1,500,000 Louisa IDA (Virginia Elec. Power Co.), 3.90%, due 12/5/97 3.90 1,500,000
430,000 Virginia Hsg. Dev. Auth., Ser. B, 5.00%, due 5/1/98 4.00 432,071
-----------
3,532,071
-----------
WASHINGTON -- 3.1%
215,000 Auburn Util. Sys. Rev. Bonds, 6.00%, due 11/1/97 (Insured: MBIA) 3.60 215,000
8,000,000 Pierce Cty. TANS, 3.75%, due 12/30/97 3.70 8,000,625
150,000 Washington G.O., Ser. A & AT6, 5.10%, due 2/1/98 4.13 150,406
-----------
8,366,031
-----------
WEST VIRGINIA -- 0.9%
2,500,000 West Virginia Public Energy Auth. (Morgantown Energy Assoc. Proj.)
Ser. 1989A, 3.80%, due 11/4/97 (LOC: Swiss Bank) 3.80 2,500,000
-----------
WISCONSIN-- 0.2%
200,000 Wisconsin G.O., Ser. A, 6.40%, due 5/1/98, Prerefunded @ 101 (Note D) 4.10 204,170
200,000 Wisconsin G.O., Ser. C, 6.80%, due 5/1/98, Prerefunded @ 101 (Note D) 4.10 204,554
-----------
408,724
-----------
TOTAL MUNICIPAL OBLIGATIONS -- 99.9% 265,440,650
OTHER ASSETS AND LIABILITIES, NET -- 0.1% 183,046
-----------
NET ASSETS -- 100.0% $265,623,696
===========
</TABLE>
Please see accompanying notes to the schedules of investments
and financial statements.
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<PAGE>
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WATERHOUSE INVESTORS CASH MANAGEMENT FUNDS
Notes to Schedules of Investments
October 31, 1997
(A) Variable rate securities. The rates shown are the
current rates on October 31, 1997. Dates shown represent the
next interest reset date.
(B) These obligations were acquired for investment, not with
intent to distribute or sell. They are restricted as to public
resale. These obligations were acquired at a cost of par. At
October 31,1997, the aggregate value of these securities is
$40,832,444, representing 2.3% of net assets and are valued at
amortized cost.
(C) Securities payable on demand. The interest rate, which
is subject to change, is based upon bank prime rates or an
index of market interest rates.
(D) Bonds which are prerefunded or escrowed to maturity are
collateralized by U.S. Government securities which are held in
escrow and are used to pay principal and interest on the
municipal issue and to retire the bonds in full at the
earliest refunding date.
(E) Security may be redeemed prior to maturity date at the
discretion of the issuer.
Description of Abbreviations
AMBAC AMBAC Assurance Corp.
BANS Bond Anticipation Notes
COP Certification of Participation
CP Commercial Paper
EDA Economic Development Authority
FGIC Financial Guaranty Insurance Company
FNMA Federal National Mortgage Association
FSA Financial Securities Assurance Inc.
GIC Guaranteed Investment Contract
GNMA Government National Mortgage Association
G.O. General Obligation
HFA Housing Finance Authority
IDA Industrial Development Authority
IDR Industrial Development Revenue Bond
LINE Line of Credit
LIQ Liquidity Agreement
LOC Letter of Credit
MBIA MBIA Insurance Corp.
PCR Pollution Control Revenue Bond
RANS Revenue Anticipation Notes
RCA Revolving Credit Agreement
SBPA Standby Bond Purchase Agreement
SFM Single Family Mortgage
TANS Tax Anticipation Notes
TRANS Tax Revenue Anticipation Notes
VRDN Variable Rate Demand Notes
This Report has been prepared for shareholders and may be distributed to others
only if preceded or accompanied by a current prospectus.
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Report of Ernst & Young LLP, Independent Auditors
Shareholders and Board of Directors
Waterhouse Investors Family of Funds, Inc.
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Waterhouse Investors Family of Funds, Inc.
(comprising, respectively, the Money Market Portfolio, the U.S. Government
Portfolio and the Municipal Portfolio of Waterhouse Investors Cash Management
Funds) as of October 31, 1997, and the related statements of operations for the
year then ended, and the statements of changes in net assets and the financial
highlights for the year then ended and for the period from December 20, 1995
(commencement of operations) to October 31, 1996. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with 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 and financial highlights. Our procedures included confirmation of
securities owned as of October 31, 1997 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the repective Portfolios constituting Waterhouse Investors Family of Funds,
Inc. at October 31, 1997, the results of their operations for the year then
ended, and the changes in their net assets and the financial highlights for the
year then ended and for the period from December 20, 1995 to October 31, 1996,
in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
December 1, 1997
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WATERHOUSE SECURITIES, INC.
Member New York Stock Exchange o SIPC
National Headquarters
100 Wall Street o New York, New York 10005
CUSTOMER SERVICE o (800) 934-4410
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