EDWARD D. JONES & CO. DAILY PASSPORT CASH TRUST
PROSPECTUS
"A PASSPORT TO CASH MANAGEMENT"
The shares of Edward D. Jones & Co. Daily Passport Cash Trust (the "Trust")
offered by this prospectus represent interests in a no-load, open-end,
diversified management investment company (a mutual fund) investing in money
market instruments to achieve stability of principal and current income
consistent with stability of principal.
AN INVESTMENT IN THE TRUST IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THE TRUST ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00
PER SHARE; THERE CAN BE NO ASSURANCE THAT THE TRUST WILL BE ABLE TO DO SO.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY.
This prospectus contains the information you should read and know before you
invest in the Trust. Keep this prospectus for future reference.
The Trust has also filed a Statement of Additional Information dated April 30,
1994, with the Securities and Exchange Commission. The information contained in
the Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Statement of Additional Information
free of charge by calling 1-800-441-2357. To obtain other information or to
make inquiries about the Trust, contact the Trust at the address listed in the
back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE AC-
CURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated April 30, 1994
TABLE OF CONTENTS
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SUMMARY OF TRUST EXPENSES 1
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FINANCIAL HIGHLIGHTS 2
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GENERAL INFORMATION 3
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LIBERTY INVESTMENT PROGRAM 3
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INVESTMENT INFORMATION 4
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Investment Objective 4
Investment Policies 4
Acceptable Investments 4
Variable Rate Demand Notes 4
Bank Instruments 5
Short-Term Credit Facilities 5
Asset-Backed Securities 5
Ratings 5
Repurchase Agreements 5
Credit Enhancement 5
Demand Features 6
Restricted and Illiquid
Securities 6
When-Issued and Delayed
Delivery Transactions 6
Investment Risks 6
Investment Limitations 7
Regulatory Compliance 7
NET ASSET VALUE 7
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INVESTING IN THE TRUST 7
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Share Purchases 7
Federal Reserve or Bank Wire 8
Full Service Account 8
Minimum Investment Required 8
What Shares Cost 8
Receipt of Orders 8
Certificates and Confirmations 9
Dividends 9
Capital Gains 9
Retirement Plans 9
EXCHANGE PRIVILEGE 9
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Requirements for Exchange 9
Tax Consequences 10
Making an Exchange 10
Telephone Instructions 10
REDEEMING SHARES 10
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Redeeming by Check 10
Using the Checking Account 11
VISA Account 11
Written Requests 11
Signatures 11
Receiving Payment 11
Accounts with Low Balances 12
TRUST INFORMATION 12
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Management of the Trust 12
Board of Trustees 12
Investment Adviser 12
Advisory Fees 12
Adviser's Background 12
Federated Investors 13
Distribution of Trust Shares 13
Shareholder Services Plan 13
Administration of the Trust 13
Administrative Services 13
Custodian 14
Transfer Agent and Dividend
Disbursing Agent 14
Legal Counsel 14
Independent Auditors 14
SHAREHOLDER INFORMATION 14
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Voting Rights 14
Massachusetts Partnership Law 14
TAX INFORMATION 15
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Federal Income Tax 15
State and Local Taxes 15
PERFORMANCE INFORMATION 15
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FINANCIAL STATEMENTS 16
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REPORT OF INDEPENDENT AUDITORS 24
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ADDRESSES Inside back cover
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SUMMARY OF TRUST EXPENSES
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<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)...................................... None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)...................................... None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable).................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)........ None
Exchange Fee.............................................................. None
ANNUAL TRUST OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee............................................................ 0.46%
12b-1 Fee................................................................. None
Total Other Expenses...................................................... 0.52%
Shareholder Servicing Fee......................................... 0.25%
Total Trust Operating Expenses (1).................................... 0.98%
</TABLE>
(1) The Total Trust Operating expenses in the table above are based on expenses
expected for the fiscal year ending February 28, 1995. The Total Trust
Operating Expenses were 0.95% for the fiscal year ended February 28, 1994.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE TRUST WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "TRUST INFORMATION." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN
$5,000 MAY BE SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment assuming (1) 5% annual return
and (2) redemption at the end of each time
period......................................... $10 $31 $54 $120
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
EDWARD D. JONES & CO. DAILY PASSPORT CASH TRUST
FINANCIAL HIGHLIGHTS
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(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Ernst & Young, Independent Auditors on page
24.
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28 OR 29,
-----------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
- ---------------- ---------- ---------- ---------- ---------- ---------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ----------------
INCOME FROM
INVESTMENT
OPERATIONS
- ----------------
Net investment
income 0.02 0.03 0.05 0.07 0.08 0.07 0.06 0.06 0.07 0.09
- ----------------
LESS
DISTRIBUTIONS
- ----------------
Dividends to
shareholders
from net
investment
income (0.02) (0.03) (0.05) (0.07) (0.08) (0.07) (0.06) (0.06) (0.07) (0.09)
- ---------------- ----- ----- ----- ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------- ----- ----- ----- ------ ------ ------ ------ ------ ------ ------
TOTAL RETURN* 2.33% 2.82% 4.98% 7.39% 8.63% 7.24% 6.15% 5.79% 7.43% 9.73%
- ----------------
RATIOS TO
AVERAGE NET
ASSETS
- ----------------
Expenses 0.95% 0.95% 0.87% 0.83% 0.88% 1.01% 1.03% 1.03% 1.03% 1.03%
- ----------------
Net investment
income 2.31% 2.79% 4.89% 7.13% 8.23% 7.14% 6.00% 5.63% 7.17% 9.27%
- ----------------
SUPPLEMENTAL
DATA
- ----------------
<CAPTION>
Net assets, end
of period (000
omitted) $2,171,225 $2,223,226 $2,469,295 $2,631,671 $2,235,991 $1,279,762 $744,107 $656,730 $645,553 $655,719
- ----------------
</TABLE>
* Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
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The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated January 9, 1980. The Trust is designed for individual, joint,
custodial, trust, fiduciary, corporate, partnership, association, or proprie-
torship accounts as a convenient means of accumulating an interest in a profes-
sionally managed, diversified portfolio limited to money market instruments ma-
turing in one year or less. A minimum initial investment of $1,000 is required.
The Trust attempts to stabilize the value of a share at $1.00. Trust shares are
currently sold and redeemed at that price.
LIBERTY INVESTMENT PROGRAM
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This Trust is one of a group of mutual funds, collectively known as the Liberty
Investment Program. The other funds in the group are:
. American Leaders Fund, Inc.--providing growth of capital and income through
high-quality stocks;
. Capital Growth Fund--providing appreciation of capital primarily through
equity securities;
. Fund for U.S. Government Securities, Inc.--providing current income through
long-term U.S. government securities;
. International Equity Fund--providing long-term capital growth and income
through international securities;
. International Income Fund--providing a high level of current income
consistent with prudent investment risk through high-quality debt
securities denominated primarily in foreign currencies;
. Liberty Equity Income Fund, Inc.--providing above-average income and
capital appreciation through income-producing equity securities;
. Liberty High Income Bond Fund, Inc.--providing high current income through
high-yielding, lower-rated, corporate bonds;
. Liberty Municipal Securities Fund, Inc.--providing a high level of current
income exempt from federal income tax through municipal bonds;
. Liberty Utility Fund, Inc.--providing current income and long-term growth
of income, primarily through electric, gas and communication utilities;
. Strategic Income Fund--providing high current income through investing in
domestic corporate debt obligations, U.S. government securities, and
foreign government and corporate debt obligations;
. Tax-Free Instruments Trust--providing current income consistent with
stability of principal and exempt from federal income tax, through high-
quality, short-term municipal securities; and
. World Utility Fund--providing total return by investing primarily in
securities issued by domestic and foreign companies in the utilities
industry.
Each of the funds may also invest in certain other types of securities as de-
scribed in each fund's prospectus.
The Liberty Investment Program provides flexibility and diversification for an
investor's long-term investment planning. It enables an investor to meet the
challenges of changing market conditions by offering convenient exchange
privileges which give access to various investment vehicles and by providing
the investment services of a proven, professional investment adviser.
INVESTMENT INFORMATION
- -------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Trust is stability of principal and current
income consistent with stability of principal. The Trust pursues this invest-
ment objective by investing in a portfolio of money market instruments matur-
ing in one year or less. The average maturity of money market instruments in
the Trust's portfolio, computed on a dollar-weighted basis, will be 120 days
or less, but the Trust intends to compute on a dollar-weighted basis of 90
days. While there is no assurance that the Trust will achieve its investment
objective, it endeavors to do so by following the investment policies de-
scribed in this prospectus. The investment objective and the policies and lim-
itations described below cannot be changed without approval of shareholders.
INVESTMENT POLICIES
ACCEPTABLE INVESTMENTS. The Trust invests in high quality money market instru-
ments that are either rated in the highest short-term rating category by one
or more nationally recognized statistical rating organizations ("NRSROs") or
of comparable quality to securities having such ratings. Examples of these in-
struments include, but are not limited to:
. domestic issues of corporate debt obligations, including variable rate de-
mand notes;
. commercial paper (including Canadian Commercial Paper and Europaper);
. certificates of deposit, demand and time deposits, bankers' acceptances
and other instruments of domestic and foreign banks and other deposit in-
stitutions ("Bank Instruments");
. short-term credit facilities, such as demand notes;
. asset-backed securities;
. obligations issued or guaranteed as to payment of principal and interest
by the U.S. government or one of its agencies or instrumentalities ("Gov-
ernment Securities"); and
. other money market instruments.
The Trust invests only in instruments denominated and payable in U.S. dollars.
VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term corpo-
rate debt instruments that have variable or floating interest rates and
provide the Trust with the right to tender the security for repurchase at
its stated principal amount plus accrued interest. Such securities typi-
cally bear interest at a rate that is intended to cause the securities to
trade at par. The interest rate may float or be adjusted at regular inter-
vals (ranging from daily to annually), and is normally based on a
published interest rate or interest rate index. Most variable rate demand
notes allow the Trust to demand the repurchase of the security on not more
than seven days prior notice. Other notes only permit the Trust to tender
the security at the time of each interest rate adjustment or at other fixed
intervals. See "Demand Features." The Trust treats variable rate demand
notes as maturing on the later of the date of the next interest adjustment
or the date on which the Trust may next tender the security for repurchase.
BANK INSTRUMENTS. The Trust only invests in Bank Instruments either issued
by an institution having capital, surplus and undivided profits over $100
million or insured by the Bank Insurance Fund ("BIF") or the Savings Associ-
ation Insurance Fund ("SAIF"). Bank Instruments may include Eurodollar Cer-
tificates of Deposit ("ECDs"), Yankee Certificates of Deposit ("Yankee CDs")
and Eurodollar Time Deposits ("ETDs"). The Trust will treat securities
credit enhanced with a bank's letter of credit as Bank Instruments.
SHORT-TERM CREDIT FACILITIES. Demand notes are short-term borrowing arrange-
ments between a corporation and an institutional lender (such as the Trust)
payable upon demand by either party. The notice period for demand typically
ranges from one to seven days, and the party may demand full or partial pay-
ment. The Trust may also enter into, or acquire participations in, short-
term revolving credit facilities with corporate borrowers. Demand notes and
other short-term credit arrangements usually provide for floating or vari-
able rates of interest.
ASSET-BACKED SECURITIES. Asset-backed securities are securities issued by
special purpose entities whose primary assets consist of a pool of loans or
accounts receivable. The securities may take the form of beneficial interest
in a special purpose trust, limited partnership interests or commercial pa-
per or other debt securities issued by a special purpose corporation. Al-
though the securities often have some form of credit or liquidity enhance-
ment, payments on the securities depend predominately upon collections of
the loans and receivables held by the issuer.
RATINGS. An NRSRO's highest rating category is determined without regard for
sub-categories and gradations. For example, securities rated A-1 or A-1+ by
Standard & Poor's Corporation ("S&P"), Prime-1 by Moody's Investors Service,
Inc. ("Moody's"), or F-1 (+ or -) by Fitch Investors Service, Inc. ("Fitch")
are all considered rated in the highest short-term rating category. The Trust
will follow applicable regulations in determining whether a security rated by
more than one NRSRO can be treated as being in the highest short-term rating
category; currently, such securities must be rated by two NRSROs in their
highest rating category. See "Regulatory Compliance."
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S. govern-
ment securities or certificates of deposit to the Trust and agree at the time
of sale to repurchase them at a mutually agreed upon time and price. To the ex-
tent that the original seller does not repurchase the securities from the
Trust, the Trust could receive less than the repurchase price on any sale of
such securities.
CREDIT ENHANCEMENT. Certain of the Trust's acceptable investments may have been
credit enhanced by a guaranty, letter of credit or insurance. The Trust
typically evaluates the credit quality and ratings of credit enhanced
securities based upon the financial condition and ratings of the party
providing the credit enhancement (the "credit enhancer"), rather than the
issuer. Generally, the Trust will not treat
credit enhanced securities as having been issued by the credit enhancer for
diversification purposes. However, under certain circumstances applicable
regulations may require the Trust to treat the securities as having been
issued by both the issuer and the credit enhancer. The bankruptcy,
receivership or default of the credit enhancer will adversely affect the
quality and marketability of the underlying security.
DEMAND FEATURES. The Trust may acquire securities that are subject to puts and
standby commitments ("demand features") to purchase the securities at their
principal amount (usually with accrued interest) within a fixed period (usu-
ally seven days) following a demand by the Trust. The demand feature may be
issued by the issuer of the underlying securities, a dealer in the securities
or by another third party, and may not be transferred separately from the un-
derlying security. The Trust uses these arrangements to provide the Trust with
liquidity and not to protect against changes in the market value of the under-
lying securities. The bankruptcy, receivership or default by the issuer of the
demand feature, or a default on the underlying security or other event that
terminates the demand feature before its exercise, will adversely affect the
liquidity of the underlying security. Demand features that are exercisable
even after a payment default on the underlying security may be treated as a
form of credit enhancement.
RESTRICTED AND ILLIQUID SECURITIES. The Trust may invest up to 10% of its net
assets in restricted securities. This restriction is not applicable to commer-
cial paper issued under Section 4(2) of the Securities Act of 1933. Restricted
securities are any securities in which the Trust may otherwise invest pursuant
to its investment objectives and policies but which are subject to restriction
on resale under federal law. The Trust will limit investments in illiquid se-
curities, including certain restricted securities not determined by the Trust-
ees to be liquid, ETDs and repurchase agreements providing for settlement in
more than seven days after notice, to 10% of its net assets.
The Trust may invest in commercial paper issued in reliance on the exemption
from registration afforded by Section 4(2) of the Securities Act of 1933. Sec-
tion 4(2) paper is restricted as to disposition under federal securities law,
and is generally sold to institutional investors, such as the Trust, who agree
that they are purchasing the paper for investment purposes and not with a view
to public distribution. Any resale by the purchaser must be in an exempt
transaction. Section 4(2) commercial paper is normally resold through, or with
the assistance of, an issuer or investment dealers who make a market in Sec-
tion 4(2) commercial paper, thus providing liquidity.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Trust may purchase short-
term U.S. government securities on a when-issued or delayed delivery basis. In
when-issued and delayed delivery transactions, the Trust relies on the seller
to complete the transaction. The seller's failure to complete the transaction
may cause the Trust to miss a price or yield considered to be advantageous.
INVESTMENT RISKS
ECDs, ETDs, Yankee CDs, CCPs, and Europaper are subject to somewhat different
risks than domestic obligations of domestic banks. Examples of these risks in-
clude international economic and political developments, foreign governmental
restrictions that may adversely affect the payment of principal or interest,
foreign withholding or other taxes on interest income, difficulties in ob-
taining or enforcing a judgment against the issuing bank, and the possible im-
pact of interruptions in the flow of international currency transactions. Dif-
ferent risks may also exist for ECDs, ETDs, and Yankee CDs because the
banks issuing these instruments, or their domestic or foreign branches, are not
necessarily subject to the same regulatory requirements that apply to domestic
banks, such as reserve requirements, loan limitations, examinations, account-
ing, auditing and recordkeeping, and the public availability of information.
These factors will be carefully considered by the Trust's adviser in selecting
investments for the Trust.
INVESTMENT LIMITATIONS
The Trust will not:
. borrow money directly or through reverse repurchase agreements (arrange-
ments in which the Trust sells a money market instrument for a percentage
of its cash value with an agreement to buy it back on a set date) or
pledge securities except, under certain circumstances, the Trust may bor-
row up to one-third of the value of its total assets and pledge up to 10%
of the value of those assets to secure such borrowings;
. invest more than 5% of its total assets in securities of one issuer (ex-
cept cash and cash items, repurchase agreements, and U.S. government obli-
gations); or
. invest more than 5% of its total assets in securities of issuers that have
records of less than three years of continuous operations.
REGULATORY COMPLIANCE
The Trust may follow non-fundamental operational policies that are more re-
strictive than its fundamental investment limitations, as set forth in this
prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended. In particular, the Trust
will comply with the various requirements of Rule 2a-7, which regulates money
market mutual funds. The Trust will also determine the effective maturity of
its investments, as well as its ability to consider a security as having re-
ceived the requisite short-term ratings by NRSROs, according to Rule 2a-7. The
Trust may change these operational policies to reflect changes in the laws and
regulations without the approval of its shareholders.
NET ASSET VALUE
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The Trust attempts to stabilize the net asset value of its shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net asset
value per share is determined by subtracting total liabilities from total as-
sets and dividing the remainder by the number of shares outstanding. The Trust,
of course, cannot guarantee that its net asset value will always remain at
$1.00 per share.
INVESTING IN THE TRUST
- --------------------------------------------------------------------------------
SHARE PURCHASES
To purchase shares of the Trust:
. sign the Automatic Collection and Reinvestment Service Agreement, also
available from an Edward D. Jones investment representative (optional, but
recommended);
. complete and sign a check-writing application, available from an Edward
D. Jones investment representative (optional);
. enclose a check for $1,000 or more made payable to Edward D. Jones & Co.,
L.P. ("Edward D. Jones"; and
. send the check and completed form(s) to your local Edward D. Jones of-
fice.
FEDERAL RESERVE OR BANK WIRE. Shares may also be purchased with federal funds
sent by Federal Reserve or bank wire. This method results in a more rapid in-
vestment in Trust shares. Shares cannot be purchased by wire on Columbus Day,
Veteran's Day, or Martin Luther King Day. An investment representative of Ed-
ward D. Jones must be contacted before wiring any funds.
FULL SERVICE ACCOUNT
Shareholders of the Trust may subscribe to Edward D. Jones & Co.'s Full Serv-
ice Account ("FSA"). This program provides a convenient method for investment
by linking the shareholder's Trust Account and Edward D. Jones & Co. Brokerage
Account. The FSA subscriber, with a free credit balance in a Brokerage Ac-
count, will automatically have this sum invested in the Trust account on a
daily basis. FSA also permits daily, automatic redemption of Trust shares to
satisfy debit balances in the shareholders' Brokerage Accounts. At present,
there is no fee for this service, but Edward D. Jones & Co., L.P. reserves the
right to charge a fee in the future.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Trust is $1,000. Subsequent investments
must be in amounts of at least $1,000 except for the FSA in which there is no
minimum requirement. If the investor has signed an Automatic Collection and
Reinvestment Service Agreement there is no minimum. An investment can be made
by sending a check to Edward D. Jones with instructions that it be invested in
the Trust.
WHAT SHARES COST
Trust shares are sold at their net asset value next determined after an order
is received. There is no sales charge imposed by the Trust.
The net asset value is determined at 12:00 noon (Eastern time) and 4:00 p.m.
(Eastern time), Monday through Friday, except on: (i) days on which there are
not sufficient changes in the value of the Trust's portfolio securities that
its net asset value might be materially affected; (ii) days during which no
shares are tendered for redemption and no orders to purchase shares are re-
ceived; and (iii) the following holidays: New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day.
RECEIPT OF ORDERS
Trust shares are sold on days on which the New York Stock Exchange is open.
Orders are considered received after payment by check is converted by Edward
D. Jones or Federated Services Company, the Trust's transfer agent, into fed-
eral funds (normally within two business days of receiving the check). When
payment is made with federal funds, the order is considered received immedi-
ately.
The Trust reserves the right to reject any purchase request.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Trust, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued.
All purchases, redemptions, and dividends paid during the preceding month will
be confirmed on the shareholder's Edward D. Jones monthly account statement.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically re-
invested on payment dates in additional shares of the Trust. Shares purchased
before 12:00 noon (Eastern time) earn dividends that day.
CAPITAL GAINS
Since the Trust's policy is, under normal circumstances, to hold portfolio se-
curities to maturity and to value portfolio securities at amortized cost, it
does not expect any capital gains or losses. If the Trust does experience
gains, however, it could result in an increase in dividends. Capital losses
could result in a decrease in dividends. If for some extraordinary reason the
Trust realizes net long-term capital gains, it will distribute them at least
once every 12 months.
RETIREMENT PLANS
Shares of the Trust can be purchased as an investment for retirement plans or
for IRA accounts. For further details, including prototype retirement plans,
contact an investment representative of Edward D. Jones and consult a tax ad-
viser.
EXCHANGE PRIVILEGE
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Trust shares may be acquired in exchange for shares of other funds in the Lib-
erty Investment Program at net asset value. Also, Trust shares may be exchanged
for shares in other funds in the Liberty Investment Program at net asset value
plus a sales charge, if applicable, and not previously paid. Neither the Trust
nor any of the funds in the Liberty Investment Program impose any additional
fees on exchanges.
REQUIREMENTS FOR EXCHANGE
Shareholders using this privilege must exchange shares having a net asset value
of at least $500. Before the exchange, the shareholder must receive a prospec-
tus of the fund for which the exchange is being made.
This privilege is available to shareholders resident in any state in which the
fund shares being acquired may be sold. Upon receipt of proper instructions and
required supporting documents, shares submitted for exchange are redeemed and
the proceeds invested in shares of the other fund. The exchange privilege may
be terminated at any time. Shareholders will be notified of the termination of
the exchange privilege.
Further information on the exchange privilege and prospectuses for the Liberty
Investment Program funds are available by contacting your Edward D. Jones in-
vestment representative.
TAX CONSEQUENCES
An exercise of the exchange privilege is treated as a sale for federal income
tax purposes. Depending upon the circumstances, a short-term or long-term capi-
tal gain or loss may be realized.
MAKING AN EXCHANGE
Exchange instructions for the Liberty Investment Program may be given in writ-
ing or by telephoning your Edward D. Jones investment representative. Written
instructions may require a signature guarantee. Shareholders of the Trust may
have difficulty in making exchanges by telephone through brokers and other fi-
nancial institutions during times of drastic economic or market changes. If a
shareholder cannot contact the broker or financial institution by telephone, it
is recommended that an exchange request be made in writing and sent by over-
night mail.
TELEPHONE INSTRUCTIONS. Telephone instructions made by the investor may be car-
ried out only if a telephone authorization form completed by the investor is on
file with Federated Services Company. If the instructions are given by a bro-
ker, a telephone authorization form completed by the broker must be on file
with Federated Services Company. Shares may be exchanged between two funds by
telephone only if the two funds have identical shareholder registrations.
Any shares held in certificate form cannot be exchanged by telephone but must
be forwarded to Federated Services Company and deposited to the shareholder's
account before being exchanged. Telephone exchange instructions may be recorded
and will be binding upon the shareholder. Such instructions will be processed
as of 4:00 p.m. (Eastern time) and must be received by Federated Services Com-
pany before that time for shares to be exchanged the same day. Shareholders ex-
changing into a fund will not receive any dividend that is payable to share-
holders of record on that date. This privilege may be modified or terminated at
any time.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Trust redeems shares at their net asset value next determined after Feder-
ated Services Company receives the redemption request. Redemptions will be made
on days on which the Trust computes its net asset value. Redemption requests
must be received in proper form and can be made:
. by writing a check;
. by VISA debit card and VISA checks;
. by contacting your Edward D. Jones & Co. investment representative; or
. by written request.
REDEEMING BY CHECK
At the shareholder's request, Federated Services Company will establish a
checking account for redeeming Trust shares. For further information, contact
an investment representative of Edward D. Jones.
USING THE CHECKING ACCOUNT. With a Trust checking account, shares may be re-
deemed simply by writing a check for $500 or more. The redemption will be made
at the net asset value on the date that Federated Services Company presents
the check to the Trust. A check may not be written to close an account. In ad-
dition, if a shareholder wishes to redeem shares and have the proceeds avail-
able, a check may be written and negotiated through the shareholder's local
bank. Checks should never be sent to Federated Services Company to redeem
shares. Cancelled checks are currently sent to the shareholder each month. We
reserve the right to return on a less frequent basis, or to truncate or image
the checks.
VISA ACCOUNT
At the shareholder's request, State Street Bank will establish a VISA account.
This VISA account allows a shareholder to redeem Trust shares by using a VISA
debit card or VISA checks. A VISA check may not be written to close an ac-
count. A shareholder with a VISA account may not use the Trust checking ac-
count privileges (only one check-writing option may be chosen). For further
information, contact an investment representative of Edward D. Jones. Can-
celled checks are currently sent to shareholders each month. We reserve the
right to return on a less frequent basis, or to truncate or image the checks.
WRITTEN REQUESTS
Trust shares may also be redeemed by sending a written request to Edward D.
Jones. Call Edward D. Jones for specific instructions before redeeming by let-
ter. The shareholder will be asked to provide in the request, the sharehold-
er's name, the Trust name, the account number, and the share or dollar amount
requested. If share certificates have been issued, they must be properly en-
dorsed and should be sent by registered or certified mail with the written re-
quest.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a redemp-
tion of any amount to be sent to an address other than that on record with the
Trust, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
. a trust company or commercial bank whose deposits are insured by the BIF,
which is administered by the Federal Deposit Insurance Corporation
("FDIC");
. a member of the New York, American, Boston, Midwest, or Pacific Stock Ex-
changes;
. a savings bank or savings and loan association whose deposits are insured
by the SAIF, which is administered by the FDIC; or
. any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Trust does not accept signatures guaranteed by a notary public.
The Trust and its transfer agent have adopted standards for accepting
signature guarantees from the above institutions. The Fund may elect in the
future to limit eligible signature guarantors to institutions that are members
of a signature guarantee program. The Trust and its transfer agent reserve the
right to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Trust may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value, due to shareholder re-
demptions.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 60 days to purchase additional shares to meet the minimum
requirement. A shareholder's checkwriting or VISA privilege may be discontin-
ued at any time.
This policy does not currently apply to IRAs, Keoghs, or other retirement
accounts. These types of accounts may be subject to the fund-required minimum
in the future. The shares may be redeemed and placed in a non-interest bearing
brokerage account without prior written notification.
At this time there is no fee for a low balance account. In the future, the
Trust may assess a fee to offset the cost of a small account, rather than liq-
uidating the account.
TRUST INFORMATION
- -------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising
all the Trust's powers except those reserved for the shareholders. The Execu-
tive Committee of the Board of Trustees handles the Board's responsibilities
between meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Trust are made by Passport
Research, Ltd., the Trust's investment adviser, subject to direction by the
Trustees. The adviser continually conducts investment research and supervision
for the Trust and is responsible for the purchase, sale, or exchange of port-
folio instruments, for which it receives an annual fee from the Trust.
ADVISORY FEES. The annual investment advisory fee is based on the Trust's
average daily net assets as shown on the chart below.
<TABLE>
<CAPTION>
ADVISORY FEE AS
AVERAGE DAILY % OF AVERAGE
NET ASSETS DAILY NET ASSETS
------------- ----------------
<S> <C>
First $500 million .50 of 1%
Second $500 million .475 of 1%
Third $500 million .45 of 1%
Fourth $500 million .425 of 1%
Over $2 billion .40 of 1%
</TABLE>
The adviser has undertaken to reimburse the Trust for operating expenses in
excess of limitations established by certain states.
ADVISER'S BACKGROUND. Passport Research, Ltd. is a Pennsylvania limited
partnership organized in 1981. Federated Advisers is the general partner of
the investment adviser and has a 50.5% interest
in the investment adviser. Federated Advisers is owned by Federated Invest-
ors. Edward D. Jones & Co., L.P. is the limited partner of the investment
adviser and has a 49.5% interest in the investment adviser.
FEDERATED INVESTORS. Federated Investors, which was founded in 1956 as Fed-
erated Investors, Inc., develops and manages mutual funds primarily for the
financial industry. Federated Investors' track record of competitive per-
formance and its disciplined, risk averse investment philosophy serve ap-
proximately 3,500 client institutions nationwide. Through these same client
institutions, individual shareholders also have access to this same level
of investment expertise.
DISTRIBUTION OF TRUST SHARES
Edward D. Jones & Co., L.P. ("E.D. Jones") is the principal distributor for
shares of the Trust. Although it receives no compensation from the Trust for
sales of its shares, it does provide administrative personnel and services to
Federated Administrative Services, for which it receives a fee equal to ap-
proximately 0.039 of 1% of average daily net assets of the Trust. Prior to
March 1, 1994, E. D. Jones provided similar personnel and services to the
Trust at approximate cost. The Trust has agreed to indemnify the distributor,
and the distributor has agreed to indemnify the Trust against certain civil
liabilities, including liabilities under the Securities Act of 1933.
SHAREHOLDER SERVICES PLAN. The Trust has adopted a Shareholder Services Plan
(the "Services Plan"). Under the Services Plan, E. D. Jones will enter into a
shareholder services agreement with the Trust to provide shareholder services
to its customers who from time to time may be owners of Trust shares. In
return for providing these services, E. D. Jones will receive payments from
the Trust at a rate not exceeding .25% of the average daily net assets of the
Trust. These shareholder services may include, but are not limited to, the
following functions: providing office space, equipment, telephone facilities,
and various personnel, including clerical, supervisory, and computer
personnel, as necessary or beneficial to establish and maintain shareholder
accounts and records; processing purchase and redemption transactions and
automatic investments of client account cash balances; answering routine
client inquiries regarding the Trust; assisting clients in changing dividend
options, account designations, and addresses; and providing such other
services as the Trust reasonably requests.
Federated Securities Corp. acts as the Trust's distributor in those states in
which Edward D. Jones is not registered. Federated Securities Corp. is a sub-
sidiary of Federated Investors and is the principal distributor for a number
of investment companies.
ADMINISTRATION OF THE TRUST
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the
Trust. Federated Administrative Services provides these at an annual rate
which
relates to the average aggregate daily net assets of all funds advised by sub-
sidiaries of Federated Investors ("Federated Funds") as specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE DAILY NET ASSETS
MAXIMUM ADMINISTRATIVE FEE OF THE FEDERATED FUNDS
-------------------------- ----------------------------------
<S> <C>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
CUSTODIAN. State Street Bank and Trust Company ("State Street Bank"), Boston,
Massachusetts, is custodian for the securities and cash of the Trust.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Pittsburgh, Pennsylvania, is transfer agent for the shares of the Trust, and
dividend disbursing agent for the Trust. E.D. Jones is sub-transfer agent for
the shares of the Trust.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania and Dickstein, Shapiro & Morin, Washington, D.C.
INDEPENDENT AUDITORS. The independent auditors for the Trust are Ernst &
Young, Pittsburgh, Pennsylvania.
SHAREHOLDER INFORMATION
- -------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections
and other matters submitted to shareholders for vote. As a Massachusetts busi-
ness trust, the Trust is not required to hold annual shareholder meetings.
Shareholder approval will be sought only for certain changes in the Trust's
operation and for the election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meet-
ing. A special meeting of the Trust shall be called by the Trustees upon the
written request of shareholders owning at least 10% of the Trust's outstanding
shares.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that ex-
pressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in
each agreement, obligation, or instrument the Trust or its Trustees enter into
or sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required to use its property to protect or compensate
the shareholder. On request, the Trust will defend any claim made and pay any
judgment against a shareholder for any act or obligation of the Trust. There-
fore, financial loss resulting from liability as a shareholder will occur only
if the Trust itself cannot meet its obligations to indemnify shareholders and
pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Trust will pay no federal income tax because it expects to meet require-
ments of the Internal Revenue Code applicable to regulated investment companies
and to receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies even though divi-
dends and distributions are received as additional shares. No federal income
tax is due on any dividends earned in an IRA or qualified retirement plan until
distributed.
STATE AND LOCAL TAXES
Shareholders are urged to consult their own tax advisers regarding the status
of their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Trust advertises its yield and effective yield.
The yield of the Trust represents the annualized rate of income earned on an
investment in the Trust over a seven-day period. It is the annualized dividends
earned during the period on the investment, shown as a percentage of the in-
vestment. The effective yield is calculated similarly to the yield, but, when
annualized, the income earned by an investment in the Trust is assumed to be
reinvested daily. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment.
Advertisements and other sales literature may also refer to total return. Total
return represents the change, over a specified period of time, in the value of
an investment in the Trust after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed
as a percentage.
From time to time, the Trust may advertise its performance using certain
financial publications and/or compare its performance to certain indices.
EDWARD D. JONES & CO. DAILY PASSPORT CASH TRUST PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------ ------------------------------------------------- ------------
<C> <S> <C>
SHORT-TERM OBLIGATIONS--39.9%
--------------------------------------------------------------
STUDENT LOAN MARKETING ASSOCIATION, FLOATING RATE NOTES--4.6%
--------------------------------------------------------------
$100,000,000 3.985%, 4/24/95(a) $ 99,949,353
------------------------------------------------- ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION, DISCOUNT NOTES--25.0%
--------------------------------------------------------------
540,845,000 3.13%-3.475%, 3/9/94-10/19/94(b) 536,641,772
------------------------------------------------- ------------
FEDERAL HOME LOAN BANK, DISCOUNT NOTES--1.4%
--------------------------------------------------------------
36,000,000 3.17%-3.31%, 7/25/94-9/16/94(b) 35,504,535
------------------------------------------------- ------------
FEDERAL FARM CREDIT BANK, DISCOUNT NOTES--0.3%
--------------------------------------------------------------
6,000,000 3.22%, 7/1/94(b) 5,934,526
------------------------------------------------- ------------
FEDERAL FARM CREDIT BANK NOTES--0.3%
--------------------------------------------------------------
7,000,000 3.32%, 5/2/94 7,000,570
------------------------------------------------- ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION NOTES--0.9%
--------------------------------------------------------------
20,475,000 8.60%-9.60%, 4/11/94-6/10/94 20,730,564
------------------------------------------------- ------------
U.S. TREASURY BILLS--5.5%
--------------------------------------------------------------
121,000,000 3.135%-3.60%, 5/5/94-2/9/95 (b) 119,352,468
------------------------------------------------- ------------
U.S. TREASURY NOTES--1.9%
--------------------------------------------------------------
41,000,000 4.25%-5.375%, 4/30/94-8/31/94 41,157,029
------------------------------------------------- ------------
TOTAL SHORT-TERM OBLIGATIONS 866,270,817
------------------------------------------------- ------------
*REPURCHASE AGREEMENTS--61.2%
--------------------------------------------------------------
167,600,000 BZW Securities, Inc., 3.50%, dated 2/28/94, due
3/1/94 167,600,000
-------------------------------------------------
80,000,000 Carroll McEntee & McGinley, Inc., 3.57%, dated
2/28/94, due 3/1/94 80,000,000
-------------------------------------------------
247,000,000 Goldman, Sachs & Co., 3.48%, dated 2/28/94, due
3/1/9 4 247,000,000
-------------------------------------------------
100,000,000 Greenwich Capital Markets, Inc., 3.50%, dated
2/28/94, due 3/1/94 100,000,000
-------------------------------------------------
90,000,000 Greenwich Capital Markets, Inc., 3.55%, dated
2/28/94, due 3/1/94 90,000,000
-------------------------------------------------
100,000,000 J.P. Morgan Securities, Inc., 3.50%, dated
2/28/94, due 3/1/94 100,000,000
-------------------------------------------------
75,000,000 Kidder Peabody & Co., Inc., 3.48%, dated 2/28/94,
due 3/1/94 75,000,000
-------------------------------------------------
</TABLE>
EDWARD D. JONES & CO. DAILY PASSPORT CASH TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------ ----------------------------------------------- --------------
<C> <S> <C>
*REPURCHASE AGREEMENTS--CONTINUED
------------------------------------------------------------
$155,000,000 Kidder Peabody & Co., Inc., 3.52%, dated
2/28/94, due 3/1/94 $ 155,000,000
-----------------------------------------------
80,000,000 Nationsbank of North Carolina, 3.50%, dated
2/28/94, due 3/1/94 80,000,000
-----------------------------------------------
50,000,000 Smith Barney, Harris Upham & Co., Inc., 3.55%,
dated 2/28/94, due 3/1/94 50,000,000
-----------------------------------------------
55,000,000 UBS Securities, Inc., 3.52%, dated 2/28/94, due
3/1/94 55,000,000
-----------------------------------------------
45,000,000 UBS Securities, Inc., 3.57%, dated 2/28/94, due
3/1/94 45,000,000
-----------------------------------------------
42,000,000 ++Kidder Peabody & Co., Inc., 3.16%, dated
1/10/94, due 3/14/94 42,000,000
-----------------------------------------------
42,000,000 ++Greenwich Capital Markets, Inc., 3.19%, dated
1/28/94, due 4/28/94 42,000,000
----------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS, (NOTE 1B) 1,328,600,000
----------------------------------------------- --------------
TOTAL INVESTMENTS, AT AMORTIZED COST $2,194,870,817+
----------------------------------------------- --------------
</TABLE>
(a)Floating rate note with current rate and next reset date shown.
(b)Discount rate at time of purchase.
*Repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in repurchase agreements were through participation in joint
accounts with other Federated funds.
+Also represents cost for federal tax purposes.
++Although final maturity falls beyond seven days, a liquidity feature is
included in this transaction to permit termination of the repurchase
agreement within seven days.
Note: The categories of investments are shown as a percentage of net assets
($2,171,224,516) at February 28, 1994.
(See Notes which are an integral part of the Financial Statements)
EDWARD D. JONES & CO. DAILY PASSPORT CASH TRUST
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------
Investments in repurchase agreements (Note 1B) $1,328,600,000
- -----------------------------------------------
Investments in other marketable securities 866,270,817
- ----------------------------------------------- --------------
Investments, at amortized cost and value (Note
1A) $2,194,870,817
- ----------------------------------------------- --------------
Cash 878,315
- ----------------------------------------------- --------------
Receivable for Trust shares sold 33,577,135
- ----------------------------------------------- --------------
Receivable for investments sold 22,572,929
- ----------------------------------------------- --------------
Interest receivable 1,849,571
- ----------------------------------------------- -------------- --------------
Total assets 2,253,748,767
- ----------------------------------------------- --------------
LIABILITIES:
- ----------------------------------------------- --------------
Payable for investments purchased 57,166,250
- -----------------------------------------------
Payable for Trust shares redeemed 22,484,653
- -----------------------------------------------
Dividends payable 879,201
- -----------------------------------------------
Accrued expense and other liabilities 1,994,147
- ----------------------------------------------- --------------
Total liabilities 82,524,251
- ----------------------------------------------- -------------- --------------
NET ASSETS for 2,171,224,516 shares of beneficial interest
outstanding $2,171,224,516
- ----------------------------------------------- -------------- --------------
NET ASSET VALUE, Offering Price, and Redemption
Price Per Share
($2,171,224,516 / 2,171,224,516 shares of beneficial interest
outstanding) $1.00
- ----------------------------------------------- -------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
EDWARD D. JONES & CO. DAILY PASSPORT CASH TRUST STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------- ----------
Interest income (Note 1C) $70,252,711
- ----------------------------------------------------- ----------
EXPENSES:
- ----------------------------------------------------- ----------
Investment advisory fee (Note 4) $9,874,011
- -----------------------------------------------------
Trustees' fees 36,564
- -----------------------------------------------------
Administrative personnel and services (Note 4) 1,719,742
- -----------------------------------------------------
Shareholder services fees (Note 4) 2,218,473
- -----------------------------------------------------
Custodian and record keeping fees and expenses 587,262
- -----------------------------------------------------
Transfer agent and dividend disbursing agent fees and
expenses 5,564,223
- -----------------------------------------------------
Trust share registration costs 92,396
- -----------------------------------------------------
Auditing fees 31,250
- -----------------------------------------------------
Legal fees 25,149
- -----------------------------------------------------
Printing and postage 206,410
- -----------------------------------------------------
Insurance premiums 39,908
- -----------------------------------------------------
Miscellaneous 28,556
- ----------------------------------------------------- ----------
Total expenses 20,423,944
- ----------------------------------------------------- ---------- -----------
Net investment income $49,828,767
- ----------------------------------------------------- ---------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
EDWARD D. JONES & CO. DAILY PASSPORT CASH TRUST STATEMENT OF CHANGES IN NET
ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28,
-------------------------------
1994 1993
-------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------
OPERATIONS--
- ------------------------------------------
Net investment income $ 49,828,767 $ 64,926,548
- ------------------------------------------ -------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2)--
- ------------------------------------------
Dividends to shareholders (49,828,767) (64,926,548)
- ------------------------------------------ -------------- ---------------
TRUST SHARE (PRINCIPAL) TRANSACTIONS (NOTE
3)--
- ------------------------------------------
Proceeds from sale of shares 9,022,703,218 8,989,829,210
- ------------------------------------------
Net asset value of shares issued to
shareholders
in payment of dividends declared 49,139,474 65,464,150
- ------------------------------------------
Cost of shares redeemed (9,123,844,305) (9,301,362,143)
- ------------------------------------------ -------------- ---------------
Change in net assets from Trust share (52,001,613) (246,068,783)
transactions -------------- ---------------
- ------------------------------------------
Change in net assets (52,001,613) (246,068,783)
- ------------------------------------------
NET ASSETS:
- ------------------------------------------
Beginning of period 2,223,226,129 2,469,294,912
- ------------------------------------------ -------------- ---------------
End of period $2,171,224,516 $ 2,223,226,129
- ------------------------------------------ -------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
EDWARD D. JONES & CO. DAILY PASSPORT CASH TRUST NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1994
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
The Trust is registered under the Investment Company Act of 1940, as amended,
as a diversified, open-end, management investment company. The following is a
summary of significant accounting policies consistently followed by the Trust
in the preparation of its financial statements. The policies are in conformity
with generally accepted accounting principles.
A. VALUATION OF INVESTMENTS--The Board of Trustees ("Trustees") has determined
that the best method currently available for valuing portfolio securities is
amortized cost. The Trust's use of the amortized cost method to value its
portfolio securities is conditioned on its compliance with Rule 2a-7 under
the Investment Company Act of 1940.
B. REPURCHASE AGREEMENTS--It is the policy of the Trust to require the custo-
dian bank to take possession, to have legally segregated in the Federal Re-
serve Book Entry System or to have segregated within the custodian bank's
vault, all securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the Trust to
monitor on a daily basis, the market value of each repurchase agreement's
underlying securities to ensure the existence of a proper level of collater-
al.
The Trust will only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers which are deemed by
the Trust's adviser to be creditworthy pursuant to guidelines established by
the Trustees. Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Trust could
receive less than the repurchase price on the sale of collateral securities.
C. INCOME--Interest income is recorded on the accrual basis. Interest income
includes interest and discount earned (net of premium), including original
issue discount as required by the Internal Revenue Code, plus realized net
gains, if any, on portfolio securities.
D. FEDERAL TAXES--It is the Trust's policy to comply with the provisions of the
Internal Revenue Code available to regulated investment companies and dis-
tribute to shareholders each year all of its taxable income. Accordingly, no
provision for federal taxes is necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Trust may engage in when-
issued or delayed delivery transactions. To the extent the Trust engages in
such transactions, it will do so for the purpose of acquiring portfolio se-
curities consistent with its investment objectives and policies and not for
the purpose of investment leverage. The Trust will record a when-issued se-
curity and the related liability on the trade date. Until the securities are
received and paid for, the Trust will maintain security positions such that
sufficient liquid assets will be available to make payment for the securi-
ties purchased. Securities purchased on a when-issued or delayed delivery
basis are marked to market daily and begin earning interest on the settle-
ment date.
F. OTHER--Investment transactions are accounted for on the date of the transac-
tion.
(2) DIVIDENDS
The Trust computes its net income daily and, immediately prior to the calcula-
tion of its net asset value at the close of business, declares and records div-
idends to shareholders of record at the time of the previous computation of the
Trust's net asset value. Monthly payment of dividends is made in additional
shares at the net asset value on the payable date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At Feb-
ruary 28, 1994, capital paid-in aggregated $2,171,224,516. Transactions in
Trust shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28,
------------------------------
1994 1993
- --------------------------------------- -------------- --------------
<S> <C> <C>
Shares outstanding, beginning of period 2,223,226,129 2,469,294,912
- ---------------------------------------
Shares sold 9,022,703,218 8,989,829,210
- ---------------------------------------
Shares issued to shareholders in
payment of dividends declared 49,139,474 65,464,150
- ---------------------------------------
Shares redeemed (9,123,844,305) (9,301,362,143)
- --------------------------------------- -------------- --------------
Shares outstanding, end of period 2,171,224,516 2,223,226,129
- --------------------------------------- -------------- --------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Passport Research, Ltd., the Trust's investment adviser ("Adviser"), receives
an annual investment advisory fee based on average daily net assets of the
Trust as follows: .50% on the first $500 million, .475% on the next $500 mil-
lion, .45% on the next $500 million, .425% on the next $500 million and .40%
thereafter. The Adviser will waive the amount that normal operating expenses of
the Trust (including the investment advisory fee, but excluding brokerage com-
missions, interest, taxes and extraordinary expenses) exceed 2 1/2% per year on
the first $30 million of average daily net assets of the Trust, 2% per year on
the next $70 million of average daily net assets of the Trust, and 1 1/2% per
year on any additional net assets.
The Fund has adopted a Shareholder Services Plan (the "Services Plan"). The
Fund will reimburse Edward D. Jones & Co., from the net assets of the Fund for
fees the Fund paid which relate to administrative support services. The
Services Plan provides that the Fund may incur shareholder services expenses up
to .25 of 1% of average daily net assets. For the year ended February 28, 1994,
the Fund paid $2,218,473 in shareholder services fees.
Administrative personnel and services were provided at the approximate cost of
$809,742 by Federated Administrative Services, Inc. and $910,000 by Edward D.
Jones & Co.
Effective March 1, 1994, Federated Administrative Services ("FAS") and Edward
D. Jones & Co. will provide administrative personnel and services based on the
level of average aggregate net assets of the total Federated Funds for the
period. The administrative fee received during any fiscal year shall be at
least $125,000 per portfolio and $30,000 per each additional class of shares.
Certain of the Officers and Trustees of the Trust are Officers and Directors of
the above companies.
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Trustees and Shareholders of
EDWARD D. JONES & CO. DAILY PASSPORT CASH TRUST:
We have audited the accompanying statement of assets and liabilities of Edward
D. Jones & Co. Daily Passport Cash Trust, including the portfolio of invest-
ments, as of February 28, 1994, and the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights (see page 2 of
this Prospectus) for each of the ten years in the period then ended. These fi-
nancial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these finan-
cial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial high-
lights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of Feb-
ruary 28, 1994, 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 pre-
sentation. We believe that our audits provide a reasonable basis for our opin-
ion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Ed-
ward D. Jones & Co. Daily Passport Cash Trust at February 28, 1994, 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 ten years in the period then ended, in conformity with gener-
ally accepted accounting principles.
ERNST & YOUNG
Pittsburgh, Pennsylvania
April 13, 1994
ADDRESSES
- --------------------------------------------------------------------------------
Edward D. Jones & Co. Daily Passport Cash Trust
Federated Investors Tower
Pittsburgh, Pennsylvania
15222-3779
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Principal Distributor
Edward D. Jones & Co., L.P. 201 Progress Parkway Maryland
Heights, Missouri 63043
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Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania
15222-3779
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Investment Adviser
Passport Research, Ltd. Federated Investors Tower
Pittsburgh, Pennsylvania
15222-3779
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Custodian
State Street Bank and Trust Company P.O. Box 1790
Boston, Massachusetts 02105
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Transfer Agent and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania
15222-3779
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Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
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Legal Counsel
Dickstein, Shapiro & Morin 2101 L Street, N.W.
Washington, D.C. 20037
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Independent Auditors
Ernst & Young
One Oxford Centre Pittsburgh,
Pennsylvania 15219
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[LOGO] Daily
Passport
Cash Trust
Edward D. Jones & Co.
EDWARD D. JONES & CO., L.P.
201 PROGRESS PARKWAY
MARYLAND HEIGHTS, MISSOURI 63043
1-800-441-2357
Distributor
Prospectus
April 30, 1994
A PASSPORT
TO CASH
MANAGEMENT
8032801A (4/94)
Statement of Additional Information
"A Passport to Cash Management"
This Statement of Additional Information should be read with the
prospectus of the Trust dated April 30, 1994. This Statement is not a
prospectus itself. To receive a copy of the prospectus, write Edward
D. Jones & Co. Daily Passport Cash Trust at 201 Progress Parkway,
Maryland Heights, Missouri 63043 or call 1-800-441-2357.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Statement dated April 30, 1994
EDWARD D. JONES & CO., L.P.
201 PROGRESS PARKWAY
MARYLAND HEIGHTS, MISSOURI 63043
1-800-441-2357
Distributor
Table of Contents
- --------------------------------------------------------------------------------
General Information About the Trust 1
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Investment Objective and Policies 1
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Types of Investments 1
Restricted and Illiquid Securities 1
When-Issued and Delayed Delivery
Transactions 2
Repurchase Agreements 2
Reverse Repurchase Agreements 2
Investment Limitations 2
Purchasing Shares 4
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Conversion to Federal Funds 4
Determining Net Asset Value 4
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Use of the Amortized Cost Method 4
Redeeming Shares 5
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Redemption in Kind 5
VISA Account 5
Trust Management 6
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Officers and Trustees 6
The Funds 8
Trust Ownership 8
Trustee Liability 8
Investment Advisory Services 9
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Adviser to the Trust 9
Advisory Fees 9
Administrative Services 9
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Shareholder Services Plan 10
Brokerage Transactions 10
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Tax Status 10
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The Trust's Tax Status 10
Shareholders' Tax Status 10
Yield 11
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Effective Yield 11
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Performance Comparisons 11
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Appendix 12
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General Information About the Trust
- --------------------------------------------------------------------------------
Edward D. Jones & Co. Daily Passport Cash Trust (the "Trust") was established as
a Massachusetts business trust under a Declaration of Trust dated January 9,
1980.
Investment Objective and Policies
- --------------------------------------------------------------------------------
The Trust's investment objective is to provide stability of principal and
current income consistent with stability of principal.
Types of Investments
The Trust invests in money market instruments which mature in one year or less
and which include, but are not limited to, bank instruments, commercial paper,
demand master notes, and U.S. government obligations.
The above investment objective and policies cannot be changed without approval
of shareholders.
Bank Instruments
In addition to domestic bank obligations such as certificates of deposit,
demand and time deposits, savings shares, and bankers' acceptances, the
Trust may invest in:
Eurodollar Certificates of Deposit issued by foreign branches of U.S. or
foreign banks;
Eurodollar Time Deposits, which are U.S. dollar-denominated deposits in
foreign branches of U.S. or foreign banks;
Canadian Time Deposits, which are U.S. dollar-denominated deposits
issued by branches of major Canadian banks located in the United States;
and
Yankee Certificates of Deposit, which are U.S. dollar-denominated
certificates of deposit issued by U.S. branches of foreign banks and
held in the United States.
U.S. Government Obligations
The types of U.S. government obligations in which the Trust may invest
generally include direct obligations of the U.S. Treasury (such as U.S.
Treasury bills, notes, and bonds) and obligations issued or guaranteed by
U.S. government agencies or instrumentalities. These securities are
backed by:
the full faith and credit of the U.S. Treasury;
the issuer's right to borrow from the U.S. Treasury;
the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
the credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:
Federal Farm Credit Banks;
Federal Home Loan Banks;
Student Loan Marketing Association;
Federal Home Loan Mortgage Corporation; and
Federal National Mortgage Association.
Restricted and Illiquid Securities
The ability of the Trust's Board of Trustees (the "Trustees") to determine the
liquidity of certain restricted securities is permitted under a Securities and
Exchange Commission ("SEC") Staff position set forth in the adopting release for
Rule 144A under the Securities Act of 1933 (the "Rule"). The Rule is a
non-exclusive safe-harbor for certain secondary market transactions involving
securities subject to restrictions on resale under federal securities laws. The
Rule provides an exemption from registration for resales of otherwise restricted
securities to qualified institutional buyers. The Rule was expected to further
enhance the liquidity of the secondary market for securities eligible for resale
under Rule 144A. The Trust believes that the Staff of the SEC has left the
question of determining the liquidity of all restricted securities (eligible for
resale under Rule 144A) for determination by the Trustees. The Trustees consider
the following criteria in determining the liquidity of certain restricted
securities.
the frequency of trades and quotes for the security;
the number of dealers willing to purchase or sell the security and the number
of other potential buyers;
dealer undertakings to make a market in the security; and
the nature of the security and the nature of the marketplace trades.
When-Issued and Delayed Delivery Transactions
These transactions are arrangements in which the Trust purchases securities with
payment and delivery scheduled for a future time. The Trust engages in
when-issued and delayed delivery transactions only for the purpose of acquiring
portfolio securities consistent with the Trust's investment objective and
policies, and not for investment leverage.
These transactions are made to secure what is considered to be an advantageous
price and yield for the Trust. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices.
No fees or other expenses, other than normal transaction costs, are incurred.
However, liquid assets of the Trust sufficient to make payment for the
securities to be purchased are segregated at the trade date. These securities
are marked to market daily and maintained until the transaction is settled.
Repurchase Agreements
The Trust requires its custodian to take possession of the securities subject to
repurchase agreements, and these securities are marked to market daily. To the
extent that the original seller does not repurchase the securities from the
Trust, the Trust could receive less than the repurchase price on any sale of
such securities. In the event that such a defaulting seller filed for bankruptcy
or became insolvent, disposition of such securities by the Trust might be
delayed pending court action. The Trust believes that under the regular
procedures normally in effect for custody of the Trust's portfolio securities
subject to repurchase agreements, a court of competent jurisdiction would rule
in favor of the Trust and allow retention or disposition of such securities. The
Trust will only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker/dealers, which are deemed by the Trust's
adviser to be creditworthy pursuant to guidelines established by the Trustees.
Reverse Repurchase Agreements
The Trust may also enter into reverse repurchase agreements. This transaction is
similar to borrowing cash. In a reverse repurchase agreement the Trust transfers
possession of a portfolio instrument to another person, such as a financial
institution, broker or dealer, in return for a percentage of the instrument's
market value in cash, and agrees that on a stipulated date in the future the
Trust will repurchase the portfolio instrument by remitting the original
consideration plus interest at an agreed upon rate. The use of reverse
repurchase agreements may enable the Trust to avoid selling portfolio
instruments at a time when a sale may be deemed to be disadvantageous, but the
ability to enter into reverse repurchase agreements does not ensure that the
Trust will be able to avoid selling portfolio instruments at a disadvantageous
time.
When effecting reverse repurchase agreements, liquid assets of the Trust, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and maintained until the transaction is settled.
Investment Limitations
The Trust will not change any of the investment limitations described below
without approval of shareholders.
Selling Short and Buying on Margin
The Trust will not sell any money market instruments short or purchase
any money market instruments on margin but may obtain such short-term
credits as may be necessary for clearance of purchases and sales of money
market instruments.
Borrowing Money
The Trust will not borrow money except as a temporary measure for
extraordinary or emergency purposes and then only in amounts not in
excess of 5% of the value of its total assets. In addition, the Trust may
enter into reverse repurchase agreements and otherwise borrow up to
one-third of the value of its total assets, including the amount
borrowed, in order to meet redemption requests without immediately
selling portfolio instruments. This latter practice is not for investment
leverage but solely to facilitate management of the portfolio by enabling
the Trust to meet redemption requests when the liquidation of portfolio
instruments would be inconvenient or disadvantageous.
Interest paid on borrowed funds will not be available for investment. The
Trust will liquidate any such borrowings as soon as possible and may not
purchase any portfolio instruments while any borrowings are outstanding.
However, during the period any reverse repurchase agreements are
outstanding, but only to the extent necessary to assure completion of the
reverse repurchase agreements, the Trust will
restrict the purchase of portfolio instruments to money market
instruments maturing on or before the expiration date of the reverse
repurchase agreements.
Pledging Assets
The Trust will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may mortgage, pledge, or
hypothecate assets having a market value not exceeding the lesser of the
dollar amounts borrowed or 10% of the value of total assets at the time
of the borrowing.
Investing in Commodities, Minerals, or Real Estate
The Trust will not invest in commodities, commodity contracts, oil, gas,
or other mineral programs or real estate, except that it may purchase
money market instruments issued by companies that invest in or sponsor
such interests.
Underwriting
The Trust will not engage in underwriting of securities issued by others,
except as it may be deemed to be an underwriter under the Securities Act
of 1933 in connection with the sale of securities in accordance with its
investment objective, policies and limitations.
Lending Cash or Securities
The Trust will not lend any of its assets, except that it may purchase or
hold money market instruments, including repurchase agreements and
variable amount demand master notes, permitted by its investment
objective and policies.
Acquiring Securities
The Trust will not acquire the voting securities of any issuer. It will
not invest in securities issued by any other investment company, except
as part of a merger, consolidation, or other acquisition. It will not
invest in securities of a company for the purpose of exercising control
or management.
Diversification of Investments
The Trust will not purchase securities issued by any one issuer having a
value of more than 5% of the value of its total assets except cash or
cash items, repurchase agreements, and U.S. government obligations.
The Trust considers the type of bank obligations it purchases as cash
items.
Concentration of Investments
The Trust will not purchase money market instruments if, as a result of
such purchase, more than 25% of the value of its total assets would be
invested in any one industry.
However, investing in bank instruments (such as time and demand deposits
and certificates of deposit), U.S. government obligations, or instruments
secured by these money market instruments, such as repurchase agreements,
shall not be considered investments in any one industry.
Investing in New Issuers
The Trust will not invest more than 5% of the value of its total assets
in money market instruments of unseasoned issuers, including their
predecessors, that have been in operation for less than three years.
Investing in Issuers Whose Securities Are Owned by Officers and Trustees of
the Trust
The Trust will not purchase or retain the securities of any issuer if the
officers and Trustees of the Trust or its investment adviser, owning
individually more than 1/2 of 1% of the issuer's securities, together own
more than 5% of the issuer's securities.
Dealing in Puts and Calls
The Trust will not invest in puts, calls, straddles, spreads, or any
combination of them.
Investing in Restricted Securities
The Trust will not invest more than 10% of its net assets in securities
which are subject to restrictions on resale under federal securities
laws, except for Section 4(2) commercial paper.
Issuing Senior Securities
The Trust will not issue senior securities, except as permitted by the
investment objective and policies and investment limitations of the
Trust.
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction.
The Trust did not borrow money, pledge securities, or invest in reverse
repurchase agreements in excess of 5% of the value of its net assets during the
last fiscal year and has no present intent to do so in the coming fiscal year.
For purposes of its policies and limitations, the Trust considers certificates
of deposit and demand and time deposits issued by a U.S. branch of a domestic
bank or savings and loan having capital, surplus, and undivided profits in
excess of $100,000,000 at the time of investment to be "cash items".
Purchasing Shares
- --------------------------------------------------------------------------------
Shares are sold at their net asset value without a sales charge on days the New
York Stock Exchange is open for business. The procedure for purchasing shares of
the Trust is explained in the prospectus under "Investing in the Trust."
Conversion to Federal Funds
It is the Trust's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be in
federal funds or be converted into federal funds. This conversion must be made
before shares are purchased. Edward D. Jones or Federated Services Company acts
as the shareholder's agent in depositing checks and converting them to federal
funds.
Determining Net Asset Value
- --------------------------------------------------------------------------------
The Trust attempts to stabilize the value of a share at $1.00. The days on which
net asset value is calculated by the Trust are described in the prospectus.
Use of the Amortized Cost Method
The Trustees have decided that the best method for determining the value of
portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization of
premium or accumulation of discount rather than at current market value.
The Trust's use of the amortized cost method of valuing portfolio instruments
depends on its compliance with certain conditions in Rule 2a-7 (the "Rule")
promulgated by the SEC under the Investment Company Act of 1940. Under the Rule,
the Trustees must establish procedures reasonably designed to stabilize the net
asset value per share, as computed for purposes of distribution and redemption,
at $1.00 per share, taking into account current market conditions and the
Trust's investment objective.
Under the Rule, the Trust is permitted to purchase instruments which are subject
to demand features or standby commitments. As defined by the Rule, a demand
feature entitles the Trust to receive the principal amount of the instrument
from the issuer or a third party on (1) no more than 30 days' notice or (2) at
specified intervals not exceeding one year on no more than 30 days' notice. A
standby commitment entitles the Trust to achieve same day settlement and to
receive an exercise price equal to the amortized cost of the underlying
instrument plus accrued interest at the time of exercise.
The Trust acquires instruments subject to demand features and standby
commitments to enhance the instruments' liquidity. The Trust treats demand
features and standby commitments as part of the underlying instruments, because
the Trust does not acquire them for speculative purposes and cannot transfer
them separately from the underlying instruments. Therefore, although the Rule
defines demand features and standby commitments as "puts," the Trust does not
consider them to be separate investments for purposes of its investment
policies.
Monitoring Procedures
The Trustees' procedures include monitoring the relationship between the
amortized cost value per share and the net asset value per share based
upon available indications of market value. The Trustees will decide
what, if any, steps should be taken if there is a difference of more than
.5% between the two values. The Trustees will take any steps they
consider appropriate (such as redemption in kind or shortening the
average portfolio maturity) to minimize any material dilution or other
unfair results arising from differences between the two methods of
determining net asset value.
Investment Restrictions
The Rule requires that the Trust limit its investments to instruments
that, in the opinion of the Trustees, present minimal credit risks and
have received the requisite rating from one or more nationally recognized
statistically rating organizations. If the instruments are not rated, the
Trustees must determine that they are of comparable quality. The Rule
also requires the Trust to maintain a dollar-weighted average portfolio
maturity (not more than 90 days) appropriate to the objective of
maintaining a stable net asset value of $1.00 per share. In addition, no
instrument with a remaining maturity of more than one year can be
purchased by the Trust.
Should the disposition of a portfolio security result in a
dollar-weighted average portfolio maturity of more than 90 days, the
Trust will invest its available cash to reduce the average maturity to 90
days or less as soon as possible.
It is the Trust's usual practice to hold portfolio securities to maturity and
realize par, unless the investment adviser determines that sale or other
disposition is appropriate in light of the Trust's investment objective. Under
the amortized cost method of valuation, neither the amount of daily income nor
the net asset value is affected by any unrealized appreciation or depreciation
of the portfolio.
In periods of declining interest rates, the indicated daily yield on shares of
the Trust computed by dividing the annualized daily income on the Trust's
portfolio by the net asset value computed as above may tend to be higher than a
similar computation made by using a method of valuation based upon market prices
and estimates.
In periods of rising interest rates, the indicated daily yield on shares of the
Trust computed the same way may tend to be lower than a similar computation made
by using a method of calculation based upon market prices and estimates.
Redeeming Shares
- --------------------------------------------------------------------------------
The Trust redeems shares at the next computed net asset value after Federated
Services Company receives the redemption request. Redemption procedures are
explained in the prospectus under "Redeeming Shares."
Redemption in Kind
The Trust is obligated to redeem shares solely in cash up to $250,000 or 1% of
the Trust's net asset value, whichever is less, for any one shareholder within a
90-day period.
Any redemption beyond this amount will also be in cash unless the Trustees
determine that further cash payments will have a material adverse effect on
remaining shareholders. In such a case, the Trust will pay all or a portion of
the remainder of the redemption in portfolio instruments, valued in the same way
as the Trust determines net asset value. The portfolio instruments will be
selected in a manner that the Trustees deem fair and equitable.
Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving their securities and selling them before
maturity could receive less than the redemption value of the securities and
could incur certain transaction costs.
VISA Account
At the shareholder's request, State Street Bank will establish a VISA account.
This VISA account allows a shareholder to redeem Trust shares by using a VISA
debit card or VISA checks.
The VISA debit card may be used to purchase merchandise or services from
merchants honoring VISA or to obtain cash advances (which a bank may limit to
$5,000 per account per day) from any bank honoring VISA.
State Street Bank will notify the Trust daily of all charges and cash advances
being presented against the VISA account, and Trust shares will be redeemed
immediately. When a VISA draft or check is presented to State Street Bank for
payment, State Street Bank presents the draft or check to the Trust. Enough
shares are redeemed from the account to cover the transactions. This enables the
shareholder to continue to earn daily income dividends on Trust shares up to the
date they are redeemed.
In the event that there are insufficient shares in the shareholder's Trust
account to cover the amount of the VISA debit card or VISA check transaction,
State Street Bank is authorized to place a stop transfer on the shareholder's
Trust account, to impose a finance charge on the amount, and to institute
collection proceedings.
Shareholders are subject to State Street Bank's VISA account regulations. State
Street Bank charges an annual VISA fee of $40 to cover credit fees and
administrative costs. Enough shares are redeemed automatically from
the account to pay the fee. Lost or stolen cards should be reported immediately
to State Street Bank (1-800-331-2451).
State Street Bank and the Trust have the right to modify or terminate the VISA
debit card privilege or to impose additional charges for establishing or
maintaining a VISA account.
Trust Management
- --------------------------------------------------------------------------------
Officers and Trustees
Officers and Trustees are listed with their addresses, principal occupations,
and present positions, including any affiliation with Passport Research, Ltd.,
Federated Investors, Federated Services Company, Federated Securities Corp.,
Federated Administrative Services, and the Funds (as defined below).
<TABLE>
<S> <C> <C>
Positions with Principal Occupations
Name and Address the Trust During Past Five Years
John F. Donahue* Chairman and Chairman and Trustee, Federated Investors; Chairman and Trustee,
Federated Investors Tower Trustee Federated Advisers, Federated Management, and Federated Research;
Pittsburgh, PA Chairman, Passport Research, Ltd.; Director, tna Life and Casualty
Company; Chief Executive Officer and Director, Trustee, or Managing
General Partner of the Funds; formerly, Director, The Standard Fire
Insurance Company. Mr. Donahue is the father of J. Christopher Donahue,
Vice President of the Trust.
John T. Conroy, Jr. Trustee President, Investment Properties Corporation; Senior Vice-President,
Wood/IPC Commercial John R. Wood and Associates, Inc., Realtors; President, Northgate
Department Village Development Corporation; General Partner or Trustee in private
John R. Wood and real estate ventures in Southwest Florida; Director, Trustee, or
Associates, Inc., Realtors Managing General Partner of the Funds; formerly, President, Naples
3255 Tamiami Trail North Property Management, Inc.
Naples, FL
William J. Copeland Trustee Director and Member of the Executive Committee, Michael Baker, Inc.;
One PNC Plaza-- Director, Trustee, or Managing General Partner of the Funds; formerly,
23rd Floor Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp. and
Pittsburgh, PA Director, Ryan Homes, Inc.
James E. Dowd Trustee Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director,
571 Hayward Mill Road Trustee, or Managing General Partner of the Funds; formerly, Director,
Concord, MA Blue Cross of Massachusetts, Inc.
Lawrence D. Ellis, M.D. Trustee Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
3471 Fifth Avenue Hospitals; Clinical Professor of Medicine and Trustee, University of
Suite 1111 Pittsburgh; Director, Trustee, or Managing General Partner of the Funds.
Pittsburgh, PA
Edward L. Flaherty, Jr.+ Trustee Attorney-at-law; Partner, Meyer and Flaherty; Director, Eat'N Park
5916 Penn Mall Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director,
Pittsburgh, PA Trustee, or Managing General Partner of the Funds; formerly, Counsel,
Horizon Financial, F.A., Western Region.
Peter E. Madden Trustee Consultant; State Representative, Commonwealth of Massachusetts;
225 Franklin Street Director, Trustee, or Managing General Partner of the Funds; formerly,
Boston, MA President, State Street Bank and Trust Company and State Street Boston
Corporation and Trustee, Lahey Clinic Foundation, Inc.
Gregor F. Meyer Trustee Attorney-at-law; Partner, Meyer and Flaherty; Chairman, Meritcare, Inc.;
5916 Penn Mall Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or Managing
Pittsburgh, PA General Partner of the Funds; formerly, Vice Chairman, Horizon
Financial, F.A.
Wesley W. Posvar Trustee Professor, Foreign Policy and Management Consultant; Trustee, Carnegie
1202 Cathedral of Endowment for International Peace, RAND Corporation, Online Computer
Learning Library Center, Inc., and U.S. Space Foundation; Chairman, Czecho Slovak
University of Pittsburgh Management Center; Director, Trustee, or Managing General Partner of the
Pittsburgh, PA Funds; President Emeritus, University of Pittsburgh; formerly, Chairman,
National Advisory Council for Environmental Policy and Technology.
Marjorie P. Smuts Trustee Public relations/marketing consultant; Director, Trustee, or Managing
4905 Bayard Street General Partner of the Funds.
Pittsburgh, PA
Richard B. Fisher President Executive Vice President and Trustee, Federated Investors; Chairman and
Federated Investors Tower Director, Federated Securities Corp.; Assistant Treasurer and Assistant
Pittsburgh, PA Secretary, Passport Research, Ltd.; President or Vice President of the
Funds; Director or Trustee of some of the Funds.
J. Christopher Donahue Vice President President and Trustee, Federated Investors; Trustee, Federated Advisers,
Federated Investors Tower Federated Management, and Federated Research; Trustee, Federated
Pittsburgh, PA Administrative Services; Trustee, Federated Services Company; President
or Vice President of the Funds; Director, Trustee or Managing General
Partner of some of the Funds. Mr. Donahue is the son of John F. Donahue,
Chairman and Trustee of the Trust.
Edward C. Gonzales Vice President Vice President, Treasurer and Trustee, Federated Investors; Vice
Federated Investors Tower and Treasurer President and Treasurer, Federated Advisers, Federated Management, and
Pittsburgh, PA Federated Research; Vice President and Treasurer, Passport Research,
Ltd.; Executive Vice President, Treasurer, and Director, Federated
Securities Corp.; Chairman, Treasurer, and Trustee, Federated
Administrative Services; Trustee, Federated Services Company; Trustee or
Director of some of the Funds; Vice President and Treasurer of the
Funds.
John W. McGonigle Vice President and Vice President, Secretary, General Counsel, and Trustee, Federated
Federated Investors Tower Secretary Investors; Vice President, Secretary and Trustee, Federated Advisers,
Pittsburgh, PA Federated Management, and Federated Research; Vice President and
Secretary, Passport Research, Ltd.; Trustee, Federated Services Company;
Executive Vice President, Secretary, and Trustee, Federated
Administrative Services; Director and Executive Vice President,
Federated Securities Corp.; Vice President and Secretary of the Funds.
John A. Staley, IV Vice President Vice President and Trustee, Federated Investors; Executive Vice
Federated Investors Tower President, Federated Securities Corp.; President and Trustee, Federated
Pittsburgh, PA Advisers, Federated Management, and Federated Research; President and
Assistant Secretary, Passport Research, Ltd.; Vice President of the
Funds; Director, Trustee, or Managing General Partner of some of the
Funds; formerly, Vice President, The Standard Fire Insurance Company and
President of its Federated Research Division.
</TABLE>
*This Trustee is deemed to be an "interested person" of the Trust as defined in
the Investment Company Act of 1940.
+Members of the Trust's Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board of Trustees
between meetings of the Board.
The Funds
"The Funds" and "Funds" mean the following investment companies: American
Leaders Fund, Inc.; Annuity Management Series; Automated Cash Management Trust;
Automated Government Money Trust; California Municipal Cash Trust; Cash Trust
Series, Inc.; Cash Trust Series II; DG Investor Series; Edward D. Jones & Co.
Daily Passport Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated Growth Trust;
Federated High Yield Trust; Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated Intermediate Government Trust; Federated
Master Trust; Federated Municipal Trust; Federated Short-Intermediate Government
Trust; Federated Short-Term U.S. Government Trust; Federated Stock Trust;
Federated Tax-Free Trust; Federated U.S. Government Bond Fund; First Priority
Funds; Fixed Income Securities, Inc.; Fortress Adjustable Rate U.S. Government
Fund, Inc.; Fortress Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.;
Fund for U.S. Government Securities, Inc.; Government Income Securities Inc.;
High Yield Cash Trust; Insight Institutional Series, Inc.; Insurance Management
Series; Intermediate Municipal Trust; International Series, Inc.; Investment
Series Funds, Inc.; Investment Series Trust; Liberty Equity Income Fund, Inc.;
Liberty High Income Bond Fund, Inc.; Liberty Municipal Securities Fund, Inc.;
Liberty Term Trust, Inc.-1999; Liberty U.S. Government Money Market Trust;
Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed Series Trust; Mark Twain
Funds; Money Market Management Inc.; Money Market Obligations Trust; Money
Market Trust; Municipal Securities Income Trust; New York Municipal Cash Trust;
111 Corcoran Funds; Peachtree Funds; The Planters Funds; Portage Funds; RIMCO
Monument Funds; The Shawmut Funds; Short-Term Municipal Trust; Signet Select
Funds; Star Funds; The Starburst Funds; The Starburst Funds II; Stock and Bond
Fund, Inc.; Sunburst Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
Trademark Funds; Trust for Financial Institutions; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; and World Investment Series, Inc.
Trust Ownership
Officers and Trustees own less than 1% of the Trust's outstanding shares. As of
April 5, 1994 no shareholders of record owned 5% or more of the outstanding
shares of the Trust.
Trustee Liability
The Trust's Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
Investment Advisory Services
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Adviser to the Trust
The Trust's investment adviser, Passport Research, Ltd., was organized as a
Pennsylvania limited partnership in 1981. Federated Advisers is the general
partner of the adviser and has a 50.5% interest in the adviser. The limited
partner of the adviser is Edward D. Jones & Co., L.P. which owns a 49.5%
interest in the adviser. Federated Advisers is owned by FII Holdings, Inc., a
subsidiary of Federated Investors. All of the voting securities of Federated
Investors are owned by a trust, the Trustees of which are John F. Donahue, his
wife, and his son, J. Christopher Donahue. John F. Donahue, Chairman and Trustee
of Federated Advisers, is Chairman and Trustee of Federated Investors and
Chairman and Trustee of the Trust. John A. Staley, IV, President and Trustee of
Federated Advisers, is Vice President and Trustee of Federated Investors,
Executive Vice President of Federated Securities Corp., and Vice President of
the Trust. J. Christopher Donahue, Trustee of Federated Advisers, is President
and Trustee of Federated Investors, Trustee of Federated Administrative
Services, Trustee, Federated Services Company; and Vice President of the Trust.
John W. McGonigle, Vice President, Secretary and Trustee of Federated Advisers,
is Trustee, Vice President, Secretary, and General Counsel of Federated
Investors, Trustee, Executive Vice President, and Secretary of Federated
Administrative Services, Trustee, Federated Services Company; Executive Vice
President and Director of Federated Securities Corp., and Vice President and
Secretary of the Trust.
At any time, Edward D. Jones can require Federated Investors to repurchase all
of its partnership interest in the adviser at the then current book value.
Edward D. Jones cannot transfer, sell, or assign its partnership interest in the
adviser without first offering it to Federated Investors.
As long as Edward D. Jones owns a partnership interest in the adviser, it cannot
acquire, organize, or cause the organization of any other money market mutual
fund or enter into arrangements with an investment adviser or underwriter of any
other money market mutual fund in which Edward D. Jones will offer the shares of
the other money market mutual fund. Edward D. Jones has agreed not to solicit
proxies in opposition to management of the Trust unless a court of competent
jurisdiction finds the conduct of a majority of the Trustees constitutes willful
misfeasance, bad faith, gross negligence, or reckless disregard of its duties.
All of the executive officers of the Trust, except J. Christopher Donahue, are
officers of the adviser. These relationships are described under "Trust
Management--Officers and Trustees."
The adviser shall not be liable to the Trust or any shareholder for any losses
that may be sustained in the purchase, holding, or sale of any security or for
anything done or omitted by it, except acts or omissions involving willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
imposed upon it by its contract with the Trust.
Advisory Fees
For its advisory services, Passport Research, Ltd. receives an annual investment
advisory fee as described in the prospectus. During the fiscal years ended
February 28 or 29, 1994, 1993, and 1992, the Trust's adviser earned $9,874,011,
$10,565,847, and $11,557,308, respectively. All advisory fees were computed on
the same basis as in the present contract described in the prospectus.
State Expense Limitations
The adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Trust's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses)
exceed 2-1/2% per year of the first $30 million of average net assets, 2%
per year of the next $70 million of average net assets, and 1-1/2% per
year of the remaining average net assets, the adviser will reimburse the
Trust for its expenses over the limitation.
If the Trust's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the adviser will
be limited, in any single fiscal year, by the amount of the investment
advisory fee.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
Administrative Services
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Federated Administrative Services, a subsidiary of Federated Investors, and
Edward D. Jones & Co., L.P., provide administrative personnel and services to
the Trust for a fee as described in the prospectus. For the fiscal years ended
February 28 or 29, 1994, 1993, and, 1992, Federated Administrative Services,
Inc., the Trust's former administrator, earned $809,742, $699,338, and $731,388,
respectively. John A. Staley, IV, an officer of the Trust and Dr. Henry J.
Gailliot, an officer of Passport Research Ltd., the adviser to the Trust, each
hold approximately
15% and 20%, respectively, of the outstanding common stock and serve as
directors of Commercial Data Services, Inc., a company which provides computer
processing services to Federated Administrative Services. For the fiscal years
ended February 28 or 29, 1994, 1993 and, 1992, Federated Administrative
Services, Inc. paid approximately $146,069, $179,920, and $202,532,
respectively, for services provided by Commercial Data Services, Inc. to the
Funds. For the fiscal years ended February 28 or 29, 1994, 1993, and 1992,
Edward D. Jones & Co., L.P. received $910,000, $1,560,000, and $1,580,291,
respectively.
Shareholder Services Plan
This arrangement permits the payment of fees to Federated Shareholder Services
and, indirectly, to Financial Institutions to cause services to be provided to
shareholders by a representative who has knowledge of the shareholder's
particular circumstances and goals. These activities and services may include,
but are not limited to, providing office space, equipment, telephone facilities,
and various clerical, supervisory, computer, and other personnel as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries; and assisting
clients in changing dividend options, account designations, and addresses. For
the fiscal period ending February 28, 1994, payments in the amount of $2,218,473
were made pursuant to the Shareholder Services Plan, all of which was paid to
Financial Institutions.
Brokerage Transactions
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When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the adviser will generally utilize those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. The adviser makes
decisions on portfolio transactions and selects brokers and dealers subject to
review by the Trustees.
The adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Trust or to the
adviser and may include:
advice as to the advisability of investing in securities;
security analysis and reports;
economic studies;
industry studies;
receipt of quotations for portfolio evaluations; and
similar services.
The adviser and its affiliates exercise reasonable business judgment in
selecting brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such persons are reasonable in relationship to the value of the brokerage and
research services provided.
Research services provided by brokers may be used by the adviser or by
affiliates of Federated Investors, in advising Federated Funds and other
accounts. To the extent that receipt of these services may supplant services for
which the adviser or its affiliates might otherwise have paid, it would tend to
reduce their expenses.
Tax Status
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The Trust's Tax Status
The Trust will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies. To qualify for this treatment, the Trust must, among other
requirements:
derive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;
derive less than 30% of its gross income from the sale of securities held less
than three months;
invest in securities within certain statutory limits; and
distribute to its shareholders at least 90% of its net income earned during the
year.
Shareholders' Tax Status
Shareholders are subject to federal income tax on dividends received as
additional shares. No portion of any income dividend paid by the Trust is
eligible for the dividends received deduction available to corporations. These
dividends, and any short-term capital gains, are taxable as ordinary income.
Capital Gains
Because the Trust invests primarily for income and because it normally
holds portfolio instruments to maturity, it is not expected to realize
long-term capital gains.
Yield
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The Trust's yield for the seven-day period ended February 28, 1994 was 2.51%.
The Trust calculates its yield, based upon the seven days ending on the day of
the calculation, called the "base period." This yield is computed by:
determining the net change in the value of a hypothetical account with a
balance of one share at the beginning of the base period, with the net change
excluding capital changes but including the value of any additional shares
purchased with dividends earned from the original one share and all dividends
declared on the original and any purchased shares;
dividing the net change in the account's value by the value of the account at
the beginning of the base period to determine the base period return; and
multiplying the base period return by (365/7).
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in the
Trust, the performance will be reduced for those shareholders paying those fees.
Effective Yield
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The Trust's effective yield for the seven-day period ended February 28, 1994 was
2.54%.
The Trust's effective yield is computed by compounding the unannualized base
period return by:
adding 1 to the base period return;
raising the sum to the 365/7th power; and
subtracting 1 from the result.
Performance Comparisons
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The Trust's performance depends upon such variables as:
portfolio quality;
average portfolio maturity;
type of instruments in which the portfolio is invested;
changes in interest rates on money market instruments;
changes in Trust expenses; and
the relative amount of Trust cash flow.
From time to time the Trust may advertise its performance compared to similar
funds or portfolios using the following:
Investors may use financial publications and/or indices to obtain a more
complete view of the Trust's performance. When comparing performance, investors
should consider all relevant factors such as the composition of any index used,
prevailing market conditions, portfolio compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Trust uses in advertising may include:
Lipper Analytical Services, Inc., ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all income dividends and capital gains distributions, if any.
From time to time, the Trust will quote its Lipper ranking in the "money market
instruments" category in advertising and sales literature.
Advertisements and other sales literature for the Trust may refer to total
return. Total return is the historic change in the value of an investment in the
Trust based on the monthly reinvestment of dividends over a specified period of
time.
From time to time as it deems appropriate, the Trust may advertise its
performance using charts, graphs, and descriptions, compared to federally
insured bank products including certificates of deposit and time deposits.
Appendix
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Standard and Poor's Corporation Commercial Paper Rating Definitions
A-1--This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.
Moody's Investors Service, Inc. Short-Term Debt Rating Definitions
Prime-1--Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
Leading market positions in well established industries.
High rates of return on funds employed.
Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
Broad margins in earning coverage of fixed financial charges and high
internal cash generation.
Well-established access to a range of financial markets and assured
sources of alternate liquidity.
Moody's Investors Service, Inc. Short-Term Loan Rating Definitions
MIG1/VMIG1--This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad based access to the market for refinancing.
Fitch Investors Service, Inc. Short-Term Debt Rating Definitions
F-1+--Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1--Very Strong Credit Quality. Issues assigned this rating reflect an
assurance for timely payment only slightly less in degree than issues rated
F-1+.
8032801B (4/94)
