LIQUID
CASH
TRUST
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
SEPTEMBER 30, 1994
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
Pittsburgh, PA 15222-3779
536319106
8110112 (11/94)
PRESIDENT'S MESSAGE
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Dear Investor:
I am pleased to present the Semi-Annual Report to Shareholders of Liquid Cash
Trust ("Trust") for the six-month period ended September 30, 1994. The report
begins with our Investment Review, which provides a brief overview of the
economy and its impact on the overnight markets. Following the Investment Review
are the Financial Statements, which include the Portfolio of Investments.
The Trust is a permissible investment vehicle for most depository institutions,
and is designed for use as an overnight liquid investment. At the close of the
reporting period, 100% of the Trust's portfolio was invested in repurchase
agreements, due to the yield advantage of these securities. In addition, these
repurchase agreements are fully collateralized by U.S. government and/or agency
obligations.
Dividends paid to shareholders during the six-month reporting period totaled $9
million, or $0.02 per share. At the end of the period, net assets stood at $355
million.
Thank you for participating in the Trust to pursue the highest possible rate in
a quality overnight investment vehicle. As always, we welcome your questions or
comments.
Sincerely,
Glen R. Johnson
President
November 15, 1994
INVESTMENT REVIEW
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Liquid Cash Trust (the "Trust") is a short-term money market fund which pursues
stability of principal and current income, and is utilized by depository
institutions as an overnight liquid investment alternative for overall asset
management programs. The Trust is rated Aaa by Moody's Investors Service, Inc.*
and its investments are generally restricted to Federal Funds ("Fed Funds") sold
and repurchase agreements ("repo"). The Trust's Aaa rating limits its Fed Funds
and repo counterparties to only the highest credit rated dealer firms and banks,
and requires proper diversification daily.
The Trust is managed to have a very short average maturity of 1 to 7 days, and
invests primarily in repo and Fed Funds on an overnight basis. The Trust may
also invest in term repo maturing in up to three months. Although the spread
between repo and Fed Funds has narrowed in recent months, repo continued to
provide a yield advantage over Fed Funds in most cases. As a result, the
investments in the Trust concentrated predominantly in repo over the report
period, and at September 30, 1994, the Trust was invested solely in repo. The
Trust also held a position in term repo maturing in less than two months, which
offered attractive rates relative to overnight repo.
During the semi-annual reporting period, the Federal Reserve Board (the "Fed")
tightened monetary policy three times--in April, May, and August--for a total of
125 basis points, raising the Fed Funds target rate from 3.50% to 4.75%. Amid
signs of continued economic strength and upward pressures on resource
utilization, the Fed raised the Fed Funds target rate by an additional 75 basis
points to 5.5% at the Federal Open Market Committee in mid-November. The Trust's
very short average maturity has enabled the yield of the Trust to keep pace with
the policy changes by the Fed. The Trust's management will continue to seek to
provide the highest possible rate in an overnight investment vehicle for
depository institutions consistent with high credit quality and investment
convenience.
* This rating is obtained after Moody's evaluates a number of factors, including
credit quality, market price exposure, and management. They monitor the
portfolio weekly for developments that could cause changes in ratings.
LIQUID CASH TRUST
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1994
(UNAUDITED)
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<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
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<C> <C> <S> <C>
*REPURCHASE AGREEMENTS--100%
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$15,000,000 BOT Securities Inc., 4.80%, dated 9/30/94, due 10/3/94 $ 15,000,000
----------------------------------------------------------------
60,000,000 BT Securities Inc., 5.00%, dated 9/30/94, due 10/3/94 60,000,000
----------------------------------------------------------------
14,600,000 BZW Securities, Inc., 4.85%, dated 9/30/94, due 10/3/94 14,600,000
----------------------------------------------------------------
15,000,000 BZW Securities, Inc., 4.98%, dated 9/30/94, due 10/3/94 15,000,000
----------------------------------------------------------------
15,000,000 Dean Witter Reynolds, Inc., 4.75%, dated 9/30/94, due 10/3/94 15,000,000
----------------------------------------------------------------
15,000,000 Deutsche Bank Government Securities, Inc., 4.90%, dated 9/30/94,
due 10/3/94 15,000,000
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15,000,000 First Chicago Capital Markets, 4.95%, dated 9/30/94, due 10/3/94 15,000,000
----------------------------------------------------------------
15,000,000 Fuji Government Securities, Inc., 5.05%, dated 9/30/94, due
10/3/94 15,000,000
----------------------------------------------------------------
15,000,000 Harris Nesbitt, Thomson Securities, Inc., 4.90%, dated 9/30/94,
due 10/3/94 15,000,000
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15,000,000 HSBC Securities, Inc., 5.15%, dated 9/30/94, due 10/3/94 15,000,000
----------------------------------------------------------------
15,000,000 J.P. Morgan Securities, Inc., 4.98%, dated 9/30/94, due 10/3/94 15,000,000
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15,000,000 Kidder, Peabody & Co., 4.80%, dated 9/30/94, due 10/3/94 15,000,000
----------------------------------------------------------------
15,000,000 NationsBank of North Carolina, N.A., 5.04%, dated 9/30/94, due
10/3/94 15,000,000
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15,000,000 Nomura Securities International, Inc., 4.80%, dated 9/30/94, due
10/3/94 15,000,000
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15,000,000 PaineWebber, Inc., 4.96%, dated 9/30/94, due 10/3/94 15,000,000
----------------------------------------------------------------
15,000,000 Sanwa-BGK Securities Co., 4.90%, dated 9/30/94, due 10/3/94 15,000,000
----------------------------------------------------------------
15,000,000 Smith, Barney, Harris, Upham & Co., Inc., 4.88%, dated 9/30/94,
due 10/3/94 15,000,000
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15,000,000 UBS Securities, Inc., 5.00%, dated 9/30/94, due 10/3/94 15,000,000
----------------------------------------------------------------
9,000,000 ** First Boston Corp., 4.80%, dated 9/2/94, due 10/3/94 9,000,000
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10,000,000 ** Lehman Government Securities, 4.85%, dated 9/28/94, due 10/5/94 10,000,000
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10,000,000 ** UBS Securities, Inc., 4.85%, dated 9/29/94, due 10/20/94 10,000,000
----------------------------------------------------------------
</TABLE>
LIQUID CASH TRUST
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<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
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<C> <C> <S> <C>
*REPURCHASE AGREEMENTS--CONTINUED
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$11,000,000 ** Goldman, Sachs & Co., 4.90%, dated 9/14/94, due 11/15/94 $ 11,000,000
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TOTAL INVESTMENTS, AT AMORTIZED COST $354,600,000+
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</TABLE>
* 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 are through participation in joint
accounts with other Federated Funds.
** Although final maturity falls at or beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($354,527,172) at September 30, 1994.
(See Notes which are an integral part of the Financial Statements)
LIQUID CASH TRUST
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1994
(UNAUDITED)
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<TABLE>
<S> <C> <C>
ASSETS:
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Investments in repurchase agreements, at amortized cost $354,600,000
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Cash 201,346
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Receivable for Trust shares sold 116,772
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Interest receivable 110,139
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Total assets 355,028,257
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LIABILITIES:
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Dividends payable $427,580
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Payable for Trust shares redeemed 34,567
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Accrued expenses 38,938
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Total liabilities 501,085
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NET ASSETS for 354,527,172 shares of beneficial interest outstanding $354,527,172
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NET ASSET VALUE, Offering Price, and Redemption Price Per Share
($354,527,172 / 354,527,172 shares of beneficial interest outstanding) $1.00
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</TABLE>
(See Notes which are an integral part of the Financial Statements)
LIQUID CASH TRUST
STATEMENT OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 1994
(UNAUDITED)
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<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
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Interest income $9,410,033
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EXPENSES--
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Investment advisory fee $ 880,450
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Trustees' fees 3,650
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Administrative personnel and services fees 169,220
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Custodian and recordkeeping fees and expenses 63,600
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Transfer and dividend disbursing agent fees and expenses 10,000
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Trust share registration costs 9,317
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Legal fees 6,200
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Auditing fees 13,800
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Printing and postage 13,500
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Insurance premiums 54
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Taxes 915
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Miscellaneous 5,000
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Total expenses 1,175,706
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Deduct--Waiver of investment advisory fee 827,288
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Net expenses 348,418
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Net investment income $9,061,615
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</TABLE>
(See Notes which are an integral part of the Financial Statements)
LIQUID CASH TRUST
STATEMENT OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
---------------------------------
1995* 1994
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<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
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OPERATIONS--
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Net investment income $ 9,061,615 $ 18,187,834
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DISTRIBUTIONS TO SHAREHOLDERS--
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Dividends to shareholders from net investment income (9,061,615) (18,187,834)
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TRUST SHARE (PRINCIPAL) TRANSACTIONS--
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Proceeds from sales of shares 2,483,352,763 6,185,652,929
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Net asset value of shares issued to shareholders in payment
of dividends declared 6,005,133 11,070,167
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Cost of shares redeemed (2,599,771,263) (6,342,906,192)
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Change in net assets from Trust share transactions (110,413,367) (146,183,096)
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Change in net assets (110,413,367) (146,183,096)
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NET ASSETS:
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Beginning of period 464,940,539 611,123,635
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End of period $ 354,527,172 $ 464,940,539
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</TABLE>
* Six months ended September 30, 1994 (unaudited)
(See Notes which are an integral part of the Financial Statements)
LIQUID CASH TRUST
FINANCIAL HIGHLIGHTS
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(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------------------------------------------------------------------------------------------
1995* 1994 1993 1992 1991 1990 1989 1988 1987 1986
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<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 0.03 0.05 0.08 0.09 0.08 0.07 0.06 0.08
- -------------------
LESS DISTRIBUTIONS
- -------------------
Dividends to
shareholders from
net investment
income (0.02) (0.03) (0.03) (0.05) (0.08) (0.09) (0.08) (0.07) (0.06) (0.08)
- ------------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
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** 2.09% 3.09% 3.35% 5.26% 7.93% 9.26% 8.57% 6.98% 6.58% 8.21%
- -------------------
RATIOS TO AVERAGE
NET ASSETS
- -------------------
Expenses 0.16%(b) 0.16% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.14% 0.10%
- -------------------
Net investment
income 4.12%(b) 3.05% 3.33% 5.16% 7.62% 8.85% 8.17% 6.74% 6.36% 7.89%
- -------------------
Expense waiver/
reimbursement (a) 0.37%(b) 0.39% 0.35% 0.34% 0.34% 0.36% 0.31% 0.33% 0.31% 0.40%
- -------------------
SUPPLEMENTAL DATA
- -------------------
Net assets, end of
period (000
omitted) 354,527 464,941 611,124 786,346 856,624 722,712 551,184 777,424 1,084,623 850,887
- -------------------
</TABLE>
* Six months ended September 30, 1994 (unaudited).
** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This expense decrease is reflected in both the expense and net investment
income ratios shown above.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
LIQUID CASH TRUST
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
(UNAUDITED)
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(1) ORGANIZATION
Liquid Cash Trust (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "Act"), as a non-diversified, open-end, management
investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
<TABLE>
<S> <C>
A. INVESTMENT VALUATIONS--The Trust's use of the amortized cost method to value its
portfolio securities is in accordance with Rule 2a-7 under the Act.
B. REPURCHASE AGREEMENTS--It is the policy of the Trust to require the custodian bank to
take possession, to have legally segregated in the Federal Reserve 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 collateral to ensure that the value of collateral at
least equals the principal amount of the repurchase agreement, including accrued
interest.
The Trust will only enter into repurchase agreements with banks and other recognized
financial institutions, such as brokers/dealers, which are deemed by the Trust's adviser
to be creditworthy pursuant to guidelines established by the Board of Trustees (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. INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS--Interest income and expenses are accrued
daily. Bond premium and discount, if applicable, are amortized as required by the
Internal Revenue Code, as amended (the "Code"). Distributions to shareholders are
recorded on the ex-dividend date.
D. FEDERAL TAXES--It is the Trust's policy to comply with the provisions of the Code
applicable to regulated investment companies and to distribute to shareholders each year
substantially all of its taxable income. Accordingly, no provisions for federal tax are
necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Trust may engage in when-issued or
delayed delivery transactions. The Trust records when-issued securities on the trade date
and maintains security positions such that sufficient liquid assets will be available to
make payment for
</TABLE>
LIQUID CASH TRUST
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<TABLE>
<S> <C>
the securities purchased. Securities purchased on a when-issued or delayed delivery basis
are marked to market daily and begin earning interest on the settlement date.
F. OTHER--Investment transactions are accounted for on the trade date.
</TABLE>
(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
September 30, 1994, capital paid-in aggregated $354,527,172. Transactions in
Trust shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
----------------------------------
1995* 1994
- ---------------------------------------------------------- -------------- ---------------
<S> <C> <C>
Shares sold 2,483,352,763 6,185,652,929
- ----------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 6,005,133 11,070,167
- ----------------------------------------------------------
Shares redeemed (2,599,771,263) (6,342,906,192)
- ---------------------------------------------------------- -------------- ---------------
Net change resulting from Trust share transactions (110,413,367) (146,183,096)
- ---------------------------------------------------------- -------------- ---------------
</TABLE>
* Six months ended September 30, 1994 (unaudited).
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Research Corp., the Trust's investment
adviser (the "Adviser"), receives for its services an annual investment advisory
fee equal to .40 of 1% of the Trust's average daily net assets. The Adviser may
waive a portion of its fee.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Trust
with administrative personnel and services. The FAS fee is based on the level of
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received during the
period of the Administrative Services Agreement shall be at least $125,000 per
portfolio and $30,000 per each additional class of shares.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Trust. The
FServ fee is based on the size, type and number of accounts and transactions
made by shareholders.
Certain of the Officers and Trustees of the Trust are Officers and Trustees of
the above companies.
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Glen R. Johnson
James E. Dowd President
Lawrence D. Ellis, M.D. J. Christopher Donahue
Edward L. Flaherty, Jr. Vice President
Peter E. Madden Richard B. Fisher
Gregor F. Meyer Vice President
Wesley W. Posvar Edward C. Gonzales
Marjorie P. Smuts Vice President and Treasurer
John W. McGonigle
Vice President and Secretary
David M. Taylor
Assistant Treasurer
Robert C. Rosselot
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any government
agency. Investment in mutual funds involves investment risk, including the
possible loss of principal. Although money market funds seek to maintain a
stable net asset value of $1.00 per share, there is no assurance that they will
be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Trust's prospectus which contains facts
concerning its objective and policies, management fees, expenses and other
information.
