PRESIDENT'S MESSAGE
Dear Investor:
I am pleased to present the Semi-Annual Report to Shareholders for Liquid
Cash Trust for the six-month period ended September 30, 1996. The Report
begins with the portfolio manager's investment review of the economy and its
impact on the overnight markets. Following the investment review are the
portfolio holdings and the financial statements.
Liquid Cash Trust offers a quality, convenient approach to overnight
investing for most depository institutions. At the close of the reporting
period, the portfolio was invested exclusively in repurchase agreements
fully collateralized by U.S. government and/or agency obligations due to the
potential yield advantage of these securities.
Dividends paid to shareholders during the six-month reporting period totaled
$0.03 per share. At the end of the reporting period, net assets stood at
$344.3 million.
Thank you for participating in this quality overnight investment vehicle. As
always, we welcome your questions or comments.
Sincerely,
[Graphic]
Glen R. Johnson
President
November 15, 1996
Although money market mutual 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. An investment in the Trust is neither insured nor guaranteed by the U.S.
government.
INVESTMENT REVIEW
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 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 backed by government agency-sponsored mortgage-backed
securities and Fed Funds remains quite narrow, this repo continued to be the
preferred investment relative to Fed Funds in most cases over the period due
to its collateralized nature.
Although the semi-annual reporting period was characterized by market
volatility amid shifting sentiment regarding the strength of the economy and
inflationary pressures, the Federal Reserve Board (the "Fed") left monetary
policy unchanged. Early in the reporting period, surprising strength in
housing and employment growth helped to build expectations that the Fed
might have to raise the current 5.25% Fed Funds target in order to ward off
inflationary pressures. These expectations receded in late July 1996, as
signs of a long-awaited slowdown in growth -- from a sturdy 4.7% pace over
the second quarter -- began to appear. Faced with some evidence of tight
labor market conditions in August 1996, however, the market feared that the
slowdown might not be occurring quickly enough to prevent wage inflation.
Finally, those fears were calmed once more as the Fed emerged from its
September 24, 1996 Federal Open Market Committee meeting with no
change in monetary policy. As we head into the fourth quarter, we believe
the Fed will likely keep monetary policy unchanged, barring any signs of
inflation.
Again, as the Fed stood pat during this turbulent period, the Trust's yield
was driven more by technical conditions in the Fed Funds and repo markets.
The Trust continues to seek maximum performance through ongoing relative
value analysis, as we evaluate the spread relationship between the Fed Funds
and repo markets for the more attractive investment. 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.
* Money market funds rated Aaa by Moody's are judged to be of an investment
quality similar to Aaa-rated fixed income obligations, that is, they are
judged to be of the best quality. Ratings are subject to change and do not
remove market risks.
LIQUID CASH TRUST
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(A)REPURCHASE AGREEMENTS -- 101.6%
<C> <S> <C>
$ 15,000,000 Aubrey G. Lanston and Company, Inc., 5.700%, dated 9/30/1996, due 10/1/1996 $ 15,000,000
5,000,000 Barclays de Zoete Wedd Securities, Inc., 5.720%, dated 9/30/1996, due 10/1/1996 5,000,000
15,000,000 Bear, Stearns and Co., 5.800%, dated 9/30/1996, due 10/1/1996 15,000,000
15,000,000 CIBC Wood Gundy Securities Corp., 5.780%, dated 9/30/1996, due 10/1/1996 15,000,000
15,000,000 Dresdner Securities (USA), Inc., 5.750%, dated 9/30/1996, due 10/1/1996 15,000,000
15,000,000 First Union Capital Markets, 5.750%, dated 9/30/1996, due 10/1/1996 15,000,000
30,000,000 Fuji Government Securities, Inc., 5.800%, dated 9/30/1996, due 10/1/1996 30,000,000
20,000,000 (b)Goldman Sachs Group, LP, 5.380%, dated 9/5/1996, due 10/4/1996 20,000,000
55,000,000 Goldman Sachs Group, LP, 5.700%, dated 9/30/1996, due 10/1/1996 55,000,000
15,000,000 Greenwich Capital Markets, Inc., 5.800%, dated 9/30/1996, due 10/1/1996 15,000,000
15,000,000 HSBC Securities, Inc., 5.750%, dated 9/30/1996, due 10/1/1996 15,000,000
15,000,000 Harris Government Security, Inc., 5.730%, dated 9/30/1996, due 10/1/1996 15,000,000
15,000,000 Merrill Lynch, Pierce, Fenner and Smith, 5.820%, dated 9/30/1996, due 10/1/1996 15,000,000
15,000,000 Morgan Stanley Group, Inc., 5.800%, dated 9/30/1996, due 10/1/1996 15,000,000
15,000,000 Nomura Securities International, Inc., 5.800%, dated 9/30/1996, due 10/1/1996 15,000,000
15,000,000 PaineWebber Group, Inc., 5.800%, dated 9/30/1996, due 10/1/1996 15,000,000
15,000,000 Prudential Securities, Inc., 5.720%, dated 9/30/1996, due 10/1/1996 15,000,000
15,000,000 Smith Barney, Inc., 5.780%, dated 9/30/1996, due 10/1/1996 15,000,000
15,000,000 Toronto Dominion Securities (USA) Inc., 5.750%, dated 9/30/1996, due 10/1/1996 15,000,000
</TABLE>
LIQUID CASH TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)REPURCHASE AGREEMENTS -- CONTINUED
$ 15,000,000 UBS Securities, Inc., 5.750%, dated 9/30/1996, due 10/1/1996 $ 15,000,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $ 350,000,000
</TABLE>
(a) The 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 the repurchase agreements are through
participation in joint accounts with other Federated funds.
(b) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement within seven days if the creditworthiness of the issuer is
downgraded.
(c) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($344,330,314) at September 30, 1996.
The following acronym is used throughout this portfolio:
LP -- Limited Partnership
(See Notes which are an integral part of the Financial Statements)
LIQUID CASH TRUST
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 350,000,000
Income receivable 130,498
Total assets 350,130,498
LIABILITIES:
Income distribution payable $1,834,285
Payable to Bank 3,938,535
Accrued expenses 27,364
Total liabilities 5,800,184
NET ASSETS for 344,330,314 shares outstanding $ 344,330,314
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
($344,330,314 / 344,330,314 shares outstanding) $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
LIQUID CASH TRUST
STATEMENT OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest $14,162,141
EXPENSES:
Investment advisory fee $1,052,998
Administrative personnel and services fee 199,017
Custodian fees 58,469
Transfer and dividend disbursing agent fees and expenses 12,674
Directors'/Trustees' fees 8,503
Auditing fees 6,588
Legal fees 2,318
Portfolio accounting fees 49,352
Share registration costs 7,503
Printing and postage 4,697
Insurance premiums 4,514
Taxes 732
Miscellaneous 4,270
Total expenses 1,411,635
Waiver of investment advisory fee (1,008,526)
Net expenses 403,109
Net investment income $13,759,032
</TABLE>
(See Notes which are an integral part of the Financial Statements)
LIQUID CASH TRUST
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
SEPTEMBER 30, MARCH 31,
1996 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 13,759,032 $ 28,607,724
DISTRIBUTIONS TO SHAREHOLDERS --
Distributions from net investment income (13,759,032) (28,607,724)
SHARE TRANSACTIONS --
Proceeds from sale of shares 2,905,531,936 5,099,133,598
Net asset value of shares issued to shareholders in
payment of distributions declared 7,871,369 17,157,868
Cost of shares redeemed (3,164,544,224) (4,834,498,765)
Change in net assets resulting from share transactions (251,140,919) 281,792,701
Change in net assets (251,140,919) 281,792,701
NET ASSETS:
Beginning of period 595,471,233 313,678,532
End of period $ 344,330,314 $ 595,471,233
</TABLE>
(See Notes which are an integral part of the Financial Statements)
LIQUID CASH TRUST
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
SEPTEMBER 30, YEAR ENDED MARCH 31,
1996 1996 1995 1994 1993 1992 1991 1990 1989 1988
<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 0.03 0.06 0.05 0.03 0.03 0.05 0.08 0.09 0.08 0.07
LESS DISTRIBUTIONS
Distributions from
net investment
income (0.03) (0.06) (0.05) (0.03) (0.03) (0.05) (0.08) (0.09) (0.08) (0.07)
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(A) 2.63% 5.84% 4.88% 3.09% 3.35% 5.26% 7.93% 9.26% 8.57% 6.98%
RATIOS TO AVERAGE NET
ASSETS
Expenses 0.15%* 0.16% 0.16% 0.16% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15%*
Net investment
income 5.23%* 5.72% 4.64% 3.05% 3.33% 5.16% 7.62% 8.85% 8.17% 6.74%*
Expense waiver/
reimbursement(b) 0.38%* 0.38% 0.39% 0.39% 0.35% 0.34% 0.34% 0.36% 0.31% 0.33%*
SUPPLEMENTAL DATA
Net assets,
end of period
(000 omitted) 344,330 $595,471 $313,679 $464,941 $611,124 $786,346 $856,624 $722,712 $551,184 $777,424
* Computed on an annualized basis.
</TABLE>
(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
LIQUID CASH TRUST
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 (UNAUDITED)
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. The investment objective of the Trust is
stability of principal and current income consistent with stability of
principal.
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.
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.
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 under repurchase
agreement transactions. Additionally, procedures have been established by
the Trust to monitor, on a daily basis, the market value of each
repurchaseagreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement
transaction.
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 the
guidelines and/or standards reviewed or 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.
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.
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 income. Accordingly, no
provisions for federal tax are necessary.
LIQUID CASH TRUST
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 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.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER -- Investment transactions are accounted for on the trade 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).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
1996 1996
<S> <C> <C>
Shares sold 2,905,531,936 5,099,133,598
Shares issued to shareholders in payment of distributions declared 7,871,369 17,157,868
Shares redeemed (3,164,544,224) (4,834,498,765)
Net change resulting from share transactions (251,140,919) 81,792,701
</TABLE>
At September 30, 1996, capital paid-in aggregated $344,330,314.
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 the Trust's average daily net assets.
The Adviser may voluntarily choose to waive any portion of its fee. The
Adviser can modify or terminate this voluntary waiver at any time at its
sole discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Trust with administrative
personnel and services. The fee paid to FServ 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.
LIQUID CASH TRUST
SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services
Agreement with Federated Shareholder Services ("FSS"), the Trust will pay
FSS up to .25% of daily average net assets of the Trust shares for the
period. The fee paid to FSS is used to finance certain services for
shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- ("FServ"),
through its subsidiary, Federated Shareholder Services Company ("FSSC")
serves as transfer and dividend disbursing agent for the Trust. The fee paid
to FSSC is based on the size, type, and number of accounts and transactions
made by shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ maintains the Trust's accounting records
for which it receives a fee. The fee is based on the level of the Trust's
average daily net assets for the period, plus out-of-pocket expenses.
GENERAL -- Certain of the Officers and Trustees of the Trust are Officers
and Directors or Trustees of the above companies.
TRUSTEES
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William J. Copeland
James E. Dowd
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr.
Peter E. Madden
Gregor F. Meyer
Wesley W. Posvar
John E. Murray, Jr.
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
Glen R. Johnson
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President, Treasurer, and Secretary
Richard B. Fisher
Vice President
S. Elliott Cohan
Assistant Secretary
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 other
government agency. Investment in mutual funds involves 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.
LIQUID
CASH
TRUST
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
SEPTEMBER 30, 1996
[Graphic]
Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
Cusip 536319106
8110112 (11/96)
