TRUST FOR GOVERNMENT CASH RESERVES
PROSPECTUS
The shares of Trust for Government Cash Reserves (the "Trust") offered
by this prospectus represent interests in an open-end, diversified
management investment company (a mutual fund), investing in short-term
U.S. government securities to achieve high current income consistent
with stability of principal and liquidity.
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 OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT
RISKS INCLUDING POSSIBLE LOSS OF PRINCIPAL. 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.
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
January 31, 1995, 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
1-800-235-4669. To obtain other information, or 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 ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated January 31, 1995
TABLE OF CONTENTS
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<TABLE>
<S> <C>
SUMMARY OF TRUST EXPENSES 1
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FINANCIAL HIGHLIGHTS 2
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GENERAL INFORMATION 3
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INVESTMENT INFORMATION 3
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Investment Objective 3
Investment Policies 3
Investment Limitations 4
Regulatory Compliance 5
TRUST INFORMATION 5
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Management of the Trust 5
Distribution of Shares 6
Administration of the Trust 6
NET ASSET VALUE 7
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INVESTING IN THE TRUST 7
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Share Purchases 7
Minimum Investment Required 8
Subaccounting Services 8
Certificates and Confirmations 8
Dividends 8
Capital Gains 9
REDEEMING SHARES 9
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By Mail 9
Telephone Redemption 10
Accounts with Low Balances 10
SHAREHOLDER INFORMATION 10
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Voting Rights 10
Massachusetts Partnership Law 10
TAX INFORMATION 11
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Federal Income Tax 11
Pennsylvania Corporate and Personal
Property Taxes 11
State and Local Taxes 11
PERFORMANCE INFORMATION 11
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FINANCIAL STATEMENTS 13
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 19
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ADDRESSES 20
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</TABLE>
I
SUMMARY OF TRUST EXPENSES
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<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
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
<CAPTION>
ANNUAL TRUST OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver) (1)................................................................. 0.29%
12b-1 Fee......................................................................................... None
Total Other Expenses.............................................................................. 0.16%
Shareholder Services Fee (after waiver) (2).......................................... 0.05%
Total Trust Operating Expenses (3)........................................................ 0.45%
<FN>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.40%.
(2) The maximum shareholder services fee is 0.25%.
(3) The Total Trust Operating Expenses in the table above are based on expenses
expected during the fiscal year ending November 30, 1995. The Total Trust
Operating Expenses were 0.45% for the fiscal year ended November 30, 1994,
and would have been 0.55% absent the voluntary waiver of a portion of the
management fee.
</TABLE>
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
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<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................................................. $5 $14 $25 $57
</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.
1
TRUST FOR GOVERNMENT CASH RESERVES
FINANCIAL HIGHLIGHTS
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(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 19.
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
----------------------------------------------------------------
1994 1993 1992 1991 1990 1989*
- ------------------------------------------------------------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
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Net investment income 0.04 0.03 0.04 0.06 0.08 0.06
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LESS DISTRIBUTIONS
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Dividends to shareholders from net investment income (0.04) (0.03) (0.04) (0.06) (0.08) (0.06)
- ------------------------------------------------------------ --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------ --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL RETURN** 3.74% 2.87% 3.58% 5.95% 7.94% 5.93%
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RATIOS TO AVERAGE NET ASSETS
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Expenses 0.45% 0.45% 0.47% 0.47% 0.45% 0.43%(a)
- ------------------------------------------------------------
Net investment income 3.68% 2.83% 3.54% 5.76% 7.65% 8.34%(a)
- ------------------------------------------------------------
Expense waiver/reimbursement (b) 0.10% 0.03% 0.02% 0.02% 0.08% 0.19%(a)
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SUPPLEMENTAL DATA
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Net assets, end of period (000 omitted) $978,691 $1,060,355 $1,145,009 $1,251,692 $880,997 $331,860
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<FN>
* Reflects operations for the period from March 30, 1989 (date of initial
public investment), to November 30, 1989. For the period from start of
business, March 20, 1989 to March 29, 1989 the net investment income was
distributed to the Trust's adviser.
** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
2
GENERAL INFORMATION
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The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated January 26, 1989. The Trust is designed for institutional
investors, such as banks, fiduciaries, custodians of public funds, and similar
institutional investors, such as corporations, unions, hospitals, insurance
companies, and municipalities as a convenient means of accumulating an interest
in a professionally managed, diversified portfolio investing only in short-term
U.S. government securities. A minimum initial investment of $25,000 within a
90-day period is required.
The Trust attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
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INVESTMENT OBJECTIVE
The investment objective of the Trust is high current income consistent with
stability of principal and liquidity. This investment objective cannot be
changed without shareholder approval. While there is no assurance that the Trust
will achieve its investment objective, it endeavors to do so by following the
investment policies described in this prospectus.
INVESTMENT POLICIES
The Trust pursues its investment objective by investing only in a portfolio of
U.S. government securities maturing in 13 months or less. The average maturity
of the securities in the Trust's portfolio, computed on a dollar-weighted basis,
will be 90 days or less. Unless indicated otherwise, the investment policies may
be changed by the Board of Trustees ("Trustees") without shareholder approval.
Shareholders will be notified before any material change in these policies
becomes effective.
The Trust will limit its investments to investments which, if owned directly,
pay interest exempt from state personal income tax. Therefore, dividends paid by
the Trust may be exempt from state personal income tax.
ACCEPTABLE INVESTMENTS. The Trust invests only in U.S. government securities.
These instruments are either issued or guaranteed by the U.S. government, its
agencies, or instrumentalities. These securities include, but are not limited
to:
- direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
- notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as the: Farm Credit System, including the National
Bank for Cooperatives, Farm Credit Banks, and Banks for Cooperatives;
Federal Home Loan Banks; and Student Loan Marketing Association.
Some obligations issued or guaranteed by agencies or instrumentalities of the
U.S. government, such as Government National Mortgage Association participation
certificates, are backed by the full faith and credit of the U.S. Treasury. No
assurances can be given that the U.S. government will provide
3
financial support to other agencies or instrumentalities, since it is not
obligated to do so. These agencies and instrumentalities are supported by:
- the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
- discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
- the credit of the agency or instrumentality.
AGENCY MASTER DEMAND NOTES. The Trust may enter into master demand notes
with various federal agencies and instrumentalities. Under a master demand
note, the Trust has the right to increase or decrease the amount of the note
on a daily basis within specified maximum and minimum amounts. Master demand
notes also normally provide for full or partial repayment upon seven or more
days notice by either the Trust or the borrower and bear interest at a
variable rate. The Trust relies on master demand notes, in part, to provide
daily liquidity. To the extent that the Trust cannot obtain liquidity
through master demand notes, it may be required to maintain a larger cash
position, invest more assets in securities with current maturities or
dispose of assets at a gain or loss to maintain sufficient liquidity.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Trust may purchase
securities on a when-issued or delayed delivery basis. These transactions are
arrangements in which the Trust purchases securities with payment and delivery
scheduled for a future time. The seller's failure to complete these transactions
may cause the Trust to miss a price or yield considered to be advantageous.
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. Accordingly, the Trust may pay more or less than the market value of the
securities on the settlement date.
The Trust may dispose of a commitment prior to settlement if the adviser deems
it appropriate to do so. In addition, the Trust may enter into transactions to
sell its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Trust may realize short-term profits or losses upon the sale of such
commitments.
INVESTMENT LIMITATIONS
The Trust will not borrow money or pledge securities except, under certain
circumstances, the Trust may borrow up to one-third of the value of its total
assets and pledge up to 10% of the value of its total assets to secure such
borrowings.
The above investment limitation cannot be changed without shareholder approval.
The following limitation, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in this limitation becomes effective.
The Trust will not invest more than 10% of its net assets in illiquid
securities.
4
REGULATORY COMPLIANCE
The Trust may follow non-fundamental operational policies that are more
restrictive 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 determine the effective maturity of its
investments 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.
TRUST INFORMATION
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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. An Executive
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 Federated
Research, 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 and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee equal
to .40 of 1% of the Trust's average daily net assets. The adviser has
undertaken to reimburse the Trust up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Trust, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Research, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Research and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services to
a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately $70 billion. Federated Investors, which was founded in 1956 as
Federated Investors, Inc., develops and manages mutual funds primarily for
the financial industry. Federated Investors' track record of competitive
performance and its disciplined, risk averse investment philosophy serve
5
approximately 3,500 client institutions nationwide. Through these same
client institutions, individual shareholders also have access to this same
level of investment expertise.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for shares of the Trust.
It is a Pennsylvania corporation organized on November 14, 1969, and is the
principal distributor for a number of investment companies. Federated Securities
Corp. is a subsidiary of Federated Investors.
SHAREHOLDER SERVICES PLAN. The Trust has adopted a Shareholder Services Plan
(the "Services Plan") under which it will pay Federated Shareholder Services, an
affiliate of Federated Investors, an amount not exceeding .25 of 1% of the
average daily net asset value of the Trust to provide personal services and/or
maintenance of shareholder accounts to the Trust and its shareholders. Federated
Shareholder Services may, from time to time and for such periods as it deems
appropriate, voluntarily reduce the amount stated above.
Federated Shareholder Services may elect to pay financial institutions fees
based upon shares owned by their clients or customers for services provided to
those clients or customers. The schedules of such fees and the basis upon which
such fees will be paid will be determined from time to time by Federated
Shareholder Services.
GLASS-STEAGALL ACT. The Glass-Steagall Act prohibits a depository institution
(such as a commercial bank or a savings and loan association) from being an
underwriter or distributor of most securities. In the event the Glass-Steagall
Act is deemed to prohibit depository institutions from acting in the
administrative capacities described above or should Congress relax current
restrictions on depository institutions, the Board of Trustees will consider
appropriate changes in the administrative services.
State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.
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 as specified
below:
<TABLE>
<CAPTION>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
-------------------- ------------------------------------
<C> <S>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.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. Average
aggregate daily net assets include those of all mutual funds advised by
affiliates of Federated Investors. Federated Administrative Services may choose
voluntarily to waive a portion of its fee.
6
CUSTODIAN. State Street Bank and Trust Company, Boston, MA, is custodian for
the securities and cash of the Trust.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Pittsburgh, PA, is transfer agent for the shares of, and dividend disbursing
agent for, the Trust.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the
Trust are Arthur Andersen LLP, Pittsburgh, PA.
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 assets
and dividing the remainder by the number of shares outstanding. The Trust cannot
guarantee that its net asset value will always remain at $1.00 per share.
The net asset value is determined at 12:00 noon, 1:00 p.m., 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 received; or (iii)
the following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
INVESTING IN THE TRUST
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SHARE PURCHASES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange and the Federal Reserve Wire System are open for business. Shares may
be purchased either by wire or mail. The Trust reserves the right to reject any
purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone.
BY WIRE. To purchase by Federal Reserve wire, call the Trust before 1:00 p.m.
(Eastern time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 3:00 p.m. (Eastern time) that
day. Federal funds should be wired as follows: Federated Services Company, c/o
State Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For Credit
to: Trust for Government Cash Reserves; Fund Number (this number can be found on
the account statement or by contacting the Trust); Group Number or Order Number;
Nominee or Institution Name; and ABA Number 011000028.
BY MAIL. To purchase by mail, send a check made payable to Trust for Government
Cash Reserves to: Federated Services Company, Trust for Government Cash
Reserves, P.O. Box 8602, Boston, MA
7
02266-8602. Orders by mail are considered received when payment by check is
converted into federal funds. This is normally the next business day after the
check is received.
AUTOMATIC INVESTMENTS. Investors may establish accounts with their financial
institutions to have cash accumulations automatically invested in the Trust. The
investments may be made on predetermined dates or when the investor's account
reaches a certain level. Participating financial institutions are responsible
for prompt transmission of orders relating to the program, and they may charge
for their services. Investors should read this prospectus along with the
financial institution's agreement or literature describing these services and
fees.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment is $25,000. However, an account may be opened
with a smaller amount as long as the minimum is reached within 90 days. Minimum
investments will be calculated by combining all accounts maintained with the
Trust. Financial institutions may impose different minimum investment
requirements on their customers.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts. However,
certain financial institutions may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent charges a fee based on the level of subaccounting services
rendered. Financial institutions may charge or pass through subaccounting fees
as part of or in addition to normal trust or agency account fees. They may also
charge fees for other services provided which may be related to the ownership of
Trust shares. This prospectus should, therefore, be read together with any
agreement between the customer and the financial institution with regard to the
services provided, the fees charged for those services, and any restrictions and
limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Trust, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Trust or Federated Services Company in writing.
Monthly confirmations are sent to report transactions such as all purchases and
redemptions as well as dividends paid during the month.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Trust unless cash
payments are requested by writing to the Trust. Shares purchased by wire before
3:00 p.m. (Eastern time) begin earning dividends that day. Shares purchased by
check begin earning dividends the day after the check is converted into federal
funds.
8
CAPITAL GAINS
The Trust does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Trust will distribute in cash or additional shares any realized
net long-term capital gains at least once every 12 months.
REDEEMING SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after Federated
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 as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Trust for Government
Cash Reserves, P.O. Box 8602, Boston, MA 02266-8602. The written request should
state: Trust for Government Cash Reserves; shareholder's name; the account
number; and the share or dollar amount requested. Sign the request exactly as
the shares are registered. Shareholders should call the Trust for assistance in
redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.
Shareholders requesting a redemption of $50,000 or more, a redemption 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 their
signatures guaranteed by:
- a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund which is administered by the Federal Deposit Insurance
Corporation ("FDIC");
- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
- a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund, 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 the transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Trust may elect in the future to
limit eligible signature guarantors to institutions that are members of the
signature guarantee program. The Trust and its transfer agent reserve the right
to amend these standards at any time without notice.
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. Dividends are paid up to and including the day that a redemption
request is processed.
9
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Trust. Telephone instructions may be
recorded. If reasonable procedures are not followed by the Trust, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Trust to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp.
If the redemption request is received before 12:00 noon (Eastern time), the
proceeds will be wired the same day to the shareholder's account at a domestic
commercial bank which is a member of the Federal Reserve System, and those
shares redeemed will not be entitled to that day's dividend. A daily dividend
will be paid on shares redeemed if the redemption request is received after
12:00 noon (Eastern time). However, the proceeds are not wired until the
following business day. Under limited circumstances, arrangements may be made
with the distributor for same-day payment of proceeds, without that day's
dividend, for redemption requests received before 2:00 p.m. (Eastern time).
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail," should be considered. If at any time
the Trust shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
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 of $25,000 due to
shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
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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 business
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 election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
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
expressly disclaim the liability of its shareholders for acts or
10
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 by the Declaration of Trust 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. Therefore, 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
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FEDERAL INCOME TAX
The Trust will pay no federal income tax because it expects to meet requirements
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 whether dividends
and distributions are received in cash or as additional shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston, & Donnelly, counsel to the Trust:
- the Trust is not subject to Pennsylvania corporate or personal property
taxes; and
- Trust shares may be subject to personal property taxes imposed by
counties, municipalities, and school districts in Pennsylvania to the
extent that the portfolio securities in the Trust would be subject to such
taxes if owned directly by residents of those jurisdictions.
STATE AND LOCAL TAXES
The Trust intends to limit its investments to U.S. government securities paying
interest which, if owned directly by shareholders of the Trust, would be exempt
from state personal income tax. However, under the laws of some states, the net
investment income distributed by the Trust may be taxable to shareholders. State
laws differ on this issue, and 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, effective yield, and
tax-equivalent yield. Yield represents the annualized rate of income earned on
an investment over a seven-day period. It is the annualized dividends earned
during the period on an investment shown as a percentage of the investment. The
effective yield is calculated similarly to the yield, but when annualized, the
income earned by an investment is assumed to be reinvested daily. The effective
yield will be slightly higher
11
than the yield because of the compounding effect of this assumed reinvestment.
The tax-equivalent yield is calculated similarly to the yield, but is adjusted
to reflect the taxable yield that would have to be earned to equal the tax
exempt yield, assuming a specific tax rate.
Advertisements and 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 shares 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, advertisements for the Trust may refer to ratings, rankings,
and other information in certain financial publications and/or compare its
performance to certain indices.
12
TRUST FOR GOVERNMENT CASH RESERVES
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ---------------------------------------------------- ------------
<C> <S> <C>
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--99%
- --------------------------------------------------------------------
$311,505,000 * Student Loan Marketing Assoc., Floating Rate
Notes, 5.56%--6.19%, 12/8/94--2/11/95 $311,296,747
------------------------------------------------
115,400,000 * Student Loan Marketing Assoc., Floating Rate
Master Note, 5.44%, 10/6/95 115,400,000
------------------------------------------------
378,235,000 ** Federal Home Loan Bank, Discount Notes,
4.81%--5.98%, 12/1/94-- 7/17/95 374,934,848
------------------------------------------------
144,200,000 ** Federal Farm Credit Bank, Discount Notes,
4.86%--6.05%, 12/1/94-- 6/9/95 143,242,203
------------------------------------------------
9,000,000 Federal Home Loan Bank Notes, 5.58%, 10/6/95 8,995,562
------------------------------------------------
15,000,000 ** Tennessee Valley Authority Discount Notes,
5.00%, 12/5/95 14,991,667
------------------------------------------------ ------------
TOTAL SHORT-TERM U.S. GOVERNMENT OBLIGATIONS 968,861,027
------------------------------------------------ ------------
U.S. TREASURY OBLIGATIONS--2.7%
- --------------------------------------------------------------------
20,000,000 ** U.S. Treasury Bills, 3.60%--5.24%,
2/9/95--6/29/95 19,592,153
------------------------------------------------
7,000,000 U.S. Treasury Notes, 5.50%, 2/15/95 7,011,522
------------------------------------------------ ------------
TOTAL U.S. TREASURY OBLIGATIONS 26,603,675
------------------------------------------------ ------------
TOTAL INVESTMENTS, AT AMORTIZED COST $995,464,702+
------------------------------------------------ ------------
<FN>
* Denotes variable rate obligation for which current rate and next reset date
are shown.
** Each issue shows the rate of discount at time of purchase.
+ Also represents cost for federal tax purposes.
Note: The category of investments is shown as a percentage of net assets
($978,691,336) at November 30, 1994.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
13
TRUST FOR GOVERNMENT CASH RESERVES
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------------------------------
Investments, at amortized cost and value $995,464,702
- ----------------------------------------------------------------------------------------------
Interest receivable 3,928,720
- ----------------------------------------------------------------------------------------------
Receivable for Trust shares sold 7,700
- ---------------------------------------------------------------------------------------------- ------------
Total assets 999,401,122
- ----------------------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------------------------------
Payable for investments purchased $ 16,645,833
- --------------------------------------------------------------------------------
Dividends payable 3,673,190
- --------------------------------------------------------------------------------
Payable to Bank 251,237
- --------------------------------------------------------------------------------
Payable for Trust shares redeemed 45,910
- --------------------------------------------------------------------------------
Accrued expenses 93,616
- -------------------------------------------------------------------------------- ------------
Total liabilities 20,709,786
- ---------------------------------------------------------------------------------------------- ------------
NET ASSETS for 978,691,336 shares of beneficial interest outstanding $978,691,336
- ---------------------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share ($978,691,336 DIVIDED BY
978,691,336 shares of beneficial interest outstanding) $ 1.00
- ---------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
14
TRUST FOR GOVERNMENT CASH RESERVES
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest income $41,085,452
- ---------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------
Investment advisory fee $3,977,036
- --------------------------------------------------------------------
Trustees' fees 16,018
- --------------------------------------------------------------------
Administrative personnel and services fees 706,623
- --------------------------------------------------------------------
Custodian fees and portfolio accounting fees 283,009
- --------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 19,831
- --------------------------------------------------------------------
Shareholder services fee 371,377
- --------------------------------------------------------------------
Trust share registration costs 28,508
- --------------------------------------------------------------------
Auditing fees 15,922
- --------------------------------------------------------------------
Legal fees 13,986
- --------------------------------------------------------------------
Printing and postage 6,009
- --------------------------------------------------------------------
Insurance premiums 22,758
- --------------------------------------------------------------------
Taxes 128
- --------------------------------------------------------------------
Miscellaneous 8,243
- -------------------------------------------------------------------- ----------
Total expenses 5,469,448
- --------------------------------------------------------------------
Deduct--Waiver of investment advisory fee 949,081
- -------------------------------------------------------------------- ----------
Net expenses 4,520,367
- --------------------------------------------------------------------------------- -----------
Net investment income $36,565,085
- --------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
15
TRUST FOR GOVERNMENT CASH RESERVES
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
-------------------------------
1994 1993
--------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------
Net investment income $ 36,565,085 $ 30,897,970
- -------------------------------------------------------------- --------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------
Dividends to shareholders from net investment income (36,565,085) (30,897,970)
- -------------------------------------------------------------- --------------- --------------
TRUST SHARE (PRINCIPAL) TRANSACTIONS--
- --------------------------------------------------------------
Net proceeds from sale of shares 3,126,914,918 3,320,318,297
- --------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of 3,033,072 2,837,236
dividends declared
- --------------------------------------------------------------
Cost of shares redeemed (3,211,611,415) (3,407,809,994)
- -------------------------------------------------------------- --------------- --------------
Change in net assets resulting from Trust share (81,663,425) (84,654,461)
transactions
- -------------------------------------------------------------- --------------- --------------
Change in net assets (81,663,425) (84,654,461)
- --------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------
Beginning of period 1,060,354,761 1,145,009,222
- -------------------------------------------------------------- --------------- --------------
End of period $ 978,691,336 $1,060,354,761
- -------------------------------------------------------------- --------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
16
TRUST FOR GOVERNMENT CASH RESERVES
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Trust is registered under the Investment Company Act of 1940, as amended
(the "Act"), as a 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.
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. 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.
C. 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.
D. WHEN ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Trust may engage in
when-issued or delayed delivery transactions. A 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.
E. DEFERRED EXPENSES--The costs incurred by the Trust with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Trust's commencement date.
F. OTHER--Investment transactions are accounted for on the trade date.
17
TRUST FOR GOVERNMENT CASH RESERVES
- --------------------------------------------------------------------------------
(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
November 30, 1994, capital paid-in aggregated $978,691,336. Transactions in
Trust shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
------------------------------
1994 1993
-------------- --------------
<S> <C> <C>
Shares sold 3,126,914,918 3,320,318,297
- ---------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 3,033,072 2,837,236
- ---------------------------------------------------------------
Shares redeemed (3,211,611,415) (3,407,809,994)
- --------------------------------------------------------------- -------------- --------------
Net change resulting from Trust share transactions (81,663,425) (84,654,461)
- --------------------------------------------------------------- -------------- --------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Research, 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 voluntarily
choose to waive a portion of its fee and reimburse certain operating expenses of
the Trust. The Adviser can modify or terminate this voluntary waiver and
reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Trust
with administrative personnel and services. Prior to March 1, 1994, these
services were provided at approximate cost. Effective March 1, 1994, the FAS fee
is based on the level of average aggregate 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.
SHAREHOLDER SERVICES FEE--Under the terms of the Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Trust will pay FSS up to .25 of
1% of average net assets of the Trust for the period. This fee is to obtain
certain personal services for shareholders and to maintain the shareholder
accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. 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 Directors or
Trustees of the above companies.
18
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- ---------------------------------------------------------
To the Shareholders and Board of Trustees of
TRUST FOR GOVERNMENT CASH RESERVES:
We have audited the accompanying statement of assets and liabilities of Trust
for Government Cash Reserves (a Massachusetts business trust), including the
schedule of portfolio investments, as of November 30, 1994, and the related
statement of operations for the year then ended, and the statement of changes in
net assets, and the financial highlights (see page 2 of the prospectus) for the
periods presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
November 30, 1994, by correspondence with the custodian and broker. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Trust
for Government Cash Reserves, as of November 30, 1994, the results of its
operations for the year then ended, and changes in its net assets and financial
highlights for the periods presented, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania,
January 12, 1995
19
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Trust for Government Cash Reserves
Federated Investors Tower
Pittsburgh, PA 15222-3779
- -------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
- -------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, PA 15222-3779
- -------------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company P.O. Box 8602
Boston, MA 02266-8602
- -------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, PA 15222-3779
- -------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
- -------------------------------------------------------------------------------------------
</TABLE>
20
TRUST FOR GOVERNMENT
CASH RESERVES
PROSPECTUS
An Open-End,
Diversified, Management
Investment Company
Prospectus dated January 31,
1995
[LOGO] FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
89833H108
9022103A (1/95) [RECYCLED PAPER LOGO]
Trust for Government Cash Reserves
Statement of Additional Information
This Statement of Additional Information should be read with the
prospectus of Trust for Government Cash Reserves (the "Trust")
dated January 31, 1995. This Statement is not a prospectus. To
receive a copy of a prospectus, write or call the Trust.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated January 31, 1995
Distributor
A subsidiary of
Federated Investors
Investment Policies 1
Acceptable Investments 1
When-Issued And Delayed
Delivery Transactions 1
Investment Limitations 1
Brokerage Transactions 2
Trust for Government Cash
Reserves Management 3
The Funds 6
Trust Ownership 6
Officers and Trustees
Compensation 7
Trustee Liability 7
Investment Advisory Services 7
Investment Adviser 7
Advisory Fees 7
Shareholder Services Plan 8
Determining Net Asset Value 8
Redemption in Kind 9
The Trust's Tax Status 9
Performance Information 9
Yield 9
Effective Yield 9
Total Return 9
Performance Comparisons 10
Investment Policies
Unless indicated otherwise, the policies described below may be changed
by the Trustees without shareholder approval. Shareholders will be
notified before any material change in these policies becomes effective.
Acceptable Investments
Some of the short-term U.S. government securities the Trust may
purchase carry variable interest rates. These securities have a rate
of interest subject to adjustment at least annually. This adjusted
interest rate is ordinarily tied to some objective standard, such as
the 91-day U.S. Treasury bill rate. Variable interest rates will reduce
the changes in the market value of such securities from their original
purchase prices. Accordingly, the potential for capital appreciation
or capital depreciation should not be greater than that of fixed
interest rate U.S. government securities having maturities equal to the
interest rate adjustment dates of the variable rate U.S. government
securities. The Trust may purchase variable rate U.S. government
securities upon the determination by the Board of Trustees that the
interest rate as adjusted will cause the instrument to have a current
market value that approximates its par value on the adjustment date.
When-Issued And Delayed Delivery Transactions
These transactions are made to secure what is considered to be an
advantageous price or 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.
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 on the Trust's records at the trade date. These assets are
marked to market daily and are maintained until the transaction has been
settled. The Trust does not intend to engage in when-issued and delayed
delivery transactions to an extent that would cause the segregation of
more than 20% of the total value of its assets.
Investment Limitations
Selling Short and Buying on Margin
The Trust will not sell any securities short or purchase any
securities on margin but may obtain such short-term credits as are
necessary for clearance of transactions.
Issuing Senior Securities and Borrowing Money
The Trust will not issue senior securities except that the Trust
may borrow money in amounts up to one-third of the value of its
total assets, including the amounts borrowed.
The Trust will not borrow money except as a temporary,
extraordinary, or emergency measure or to facilitate management of
the portfolio by enabling the Trust to meet redemption requests
when the liquidation of portfolio securities is deemed to be
inconvenient or disadvantageous. The Trust will not purchase any
securities while borrowings in excess of 5% of the value of its
total assets are outstanding.
Pledging Assets
The Trust will not mortgage, pledge, or hypothecate any assets
except as necessary to secure permitted borrowings. In those
cases, it may pledge 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 pledge.
Lending Cash or Securities
The Trust will not lend any of its assets, except that it may
purchase or hold U.S. government securities permitted by its
investment objective, policies and limitations.
The above limitations cannot be changed without shareholder approval.
The following investment limitations, however, may be changed by the
Trustees without shareholder approval. Shareholders will be notified
before any material change in these limitations becomes effective.
Investing in Restricted Securities
The Trust will not invest in securities subject to restrictions on
resale under federal securities law.
Investing in Illiquid Securities
The Trust will not invest more than 10% of the value of its net
assets in illiquid securities.
Investing in Securities of Other Investment Companies
The Trust will not purchase securities of other investment
companies, except as part of a merger, consolidation, or other
acquisition.
Investing in New Issuers
The Trust will not invest more than 5% of the value of its total
assets in securities of issuers which have records of less than
three years of continuous operations, including the operation of
any predecessor.
Investing for Control
The Trust will not invest in securities of a company for the
purpose of exercising control or management.
Investing in Issuers Whose Securities Are Owned by Officers 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 .50 of 1% of the issuer's
securities together own more than 5% of the issuer's securities.
Investing in Options
The Trust will not invest in puts, calls, straddles, spreads, or
any combination of them.
Investing in Minerals
The Trust will not purchase or sell interests in oil, gas, or
other mineral exploration or development programs or leases,
although it may purchase the securities of issuers which invest in
or sponsor such programs.
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 limitation.
The Trust did not borrow money or pledge securities in excess of 5% of
the value of its net assets during the last fiscal year and has no
present intent to do so during the coming fiscal year.
Brokerage Transactions
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 use 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 guidelines
established by the Board of 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.
Research services provided by brokers and dealers may be used by the
adviser or its affiliates in advising the Trust 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. 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. During the fiscal years ended November 30, 1994,
1993, and 1992, the Trust paid no brokerage commissions.
Although investment decisions for the Trust are made independently from
those of the other accounts managed by the adviser, investments of the
type the Trust may make may also be made by those other accounts. When
the Trust and one or more other accounts managed by the adviser are
prepared to invest in, or desire to dispose of, the same security,
available investments or opportunities for sales will be allocated in a
manner believed by the adviser to be equitable to each. In some cases,
this procedure may adversely affect the price paid or received by the
Trust or the size of the position obtained or disposed of by the Trust.
In other cases, however, it is believed that coordination and the
ability to participate in volume transactions will be to the benefit of
the Trust.
Trust for Government Cash Reserves Management
Officers and Trustees are listed with their addresses, principal
occupations, and present positions.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp.; Chairman, Passport Research, Ltd.; Director, AEtna Life
and Casualty Company; Chief Executive Officer and Director, Trustee, or
Managing General Partner of the Funds. Mr. Donahue is the father of J.
Christopher Donahue , Vice President of the Trust.
Thomas G. Bigley
28th Floor
One Oxford Center
Pittsburgh, PA 15219
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board,
Children's Hospital of Pittsburgh; Director, Trustee or Managing
General Partner of the Funds; formerly, Senior Partner, Ernst &
Young LLP.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Trustee
President, Investment Properties Corporation; Senior Vice-President,
John R. Wood and Associates, Inc., Realtors; President, Northgate
Village Development Corporation; Partner or Trustee in private real
estate ventures in Southwest Florida; Director, Trustee, or Managing
General Partner of the Funds; formerly, President, Naples Property
Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.;
Director, Trustee, or Managing General Partner of the Funds; formerly,
Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp. and
Director, Ryan Homes, Inc.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Director,
Blue Cross of Massachusetts, Inc.
Lawrence D. Ellis, M.D.
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Trustee
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
Hospitals; Professor of Medicine and Trustee, University of Pittsburgh;
Director of Corporate Health, University of Pittsburgh Medical Center;
Director, Trustee, or Managing General Partner of the Funds.
Edward L. Flaherty, Jr.@
Two Gateway Center - Suite 674
Pittsburgh, PA
Trustee
Attorney-at-law; Partner, Henny, Koehuba, Meyer and Flaherty; Director,
Eat'N Park Restaurants, Inc., and Statewide Settlement Agency, Inc.;
Director, Trustee, or Managing General Partner of the Funds; formerly,
Counsel, Horizon Financial, F.A., Western Region.
Glen R. Johnson*
Federated Investors Tower
Pittsburgh, PA
President and Trustee
Trustee, Federated Investors; President and/or Trustee of some of the
Funds; staff member, Federated Securities Corp. and Federated
Administrative Services.
Peter E. Madden
225 Franklin Street
Boston, MA
Trustee
Consultant; State Representative, Commonwealth of Massachusetts;
Director, Trustee, or Managing General Partner of the Funds; formerly,
President, State Street Bank and Trust Company and State Street Boston
Corporation and Trustee, Lahey Clinic Foundation, Inc.
Gregor F. Meyer
Two Gateway Center - Suite 674
Pittsburgh, PA
Trustee
Attorney-at-law; Partner, Henny, Koehuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice
Chairman, Horizon Financial, F.A.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Trustee
Professor, Foreign Policy and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer
Library Center, Inc., and U.S. Space Foundation; Chairman, Czecho Slovak
Management Center; Director, Trustee, or Managing General Partner of the
Funds; President Emeritus, University of Pittsburgh; formerly, Chairman,
National Advisory Council for Environmental Policy and Technology.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Trustee
Public relations/marketing consultant; Director, Trustee, or Managing
General Partner of the Funds.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Vice President
President and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; President and Director,
Federated Research Corp.; President, Passport Research, Ltd.; Trustee,
Federated Administrative Services, Federated Services Company, and
Federated Shareholder Services; 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.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Vice President
Executive Vice President and Trustee, Federated Investors; Director,
Federated Research Corp.; Chairman and Director, Federated Securities
Corp.; President or Vice President of some of the Funds; Director or
Trustee of some of the Funds.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Vice President and Treasurer
Vice President, Treasurer, and Trustee, Federated Investors; Vice
President and Treasurer, Federated Advisers, Federated Management,
Federated Research, Federated Research Corp., and Passport Research,
Ltd.; Executive Vice President, Treasurer, and Director, Federated
Securities Corp.; Trustee, Federated Services Company and Federated
Shareholder Services; Chairman, Treasurer, and Trustee, Federated
Administrative Services; Trustee or Director of some of the Funds; Vice
President and Treasurer of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated
Investors; Vice President, Secretary, and Trustee, Federated Advisers,
Federated Management, and Federated Research; Vice President and
Secretary, Federated Research Corp. and Passport Research, Ltd.;
Trustee, Federated Services Company; Executive Vice President,
Secretary, and Trustee, Federated Administrative Services; Secretary and
Trustee, Federated Shareholder Services; Executive Vice President and
Director, Federated Securities Corp.; Vice President and Secretary of
the Funds.
* This Trustee is deemed to be an "interested person" as defined
in the Investment Company Act of 1940, as amended.
@ Member of the 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
As referred to in the list of Trustees and Officers, "Funds" includes
the following investment companies:
American Leaders Fund, Inc.; Annuity Management Series; Arrow Funds;
Automated Government Money Trust; Cash Trust Series II; Cash Trust
Series, Inc.; DG Investor Series; Edward D. Jones & Co. Daily Passport
Cash 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 Institutional
Trust; Federated Intermediate Government Trust; Federated Master 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 U.S. Government Money
Market Trust; Liberty Term Trust, Inc. - 1999; Liberty Utility Fund,
Inc.; Liquid Cash Trust; Managed Series Trust; The Medalist Funds: Money
Market Management, Inc.; Money Market Obligations Trust; Money Market
Trust; Municipal Securities Income Trust; 111 Corcoran Funds; Peachtree
Funds; The Planters Funds; Portage Funds; RIMCO Monument Funds; The
Shawmut Funds; Short-Term Municipal Trust; 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; World Investment Series, Inc.
Trust Ownership
Officers and Trustees own less than 1% of the Trust's outstanding
shares.
As of January 10, 1995, the following shareholders owned 5% or more of
the outstanding shares of the Trust:
The Fidelity Bank, Philadelphia, Pennsylvania, owned approximately
90,732,092 shares (8.75%); First American Trust Company, Santa Ana,
California, owned approximately 73,932,777 shares (7.13%); Eastern Bank
& Trust Company, Salem, Massachusetts, owned approximately 52,972,747
shares (5.11%).
Officers and Trustees Compensation
NAME , AGGREGATE TOTAL COMPENSATION
PAID
POSITION WITH COMPENSATION FROM TO TRUSTEES FROM
TRUST TRUST TRUST AND FUND
COMPLEX
John F. Donahue, $ -0- $ -0- for the
Trust and
Chairman and Trustee 69 investment
companies
Thomas G. Bigley, $ 509.00 $ 24,991 for the
Trust and
Trustee 50 investment
companies
John T. Conroy, Jr., $ 2,204.75 $ 136,100 for the
Trust and
Trustee 65 investment
companies
William J. Copeland, $ 2,204.75 $ 136,100 for the
Trust and
Trustee 65 investment
companies $
James E. Dowd, $ 2,204.75 $ 136,100 for the
Trust and
Trustee 65 investment
companies
Lawrence D. Ellis, M.D., $ 1,997.50 $ 123,600 for the
Trust and
Trustee 65 investment
companies
Edward L. Flaherty, Jr., $ 2,204.75 $ 136,100 for the
Trust and
Trustee 65 investment
companies
Glen R. Johnson, $ -0- $ -0- for the
Trust and
President and Trustee 9 investment
companies
Peter E. Madden, $ 1,692.50 $ 104,880 for the
Trust and
Trustee 65 investment
companies
Gregor F. Meyer, $ 1,997.50 $ 123,600 for the
Trust and
Trustee 65 investment
companies
Wesley W. Posvar, $ 1,997.50 $ 123,600 for the
Trust and
Trustee 65 investment
companies
Marjorie P. Smuts, $ 1,997.50 $ 123,600 for the
Trust and
Trustee 65 investment
companies
Trustee Liability
The 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
Investment Adviser
The Trust's investment adviser is Federated Research. It is a
subsidiary of Federated Investors. All 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.
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, Federated Research receives an annual
investment advisory fee as described in the prospectus.
For the fiscal years ended November 30, 1994, 1993, and 1992, the
adviser earned $3,977,036, $4,366,904, and $4,670,053, respectively, of
which $949,081, $357,710, and $280,690 respectively, was voluntarily
waived.
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 fees.
This arrangement is not part of the advisory contract and may be
amended or rescinded in the future.
Trust Administration
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services to the Trust for a fee as
described in the prospectus. Prior to March 1, 1994, Federated
Administrative Services, Inc., also a subsidiary of Federated Investors,
served as the Trust's administrator. (For purposes of this Statement of
Additional Information, Federated Administrative Services and Federated
Administrative Services, Inc. may hereinafter collectively be referred
to as the "Administrators".) For the fiscal years ended November 30,
1994, 1993, and 1992, the Administrators earned $706,623, $554,513, and
$484,781, respectively. Dr. Henry J. Gailliot, an officer of Federated
Research, the adviser to the Trust, holds approximately 20% of the
outstanding common stock and serves as a director of Commercial Data
Services, Inc., a company which provides computer processing services to
Federated Administrative Services.
Shareholder Services Plan
This arrangement permits the payment of fees to Federated Shareholder
Services and Financial Institutions to cause services to be provided
which are necessary for the maintenance of shareholder accounts and to
encourage personal services 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 balance; answering routine client
inquiries; and assisting clients in changing dividend options, account
designations, and addresses. By adopting the Shareholder Services Plan,
the Board of Trustees expects that the Trust will benefit by:
(1) providing personal services to shareholders; (2) investing
shareholder assets with a minimum of delay and administrative detail;
(3) enhancing shareholder recordkeeping systems; and (4) responding
promptly to shareholders' requests and inquiries concerning their
accounts. For the fiscal period ending November 30, 1994, payments in
the amount of $371,377 were made pursuant to the Shareholder Services
Plan, all of which was paid to financial institutions.
Custodian and Portfolio Recordkeeper. State Street Bank and Trust
Company, Boston, MA is custodian for the securities and cash of the
Trust. It also provides certain accounting and recordkeeping services
with respect to the Trust's portfolio investments.
Transfer Agent. As transfer agent, Federated Services Company maintains
all necessary shareholder records. For its services, the transfer agent
receives a fee based on the number of shareholder accounts.
Determining Net Asset Value
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. Accordingly, 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 opposite may be
true.
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 Securities and Exchange Commission
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. The 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 0.5 of 1% 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.
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 payments
should be in kind. In such cases, 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 who sell these securities
could receive less than the redemption value and could incur certain
transaction costs.
The Trust's Tax Status
To qualify for the special tax treatment afforded to regulated
investment companies, 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.
Performance Information
Performance depends upon such variables as: portfolio quality; average
portfolio maturity; type of instruments in which the portfolio is
invested; changes in interest rates; changes in expenses; and the
relative amount of cash flow. To the extent that financial institutions
and broker/dealers charge fees in connection with services provided in
conjunction with an investment in shares of the Trust, the performance
will be reduced for those shareholders paying those fees.
Yield
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.
The Trust's yield for the seven-day period ended November 30, 1994, was
5.05%.
Effective Yield
The Trust calculates its effective yield 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.
The Trust's effective yield for the seven-day period ended November 30,
1994, was 5.18%.
Total Return
Average annual total return is the average compounded rate of return for
a given period that would equate a $1,000 initial investment to the
ending redeemable value of that investment. The ending redeemable value
is computed by multiplying the number of shares owned at the end of the
period by the net asset value per share at the end of the period. The
number of shares owned at the end of the period is based on the number
of shares purchased at the beginning of the period with $1,000, adjusted
over the period by any additional shares, assuming the monthly
reinvestment of all dividends and distributions.
Performance Comparisons
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 based on total return, which assumes the reinvestment
of all income dividends and capital gains distributions, if any.
- Donoghue's Money Fund Report publishes annualized yields of money
market funds weekly. Donoghue's Money Market Insight publication
reports monthly and 12-month-to-date investment results for the
same money funds.
- Money, a monthly magazine, regularly ranks money market funds in
various categories based on the latest available seven-day
effective yield.
- Salomon 30-day Treasury Bill Index is a weekly quote of the most
representative yields for selected securities, issued by the U.S.
Treasury, maturing in 30 days.
- Discount Corporation of New York 30-Day Federal Agencies is a
weekly quote of the average daily offering price for selected
federal agency issues maturing in 30 days.
9022103B (1/95)
