GOVERNMENT
CASH
SERIES
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
NOVEMBER 30, 1993
ESTABLISHED 1989
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
0122604 (1/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Government
Cash Series (the "Fund"), which covers the six-month period ended November 30,
1993. The report includes the Investment Review and Financial Statements, which
contain the Portfolio of Investments.
Government Cash Series keeps your cash working for you by pursuing current
income -- with the advantages of daily liquidity and stability of
principal* -- through the relative safety of short-term U.S. government
securities. At the end of the report period, issues of the United States
Treasury, Federal Farm Credit Bank, Federal Home Loan Bank, Federal Home Loan
Mortgage Corporation, Federal National Mortgage Association, and Student Loan
Marketing Association made up 42.2% of the Fund's holdings. Repurchase
agreements backed by government and/or agency securities accounted for 58.6% of
the portfolio, reflecting their yield advantage over many government
obligations.
From beginning to end of the report period, the Fund's net assets rose from
$400.2 million to $439.4 million. Dividends paid to shareholders during the
period totaled approximately $5.3 million, or $0.01 per share.
Thank you for choosing Government Cash Series for your short-term investment
needs. We will continue to keep you up to date on the Fund's activity. In the
meantime, please contact your investment representative if you have any
questions about the Fund.
Sincerely,
Richard B. Fisher
President
January 14, 1994
* While no money market mutual fund can guarantee that a stable net asset value
will be maintained, the Fund has done so since its inception. Investments in
mutual funds are neither insured nor guaranteed by the U.S. government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Government Cash Series is invested in direct U.S. Treasury and U.S. government
agency obligations and in repurchase agreements which have these securities as
collateral. Although the Fund has maintained a Treasury position due to narrow
agency yield spreads over Treasuries, the Fund continues to invest in issues of
the Federal National Mortgage Association, Student Loan Marketing Association,
Federal Farm Credit Bank System, Federal Home Loan Bank System, and Federal Home
Loan Mortgage Corp. Recently, the Fund has been managed with an average maturity
of 44-55 days, which is toward the higher end of its range.
During the semi-annual reporting period, the Federal Reserve (the "Fed")
continued to target a Federal Funds rate of 3%. The Fed's monetary policy has
remained on hold for well over a year now, since early September 1992. A
comparison of three-month Treasury bill rates during the same time period showed
a rise from 3.11% at the beginning of the period to 3.20% early in June,
followed by a decline in rates to 2.97% late in September, and then a rise to
3.21% by the end of November. As a yield advantage continued to exist for
investments in repurchase agreements versus direct investments in short-term
Treasury and agency securities, a substantial percentage of the Fund's
investments remained in repurchase agreements. The Fund continued to combine
attractive yields from repurchase agreements collateralized by U.S. government
mortgage-backed securities with short-term agency floating rate notes and
Treasury and agency securities with longer maturities of 6 to 12 months.
With the Fed on hold, movements in short rates over the period were driven by
market sentiment, and more recently, stronger economic statistics. Short rates
reached a peak in early June 1993, fueled by fears that data showing higher
inflation would force the Fed to raise interest rates. Rates then declined until
the near end of September, as inflationary worries subsided in the face of
weaker economic growth and more favorable reports on consumer and producer
prices. Strong fourth quarter economic growth has forced short rates upward
again, on speculation that if the growth is sustainable, unlike the strong
fourth quarter growth experienced in 1992, the Fed might be moved to tighten
monetary policy sometime in the first half of 1994 in order to keep a strict
rein on inflation. The current slack in the economy and recent inflation
reports, however, argue against the need for the Fed to move aggressively in the
very near future. Over the reporting period, the Fund has been managed with a
somewhat longer average maturity based on relative market opportunities.
However, changing economic and market developments are continuously monitored to
best serve our clients attracted to the short-term U.S. government market.
GOVERNMENT CASH SERIES
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
The obligations listed below are issued by or guaranteed by the U.S. government,
its agencies or instrumentalities, or secured by such obligations.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ----------------------------------------------------------------
<C> <C> <S> <C>
SHORT-TERM OBLIGATIONS--42.2%
- ----------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK BOND--0.7%
----------------------------------------------------------------
$ 3,000,000 3.32%, 5/2/94 $ 3,000,599
---------------------------------------------------------------- ------------
FEDERAL FARM CREDIT BANK, DISCOUNT NOTES--2.6%*
----------------------------------------------------------------
3,000,000 3.45%, 1/18/94 2,986,200
----------------------------------------------------------------
4,430,000 3.15%, 4/15/94 4,377,671
----------------------------------------------------------------
4,000,000 3.41%, 8/10/94 3,904,520
---------------------------------------------------------------- ------------
Total 11,268,391
---------------------------------------------------------------- ------------
FEDERAL HOME LOAN BANK, DISCOUNT NOTES--1.2%*
----------------------------------------------------------------
5,500,000 3.22%, 2/2/94 5,469,007
---------------------------------------------------------------- ------------
FEDERAL HOME LOAN MORTGAGE CORP., DISCOUNT NOTES--0.7%*
----------------------------------------------------------------
3,000,000 3.13%, 1/20/94 2,986,958
---------------------------------------------------------------- ------------
FEDERAL HOME LOAN BANK BOND--0.5%
----------------------------------------------------------------
2,300,000 9.55%, 4/25/94 2,355,937
---------------------------------------------------------------- ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION BANK BOND--0.9%
----------------------------------------------------------------
4,000,000 8.60%, 6/10/94 4,106,157
---------------------------------------------------------------- ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION, DISCOUNT NOTES--20.4%*
----------------------------------------------------------------
6,000,000 3.21%, 12/2/93 5,999,465
----------------------------------------------------------------
6,000,000 3.32%, 12/3/93 5,998,893
----------------------------------------------------------------
10,000,000 3.33%, 12/7/93 9,994,450
----------------------------------------------------------------
5,000,000 3.33%, 12/10/93 4,995,837
----------------------------------------------------------------
4,000,000 3.61%, 1/3/94 3,986,763
----------------------------------------------------------------
7,000,000 3.27%, 2/7/94 6,956,763
----------------------------------------------------------------
6,000,000 3.26%, 3/11/94 5,945,667
----------------------------------------------------------------
5,000,000 3.15%, 4/4/94 4,945,750
----------------------------------------------------------------
5,000,000 3.16%, 4/14/94 4,941,189
----------------------------------------------------------------
</TABLE>
GOVERNMENT CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ----------------------------------------------------------------
<C> <C> <S> <C>
SHORT-TERM OBLIGATIONS--(CONTINUED)
- ----------------------------------------------------------------------------------
$ 4,500,000 3.20%, 6/2/94 $ 4,426,800
----------------------------------------------------------------
8,000,000 3.30%, 6/3/94 7,865,067
----------------------------------------------------------------
4,000,000 3.29%, 6/7/94 3,931,276
----------------------------------------------------------------
3,000,000 3.20%, 6/30/94 2,943,733
----------------------------------------------------------------
2,000,000 3.38%, 7/6/94 1,959,252
----------------------------------------------------------------
3,000,000 3.19%, 7/18/94 2,939,124
----------------------------------------------------------------
7,400,000 3.34%-3.35%, 8/8/94 7,228,125
----------------------------------------------------------------
3,000,000 3.31%, 8/18/94 2,928,283
----------------------------------------------------------------
2,000,000 3.27%, 8/26/94 1,951,313
---------------------------------------------------------------- ------------
Total 89,937,750
---------------------------------------------------------------- ------------
STUDENT LOAN MARKETING ASSOCIATION, FLOATING RATE NOTES--5.5%**
----------------------------------------------------------------
10,000,000 3.69%, 12/7/93 9,990,790
----------------------------------------------------------------
14,000,000 3.79%, 12/7/93 13,991,934
---------------------------------------------------------------- ------------
Total 23,982,724
---------------------------------------------------------------- ------------
UNITED STATES TREASURY BILLS--4.2%*
----------------------------------------------------------------
4,000,000 3.25%, 4/7/94 3,954,280
----------------------------------------------------------------
8,500,000 3.15%-3.27%, 5/5/94 8,381,619
----------------------------------------------------------------
4,000,000 3.30%, 5/26/94 3,935,467
----------------------------------------------------------------
2,000,000 3.30%, 9/22/94 1,945,917
---------------------------------------------------------------- ------------
Total 18,217,283
---------------------------------------------------------------- ------------
UNITED STATES TREASURY NOTES--5.5%
----------------------------------------------------------------
7,000,000 6.875%, 2/15/94 7,048,970
----------------------------------------------------------------
4,000,000 5.75%, 3/31/94 4,030,237
----------------------------------------------------------------
4,000,000 7.00%, 4/15/94 4,050,138
----------------------------------------------------------------
9,000,000 5.375%, 4/30/94 9,072,406
---------------------------------------------------------------- ------------
Total 24,201,751
---------------------------------------------------------------- ------------
TOTAL SHORT--TERM OBLIGATIONS 185,526,557
---------------------------------------------------------------- ------------
</TABLE>
GOVERNMENT CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ----------------------------------------------------------------
<C> <C> <S> <C>
*** REPURCHASE AGREEMENTS--58.6%
- ----------------------------------------------------------------------------------
$ 3,600,000 BZW, Securities, Inc., 3.23%, dated 11/30/93, due 12/1/93 $ 3,600,000
----------------------------------------------------------------
20,000,000 Deutsche Bank Government Securities, Inc., 3.27%, dated
11/30/93, due 12/1/93 20,000,000
----------------------------------------------------------------
20,000,000 Fuji Government Securities, Inc., 3.27%, dated 11/30/93, due
12/1/93 20,000,000
----------------------------------------------------------------
20,000,000 Greenwich Capital Markets, Inc., 3.30%, dated 11/30/93, due
12/1/93 20,000,000
----------------------------------------------------------------
40,000,000 Kidder, Peabody & Co., Inc., 3.27%, dated 11/30/93, due 12/1/93 40,000,000
----------------------------------------------------------------
40,000,000 PaineWebber, Inc., 3.325%, dated 11/30/93, due 12/1/93 40,000,000
----------------------------------------------------------------
20,000,000 SG Warburg Securities, 3.27%, dated 11/30/93, due 12/1/93 20,000,000
----------------------------------------------------------------
65,000,000 UBS Securities, Inc., 3.30%, dated 11/30/93, due 12/1/93 65,000,000
----------------------------------------------------------------
5,000,000 + Morgan Stanley & Co., Inc., 3.25%, dated 10/7/93, due 1/3/94 5,000,000
----------------------------------------------------------------
6,000,000 + Kidder, Peabody & Co., Inc., 3.28%, dated 10/22/93, due 1/4/94 6,000,000
----------------------------------------------------------------
9,000,000 + Lehman Bros. Government Securities, Inc., 3.35%, dated 11/2/93,
due 1/10/94 9,000,000
----------------------------------------------------------------
9,000,000 + Nomura Securities International, Inc., 3.30%, dated 11/8/93,
due 2/7/94 9,000,000
---------------------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS (NOTE 2B) 257,600,000
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS, AT AMORTIZED COST $443,126,557++
---------------------------------------------------------------- ------------
* Each issue shows the rate of discount at the time of purchase.
** Denotes variable rate obligation for which current rate and next reset date is shown.
*** Repurchase agreements are fully collateralized by the U.S. government and/or agency
obligations based on market prices at the date of the portfolio. The investment in
repurchase agreements were through participation in joint accounts with other Federated
funds.
+ Although final maturity falls beyond seven days, a liquidity feature is included in each
transaction to permit termination of the repurchase agreement.
++ Also represents cost for federal tax purposes.
</TABLE>
Note: The categories of investments are shown as a percentage of net assets
($439,440,925) at November 30, 1993.
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT CASH SERIES
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in repurchase agreements (Note 2B) $257,600,000
- -----------------------------------------------------------------
Investments in other securities (Note 2A) 185,526,557
- ----------------------------------------------------------------- ------------
Total investments, at amortized cost and value $443,126,557
- --------------------------------------------------------------------------------
Cash 292,388
- --------------------------------------------------------------------------------
Interest receivable 664,276
- --------------------------------------------------------------------------------
Receivable for capital stock sold 54,298
- --------------------------------------------------------------------------------
Deferred expenses (Note 2F) 72,707
- -------------------------------------------------------------------------------- ------------
Total assets 444,210,226
- --------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------
Payable for investments purchased 3,904,520
- -----------------------------------------------------------------
Dividends payable 418,878
- -----------------------------------------------------------------
Payable for capital stock redeemed 292,738
- -----------------------------------------------------------------
Accrued expenses and other liabilities 153,165
- ----------------------------------------------------------------- ------------
Total liabilities 4,769,301
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 439,440,925 shares of capital stock outstanding $439,440,925
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share
($439,440,925 / 439,440,925 shares of capital stock outstanding) $1.00
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT CASH SERIES
STATEMENT OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------
Interest income (Note 2C) $7,507,579
- ----------------------------------------------------------------------------------
EXPENSES--
- ---------------------------------------------------------------------
Investment advisory fee (Note 5) $1,138,839
- ---------------------------------------------------------------------
Distribution fees (Note 5) 797,187
- ---------------------------------------------------------------------
Directors' fees 3,600
- ---------------------------------------------------------------------
Administrative personnel and services (Note 5) 210,148
- ---------------------------------------------------------------------
Custodian, transfer and dividend disbursing agent fees and expenses 112,194
- ---------------------------------------------------------------------
Capital stock registration costs 89,556
- ---------------------------------------------------------------------
Auditing fees 7,063
- ---------------------------------------------------------------------
Legal fees 7,800
- ---------------------------------------------------------------------
Printing and postage 15,750
- ---------------------------------------------------------------------
Insurance premiums 4,086
- ---------------------------------------------------------------------
Taxes 25,435
- ---------------------------------------------------------------------
Miscellaneous 3,069
- --------------------------------------------------------------------- ----------
Total expenses 2,414,727
- ---------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 5) 159,437
- --------------------------------------------------------------------- ----------
Net expenses 2,255,290
- ---------------------------------------------------------------------------------- ----------
Net investment income $5,252,289
- ---------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT CASH SERIES
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
--------------------------------
1994* 1993
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------
Net investment income $ 5,252,289 $ 13,241,008
- ------------------------------------------------------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- -------------------------------------------------------------
Dividends to shareholders from net investment income (5,252,289) (13,241,008)
- ------------------------------------------------------------- -------------- --------------
CAPITAL STOCK TRANSACTIONS (NOTE 4)--
- -------------------------------------------------------------
Proceeds from sale of shares 1,703,735,058 2,454,390,206
- -------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 3,580,072 7,535,453
- -------------------------------------------------------------
Cost of shares redeemed (1,668,105,096) (2,612,369,377)
- ------------------------------------------------------------- -------------- --------------
Change in net assets from capital stock transactions 39,210,034 (150,443,718)
- ------------------------------------------------------------- -------------- --------------
Change in net assets 39,210,034 (150,443,718)
- -------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------
Beginning of period 400,230,891 550,674,609
- ------------------------------------------------------------- -------------- --------------
End of period $ 439,440,925 $ 400,230,891
- ------------------------------------------------------------- -------------- --------------
</TABLE>
*Six months ended November 30, 1993 (unaudited).
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT CASH SERIES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
-----------------------------------------------------
1994** 1993 1992 1991 1990*
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
- ----------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------
Net investment income 0.01 0.03 0.04 0.07 0.06
- ----------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------
Dividends to shareholders from net
investment income (0.01) (0.03) (0.04) (0.07) (0.06)
- ---------------------------------------------- ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------- ------ ------ ------ ------ ------
TOTAL RETURN*** 1.16% 2.54% 4.33% 6.80% 6.53%
- ----------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------
Expenses 0.99%(a) 0.99% 0.98% 0.94% 0.73%(a)
- ----------------------------------------------
Net investment income 2.31%(a) 2.53% 4.25% 6.48% 7.74%(a)
- ----------------------------------------------
Expense waiver/reimbursements (b) 0.07% 0.06% 0.06% 0.13% 0.32%
- ----------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------
Net assets, end of period (000 omitted) $439,441 $400,231 $550,675 $631,718 $493,995
- ----------------------------------------------
</TABLE>
* Reflects operations for the period from August 23, 1989 (date of initial
public investment), to May 31, 1990. For the period from the start of
business, July 27, 1989, to August 22, 1989, net investment income
aggregating $0.0065 per share ($646) was distributed to the Fund's
investment adviser.
** Six months ended November 30, 1993 (unaudited).
*** Based on net asset value which does not reflect the sales load or redemption
fee, if applicable.
(a) Computed on an annualized basis.
(b) This expense decrease is reflected in both the expense and net investment
income ratios shown above (Note 5).
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT CASH SERIES
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Government Cash Series (the "Fund") is one of the portfolios of Cash Trust
Series, Inc. (the "Corporation"), an open-end management investment company
registered under the Investment Company Act of 1940, as amended. The financial
statements of the other portfolios are presented separately. The assets of each
portfolio are segregated, and a shareholder's interest is limited to the
portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Board of Directors ("Directors") has determined
that the best method currently available for valuing portfolio securities is
amortized cost. The Fund's use of the amortized cost method to value its
portfolio securities is conditioned on its compliance with Rule 2a-7 under
the Investment Company Act of 1940, as amended.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve
Book Entry System, or to have segregated within the custodian bank's vault,
all securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the Fund to
monitor, on a daily basis, the market value of each repurchase agreement's
underlying investments to ensure the existence of a proper level of
collateral.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers which are deemed by
the Fund's adviser to be creditworthy pursuant to guidelines established by
the Directors. Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral securities.
C. INCOME--Interest income is recorded on the accrual basis. Interest income
includes interest and discount earned (net of premium), including original
issue discount as required by the Internal Revenue Code, plus realized net
gains, if any, on portfolio securities.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Internal Revenue Code applicable to investment companies and to distribute to
shareholders each year all of its taxable income. Accordingly, no provision
for federal tax is necessary.
GOVERNMENT CASH SERIES
- --------------------------------------------------------------------------------
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. To the extent the Fund engages
in such transactions, it will do so for the purpose of acquiring portfolio
securities consistent with its investment objectives and policies and not for
the purpose of investment leverage. The Fund will record a when-issued
security and the related liability on the trade date. Until the securities
are received and paid for, the Fund will maintain 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.
F. DEFERRED EXPENSES--Costs incurred by the Fund 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 August 15, 1989.
G. OTHER--Investment transactions are accounted for on the date of the
transaction.
(3) DIVIDENDS
The Fund computes its net income daily and, immediately prior to the calculation
of its net asset value at the close of business, declares and records dividends
to shareholders of record at the time of the previous computation of the Fund's
net asset value. Payment of dividends is made monthly in cash, or in additional
shares at the net asset value on the payable date.
(4) CAPITAL STOCK
At November 30, 1993, there were 50,000,000,000 shares of $0.001 par value
capital stock authorized. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
--------------------------------
1994* 1993
-------------- --------------
<S> <C> <C>
Shares outstanding, beginning of period 400,230,891 550,674,609
- -------------------------------------------------------------
Shares sold 1,703,735,058 2,454,390,206
- -------------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 3,580,072 7,535,453
- -------------------------------------------------------------
Shares redeemed (1,668,105,096) (2,612,369,377)
- ------------------------------------------------------------- -------------- --------------
Shares outstanding, end of period 439,440,925 400,230,891
- ------------------------------------------------------------- -------------- --------------
</TABLE>
*Six months ended November 30, 1993 (unaudited).
(5) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Federated Advisers, the Fund's investment adviser ("Adviser"), receives for its
services an annual investment advisory fee equal to .50 of 1% of the Fund's
average daily net assets. The Adviser has
GOVERNMENT CASH SERIES
- --------------------------------------------------------------------------------
voluntarily agreed to waive a portion of its fee. The Adviser can terminate this
waiver at any time at its sole discretion.
For the six months ended November 30, 1993, the Adviser earned an investment
advisory fee of $1,138,839 of which $159,437 was voluntarily waived.
The Corporation will reimburse Federated Securities Corp. from the assets of the
Fund, for distribution service fees it paid which relate to the distribution and
administration of the Fund's shares, up to an amount of .35 of 1% of average
aggregate net asset value of shares held during the period in the accounts for
which a broker or administrator provided services. For the six months ended
November 30, 1993, the Fund incurred expenses of $797,187 related to this
agreement.
Administrative personnel and services were provided at approximate cost by
Federated Administrative Services, Inc. Certain of the Officers and Directors of
the Corporation are Officers and Directors of the above corporations.
<TABLE>
<S> <C>
DIRECTORS OFFICERS
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Richard B. Fisher
J. Christopher Donahue President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Peter E. Madden Vice President and Treasurer
Gregor F. Meyer John W. McGonigle
Wesley W. Posvar Vice President and Secretary
Marjorie P. Smuts John A. Staley, IV
Vice President
David M. Taylor
Assistant Treasurer
Charles H. Field
Assistant Secretary
</TABLE>
Mutual funds are not obligations of or insured by any bank nor are they insured
by the federal government or any of its agencies.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Fund's prospectus which contains facts concerning its
objective and policies, management fees, expenses and other information.
Municipal
Cash
Series
Semi-Annual Report
To Shareholders
November 30, 1993
Established 1989
Federated Securities Corp.
Distributor
A subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
0122605 (1/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Municipal
Cash Series (the "Fund"), which covers the six-month period ended November 30,
1993. The report includes the Investment Review and Financial Statements, which
contain the Portfolio of Investments.
Municipal Cash Series keeps your cash working for you by pursuing current income
exempt from federal regular income tax*--with the advantages of daily liquidity
and stability of principal**-- through a diversified portfolio of short-term
municipal securities. At the end of the period, Fund assets were invested in 111
different issuers in 36 states to provide broad diversification.
The 1993 increase in federal income tax rates prompted many investors to
increase their tax-free investments. This fact helped the Fund's net assets rise
from $456.2 million to $584.8 million during the six-month report period.
Dividends paid to shareholders during the period totaled approximately $4.6
million, or $0.01 per share.
Thank you for choosing Municipal Cash Series as a short-term investment. We will
continue to keep you up to date on the Fund's activity. In the meantime, please
contact your investment representative if you have any questions about the Fund.
Sincerely,
Richard B. Fisher
President
January 14, 1994
* Income may be subject to the federal alternative minimum tax and state and
local taxes.
** While no money market mutual fund can guarantee that a stable net asset value
will be maintained, the Fund has done so since its inception. Investments in
mutual funds are neither insured nor guaranteed by the U.S. government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
United States economic growth accelerated over the six-month period ending
November 30, 1993. Third quarter real GNP grew at a 2.8% annual rate, up from a
1.3% annual rate for the first half of 1993. Growth in the economy was fueled
primarily by increased consumer spending, surge in new home sales, and increased
productivity of capital and labor resources. At this point, economic data on the
economy suggests growth as high as 4.0% to 5.0% in the fourth quarter. The
economy however may not be able to sustain the vigorous fourth quarter pace in
1994 due to fiscal constraints, particularly the Clinton tax increases, defense
downsizing, corporate restructuring, weaker exports and the prospect for health
care reform.
Despite the evidence of stronger growth in the economy, yields of U.S. Treasury
and prime money market instruments remained relatively stable and at
historically low levels over the reporting period. Three month commercial paper,
a proxy for short-term rates, traded in a narrow range near the 3.25% level
until late October before moving slightly higher in November to the 3.40% level.
The increase in rates in November reflected higher year-end financing costs by
corporations. The Federal Reserve Board also continued to maintain a steady
monetary policy leaving the discount and federal funds rate unchanged at 3.00%
since September 1992. However, if the economy continues to accelerate in 1994,
this may influence the Federal Reserve to implement a more restrictive monetary
policy by increasing the federal funds rate.
Tax-exempt securities also remained at historically low levels over the period.
However, unlike the short-term taxable markets, yields on short-term tax-exempt
securities exhibited substantial volatility due to imbalances in the supply of
paper relative to demand. Interest rates on seven-day Variable Rate Demand Notes
("VRDNs") averaged 2.20% over the period, but were as low as 1.85% in early July
and as high as 3.10% in late September. On a week-to-week basis, tax-exempt
money market fund yields are driven by the VRDN market since they typically
comprise 60% or more of a fund's assets. For the most part, this volatility in
VRDN yields worked to the favor of the tax-exempt investor as VRDNs averaged 80%
of comparable taxable rates over the report period. Normally, VRDN rates will
vary in a range somewhere between 70% and 75% of comparable taxable rates. In
the fixed-rate note sector, the addition of increased supply in June, July and
August due to traditional summer financing by municipal issuers, provided many
opportunities to purchase and lock in attractive yields on high-quality notes.
Reflecting activity in the short-term tax-exempt market, the seven-day net yield
of the fund as of November 30, 1993 was 1.76%. Meanwhile, net assets were $584.8
million and the average maturity was 71 days. Management will continue to
monitor the short-term tax-exempt market for investments consistent with the
objective of the fund.
MUNICIPAL CASH SERIES
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--99.1%
- ---------------------------------------------------------------------
ALABAMA--7.8%
------------------------------------------------------
$ 1,400,000 Alabama Higher Education Loan Corp., Weekly VRDNs
(Bayerische Landesbank LOC)/(Subject to AMT) VMIG1 $ 1,400,000
------------------------------------------------------
4,300,000 Alabama Higher Education Loan Corp., Weekly VRDNs
(Bayerische Landesbank LOC)/(Subject to AMT) VMIG1 4,300,000
------------------------------------------------------
4,300,000 Alabama Higher Education Loan Corp., Weekly VRDNs
(Bayerische Landesbank LOC)/(Subject to AMT) VMIG1 4,300,000
------------------------------------------------------
6,500,000 Alabama Higher Education Loan Corp., Weekly VRDNs
(Series 1987A)/(Fuji Bank Ltd. LOC)/(Subject to AMT) VMIG1 6,500,000
------------------------------------------------------
1,500,000 Anniston, AL, IDB Weekly VRDNs (Hoover Group)/
(Comerica Bank LOC)/(Subject to AMT) P-1 1,500,000
------------------------------------------------------
6,000,000 Birmingham, AL, IDB Weekly VRDNs (Series 1992)/
National Computer Print, Inc.)/(AmSouth Bank N.A.
LOC)/(Subject to AMT) VMIG1 6,000,000
------------------------------------------------------
1,000,000 Calhoun County, AL, Economic Development Council
Weekly VRDNs (Series 1990)/(Food Ingredients Technol-
ogy Co.)/(Nationsbank of North Carolina N.A. LOC)/
(Subject to AMT) P-1 1,000,000
------------------------------------------------------
5,000,000 Hoover, AL, IDA Weekly VRDNs (Bud's Best
Cookies, Inc.)/(SouthTrust Bank of Alabama LOC)/
(Subject to AMT) P-1 5,000,000
------------------------------------------------------
270,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell
Manufacturing)/(SouthTrust Bank of Alabama LOC)/
(Subject to AMT) P-1 270,000
------------------------------------------------------
325,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell
Manufacturing)/(SouthTrust Bank of Alabama LOC)/
(Subject to AMT) P-1 325,000
------------------------------------------------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
ALABAMA--CONTINUED
------------------------------------------------------
$ 370,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell
Manufacturing)/(SouthTrust Bank of Alabama LOC)/
(Subject to AMT) P-1 $ 370,000
------------------------------------------------------
345,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell
Manufacturing)/(SouthTrust Bank of Alabama LOC)/
(Subject to AMT) P-1 345,000
------------------------------------------------------
395,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell
Manufacturing)/(SouthTrust Bank of Alabama LOC)/
(Subject to AMT) P-1 395,000
------------------------------------------------------
285,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell
Manufacturing)/(SouthTrust Bank of Alabama LOC)/
(Subject to AMT) P-1 285,000
------------------------------------------------------
2,000,000 Phoenix City, AL, IDB, 2.40% CP (Series 1988)/
(Mead Coated Board)/(ABN AMRO Bank N.V. LOC)/
(Subject to AMT), Mandatory Tender 12/6/93 P-1 2,000,000
------------------------------------------------------
2,800,000 Phoenix City, AL, IDB, 2.65% CP (Series 1988)/
(Mead Coated Board)/(ABN AMRO Bank N.V. LOC)/
(Subject to AMT), Mandatory Tender 1/12/94 P-1 2,800,000
------------------------------------------------------
6,000,000 St. Clair County, AL, IDB Weekly VRDNs (Series 1993)/
(EBSCO Industries, Inc.)/(National Australia Bank Ltd.
LOC)/(Subject to AMT) A-1+ 6,000,000
------------------------------------------------------
2,690,000 Vincent, AL, IDB, Weekly VRDNs (Series 1993)/(EBSCO
Industries, Inc.)/(National Australia Bank Ltd. LOC)/
(Subject to AMT) A-1+ 2,690,000
------------------------------------------------------ ------------
Total 45,480,000
------------------------------------------------------ ------------
ARKANSAS--1.8%
------------------------------------------------------
4,730,000 Little Rock, AR, 2.85% TRANs School District of
Pulaski County (Series 1993), 12/30/93 MIG2 4,730,000
------------------------------------------------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
ARKANSAS--CONTINUED
------------------------------------------------------
$ 6,000,000 Springdale, AR, IDA Weekly VRDNs (Newly Food)/ (Mellon
Bank N.A. LOC)/(Subject to AMT) VMIG1 $ 6,000,000
------------------------------------------------------ ------------
Total 10,730,000
------------------------------------------------------ ------------
CALIFORNIA--3.7%
------------------------------------------------------
18,000,000 California School Cash Reserve Program Authority,
3.40% TANs (Series 1993A)/(California School Boards
Pooled Loan Program), 7/5/94 SP-1+ 18,051,664
------------------------------------------------------
1,760,000 San Francisco, CA, Redevelopment Finance Agency Weekly
VRDNs (St. Francis Place)/(Mitsubishi Trust & Banking
Corp. Ltd. LOC) VMIG2 1,760,000
------------------------------------------------------
2,000,000 Seal Beach, CA, 3.10% TRANs, 7/14/94 MIG2 2,000,595
------------------------------------------------------ ------------
Total 21,812,259
------------------------------------------------------ ------------
COLORADO--0.6%
------------------------------------------------------
3,500,000 Denver, (City & County), CO, Weekly VRDNs
(Series 1992F)/(Bank of Montreal LOC)/
(Subject to AMT) A-1+ 3,500,000
------------------------------------------------------ ------------
Total 3,500,000
------------------------------------------------------ ------------
CONNECTICUT--0.7%
------------------------------------------------------
4,045,000 Connecticut State HFA, 2.90% Annual TOBs
(Series 1993H-2)/(Subject to AMT), Mandatory Tender
11/15/94 A-1+ 4,045,000
------------------------------------------------------ ------------
DELAWARE--1.8%
------------------------------------------------------
3,200,000 Delaware EDA Weekly VRDNs (Series 1986)/
(Interstate Business Complex)/(PNC Bank N.A. LOC)/
(Subject to AMT) P-1 3,200,000
------------------------------------------------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
DELAWARE--CONTINUED
------------------------------------------------------
$ 7,400,000 Sussex County, DE, IDA Weekly VRDNs, (Perdue
Farms)/(Series 1992)/(Rabobank Nederland LOC)/
(Subject to AMT) P-1 $ 7,400,000
------------------------------------------------------ ------------
Total 10,600,000
------------------------------------------------------ ------------
FLORIDA--1.1%
------------------------------------------------------
3,300,000 Hillsborough County, FL, IDA Weekly VRDNs (SIFCO
Turbine Component Service)/(Series 1992)/(National
City Bank Cleveland LOC)/(Subject to AMT) P-1 3,300,000
------------------------------------------------------
1,600,000 Jacksonville, FL, Weekly VRDNs (Metal Sales
Manufacturing)/(First National Bank, Louisville LOC)/
(Subject to AMT) P-1 1,600,000
------------------------------------------------------
1,500,000 Sumter County, FL, IDA Weekly VRDNs (Great Southern
Wood Of Florida, Inc.)/(SouthTrust Bank of Alabama
LOC)/(Subject to AMT) VMIG1 1,500,000
------------------------------------------------------ ------------
Total 6,400,000
------------------------------------------------------ ------------
GEORGIA--2.2%
------------------------------------------------------
4,075,000 Brunswick, GA, Housing Authority Weekly VRDNs
(Series S93)/(Island Square Apartments)/(Columbus
Bank & Trust Co. LOC)/(Subject to AMT) A-1 4,075,000
------------------------------------------------------
7,115,000 Columbus, GA, IDA Weekly VRDNs (Industrial And Port
Development Commission)/(Series 1992)/(Main Street
Village Partnership)/(Columbus Bank & Trust Co. LOC) A-1 7,115,000
------------------------------------------------------
1,700,000 Columbus, GA, IDA Weekly VRDNs, (Series 90B)/(R. P.
Real Estate, Inc.)/(Columbus Bank & Trust Co. LOC)/
(Subject to AMT) A-1 1,700,000
------------------------------------------------------ ------------
Total 12,890,000
------------------------------------------------------ ------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
ILLINOIS--0.9%
------------------------------------------------------
$ 3,450,000 Batavia, IL, IDB Weekly VRDNs (Millard Warehouse
Batavia Inc.)/(Northern Trust Co. LOC)/(Subject to
AMT) VMIG1 $ 3,450,000
------------------------------------------------------
1,600,000 Illinois Development Finance Authority Weekly VRDNs
(Techisand, Inc.)/(National City Bank, Cleveland LOC)/
(Subject to AMT) P-1 1,600,000
------------------------------------------------------ ------------
Total 5,050,000
------------------------------------------------------ ------------
INDIANA--4.6%
------------------------------------------------------
1,810,000 Avilla, IN, IDR Weekly VRDNs (Group Dekko Interna-
tional, Inc.)/(Bank One, Indianapolis N.A. LOC) P-1 1,810,000
------------------------------------------------------
2,600,000 Crown Point, IN, IDA Weekly VRDNs
(D&M Manufacturing, Inc.)/(First National Bank of
Louisville LOC)/(Subject to AMT) P-1 2,600,000
------------------------------------------------------
6,000,000 Greencastle, IN, IDA Weekly VRDNs (HA Parts Products,
Inc.)/(Fuji Bank Ltd. LOC)/(Subject to AMT) VMIG1 6,000,000
------------------------------------------------------
1,945,000 Indianapolis, IN, IDR Weekly VRDNs (Series 1991)/
(Cantor & Coleman II)/(Bank One, Indianapolis N.A.
LOC)/(Subject to AMT) P-1 1,945,000
------------------------------------------------------
1,875,000 Lawrence, IN, IDA Monthly VRDNs (H & H Steel)/ (Bank
One, Indianapolis N.A. LOC)/(Subject to AMT) P-1 1,875,000
------------------------------------------------------
2,270,000 Lebanon, IN, IDA Weekly VRDNs (Series 1991)/(White
Castle System Inc.)/(Bank One, Columbus N.A. LOC)/
(Subject to AMT) A-1+ 2,270,000
------------------------------------------------------
2,900,000 Tippecanoe County, IN, 3.15% Temporary Loan Warrants
(Indiana School Corp.), 12/31/93 NR 2,900,231
------------------------------------------------------
3,600,000 Tippecanoe County, IN, EDR Weekly VRDNs (Lafayette
Venetian Blind, Inc.)/(Central Trust Co. N.A. LOC)/
(Subject to AMT) P-1 3,600,000
------------------------------------------------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
INDIANA--CONTINUED
------------------------------------------------------
$ 4,089,000 Valparaiso, IN, Community Schools, 3.10% Tax
Anticipation Warrants, 12/31/93 NR $ 4,089,292
------------------------------------------------------ ------------
Total 27,089,523
------------------------------------------------------ ------------
KANSAS--1.6%
------------------------------------------------------
9,500,000 Hays, KS, Manufacturing Development Weekly VRDNs
(Series 1988)/(Yuasa Exide Battery Corp.)/(Sakura Bank
Ltd. LOC)/(Subject to AMT) P-1 9,500,000
------------------------------------------------------ ------------
KENTUCKY--5.0%
------------------------------------------------------
1,300,000 Caldwell County, KY, IDR Weekly VRDNs (Series 1990)/
(Thompson Steel Pipe)/(National Bank of
Detroit LOC)/(Subject to AMT) A-1+ 1,300,000
------------------------------------------------------
2,000,000 Jefferson County, KY, IDR Weekly VRDNs (O'Neal
Steel, Inc.)/(South Trust Bank of Alabama LOC)/
(Subject to AMT) P-1 2,000,000
------------------------------------------------------
2,720,000 Jefferson County, KY, IDR Weekly VRDNs (Series 1991)/
(Findley Adhesives Company)/(Bank One, Columbus N.A.
LOC)/(Subject to AMT) P-1 2,720,000
------------------------------------------------------
6,500,000 Kentucky Pollution Abatement & Water Resource Finance
Authority Daily VRDNs (Toyota Motors Co. Guaranty)/
(Subject to AMT) A-1+ 6,500,000
------------------------------------------------------
2,200,000 Kentucky Rural, EDA Weekly VRDNs (Series 1990)/
(Thompson Steel Pipe Company)/(National Bank of
Detroit LOC)/(Subject to AMT) A-1+ 2,200,000
------------------------------------------------------
4,600,000 Lexington Fayette, KY, Urban Co. Government Industrial
Building Weekly VRDNs, (EPI Corporation)/(PNC Bank
Kentucky LOC)/(Subject to AMT) P-1 4,600,000
------------------------------------------------------
6,000,000 Scottsville, KY, 2.85% Semi-Annual TOBs (Sumitomo
Electric Wiring Systems)/(Sumitomo Bank, Ltd. LOC),
Mandatory Tender 5/1/94 A-1 6,000,000
------------------------------------------------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
KENTUCKY--CONTINUED
------------------------------------------------------
$ 4,000,000 Wynchester, KY, IDR Weekly VRDNs (Walle Corp.)/ (Union
Bank of Switzerland LOC)/(Subject to AMT) P-1 $ 4,000,000
------------------------------------------------------ ------------
Total 29,320,000
------------------------------------------------------ ------------
MAINE--0.7%
------------------------------------------------------
4,000,000 Lewiston, ME, IDA Weekly VRDNs (Geiger Brothers)/
(Fleet National Bank LOC)/(Subject to AMT) P-1 4,000,000
------------------------------------------------------ ------------
MARYLAND--1.6%
------------------------------------------------------
9,500,000 Maryland State Community Development Administration,
2.90% Annual TOBs (1993 Fourth Series)/(Subject to
AMT), Mandatory Tender 11/2/94 VMIG1 9,500,000
------------------------------------------------------ ------------
MASSACHUSETTS--2.3%
------------------------------------------------------
1,900,000 Massachusetts Industrial Finance Authority IDR Weekly
VRDNs (Catamount Manufacturing Realty Trust)/
(Fleet Bank of New York LOC)/(Subject to AMT) A-1 1,900,000
------------------------------------------------------
6,500,000 Springfield, MA, 3.40% RANs, 12/3/93 NR(4) 6,500,176
------------------------------------------------------
2,650,000 Tauton, MA, IDR Weekly VRDNs (CD Realty Trust 1X
Project-1985)/(Fleet Bank Maine LOC)/(Subject to AMT) A-1 2,650,000
------------------------------------------------------
2,500,000 Worchester, MA, 3.35% BANs (Subject to AMT), 8/24/94 NR(4) 2,501,754
------------------------------------------------------ ------------
Total 13,551,930
------------------------------------------------------ ------------
MICHIGAN--2.1%
------------------------------------------------------
6,835,000 Michigan State Strategic Fund Weekly VRDNs
(Series 1991)/(AGA Gas, Inc.)/(Svenska
Handelsbanken, Stockholm LOC)/(Subject to AMT) P-1 6,835,000
------------------------------------------------------
5,300,000 Michigan State Strategic Fund Weekly VRDNs
(Tesco Engineering Co.)/(Bank of Tokyo Ltd. LOC) VMIG1 5,300,000
------------------------------------------------------ ------------
Total 12,135,000
------------------------------------------------------ ------------
MINNESOTA--7.4%
------------------------------------------------------
11,000,000 Becker, MN, 3.00% GO BANs (Series 1993), 10/1/94 MIG1 11,000,000
------------------------------------------------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
MINNESOTA--CONTINUED
------------------------------------------------------
$ 5,380,000 Byron, MN, IDB Weekly VRDNs (Schmidt Printing, Inc.)/
(Norwest Bank Minnesota LOC)/(Subject to AMT) A-1+ $ 5,380,000
------------------------------------------------------
6,000,000 Minnesota State Higher Education Coordinating Board
Weekly VRDNs (Student Loan Program)/(Series 1990)/
(First Bank N.A. LOC)/(Subject to AMT) VMIG1 6,000,000
------------------------------------------------------
4,500,000 Minnesota State Higher Education Coordinating Board
Weekly VRDNs (Student Loan Program)/(Series 1992A)/
(Subject to AMT) VMIG1 4,500,000
------------------------------------------------------
1,000,000 Minnesota State Higher Education Coordinating
Board Weekly VRDNs (Student Loan Program)/
(Subject to AMT) VMIG1 1,000,000
------------------------------------------------------
6,000,000 Minnesota State Higher Education Coordinating
Board Weekly VRDNs (Student Loan Program)/
(Subject to AMT) P-1 6,000,000
------------------------------------------------------
965,000 Plymouth, MN, Weekly VRDNs (Nuaire, Inc.)/
(Norwest Bank Minnesota LOC)/(Subject to AMT) P-1 965,000
------------------------------------------------------
3,025,000 Saint Paul, MN, Port Authority Weekly VRDNs
(Series 1993)/(H.M. Symth Company, Inc.)/
(Norwest Bank Minnesota LOC)/(Subject to AMT) A-1+ 3,025,000
------------------------------------------------------
5,580,000 White Bear, MN, Weekly VRDNs (Thermoform Plastics,
Inc.)/(Norwest Bank Minnesota LOC)/(Subject to AMT) A-1+ 5,580,000
------------------------------------------------------ ------------
Total 43,450,000
------------------------------------------------------ ------------
MISSISSIPPI--1.8%
------------------------------------------------------
2,000,000 Jones County, MS, IDB Weekly VRDNs (Southeastern
Specialty Foods Corp.)/(AmSouth Bank, N.A. LOC)/
(Subject to AMT) P-1 2,000,000
------------------------------------------------------
2,700,000 Oliver Branch, MS, IDR Weekly VRDNs (Series 1986)/
(United Healthcare of Mississippi, Inc.)/(First Union
National Bank LOC)/(Subject to AMT) VMIG1 2,700,000
------------------------------------------------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
MISSISSIPPI--CONTINUED
------------------------------------------------------
$ 2,000,000 Mississippi Business Finance Corporation, Weekly VRDNs
(O'Neal Steel, Inc.)/(SouthTrust Bank of Alabama LOC)/
(Subject to AMT) P-1 $ 2,000,000
------------------------------------------------------
4,000,000 Warren County, MS, IDA Weekly VRDNs
(Vesper Corp.)/(Union Bank of Switzerland LOC)/
(Subject to AMT) P-1 4,000,000
------------------------------------------------------ ------------
Total 10,700,000
------------------------------------------------------ ------------
MISSOURI--0.2%
------------------------------------------------------
1,350,000 Missouri Export and Infrastructure Board Weekly VRDNs
(Ex-L-Tube, Inc.)/(Norwest Bank Minnesota LOC)/
(Subject to AMT) P-1 1,350,000
------------------------------------------------------ ------------
MONTANA--0.3%
------------------------------------------------------
1,800,000 Forsythe Rosebud County, MT, PCR Daily VRDNs
(Pacificorp)/(Mitsubishi Bank, Ltd. LOC)/
(Subject to AMT) P-1 1,800,000
------------------------------------------------------ ------------
NEBRASKA--5.3%
------------------------------------------------------
7,200,000 Douglas County, NE, Weekly VRDNs (Series 1991)/
(Malhove Inc.)/(Norwest Bank Minnesota LOC)/
(Subject to AMT) A-1+ 7,200,000
------------------------------------------------------
24,000,000 Nebraska Higher Education Loan Program, Inc., 2.85%
Semi-Annual TOBs (Series 1993 B)/(Escrowed in
Treasuries), Mandatory Tender 3/10/94 VMIG1 24,000,000
------------------------------------------------------ ------------
Total 31,200,000
------------------------------------------------------ ------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
NEW HAMPSHIRE--2.8%
------------------------------------------------------
$ 12,500,000 New Hampshire Business Finance Authority, 2.95%
Annual TOBs (New England Power Company Guaranty)/
(Subject to AMT), Mandatory Tender 7/1/94 VMIG1 $ 12,500,000
------------------------------------------------------
4,000,000 New Hampshire, IDA, 2.90% Semi-Annual TOBs
(United Illuminating Co.)/(Barclays Bank PLC LOC)/
(Subject to AMT), Mandatory Tender 3/1/94 A-1+ 4,000,000
------------------------------------------------------ ------------
Total 16,500,000
------------------------------------------------------ ------------
NEW JERSEY--0.3%
------------------------------------------------------
2,000,000 West Milford Township, NJ, 3.28% BANs, 1/28/94 NR(3) 2,000,551
------------------------------------------------------ ------------
NEW YORK--4.5%
------------------------------------------------------
6,000,000 Longwood Central School District, NY, 3.25% TANs,
6/30/94 NR 6,005,040
------------------------------------------------------
1,200,000 Nassau County, NY, 3.15% BANs (Series 1993B), 8/15/94 SP-1 1,202,057
------------------------------------------------------
19,300,000 William Floyd UFSD, 3.25% TANs, 6/30/94 NR 19,343,714
------------------------------------------------------ ------------
Total 26,550,811
------------------------------------------------------ ------------
NORTH CAROLINA--3.5%
------------------------------------------------------
2,000,000 Bladen County, NC, Industrial Facilities & Pollution
Control Financing Authority Weekly VRDNs (BCH Energy,
Limited Partnership)/(Bank of Tokyo Ltd. LOC)/
(Subject to AMT) A-1+ 2,000,000
------------------------------------------------------
1,000,000 Forsyth County, NC, Industrial Facilities & Pollution
Control Financing Authority Weekly VRDNs
(Series 1991)/(Microfibres, Inc.)/(Nationsbank of
North Carolina N.A. LOC)/(Subject to AMT) P-1 1,000,000
------------------------------------------------------
3,825,000 Guilford County, NC, Industrial Facilities &
Pollution Control Financing Authority Weekly
VRDNs (Series 1989)/(Culp, Inc.)/
(First Union National Bank LOC)/(Subject to AMT) P-1 3,825,000
------------------------------------------------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
------------------------------------------------------
$ 2,000,000 Mecklenberg, NC, Industrial Facilities & Pollution
Control Financing Authority Weekly VRDNs (Manhasset
Bay Associates)/(Bank of Tokyo Ltd. LOC)/(Subject to
AMT) A-1+ $ 2,000,000
------------------------------------------------------
3,500,000 New Hanover County, NC, Industrial Facilities &
Pollution Control Financing Authority, IDR Weekly
VRDNs (Efson, Inc.)/(Branch Banking & Trust Co. LOC)/
(Subject to AMT) P-1 3,500,000
------------------------------------------------------
5,200,000 Orange County, NC, PFA Weekly VRDNs
(Mebane Packaging Corp.)/(First Union Bank LOC)/
(Subject to AMT) A-1 5,200,000
------------------------------------------------------
3,200,000 Rutherford County, NC, Industrial Facilities Pollution
Control Financing Authority Weekly VRDNs (Spring-Ford
Knitting Co.)/(Branch Banking & Trust Co. LOC)/
(Subject to AMT) P-1 3,200,000
------------------------------------------------------ ------------
Total 20,725,000
------------------------------------------------------ ------------
OHIO--2.3%
------------------------------------------------------
1,000,000 Cincinnati, OH, Student Loan Revenue Bonds, 2.90%
Annual TOBs (Series 1987A)/(Cincinnati Student Loan
Funding Corp.)/(Fuji Bank Ltd. LOC)/(Subject to AMT),
Mandatory Tender 7/1/94 VMIG1 1,000,000
------------------------------------------------------
1,000,000 Defiance County, OH, IDR Weekly VRDNs (Detrich
Industries, Inc.)/(PNC Bank N.A. LOC) A-1 1,000,000
------------------------------------------------------
3,000,000 Lucas County, OH, Various Purpose Improvement Notes,
3.87% BANs (Series 1993-1), 8/18/94 NR(4) 3,007,630
------------------------------------------------------
2,500,000 Ohio State Air Quality Development Authority, PCR,
2.80% Annual TOBs (Series 1993A)/(Duquesne Light
Co.)/(Union Bank of Switzerland LOC), Mandatory Tender
10/12/94 P-1 2,500,000
------------------------------------------------------
2,445,000 Stark County, OH, 3.11% BANs, 4/8/94 NR(3) 2,446,749
------------------------------------------------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
OHIO--CONTINUED
------------------------------------------------------
$ 1,300,000 Student Loan Funding of Cincinnati, OH, Weekly
VRDNs (National Westminster Bank PLC LOC)/
(Subject to AMT) VMIG1 $ 1,300,000
------------------------------------------------------
2,200,000 Trumbull County, OH, IDA Weekly VRDNs
(Series 1989)/(McDonald Steel, Inc.)/
(PNC Bank N.A. LOC)/(Subject to AMT) A-1 2,200,000
------------------------------------------------------ ------------
Total 13,454,379
------------------------------------------------------ ------------
OKLAHOMA--7.7%
------------------------------------------------------
3,500,000 Adair County, OK, IDA Weekly VRDNs (Series B)/ (Baldor
Electric Co.)/(Wachovia Bank & Trust Co., N.A.
LOC)/(Subject to AMT) P-1 3,500,000
------------------------------------------------------
6,100,000 Broken Arrow, OK, EDA Weekly VRDNs (Blue Bell
Creameries, Inc.)/(Banque Nationale de Paris LOC) VMIG1 6,100,000
------------------------------------------------------
6,300,000 Oklahoma Development Finance Authority, 3.00% Semi-
Annual TOBs (Simmons Poultry Farms)/(Bayerische
Vereinsbank AG LOC)/(Subject to AMT), Optional
Tender 2/1/94 VMIG1 6,300,000
------------------------------------------------------
14,400,000 Southeastern Oklahoma Industries Authority, Weekly
VRDNs Solid Waste Revenue Bonds (Weyerhauser, Inc.
Guaranty)/(Subject to AMT) A-1 14,400,000
------------------------------------------------------
15,000,000 Tulsa County, OK, HFA, 2.97% Semi-Annual TOBs
(Series 1992A)/(Bayerische Landesbank LOC)/
(Subject to AMT), Optional Tender 1/4/94 SP-1+ 15,000,000
------------------------------------------------------ ------------
Total 45,300,000
------------------------------------------------------ ------------
PENNSYLVANIA--8.0%
------------------------------------------------------
5,600,000 Berks County, PA, 2.875% TRANs, 12/31/93 NR 5,600,000
------------------------------------------------------
5,000,000 Luzerne County, PA, 2.80% TRANs, 12/31/93 NR 5,000,000
------------------------------------------------------
7,700,000 Pennsylvania EDA Monthly VRDNs (Series 1990B)/
(Gutchess Hardwoods)/(Fleet Bank of New York LOC) A-1 7,700,000
------------------------------------------------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
PENNSYLVANIA--CONTINUED
------------------------------------------------------
$ 6,810,000 Pennsylvania EDA Solid Waste Disposal Revenue
Bonds, 2.65% CP (Series 1992A)/(Inter-Power/AhlCon
Partners)/(Banque Paribas LOC)/(Subject to AMT),
Mandatory Tender 2/25/94 A-1+ $ 6,810,000
------------------------------------------------------
2,975,000 Pennsylvania EDA Weekly VRDNs (Stone & Lime Co.)/ (PNC
Bank N.A. LOC)/(Subject to AMT) P-1 2,975,000
------------------------------------------------------
5,000,000 Pennsylvania EDA, 2.65% CP (Series 1992) Solid Waste
Revenue Bonds (Inter-Power/AhlCon Partners)/(Banque
Paribas LOC)/(Subject to AMT), Mandatory Tender
1/27/94 A-1+ 5,000,000
------------------------------------------------------
6,000,000 Pennsylvania Higher Education Assistance Agency Weekly
VRDNs (Fuji Bank Ltd. LOC)/(Subject to AMT) VMIG1 6,000,000
------------------------------------------------------
800,000 Pennsylvania State Higher Education Assistance Agency
Weekly VRDNs (Union Bank of Switzerland LOC)/ (Subject
to AMT) A-1+ 800,000
------------------------------------------------------
3,000,000 Philadelphia, PA, IDA 3.00% Annual TOBs Commercial
Development Revenue Bonds (Series A)/(Economy Inn)/
(Bank of Tokyo, Ltd. LOC), Optional Tender 6/1/94 A-1+ 3,000,000
------------------------------------------------------
4,000,000 Philadelphia, PA, IDA 3.15% Annual TOBs (Series A)/
(Suite Hotel)/(Bank of Tokyo Ltd. LOC), Optional
Tender 6/1/94 A-1+ 4,000,000
------------------------------------------------------ ------------
Total 46,885,000
------------------------------------------------------ ------------
RHODE ISLAND--0.4%
------------------------------------------------------
2,500,000 Cranston, RI, 3.40% BANs 7/15/94 NR(3) 2,506,083
------------------------------------------------------ ------------
SOUTH CAROLINA--0.4%
------------------------------------------------------
2,260,000 Dorchester County, SC, IDB Weekly VRDNs
(L.G. Industrial Project of South Carolina, Inc.)/
(Meridian Bank LOC)/(Subject to AMT) P-1 2,260,000
------------------------------------------------------ ------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
TENNESSEE--0.4%
------------------------------------------------------
$ 2,310,000 Cocke County, TN, IDR Weekly VRDNs (Series 1988)/
(GCI, Inc.)/(Sanwa Bank Ltd. LOC)/(Subject to AMT) P-1 $ 2,310,000
------------------------------------------------------ ------------
TEXAS--4.4%
------------------------------------------------------
3,000,000 Galveston, TX, IDC Weekly VRDNs (Series 1993)/(Mitch-
ell Interest)/(National Westminister Bank PLC LOC) A-1+ 3,000,000
------------------------------------------------------
3,000,000 Harris County, TX, IDA Daily VRDNs (Yokohoma Tire
Corp.)/(Industrial Bank of Japan Ltd. LOC) P-1 3,000,000
------------------------------------------------------
17,800,000 North Texas Higher Education Student Loan Weekly VRDNs
(Series 1992)/(AMBAC Insured)/
(Subject to AMT) A-1+ 17,800,000
------------------------------------------------------
2,000,000 San Antonio, TX IDA Weekly VRDNs (Colin Medical
Instruments Corp.)/(Sanwa Bank, Ltd. LOC)/
(Subject to AMT) A-1+ 2,000,000
------------------------------------------------------ ------------
Total 25,800,000
------------------------------------------------------ ------------
UTAH--2.2%
------------------------------------------------------
8,000,000 Tooele County, UT, Waste Treatment, 2.65% CP
(Union Pacific Corp. Guaranty)/(Subject to AMT),
Mandatory Tender 2/22/94 A-1 8,000,000
------------------------------------------------------
4,700,000 Tooele County, UT, Waste Treatment, 2.80% CP
(Union Pacific Corp. Guaranty)/(Subject to AMT),
Mandatory Tender 1/20/94 A-1 4,700,000
------------------------------------------------------ ------------
Total 12,700,000
------------------------------------------------------ ------------
VIRGINIA--7.1%
------------------------------------------------------
5,800,000 Alexandria, VA, Redevelopment and Housing Authority
Weekly VRDNs (Crystal City Apartments)/(Safeco Insur-
ance Co. of America Insured)/(Sumitomo Bank LTD)/
(Subject to AMT) A-1+ 5,800,000
------------------------------------------------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
VIRGINIA--CONTINUED
------------------------------------------------------
$ 1,900,000 Amelia County, VA, IDA Weekly VRDNs (Series 1991)/
(Chambers Waste Systems)/(Nations Bank of
North Carolina N.A. LOC)/(Subject to AMT) VMIG1 $ 1,900,000
------------------------------------------------------
1,600,000 Fulton County, VA, IDA Weekly VRDNs
(Datacard Corp.)/(Norwest Bank Minnesota LOC)/
(Subject to AMT) P-1 1,600,000
------------------------------------------------------
1,300,000 Greensville County, VA, IDA Daily VRDNs, (Purdue
Farms, Inc.)/(Morgan Guaranty Trust Co. LOC)/
(Subject to AMT) A-1+ 1,300,000
------------------------------------------------------
5,000,000 Richmond, VA, Redevelopment and Housing Authority
Weekly VRDNs (Series B)/(Bayerische Landesbank
LOC)/(Subject to AMT) VMIG1 5,000,000
------------------------------------------------------
855,000 Richmond, VA, Redevelopment and Housing Authority
Weekly VRDNs (Series B6)/(Tobacco Row)/(Bayerische
Landesbank LOC)/(Subject to AMT) VMIG1 855,000
------------------------------------------------------
2,000,000 Virginia Education Loan Authority, 2.85% Multi-term
TOBs (Series 1993H)/(Escrowed in Treasuries)/
(Subject to AMT), Mandatory Tender 2/24/94 VMIG1 2,000,000
------------------------------------------------------
3,000,000 Virginia Peninsula Port Authority Daily VRDNs (Kinyo
Virginia, Inc.)/(Industrial Bank of Japan Ltd. LOC)/
(Subject to AMT) P-1 3,000,000
------------------------------------------------------
14,000,000 Virginia State Housing Development Authority, 2.80%
Annual TOBs (Series 1993I)/(Subject to AMT), Mandatory
Tender 11/4/94 A-1+ 14,000,000
------------------------------------------------------
3,000,000 Virginia State Housing Development Authority, 2.90%
Annual TOBs (Series 1993B)/(Subject to AMT), Mandatory
Tender 11/4/94 SP-1+ 3,000,000
------------------------------------------------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
VIRGINIA--CONTINUED
------------------------------------------------------
$ 3,000,000 Virginia State, HDA, 2.95% Semi-Annual TOBs
(Series 1992B)/(Stem II)/(Subject to AMT),
Mandatory Tender 3/24/94 A-1+ $ 3,000,000
------------------------------------------------------ ------------
Total 41,455,000
------------------------------------------------------ ------------
WASHINGTON--0.5%
------------------------------------------------------
3,000,000 Port Angeles, WA, Port Industrial Development Corp.
Weekly VRDNs (Series 92B)/(Daishowa American
Project)/(Industrial Bank of Japan Ltd. LOC)/
(Subject to AMT) A-1+ 3,000,000
------------------------------------------------------ ------------
WISCONSIN--0.2%
------------------------------------------------------
1,350,000 Shell Lake, WI, Weekly VRDNs (Doboy Packaging)/ (Union
Bank of Switzerland LOC)/(Subject to AMT) P-1 1,350,000
------------------------------------------------------ ------------
MISCELLANEOUS--0.5%
------------------------------------------------------
2,730,440 NCNB Tax-Exempt Trust Weekly VRDNs (Series 1989A)/
(NationsBank of North Carolina LOC)/(Subject to AMT) P-1 2,730,440
------------------------------------------------------ ------------
TOTAL SHORT-TERM MUNICIPAL SECURITIES
(AT AMORTIZED COST) $579,630,976+
------------------------------------------------------ ------------
</TABLE>
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($584,792,045) at
November 30, 1993.
* See Notes to Portfolio of Investments
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C>
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
BANs -- Bond Anticipation Notes
CP -- Commercial Paper
EDA -- Economic Development Authority
EDR -- Economic Development Revenue
GO -- General Obligation
HDA -- Hospital Development Authority
HFA -- Hospital Finance Authority/Agency
IDA -- Industrial Development Authority
IDB -- Industrial Development Bond
IDC -- Industrial Development Corporation
IDR -- Industrial Development Revenue
LOC -- Letter of Credit
PCR -- Pollution Control Revenue
PFA -- Public Facility Authority
TANs -- Tax Anticipation Notes
TOBs -- Tender Option Bonds
TRANs -- Tax and Revenue Anticipation Notes
UFSD -- Unified Free School District
UT -- Unlimited Tax
VRDNs -- Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL CASH SERIES
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL OBLIGATION RATINGS
S&P
A Standard & Poor's note rating reflects the liquidity concerns and market
access risks unique to notes.
SP-1Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a
plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
MOODY'S
Moody's short-term ratings are designated Moody's Investment Grade (MIG or VMIG
(see below)). The purpose of the MIG or VMIG ratings is to provide investors
with a simple system by which the relative investment qualities of short-term
obligations may be evaluated.
MIG1This designation denotes best quality. There is present strong protection by
establishing cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
MIG2This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.
FITCH
Fitch's short term ratings place greater emphasis on the existence of liquidity
necessary to meet the issuers obligations in a timely manner.
F-1Strongest degree of assurance for timely payment. Those issues determined to
provide exceptionally strong credit quality are given a plus (+) designation.
F-2Notes reflecting a degree of assurance for timely payment only slightly less
in degree than the highest category.
VARIABLE RATE DEMAND NOTES (VRDNS)
AND
TENDER OPTION BONDS (TOBS)
RATINGS
S&P
Standard & Poor's assigns dual ratings to all long-term debt issues that have as
part of their provisions a variable rate demand feature. The first rating
(long-term rating) addresses the likelihood of repayment of principal and
interest when due, and the second rating (short-term rating) describes the
demand characteristics. Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The
definitions for the long-term and the short-term ratings are provided below.)
- --------------------------------------------------------------------------------
MOODY'S
Short-term ratings on issues with demand features are differentiated by the use
of the VMIG symbol to reflect such characteristics as payment upon periodic
demand rather than fixed maturity dates and payment relying on external
liquidity.
In this case, two ratings are usually assigned, (for example, Aaa/VMIG-1); the
first representing an evaluation of the degree of risk associated with scheduled
principal and interest payments, and the second representing an evaluation of
the degree of risk associated with the demand feature. The VMIG rating can be
assigned a 1 or 2 designation using the same definitions described above for the
MIG rating.
FITCH
Fitch usually assigns two ratings to long-term debt issues that include
provisions for a variable rate demand feature. The long-term rating addresses
the ability of the obligor to pay debt service and the short-term rating
addresses the timely payment of the demand feature. Examples of rating
designations are as follows: AAA/F-1+, AA/F-1+, A/F-1+. (The definitions for the
long-term and short-term ratings are provided below.)
COMMERCIAL PAPER (CP) RATINGS
S&P
A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days.
A-1 This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+) sign
designation.
A-2 Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues
designated "A-1."
MOODY'S
P-1 Issuers rated PRIME-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations.
P-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations.
The following is an explanation of the Fitch ratings. These ratings are not
referenced in the Portfolio of Investments.
FITCH
F-1 Issues assigned this rating reflect a strong degree of assurance for timely
payment. Those issuers determined to possess the strongest degree of
assurance for timely payment are denoted with a plus (+) sign designation.
- --------------------------------------------------------------------------------
F-2 Issuers carrying this rating have a satisfactory degree of assurance for
timely payment, but the margin of safety is not as great as the "F-1+" and
"F-1" categories.
LONG TERM DEBT RATINGS
(INVESTMENT GRADE)
S&P
AAA Debt rated "AAA" has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
A Debt rated "A" has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
BBB Debt rated "BBB" is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest that
debt rated in higher ratings categories.
MOODY'S
AAA Bonds that are rated AAA are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large margin and
principal is secure. While the various protective elements are likely to
change, such changes which can be foreseen are most unlikely to impair
the fundamentally strong position of such issues.
AA Bonds that are rated AA are judged to be of high quality by all standards.
Together with the AAA group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in AAA securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in AAA securities.
A Bonds that are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be
present that suggest a susceptibility to impairment some time in the future.
BAA Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment characteristics
and in fact have speculative characteristics as well.
- --------------------------------------------------------------------------------
FITCH
AAA Bonds that are rated AAA are of the highest credit quality. The obligor has
an exceptionally strong ability to pay debt service.
AA Bonds that are rated AA are of very high quality. The obligor has a very
strong ability to pay debt service. Debt rated in this category may also
have a (+( or (-) sign with a rating to indicate the relative position
within the rating category.
A Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
BBB Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to
be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and
therefore impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.
NR indicates that both the bonds and the obligor or credit enhancer are not
currently rated by S&P's, Moody's, or Fitch with respect to short-term
indebtedness. However, management considers them to be of comparable quality
to securities rated in one of the two highest short-term ratings categories
by a nationally recognized statistical ratings organization.
NR(1) The underlying issuer/obligor/guarantor has other outstanding long-term
debt rated "'AAA" by Standard & Poor's, "Aaa" by Moody's or "AA" by Fitch.
NR(2) The underlying issuer/obligor/guarantor has other outstanding long-term
debt rated "AA" by Standard & Poor's, "Aa" Moody's or "AA" by Fitch.
NR(3) The underlying issuer/obligor/guarantor has other outstanding long-term
debt rated "A" by Standard & Poor's, Moody's, or Fitch.
NR(4) The underlying issuer/obligor/guarantor has other outstanding long-term
debt rated "BBB" by Standard & Poor's, "Baa" by Moody's, or "BBB" by
Fitch.
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL CASH SERIES
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------
Investments, at amortized cost and value (Note 2A) $579,630,976
- -------------------------------------------------------------------------------
Cash 3,353,761
- -------------------------------------------------------------------------------
Interest receivable 3,196,091
- -------------------------------------------------------------------------------
Deferred expenses (Note 2E) 34,033
- ------------------------------------------------------------------------------- ------------
Total assets 586,214,861
- -------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------
Payable for capital stock redeemed $903,538
- --------------------------------------------------------------------
Dividends payable 258,920
- --------------------------------------------------------------------
Accrued expenses and other liabilities 260,358
- -------------------------------------------------------------------- --------
Total liabilities 1,422,816
- ------------------------------------------------------------------------------- ------------
NET ASSETS for 584,792,045 shares of capital stock outstanding $584,792,045
- ------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share
($584,792,045 / 584,792,045) shares of beneficial interest outstanding) $1.00
- ------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL CASH SERIES
STATEMENT OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------
Interest income (Note 2B) $7,024,948
- ----------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------
Investment advisory fee (Note 5) $1,236,533
- ---------------------------------------------------------------------
Distribution services fees (Note 5) 865,499
- ---------------------------------------------------------------------
Directors' fees 4,000
- ---------------------------------------------------------------------
Administrative personnel and services (Note 5) 217,487
- ---------------------------------------------------------------------
Custodian, transfer and dividend disbursing agent fees and expenses 147,639
- ---------------------------------------------------------------------
Capital stock registration costs 77,151
- ---------------------------------------------------------------------
Auditing fees 7,250
- ---------------------------------------------------------------------
Legal fees 8,300
- ---------------------------------------------------------------------
Printing and postage 20,500
- ---------------------------------------------------------------------
Insurance premiums 6,361
- ---------------------------------------------------------------------
Taxes 24,550
- ---------------------------------------------------------------------
Miscellaneous 2,125
- --------------------------------------------------------------------- ----------
Total expenses 2,617,395
- ---------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 5) (169,052)
- --------------------------------------------------------------------- ----------
Net expenses 2,448,343
- ---------------------------------------------------------------------------------- ----------
Net investment income $4,576,605
- ---------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL CASH SERIES
STATEMENT OF CHANGES IN NET ASSETS
NOVEMBER 30, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
----------------------------------
1994* 1993
--------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------
Net investment income $ 4,576,605 $ 10,783,807
- ------------------------------------------------------------ --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)
- ------------------------------------------------------------
Dividends to shareholders from net investment income (4,576,605) (10,783,807)
- ------------------------------------------------------------ --------------- ---------------
CAPITAL STOCK TRANSACTIONS (NOTE 4)
- ------------------------------------------------------------
Proceeds from sale of shares 1,521,002,359 3,560,486,229
- ------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 3,928,169 8,634,396
- ------------------------------------------------------------
Cost of shares redeemed (1,396,343,253) (3,629,729,864)
- ------------------------------------------------------------ --------------- ---------------
Change in net assets from capital stock transactions 128,587,275 (60,609,239)
- ------------------------------------------------------------ --------------- ---------------
Change in net assets 128,587,275 (60,609,239)
- ------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------
Beginning of period 456,204,770 516,814,009
- ------------------------------------------------------------ --------------- ---------------
End of period $ 584,792,045 $ 456,204,770
- ------------------------------------------------------------ --------------- ---------------
</TABLE>
* Six months ended November 30, 1993 (unaudited).
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL CASH SERIES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
----------------------------------------------------------------
1994* 1993 1992 1991 1990**
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------
Net investment income 0.01 0.03 0.04 0.05 0.04
- ---------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------
Dividends to shareholders from net
investment income (0.01) (0.03) (0.04) (0.05) (0.04)
- --------------------------------------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------- ------- ------- ------- ------- -------
TOTAL RETURN*** 0.93% 2.11% 3.53% 5.24% 4.68%
- ---------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------
Expenses 0.99%(a) 0.99% 0.98% 0.94% 0.73%(a)
- ---------------------------------------
Net investment income 1.85%(a) 2.10% 3.42% 5.02% 5.76%(a)
- ---------------------------------------
Expense waiver/reimbursement(b) 0.07%(a) 0.03% 0.03% 0.17% 0.45%(a)
- ---------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------
Net assets, end of period (000
omitted) $584,792 $456,205 $516,814 $403,151 $195,897
- ---------------------------------------
</TABLE>
* Six months ended November 30, 1993 (unaudited).
** Reflects operations from period from August 25, 1989 (date of initial public
investment) to
May 31, 1990.
*** Based on net asset value which does not reflect the sales load or redemption
fee, if applicable.
(a) Computed on an annualized basis.
(b) Increase/decrease in above expense/income ratios due to waivers or
reimbursements of expenses (Note 3).
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL CASH SERIES
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Municipal Cash Series (the "Fund"), is one of the portfolios of Cash Trust
Series, Inc. (the "Corporation"), an open-end management investment company
registered under the Investment Company Act of 1940, as amended. The financial
statements of the other portfolios are presented separately. The assets of each
portfolio are segregated, and a shareholder's interest is limited to the
portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a--7 under the
Investment Company Act of 1940.
B. INCOME--Interest income is recorded on the accrual basis and includes
discount earned, less any premium.
C. FEDERAL TAXES--It is the Fund's policy to continue to comply with the
provisions of the Internal Revenue Code applicable to investment companies
and to distribute to shareholders each year all of its taxable income.
Accordingly, no provision for federal tax is necessary.
At May 31, 1993, the Fund, for federal income tax purposes, had a capital
loss carryforward of $4,006 which expires in 1999 ($1), 2000 ($1,447) and
2001 ($2,558), which will reduce the Fund's taxable income arising from
future net realized gains on investments, if any, to the extent permitted by
the Internal Revenue Code, and thus will reduce the amount of the capital
gain distributions to shareholders which would otherwise be necessary to
relieve the Fund of any liability for federal tax.
Dividends paid by the Fund representing net interest received on tax-exempt
municipal securities are not includable by shareholders as gross income for
federal income tax purposes because the Fund intends to meet certain
requirements of the Internal Revenue Code applicable to regulated investment
companies which will enable the Fund to pay exempt-interest dividends. The
portion of such interest, if any, earned on private activity bonds issued
after August 7, 1986 may be considered a tax preference item to shareholders.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities and maintains security positions such that sufficient liquid
assets will be available to make payment for the securities
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
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--Costs incurred by the Fund in connection with its initial
share registration, other than organization expenses, were deferred and are
being amortized on a straight-line basis through August 15, 1994.
F. OTHER--Investment transactions are accounted for on the date of the
transaction.
(3) DIVIDENDS
The Fund computes its net income daily and, immediately prior to the calculation
of its net asset value at the close of business, declares and records dividends
to shareholders of record at the time of the previous computation of the Fund's
net asset value. Payment of dividends is made monthly in cash, or in additional
shares at the net asset value on the payable date.
(4) CAPITAL STOCK
At November 30, 1993, there were 50,000,000,000 shares of $0.001 par value
capital stock authorized. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
<S> <C> <C>
1994* 1993
-------------- ---------------
Shares outstanding, beginning of period 456,204,770 516,814,009
- ---------------------------------------------------------
Shares sold 1,521,002,359 3,560,486,229
- ---------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 3,928,169 8,634,396
- ---------------------------------------------------------
Shares redeemed (1,396,343,253) (3,629,729,864)
- --------------------------------------------------------- -------------- ---------------
Shares outstanding, end of period 584,792,045 456,204,770
- --------------------------------------------------------- -------------- ---------------
</TABLE>
* Six months ended November 30, 1993 (unaudited).
(5) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Federated Advisers, the Fund's investment adviser ("Adviser"), receives for its
services an annual investment advisory fee equal to .50 of 1% of the Fund's
average daily net assets. The Adviser has voluntarily agreed to waive a portion
of its fee. The Adviser can modify or terminate this voluntary waiver at any
time at its sole discretion. For the six months ended November 30, 1993, the
Adviser earned a fee of $1,236,533 of which $169,052 was voluntarily waived.
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
The Corporation has adopted a Distribution Plan (the "Plan") for the Fund
pursuant to Rule 12b-1 under the Investment Company Act of 1940. The Fund will
reimburse Federated Securities Corp. ("FSC"), the principal distributor, from
the net assets of the Fund for fees the Fund paid which relate to the
distribution and administration of the Fund's shares. The Plan provides that the
Fund may incur distribution expenses up to .35 of 1% of the average daily net
assets of the shares annually, to pay commissions, maintenance fees and to
reimburse the distributor. For the six months ended November 30, 1993, FSC
earned $865,499.
During the six months ended November 30, 1993, the Fund engaged in purchase and
sale transactions with other Funds advised by the Adviser pursuant to Rule 17a-7
of the Investment Company Act of 1940 amounting to $286,905,000 and
$306,570,000, respectively. These purchases and sales were conducted on an
arms-length basis insofar as they were transacted for cash consideration only,
at independent current market prices and without brokerage commission, fee or
other remuneration.
Administrative personnel and services were provided at approximate cost by
Federated Administrative Services, Inc. ("FAS") Certain of the Officers and
Directors of the Corporation are Officers and Directors of the above
corporations.
<TABLE>
<S> <C>
DIRECTORS OFFICERS
- -----------------------------------------------------------------------------
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Richard B. Fisher
J. Christopher Donahue President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Peter E. Madden Vice President and Treasurer
Gregor F. Meyer John W. McGonigle
Wesley W. Posvar Vice President and Secretary
Marjorie P. Smuts John A. Staley, IV
Vice President
David M. Taylor
Assistant Treasurer
Charles H. Field
Assistant Secretary
</TABLE>
Mutual funds are not obligations of or insured by any bank nor are they insured
by the federal government or any of its agencies.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Fund's prospectus which contains facts concerning its
objective and policies, management fees, expenses and other information.
Prime
Cash
Series
Semi-Annual Report
To Shareholders
November 30, 1993
Established 1989
Federated Securities Corp.
Distributor
A subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
0122606 (1/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Prime Cash
Series (the "Fund"), which covers the six-month period ended November 30, 1993.
The report includes the Investment Review and Financial Statements, which
contain the Portfolio of Investments.
Prime Cash Series keeps your cash working for you by pursuing current
income--with the advantages of daily liquidity and stability of
principal*--through a diversified portfolio of high-quality money market
securities. At the end of the report period, Fund assets were invested in
commercial paper (60.9%), variable rate obligations (25.2%), repurchase
agreements (7.1%), short-term notes (6.8%), and certificates of deposit (0.6%).
The Fund's net assets as of November 30, 1993, were $827.3 million--up from
$796.8 million at the start of the report period. Dividends paid to shareholders
during the period totaled $9.4 million, or $0.01 per share.
Thank you for choosing Prime Cash Series as a short-term investment. We will
continue to keep you up to date on the Fund's activity. In the meantime, please
contact your investment representative if you have any questions about the Fund.
Sincerely,
Richard B. Fisher
President
January 14, 1994
* While no money market mutual fund can guarantee that a stable net asset value
will be maintained, the Fund has done so since its inception. Investments in
mutual funds are neither insured nor guaranteed by the U.S. government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
During the past year, the U.S. economy has grown at a very modest pace
commensurate with a low inflation environment. October 1993 was the first month
during which almost all economic releases were positive. Consumer spending,
especially on durable goods, housing and business investment, should contribute
to pushing the economy forward. But a variety of other factors, including slow
growth abroad, continued corporate restructuring and a tighter federal budget,
should help prevent the economy from overheating. In this mild recovery,
inflation has remained under control with respect to both the CPI and PPI.
Strength in the CRB index has been attributed to problems resulting from the
flooding in the Midwest.
The money supply has been steadily increasing during the last six months
following a very weak period over the prior several months. In aggregate, money
supply has been growing, although the measures are still below Federal Reserve
(the "Fed") targets. The annualized growth rate for M2 over the past six months
has been 2.5%. Utilizing the other aggregates, M1 expanded by 10.6% while M3
increased by 1.5%. It is unlikely that a strong recovery can occur without an
uptick in liquidity for sustenance.
Over the past six months short-term rates have held steady in the low 3% range.
Both the Federal Funds rate and the discount rate have stayed at 3% during the
period. The Fed changed from a neutral position to being biased to tighten in
August but then reverted back to neutrality in September.
Given these low short-term interest rates but taking into consideration the fact
that inflation has started to rise, the target effective average maturity range
for Prime Cash Series has been 50-60 days throughout the past six months. This
reflects a belief that short-term rates may have bottomed but should not be
rising quickly. This also reflects a modest lengthening of about 5 days
throughout the period. In structuring the Fund, there is continued emphasis
placed on positioning 25%-30% of the Fund's assets in variable rate demand notes
and accomplishing a modest barbell structure.
During the six months ending November 30, 1993, the net assets of Prime Cash
Series increased from $796.8 to $827.3 million, while the 7-day net yield
increased from 2.27% to 2.44%*. The effective average maturity of the Fund on
November 30 was 63 days.
* Past performance is not indicative of future results. Yield will vary.
PRIME CASH SERIES
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ----------------------------------------------------------------
<C> <C> <S> <C>
CERTIFICATES OF DEPOSIT--0.6%
- ------------ ---------------------------------------------------------------------
$ 5,000,000 American Express Centurion Bank, 3.37%, 1/27/94 $ 5,000,000
---------------------------------------------------------------- ------------
*COMMERCIAL PAPER--60.9%
- ------------ ---------------------------------------------------------------------
BANKING--18.6%
----------------------------------------------------------------
35,000,000 Abbey National N.A. Corp. (Guaranteed by Abbey
National Bank PLC), 3.27%--3.45%, 4/12/94--5/24/94 34,520,885
----------------------------------------------------------------
5,000,000 ABN AMRO Bank, NV, 3.35%, 1/12/94 4,980,750
----------------------------------------------------------------
6,000,000 Bank of Nova Scotia, 3.30%, 1/21/94 5,972,120
----------------------------------------------------------------
14,000,000 Barclays Bank of Canada, 3.25%--3.37%, 12/16/93--4/28/94 13,863,690
----------------------------------------------------------------
18,000,000 Canadian Imperial Holdings, Inc., 3.19%--3.22%, 3/10/94--3/14/94 17,838,991
----------------------------------------------------------------
10,300,000 Comdisco, Inc. (Union Bank of Switzerland LOC), 3.36%, 2/11/94 10,230,684
----------------------------------------------------------------
10,000,000 National Westminster Bank, PLC, 3.11%, 12/7/93 9,994,817
----------------------------------------------------------------
13,147,000 Paragon Communications (Credit Lyonnais LOC), 3.14%--3.28%,
12/10/93--1/6/94 13,123,981
----------------------------------------------------------------
14,000,000 PEMEX Capital, Inc. (Swiss Bank Corp. LOC), 3.35%--3.38%,
1/4/94--1/12/94 13,950,988
----------------------------------------------------------------
5,000,000 Royal Bank of Canada, 3.36%, 5/12/94 4,924,400
----------------------------------------------------------------
10,000,000 Svenska Handelsbanken, Inc., 3.45%, 5/11/94 9,847,944
----------------------------------------------------------------
5,000,000 TNT Limited (Barclays Bank PLC LOC), 3.42%, 1/28/94 4,972,853
----------------------------------------------------------------
10,000,000 Toronto Dominion Holdings (USA), Inc., 3.35%, 1/10/94 9,963,333
---------------------------------------------------------------- ------------
Total 154,185,436
---------------------------------------------------------------- ------------
FINANCE--AUTOMOTIVE--7.9%
----------------------------------------------------------------
21,000,000 Ford Credit Receivables Funding, Inc., 3.31%--3.37%,
2/16/94--2/18/94 20,849,700
----------------------------------------------------------------
5,000,000 Hertz Funding Corp., 3.36%, 2/1/94 4,971,239
----------------------------------------------------------------
40,000,000 New Center Asset Trust (Series A1+/P1), 3.27%--3.41%,
1/6/94--4/18/94 39,658,542
---------------------------------------------------------------- ------------
Total 65,479,481
---------------------------------------------------------------- ------------
</TABLE>
PRIME CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ----------------------------------------------------------------
<C> <C> <S> <C>
*COMMERCIAL PAPER--CONTINUED
- ----------------------------------------------------------------------------------
FINANCE--COMMERCIAL--5.3%
----------------------------------------------------------------
$ 2,000,000 CIT Group Holdings, Inc., 3.33%, 4/19/94 $ 1,974,748
----------------------------------------------------------------
30,000,000 General Electric Capital Corp., 3.18%--3.43%, 12/8/93--5/27/94 29,739,338
----------------------------------------------------------------
12,000,000 Transamerica Finance Corp., 3.43%, 6/2/94 11,793,820
---------------------------------------------------------------- ------------
Total 43,507,906
---------------------------------------------------------------- ------------
FINANCE--RETAIL--7.1
----------------------------------------------------------------
8,000,000 Household Finance Corp., 3.27%--3.63%, 1/20/94--8/3/94 7,999,729
----------------------------------------------------------------
15,000,000 Grand Metropolitan Finance PLC, 3.33%--3.45%, 1/11/94--5/2/94 14,837,766
----------------------------------------------------------------
36,078,000 Sears Credit Corp. B, 3.30%--3.47%, 1/6/94--5/9/94 35,719,137
---------------------------------------------------------------- ------------
Total 58,556,632
---------------------------------------------------------------- ------------
FUNDING CORPORATION--16.8%
----------------------------------------------------------------
5,000,000 Asset Securitization Cooperative Corp., 3.40%, 12/20/93 4,991,160
----------------------------------------------------------------
40,500,000 Beta Finance Inc., 3.27%--3.44%, 12/7/93--5/24/94 40,077,579
----------------------------------------------------------------
12,100,000 Corporate Asset Funding Co., Inc., 3.23%--3.35%,
12/9/93--3/7/94 12,067,562
----------------------------------------------------------------
20,900,000 Falcon Asset Securitization Corp., 3.25%--3.36%,
1/19/94--2/22/94 20,788,207
----------------------------------------------------------------
37,000,000 McKenna Triangle National Corp., 3.35%--3.41%, 1/21/94--5/26/94 36,731,787
----------------------------------------------------------------
10,000,000 PREFCO, 3.38%, 2/10/94 9,933,931
----------------------------------------------------------------
14,317,000 Premium Funding, Inc., Series B, 3.28%--3.43%, 1/7/94--2/28/94 14,210,983
---------------------------------------------------------------- ------------
Total 138,801,209
---------------------------------------------------------------- ------------
INSURANCE--3.8%
----------------------------------------------------------------
12,100,000 CXC, Inc. (CAPMAC Surety Guaranteed), 3.14%, 12/10/93 12,090,562
----------------------------------------------------------------
11,502,000 Prospect St. Sr. Loan Port. L.P. (Guaranteed by FSA),
3.42%--3.43%, 2/22/94--4/22/94 11,379,424
----------------------------------------------------------------
8,000,000 Prudential Funding Corp., 3.32%--3.43%, 1/5/94--1/13/94 7,971,877
---------------------------------------------------------------- ------------
Total 31,441,863
---------------------------------------------------------------- ------------
TELECOMMUNICATIONS--1.4%
----------------------------------------------------------------
12,000,000 AT&T Corp., 3.30%--3.32%, 12/13/93--1/7/94 11,975,639
---------------------------------------------------------------- ------------
TOTAL COMMERCIAL PAPER 503,948,166
---------------------------------------------------------------- ------------
</TABLE>
PRIME CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ----------------------------------------------------------------
<C> <C> <S> <C>
SHORT-TERM NOTES--6.8%
- ----------------------------------------------------------------------------------
BANKING--1.8%
----------------------------------------------------------------
$ 7,500,000 ABC II (Bankers Trust Co. Put), 4.34%, 8/8/94 $ 7,500,000
----------------------------------------------------------------
1,000,000 First Union Corp., 3.36%, 12/15/93 1,002,204
----------------------------------------------------------------
6,000,000 Security Pacific Corp., 8.90%, 5/9/94 6,139,384
---------------------------------------------------------------- ------------
Total 14,641,588
---------------------------------------------------------------- ------------
FINANCE--AUTOMOTIVE--4.3%
----------------------------------------------------------------
30,000,000 GMAC Mortgage Corp. of PA (Guaranteed by GMAC), 3.37%, 12/1/93 30,000,000
----------------------------------------------------------------
3,232,469 Premier Auto Trust 1993--2 Class A--1, 3.23%, 4/15/94 3,232,468
----------------------------------------------------------------
1,927,591 Premier Auto Trust 1993--3 Class A--1, 3.44%, 6/15/94 1,926,929
---------------------------------------------------------------- ------------
Total 35,159,397
---------------------------------------------------------------- ------------
TOBACCO--0.7%
----------------------------------------------------------------
6,000,000 Philip Morris Cos., Inc., 3.59%--4.79%, 2/15/94 6,052,559
---------------------------------------------------------------- ------------
TOTAL SHORT-TERM NOTES 55,853,544
---------------------------------------------------------------- ------------
**VARIABLE RATE OBLIGATIONS--25.2%
- ------------ ---------------------------------------------------------------------
BANKING--15.2%
----------------------------------------------------------------
1,175,000 Avalon Hotel Associates (Meridian Bank LOC), 3.54%, 12/2/93 1,175,000
----------------------------------------------------------------
10,000,000 Azdel, Inc. (PNC Bank, Kentucky LOC), 3.44%, 12/6/93 10,000,000
----------------------------------------------------------------
8,550,000 College--Kent L.P. (Society National Bank LOC), 3.57%, 12/3/93 8,550,000
----------------------------------------------------------------
2,575,000 Eastern Milk Producers Coop. Assn., Inc. (Barclays Bank, PLC
LOC), 3.55%, 12/1/93 2,575,000
----------------------------------------------------------------
8,600,000 Euclid/Superior Parking L.P. (Society National Bank LOC), 3.57%,
12/3/93 8,600,000
----------------------------------------------------------------
4,350,000 Industrial Development Board of Sylacuaga, AL, (South Trust Bank
of Alabama LOC), 3.52%, 12/1/93 4,350,000
----------------------------------------------------------------
13,000,000 Kentucky Rural EDA (PCI)/(PNC Bank N.A. LOC), 3.54%, 12/6/93 13,000,000
----------------------------------------------------------------
6,400,000 Maryland Industrial Development Financing Authority (Barclays
Bank PLC LOC), 3.60%, 12/6/93 6,400,000
----------------------------------------------------------------
810,000 New Jersey EDA Economic Growth Bonds, (Series K--3)/(Banque
Nationale de Paris LOC), 3.45%, 12/6/93 810,000
----------------------------------------------------------------
</TABLE>
PRIME CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ----------------------------------------------------------------
<C> <C> <S> <C>
**VARIABLE RATE OBLIGATIONS--CONTINUED
- ----------------------------------------------------------------------------------
BANKING--CONTINUED
----------------------------------------------------------------
$ 4,205,000 New Jersey EDA Economic Growth Bonds, (Series 1992H)/(Banque
Nationale de Paris LOC), 3.33%, 12/6/93 $ 4,205,000
----------------------------------------------------------------
6,480,000 Pennsylvania Economic Development Finance Authority (Series
1993C)/(Barclays Bank PLC LOC), 3.49%, 12/2/93 6,480,000
----------------------------------------------------------------
35,000,000 SMM Trust 1993--B (Guaranteed by Morgan Guaranty Trust Co.),
3.55%, 2/14/94 35,000,000
----------------------------------------------------------------
3,800,000 Toledo Medical Building I L.P., Mortgage Revenue Notes, (Series
1987)/(Huntington National Bank LOC), 4.10%, 11/1/94 3,800,000
----------------------------------------------------------------
20,575,000 Union Development Co., Inc. (Bank of America LOC), 3.49%,
12/2/93 20,575,000
---------------------------------------------------------------- ------------
Total 125,520,000
---------------------------------------------------------------- ------------
FINANCE--AUTOMOTIVE--2.8%
----------------------------------------------------------------
23,000,000 Carco Auto Loan Master Trust Certificates, Series 1993--2, Class
A--1, 3.22%, 12/15/93 23,000,000
---------------------------------------------------------------- ------------
INSURANCE--3.0%
----------------------------------------------------------------
25,000,000 Sun Life Insurance Co. of America, 3.33%--3.54%, 12/1/93 25,000,000
---------------------------------------------------------------- ------------
LEASING--4.2%
----------------------------------------------------------------
35,000,000 PHH/CFC Leasing (Societe Generale LOC), 3.46%, 12/1/93 35,000,000
---------------------------------------------------------------- ------------
TOTAL VARIABLE RATE OBLIGATIONS 208,520,000
---------------------------------------------------------------- ------------
***REPURCHASE AGREEMENTS--7.1%
- ------------ ---------------------------------------------------------------------
19,100,000 Eastbridge Capital, Inc., dated 11/30/93, due 12/1/93 19,100,000
----------------------------------------------------------------
18,900,000 Kidder, Peabody & Co., Inc., dated 11/30/93, due 12/1/93 18,900,000
----------------------------------------------------------------
8,000,000 PaineWebber, Inc., dated 11/30/93, due 12/1/93 8,000,000
----------------------------------------------------------------
13,000,000 UBS Securities, Inc., dated 11/30/93, due 12/1/93 13,000,000
---------------------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS (NOTE 2B) 59,000,000
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS, AT AMORTIZED COST 832,321,710+
---------------------------------------------------------------- ------------
</TABLE>
PRIME CASH SERIES
- --------------------------------------------------------------------------------
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C> <C>
CAPMAC -- Capital Municipal Assurance Corporation
EDA -- Economic Development Authority
FSA -- Financial Security Assurance
LOC -- Letter of Credit
</TABLE>
* Each issue shows the rate of discount at the time of purchase for discount
issues, or the coupon for interest bearing issues.
** Current rate and next reset date shown.
*** Repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in repurchase agreements are through participation in joint
accounts with other Federated funds.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($827,325,560) at November 30, 1993.
(See Notes which are an integral part of the Financial Statements)
PRIME CASH SERIES
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments, at amortized cost and value (Notes 2A and 2B) $832,321,710
- --------------------------------------------------------------------------------
Cash 7,033
- --------------------------------------------------------------------------------
Interest receivable 1,201,097
- --------------------------------------------------------------------------------
Receivable for capital stock sold 413,771
- --------------------------------------------------------------------------------
Deferred expenses (Note 2F) 44,254
- -------------------------------------------------------------------------------- ------------
Total assets 833,987,865
- --------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------
Payable for capital stock redeemed $5,506,962
- -------------------------------------------------------------------
Dividends payable 615,084
- -------------------------------------------------------------------
Payable to distributor 3,288
- -------------------------------------------------------------------
Accrued expenses and other liabilities 536,971
- ------------------------------------------------------------------- ----------
Total liabilities 6,662,305
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 827,325,560 shares of capital stock outstanding $827,325,560
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share
($827,325,560 / 827,325,560 shares of capital stock outstanding) $1.00
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME CASH SERIES
STATEMENT OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest income (Note 2C) $13,453,223
- ---------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------
Investment advisory fee (Note 5) $2,043,779
- --------------------------------------------------------------------
Distribution fees (Note 5) 1,430,590
- --------------------------------------------------------------------
Directors' fees 5,300
- --------------------------------------------------------------------
Administrative personnel and services (Note 5) 306,694
- --------------------------------------------------------------------
Custodian, transfer and dividend disbursing agent fees and expenses 742,984
- --------------------------------------------------------------------
Capital stock registration costs 70,131
- --------------------------------------------------------------------
Auditing fees 7,250
- --------------------------------------------------------------------
Legal fees 5,700
- --------------------------------------------------------------------
Printing and postage 49,750
- --------------------------------------------------------------------
Insurance premiums 560
- --------------------------------------------------------------------
Taxes 47,000
- --------------------------------------------------------------------
Miscellaneous 4,160
- -------------------------------------------------------------------- ----------
Total expenses 4,713,898
- --------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 5) 667,157
- -------------------------------------------------------------------- ----------
Net expenses 4,046,741
- --------------------------------------------------------------------------------- -----------
Net investment income $ 9,406,482
- --------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME CASH SERIES
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
----------------------------------
1994* 1993
--------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------
Net investment income $ 9,406,482 $ 20,527,989
- ------------------------------------------------------------ --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- ------------------------------------------------------------
Dividends to shareholders from net investment income (9,406,482) (20,527,989)
- ------------------------------------------------------------ --------------- ---------------
CAPITAL STOCK TRANSACTIONS (NOTE 4)--
- ------------------------------------------------------------
Proceeds from sale of shares 2,198,213,177 3,807,750,927
- ------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 8,775,517 19,239,001
- ------------------------------------------------------------
Cost of shares redeemed (2,176,494,647) (3,780,174,113)
- ------------------------------------------------------------ --------------- ---------------
Change in net assets from capital stock transactions 30,494,047 46,815,815
- ------------------------------------------------------------ --------------- ---------------
Change in net assets 30,494,047 46,815,815
- ------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------
Beginning of period 796,831,513 750,015,698
- ------------------------------------------------------------ --------------- ---------------
End of period $ 827,325,560 $ 796,831,513
- ------------------------------------------------------------ --------------- ---------------
</TABLE>
*Six months ended November 30, 1993 (unaudited).
(See Notes which are an integral part of the Financial Statements)
PRIME CASH SERIES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
---------------------------------------------------------
1994** 1993 1992 1991 1990*
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------
Net investment income 0.01 0.03 0.04 0.07 0.06
- ---------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------
Dividends to shareholders from
net investment income (0.01) (0.03) (0.04) (0.07) (0.06)
- --------------------------------------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------- --------- --------- --------- --------- ---------
TOTAL RETURN*** 1.16% 2.61% 4.37% 6.99% 6.56%
- ---------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------
Expenses 0.99%(a) 0.99% 0.98% 0.94% 0.73%(a)
- ---------------------------------------
Net investment income 2.30%(a) 2.58% 4.21% 6.50% 7.82%(a)
- ---------------------------------------
Expense waiver/reimbursements (b) 0.16% 0.15% 0.22% 0.44% 0.46%
- ---------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------
Net assets, end of period (000
omitted) $827,326 $796,832 $750,016 $562,465 $189,254
- ---------------------------------------
</TABLE>
* Reflects operations for the period from August 18, 1989 (date of initial
public investment), to May 31, 1990. For the period from the start of
business, July 27, 1989, to August 17, 1989, net investment income
aggregating $0.0051 per share ($514) was distributed to the Fund's
investment adviser.
** Six months ended November 30, 1993 (unaudited).
*** Based on net asset value which does not reflect the sales load or redemption
fee, if applicable.
(a) Computed on an annualized basis.
(b) This expense decrease is reflected in both the expense and net investment
income ratios shown above (Note 5).
(See Notes which are an integral part of the Financial Statements)
PRIME CASH SERIES
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Prime Cash Series (the "Fund") is one of the portfolios of Cash Trust Series,
Inc. (the "Corporation"), an open-end management investment company registered
under the Investment Company Act of 1940, as amended. The financial statements
of the other portfolios are presented separately. The assets of each portfolio
are segregated, and a shareholders interest is limited to the portfolio in which
shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Board of Directors ("Directors") has determined
that the best method currently available for valuing portfolio securities is
amortized cost. The Fund's use of the amortized cost method to value its
portfolio securities is conditioned on its compliance with Rule 2a-7 under
the Investment Company Act of 1940, as amended.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve
Book Entry System, or to have segregated within the custodian bank's vault,
all securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the Fund to
monitor, on a daily basis, the market value of each repurchase agreement's
underlying investments to ensure the existence of a proper level of
collateral.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers which are deemed by
the Fund's adviser to be creditworthy pursuant to guidelines established by
the Directors. Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral securities.
C. INCOME--Interest income is recorded on the accrual basis. Interest income
includes interest and discount earned (net of premium), including original
issue discount as required by the Internal Revenue Code plus net realized
gains, if any, on portfolio securities.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Internal Revenue Code applicable to investment companies and to distribute to
shareholders each year all of its taxable income. Accordingly, no provision
for federal tax is necessary.
PRIME CASH SERIES
- --------------------------------------------------------------------------------
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. To the extent the Fund engages
in such transactions, it will do so for the purpose of acquiring portfolio
securities consistent with its investment objective and policies and not for
the purpose of investment leverage. When the Fund indicates its interest in
acquiring such portfolio securities, no liability accrues to the Fund until
the trade date of the transaction. The Fund will record a when-issued
security and the related liability on the trade date. Until the securities
are received and paid for, the Fund will maintain 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.
F. DEFERRED EXPENSES--Costs incurred by the Fund 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 August 15, 1989.
G. OTHER--Investment transactions are accounted for on the date of the
transaction.
(3) DIVIDENDS
The Fund computes its net income daily, and immediately prior to the calculation
of its net asset value at the close of business, declares and records dividends
to shareholders of record at the time of the previous computation of the Fund's
net asset value. Payment of dividends is made monthly in cash, or in additional
shares at the net asset value on the payable date.
(4) CAPITAL STOCK
At November 30, 1993, there were 50,000,000,000 shares of $0.001 par value
capital stock authorized. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
--------------------------------
1994* 1993
- -------------------------------------------------------------- -------------- --------------
<S> <C> <C>
Shares outstanding, beginning of period 796,831,513 750,015,698
- --------------------------------------------------------------
Shares sold 2,198,213,177 3,807,750,927
- --------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 8,775,517 19,239,001
- --------------------------------------------------------------
Shares redeemed (2,176,494,647) (3,780,174,113)
- -------------------------------------------------------------- -------------- --------------
Shares outstanding, end of period 827,325,560 796,831,513
- -------------------------------------------------------------- -------------- --------------
</TABLE>
*Six months ended November 30, 1993 (unaudited).
PRIME CASH SERIES
- --------------------------------------------------------------------------------
(5) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Federated Advisers, the Fund's investment adviser ("Adviser"), receives for its
services an annual investment advisory fee equal to .50 of 1% of the Fund's
average daily net assets. The Adviser has voluntarily agreed to waive a portion
of its fee. The Adviser can terminate this waiver at any time at its sole
discretion. For the six months ended November 30, 1993, the Adviser earned an
investment advisory fee of $2,043,779, of which $667,157 was voluntarily waived.
The Corporation will reimburse Federated Securities Corp. from the assets of the
Fund, for distribution service fees it paid which relate to the distribution and
administration of the Fund's shares, up to an amount .35 of 1% of average
aggregate net asset value of shares held during the period in the accounts for
which a broker or administrator provided services. For the six months ended
November 30, 1993, the Fund incurred expenses of $1,430,590 related to this
agreement.
Administrative personnel and services were provided at approximate cost by
Federated Administrative Services, Inc. Certain of the Officers and Directors of
the Corporation are Officers and Directors of the above corporations.
<TABLE>
<S> <C>
DIRECTORS OFFICERS
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Richard B. Fisher
J. Christopher Donahue President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Peter E. Madden Vice President and Treasurer
Gregor F. Meyer John W. McGonigle
Wesley W. Posvar Vice President and Secretary
Marjorie P. Smuts John A. Staley, IV
Vice President
David M. Taylor
Assistant Treasurer
Charles H. Field
Assistant Secretary
</TABLE>
Mutual funds are not obligations of or insured by any bank nor are they insured
by the federal government or any of its agencies.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Fund's prospectus which contains facts concerning its
objective and policies, management fees, expenses and other information.
TREASURY
CASH
SERIES
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
NOVEMBER 30, 1993
ESTABLISHED 1990
FEDERATED SECURITIES CORP.
DISTRIBUTOR
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
0122607 (1/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Treasury Cash
Series (the "Fund"), which covers the six-month period ended November 30, 1993.
The report includes the Investment Review and Financial Statements, which
contain the Portfolio of Investments.
Treasury Cash Series keeps your cash working for you by pursuing current
income--with the advantages of daily liquidity and stability of
principal*--through a diversified portfolio of short-term U.S. Treasury
obligations or repurchase agreements backed by these obligations. At the end of
the report period, U.S. Treasury bills and notes made up 34.9% of the Fund's
holdings. Repurchase agreements accounted for 65.2% of the portfolio, reflecting
their yield advantage over many direct government obligations.
At the end of the period, the Fund's net assets stood at $472.0 million.
Dividends paid to shareholders during the period totaled $5.6 million, or $0.01
per share.
Thank you for choosing Treasury Cash Series as a short-term investment. We will
continue to keep you up to date on the Fund's activity. In the meantime, please
contact your investment representative if you have any questions about the Fund.
Sincerely,
Richard B. Fisher
President
January 14, 1994
* While no money market mutual fund can guarantee that a stable net asset value
will be maintained, the Fund has done so since its inception. Investments in
mutual funds are neither insured nor guaranteed by the U.S. government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Treasury Cash Series, which is rated AAAm by Standard & Poor's and Aaa by
Moody's,* is invested in direct obligations of the U.S. Treasury, either in the
form of notes and bills or as collateral for repurchase agreements. Recently,
the Fund has been managed with an average maturity of 45-55 days, which is
toward the higher end of its range.
During the semi-annual reporting period, the Federal Reserve ("the Fed")
continued to target a Federal Funds rate of 3%. The Fed's monetary policy has
remained on hold for well over a year now, since early September 1992. A
comparison of three-month Treasury bill rates during the same time period showed
a rise from 3.11% at the beginning of the period to 3.20% early in June,
followed by a decline in rates to 2.97% late in September, and then a rise to
3.21% by the end of November. A yield advantage continued to exist for
investments in repurchase agreements versus direct investments in short-term
Treasury securities. The barbell structure of the Fund was maintained over the
period, combining a significant position in overnight repurchase agreements with
Treasury securities with longer maturities of six to twelve months.
With the Fed on hold, movements in short rates over the period were driven by
market sentiment, and more recently, stronger economic statistics. Short rates
reached a peak in early June 1993, fueled by fears that data showing higher
inflation would force the Fed to raise interest rates. Rates then declined until
the near end of September, as inflationary worries subsided in the face of
weaker economic growth and more favorable reports on consumer and producer
prices. Strong fourth quarter economic growth has forced short rates upward
again, on speculation that if the growth is sustainable, unlike the strong
fourth quarter growth experienced in 1992, the Fed might be moved to tighten
monetary policy sometime in the first half of 1994 in order to keep a strict
rein on inflation. The current slack in the economy and recent inflation
reports, however, argue against the need for the Fed to move aggressively in the
very near future. Over the reporting period, the Fund has been managed with a
somewhat longer average maturity based on relative market opportunities.
However, changing economic and market developments are continuously monitored to
best serve our clients attracted to the short-term U.S. government market.
Government Portfolio Management Group
Susan Hill
December 30, 1993
* Ratings are subject to change
TREASURY CASH SERIES
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
SHORT-TERM U.S. TREASURY OBLIGATIONS--34.9%
- ----------------------------------------------------------------------------------
U.S. TREASURY BILLS--12.8%
----------------------------------------------------------------
$ 61,000,000 3.12%-3.33%, 1/13/94-5/26/94 $ 60,259,684
---------------------------------------------------------------- ------------
U.S. TREASURY NOTES--22.1%
----------------------------------------------------------------
103,000,000 4.25%-9.50%, 1/31/94-8/15/94 104,521,373
---------------------------------------------------------------- ------------
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 164,781,057
---------------------------------------------------------------- ------------
**REPURCHASE AGREEMENTS--65.2%
- ----------------------------------------------------------------------------------
20,000,000 BZW Securities, Inc., 3.20%, dated 11/30/93, due 12/1/93 20,000,000
----------------------------------------------------------------
15,900,000 BZW Securities, Inc., 3.23%, dated 11/30/93, due 12/1/93 15,900,000
----------------------------------------------------------------
20,000,000 Bear, Stearns & Co., Inc. 3.20%, dated 11/30/93, due 12/1/93 20,000,000
----------------------------------------------------------------
20,000,000 BT Securities Corp., 3.20%, dated 11/30/93, due 12/1/93 20,000,000
----------------------------------------------------------------
20,000,000 BT Securities Corp., 3.25%, dated 11/30/93, due 12/1/93 20,000,000
----------------------------------------------------------------
20,000,000 Daiwa Securities America, Inc., 3.20%, dated 11/30/93, due
12/1/93 20,000,000
----------------------------------------------------------------
20,000,000 Donaldson, Lufkin & Jenrette Securities Corp., 3.20%, dated
11/30/93, due 12/1/93 20,000,000
----------------------------------------------------------------
20,000,000 Fuji Government Securities, Inc., 3.20%, dated 11/30/93, due
12/1/93 20,000,000
----------------------------------------------------------------
30,000,000 Goldman Sachs & Co., 3.23%, dated 11/30/93, due 12/1/93 30,000,000
----------------------------------------------------------------
20,000,000 Greenwich Capital Markets Inc., 3.25%, dated
11/30/93, due 12/1/93 20,000,000
----------------------------------------------------------------
20,000,000 J. P. Morgan Securities, Inc., 3.24%, dated 11/30/93, due
12/1/93 20,000,000
----------------------------------------------------------------
20,000,000 Kidder, Peabody & Co., 3.20%, dated 11/30/93, due 12/1/93 20,000,000
----------------------------------------------------------------
20,000,000 Nikko Securities Co. International, Inc., 3.20%, dated 11/30/93,
due 12/1/93 20,000,000
----------------------------------------------------------------
20,000,000 Sanwa-BGK Securities Co., 3.20%, dated 11/30/93, due 12/1/93 20,000,000
----------------------------------------------------------------
</TABLE>
TREASURY CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
**REPURCHASE AGREEMENTS--CONTINUED
- ----------------------------------------------------------------------------------
$ 8,000,000 * Goldman Sachs & Co., 3.10%, dated 11/30/93, due 12/20/93 $ 8,000,000
----------------------------------------------------------------
6,000,000 * Kidder, Peabody & Co., Inc., 3.20%, dated 10/25/93, due 1/24/94 6,000,000
----------------------------------------------------------------
8,000,000 * Morgan Stanley & Co., 3.25%, dated 10/5/93, due 1/4/94 8,000,000
---------------------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS (NOTE 2B) 307,900,000
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS, AT AMORTIZED COST $472,681,057+
---------------------------------------------------------------- ------------
</TABLE>
* 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.
** Repurchase agreements are fully collateralized by U.S. Treasury obligations
based on market prices as of the date of the portfolio. The investments in
repurchase agreements are through participation in joint accounts with other
Federated funds.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($472,044,387) at November 30, 1993.
(See Notes which are an integral part of the Financial Statements)
TREASURY CASH SERIES
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in repurchase agreements, (Note 2B) $307,900,000
- -----------------------------------------------------------------
Investments in other securities (Note 2A) 164,781,057
- ----------------------------------------------------------------- ------------
Total investments, at amortized cost and value $472,681,057
- --------------------------------------------------------------------------------
Cash 125,209
- --------------------------------------------------------------------------------
Interest receivable 1,631,346
- --------------------------------------------------------------------------------
Receivable for capital stock sold 179,301
- --------------------------------------------------------------------------------
Deferred expenses (Note 2F) 52,033
- -------------------------------------------------------------------------------- ------------
Total assets 474,668,946
- --------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------
Payable for capital stock redeemed 2,172,543
- -----------------------------------------------------------------
Dividends payable 335,156
- -----------------------------------------------------------------
Accrued expenses and other liabilities 116,860
- ----------------------------------------------------------------- ------------
Total liabilities 2,624,559
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 472,044,387 shares of capital stock outstanding $472,044,387
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share
($472,044,387 / 472,044,387 shares of capital stock outstanding) $1.00
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TREASURY CASH SERIES
STATEMENT OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------
Interest income (Note 2C) $8,090,027
- ----------------------------------------------------------------------------------
EXPENSES--
- ----------------------------------------------------------------------------------
Investment advisory fee (Note 5) $1,260,399
- ---------------------------------------------------------------------
Distribution fees (Note 5) 882,271
- ---------------------------------------------------------------------
Directors' fees 3,500
- ---------------------------------------------------------------------
Administrative personnel and services (Note 5) 234,000
- ---------------------------------------------------------------------
Custodian, transfer and dividend disbursing agent fees and expenses 123,880
- ---------------------------------------------------------------------
Capital stock registration costs 74,382
- ---------------------------------------------------------------------
Auditing fees 7,250
- ---------------------------------------------------------------------
Legal fees 7,750
- ---------------------------------------------------------------------
Printing and postage 13,950
- ---------------------------------------------------------------------
Insurance premiums 4,376
- ---------------------------------------------------------------------
Taxes 31,162
- ---------------------------------------------------------------------
Miscellaneous 3,000
- --------------------------------------------------------------------- ----------
Total expenses 2,645,920
- ---------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 5) 150,325
- --------------------------------------------------------------------- ----------
Net expenses 2,495,595
- ---------------------------------------------------------------------------------- ----------
Net investment income $5,594,432
- ---------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TREASURY CASH SERIES
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
<S> <C> <C>
1994* 1993
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------
Net investment income $ 5,594,432 $ 14,839,682
- ----------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- -----------------------------------------------------------
Dividends to shareholders from net investment income (5,594,432) (14,839,682)
- ----------------------------------------------------------- --------------- ---------------
CAPITAL STOCK TRANSACTIONS (NOTE 4)--
- -----------------------------------------------------------
Proceeds from sale of shares 1,317,674,504 2,890,908,923
- -----------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 4,543,329 11,631,542
- -----------------------------------------------------------
Cost of shares redeemed (1,382,507,659) (3,008,967,716)
- ----------------------------------------------------------- --------------- ---------------
Change in net assets from capital stock transactions (60,289,826) (106,427,251)
- ----------------------------------------------------------- --------------- ---------------
Change in net assets (60,289,826) (106,427,251)
- -----------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------
Beginning of period 532,334,213 638,761,464
- ----------------------------------------------------------- --------------- ---------------
End of period $ 472,044,387 $ 532,334,213
- ----------------------------------------------------------- --------------- ---------------
</TABLE>
* Six months ended November 30, 1993 (unaudited).
(See Notes which are an integral part of the Financial Statements)
TREASURY CASH SERIES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
-----------------------------------------------------------------
1994** 1993 1992 1991 1990*
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------
Net investment income 0.01 0.02 0.04 0.07 0.02
- --------------------------------------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS
- ---------------------------------------
Dividends to shareholders from net
investment income (0.01) (0.02) (0.04) (0.07) (0.02)
- --------------------------------------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------- -------- -------- -------- -------- --------
TOTAL RETURN*** 1.12% 2.47% 4.24% 6.83% 2.42%
- ---------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------
Expenses 0.99%(a) 0.99% 0.98% 0.88% 0.60%(a)
- ---------------------------------------
Net investment income 2.22%(a) 2.46% 4.18% 6.39% 7.75%(a)
- ---------------------------------------
Expense waiver/reimbursement (b) 0.06%(a) 0.04% 0.04% 0.22% 0.44%(a)
- ---------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------
Net assets, end of period (000
omitted) $472,044 $532,334 $638,761 $713,430 $127,800
- ---------------------------------------
</TABLE>
* Reflects operations for the period from February 7, 1990 (date of initial
public investment), to May 31, 1990.
** For the six months ended November 30, 1993 (unaudited).
*** Based on net asset value which does not reflect the sales load or redemption
fee, if applicable.
(a) Computed on an annualized basis.
(b) Increase/decrease in above expense/income ratios due to waivers or
reimbursement of expenses (Note 5).
(See Notes which are an integral part of the Financial Statements)
TREASURY CASH SERIES
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1993
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Treasury Cash Series (the "Fund") is one of the portfolios of Cash Trust Series,
Inc. (the "Corporation"), an open-end management investment company registered
under the Investment Company Act of 1940, as amended. The financial statements
of the other portfolios are presented separately. The assets of each portfolio
are segregated, and a shareholder's interest is limited to the portfolio in
which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Board of Directors ("Directors") has determined
that the best method currently available for valuing portfolio securities is
amortized cost. The Fund's use of the amortized cost method to value its
portfolio securities is conditioned on its compliance with Rule 2a-7 under
the Investment Company Act of 1940, as amended.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve
Book Entry System, or to have segregated within the custodian bank's vault,
all securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the Fund to
monitor on a daily basis, the market value of each repurchase agreement's
underlying investments to ensure the existence of a proper level of
collateral.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers which are deemed by
the Fund's adviser to be creditworthy pursuant to guidelines established by
the Directors. Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral securities.
C. INCOME--Interest income is recorded on the accrual basis. Interest income
includes interest and discount earned (net of premium), including original
issue discount as required by the Internal Revenue Code, plus realized net
gains, if any, on portfolio securities.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Internal Revenue Code applicable to investment companies and to distribute to
shareholders each year all of its taxable income. Accordingly, no provision
for federal tax is necessary.
TREASURY CASH SERIES
- --------------------------------------------------------------------------------
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. To the extent the Fund engages
in such transactions, it will do so for the purpose of acquiring portfolio
securities consistent with its investment objective and policies and not for
the purpose of investment leverage. The Fund will record a when-issued
security and the related liability on the trade date. Until the securities
are received and paid for, the Fund will maintain 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.
F. DEFERRED EXPENSES--The costs incurred by the Fund 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 February 5,
1990.
G. OTHER--Investment transactions are accounted for on the date of the
transaction.
(3) DIVIDENDS
The Fund computes its net income daily, and immediately prior to the calculation
of its net asset value at the close of business, declares and records dividends
to shareholders of record at the time of the previous computation of the Fund's
net asset value. Payment of dividends is made monthly in cash, or in additional
shares at the net asset value on the payable date.
(4) CAPITAL STOCK
At November 30, 1993, there were 50,000,000,000 shares of $0.001 par value
capital stock authorized. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
---------------------------------
1994* 1993
- ------------------------------------------------------------ -------------- --------------
<S> <C> <C>
Shares outstanding, beginning of period 532,334,213 638,761,464
- ------------------------------------------------------------
Shares sold 1,317,674,504 2,890,908,923
- ------------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 4,543,329 11,631,542
- ------------------------------------------------------------
Shares redeemed (1,382,507,659) (3,008,967,716)
- ------------------------------------------------------------ -------------- --------------
Shares outstanding, end of period 472,044,387 532,334,213
- ------------------------------------------------------------ -------------- --------------
</TABLE>
* Six months ended November 30, 1993 (unaudited).
TREASURY CASH SERIES
- --------------------------------------------------------------------------------
(5) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Federated Advisers, the Fund's investment adviser ("Adviser"), receives for its
services an annual investment advisory fee equal to .50 of 1% of the Fund's
average daily net assets. The Adviser has voluntarily agreed to waive a portion
of its fee. The Adviser can terminate this waiver at any time at its sole
discretion. For the six months ended November 30, 1993, the Adviser earned an
investment advisory fee of $1,260,399, of which $150,325 was voluntarily waived.
The Corporation will reimburse Federated Securities Corp. from the assets of the
Fund, for distribution service fees it paid which relate to the distribution and
administration of the Fund's shares, up to an amount of .35 of 1% of average
aggregate net asset value of shares held during the period in the accounts for
which a broker or administrator provided services. For the six months ended
November 30, 1993, the Fund incurred expenses of $882,271 related to this
agreement.
Administrative personnel and services were provided at approximate cost by
Federated Administrative Services, Inc. Certain Officers and Directors of the
Corporation are Officers and Directors of the above corporations.
(6) FORWARD TRADE COMMITMENTS
At November 30, 1993, the Fund was under agreement to enter into the following
repurchase agreements:
$5,000,000 Nikko Securities Co., 5.40%, dated 12/31/93, due 1/3/94
$7,000,000 First Boston Corp., 3.20%, dated 1/3/94, due 1/31/94
These repurchase agreements were made in the normal course of business and are
subject to the Fund's general investment restrictions regarding creditworthiness
and collateralization levels. The contracts were executed on December 31, 1993,
and January 3, 1994, respectively.
<TABLE>
<S> <C>
DIRECTORS OFFICERS
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Richard B. Fisher
J. Christopher Donahue President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Peter E. Madden Vice President and Treasurer
Gregor F. Meyer John W. McGonigle
Wesley W. Posvar Vice President and Secretary
Marjorie P. Smuts John A. Staley, IV
Vice President
David M. Taylor
Assistant Treasurer
Charles H. Field
Assistant Secretary
</TABLE>
Mutual funds are not obligations of or insured by any bank nor are they insured
by the federal government or any of its agencies.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Fund's prospectus which contains facts concerning its
objective and policies, management fees, expenses and other information.
