- --------------------------------------------------------------------------------
GOVERNMENT
- --------------------------------------------------------------------------------
CASH
- --------------------------------------------------------------------------------
TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL REPORT
TO SHAREHOLDERS
MAY 31, 1994
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
147551024
0122604 (7/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for Government Cash
Series (the "Fund"), which covers the twelve-month period ended May 31, 1994.
The report includes the Investment Review and Financial Statements, which
contain the Portfolio of Investments.
Government Cash Series pursues current income--along with the additional
advantages of daily liquidity and stability of principal*--through some of the
most secure investments available. Because of their yield advantage, repurchase
agreements backed fully by short-term U.S. government securities accounted for
63.5% of the portfolio at the end of the reporting period.
At the end of the period, the Fund's net assets stood at $401.3 million.
Dividends paid to shareholders during the period totaled $10.7 million, or $0.02
per share.
Thank you for putting your cash to work through Government Cash Series. Please
contact your investment representative if you have any questions about the Fund.
We will continue to keep you up to date on your investment.
Sincerely,
Richard B. Fisher
President
July 15, 1994
* As a money market mutual fund, the Fund is managed to pursue a stable share
price of $1.00, although there is no guarantee that it will do so.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Government Cash Series (the "Fund") 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, Farm Credit Bank System, Federal Home Loan Bank System, and Federal
Home Loan Mortgage Corporation. Recently, the Fund has been managed with a
somewhat conservative average maturity of 30-40 days.
The reporting period brought the first changes in Federal Reserve (the "Fed")
policy since September, 1992. The Fed tightened monetary policy by increasing
the Federal Fund target rate from 3% to 4.25% over the period from February
through May. The moves were viewed as being a preemptive strike against the
threat of inflation by removing the stimulus that the Fed had been providing to
the economy through an overly accommodative policy stance. With inflation
apparently under control and economic growth slowing slightly, Fed policy
appears to be on hold temporarily at its current neutral stance. However, rising
capacity utilization rates, commodity prices, and other inflation measures may
prompt another tightening by the Fed sometime this summer in order to keep
inflation firmly in check.
Prior to the policy changes by the Fed, movements in short rates were largely
driven by market sentiment during the reporting period. The rate on the three
month Treasury bill fell from 3.1% at the end of May 1993 to 3.0% at the end of
September. The rate then rose to 3.2% by the end of November and then returned
to near 3% by the end of January. Once the Fed began tightening in February, the
three-month Treasury bill rate then rose steadily to 4.25% by the end of May,
1994.
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. We believe this portfolio structure
continues to provide a competitive yield.
Over the reporting period, the Fund's average maturity drifted shorter in the
face of the somewhat uncertain environment created by the Fed. In light of the
expectations of additional tightening in monetary policy, the Fund is expected
to continue to maintain its conservative posture in the near future, while
maximizing performance through ongoing relative value analysis. 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
MAY 31, 1994
- --------------------------------------------------------------------------------
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--37.8%
- ----------------------------------------------------------------------------------
* FEDERAL HOME LOAN BANK, DISCOUNT NOTES--2.0%
-----------------------------------------------------------------
$ 8,000,000 3.92%, 9/9/94 $ 7,912,889
----------------------------------------------------------------- ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION BANK BOND--1.0%
-----------------------------------------------------------------
4,000,000 8.60%, 6/10/94 4,005,002
----------------------------------------------------------------- ------------
* FEDERAL NATIONAL MORTGAGE ASSOCIATION, DISCOUNT NOTES--18.4%
-----------------------------------------------------------------
4,500,000 3.20%, 6/2/94 4,499,600
-----------------------------------------------------------------
8,500,000 3.30%, 6/2/94 8,499,221
-----------------------------------------------------------------
8,000,000 3.30%, 6/3/94 7,998,533
-----------------------------------------------------------------
4,000,000 3.29%, 6/7/94 3,997,807
-----------------------------------------------------------------
3,000,000 3.20%, 6/30/94 2,992,267
-----------------------------------------------------------------
2,000,000 3.38%, 7/6/94 1,993,428
-----------------------------------------------------------------
3,000,000 3.19%, 7/18/94 2,987,506
-----------------------------------------------------------------
3,400,000 3.35%, 8/8/94 3,378,486
-----------------------------------------------------------------
4,000,000 3.34%, 8/8/94 3,974,764
-----------------------------------------------------------------
4,000,000 3.41%, 8/10/94 3,973,478
-----------------------------------------------------------------
4,000,000 3.38%, 8/15/94 3,971,833
-----------------------------------------------------------------
3,000,000 3.31%, 8/18/94 2,978,485
-----------------------------------------------------------------
2,000,000 3.27%, 8/26/94 1,984,377
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5,000,000 3.93%, 9/1/94 4,949,783
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3,000,000 3.48%, 10/19/94 2,959,458
-----------------------------------------------------------------
4,000,000 4.40%, 10/27/94 3,927,644
-----------------------------------------------------------------
</TABLE>
GOVERNMENT CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- -----------------------------------------------------------------
<C> <C> <S> <C>
SHORT-TERM OBLIGATIONS--CONTINUED
- ----------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION, DISCOUNT NOTES--CONTINUED
-----------------------------------------------------------------
$ 5,000,000 4.75%, 11/28/94 $ 4,881,375
-----------------------------------------------------------------
4,000,000 4.75%, 11/29/94 3,904,472
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Total 73,852,517
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** FEDERAL NATIONAL MORTGAGE ASSOCIATION, FLOATING RATE NOTE--1.4%
-----------------------------------------------------------------
5,500,000 4.31%, 6/1/94 5,499,462
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** STUDENT LOAN MARKETING ASSOCIATION, FLOATING RATE NOTES--6.0%
-----------------------------------------------------------------
10,000,000 4.83%, 8/22/94 9,997,139
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14,000,000 4.93%, 3/27/95 13,994,986
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Total 23,992,125
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* UNITED STATES TREASURY BILLS--2.5%
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2,000,000 3.30%, 9/22/94 1,979,283
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3,000,000 3.38%, 11/17/94 2,952,398
-----------------------------------------------------------------
1,500,000 3.60%, 2/9/95 1,462,050
-----------------------------------------------------------------
4,000,000 4.93%, 5/4/95 3,815,399
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Total 10,209,130
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UNITED STATES TREASURY NOTES--6.5%
-----------------------------------------------------------------
7,000,000 8.63%, 8/15/94 7,064,994
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5,000,000 4.25%, 8/31/94 5,010,926
-----------------------------------------------------------------
4,000,000 9.50%, 10/15/94 4,088,455
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6,000,000 6.00%, 11/15/94 6,049,277
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4,000,000 5.50%, 2/15/95 4,022,438
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Total 26,236,090
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TOTAL SHORT-TERM OBLIGATIONS 151,707,215
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***REPURCHASE AGREEMENTS--63.5%
- ----------------------------------------------------------------------------------
20,000,000 Barclays Bank PLC., 4.35%, dated 5/31/94, due 6/1/94 20,000,000
-----------------------------------------------------------------
13,900,000 Barclays Bank PLC., 4.30%, dated 5/31/94, due 6/1/94 13,900,000
-----------------------------------------------------------------
15,000,000 Caroll McEntee Repo Mortgage Backed, 4.32%, dated 5/31/94, due
6/1/94 15,000,000
-----------------------------------------------------------------
</TABLE>
GOVERNMENT CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
REPURCHASE AGREEMENTS--CONTINUED
- ----------------------------------------------------------------------------------
$15,000,000 Deutsche Bank Government Securities, Inc., 4.32%, dated 5/31/94,
due 6/1/94 $ 15,000,000
-----------------------------------------------------------------
15,000,000 Fuji Government Securities, Inc., 4.33%, dated 5/31/94, due
6/1/94 15,000,000
-----------------------------------------------------------------
70,000,000 Greenwich Capital Markets, Inc., 4.38%, dated 5/31/94, due 6/1/94 70,000,000
-----------------------------------------------------------------
20,000,000 J.P. Morgan Securities, Inc., 4.40%, dated 5/31/94, due 6/1/94 20,000,000
-----------------------------------------------------------------
15,000,000 Kidder Peabody & Co., 4.32%, dated 5/31/94, due 6/1/94 15,000,000
-----------------------------------------------------------------
15,000,000 Merrill Lynch Government Securities, Inc., 4.33%, dated 5/31/94,
due 6/1/94 15,000,000
-----------------------------------------------------------------
15,000,000 S.G. Warburg & Co., Inc., 4.32%, dated 5/31/94, due 6/1/94 15,000,000
-----------------------------------------------------------------
15,000,000 U.B.S. Securities Inc., 4.35%, dated 5/31/94, due 6/1/94 15,000,000
-----------------------------------------------------------------
9,000,000 + Goldman Sachs Group LP, 3.80%, dated 3/4/94, due 6/2/94 9,000,000
-----------------------------------------------------------------
7,000,000 + Morgan Stanley & Co., Inc., 3.81%, dated 3/31/94, due 6/29/94 7,000,000
-----------------------------------------------------------------
10,000,000 + First Boston Corp., 4.30%, dated 5/26/94, due 6/30/94 10,000,000
----------------------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS (NOTE 2B) 254,900,000
----------------------------------------------------------------- ------------
TOTAL INVESTMENTS, AT AMORTIZED COST (NOTE 2A) $406,607,215++
----------------------------------------------------------------- ------------
</TABLE>
* 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 as of date of 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 within seven days if the creditworthiness of the issuers is
downgraded.
++ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($401,333,704) at May 31, 1994.
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT CASH SERIES
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in repurchase agreements (Note 2B) $254,900,000
- -----------------------------------------------------------------
Investments in other securities (Note 2A) 151,707,215
- ----------------------------------------------------------------- ------------
Total investments, at amortized cost and value $406,607,215
- --------------------------------------------------------------------------------
Cash 257,474
- --------------------------------------------------------------------------------
Interest receivable 817,432
- --------------------------------------------------------------------------------
Receivable for capital stock sold 230
- --------------------------------------------------------------------------------
Deferred expenses (Note 2F) 18,689
- -------------------------------------------------------------------------------- ------------
Total assets 407,701,040
- --------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------
Payable for investments purchased 5,499,463
- -----------------------------------------------------------------
Dividends payable 511,040
- -----------------------------------------------------------------
Payable for capital stock redeemed 167,204
- -----------------------------------------------------------------
Accrued expenses 189,629
- ----------------------------------------------------------------- ------------
Total liabilities 6,367,336
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 401,333,704 shares of capital stock outstanding $401,333,704
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share
($401,333,704 / 401,333,704 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
YEAR ENDED MAY 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest income (Note 2C) $15,073,832
- ---------------------------------------------------------------------------------
EXPENSES--
- --------------------------------------------------------------------
Investment advisory fee (Note 4) $2,214,398
- --------------------------------------------------------------------
Distribution fees (Note 4) 1,281,316
- --------------------------------------------------------------------
Directors' fees 4,484
- --------------------------------------------------------------------
Administrative personnel and services (Note 4) 400,965
- --------------------------------------------------------------------
Custodian and portfolio accounting fees 143,118
- --------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 142,031
- --------------------------------------------------------------------
Shareholder services fee (Note 4) 268,762
- --------------------------------------------------------------------
Capital stock registration costs 199,088
- --------------------------------------------------------------------
Auditing fees 14,615
- --------------------------------------------------------------------
Legal fees 10,997
- --------------------------------------------------------------------
Printing and postage 29,889
- --------------------------------------------------------------------
Insurance premiums 12,171
- --------------------------------------------------------------------
Taxes 55,217
- --------------------------------------------------------------------
Miscellaneous 8,828
- -------------------------------------------------------------------- ----------
Total expenses 4,785,879
- --------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 4) 401,216
- -------------------------------------------------------------------- ----------
Net expenses 4,384,663
- --------------------------------------------------------------------------------- -----------
Net investment income $10,689,169
- --------------------------------------------------------------------------------- -----------
</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 $ 10,689,169 $ 13,241,008
- ----------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- -----------------------------------------------------------
Dividends to shareholders from net investment income (10,689,169) (13,241,008)
- ----------------------------------------------------------- --------------- ---------------
CAPITAL STOCK TRANSACTIONS (NOTE 3)--
- -----------------------------------------------------------
Proceeds from sale of shares 3,153,905,957 2,454,390,206
- -----------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 7,564,032 7,535,453
- -----------------------------------------------------------
Cost of shares redeemed (3,160,367,176) (2,612,369,377)
- ----------------------------------------------------------- --------------- ---------------
Change in net assets from capital stock transactions 1,102,813 (150,443,718)
- ----------------------------------------------------------- --------------- ---------------
Change in net assets 1,102,813 (150,443,718)
- -----------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------
Beginning of period 400,230,891 550,674,609
- ----------------------------------------------------------- --------------- ---------------
End of period $ 401,333,704 $ 400,230,891
- ----------------------------------------------------------- --------------- ---------------
</TABLE>
(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 0.02 0.03 0.04 0.07 0.06
- ---------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------
Dividends to shareholders from net
investment income (0.02) (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** 2.45% 2.54% 4.33% 6.80% 6.53%
- ---------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------
Expenses 0.99% 0.99% 0.98% 0.94% 0.73%(b)
- ---------------------------------------------
Net investment income 2.41% 2.53% 4.25% 6.48% 7.74%(b)
- ---------------------------------------------
Expense waiver/reimbursements (a) 0.09% 0.06% 0.06% 0.13% 0.32%(b)
- ---------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------
Net assets, end of period (000 omitted) $401,334 $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.
** Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT CASH SERIES
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Cash Trust Series, Inc. (the "Corporation"), is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end management
investment company. The Corporation consists of four portfolios. The financial
statements included herein present only those of Government Cash Series (the
"Fund"). 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.
Effective June 15, 1993, shareholders approved the reorganization of the fund as
a portfolio of Cash Trust Series, Inc., a Maryland corporation.
(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. These
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 Act.
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 collateral to ensure the value at least equals the principal
amount of the repurchase agreement, including accrued interest.
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 Board of Directors ("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. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discounts, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its taxable income. Accordingly,
no provisions for federal tax are necessary.
GOVERNMENT CASH SERIES
- --------------------------------------------------------------------------------
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. A Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis
are marked to market daily and begin earning interest on the settlement date.
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 the Fund's
commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At May 31, 1994, there were 12,500,000,000 shares of $0.001 par value capital
stock authorized. Capital paid in aggregated $401,333,704. Transactions in
capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
--------------------------------
1994 1993
- ------------------------------------------------------------- -------------- --------------
<S> <C> <C>
Shares sold 3,153,905,957 2,454,390,206
- -------------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 7,564,032 7,535,453
- -------------------------------------------------------------
Shares redeemed (3,160,367,176) (2,612,369,377)
- ------------------------------------------------------------- -------------- --------------
Net change resulting from capital stock transactions 1,102,813 (150,443,718)
- ------------------------------------------------------------- -------------- --------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Advisers, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50 of 1% of the Fund's average daily net assets. The Adviser may voluntarily
choose to waive a portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with administrative personnel and services. Prior to March 1, 1994, these
services were provided at approximate cost. Effective March 1, 1994, the FAS fee
is based on the level of average aggregate daily net assets of all funds advised
by subsidiaries of Federated Investors for the period. The administrative fee
received during any fiscal year shall be at least $125,000 per portfolio and
$30,000 per each additional class of shares.
DISTRIBUTION AND SHAREHOLDER SERVICES FEES--The Fund has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the
plan, the Fund will reimburse Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Fund to finance
GOVERNMENT CASH SERIES
- --------------------------------------------------------------------------------
activities intended to result in the sale of the Fund's shares. The Plan
provides that the Fund may incur distribution expenses up to 0.35 of 1% of the
average daily net assets of the shares, annually, to reimburse FSC.
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services ("FSS"), the Fund will pay FSS up to 0.25 of 1% of average net assets
of the Fund for the period. This fee is to obtain certain personal services for
shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT--Federated Services Company ("FServ")
serves as transfer and dividend disbursing agent for the Fund. The FServ fee is
based on the size, type and number of accounts and transactions made by
shareholders.
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Board of Directors of
CASH TRUST SERIES, INC. and
Shareholders of GOVERNMENT CASH SERIES:
We have audited the accompanying statement of assets and liabilities of
Government Cash Series (one of the portfolios comprising Cash Trust Series,
Inc.), including the portfolio of investments, as of May 31, 1994, the related
statement of operations for the year then ended, the statement of changes in net
assets for the years ended May 31, 1994 and 1993, and the financial highlights
for each of the years in the five-year period ended May 31, 1994. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
May 31, 1994 by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Government Cash
Series as of May 31, 1994, the results of its operations, the changes in its net
assets, and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE
Boston, Massachusetts
July 8, 1994
<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 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
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL REPORT
TO SHAREHOLDERS
MAY 31, 1994
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
147551303
0122605 (7/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for Municipal Cash
Series (the "Fund"), which covers the twelve-month period ended May 31, 1994.
The report includes the Investment Review and Financial Statements, which
contain the Portfolio of Investments.
Municipal Cash Series pursues current income exempt from federal regular income
tax*--along with the additional advantages of daily liquidity and stability of
principal**--through a portfolio of short-term municipal securities. At the end
of the period, the portfolio was invested in securities issued by municipalities
in 34 states.
At the end of the period, the Fund's net assets stood at $574.8 million, a
dramatic increase of more than $119 million over the assets at the beginning of
the period. Dividends paid to shareholders during the period totaled $9.9
million, or $0.02 per share.
Thank you for putting your cash to work pursuing tax-free income through
Municipal Cash Series. Please contact your investment representative if you have
any questions about the Fund. We will continue to keep you up to date on your
investment progress.
Sincerely,
Richard B. Fisher
President
July 15, 1994
* Income may be subject to the federal alternative minimum tax.
** As a money market mutual fund, the Fund is managed to pursue a stable share
price of $1.00, although there is no guarantee that it will do so.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Municipal Cash Series (the "Fund"), invests in high quality, short-term
tax-exempt debt securities and seeks to maintain a constant net asset value of
$1.00 a share. For the twelve-month period ending May 31, 1994, the Fund paid
shareholders a net annualized return of 1.83%. This is equivalent to a taxable
money market fund return in the highest federal tax bracket of 39.6% of 2.96%.
Tax-exempt funds provide an attractive alternative to taxable money market
funds.
The first few months of the reporting period were characterized by slow economic
growth coupled with low inflationary pressures. With little threat of inflation,
the municipal markets responded with some of the lowest yields over the past
decade in both the bonds and the money market. Despite the low yield
environment, total assets of municipal money market funds reached an all-time
high of over $116 billion in March, 1994, illustrating the popularity of
tax-exempt cash investments.
In the first quarter of 1994 there was a shift in the outlook for the economy
and, in turn, short-term interest rates. Signs of economic strength prompted the
Federal Reserve (the "Fed") to twice "tighten" or increase short-term interest
rates, moving the Federal Funds rate target from 3.0% to 3.50%. The Fed again
tightened twice (in mid-April and mid-May) moving the Federal Funds target from
3.50% to 4.25%. The municipal money market reacted to the Fed policy with a
corresponding back-up in rates, which was somewhat exacerbated by $3.2 million
of new fixed-rate supply offered by the State of California in mid-February.
With renewed concerns of economic recovery and inflation, investors immediately
began to demand higher liquidity premiums to invest further out the yield curve,
causing rates on one-year municipal notes to rise to their highest levels since
June, 1992. For example, the Bond Buyer Note Index, a proxy for one-year
municipal notes, started the period at 2.55% and steadily increased over 1.20%
to end the period at 3.75%. Although yields on twelve-month tax-free securities
did rise, they did not rise by the same magnitude as on comparable maturity
taxable instruments. In November, the one-year tax-exempt note yield was 76% of
the taxable yield; in May it was 68%.*
In this environment of increasing money market interest rates, the Fund's
average portfolio maturity was shortened from the 70-day range at the beginning
of December, 1993, to the 50-day range in May, 1994. Looking ahead to the second
half of 1994, we expect short-term rates to continue to rise as the U.S. economy
continued its solid and sustainable recovery. If rates do, in fact, rise this
year, we will continue to keep the average maturity short and the portfolio
liquid while choosing carefully and selectively along the yield curve as
attractive fixed income opportunities appear.
* The direction of rates on tax-free variable rate demand notes (VRDNs), which
comprise 50% of the Fund's assets, increased as well over the period. VRDNs
started the period at 2.20% and increased 0.50% to 2.90% by May 31, 1994.
However, because VRDNs are particularly affected by a variety of supply and
demand seasonal factors, VRDN yields displayed significant volatility over the
period.
MUNICIPAL CASH SERIES
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
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RATING:
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AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--100.8%
- ---------------------------------------------------------------------
ALABAMA--5.3%
------------------------------------------------------
$ 1,400,000 Alabama Higher Education Loan Corp., Weekly VRDNs
(Bayerische Landesbank LOC)/(Subject to AMT) VMIG1 $ 1,400,000
------------------------------------------------------
5,000,000 Alabama State Weekly VRDNs (Pine City Fiber Co.)/
(Barclays Bank PLC LOC) VMIG1 5,000,000
------------------------------------------------------
950,000 Calhoun County, AL, Economic Development Council
Weekly VRDNs (Series 1990)/(Food Ingredients
Technology Co.)/(Nationsbank of North Carolina N.A.
LOC)/(Subject to AMT) P-1 950,000
------------------------------------------------------
5,000,000 Homewood, AL, IDA Weekly VRDNs (Mountain Brook
Ltd.)/(SouthTrust Bank of Alabama LOC) P-1 5,000,000
------------------------------------------------------
2,500,000 Hoover, AL, IDA Weekly VRDNs (Bud's Best
Cookies, Inc.)/(SouthTrust Bank of Alabama LOC)/
(Subject to AMT) P-1 2,500,000
------------------------------------------------------
285,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell
Manufacturing)/(SouthTrust Bank of Alabama LOC)/
(Subject to AMT) P-1 285,000
------------------------------------------------------
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
------------------------------------------------------
370,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell
Manufacturing)/(SouthTrust Bank of Alabama LOC)/
(Subject to AMT) P-1 370,000
------------------------------------------------------
</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
------------------------------------------------------
$ 325,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell
Manufacturing)/(SouthTrust Bank of Alabama LOC)/
(Subject to AMT) P-1 $ 325,000
------------------------------------------------------
270,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell
Manufacturing)/(SouthTrust Bank of Alabama LOC)/
(Subject to AMT) P-1 270,000
------------------------------------------------------
4,500,000 Scottsboro, AL, IDB Weekly VRDNs (Series 1994)/
(Maples Industries, Inc.)/(AmSouth Bank N.A. LOC)/
(Subject to AMT) P-1 4,500,000
------------------------------------------------------
6,475,000 St. Clair County, AL, IDB Weekly VRDNs (Series 1993)/
(EBSCO Industries, Inc.)/(National Australia Bank Ltd.
LOC)/(Subject to AMT) A-1+ 6,475,000
------------------------------------------------------
2,690,000 Vincent, AL, Weekly VRDNs (Series 1993)/(EBSCO
Industries, Inc.)/(National Australia Bank Ltd. LOC)/
(Subject to AMT) A-1+ 2,690,000
------------------------------------------------------ ------------
Total 30,505,000
------------------------------------------------------ ------------
ARKANSAS--2.0%
------------------------------------------------------
4,400,000 Little Rock, AR, Pulaski County School District, 3.50%
TRANs (Series 1994), 12/29/94 MIG2 4,400,000
------------------------------------------------------
1,000,000 Sheridan, AR, IDR Weekly VRDNs (Series B)/ H. H.
Robertson Co.)/(PNC Bank N.A. LOC) P-1 1,000,000
------------------------------------------------------
6,000,000 Springdale, AR, IDA Weekly VRDNs (Newly Food)/ (Mellon
Bank N.A. LOC)/(Subject to AMT) VMIG1 6,000,000
------------------------------------------------------ ------------
Total 11,400,000
------------------------------------------------------ ------------
CALIFORNIA--4.4%
------------------------------------------------------
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+ 18,008,132
------------------------------------------------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
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RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
CALIFORNIA--CONTINUED
------------------------------------------------------
$ 3,465,000 Los Angeles, CA, SFM Housing Authority, 4.00%
Semi-annual TOBs (Meridian Bank BPA)/(GNMA
Collateralized)/(Subject to AMT), Optional Tender
6/1/95 NR(1) $ 3,465,000
------------------------------------------------------
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 2,000,114
------------------------------------------------------ ------------
Total 25,233,246
------------------------------------------------------ ------------
COLORADO--2.6%
------------------------------------------------------
5,000,000 Adams County, CO, IDB Weekly VRDNs (Series 1993)/
(Bace Manufacturing Inc.)/(Norwest Bank Minnesota
LOC)/(Subject to AMT) A-1+ 5,000,000
------------------------------------------------------
5,500,000 Denver (City & County), CO, Weekly VRDNs
(Series 1992F)/(Bank of Montreal LOC)/(Subject to AMT) A-1+ 5,500,000
------------------------------------------------------
4,600,000 Denver (City & County), CO, Weekly VRDNs
(Series 92D & 92F)/(Denver Airport System)/
(Morgan Guaranty Trust Co. LOC)/(Subject to AMT) A-1+ 4,600,000
------------------------------------------------------ ------------
Total 15,100,000
------------------------------------------------------ ------------
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--1.4%
------------------------------------------------------
2,000,000 Hillsborough County, FL, IDA Weekly VRDNs
(Ringhaver Equipment Co.)/(Mellon Bank N.A. LOC)/
(Subject to AMT) P-1 2,000,000
------------------------------------------------------
3,000,000 Hillsborough County, FL, IDA Weekly VRDNs (SIFCO
Turbine Component Service)/(Series 1992)/(National
City Bank, Cleveland LOC)/(Subject to AMT) P-1 3,000,000
------------------------------------------------------
1,600,000 Jacksonville, FL, Weekly VRDNs (Metal Sales
Manufacturing)/(First National Bank, Louisville LOC)/
(Subject to AMT) P-1 1,600,000
------------------------------------------------------
1,450,000 Sumter County, FL, IDA Weekly VRDNs (Great Southern
Wood of Florida, Inc.)/(SouthTrust Bank of Alabama
LOC)/(Subject to AMT) VMIG1 1,450,000
------------------------------------------------------ ------------
Total 8,050,000
------------------------------------------------------ ------------
GEORGIA--1.0%
------------------------------------------------------
4,030,000 Brunswick, GA, Housing Authority Weekly VRDNs
(Series S93)/(Island Square Apartments)/(Columbus
Bank & Trust Co. LOC)/(Subject to AMT) A-1 4,030,000
------------------------------------------------------
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 5,730,000
------------------------------------------------------ ------------
</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
- ---------------------------------------------------------------------
ILLINOIS--1.1%
------------------------------------------------------
$ 3,150,000 Batavia, IL, IDB Weekly VRDNs (Millard Warehouse
Batavia, Inc.)/(Northern Trust Co. LOC)/(Subject to
AMT) VMIG1 $ 3,150,000
------------------------------------------------------
1,600,000 Illinois Development Finance Authority Weekly VRDNs
(Techisand, Inc.)/(National City Bank, Cleveland LOC)/
(Subject to AMT) P-1 1,600,000
------------------------------------------------------
1,500,000 Sangamon, IL, IDR Weekly VRDNs (Series 1994)/ (Contech
Construction Products, Inc.)/(Mellon Bank N.A.
LOC)/(Subject to AMT) VMIG1 1,500,000
------------------------------------------------------ ------------
Total 6,250,000
------------------------------------------------------ ------------
INDIANA--4.2%
------------------------------------------------------
1,810,000 Avilla, IN, IDR Weekly VRDNs (Group Dekko
International, 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
------------------------------------------------------
1,885,000 Indianapolis, IN, IDR Weekly VRDNs (Series 1991)/
(Cantor & Coleman II)/(Bank One, Indianapolis N.A.
LOC)/(Subject to AMT) P-1 1,885,000
------------------------------------------------------
1,805,000 Lawrence, IN, IDA Monthly VRDNs (H & H Steel)/ (Bank
One, Indianapolis N.A. LOC)/(Subject to AMT) P-1 1,805,000
------------------------------------------------------
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
------------------------------------------------------
3,500,000 Tippecanoe County, IN, EDR Weekly VRDNs (Lafayette
Venetian Blind, Inc.)/(Central Trust Co. N.A. LOC)/
(Subject to AMT) P-1 3,500,000
------------------------------------------------------
</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
------------------------------------------------------
$ 4,000,000 Westfield, IN, IDR, Weekly VRDNs (Series 1994)/
(Standard Locknut & Lockwasher, Inc.)/(Bank One,
Indianapolis LOC)/(Subject to AMT) P-1 $ 4,000,000
------------------------------------------------------ ------------
Total 23,870,000
------------------------------------------------------ ------------
KANSAS--1.7%
------------------------------------------------------
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%
------------------------------------------------------
1,100,000 Caldwell County, KY, IDR Weekly VRDNs (Series 1990)/
(Thompson Steel Pipe)/(National Bank of
Detroit LOC)/(Subject to AMT) A-1+ 1,100,000
------------------------------------------------------
4,000,000 Clark County, KY, IDR Weekly VRDNs (Walle Corp.)/
(Union Bank of Switzerland LOC)/(Subject to AMT) P-1 4,000,000
------------------------------------------------------
4,080,000 Glasgow, KY, Individual Revenue Bonds Weekly VRDNs
(Series 1994)/(Ply Tech Corp.)/(Liberty National Bank
& Trust Co. LOC)/(Subject to AMT) P-1 4,080,000
------------------------------------------------------
2,000,000 Jefferson County, KY, IDR Weekly VRDNs (O'Neal
Steel, Inc.)/(SouthTrust 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
------------------------------------------------------
2,400,000 Jefferson County, KY, Weekly VRDNs (Gateway Press,
Inc.)/(PNC Bank, Kentucky LOC)/(Subject to AMT) P-1 2,400,000
------------------------------------------------------
2,100,000 Kentucky Rural, EDA Weekly VRDNs (Series 1990)/
(Thompson Steel Pipe Company)/(National Bank of
Detroit LOC)/(Subject to AMT) A-1+ 2,100,000
------------------------------------------------------
</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
------------------------------------------------------
$ 4,500,000 Lexington Fayette, KY, Urban Co. Government Industrial
Building Weekly VRDNs (EPI Corporation)/(PNC Bank
Kentucky LOC)/(Subject to AMT) P-1 $ 4,500,000
------------------------------------------------------
6,000,000 Scottsville, KY, 3.50% Semi-Annual TOBs (Sumitomo
Electric Wiring Systems)/(Sumitomo Bank Ltd. LOC),
Mandatory Tender 11/1/94 A-1 6,000,000
------------------------------------------------------ ------------
Total 28,900,000
------------------------------------------------------ ------------
MAINE--1.4%
------------------------------------------------------
4,000,000 Lewiston, ME, IDA Weekly VRDNs (Geiger Brothers)/
(Fleet National Bank LOC)/(Subject to AMT) P-1 4,000,000
------------------------------------------------------
4,250,000 Maine State Housing Authority Mortgage Purchase Bonds,
3.70% Annual TOBs (Series 1992B-2)/(Subject to AMT),
Mandatory Tender 4/13/95 A-1+ 4,250,000
------------------------------------------------------ ------------
Total 8,250,000
------------------------------------------------------ ------------
MARYLAND--5.1%
------------------------------------------------------
4,760,000 Anne Arundel County, MD, 3.10% CP (Series 1988)/
(Baltimore Gas & Electric Co. Guaranty)/(Subject to
AMT), Mandatory Tender 8/22/94 A-1 4,760,000
------------------------------------------------------
1,800,000 Anne Arundel County, MD, 3.30% CP (Series 1988)/
(Baltimore Gas & Electric Co. Guaranty)/(Subject to
AMT), Mandatory Tender 8/23/94 A-1 1,800,000
------------------------------------------------------
3,645,000 Baltimore, MD, Weekly VRDNs (Series 1988)/(Cherill
Associates Facility)/(Nationsbank of Maryland LOC)/
(Subject to AMT) P-1 3,645,000
------------------------------------------------------
3,141,000 Hartford County, MD, Weekly VRDNs (Series 1989)/
(Hartford Commons Associates Facility)/(Nationsbank of
Virginia N.A. LOC)/(Subject to AMT) P-1 3,141,000
------------------------------------------------------
</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
- ---------------------------------------------------------------------
MARYLAND--CONTINUED
------------------------------------------------------
$ 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
------------------------------------------------------
3,400,000 Maryland State Community Development Department of
Single Family Housing, 3.40% Annual TOBs (Third Series
1994)/(Subject to AMT), Mandatory Tender 3/30/95 VMIG1 3,400,000
------------------------------------------------------
3,110,000 Wicomico County, MD, Weekly VRDNs Economic Development
Revenue Bonds (Series 1994)/(Field Container Co.
L.P.)/(Northern Trust Co. LOC)/
(Subject to AMT) SP-1+ 3,110,000
------------------------------------------------------ ------------
Total 29,356,000
------------------------------------------------------ ------------
MASSACHUSETTS--2.3%
------------------------------------------------------
1,600,000 Massachusetts Industrial Finance Authority IDR Weekly
VRDNs (Catamount Manufacturing Realty Trust)/
(Fleet Bank of New York LOC)/(Subject to AMT) A-1 1,600,000
------------------------------------------------------
6,645,000 Massachusetts State, HFA Single Family Housing Revenue
Bonds, 3.20% Semi-Annual TOBs (FGIC Insured)/(Subject
to AMT), Mandatory Tender 12/1/94 A-1+ 6,645,000
------------------------------------------------------
2,570,000 Taunton, MA, IDR Weekly VRDNs (CD Realty Trust 1X
Project-1985)/(Fleet Bank, Maine LOC)/(Subject to AMT) A-1 2,570,000
------------------------------------------------------
2,500,000 Worcester, MA, 3.35% BANs (Subject to AMT), 8/24/94 NR(4) 2,500,554
------------------------------------------------------ ------------
Total 13,315,554
------------------------------------------------------ ------------
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
------------------------------------------------------ ------------
</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--7.4%
------------------------------------------------------
$ 11,000,000 Becker, MN, 3.00% GO BANs (Series 1993), 10/1/94 MIG1 $ 11,000,000
------------------------------------------------------
6,000,000 Becker, MN, Temporary Solid Waste Facility, 3.25% BANs
(Series 1994A)/(Liberty Paper, Inc.)/(Escrowed in
Treasuries)/(Subject to AMT), 10/1/94 MIG1 6,000,000
------------------------------------------------------
5,380,000 Byron, MN, IDB Weekly VRDNs (Schmidt Printing, Inc.)/
(Norwest Bank Minnesota LOC)/(Subject to AMT) A-1+ 5,380,000
------------------------------------------------------
4,000,000 Minnesota State Higher Education Coordinating Board
Weekly VRDNs (Student Loan Program)/(Subject to AMT) VMIG1 4,000,000
------------------------------------------------------
3,000,000 Minnesota State Higher Education Coordinating Board
Weekly VRDNs (Supplemental Student Loan Program)/
(Series 1992A)/(Subject to AMT) VMIG1 3,000,000
------------------------------------------------------
6,000,000 Minnesota State Higher Education Coordinating Board
Weekly VRDNs (Supplemental Student Loan Program)/
(Subject to AMT) VMIG1 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 St. Paul, MN, Port Authority Weekly VRDNs
(H.M. Smyth Co., Inc.)/(Norwest Bank, Minnesota LOC) A-1+ 3,025,000
------------------------------------------------------
3,000,000 White Bear Lake, MN, IDR Weekly VRDNs (Series 1993)/
(Taylor Corp.)/(Norwest Bank Minnesota LOC) P-1 3,000,000
------------------------------------------------------ ------------
Total 42,370,000
------------------------------------------------------ ------------
MISSISSIPPI--2.4%
------------------------------------------------------
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
------------------------------------------------------
2,000,000 Mississippi Business Finance Corp. Weekly VRDNs
(O'Neal Steel, Inc.)/(SouthTrust Bank of Alabama LOC)/
(Subject to AMT) P-1 2,000,000
------------------------------------------------------
</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
- ---------------------------------------------------------------------
MISSISSIPPI--CONTINUED
------------------------------------------------------
$ 3,250,000 Mississippi Business Finance Corp., IDRB, Weekly VRDNs
(Series 1994)/(Flexsteel Industries, Inc.)/(Norwest
Bank Minnesota LOC)/(Subject to AMT) A-1+ $ 3,250,000
------------------------------------------------------
2,700,000 Olive Branch, MS, IDR Weekly VRDNs (Series 1986)/
(United Healthcare of Mississippi, Inc.)/(First Union
National Bank LOC)/(Subject to AMT) VMIG1 2,700,000
------------------------------------------------------
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 13,950,000
------------------------------------------------------ ------------
MISSOURI--0.2%
------------------------------------------------------
1,275,000 Missouri Export and Infrastructure Board Weekly VRDNs
(Ex-L-Tube, Inc.)/(Norwest Bank Minnesota LOC)/
(Subject to AMT) P-1 1,275,000
------------------------------------------------------ ------------
NEBRASKA--1.1%
------------------------------------------------------
6,400,000 Douglas County, NE, Weekly VRDNs (Series 1991)/
(Malhove, Inc.)/(Norwest Bank Minnesota LOC)/
(Subject to AMT) A-1+ 6,400,000
------------------------------------------------------ ------------
NEW HAMPSHIRE--4.5%
------------------------------------------------------
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
------------------------------------------------------
9,000,000 New Hampshire, IDA, 3.05% Semi-Annual TOBs
(United Illuminating Co.)/(Barclays Bank PLC LOC)/
(Subject to AMT), Optional Tender 9/1/94 A-1+ 9,000,000
------------------------------------------------------
4,175,000 Portsmouth, NH, 4.00% BANs, 12/1/94 NR 4,183,070
------------------------------------------------------ ------------
Total 25,683,070
------------------------------------------------------ ------------
</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 YORK--4.6%
------------------------------------------------------
$ 6,000,000 Longwood Central School District, NY, 3.25% TANs,
6/30/94 NR(3) $ 6,000,693
------------------------------------------------------
1,200,000 Nassau County, NY, 3.15% BANs (Series 1993B), 8/15/94 SP-1 1,200,600
------------------------------------------------------
19,300,000 William Floyd Union Free School District, 3.25% TANs,
6/30/94 NR(3) 19,306,008
------------------------------------------------------ ------------
Total 26,507,301
------------------------------------------------------ ------------
NORTH CAROLINA--1.2%
------------------------------------------------------
2,730,440 NCNB Tax-Exempt Trust Weekly VRDNs (Series 1989A)/
(Nationsbank of North Carolina LOC)/(Subject to AMT) P-1 2,730,440
------------------------------------------------------
840,000 Orange County, NC, Industrial Facilities & Pollution
Control Financing Authority Weekly VRDNs
(Mebane Packaging Corp.)/(First Union National Bank
LOC)/(Subject to AMT) A-1 840,000
------------------------------------------------------
3,100,000 Wilson County, NC, PCA Weekly VRDNs IDRB (Series
1994)/(Granutec, Inc.)/(Branch Banking & Trust Co.
LOC)/ (Subject to AMT) P-1 3,100,000
------------------------------------------------------ ------------
Total 6,670,440
------------------------------------------------------ ------------
OHIO--4.4%
------------------------------------------------------
1,600,000 Cincinnati, OH, Student Loan Authority Weekly VRDNs
(Cincinnati Student Loan Funding Corp.)/(National
Westminster Bank PLC LOC)/(Subject to AMT) VMIG1 1,600,000
------------------------------------------------------
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
------------------------------------------------------
700,000 Defiance County, OH, IDR Weekly VRDNs (Detrich
Industries, Inc.)/(PNC Bank N.A. LOC) A-1 700,000
------------------------------------------------------
3,000,000 Lucas County, OH, Various Purpose Improvement Notes,
3.87% BANs (Series 1993-1), 8/18/94 NR(4) 3,002,289
------------------------------------------------------
</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
------------------------------------------------------
$ 6,495,000 Ohio HFA Single Family Mortgage Weekly VRDNs (Series
PT-8)/(GNMA Collateralized)/ (Subject to AMT) R A-1+ $ 6,495,000
------------------------------------------------------
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
------------------------------------------------------
1,450,000 Stark County, OH, IDR, Weekly VRDNs (Series 1994)/
(Wilkof Morris)/(Society Bank & Trust Co. LOC)/
(Subject to AMT) P-1 1,450,000
------------------------------------------------------
1,300,000 Student Loan Funding of Cincinnati, OH, Weekly
VRDNs (National Westminster Bank PLC LOC)/
(Subject to AMT) VMIG1 1,300,000
------------------------------------------------------
5,000,000 Summit County, OH, 3.70% BANs (Series 1994A), 3/9/95 NR(4) 5,007,429
------------------------------------------------------
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 25,254,718
------------------------------------------------------ ------------
OKLAHOMA--7.8%
------------------------------------------------------
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
------------------------------------------------------
6,100,000 Oklahoma Development Finance Authority, 2.80% Semi-
Annual TOBs (Simmons Poultry Farms)/(Bayerische
Vereinsbank AG LOC)/(Subject to AMT), Optional
Tender 8/1/94 VMIG1 6,100,000
------------------------------------------------------
</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
- ---------------------------------------------------------------------
OKLAHOMA--CONTINUED
------------------------------------------------------
$ 3,500,000 Oklahoma HFA Single Family Mortgage Revenue Bonds,
3.87% Annual TOBs (Series 1994)/(Morgan Stanley
Guaranty)/(Collateralized in U.S. Treasuries)/(Subject
to AMT), Mandatory Tender 5/1/95 VMIG1 $ 3,500,000
------------------------------------------------------
10,400,000 Southeastern Oklahoma Industries Authority, Weekly
VRDNs Solid Waste Revenue Bonds (Weyerhauser, Inc.
Guaranty)/(Subject to AMT) A-1 10,400,000
------------------------------------------------------
15,000,000 Tulsa County, OK, Home Finance Authority, 3.00%
Semi-Annual TOBs (Series 1992A)/
(Bayerische Landesbank LOC)/(Subject to AMT),
Optional Tender 7/1/94 SP-1+ 15,000,000
------------------------------------------------------ ------------
Total 44,600,000
------------------------------------------------------ ------------
PENNSYLVANIA--9.6%
------------------------------------------------------
5,000,000 Allegheny County, PA, IDA, PCR, 3.75% CP (USX, Inc.)/
(Long Term Credit Bank of Japan Ltd. LOC), Mandatory
Tender 8/18/94 A-2 5,000,000
------------------------------------------------------
4,000,000 Carbon County, PA, IDA, 3.05% CP (Series A)/(Panther
Creek)/(National Westminster Bank PLC LOC)/(Subject to
AMT), Mandatory Tender 8/26/94 A-1+ 4,000,000
------------------------------------------------------
15,000,000 Clinton County, PA, IDA, Solid Waste Disposal Revenue
Bonds, 2.90% Annual TOBs (Series 1992A)/(International
Paper Co. Guaranty)/(Subject to AMT), Optional Tender
1/15/95 A-2 15,000,000
------------------------------------------------------
900,000 Pennsylvania Economic Development Financing Authority
Weekly VRDNs (Tamaqua Cable Co.)/(PNC Bank N.A.
LOC)/(Subject to AMT) P-1 900,000
------------------------------------------------------
5,000,000 Pennsylvania Economic Development Financing Authority,
2.50% CP Solid Waste Disposal (Series 1992A)/(Inter-
Power/AhlCon Partners)/(Banque Paribas LOC)/(Subject
to AMT), Mandatory Tender 6/13/94 A-1 5,000,000
------------------------------------------------------
</TABLE>
15
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
------------------------------------------------------
$ 6,900,000 Pennsylvania EDA Monthly VRDNs (Series 1990B)/
(Gutchess Hardwoods)/(Fleet Bank of New York LOC) A-1 $ 6,900,000
------------------------------------------------------
2,675,000 Pennsylvania EDA Weekly VRDNs (Stone & Lime Co.)/ (PNC
Bank N.A. LOC)/(Subject to AMT) P-1 2,675,000
------------------------------------------------------
3,500,000 Pennsylvania EDA Weekly VRDNs (Walnut & Craig Street
Associates)/(PNC Bank N.A. LOC)/(Subject to AMT) P-1 3,500,000
------------------------------------------------------
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 7/1/94 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
------------------------------------------------------
5,000,000 Philadelphia, PA, IDA, 4.00% Annual TOBs (Suite
Hotel)/ (First National Bank of Boston LOC), Optional
Tender 6/1/95 P-1 5,000,000
------------------------------------------------------ ------------
Total 54,975,000
------------------------------------------------------ ------------
RHODE ISLAND--0.4%
------------------------------------------------------
2,500,000 Cranston, RI, 3.40% BANs, 7/15/94 NR(4) 2,501,184
------------------------------------------------------ ------------
SOUTH CAROLINA--0.4%
------------------------------------------------------
2,130,000 Dorchester County, SC, IDB Weekly VRDNs
(L.G. Industrial Project of South Carolina, Inc.)/
(Meridian Bank LOC)/(Subject to AMT) P-1 2,130,000
------------------------------------------------------ ------------
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
------------------------------------------------------ ------------
</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
- ---------------------------------------------------------------------
TEXAS--3.7%
------------------------------------------------------
$ 5,000,000 Brazos River Authority, TX, 3.35% CP Collateralized
PCR Refunding Bonds (Series 1994B)/(Texas Utilities
Electric Co.)/(Canadian Imperial Bank of Commerce
LOC)/ (Subject to AMT), Mandatory Tender 9/15/94 A-1 $ 5,000,000
------------------------------------------------------
7,600,000 Harris County, TX, Industrial Development Corp., PCR,
3.40% CP (Series 1987)/(Exxon Corp. Guaranty)/(Subject
to AMT), Mandatory Tender 10/18/94 A-1+ 7,600,000
------------------------------------------------------
2,800,000 Lubbock, TX, IDC Daily VRDNs (McLane Co., Inc.)/
(NationsBank of Florida & NationsBank of North
Carolina N.A. LOCs)/(Subject to AMT) A-1 2,800,000
------------------------------------------------------
6,000,000 San Antonio, TX, IDA Weekly VRDNs (Colin Medical
Instruments Corp.)/(Sanwa Bank Ltd. LOC)/
(Subject to AMT) A-1+ 6,000,000
------------------------------------------------------ ------------
Total 21,400,000
------------------------------------------------------ ------------
UTAH--2.0%
------------------------------------------------------
1,000,000 Tooele County, UT, 2.75% CP Waste Treatment
(Union Pacific Corp. Guaranty)/(Subject to AMT),
Mandatory Tender 6/13/94 A-1 1,000,000
------------------------------------------------------
6,000,000 Tooele County, UT, 3.30% CP Waste Treatment
(Union Pacific Corp. Guaranty)/(Subject to AMT),
Mandatory Tender 10/17/94 A-1 6,000,000
------------------------------------------------------
4,700,000 Tooele County, UT, 3.45% CP Waste Treatment
(Union Pacific Corp. Guaranty)/(Subject to AMT),
Mandatory Tender 10/24/94 A-1 4,700,000
------------------------------------------------------ ------------
Total 11,700,000
------------------------------------------------------ ------------
</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
- ---------------------------------------------------------------------
VIRGINIA--7.3%
------------------------------------------------------
$ 8,800,000 Alexandria, VA, Redevelopment and Housing Authority
Weekly VRDNs (Crystal City Apartments)/(Safeco
Insurance Co. of America Insured)/(Sumitomo Bank
BPA)/(Subject to AMT) A-1 $ 8,800,000
------------------------------------------------------
1,900,000 Chesapeake, VA, IDA Weekly VRDNs (Series 1986)/ (Volvo
of America, Inc.)/(Union Bank of Switzerland
LOC)/(Subject to AMT) P-1 1,900,000
------------------------------------------------------
1,600,000 Fulton County, VA, IDA Weekly VRDNs
(American Graphics)/(NationsBank of Virginia LOC)/
(Subject to AMT) P-1 1,600,000
------------------------------------------------------
1,400,000 Greensville County, VA, IDA Daily VRDNs (Purdue Farms,
Inc.)/(Morgan Guaranty Trust Co. LOC)/
(Subject to AMT) A-1+ 1,400,000
------------------------------------------------------
3,000,000 Halifax County, VA, IDA, MMMs, 2.80% CP (Virginia
Electric Power Co. Guaranty)/(Subject to AMT),
Mandatory Tender 7/14/94 A-1 3,000,000
------------------------------------------------------
5,000,000 Richmond, VA, Redevelopment and Housing Authority
Weekly VRDNs (Series B-5)/(Tobacco Row)/(Bayerische
Landesbank LOC)/(Subject to AMT) VMIG1 5,000,000
------------------------------------------------------
1,000,000 Richmond, VA, Redevelopment and Housing Authority
Weekly VRDNs (Series B-8)/(Bayerische Landesbank
LOC)/(Subject to AMT) VMIG1 1,000,000
------------------------------------------------------
2,285,000 Virginia Beach, VA, Development Authority Weekly VRDNs
(Series 1993)/(Ocean Ranch Motel Corp.)/ (Nationsbank
of Virginia N.A. LOC)/(Subject to AMT) A-1 2,285,000
------------------------------------------------------
</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
------------------------------------------------------
$ 14,000,000 Virginia State Housing Development Authority, 2.80%
Annual TOBs (Series 1993I)/(Subject to AMT), Mandatory
Tender 11/4/94 SP-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
------------------------------------------------------ ------------
Total 41,985,000
------------------------------------------------------ ------------
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--0.8%
------------------------------------------------------
3,000,000 Marshfield, WI, IDR Weekly VRDNs (Series 1993)/(Wick
Building System, Inc.)/(Bank One, Milwaukee N.A.
LOC)/(Subject to AMT) P-1 3,000,000
------------------------------------------------------
1,350,000 Shell Lake, WI, Weekly VRDNs (Doboy Packaging)/ (Union
Bank of Switzerland LOC)/(Subject to AMT) P-1 1,350,000
------------------------------------------------------ ------------
Total 4,350,000
------------------------------------------------------ ------------
TOTAL INVESTMENTS, AT AMORTIZED COST (NOTE 2A) $579,301,513+
------------------------------------------------------ ------------
</TABLE>
* Please refer to the Appendix to the Statement of Additional Information for an
explanation of the credit ratings. Current credit ratings are unaudited.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($574,801,275)
at May 31, 1994.
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C>
AMT -- Alternative Minimum Tax
BANs -- Bond Anticipation Notes
BPA -- Bond Purchase Agreement
CP -- Commercial Paper
EDA -- Economic Development Authority
EDR -- Economic Development Revenue
FGIC -- Financial Guaranty Insurance Company
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority/Agency
IDA -- Industrial Development Authority
IDB -- Industrial Development Bond
IDC -- Industrial Development Corporation
IDR -- Industrial Development Revenue
IDRB -- Industrial Development Revenue Bonds
LOC(s) -- Letter(s) of Credit
MMMs -- Money Market Municipals
PCA -- Pollution Control Authority
PCR -- Pollution Control Revenue
R -- Denotes restricted securities which are subject to restrictions or resale under
Federal securities laws. These securities are considered liquid under criteria
established by the Board of Directors.
TANs -- Tax Anticipation Notes
TOBs -- Tender Option Bonds
TRANs -- Tax and Revenue Anticipation Notes
VRDNs -- Variable Rate Demand Notes
NR indicates that both the bonds and the obligor or credit enhancer are not currently rated
by Standard & Poor'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 "AAA" by Fitch.
NR(2) The underlying issuer/obligor/guarantor has other outstanding long-term debt rated "AA"
by Standard & Poor's, "Aa" by 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.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL CASH SERIES
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments, at amortized cost and value (Note 2A) $579,301,513
- --------------------------------------------------------------------------------
Cash 2,174,517
- --------------------------------------------------------------------------------
Interest receivable 3,961,805
- --------------------------------------------------------------------------------
Receivable for capital stock sold 8,024
- --------------------------------------------------------------------------------
Deferred expenses (Note 2E) 8,508
- -------------------------------------------------------------------------------- ------------
Total assets 585,454,367
- --------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------
Payable for investments purchased $9,965,000
- -------------------------------------------------------------------
Dividends payable 297,214
- -------------------------------------------------------------------
Payable for capital stock redeemed 87,986
- -------------------------------------------------------------------
Accrued expenses 302,892
- ------------------------------------------------------------------- ----------
Total liabilities 10,653,092
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 574,801,275 shares of capital stock outstanding $574,801,275
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share:
($574,801,275 / 574,801,275) shares of capital stock outstanding) $1.00
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL CASH SERIES
STATEMENT OF OPERATIONS
YEAR ENDED MAY 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest income (Note 2B) $15,321,930
- ---------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------
Investment advisory fee (Note 4) $2,737,684
- --------------------------------------------------------------------
Distribution fees (Note 4) 1,542,256
- --------------------------------------------------------------------
Directors' fees 4,990
- --------------------------------------------------------------------
Administrative personnel and services (Note 4) 441,902
- --------------------------------------------------------------------
Custodian and portfolio accounting fees 164,662
- --------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 222,655
- --------------------------------------------------------------------
Shareholder services fee (Note 4) 374,123
- --------------------------------------------------------------------
Capital stock registration costs 109,864
- --------------------------------------------------------------------
Auditing fees 14,615
- --------------------------------------------------------------------
Legal fees 11,886
- --------------------------------------------------------------------
Printing and postage 39,868
- --------------------------------------------------------------------
Insurance premiums 12,721
- --------------------------------------------------------------------
Taxes 51,715
- --------------------------------------------------------------------
Miscellaneous 6,693
- -------------------------------------------------------------------- ----------
Total expenses 5,735,634
- --------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 4) 315,012
- -------------------------------------------------------------------- ----------
Net expenses 5,420,622
- --------------------------------------------------------------------------------- -----------
Net investment income $ 9,901,308
- --------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL 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 $ 9,901,308 $ 10,783,807
- ------------------------------------------------------------ --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2B)
- ------------------------------------------------------------
Dividends to shareholders from net investment income (9,901,308) (10,783,807)
- ------------------------------------------------------------ --------------- ---------------
CAPITAL STOCK TRANSACTIONS (NOTE 3)
- ------------------------------------------------------------
Proceeds from sale of shares 2,785,140,041 3,560,486,229
- ------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 8,586,674 8,634,396
- ------------------------------------------------------------
Cost of shares redeemed (2,675,130,210) (3,629,729,864)
- ------------------------------------------------------------ --------------- ---------------
Change in net assets from capital stock transactions 118,596,505 (60,609,239)
- ------------------------------------------------------------ --------------- ---------------
Change in net assets 118,596,505 (60,609,239)
- ------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------
Beginning of period 456,204,770 516,814,009
- ------------------------------------------------------------ --------------- ---------------
End of period $ 574,801,275 $ 456,204,770
- ------------------------------------------------------------ --------------- ---------------
</TABLE>
(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 0.02 0.03 0.04 0.05 0.04
- ---------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------
Dividends to shareholders from net
investment income (0.02) (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** 1.83% 2.11% 3.53% 5.24% 4.68%
- ---------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------
Expenses 0.99% 0.99% 0.98% 0.94% 0.73%(b)
- ---------------------------------------
Net investment income 1.81% 2.10% 3.42% 5.02% 5.76%(b)
- ---------------------------------------
Expense waiver/reimbursement (a) 0.06% 0.03% 0.03% 0.17% 0.45%(b)
- ---------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------
Net assets, end of period (000
omitted) $574,801 $456,205 $516,814 $403,151 $195,897
- ---------------------------------------
</TABLE>
* Reflects operations for the 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 contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL CASH SERIES
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Cash Trust Series, Inc. (the "Corporation"), is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end management
investment company. The Corporation consists of four portfolios. The financial
statements included herein present only those of Municipal Cash Series (the
"Fund"). 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.
Effective June 15, 1993, shareholders approved the reorganization of the Fund as
a portfolio of Cash Trust Series, Inc., a Maryland corporation.
(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. These
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 Act.
B. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized as
required by the Internal Revenue Code, as amended (the "Code"). Distributions
to shareholders are recorded on the ex-dividend date.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its tax-exempt income.
Accordingly, no provisions for federal tax are necessary.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. A Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis
are marked to market daily and begin earning interest on the settlement date.
E. DEFERRED EXPENSES--The costs incurred by the 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 the Fund's
commencement date.
F. OTHER--Investment transactions are accounted for on the trade date.
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
(3) CAPITAL STOCK
At May 31, 1994, there were 12,500,000,000 shares of $0.001 par value capital
stock authorized. Capital paid in aggregated $574,801,275. Transactions in
capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
<S> <C> <C>
1994 1993
-------------- ---------------
- ---------------------------------------------------------
Shares sold 2,785,140,041 3,560,486,229
- ---------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 8,586,674 8,634,396
- ---------------------------------------------------------
Shares redeemed (2,675,130,210) (3,629,729,864)
- --------------------------------------------------------- -------------- ---------------
Net change resulting from capital stock transactions 118,596,505 (60,609,239)
- --------------------------------------------------------- -------------- ---------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Advisers, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50 of 1% of the Fund's average daily net assets. The Adviser may voluntarily
choose to waive a portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with administrative personnel and services. Prior to March 1, 1994, these
services were provided at approximate cost. Effective March 1, 1994, the FAS fee
is based on the level of average aggregate daily net assets of all funds advised
by subsidiaries of Federated Investors for the period. The administrative fee
received during any fiscal year shall be at least $125,000 per portfolio and
$30,000 per each additional class of shares.
DISTRIBUTION AND SHAREHOLDER SERVICES FEES--The Fund has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the
Plan, the Fund will reimburse Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Fund to finance activities intended to
result in the sale of the Fund's shares. The Plan provides that the Fund may
incur distribution expenses up to 0.35 of 1% of the average daily net assets of
the shares, annually, to reimburse FSC.
Under the terms of a shareholder services agreement with Federated Shareholder
Services ("FSS"), the Fund will pay FSS up to 0.25 of 1% of average net assets
of the Fund for the period. This fee is to obtain certain personal services for
shareholders and to maintain shareholder accounts.
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
TRANSFER AND DIVIDEND DISBURSING AGENT--Federated Services Company ("FServ")
serves as transfer and dividend disbursing agent for the Fund. The FServ fee is
based on the size, type and number of accounts and transactions made by
shareholders.
INTERFUND TRANSACTIONS--During the year ended May 31, 1994, the Fund engaged in
purchase and sale transactions with other affiliated funds pursuant to Rule
17a-7 of the Investment Company Act of 1940 amounting to $592,805,000 and
$667,730,000, respectively. These purchases and sales were conducted on an arms
length basis and transacted for cash consideration only, at independent current
market prices and without brokerage commissions, fees or other remuneration.
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Board of Directors of
CASH TRUST SERIES, INC. and Shareholders of
MUNICIPAL CASH SERIES:
We have audited the accompanying statement of assets and liabilities of
Municipal Cash Series (one of the portfolios comprising Cash Trust Series,
Inc.), including the portfolio of investments, as of May 31, 1994, the related
statement of operations for the year then ended, the statement of changes in net
assets for the years ended May 31, 1994 and 1993, and the financial highlights
for each of the years in the five-year period ended May 31, 1994. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
May 31, 1994, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Municipal Cash
Series as of May 31, 1994, the results of its operations, the changes in its net
assets, and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE
Boston, Massachusetts
July 8, 1994
<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 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
- --------------------------------------------------------------------------------
TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL REPORT
TO SHAREHOLDERS
MAY 31, 1994
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
147551105
0122606 (7/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for Prime Cash Series
(the "Fund"), which covers the twelve-month period ended May 31, 1994. The
Report includes the Investment Review and Financial Statements, which contain
the Portfolio of Investments.
Prime Cash Series pursues current income--along with the additional advantages
of daily liquidity and stability of principal*--through a diversified portfolio
of high-quality money market securities. At the end of the period, the portfolio
was invested primarily in commercial paper (45.7%) and variable rate obligations
(29.7%). It also held positions in repurchase agreements (20.9%), as well as
certificates of deposit and a bank note.
At the end of the period, the Fund's net assets stood at $791 million. Dividends
paid to shareholders during the period totaled $19.9 million, or $0.02 per
share.
Thank you for putting your cash to work through Prime Cash Series. Please
contact your investment representative if you have any questions about the Fund.
We will continue to keep you up to date on your investment progress.
Sincerely,
Richard B. Fisher
President
July 15, 1994
* As a money market mutual fund, the Fund is managed to pursue a stable share
price of $1.00, although there is no guarantee that it will do so.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Prime Cash Series (the "Fund"), invests exclusively in money market instruments
maturing in thirteen months or less. The average maturity of these securities,
computed on a dollar-weighted basis, is restricted to 90 days or less. Portfolio
securities must be rated in one of the two highest short-term rating categories
by one or more nationally recognized statistical rating organizations or be of
comparable quality to securities having such ratings. Typical security types
include, but are not limited to, commercial paper, certificates of deposit, time
deposits, Eurodollar certificates of deposit, variable rate instruments and
repurchase agreements.
The pace of U.S. economic activity has been moderate over the past year except
for a spurt of strength in the fourth quarter of 1993. Employment seems to be
making modest but steady gains while personal income and personal spending have
experienced minor upticks. From a manufacturing vantage point, industrial
production, capacity utilization, and durable goods orders have all begun to
rebound. In this mild recovery, both the Consumer Price Index, ("CPI") and the
Producer Price Index, ("PPI") have been contained, indicating that inflation
remains under control.
The target average maturity range for Prime Cash Series has gone from its
maximum of 50-60 days in November, 1993, to its current 30-40 day range. This
reflects our continuing bias that the money market yield curve is fairly steep,
and value can be obtained through both structure as well as by stepping out the
curve a bit. 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.
Defensive positioning has proven helpful since October, 1993. The Federal
Reserve ("the Fed") has raised short-term rates four times since February 4,
1994. The Fed Funds target has gone from 3% to 4.25% and the discount rate has
increased from 3% to 3.5%. Despite the fact that CPI and PPI indicate moderate
inflationary levels, the Fed has begun to fight "inflation expectations." Given
the continued path of recovery, the Fed has now declared a neutral stance.
For the fiscal year ending May 31, 1994, the net assets of Prime Cash Series
decreased from $796.8 million to $791.1 million while the seven-day net yield
increased from 2.27% to 3.18%.* The effective average maturity of the Fund on
May 31 was 35 days.
* Performance quoted represents past performance and is not indicative of future
returns.
PRIME CASH SERIES
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
BANK NOTES--0.6%
- ----------------------------------------------------------------------------------
$ 5,000,000 NBD Bank, N.A., Detroit, 3.30%, 7/11/94 $ 5,000,159
----------------------------------------------------------------- ------------
CERTIFICATES OF DEPOSIT--0.9%
- ----------- ----------------------------------------------------------------------
7,000,000 Canadian Imperial Bank of Commerce, 3.40%, 7/8/94 7,000,000
----------------------------------------------------------------- ------------
*COMMERCIAL PAPER--45.7%
- ----------- ----------------------------------------------------------------------
BANKING--9.6%
-----------------------------------------------------------------
12,000,000 Bankers Trust New York Corporation, DTC, CP, 4.67%, 8/22/94 11,872,353
-----------------------------------------------------------------
13,000,000 BNP U.S. Finance Corp., 3.23%, 7/25/94 12,937,015
-----------------------------------------------------------------
10,000,000 Canadian Imperial Holdings, Inc., 3.29%-3.30%, 8/9/94-8/11/94 9,935,929
-----------------------------------------------------------------
9,398,000 Paragon Communications (Credit Lyonnais LOC), 3.80%, 6/6/94 9,393,040
-----------------------------------------------------------------
5,000,000 PEMEX Capital, Inc. (Swiss Bank Corp. LOC), 3.38%, 8/2/94 4,970,894
-----------------------------------------------------------------
5,000,000 Queensland Alumina, Ltd. (Credit Suisse LOC), 3.90%, 7/12/94 4,977,792
-----------------------------------------------------------------
6,000,000 Southeast Paper Manufacturing Co. (Banque Paribus NY LOC), 4.27%,
10/5/94 5,910,330
-----------------------------------------------------------------
16,000,000 Toronto Dominion Holdings (USA), Inc., 3.25%-4.98%,
7/13/94-11/10/94 15,753,150
----------------------------------------------------------------- ------------
Total 75,750,503
----------------------------------------------------------------- ------------
FINANCE--AUTOMOTIVE--0.6%
-----------------------------------------------------------------
5,000,000 Ford Credit Receivables Funding, Inc., 4.49%, 8/25/94 4,946,993
----------------------------------------------------------------- ------------
FINANCE--COMMERCIAL--8.4%
-----------------------------------------------------------------
15,000,000 CIT Group Holdings, Inc., 3.25%-3.33%, 7/13/94-7/18/94 14,938,144
-----------------------------------------------------------------
20,000,000 General Electric Capital Corp., 3.22%-4.98%, 7/11/94-11/8/94 19,817,274
-----------------------------------------------------------------
32,000,000 Transamerica Finance Corp., 3.25%-3.95%, 6/2/94-9/8/94 31,816,978
----------------------------------------------------------------- ------------
Total 66,572,396
----------------------------------------------------------------- ------------
FINANCE--RETAIL--2.9%
-----------------------------------------------------------------
5,000,000 Household Finance Corp., 4.22%, 10/13/94 4,921,461
-----------------------------------------------------------------
18,000,000 ITT Financial Corp., 3.82%-3.85%, 6/16/94-7/7/94 17,953,283
----------------------------------------------------------------- ------------
Total 22,874,744
----------------------------------------------------------------- ------------
</TABLE>
PRIME CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
*COMMERCIAL PAPER--CONTINUED
- ----------------------------------------------------------------------------------
FUNDING CORPORATION--11.2%
-----------------------------------------------------------------
$10,000,000 Asset Securitization Cooperative Corp., 3.88%, 7/19/94 $ 9,948,267
-----------------------------------------------------------------
4,000,000 Beta Finance, Inc., 3.65%, 8/4/94 3,974,044
-----------------------------------------------------------------
6,800,000 CIESCO, LP, 3.30%-3.98%, 8/3/94-9/15/94 6,731,011
-----------------------------------------------------------------
9,700,000 Corporate Asset Funding Co., Inc., 3.22%-3.62%, 6/8/94-8/18/94 9,671,234
-----------------------------------------------------------------
35,000,000 McKenna Triangle National Corp., 3.22%-4.68%, 6/16/94-9/1/94 34,728,018
-----------------------------------------------------------------
17,000,000 New Center Asset Trust (Series A1+/P1), 3.75%-3.92%,
6/9/94-7/15/94 16,938,340
-----------------------------------------------------------------
7,000,000 Sheffield Receivables Corp., 3.89%, 7/14/94 6,967,475
----------------------------------------------------------------- ------------
Total 88,958,389
----------------------------------------------------------------- ------------
INSURANCE--5.6%
-----------------------------------------------------------------
3,000,000 Al Credit Corp., 4.02%, 9/26/94 2,960,805
-----------------------------------------------------------------
18,716,000 Prospect St. Sr. Loan Port. L.P. (Guaranteed by FSA),
3.45%-4.55%, 6/3/94-8/26/94 18,604,511
-----------------------------------------------------------------
23,000,000 Prudential Funding Corp., 3.23%-4.25%, 7/26/94-10/6/94 22,718,296
----------------------------------------------------------------- ------------
Total 44,283,612
----------------------------------------------------------------- ------------
MACHINERY, EQUIPMENT, AUTO--4.7%
-----------------------------------------------------------------
37,000,000 Eaton Corp., 3.82%-4.50%, 6/14/94-8/29/94 36,828,971
----------------------------------------------------------------- ------------
OIL & OIL FINANCE--1.5%
-----------------------------------------------------------------
12,000,000 Rockwell International Corp., 3.98%, 9/13/94 11,862,027
----------------------------------------------------------------- ------------
RETAIL--1.2%
-----------------------------------------------------------------
10,000,000 Melville Corp., 4.20%, 10/12/94 9,844,833
----------------------------------------------------------------- ------------
TOTAL COMMERCIAL PAPER 361,922,468
----------------------------------------------------------------- ------------
SHORT-TERM NOTES--2.5%
- ----------------------------------------------------------------------------------
BANKING--1.0%
-----------------------------------------------------------------
7,500,000 ABC II (Bankers Trust Co. Put), 4.34%, 8/8/94 7,500,000
----------------------------------------------------------------- ------------
FINANCE--AUTOMOTIVE--1.4%
-----------------------------------------------------------------
11,000,000 GMAC Mortgage Corp. of PA (Guaranteed by GMAC), 4.625%, 6/1/94 11,000,000
----------------------------------------------------------------- ------------
</TABLE>
PRIME CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
SHORT-TERM NOTES--CONTINUED
- ----------------------------------------------------------------------------------
FINANCE--RETAIL--0.1%
-----------------------------------------------------------------
$ 1,000,000 Household Finance Corp., 8.40%, 8/3/94 $ 1,008,055
----------------------------------------------------------------- ------------
TOTAL SHORT-TERM NOTES 19,508,055
----------------------------------------------------------------- ------------
**VARIABLE RATE OBLIGATIONS--29.7%
- ----------- ----------------------------------------------------------------------
BANKING--22.4%
-----------------------------------------------------------------
5,000,000 American Express Centurion Bank, 4.25%, 7/27/94 5,000,000
-----------------------------------------------------------------
1,175,000 Avalon Hotel Associates (Meridian Bank LOC), 4.71%, 6/2/94 1,175,000
-----------------------------------------------------------------
10,000,000 Azdel, Inc. (PNC Bank, Kentucky LOC), 4.58%, 6/6/94 10,000,000
-----------------------------------------------------------------
8,500,000 College-Kent L.P. (Society National Bank LOC), 4.72%, 6/3/94 8,500,000
-----------------------------------------------------------------
2,575,000 Eastern Milk Producers Corp. Assn., Inc. (Barclays Bank, PLC
LOC), 4.70%, 6/1/94 2,575,000
-----------------------------------------------------------------
8,300,000 Euclid/Superior Parking L.P. (Society National Bank LOC), 4.71%,
6/3/94 8,300,000
-----------------------------------------------------------------
7,200,000 Industrial Development Board of Pelham (Industrial Enterprise
Project), 4.54%, 6/2/94 7,200,000
-----------------------------------------------------------------
4,130,000 Industrial Development Board of Sylacuaga, AL, (South Trust Bank
of Alabama LOC), 4.65%, 6/1/94 4,130,000
-----------------------------------------------------------------
13,000,000 Kentucky Rural EDA (PCI)/(PNC Bank N.A. LOC), 4.69%, 6/6/94 13,000,000
-----------------------------------------------------------------
11,400,000 Maryland Industrial Development Financing Authority (First
National Bank, Maryland LOC), 4.75%, 6/6/94 11,400,000
-----------------------------------------------------------------
765,000 New Jersey EDA Economic Growth Bonds (Series K-3)/(Banque
Nationale de Paris LOC), 4.53%, 6/6/94 765,000
-----------------------------------------------------------------
4,205,000 New Jersey EDA Economic Growth Bonds (Series 1992H)/(Banque
Nationale de Paris LOC), 4.53%, 6/6/94 4,205,000
-----------------------------------------------------------------
6,480,000 Pennsylvania Economic Development Finance Authority (Series
1993C)/(Barclays Bank PLC LOC), 4.65%, 6/2/94 6,480,000
-----------------------------------------------------------------
35,000,000 PHH/CFC Leasing (Societe Generale LOC), 4.58%, 6/1/94 35,000,000
-----------------------------------------------------------------
35,000,000 SMM Trust 1993-B (Guaranteed by Morgan Guaranty Trust Co.),
4.86%, 8/12/94 35,000,000
-----------------------------------------------------------------
</TABLE>
PRIME CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
**VARIABLE RATE OBLIGATIONS--CONTINUED
- ----------------------------------------------------------------------------------
BANKING--CONTINUED
-----------------------------------------------------------------
$ 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
-----------------------------------------------------------------
20,325,000 Union Development Co., Inc. (Bank of America LOC), 4.64%, 6/2/94 20,325,000
----------------------------------------------------------------- ------------
Total 176,855,000
----------------------------------------------------------------- ------------
FINANCE--AUTOMOTIVE--2.9%
-----------------------------------------------------------------
23,000,000 Carco Auto Loan Master Trust Certificates, Series 1993-2, Class
A-1, 4.46%, 6/15/94 23,000,000
----------------------------------------------------------------- ------------
INSURANCE--4.4%
-----------------------------------------------------------------
25,000,000 Sun Life Insurance Co. of America, 4.15%-4.92%, 6/1/94 25,000,000
-----------------------------------------------------------------
10,000,000 Travelers Corp., 3.98%, 6/29/94 10,000,000
----------------------------------------------------------------- ------------
Total 35,000,000
----------------------------------------------------------------- ------------
TOTAL VARIABLE RATE OBLIGATIONS 234,855,000
----------------------------------------------------------------- ------------
***REPURCHASE AGREEMENTS--20.9%
- ----------- ----------------------------------------------------------------------
16,000,000 Chase Manhattan Bank, N.A., 4.25%, dated 5/31/94, due 6/1/94 16,000,000
-----------------------------------------------------------------
20,000,000 Daiwa Securities America, Inc., 4.25%, dated 5/31/94, due 6/1/94 20,000,000
-----------------------------------------------------------------
35,000,000 Donaldson Lufkin & Jenrette Securities Corp., 4.25%, dated
5/31/94, due 6/1/94 35,000,000
-----------------------------------------------------------------
31,650,000 Nikko Securities Co., International, Inc., 4.25%, dated 5/31/94,
due 6/1/94 31,650,000
-----------------------------------------------------------------
9,000,000 PaineWebber, Inc., 4.30%, dated 5/31/94, due 6/1/94 9,000,000
-----------------------------------------------------------------
42,900,000 S. G. Warburg & Co., Inc., 4.25%, dated 5/31/94, due 6/1/94 42,900,000
-----------------------------------------------------------------
10,400,000 Salomon Brothers, Inc., 4.30%, dated 5/31/94, due 6/1/94 10,400,000
-----------------------------------------------------------------
200,000 State Street Bank and Trust Co., 4.27%, dated 5/31/94, due 6/1/94 200,000
----------------------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS (NOTE 2B) 165,150,000
----------------------------------------------------------------- ------------
TOTAL INVESTMENTS, AT AMORTIZED COST (NOTE 2A) $793,435,682+
----------------------------------------------------------------- ------------
</TABLE>
PRIME CASH SERIES
- --------------------------------------------------------------------------------
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C> <C>
CP -- Commercial Paper
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
($791,147,071) at May 31, 1994.
(See Notes which are an integral part of the Financial Statements)
PRIME CASH SERIES
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in repurchase agreements (Note 2B) $165,150,000
- -----------------------------------------------------------------
Investments in other securities (Note 2A) 628,285,682
- ----------------------------------------------------------------- ------------
Total investments, at amortized cost and value $793,435,682
- --------------------------------------------------------------------------------
Cash 277,041
- --------------------------------------------------------------------------------
Interest receivable 1,207,161
- --------------------------------------------------------------------------------
Receivable for capital stock sold 361,175
- --------------------------------------------------------------------------------
Deferred expenses (Note 2F) 11,063
- -------------------------------------------------------------------------------- ------------
Total assets 795,292,122
- --------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------
Payable for capital stock redeemed 2,793,834
- -----------------------------------------------------------------
Dividend payable 784,151
- -----------------------------------------------------------------
Accrued expenses 567,066
- ----------------------------------------------------------------- ------------
Total liabilities 4,145,051
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 791,147,071 shares of capital stock outstanding $791,147,071
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share:
($791,147,071 / 791,147,071 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
YEAR ENDED MAY 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest income (Note 2C) $27,967,568
- ---------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------
Investment advisory fee (Note 4) $4,069,739
- --------------------------------------------------------------------
Distribution fees (Note 4) 2,332,300
- --------------------------------------------------------------------
Directors' fees 8,431
- --------------------------------------------------------------------
Administrative personnel and services (Note 4) 621,911
- --------------------------------------------------------------------
Custodian and portfolio accounting fees 262,911
- --------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 1,343,226
- --------------------------------------------------------------------
Shareholder services fee (Note 4) 512,116
- --------------------------------------------------------------------
Capital stock registration costs 113,735
- --------------------------------------------------------------------
Auditing fees 14,614
- --------------------------------------------------------------------
Legal fees 15,528
- --------------------------------------------------------------------
Printing and postage 111,168
- --------------------------------------------------------------------
Insurance 18,293
- --------------------------------------------------------------------
Taxes 98,248
- --------------------------------------------------------------------
Miscellaneous 14,339
- -------------------------------------------------------------------- ----------
Total expenses 9,536,559
- --------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 4) 1,478,163
- -------------------------------------------------------------------- ----------
Net expenses 8,058,396
- --------------------------------------------------------------------------------- -----------
Net investment income $19,909,172
- --------------------------------------------------------------------------------- -----------
</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 $ 19,909,172 $ 20,527,989
- ----------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- -----------------------------------------------------------
Dividends to shareholders from net investment income (19,909,172) (20,527,989)
- ----------------------------------------------------------- --------------- ---------------
CAPITAL STOCK TRANSACTIONS (NOTE 3)--
- -----------------------------------------------------------
Proceeds from sale of shares 4,172,769,883 3,807,750,927
- -----------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 18,573,064 19,239,001
- -----------------------------------------------------------
Cost of shares redeemed (4,197,027,389) (3,780,174,113)
- ----------------------------------------------------------- --------------- ---------------
Change in net assets from capital stock transactions (5,684,442) 46,815,815
- ----------------------------------------------------------- --------------- ---------------
Change in net assets (5,684,442) 46,815,815
- -----------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------
Beginning of period 796,831,513 750,015,698
- ----------------------------------------------------------- --------------- ---------------
End of period $ 791,147,071 $ 796,831,513
- ----------------------------------------------------------- --------------- ---------------
</TABLE>
(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 0.02 0.03 0.04 0.07 0.06
- ----------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------
Dividends to shareholders from
net investment income (0.02) (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** 2.48% 2.61% 4.37% 6.99% 6.56 %
- ----------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------
Expenses 0.99% 0.99% 0.98% 0.94% 0.73 %(b)
- ----------------------------------------------
Net investment income 2.45% 2.58% 4.21% 6.50% 7.82 %(b)
- ----------------------------------------------
Expense waiver/reimbursements (a) 0.18% 0.15% 0.22% 0.44% 0.46 %(b)
- ----------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------
Net assets, end of period (000 omitted) $791,147 $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.
** Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
PRIME CASH SERIES
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Cash Trust Series, Inc. (the "Corporation"), is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end management
investment company. The Corporation consists of four portfolios. The financial
statements included herein present only those of Prime Cash Series (the "Fund").
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.
Effective June 15, 1993, shareholders approved the reorganization of the Fund as
a portfolio of Cash Trust Series, Inc., a Maryland corporation.
(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. These
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 Act.
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 collateral to ensure the value at least equals the principal
amount of the repurchase agreement, including accrued interest.
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 Board of Directors ("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. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized as
required by the Internal Revenue Code, as amended (the "Code"). Distributions
to shareholders are recorded on the ex-dividend date.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its taxable income. Accordingly,
no provision for federal tax are necessary.
PRIME CASH SERIES
- --------------------------------------------------------------------------------
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. A Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis
are marked to market daily and begin earning interest on the settlement date.
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 the Fund's
commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At May 31, 1994, there were 12,500,000,000 shares of $0.001 par value capital
stock authorized. Capital paid in aggregated $791,147,071. Transactions in
capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
--------------------------------
1994 1993
- ------------------------------------------------------------- -------------- --------------
<S> <C> <C>
Shares sold 4,172,769,883 3,807,750,927
- -------------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 18,573,064 19,239,001
- -------------------------------------------------------------
Shares redeemed (4,197,027,389) (3,780,174,113)
- ------------------------------------------------------------- -------------- --------------
Net change resulting from capital stock transactions (5,684,442) 46,815,815
- ------------------------------------------------------------- -------------- --------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Advisers, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50 of 1% of the Fund's average daily net assets. The Adviser may voluntarily
choose to waive a portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with administrative personnel and services. Prior to March 1, 1994, these
services were provided at approximate cost. Effective March 1, 1994, the FAS fee
is based on the level of average aggregate daily net assets of all funds advised
by subsidiaries of Federated Investors for the period. The administrative fee
received during any fiscal year shall be at least $125,000 per portfolio and
$30,000 per each additional class of shares.
DISTRIBUTION AND SHAREHOLDER SERVICES FEES--The Fund has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the
Plan, the Fund will reimburse Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Fund to finance
PRIME CASH SERIES
- --------------------------------------------------------------------------------
activities intended to result in the sale of the Fund's shares. The Plan
provides that the Fund may incur distribution expenses up to 0.35 of 1% of the
average daily net assets of the shares, annually, to reimburse FSC.
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services ("FSS"), the Fund will pay FSS up to 0.25 of 1% of average net assets
of the Fund for the period. This fee is to obtain certain personal services for
shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT--Federated Services Company ("FServ")
serves as transfer and dividend disbursing agent for the Fund. The FServ fee is
based on the size, type and number of accounts and transactions made by
shareholders.
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Board of Directors of
CASH TRUST SERIES, INC. and Shareholders of
PRIME CASH SERIES:
We have audited the accompanying statement of assets and liabilities of Prime
Cash Series (one of the portfolios comprising Cash Trust Series, Inc.),
including the portfolio of investments, as of May 31, 1994, the related
statement of operations for the year then ended, the statement of changes in net
assets for the years ended May 31, 1994 and 1993 and the financial highlights
for each of the years in the five-year period ended May 31, 1994. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
May 31, 1994 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Prime Cash Series as
of May 31, 1994, the results of its operations, the changes in its net assets,
and its financial highlights for the respective stated periods in conformity
with generally accepted accounting principles.
DELOITTE & TOUCHE
Boston, Massachusetts
July 8, 1994
<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 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
- --------------------------------------------------------------------------------
TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUAL REPORT
TO SHAREHOLDERS
MAY 31, 1994
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
147551402
0122607 (7/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for Treasury Cash
Series (the "Fund"), which covers the twelve-month period ended May 31, 1994.
The report includes the Investment Review and Financial Statements, which
contain the Portfolio of Investments.
Treasury Cash Series pursues current income--along with the additional
advantages of daily liquidity and stability of principal*--through some of the
most stable investments available. The Fund's diversified portfolio may consist
of short-term U.S. Treasury obligations or repurchase agreements backed by these
obligations. Because of their yield advantage, repurchase agreements continued
to account for over 74% of the portfolio at the end of the reporting period.
At the end of the period, the Fund's net assets stood at $427 million. Dividends
paid to shareholders during the period totaled $11.3 million, or $0.02 per
share.
As always, we thank you for putting your cash to work through Treasury Cash
Series. Please contact your investment representative if you have any questions
about the Fund. We will continue to keep you up to date on your investment.
Sincerely,
Richard B. Fisher
President
July 15, 1994
* As a money market mutual fund, the Fund is managed to pursue a stable share
price of $1.00, although there is no guarantee that it will do so.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Treasury Cash Series (the "Fund"), which is rated AAAm by Standard & Poor's
Corporation and Aaa by Moody's Investors Service, Inc.*, 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 a
somewhat conservative average maturity of 30-40 days.
The reporting period brought the first changes in Federal Reserve (the "Fed")
policy since September, 1992. The Fed tightened monetary policy by increasing
the Federal Fund target rate from 3% to 4.25% over the period from February
through May. The moves were viewed as being preemptive strikes against the
threat of inflation by removing the stimulus that the Fed had been providing to
the economy through an overly accommodative policy stance. With inflation
apparently under control and economic growth slowing slightly, Fed policy
appears to be on hold temporarily at its current neutral stance. However, rising
capacity utilization rates, commodity prices, and other inflation measures may
prompt another tightening by the Fed sometime this summer in order to keep
inflation firmly in check.
Prior to the policy changes by the Fed, movements in short-term rates were
largely driven by market sentiment during the reporting period. The rate on the
three-month Treasury bill fell from 3.1% at the end of May, 1993, to 3.0% at the
end of September. The rate then rose to 3.2% by the end of November and then
returned to near 3% by the end of January. Once the Fed began tightening in
February, the three-month Treasury bill rate then rose steadily to 4.25% by the
end of May, 1994.
As 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.
Over the reporting period, the Fund's average maturity drifted shorter in the
face of the somewhat uncertain environment created by the Fed. In light of the
expectations of additional tightenings in monetary policy, the Fund is expected
to continue to maintain its conservative posture in the near future, while
maximizing performance through ongoing relative value analysis. However,
changing economic and market developments are continuously monitored to best
serve our clients attracted to the short-term U.S. government market.
* Ratings are subject to change.
TREASURY CASH SERIES
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
SHORT-TERM U.S. TREASURY OBLIGATIONS--25.6%
- ----------------------------------------------------------------------------------
U.S. TREASURY BILLS--9.3%
-----------------------------------------------------------------
$40,000,000 3.135%-4.55%, 7/7/94-4/6/95 $ 39,544,528
-----------------------------------------------------------------
U.S. TREASURY NOTES--16.3%
-----------------------------------------------------------------
69,151,000 4.25%-9.50%, 6/30/94-2/15/95 69,682,772
----------------------------------------------------------------- ------------
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 109,227,300
----------------------------------------------------------------- ------------
**REPURCHASE AGREEMENTS--74.6%
- ----------------------------------------------------------------------------------
20,000,000 BT Securities Corp., 4.30%, dated 5/31/94, due 6/1/94 20,000,000
-----------------------------------------------------------------
33,600,000 BZW Securities, Inc., 4.30%, dated 5/31/94, due 6/1/94 33,600,000
-----------------------------------------------------------------
20,000,000 Carroll McEntee & McGinley, Inc., 4.30%, dated 5/31/94, due
6/1/94 20,000,000
-----------------------------------------------------------------
20,000,000 Daiwa Securities America, Inc., 4.25%, dated 5/31/94, due 6/1/94 20,000,000
-----------------------------------------------------------------
20,000,000 Dean Witter Reynolds, Inc., 4.30%, dated 5/31/94, due 6/1/94 20,000,000
-----------------------------------------------------------------
20,000,000 Deutsche Bank Capital Corp., 4.30%, dated 5/31/94, due 6/1/94 20,000,000
-----------------------------------------------------------------
20,000,000 Donaldson, Lufkin & Jenrette Securities Corp., 4.25%, dated
5/31/94, due 6/1/94 20,000,000
-----------------------------------------------------------------
20,000,000 Fuji Government Securities, Inc., 4.25%, dated 5/31/94, due
6/1/94 20,000,000
-----------------------------------------------------------------
20,000,000 Harris Trust & Savings Bank, 4.30%, dated 5/31/94, due 6/1/94 20,000,000
-----------------------------------------------------------------
20,000,000 J.P. Morgan Securities, Inc., 4.27%, dated 5/31/94, due 6/1/94 20,000,000
-----------------------------------------------------------------
10,000,000 Kidder, Peabody & Co., Inc., 4.28%, dated 5/31/94, due 6/1/94 10,000,000
-----------------------------------------------------------------
20,000,000 NationsBank Corp., 4.24%, dated 5/31/94, due 6/1/94 20,000,000
-----------------------------------------------------------------
20,000,000 Nikko Securities International, Inc., 4.25%, dated 5/31/94, due
6/1/94 20,000,000
-----------------------------------------------------------------
20,000,000 Smith Barney, Harris Upham & Co., Inc., 4.35%, dated 5/31/94, due
6/1/94 20,000,000
-----------------------------------------------------------------
</TABLE>
TREASURY CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
**REPURCHASE AGREEMENTS--CONTINUED
- ----------------------------------------------------------------------------------
$20,000,000 UBS Securities, Inc., 4.30%, dated 5/31/94, due 6/1/94 $ 20,000,000
-----------------------------------------------------------------
8,000,000 * Merrill Lynch Government Securities, Inc., 4.25%, dated 5/6/94,
due 8/4/94 8,000,000
-----------------------------------------------------------------
7,000,000 * UBS Securities, Inc., 4.30%, dated 5/19/94, due 6/9/94 7,000,000
----------------------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS (NOTE 2B) 318,600,000
----------------------------------------------------------------- ------------
TOTAL INVESTMENTS, AT AMORTIZED COST (NOTE 2A) $427,827,300+
----------------------------------------------------------------- ------------
</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 if the creditworthiness of the issuer is
downgraded.
** 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
($427,005,384) at May 31, 1994.
(See Notes which are an integral part of the Financial Statements)
TREASURY CASH SERIES
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in repurchase agreements, (Note 2B) $318,600,000
- -----------------------------------------------------------------
Investments in other securities (Note 2A) 109,227,300
- ----------------------------------------------------------------- ------------
Total investments, at amortized cost and value $427,827,300
- --------------------------------------------------------------------------------
Interest receivable 1,285,490
- --------------------------------------------------------------------------------
Receivable for capital stock sold 2,139
- --------------------------------------------------------------------------------
Deferred expenses (Note 2F) 28,018
- -------------------------------------------------------------------------------- ------------
Total assets 429,142,947
- --------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------
Payable to Bank 940,101
- -----------------------------------------------------------------
Dividends payable 481,998
- -----------------------------------------------------------------
Payable for capital stock redeemed 451,215
- -----------------------------------------------------------------
Accrued expenses 264,249
- ----------------------------------------------------------------- ------------
Total liabilities 2,137,563
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 427,005,384 shares of capital stock outstanding $427,005,384
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share:
($427,005,384 / 427,005,384 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
YEAR ENDED MAY 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest income (Note 2C) $16,049,303
- ---------------------------------------------------------------------------------
EXPENSES--
- ---------------------------------------------------------------------------------
Investment advisory fee (Note 4) $2,413,838
- --------------------------------------------------------------------
Distribution fees (Note 4) 1,399,065
- --------------------------------------------------------------------
Directors' fees 5,895
- --------------------------------------------------------------------
Administrative personnel and services (Note 4) 441,499
- --------------------------------------------------------------------
Custodian and portfolio accounting fees 222,894
- --------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 222,676
- --------------------------------------------------------------------
Shareholder services fee (Note 4) 289,832
- --------------------------------------------------------------------
Capital stock registration costs 123,539
- --------------------------------------------------------------------
Auditing fees 14,615
- --------------------------------------------------------------------
Legal fees 11,182
- --------------------------------------------------------------------
Printing and postage 30,590
- --------------------------------------------------------------------
Insurance premiums 13,877
- --------------------------------------------------------------------
Taxes 60,007
- --------------------------------------------------------------------
Miscellaneous 5,180
- -------------------------------------------------------------------- ----------
Total expenses 5,254,689
- --------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 4) 475,263
- -------------------------------------------------------------------- ----------
Net expenses 4,779,426
- --------------------------------------------------------------------------------- -----------
Net investment income $11,269,877
- --------------------------------------------------------------------------------- -----------
</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 $ 11,269,877 $ 14,839,682
- ----------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- -----------------------------------------------------------
Dividends to shareholders from net investment income (11,269,877) (14,839,682)
- ----------------------------------------------------------- --------------- ---------------
CAPITAL STOCK TRANSACTIONS (NOTE 3)--
- -----------------------------------------------------------
Proceeds from sale of shares 2,488,576,649 2,890,908,923
- -----------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 9,258,121 11,631,542
- -----------------------------------------------------------
Cost of shares redeemed (2,603,163,599) (3,008,967,716)
- ----------------------------------------------------------- --------------- ---------------
Change in net assets from capital stock transactions (105,328,829) (106,427,251)
- ----------------------------------------------------------- --------------- ---------------
Change in net assets (105,328,829) (106,427,251)
- -----------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------
Beginning of period 532,334,213 638,761,464
- ----------------------------------------------------------- --------------- ---------------
End of period $ 427,005,384 $ 532,334,213
- ----------------------------------------------------------- --------------- ---------------
</TABLE>
(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 0.02 0.02 0.04 0.07 0.02
- --------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------
Dividends to shareholders from net
investment income (0.02) (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** 2.37% 2.47% 4.24% 6.83% 2.42%
- --------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------
Expenses 0.99% 0.99% 0.98% 0.88% 0.60%(b)
- --------------------------------------------
Net investment income 2.33% 2.46% 4.18% 6.39% 7.75%(b)
- --------------------------------------------
Expense waiver/reimbursement (a) 0.10% 0.04% 0.04% 0.22% 0.44%(b)
- --------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------
Net assets, end of period (000 omitted) $427,005 $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.
** Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
TREASURY CASH SERIES
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Cash Trust Series, Inc. (the "Corporation"), is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end management
investment company. The Corporation consists of four portfolios. The financial
statements included herein present only those of Treasury Cash Series (the
"Fund"). 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.
Effective June 15, 1993, shareholders approved the reorganization of the Fund as
a portfolio of Cash Trust Series, Inc., a Maryland corporation.
(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. These
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 Act.
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 collateral to ensure the value at least equals the principal
amount of the repurchase agreement, including accrued interest.
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 Board of Directors ("Directors").
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized as
required by the Internal Revenue Code, as amended (the "Code"). Distributions
to shareholders are recorded on the ex-dividend date.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its taxable income. Accordingly,
no provisions for federal tax are necessary.
TREASURY CASH SERIES
- --------------------------------------------------------------------------------
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. A Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis
are marked to market daily and begin earning interest on the settlement date.
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 the Fund's
commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At May 31, 1994, there were 12,500,000,000 shares of $0.001 par value capital
stock authorized. Capital paid in aggregated $427,005,384. Transactions in
capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
---------------------------------
1994 1993
- ------------------------------------------------------------ -------------- --------------
<S> <C> <C>
Shares sold 2,488,576,649 2,890,908,923
- ------------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 9,258,121 11,631,542
- ------------------------------------------------------------
Shares redeemed (2,603,163,599) (3,008,967,716)
- ------------------------------------------------------------ -------------- --------------
Net change resulting from capital stock transactions (105,328,829) (106,427,251)
- ------------------------------------------------------------ -------------- --------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Advisers, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50 of 1% of the Fund's average daily net assets. The Adviser may voluntarily
choose to waive a portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with administrative personnel and services. Prior to March 1, 1994, these
services were provided at approximate cost. Effective March 1, 1994, the FAS fee
is based on the level of average aggregate daily net assets of all funds advised
by subsidiaries of Federated Investors for the period. The administrative fee
received during any fiscal year shall be at least $125,000 per portfolio and
$30,000 per each additional class of shares.
DISTRIBUTION AND SHAREHOLDER SERVICES FEES--The Fund has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the
Plan, the Fund will reimburse Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Fund to finance
TREASURY CASH SERIES
- --------------------------------------------------------------------------------
activities intended to result in the sale of the Fund's shares. The Plan
provides that the Fund may incur distribution expenses up to 0.35 of 1% of the
average daily net assets of the shares, annually, to reimburse FSC.
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services ("FSS"), the Fund will pay FSS up to 0.25 of 1% of average net assets
of the Fund for the period. This fee is to obtain certain personal services for
shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT--Federated Services Company ("FServ")
serves as transfer and dividend disbursing agent for the Fund. The FServ fee is
based on the size, type and number of accounts and transactions made by
shareholders.
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Board of Directors of
CASH TRUST SERIES, INC. and Shareholders of
TREASURY CASH SERIES:
We have audited the accompanying statement of assets and liabilities of Treasury
Cash Series (one of the portfolios comprising Cash Trust Series, Inc.),
including the portfolio of investments, as of May 31, 1994, the related
statement of operations for the year then ended, the statement of changes in net
assets for the years ended May 31, 1994 and 1993, and the financial highlights
for each of the years in the five-year period ended May 31, 1994. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
May 31, 1994 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Treasury Cash Series
as of May 31, 1994, the results of its operations, the changes in its net assets
and its financial highlights for the respective stated periods in conformity
with generally accepted accounting principles.
DELOITTE & TOUCHE
Boston, Massachusetts
July 8, 1994
<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 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.
