- --------------------------------------------------------------------------------
TREASURY
- --------------------------------------------------------------------------------
CASH
- --------------------------------------------------------------------------------
SERIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
NOVEMBER 30, 1994
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
147551402
0122607 (1/95)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Treasury Cash
Series (the "Fund"), which covers the six-month period ended November 30, 1994.
The report includes the Investment Review and Financial Statements, which
contain the Portfolio of Investments.
During the reporting period, the Fund helped your cash earn $0.02 in dividends
per share, while offering the advantages of daily liquidity and stability of
principal.*
At the end of the report period, 79% of the Fund's $457 million in assets was
invested in repurchase agreements backed by U.S. government securities because
these securities offered yield advantage over many direct government securities.
The remainder of the Fund's assets were invested in direct U.S. Treasury bills
and notes.
Thank you for choosing the Fund as a convenient way to put your cash to work
earning income from U.S. Treasury obligations. Please contact your investment
representative if you have any questions about the Fund.
Sincerely,
Richard B. Fisher
President
January 15, 1995
* No money market mutual fund can guarantee that a stable net asset value will
be maintained. An investment in the Fund is neither insured nor guaranteed by
the U.S. government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Treasury Cash Series (the "Fund"), which is rated AAAm by Standard & Poor's
Ratings Group and Aaa by Moody's Investors Services, 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.
During the reporting period, the Federal Reserve Board (the "Fed") continued its
restrictive interest rate stance. The Fed tightened monetary policy by
increasing the Fed Funds target rate from 4.25% to 5.50% over the period.
Despite the continued low inflationary environment, solid economic growth,
growing employment rolls and capacity constraints would point toward another
increase to the targeted Fed Funds rate early in 1995.
Movements in short rates were largely driven by fear of an overheating economy
and the resultant inflationary pressures during the reporting period. The rate
on the three-month Treasury bill rose from 4.3% at the end of May 1994, to 5.4%
at the end of November, reflecting the Federal Reserve's restrictive stance.
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 was maintained on the
defensive end of its range. 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.
* These ratings are obtained after Standard and Poor's and Moody's evaluate a
number of factors, including credit quality, market price exposure, and
management. They monitor the portfolio weekly for developments that could
cause changes in ratings.
TREASURY CASH SERIES
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
SHORT-TERM U.S. TREASURY OBLIGATIONS--21.0%
- ----------------------------------------------------------------------------------
U.S. TREASURY BILLS--12.7%
----------------------------------------------------------------
$59,000,000 3.60%-5.62%, 1/5/95-9/21/95 $ 57,866,603
----------------------------------------------------------------
U.S. TREASURY NOTES--8.3%
----------------------------------------------------------------
38,000,000 3.875%-8.50%, 12/31/94-7/31/95 38,038,699
---------------------------------------------------------------- ------------
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 95,905,302
---------------------------------------------------------------- ------------
*REPURCHASE AGREEMENTS--79.3%
- ----------------------------------------------------------------------------------
20,000,000 Bank of Tokyo LTD, 5.75%, dated 11/30/94, due 12/01/94 20,000,000
----------------------------------------------------------------
20,000,000 BT Securities Corp., 5.78%, dated 11/30/94, due 12/01/94 20,000,000
----------------------------------------------------------------
38,300,000 BZW Securities, Inc., 5.72%, dated 11/30/94, due 12/01/94 38,300,000
----------------------------------------------------------------
5,000,000 Chase Manhattan Bank, 5.70%, dated 11/30/94, due 12/01/94 5,000,000
----------------------------------------------------------------
20,000,000 Chemical Securities Inc., 5.72%, dated 11/30/94, due 12/01/94 20,000,000
----------------------------------------------------------------
15,000,000 Daiwa Securities America, Inc., 5.72%, dated 11/30/94, due
12/01/94 15,000,000
----------------------------------------------------------------
20,000,000 Deutsche Bank Capital Corp., 5.77%, dated 11/30/94, due 12/01/94 20,000,000
----------------------------------------------------------------
20,000,000 Donaldson, Lufkin & Jenrette Securities Corp., 5.70%, dated
11/30/94, due 12/01/94 20,000,000
----------------------------------------------------------------
20,000,000 First Chicago Capital Markets, 5.71%, dated 11/30/94, due
12/01/94 20,000,000
----------------------------------------------------------------
20,000,000 Fuji Securities, Inc., 5.72%, dated 11/30/94, due 12/01/94 20,000,000
----------------------------------------------------------------
20,000,000 Harris Trust & Savings Bank, 5.77%, dated 11/30/94, due 12/01/94 20,000,000
----------------------------------------------------------------
20,000,000 HSBC Securities, Inc., 5.80%, dated 11/30/94, due 12/01/94 20,000,000
----------------------------------------------------------------
20,000,000 J.P. Morgan Securities, Inc., 5.77%, dated 11/30/94, due
12/01/94 20,000,000
----------------------------------------------------------------
20,000,000 NCNB Corp., 5.73%, dated 11/30/94, due 12/01/94 20,000,000
----------------------------------------------------------------
20,000,000 Nikko Securities Co. International, Inc., 5.72%, dated 11/30/94,
due 12/01/94 20,000,000
----------------------------------------------------------------
4,000,000 State Street Bank & Trust Co., 5.74%, dated 11/30/94, due
12/01/94 4,000,000
----------------------------------------------------------------
</TABLE>
TREASURY CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
*REPURCHASE AGREEMENTS--CONTINUED
- ----------------------------------------------------------------------------------
$20,000,000 UBS Securities, Inc., 5.77%, dated 11/30/94, due 12/01/94 $ 20,000,000
----------------------------------------------------------------
6,000,000 ** Daiwa Securities America, Inc., 5.25%, dated 11/09/94, due
12/20/94 6,000,000
----------------------------------------------------------------
10,000,000 ** First Boston Corp., 5.08%, dated 11/04/94, due 12/05/94 10,000,000
----------------------------------------------------------------
9,000,000 ** Merrill Lynch, Pierce, Fenner & Smith, Inc., 5.20%, dated
10/28/94, due 12/27/94 9,000,000
----------------------------------------------------------------
9,000,000 ** Morgan Stanley & Co., Inc., 5.47%, dated 11/07/94, due 12/12/94 9,000,000
----------------------------------------------------------------
6,000,000 ** Morgan Stanley & Co., Inc., 5.46%, dated 11/25/94, due 12/20/94 6,000,000
---------------------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS 362,300,000
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS AT AMORTIZED COST $458,205,302+
---------------------------------------------------------------- ------------
</TABLE>
* 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.
** 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.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($457,031,753) at November 30, 1994.
(See Notes which are an integral part of the Financial Statements)
TREASURY CASH SERIES
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in repurchase agreements $362,300,000
- -----------------------------------------------------------------
Investments in other securities 95,905,302
- ----------------------------------------------------------------- ------------
Total investments, at amortized cost and value $458,205,302
- --------------------------------------------------------------------------------
Interest receivable 632,792
- --------------------------------------------------------------------------------
Deferred expenses 8,006
- -------------------------------------------------------------------------------- ------------
Total assets 458,846,100
- --------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------
Payable for capital stock redeemed 923,423
- -----------------------------------------------------------------
Dividends payable 682,741
- -----------------------------------------------------------------
Payable to bank 70,590
- -----------------------------------------------------------------
Accrued expenses 137,593
- ----------------------------------------------------------------- ------------
Total liabilities 1,814,347
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 457,031,753 shares of capital stock outstanding $457,031,753
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
($457,031,753 / 457,031,753 shares of capital stock outstanding) $1.00
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TREASURY CASH SERIES
STATEMENT OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest income $10,144,647
- ---------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------
Investment advisory fee $1,098,629
- --------------------------------------------------------------------
Distribution services fees 219,726
- --------------------------------------------------------------------
Directors' fees 2,813
- --------------------------------------------------------------------
Administrative personnel and services 166,333
- --------------------------------------------------------------------
Custodian and portfolio accounting fees 100,124
- --------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 122,152
- --------------------------------------------------------------------
Shareholder services fee 549,315
- --------------------------------------------------------------------
Capital stock registration costs 39,313
- --------------------------------------------------------------------
Auditing fees 7,430
- --------------------------------------------------------------------
Legal fees 5,627
- --------------------------------------------------------------------
Printing and postage 14,606
- --------------------------------------------------------------------
Insurance premiums 6,335
- --------------------------------------------------------------------
Taxes 28,810
- --------------------------------------------------------------------
Miscellaneous 2,802
- -------------------------------------------------------------------- ----------
Total expenses 2,364,015
- --------------------------------------------------------------------
Deduct--Waiver of investment advisory fee 188,729
- -------------------------------------------------------------------- ----------
Net expenses 2,175,286
- --------------------------------------------------------------------------------- -----------
Net investment income $ 7,969,361
- --------------------------------------------------------------------------------- -----------
</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>
1995* 1994
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------
Net investment income $ 7,969,361 $ 11,269,877
- ----------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------
Dividends to shareholders from net investment income (7,969,361) (11,269,877)
- ----------------------------------------------------------- --------------- ---------------
CAPITAL STOCK TRANSACTIONS--
- -----------------------------------------------------------
Proceeds from sale of shares 1,166,722,263 2,488,576,649
- -----------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 6,215,349 9,258,121
- -----------------------------------------------------------
Cost of shares redeemed (1,142,911,243) (2,603,163,599)
- ----------------------------------------------------------- --------------- ---------------
Change in net assets resulting from capital stock
transactions 30,026,369 (105,328,829)
- ----------------------------------------------------------- --------------- ---------------
Change in net assets 30,026,369 (105,328,829)
- -----------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------
Beginning of period 427,005,384 532,334,213
- ----------------------------------------------------------- --------------- ---------------
End of period $ 457,031,753 $ 427,005,384
- ----------------------------------------------------------- --------------- ---------------
</TABLE>
* Six months ended November 30, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
TREASURY CASH SERIES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
------------------------------------------------------------------
1995** 1994 1993 1992 1991 1990*
------ ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------
Net investment income 0.02 0.02 0.02 0.04 0.07 0.02
- ------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------
Dividends to shareholders from net
investment income (0.02) (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 $1.00
- ------------------------------------ ----- ----- ----- ----- ----- -----
TOTAL RETURN*** 1.82% 2.37% 2.47% 4.24% 6.83% 2.42%
- ------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------
Expenses 0.99%(b) 0.99% 0.99% 0.98% 0.88% 0.60%(b)
- ------------------------------------
Net investment income 3.63%(b) 2.33% 2.46% 4.18% 6.39% 7.75%(b)
- ------------------------------------
Expense waiver/reimbursement (a) 0.09%(b) 0.10% 0.04% 0.04% 0.22% 0.44%(b)
- ------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------
Net assets, end of period (000
omitted) $457,032 $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.
** For the six months ended November 30, 1994 (unaudited).
*** 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.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
TREASURY CASH SERIES
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(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, diversified 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.
(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 that the value of collateral 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 (the "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.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and
TREASURY CASH SERIES
- --------------------------------------------------------------------------------
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 not to exceed a period of five years from the
Fund's commencement date.
G. FORWARD TRADE COMMITMENTS--At November 30, 1994, the Fund was under agreement
to enter into the following repurchase agreements:
$4,000,000 Sanwa-BGK Securities, Co. 7.50%, dated 12/30/94, due 1/3/95
$3,000,000 Smith Barney, Inc. 8.00%, dated 12/30/94, due 1/3/95
$7,000,000 Harris Trust & Savings Bank 7.30%, dated 12/30/94, due
1/3/95
These repurchase agreements were made in the normal course of business and
are subject to the Fund's general investment restrictions regarding
creditworthiness and collateralization levels. The contracts were executed on
December 30, 1994. The fair value of the forward commitments approximates the
contract amounts at November 30, 1994.
H. OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At November 30, 1994, there were 12,500,000,000 shares of $0.001 par value
capital stock authorized. Capital paid in aggregated $457,031,753. Transactions
in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
---------------------------------
1995* 1994
- ------------------------------------------------------------ -------------- --------------
<S> <C> <C>
Shares sold 1,166,722,263 2,488,576,649
- ------------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 6,215,349 9,258,121
- ------------------------------------------------------------
Shares redeemed (1,142,911,243) (2,603,163,599)
- ------------------------------------------------------------ -------------- --------------
Net change resulting from capital stock transactions 30,026,369 (105,328,829)
- ------------------------------------------------------------ -------------- --------------
</TABLE>
* Six months ended November 30, 1994.
(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
.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.
TREASURY CASH SERIES
- --------------------------------------------------------------------------------
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
administrative personnel and services. The FAS fee is based on the level of
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received during the
period of the Administrative Services Agreement shall be at least $125,000 per
portfolio and $30,000 per each additional class of shares.
DISTRIBUTION AND SHAREHOLDER SERVICES FEE--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 .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 .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 FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. The
FServ fee is based on the size, type and number of accounts and transactions
made by shareholders.
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
<TABLE>
<S> <C>
DIRECTORS OFFICERS
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Richard B. Fisher
William J. Copeland President
J. Christopher Donahue J. Christopher Donahue
James E. Dowd Vice President
Lawrence D. Ellis, M.D. Edward C. Gonzales
Edward L. Flaherty, Jr. Vice President and Treasurer
Peter E. Madden John W. McGonigle
Gregor F. Meyer Vice President and Secretary
Wesley W. Posvar David M. Taylor
Marjorie P. Smuts Assistant Treasurer
Charles H. Field
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risks,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
- --------------------------------------------------------------------------------
MUNICIPAL
- --------------------------------------------------------------------------------
CASH
- --------------------------------------------------------------------------------
SERIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
NOVEMBER 30, 1994
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
147551303
0122605 (1/95)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Municipal
Cash Series (the "Fund"), which covers the six-month period ended November 30,
1994. The report includes the Investment Review and Financial Statements, which
contain the Portfolio of Investments.
During the period, the Fund helped your cash earn $0.01 per share in dividends
exempt from federal regular income tax,* with the advantages of daily liquidity
and stability of principal.**
At the end of the period, the Fund's $475.3 million in assets was invested in a
diversified portfolio of short-term securities issued by municipalities across
37 states.
Thank you for choosing the Fund as a convenient way to put your cash to work.
Please contact your investment representative if you have any questions about
the Fund.
Sincerely,
Richard B. Fisher
President
January 15, 1995
* Income may be subject to the federal alternative minimum tax and state and
local taxes.
** No money market mutual fund can guarantee that a stable net asset value will
be maintained. An investment in the Fund is neither insured nor guaranteed by
the U.S. government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
An Interview with Fund Portfolio Manager Mary Jo Ochson
Q Recently, there has been a lot of concern, as well as press coverage, about
the subject of derivatives. What are derivatives?
A The term "derivative" has been applied to many different types of
investments. In the context of money market funds, derivatives generally
refer to adjustable rate securities designed for speculation on changes in
interest rates. These speculative derivatives provide above-market yields when
interest rates fall or remain stable, or when the yield curve is steep. They
provide below-market yields, however, when interest rates rise or become more
volatile, or when the yield curve flattens. All three of these latter conditions
occurred in 1994. As a result, many of these speculative securities lost a
significant part of their value, enough to threaten the $1.00 per share price of
some money market funds.
It is important to distinguish these speculative derivatives from adjustable
rate securities that are indexed to money market interest rates. These indexed
securities are designed to track changes in market rates, and should approximate
their par value in reasonably foreseeable market conditions. Tax-exempt money
market funds like the Fund have the right to tender many of these securities for
purchase at their par value. Money market funds have used these securities for
decades, through several interest rate cycles, without jeopardizing their stable
net asset values.
Q Do money market funds advised by Federated Investors ("Federated") invest
in the derivatives that have been in the headlines recently?
A No. None of the money market funds advised by Federated has invested in any
of the types of derivatives that have been in the headlines lately. Our
mutual funds only invest in adjustable rate securities that track changes
in money market interest rates.
With respect to speculative derivatives, we determined from the outset that the
potential volatility of these securities was contrary to the intent of the rules
governing the use of variable rate securities by money market funds. We also
realized the potential for these securities to deviate significantly from par
and threaten the $1.00 per share price of a money market fund. We spoke out
against the use of these securities by money market funds at industry
conferences throughout 1993, when the securities still offered attractive
yields. Our views were vindicated when, in June, 1994, the Securities and
Exchange Commission sent a letter to the Investment Company Institute requiring
money market funds to divest themselves of these securities in an orderly
manner.
- --------------------------------------------------------------------------------
Q What happened to short-term interest rates over the past year?
A There was a dramatic shift in the monetary policy of the Federal Reserve
Board (the "Fed") during the 12 months preceding November 30, 1994.
Throughout the fourth quarter of 1993, the Fed kept the Federal funds rate (the
rate banks charge each other for overnight loans) steady at 3.00%, where it had
been for a year and a half. The Fed had maintained short-term interest rates at
these low levels in order to stimulate the economy. However, in early 1994,
reports began to show stronger than anticipated economic growth. Real Gross
National Product grew at a 7.00% annual rate in the fourth quarter of 1993, and
the national unemployment rate declined to 6.00%. Concerned that these factors
could lead to an increase in wages and prices, the Fed took the first step on
February 4, 1994, to fight future inflation by raising its Federal funds rate
target to 3.25%. Since then, the Fed has continued to be aggressive, moving the
Federal funds rate target upward five more times from 3.25% to 5.50%.
Q How did municipal money market yields react to these rate increases?
A Municipal money market interest rates followed the upward movement in
taxable rates but to a slightly lesser degree, as they are affected by
federal, state and local tax factors as well as market supply and demand
imbalances.
The Fund's yields have proven to be responsive to the increases in money market
rates. As of November 30, 1994, the Fund's tax-free, annualized seven-day net
yield was 2.94%.* This was equivalent to a taxable yield of 4.87% for those
investors subject to the highest federal and state tax brackets.** These numbers
illustrate the Fund's attractiveness relative to taxable investments.
* Performance quoted represents past performance and is not indicative of
future results. Yields will vary.
** These numbers assume that state income taxes are fully deductible in
computing federal income tax liability.
- --------------------------------------------------------------------------------
Q What is your outlook for the markets and the Fund?
A The economy continues to show surprising resilience to the Fed's attempts
to bring growth under control. We expect that the Fed will act again to
tighten monetary policy in the first quarter of 1995. At that point in
time, the Federal funds target could be as high as 6.50%. As a result, we plan
to maintain a conservative posture in the near future, while attempting to
maximize performance through ongoing relative value analysis. However, we will
continue to monitor changing economic and market developments so as to serve our
clients attracted to the short-term tax-exempt securities market. In this
environment, stable net asset value money market funds like the Fund will
continue to be an important component in preserving capital, and should reflect
rising short-term interest rates with increasing net yields.
Q On December 6, 1994, the Board of Supervisors of Orange County, California
filed a Bankruptcy Petition under Chapter 9 of the Bankruptcy Code on
behalf of the county and the county investment pool. What effect does this
petition have on the Fund?
A The Fund has no exposure to obligations of Orange County, California.
Additionally, we do not have any exposure to the other 100+ Orange County
municipalities that are participants in the Orange County pool. Therefore,
the Orange County Bankruptcy Petition does not present a threat to the $1.00 per
share net asset value of the Fund.
MUNICIPAL CASH SERIES
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--100.2%
- ---------------------------------------------------------------------
ALABAMA--0.5%
------------------------------------------------------
$ 500,000 Hoover, AL, IDA Weekly VRDNs (Bud's Best
Cookies, Inc.)/(SouthTrust Bank of Alabama LOC)/
(Subject to AMT) P-1 $ 500,000
------------------------------------------------------
285,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell
Manufacturing)/(SouthTrust Bank of Alabama LOC)/
(Subject to AMT) P-1 285,000
------------------------------------------------------
325,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell
Manufacturing)/(SouthTrust Bank of Alabama LOC)/
(Subject to AMT) P-1 325,000
------------------------------------------------------
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
------------------------------------------------------
345,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell
Manufacturing)/(SouthTrust Bank of Alabama LOC)/
(Subject to AMT) P-1 345,000
------------------------------------------------------ ------------
Total 2,220,000
------------------------------------------------------ ------------
ARKANSAS--4.0%
------------------------------------------------------
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
------------------------------------------------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
ARKANSAS--CONTINUED
------------------------------------------------------
$ 7,500,000 Siloam Springs, AR, IDRB Weekly VRDNs (Series 1994)/
(Lazy Boy Chair Co.)/(NBD Bank N.A. LOC)/
(Subject to AMT) P-1 $ 7,500,000
------------------------------------------------------
6,000,000 Springdale, AR, IDA Weekly VRDNs (Newly Food)/ (Mellon
Bank N.A. LOC)/(Subject to AMT) VMIG1 6,000,000
------------------------------------------------------ ------------
Total 18,900,000
------------------------------------------------------ ------------
CALIFORNIA--3.2%
------------------------------------------------------
3,465,000 Los Angeles County, CA, SFM Housing Authority, 4.00%
Semi-Annual TOBs (GNMA Collateralized)/(Meridian Bank
BPA)/(Subject to AMT), Optional Tender 6/1/95 NR(1) 3,465,000
------------------------------------------------------
10,000,000 San Bernardino County, CA, 4.50% TRANs, 7/31/95 SP-1+ 10,038,064
------------------------------------------------------
1,760,000 San Francisco, CA, Redevelopment Finance Agency Weekly
VRDNs (St. Francis Place)/(Mitsubishi Trust & Banking
Corp. Ltd. LOC) VMIG2 1,760,000
------------------------------------------------------ ------------
Total 15,263,064
------------------------------------------------------ ------------
COLORADO--1.0%
------------------------------------------------------
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
------------------------------------------------------ ------------
DELAWARE--2.2%
------------------------------------------------------
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
------------------------------------------------------
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
------------------------------------------------------ ------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
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<CAPTION>
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RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
FLORIDA--0.1%
------------------------------------------------------
$ 400,000 Hillsborough County, FL, IDA Weekly VRDNs (SIFCO
Turbine Component Service)/(Series 1992)/(National
City Bank, Cleveland LOC)/(Subject to AMT) P-1 $ 400,000
------------------------------------------------------
100,000 Jacksonville, FL, Weekly VRDNs (Metal Sales
Manufacturing)/(First National Bank, Louisville LOC)/
(Subject to AMT) P-1 100,000
------------------------------------------------------ ------------
Total 500,000
------------------------------------------------------ ------------
GEORGIA--2.2%
------------------------------------------------------
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
------------------------------------------------------
4,700,000 Gwinnett County, GA, IDA Daily VRDNs (Volvo of
America, Inc.)/(Union Bank of Switzerland LOC)/
(Subject to AMT) P-1 4,700,000
------------------------------------------------------ ------------
Total 10,430,000
------------------------------------------------------ ------------
ILLINOIS--1.6%
------------------------------------------------------
3,700,000 Chicago, IL, Gas Supply, 4.95% Annual TOBs (Series
1993B)/(Peoples Gas Light & Coke Company)/(Subject to
AMT), Mandatory Tender 12/1/95 VMIG1 3,700,000
------------------------------------------------------
1,100,000 Chicago, IL, O'Hare International Airport Weekly VRDNs
(Series 1988B)/(General Airport)/(Sanwa Bank Ltd.
LOC)/(Subject to AMT) VMIG1 1,100,000
------------------------------------------------------
1,400,000 Illinois Development Finance Authority Weekly VRDNs
(Techisand, Inc.)/(National City Bank, Cleveland LOC)/
(Subject to AMT) P-1 1,400,000
------------------------------------------------------
</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
- ---------------------------------------------------------------------
ILLINOIS--CONTINUED
------------------------------------------------------
$ 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 7,700,000
------------------------------------------------------ ------------
INDIANA--6.2%
------------------------------------------------------
1,705,000 Avilla, IN, IDR Weekly VRDNs (Group Dekko
International, Inc.)/(Bank One, Indianapolis N.A. LOC) P-1 1,705,000
------------------------------------------------------
2,420,000 Crown Point, IN, IDA Weekly VRDNs
(D & M Manufacturing, Inc.)/(First National Bank of
Louisville LOC)/(Subject to AMT) P-1 2,420,000
------------------------------------------------------
1,600,000 Franklin, IN, Economic Development Refunding Weekly
VRDNs (Series 1994)/(Federal Home Loan Bank of
Indianapolis LOC)/(Subject to AMT) VMIG1 1,600,000
------------------------------------------------------
5,000,000 Greencastle, IN, IDA Weekly VRDNs (HA Parts Products,
Inc.)/(Fuji Bank Ltd. LOC)/(Subject to AMT) VMIG1 5,000,000
------------------------------------------------------
3,140,000 Huntingburg, IN, Weekly VRDNs (Series 1993)/(DMI
Furniture, Inc.)/(Bank One, Indianapolis LOC)/(Subject
to AMT) P-1 3,140,000
------------------------------------------------------
2,940,000 Huntingburg, IN, Weekly VRDNs (Series 1993)/(DMI
Furniture, Inc.)/(Bank One, Indianapolis LOC)/(Subject
to AMT) P-1 2,940,000
------------------------------------------------------
3,020,000 Indianapolis, IN, IDR Weekly VRDNs (Series 1991)/
(Cantor & Coleman II)/(Bank One, Indianapolis N.A.
LOC)/(Subject to AMT) P-1 3,020,000
------------------------------------------------------
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
------------------------------------------------------
3,300,000 Tippecanoe County, IN, EDR Weekly VRDNs (Lafayette
Venetian Blind, Inc.)/(PNC Bank, Ohio N.A. LOC)/
(Subject to AMT) P-1 3,300,000
------------------------------------------------------
</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 29,395,000
------------------------------------------------------ ------------
IOWA--1.2%
------------------------------------------------------
3,500,000 Des Moines, IA, IDR Weekly VRDNs (Series 1994)/
(The Printer, Inc.)/(Norwest Bank Minnesota LOC)/
(Subject to AMT) A-1+ 3,500,000
------------------------------------------------------
2,330,000 Iowa Finance Authority IDRB Weekly VRDNs (Series
1994)/(V-T Industries, Inc.)/(Norwest Bank Minnesota
LOC)/(Subject to AMT) P-1 2,330,000
------------------------------------------------------ ------------
Total 5,830,000
------------------------------------------------------ ------------
KANSAS--2.0%
------------------------------------------------------
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--6.4%
------------------------------------------------------
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, 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
------------------------------------------------------
</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
- ---------------------------------------------------------------------
KENTUCKY--CONTINUED
------------------------------------------------------
$ 2,380,000 Jefferson County, KY, IDR Weekly VRDNs (Series 1991)/
(Findley Adhesives Company)/(Bank One, Columbus N.A.
LOC)/(Subject to AMT) P-1 $ 2,380,000
------------------------------------------------------
2,100,000 Jefferson County, KY, Weekly VRDNs (Gateway Press,
Inc.)/(PNC Bank, Kentucky LOC)/(Subject to AMT) P-1 2,100,000
------------------------------------------------------
2,000,000 Kentucky Pollution Abatement and Water Resource
Finance Authority Daily VRDNs (Toyota Motor Corp.
Guaranty)/(Subject to AMT) A-1+ 2,000,000
------------------------------------------------------
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
------------------------------------------------------
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, 4.10% Semi-Annual TOBs (Sumitomo
Electric Wiring Systems)/(Sumitomo Bank Ltd. LOC)/
(Subject to AMT), Optional Tender 5/1/95 A-1 6,000,000
------------------------------------------------------ ------------
Total 30,260,000
------------------------------------------------------ ------------
MAINE--1.5%
------------------------------------------------------
3,575,000 Lewiston, ME, IDA Weekly VRDNs (Geiger Brothers)/
(Fleet National Bank LOC)/(Subject to AMT) P-1 3,575,000
------------------------------------------------------
3,470,000 Maine Finance Authority, IDRB Weekly VRDNs (Series
1992)/(Pride Management Company)/(Bank One, Milwaukee
LOC)/(Subject to AMT) P-1 3,470,000
------------------------------------------------------ ------------
Total 7,045,000
------------------------------------------------------ ------------
</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--4.2%
------------------------------------------------------
$ 3,450,000 Anne Arundel County, MD, EDRB, 3.35% CP (Series
1988)/(Baltimore Gas & Electric Co. Guaranty)/
(Subject to AMT), Mandatory Tender 12/13/94 A-1 $ 3,450,000
------------------------------------------------------
4,760,000 Anne Arundel County, MD, EDRB, 3.70% CP (Series
1988)/(Baltimore Gas & Electric Co. Guaranty)/
(Subject to AMT), Mandatory Tender 12/9/94 A-1 4,760,000
------------------------------------------------------
3,645,000 Baltimore, MD, Weekly VRDNs (Series 1988)/(Cherill
Associates Facility)/(Nationsbank of Maryland LOC)/
(Subject to AMT) P-1 3,645,000
------------------------------------------------------
4,525,000 Maryland State CDA Weekly VRDNs (Series 1990B)/
(Cherry Hill Apartment Ltd.)/(Nationsbank of Maryland
LOC)/(Subject to AMT) P-1 4,525,000
------------------------------------------------------
3,400,000 Maryland State Community Development Department Single
Family Housing, 3.40% Annual TOBs (Third Series
1994)/(Subject to AMT), Mandatory Tender 3/30/95 VMIG1 3,400,000
------------------------------------------------------ ------------
Total 19,780,000
------------------------------------------------------ ------------
MASSACHUSETTS--4.1%
------------------------------------------------------
8,000,000 Gloucester, MA, 4.33% BANs, 9/22/95 NR(4) 8,001,810
------------------------------------------------------
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
------------------------------------------------------
4,000,000 Springfield, MA, 4.75% BANs (Fleet National Bank LOC),
8/4/95 P-1 4,011,680
------------------------------------------------------
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
------------------------------------------------------
3,245,000 Worchester, MA, 5.00% BANs, 8/31/95 NR(4) 3,258,970
------------------------------------------------------ ------------
Total 19,442,460
------------------------------------------------------ ------------
</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
- ---------------------------------------------------------------------
MICHIGAN--3.0%
------------------------------------------------------
$ 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
------------------------------------------------------
2,000,000 Michigan State Strategic Fund Weekly VRDNs
(Tesco Engineering Co.)/(Bank of Tokyo Ltd. LOC) VMIG1 2,000,000
------------------------------------------------------
5,300,000 Michigan State Strategic Fund Weekly VRDNs
(Tesco Engineering Co.)/(Bank of Tokyo Ltd. LOC) VMIG1 5,300,000
------------------------------------------------------ ------------
Total 14,135,000
------------------------------------------------------ ------------
MINNESOTA--1.9%
------------------------------------------------------
5,280,000 Byron, MN, IDB Weekly VRDNs (Schmidt Printing, Inc.)/
(Norwest Bank Minnesota LOC)/(Subject to AMT) A-1+ 5,280,000
------------------------------------------------------
925,000 Plymouth, MN, Weekly VRDNs (Nuaire, Inc.)/(Norwest
Bank Minnesota LOC)/(Subject to AMT) P-1 925,000
------------------------------------------------------
3,025,000 St. Paul, MN, Port Authority Weekly VRDNs
(H.M. Smyth Co., Inc.)/(Norwest Bank, Minnesota LOC) A-1+ 3,025,000
------------------------------------------------------ ------------
Total 9,230,000
------------------------------------------------------ ------------
MISSISSIPPI--2.5%
------------------------------------------------------
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
------------------------------------------------------
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
------------------------------------------------------
</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
- ---------------------------------------------------------------------
MISSISSIPPI--CONTINUED
------------------------------------------------------
$ 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 11,950,000
------------------------------------------------------ ------------
MISSOURI--1.6%
------------------------------------------------------
1,200,000 Missouri Export and Infrastructure Board Weekly VRDNs
(Ex-L-Tube, Inc.)/(Norwest Bank Minnesota LOC)/
(Subject to AMT) P-1 1,200,000
------------------------------------------------------
6,600,000 Missouri Higher Education Loan Authority Weekly VRDNs
(Series 1988A)/(Student Loan Revenue Bonds)/ (Dai-Ichi
Kangyo Bank Ltd. LOC)/(Subject to AMT) VMIG1 6,600,000
------------------------------------------------------ ------------
Total 7,800,000
------------------------------------------------------ ------------
MONTANA--1.5%
------------------------------------------------------
2,200,000 Forsythe Rosebud County, MT, PCR Daily VRDNs
(Pacificorp)/(Mitsubishi Bank Ltd. LOC)/(Subject to
AMT) P-1 2,200,000
------------------------------------------------------
5,075,000 Montana State Board of Housing Single Family Mortgage,
4.15% Semi-Annual TOBs (Series 1990-C)/(FHA
Insured)/(Meredian Bank BPA), Optional Tender 4/1/95 NR(1) 5,075,000
------------------------------------------------------ ------------
Total 7,275,000
------------------------------------------------------ ------------
NEBRASKA--1.3%
------------------------------------------------------
6,400,000 Douglas County, NE, Weekly VRDNs (Series 1991)/
(Malhove, Inc.)/(Norwest Bank Minnesota LOC)/
(Subject to AMT) A-1+ 6,400,000
------------------------------------------------------ ------------
</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
- ---------------------------------------------------------------------
NEW HAMPSHIRE--2.9%
------------------------------------------------------
$ 7,000,000 New Hampshire Business Finance Authority PCR, 3.70%
CP (Series 1990A)/(New England Power Co. Guaranty),
Mandatory Tender 1/26/95 A-1 $ 7,000,000
------------------------------------------------------
2,400,000 New Hampshire Business Finance Authority PCR, 3.75% CP
(Series 1990A)/(New England Power Co. Guaranty),
Mandatory Tender 1/17/95 A-1 2,400,000
------------------------------------------------------
4,175,000 Portsmouth, NH, 4.00% BANs, 12/1/94 NR 4,175,000
------------------------------------------------------ ------------
Total 13,575,000
------------------------------------------------------ ------------
NEW JERSEY--1.5%
------------------------------------------------------
7,000,000 Hudson County, NJ, 4.55% BANs, 10/11/95 NR(4) 7,008,635
------------------------------------------------------ ------------
NEW MEXICO--1.7%
------------------------------------------------------
7,900,000 Las Cruces, NM, IDRB Weekly VRDNs (Series 1994A)/
(F & A Dairy Products, Inc.)/(Norwest Bank Minnesota
LOC)/(Subject to AMT) P-1 7,900,000
------------------------------------------------------ ------------
NEW YORK--1.7%
------------------------------------------------------
4,000,000 Central Islip, NY, 4.50% TANs, 6/30/95 NR 4,011,104
------------------------------------------------------
4,000,000 Plainview, NY, Old Bethpage Central School District,
4.50% TANs, 6/30/95 NR 4,010,460
------------------------------------------------------ ------------
Total 8,021,564
------------------------------------------------------ ------------
NORTH CAROLINA--3.7%
------------------------------------------------------
1,825,000 Guilford County, NC, Industrial Facilities & Pollution
Control Financing Authority Weekly VRDNs (Series
1989)/(Culp, Inc.)/(Wachovia Bank of NC N.A. LOC)/
(Subject to AMT) P-1 1,825,000
------------------------------------------------------
2,545,000 Halifax County, NC, Industrial Facilities & Pollution
Control Financing Authority Daily VRDNs (Series 1993)/
(Westmoreland-LG&E Partners)/(Credit Suisse LOC)/
(Subject to AMT) A-1+ 2,545,000
------------------------------------------------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
------------------------------------------------------
$ 2,500,000 New Hanover County, NC, Industrial Facilities &
Pollution Control Finance Authority Weekly VRDNs
(Efson, Inc.)/(Branch Banking & Trust Co., Wilson
LOC)/ (Subject to AMT) P-1 $ 2,500,000
------------------------------------------------------
3,710,000 Orange County, NC, Industrial Facilities & Pollution
Control Financing Authority Weekly VRDNs
(Mebane Packaging Corp.)/(First Union National Bank
LOC)/(Subject to AMT) A-1 3,710,000
------------------------------------------------------
7,100,000 Wilson County, NC, PCA, IDRB Weekly VRDNs (Series
1994)/(Granutec, Inc.)/(Branch Banking & Trust Co.
LOC)/ (Subject to AMT) P-1 7,100,000
------------------------------------------------------ ------------
Total 17,680,000
------------------------------------------------------ ------------
NORTH DAKOTA--1.4%
------------------------------------------------------
6,500,000 Fargo, ND, IDRB Weekly VRDNs (Series 1994)/(Pan-O-Gold
Baking Co.)/(Norwest Bank Minnesota LOC)/ (Subject to
AMT) A-1+ 6,500,000
------------------------------------------------------ ------------
OHIO--3.8%
------------------------------------------------------
700,000 Defiance County, OH, IDR Weekly VRDNs (Detrich
Industries, Inc.)/(PNC Bank N.A. LOC) A-1 700,000
------------------------------------------------------
2,500,000 Ohio State Air Quality Development Authority, 3.15%
Semi-Annual TOBs (Series 1993A)/(Duquesne Light Power
Co.)/(Union Bank of Switzerland LOC), Mandatory Tender
12/8/94 A-1+ 2,500,000
------------------------------------------------------
6,000,000 Ohio State Air Quality Development Authority, 4.25%
Annual TOBs (Series C)/(Ohio Edison Co.)/(Barclays
Bank PLC LOC), Optional Tender 9/1/95 A-1+ 6,000,000
------------------------------------------------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------ ------------------------------------------------------ -------- ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
OHIO--CONTINUED
------------------------------------------------------
$ 1,450,000 Stark County, OH, IDR Weekly VRDNs (Series 1994)/
(Wilkof Morris)/(Society National Bank LOC)/(Subject
to AMT) P-1 $ 1,450,000
------------------------------------------------------
5,000,000 Summit County, OH, 3.70% BANs (Series 1994A), 3/9/95 NR(4) 5,002,591
------------------------------------------------------
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 17,852,591
------------------------------------------------------ ------------
OKLAHOMA--5.2%
------------------------------------------------------
2,300,000 Adair County, OK, IDA Weekly VRDNs (Series B)/ (Baldor
Electric Co.)/(Wachovia Bank & Trust Co. N.A.
LOC)/(Subject to AMT) P-1 2,300,000
------------------------------------------------------
6,100,000 Broken Arrow, OK, EDA Weekly VRDNs (Blue Bell
Creameries, Inc.)/(Banque Nationale de Paris LOC) VMIG1 6,100,000
------------------------------------------------------
5,900,000 Oklahoma Development Finance Authority, 3.90% Semi-
Annual TOBs (Simmons Poultry Farms)/(Bayerische
Vereinsbank AG LOC)/(Subject to AMT), Optional
Tender 2/1/95 P-1 5,900,000
------------------------------------------------------
10,400,000 Southeastern Oklahoma Industries Authority, Weekly
VRDNs Solid Waste (Weyerhauser, Inc. Guaranty)/
(Subject to AMT) A-1 10,400,000
------------------------------------------------------ ------------
Total 24,700,000
------------------------------------------------------ ------------
PENNSYLVANIA--10.0%
------------------------------------------------------
5,000,000 Allegheny County, PA, IDA, PCR, 4.05% CP (USX Marathon
Group)/(Long Term Credit Bank of Japan Ltd. LOC),
Mandatory Tender 2/9/95 A-2 5,000,000
------------------------------------------------------
5,000,000 Carbon County, PA, IDA, 3.55% CP (Panther Creek)/
(National Westminster Bank PLC LOC)/(Subject to AMT),
Mandatory Tender 1/13/95 A-1+ 5,000,000
------------------------------------------------------
</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
- ---------------------------------------------------------------------
PENNSYLVANIA--CONTINUED
------------------------------------------------------
$ 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
------------------------------------------------------
2,000,000 Northampton County, PA, IDA, 3.85% CP (Citizens
Utilities Co.)/(Subject to AMT), Mandatory Tender
2/19/95 A-1+ 2,000,000
------------------------------------------------------
900,000 Pennsylvania Economic Development Financing Authority
Weekly VRDNs (Tamaqua Cable Co.)/(PNC Bank N.A.
LOC)/(Subject to AMT) P-1 900,000
------------------------------------------------------
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
------------------------------------------------------
1,500,000 Pennsylvania Higher Education Assistance Agency Weekly
VRDNs (Fuji Bank Ltd. LOC)/(Subject to AMT) VMIG1 1,500,000
------------------------------------------------------
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 47,475,000
------------------------------------------------------ ------------
RHODE ISLAND--0.6%
------------------------------------------------------
2,950,000 Rhode Island Public Transit Authority, 5.25% RANs
(Series 1994), 7/6/95 MIG2 2,960,922
------------------------------------------------------ ------------
</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
- ---------------------------------------------------------------------
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--2.2%
------------------------------------------------------
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
------------------------------------------------------
8,000,000 Roane County, TN, IDB Solid Waste Disposal, 4.85%
Annual TOBs (Series 1990A)/(Horsehead Resource
Development Co., Inc.)/(Long Term Credit Bank of Japan
Ltd. LOC)/(Subject to AMT), Mandatory Tender 11/1/95 A-2 8,000,000
------------------------------------------------------ ------------
Total 10,310,000
------------------------------------------------------ ------------
TEXAS--3.2%
------------------------------------------------------
5,000,000 Brazos River Authority, TX, 3.95% CP (Series 1994B)/
(Texas Utilities Electric Co.)/(Canadian Imperial Bank
of Commerce LOC)/(Subject to AMT), Mandatory Tender
2/13/95 A-1 5,000,000
------------------------------------------------------
200,000 Harris County, TX, HFDC Daily VRDNs (Series 1994)/
(Methodist Hospital) A-1+ 200,000
------------------------------------------------------
2,700,000 Harris County, TX, IDC Daily VRDNs (Yokohoma Tire
Corp.)/(Industrial Bank of Japan Ltd. LOC)/(Subject to
AMT) A-1 2,700,000
------------------------------------------------------
3,600,000 Lubbock, TX, IDC Daily VRDNs (McLane Co., Inc.)/
(NationsBank of North Carolina N.A. LOC)/(Subject to
AMT) A-1 3,600,000
------------------------------------------------------
3,700,000 San Antonio, TX, IDA Weekly VRDNs (Colin Medical
Instruments Corp.)/(Sanwa Bank Ltd. LOC)/
(Subject to AMT) A-1+ 3,700,000
------------------------------------------------------ ------------
Total 15,200,000
------------------------------------------------------ ------------
</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
- ---------------------------------------------------------------------
UTAH--0.5%
------------------------------------------------------
$ 2,600,000 Tooele County, UT, Waste Management 3.80% CP (Union
Pacific Corp. Guaranty)/(Subject to AMT), Mandatory
Tender 1/23/95 A-1 $ 2,600,000
------------------------------------------------------ ------------
VIRGINIA--6.4%
------------------------------------------------------
4,000,000 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 4,000,000
------------------------------------------------------
1,900,000 Chesapeake, VA, IDA Weekly VRDNs (Series 1986)/ (Volvo
Auto Rec. Grantor Trust 1991-A)/(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
------------------------------------------------------
3,000,000 Halifax County, VA, IDA, MMMs, PRC, 3.50% CP (Virginia
Electric Power Co. Guaranty)/(Subject to AMT),
Mandatory Tender 12/9/94 A-1 3,000,000
------------------------------------------------------
1,700,000 Richmond, VA, Redevelopment and Housing Authority
Weekly VRDNs (Series B-1)/(Red Tobacco Row)/
(Bayerische Landesbank GIC)/(Subject to AMT) VMIG1 1,700,000
------------------------------------------------------
2,000,000 Richmond, VA, Redevelopment and Housing Authority
Weekly VRDNs (Series B-5)/(Red Tobacco Row)/
(Bayerische Landesbank GIC)/(Subject to AMT) VMIG1 2,000,000
------------------------------------------------------
1,950,000 Richmond, VA, Redevelopment and Housing Authority
Weekly VRDNs (Series B-7)/(Bayerische Landesbank
GIC)/(Subject to AMT) VMIG1 1,950,000
------------------------------------------------------
2,000,000 Richmond, VA, Redevelopment and Housing Authority
Weekly VRDNs (Series B-9)/(Tobacco Row)/(Bayerische
Landesbank GIC)/(Subject to AMT) VMIG1 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
- ---------------------------------------------------------------------
VIRGINIA--CONTINUED
------------------------------------------------------
$ 2,230,000 Virginia Beach, VA, Development Authority Weekly VRDNs
(Series 1993)/(Ocean Ranch Motel Corp.)/ (Nationsbank
of Virginia N.A. LOC)/(Subject to AMT) A-1 $ 2,230,000
------------------------------------------------------
6,100,000 Virginia Peninsula Port Authority Daily VRDNs (Kinyo
Virginia, Inc.)/(Industrial Bank of Japan Ltd. LOC)/
(Subject to AMT) A-1 6,100,000
------------------------------------------------------
4,000,000 Virginia State, HDA, 4.20% Semi-Annual TOBs (Series
1993)/(Subject to AMT), Mandatory Tender 5/11/95 A-1+ 4,000,000
------------------------------------------------------ ------------
Total 30,480,000
------------------------------------------------------ ------------
WISCONSIN--2.8%
------------------------------------------------------
2,780,000 Marschfield, WI, IDR Weekly VRDNs (Series 1993)/(Wick
Building System, Inc.)/(Bank One, Milwaukee N.A.
LOC)/(Subject to AMT) P-1 2,780,000
------------------------------------------------------
1,200,000 Shell Lake, WI, Weekly VRDNs (Doboy Packaging)/ (Union
Bank of Switzerland LOC)/(Subject to AMT) P-1 1,200,000
------------------------------------------------------
9,210,000 Wisconsin Housing and Economic Development Authority,
4.10% Semi-Annual TOBs (Series B)/(FSA Insured)/
(Meredian BPA)/(Subject to AMT), Optional Tender
3/1/95 NR(1) 9,210,000
------------------------------------------------------ ------------
Total 13,190,000
------------------------------------------------------ ------------
TOTAL INVESTMENTS (AT AMORTIZED COST) $476,239,236+
------------------------------------------------------ ------------
</TABLE>
* See Notes to Portfolio of Investments on page 22. Current credit ratings are
unaudited.
+ Also represents cost for federal tax purposes.
Note: The categories of investment are shown as a percentage of net assets
($475,270,366) at November 30, 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
CDA -- Community Development Administration
CP -- Commercial Paper
EDA -- Economic Development Authority
EDR -- Economic Development Revenue
EDRB -- Economic Development Revenue Bonds
FHA -- Federal Housing Administration
FSA -- Financial Security Assurance
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage Association
HDA -- Hospital Development Authority
HFDC -- Health Facility Development Corporation
IDA -- Industrial Development Authority
IDB -- Industrial Development Bond
IDC -- Industrial Development Corporation
IDR -- Industrial Development Revenue
IDRB -- Industrial Development Revenue Bonds
LOC -- Letter of Credit
MMMs -- Money Market Municipals
PCA -- Pollution Control Authority
PCR -- Pollution Control Revenue
RANs -- Revenue Anticipation Notes
SFM -- Single Family Mortgage
TANs -- Tax Anticipation Notes
TOBs -- Tender Option Bonds
TRANs -- Tax and Revenue Anticipation Notes
UT -- Utah/Unlimited Tax
VA -- Virginia/Veterans Administration
VRDNs -- Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL CASH SERIES
NOTES TO PORTFOLIO OF INVESTMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
STANDARD AND POOR'S CORPORATION MUNICIPAL BOND RATINGS
AAA Debt rated "AAA" has the highest rating assigned by Standard & Poor's
Corporation. Capacity to pay interest and repay principal is extremely
strong.
AA Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A Debt rated "A" has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
BBB Debt rated "BBB" is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher rated categories.
NR NR indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not
rate a particular type of obligation as a matter of policy.
Plus (+) or minus (-): The ratings from AA to "BBB" may be modified by the
addition of a plus or minus sign to show relative standing within the
major rating categories.
MOODY'S INVESTORS SERVICE, INC. MUNICIPAL BOND RATINGS
AAA Bonds which are rated AAA are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
AA Bonds which are rated AA are judged to be of high quality by all standards.
Together with the AAA group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in AAA securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in AAA securities.
A Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
- --------------------------------------------------------------------------------
BAA Bonds which are rated BAA are considered medium grade obligations, (i.e.,
they are neither highly protected nor poorly secured.) Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment characteristics
and in fact have speculative characteristics as well.
NR Not rated by Moody's.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from AA through BAA in its corporate or municipal bond rating
system. The modifier 1 indicates that the security ranks in the higher end
of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower end
of its generic rating category.
STANDARD & POOR'S CORPORATION MUNICIPAL NOTE RATINGS
SP-1 Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a
plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
MOODY'S INVESTORS SERVICE, INC. SHORT-TERM LOAN RATINGS
MIG1/VMIG1 This designation denotes best quality. There is a present strong
protection by established cash flows, superior liquidity support or
demonstrated broadbased access to the market for refinancing.
MIG2/VMIG2 This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
FITCH INVESTOR'S SERVICE, INC. SHORT-TERM DEBT RATINGS
F-1 VERY STRONG CREDIT QUALITY. Issues assigned this rating reflect an assurance
for timely payment only slightly less in degree than issues rated F-1+.
F-2 GOOD CREDIT QUALITY. Issuers carrying this rating have a satisfactory degree
of assurance for timely payment, but the margin of safety is not as great as
the F-1+ and F-1 categories.
STANDARD AND POOR'S CORPORATION COMMERCIAL PAPER RATINGS
A-1 This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) sign designation.
A-2 Capacity for timely payment on issues with this designation is satisfactory.
However, the relative degree of safety is not as high as for issues
designated A-1.
- --------------------------------------------------------------------------------
MOODY'S INVESTORS SERVICE, INC. COMMERCIAL PAPER RATINGS
PRIME-1 Issuers rated PRIME-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations.
PRIME-1 repayment capacity will normally be evidenced by the following
characteristics:
- Leading market positions in well established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
- Broad margins in earning coverage of fixed financial charges and high
internal cash generation.
- Well-established access to a range of financial markets and assured
sources of alternate liquidity.
PRIME-2 Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to
a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample
alternate liquidity is maintained.
MUNICIPAL CASH SERIES
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $476,239,236
- --------------------------------------------------------------------------------
Cash 580,279
- --------------------------------------------------------------------------------
Interest receivable 3,062,007
- --------------------------------------------------------------------------------
Receivable for capital stock sold 2,253
- -------------------------------------------------------------------------------- ------------
Total assets 479,883,775
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Payable for investments purchased $3,700,000
- -------------------------------------------------------------------
Payable for capital stock redeemed 502,908
- -------------------------------------------------------------------
Dividends payable 274,083
- -------------------------------------------------------------------
Accrued expenses 136,418
- ------------------------------------------------------------------- ----------
Total liabilities 4,613,409
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 475,270,366 shares of capital stock outstanding $475,270,366
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
($475,270,366 / 475,270,366) 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
SIX MONTHS ENDED NOVEMBER 30, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------
Interest income $9,021,863
- ----------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------
Investment advisory fee $1,369,614
- ---------------------------------------------------------------------
Administrative personnel and services 207,360
- ---------------------------------------------------------------------
Custodian and portfolio accounting fees 81,593
- ---------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 93,720
- ---------------------------------------------------------------------
Directors' fees 5,409
- ---------------------------------------------------------------------
Shareholder services fee 684,807
- ---------------------------------------------------------------------
Distribution services fee 273,923
- ---------------------------------------------------------------------
Capital stock registration costs 22,941
- ---------------------------------------------------------------------
Auditing fees 26,806
- ---------------------------------------------------------------------
Legal fees 5,556
- ---------------------------------------------------------------------
Printing and postage 12,251
- ---------------------------------------------------------------------
Insurance premiums 13,166
- ---------------------------------------------------------------------
Taxes 56,151
- ---------------------------------------------------------------------
Miscellaneous 6,956
- --------------------------------------------------------------------- ----------
Total expenses 2,860,253
- ---------------------------------------------------------------------
Deduct--Waiver of investment advisory fee 148,418
- --------------------------------------------------------------------- ----------
Net expenses 2,711,835
- ---------------------------------------------------------------------------------- ----------
Net investment income $6,310,028
- ---------------------------------------------------------------------------------- ----------
</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,
----------------------------------
1995* 1994
--------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------
Net investment income $ 6,310,028 $ 9,901,308
- ------------------------------------------------------------ --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------
Dividends to shareholders from net investment income (6,310,028) (9,901,308)
- ------------------------------------------------------------ --------------- ---------------
CAPITAL STOCK TRANSACTIONS--
- ------------------------------------------------------------
Proceeds from sale of shares 1,135,431,427 2,785,140,041
- ------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 5,445,260 8,586,674
- ------------------------------------------------------------
Cost of shares redeemed (1,240,407,596) (2,675,130,210)
- ------------------------------------------------------------ --------------- ---------------
Change in net assets resulting from capital stock
transactions (99,530,909) 118,596,505
- ------------------------------------------------------------ --------------- ---------------
Change in net assets (99,530,909) 118,596,505
- ------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------
Beginning of period 574,801,275 456,204,770
- ------------------------------------------------------------ --------------- ---------------
End of period $ 475,270,366 $ 574,801,275
- ------------------------------------------------------------ --------------- ---------------
</TABLE>
* Six months ended November 30, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL CASH SERIES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
-----------------------------------------------------------------------------
1995** 1994 1993 1992 1991 1990*
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ----------------------------
INCOME FROM INVESTMENT
OPERATIONS
- ----------------------------
Net investment income 0.01 0.02 0.03 0.04 0.05 0.04
- ----------------------------
LESS DISTRIBUTIONS
- ----------------------------
Dividends to shareholders
from net investment income (0.01) (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 $1.00
- ---------------------------- ----- ----- ----- ----- ----- -----
TOTAL RETURN*** 1.17% 1.83% 2.11% 3.53% 5.24% 4.68%
- ----------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------
Expenses 0.99%(b) 0.99% 0.99% 0.98% 0.94% 0.73%(b)
- ----------------------------
Net investment income 2.30%(b) 1.81% 2.10% 3.42% 5.02% 5.76%(b)
- ----------------------------
Expense waiver/
reimbursement (a) 0.05%(b) 0.06% 0.03% 0.03% 0.17% 0.45%(b)
- ----------------------------
SUPPLEMENTAL DATA
- ----------------------------
Net assets, end of period
(000 omitted) $475,270 $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.
** Six months ended November 30, 1994 (unaudited).
*** 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.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL CASH SERIES
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(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 non-diversified 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.
(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. The 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. OTHER--Investment transactions are accounted for on the trade date.
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
(3) CAPITAL STOCK
At November 30, 1994, there were 12,500,000,000 shares of $0.001 par value
capital stock authorized. Capital paid-in aggregated $475,270,366. Transactions
in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
<S> <C> <C>
1995* 1994
-------------- ---------------
- ---------------------------------------------------------
Shares sold 1,135,431,427 2,785,140,041
- ---------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 5,445,260 8,586,674
- ---------------------------------------------------------
Shares redeemed (1,240,407,596) (2,675,130,210)
- --------------------------------------------------------- -------------- ---------------
Net change resulting from capital stock transactions (99,530,909) 118,596,505
- --------------------------------------------------------- -------------- ---------------
</TABLE>
* Six months ended November 30, 1994.
(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
.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
administrative personnel and services. The FAS fee is based on the level of
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received during the
period of the Administrative Services Agreement shall be at least $125,000 per
portfolio and $30,000 per each additional class of shares.
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 .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 .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 the shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. The
FServ fee is based on the size, type and number of accounts and transactions
made by shareholders.
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
INTERFUND TRANSACTIONS--During the six months ended November 30, 1994, the Fund
engaged in purchase and sale transactions with other affiliated funds at current
value pursuant to Rule 17a-7 under the Act amounting to $246,275,000 and
$305,290,000, respectively.
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
<TABLE>
<S> <C>
DIRECTORS OFFICERS
- -----------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Richard B. Fisher
William J. Copeland President
J. Christopher Donahue J. Christopher Donahue
James E. Dowd Vice President
Lawrence D. Ellis, M.D. Edward C. Gonzales
Edward L. Flaherty, Jr. Vice President and Treasurer
Peter E. Madden John W. McGonigle
Gregor F. Meyer Vice President and Secretary
Wesley W. Posvar David M. Taylor
Marjorie P. Smuts Assistant Treasurer
Charles H. Field
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
- --------------------------------------------------------------------------------
GOVERNMENT
- --------------------------------------------------------------------------------
CASH
- --------------------------------------------------------------------------------
SERIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
NOVEMBER 30, 1994
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
147551204
0122604 (1/95)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Government
Cash Series (the "Fund"), which covers the six-month period ended November 30,
1994. The report includes the Investment Review and Financial Statements, which
contain the Portfolio of Investments.
During the reporting period, the Fund helped your cash earn $0.02 in dividends
per share, while offering the advantages of daily liquidity and stability of
principal.*
At the end of the report period, 35.6% of the Fund's $401.1 million in assets
was invested in securities issued by the United States Treasury and various
government agencies, including the Federal Farm Credit Bank, Federal Home Loan
Bank, Federal Home Loan Mortgage Corporation, Federal National Mortgage
Association, and Student Loan Marketing Association. More than 67% of the Fund's
assets were invested in repurchase agreements backed by government and/or agency
securities, because repurchase agreements offered a yield advantage over many
direct government obligations.
Thank you for choosing the Fund as a convenient way to put your cash to work
pursuing income from U.S. government securities. Please contact your investment
representative if you have any questions about the Fund.
Sincerely,
Richard B. Fisher
President
January 15, 1995
* No money market mutual fund can guarantee that a stable net asset value will
be maintained. An investment in the Fund is neither insured nor guaranteed by
the U.S. government.
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, Federal Farm Credit Bank System, Federal Home Loan Bank System, and
Federal Home Loan Mortgage Corp. Recently, the Fund has been managed with a
somewhat conservative average maturity of 30-40 days.
During the reporting period, the Federal Reserve Board (the "Fed") continued its
restrictive interest rate stance. The Fed tightened monetary policy by
increasing the Fed Funds target rate from 4.25% to 5.50% over the period.
Despite the continued low inflationary environment, solid economic growth,
growing employment rolls, and capacity constraints would point toward another
increase to the targeted Fed Funds rate early in 1995.
Movements in short rates were largely driven by fear of an overheating economy
and the resultant inflationary pressures during the reporting period. The rate
on the three-month Treasury bill rose from 4.3% at the end of May 1994, to 5.4%
at the end of November, reflecting the Fed's restrictive stance.
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. This portfolio structure continues to
provide a competitive yield.
Over the reporting period, the Fund's average maturity was maintained on the
defensive end of its range. 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.
GOVERNMENT CASH SERIES
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
The obligations listed below are issued by or guaranteed by the U.S. government,
its agencies or instrumentalities, or secured by such obligations.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------
<C> <C> <S> <C>
SHORT-TERM OBLIGATIONS--37.6%
- ----------------------------------------------------------------------------------
* FEDERAL FARM CREDIT BANK, DISCOUNT NOTES--3.2%
----------------------------------------------------------------
$ 6,000,000 5.70%, 4/5/95 $ 5,881,250
----------------------------------------------------------------
7,000,000 5.62%, 4/18/95 6,849,197
---------------------------------------------------------------- ------------
Total 12,730,447
---------------------------------------------------------------- ------------
** FEDERAL HOME LOAN BANK, FLOATING RATE NOTE--2.0%
----------------------------------------------------------------
8,000,000 5.00%, 12/6/94 7,996,400
---------------------------------------------------------------- ------------
* FEDERAL HOME LOAN BANK, DISCOUNT NOTES--3.7%
----------------------------------------------------------------
6,000,000 4.90%, 2/22/95 5,932,217
----------------------------------------------------------------
4,150,000 5.99%, 5/19/95 4,033,303
----------------------------------------------------------------
3,000,000 5.30%, 6/12/95 2,914,758
----------------------------------------------------------------
2,000,000 6.57%, 11/22/95 1,870,060
---------------------------------------------------------------- ------------
Total 14,750,338
---------------------------------------------------------------- ------------
** FEDERAL HOME LOAN MORTGAGE ASSOCIATION, FLOATING RATE NOTE--2.2%
----------------------------------------------------------------
9,000,000 5.49%, 12/1/94 8,993,786
---------------------------------------------------------------- ------------
* FEDERAL HOME LOAN MORTGAGE ASSOCIATION, DISCOUNT NOTE--0.7%
----------------------------------------------------------------
3,000,000 5.58%, 4/4/95 2,942,340
---------------------------------------------------------------- ------------
* FEDERAL NATIONAL MORTGAGE ASSOCIATION, DISCOUNT NOTES--9.5%
----------------------------------------------------------------
6,000,000 5.04%, 1/4/95 5,971,440
----------------------------------------------------------------
3,500,000 4.92%, 1/5/95 3,483,258
----------------------------------------------------------------
4,000,000 4.93%, 1/19/95 3,973,159
----------------------------------------------------------------
3,000,000 5.09%, 2/17/95 2,966,915
----------------------------------------------------------------
5,000,000 5.30%, 3/2/95 4,933,014
----------------------------------------------------------------
4,000,000 5.37%, 3/22/95 3,933,770
----------------------------------------------------------------
</TABLE>
GOVERNMENT CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------
<C> <C> <S> <C>
SHORT-TERM OBLIGATIONS--CONTINUED
- ----------------------------------------------------------------------------------
* FEDERAL NATIONAL MORTGAGE ASSOCIATION, DISCOUNT NOTES--CONTINUED
----------------------------------------------------------------
$ 3,000,000 5.41%, 3/22/95 $ 2,949,958
----------------------------------------------------------------
2,000,000 5.47%, 3/31/95 1,963,533
----------------------------------------------------------------
3,000,000 5.64%, 4/27/95 2,930,910
----------------------------------------------------------------
5,000,000 5.80%, 5/11/95 4,870,306
---------------------------------------------------------------- ------------
Total 37,976,263
---------------------------------------------------------------- ------------
** FEDERAL NATIONAL MORTGAGE ASSOCIATION, FLOATING RATE NOTES--3.0%
----------------------------------------------------------------
5,500,000 5.57%, 12/6/94 5,499,732
----------------------------------------------------------------
6,500,000 5.77%, 12/1/94 6,497,269
---------------------------------------------------------------- ------------
Total 11,997,001
---------------------------------------------------------------- ------------
** STUDENT LOAN MARKETING ASSOCIATION, FLOATING RATE NOTES--6.2%
----------------------------------------------------------------
14,000,000 6.19%, 12/6/94 13,998,055
----------------------------------------------------------------
4,500,000 5.74%, 12/6/94 4,500,000
----------------------------------------------------------------
6,150,000 5.99%, 12/6/94 6,175,636
---------------------------------------------------------------- ------------
Total 24,673,691
---------------------------------------------------------------- ------------
* UNITED STATES TREASURY BILLS--4.2%
----------------------------------------------------------------
1,500,000 3.60%, 2/9/95 1,489,500
----------------------------------------------------------------
3,000,000 4.84%, 4/6/95 2,949,180
----------------------------------------------------------------
4,000,000 4.93%, 5/4/95 3,915,642
----------------------------------------------------------------
3,500,000 5.14%, 5/4/95 3,423,043
----------------------------------------------------------------
3,000,000 5.235%, 6/29/95 2,908,388
----------------------------------------------------------------
2,500,000 5.37%, 8/24/95 2,400,804
---------------------------------------------------------------- ------------
Total 17,086,557
---------------------------------------------------------------- ------------
</TABLE>
GOVERNMENT CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------
<C> <C> <S> <C>
SHORT-TERM OBLIGATIONS--CONTINUED
- ----------------------------------------------------------------------------------
UNITED STATES TREASURY NOTES--2.9%
----------------------------------------------------------------
$ 4,000,000 5.50%, 2/15/95 $ 4,006,584
----------------------------------------------------------------
4,000,000 5.50%, 2/15/95 4,002,286
----------------------------------------------------------------
3,500,000 8.50%, 5/15/95 3,549,883
---------------------------------------------------------------- ------------
Total 11,558,753
---------------------------------------------------------------- ------------
TOTAL SHORT-TERM OBLIGATIONS 150,705,576
---------------------------------------------------------------- ------------
***REPURCHASE AGREEMENTS--67.9%
- ----------------------------------------------------------------------------------
19,300,000 Barclays Bank PLC, 5.72%, dated 11/30/94, due 12/1/94 19,300,000
----------------------------------------------------------------
15,000,000 Deutsche Bank Government Securities, Inc., 5.79%, dated
11/30/94, due 12/1/94 15,000,000
----------------------------------------------------------------
10,000,000 Fuji Government Securities, Inc., 5.80%, dated 11/30/94, due
12/1/94 10,000,000
----------------------------------------------------------------
55,000,000 Greenwich Capital Markets, Inc., 5.80%, dated 11/30/94, due
12/1/94 55,000,000
----------------------------------------------------------------
20,000,000 Harris Trust & Savings Bank, Chicago, 5.79%, dated 11/30/94,
due 12/1/94 20,000,000
----------------------------------------------------------------
15,000,000 J.P. Morgan Securities, Inc., 5.85%, dated 11/30/94, due 12/1/94 15,000,000
----------------------------------------------------------------
15,000,000 Morgan Stanley & Co., Inc., 5.80%, dated 11/30/94, due 12/1/94 15,000,000
----------------------------------------------------------------
15,000,000 HSBC Securities, Inc., 5.82%, dated 11/30/94, due 12/1/94 15,000,000
----------------------------------------------------------------
30,000,000 Paine Webber Group, Inc., 5.78%, dated 11/30/94, due 12/1/94 30,000,000
----------------------------------------------------------------
15,000,000 S.G. Warburg & Co., Inc., 5.79%, dated 11/30/94, due 12/1/94 15,000,000
----------------------------------------------------------------
9,000,000 + First Boston Corp., 5.55%, dated 11/17/94, due 12/19/94 9,000,000
----------------------------------------------------------------
10,000,000 + Merrill Lynch Government Securities, Inc., 5.50%, dated
11/28/94, due 12/20/94 10,000,000
----------------------------------------------------------------
6,000,000 + First Boston Corp., 5.15%, dated 10/25/94, due 12/23/94 6,000,000
----------------------------------------------------------------
9,000,000 + First Boston Corp., 5.40%, dated 10/20/94, due 1/3/95 9,000,000
----------------------------------------------------------------
</TABLE>
GOVERNMENT CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------
<C> <C> <S> <C>
***REPURCHASE AGREEMENTS--CONTINUED
- ----------------------------------------------------------------------------------
$14,000,000 Nomura Securities International, Inc., 7.75%, dated 12/30/94,
due 1/3/95 $ 14,000,000
----------------------------------------------------------------
8,000,000 + Lehman Government Securities, 5.55%, dated 10/5/94, due 1/3/95 8,000,000
----------------------------------------------------------------
7,000,000 + Lehman Government Securities, 5.50%, dated 10/28/94, due 1/4/95 7,000,000
---------------------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS 272,300,000
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS (AT AMORTIZED COST) $423,005,576++
---------------------------------------------------------------- ------------
</TABLE>
* Each issue shows the rate of discount at the time of purchase.
** Denotes variable rate obligations 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
($401,134,821) at November 30, 1994.
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT CASH SERIES
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in repurchase agreements $272,300,000
- -----------------------------------------------------------------
Investments in other securities 150,705,576
- ----------------------------------------------------------------- ------------
Total investments, at amortized cost and value $423,005,576
- --------------------------------------------------------------------------------
Cash 219,068
- --------------------------------------------------------------------------------
Interest receivable 803,342
- --------------------------------------------------------------------------------
Receivable for capital stock sold 25,002
- -------------------------------------------------------------------------------- ------------
Total assets 424,052,988
- --------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------
Payable for investments purchased 21,996,400
- -----------------------------------------------------------------
Dividends payable 612,974
- -----------------------------------------------------------------
Payable for capital stock redeemed 127,289
- -----------------------------------------------------------------
Accrued expenses 181,504
- ----------------------------------------------------------------- ------------
Total liabilities 22,918,167
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 401,134,821 shares of capital stock outstanding $401,134,821
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
($401,134,821 / 401,134,821 shares of capital stock outstanding) $1.00
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT CASH SERIES
STATEMENT OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------
Interest income $9,673,181
- ----------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------
Investment advisory fee $1,026,451
- ---------------------------------------------------------------------
Administrative personnel and services 155,405
- ---------------------------------------------------------------------
Custodian and portfolio accounting fees 96,250
- ---------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 110,670
- ---------------------------------------------------------------------
Directors' fees 2,150
- ---------------------------------------------------------------------
Shareholder services fee 513,225
- ---------------------------------------------------------------------
Distribution services fee 205,290
- ---------------------------------------------------------------------
Capital stock registration costs 24,192
- ---------------------------------------------------------------------
Auditing fees 7,250
- ---------------------------------------------------------------------
Legal fees 5,000
- ---------------------------------------------------------------------
Printing and postage 14,500
- ---------------------------------------------------------------------
Insurance premiums 6,000
- ---------------------------------------------------------------------
Taxes 27,500
- ---------------------------------------------------------------------
Miscellaneous 4,400
- --------------------------------------------------------------------- ----------
Total expenses 2,198,283
- ---------------------------------------------------------------------
Deduct--Waiver of investment advisory fee 165,911
- --------------------------------------------------------------------- ----------
Net expenses 2,032,372
- ---------------------------------------------------------------------------------- ----------
Net investment income $7,640,809
- ---------------------------------------------------------------------------------- ----------
</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,
----------------------------------
1995* 1994
--------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------
Net investment income $ 7,640,809 $ 10,689,169
- ----------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------
Dividends to shareholders from net investment income (7,640,809) (10,689,169)
- ----------------------------------------------------------- --------------- ---------------
CAPITAL STOCK TRANSACTIONS--
- -----------------------------------------------------------
Proceeds from sale of shares 1,716,314,699 3,153,905,957
- -----------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 5,583,711 7,564,032
- -----------------------------------------------------------
Cost of shares redeemed (1,722,097,293) (3,160,367,176)
- ----------------------------------------------------------- --------------- ---------------
Change in net assets resulting from capital stock
transactions (198,883) 1,102,813
- ----------------------------------------------------------- --------------- ---------------
Change in net assets (198,883) 1,102,813
- -----------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------
Beginning of period 401,333,704 400,230,891
- ----------------------------------------------------------- --------------- ---------------
End of period $ 401,134,821 $ 401,333,704
- ----------------------------------------------------------- --------------- ---------------
</TABLE>
* Six months ended November 30, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT CASH SERIES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
-------------------------------------------------------------
1995** 1994 1993 1992 1991 1990*
------ ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------
INCOME FROM INVESTMENT
OPERATIONS
- -------------------------------
Net investment income 0.02 0.02 0.03 0.04 0.07 0.06
- -------------------------------
LESS DISTRIBUTIONS
- -------------------------------
Dividends to shareholders
from net investment income (0.02) (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 $1.00
- ------------------------------- ------ ----- ----- ----- ----- ----
TOTAL RETURN*** 1.88% 2.45% 2.54% 4.33% 6.80% 6.53%
- -------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------
Expenses 0.99%(b) 0.99% 0.99% 0.98% 0.94% 0.73%(b)
- -------------------------------
Net investment income 3.72%(b) 2.41% 2.53% 4.25% 6.48% 7.74%(b)
- -------------------------------
Expense waiver/
reimbursements (a) 0.08%(b) 0.09% 0.06% 0.06% 0.13% 0.32%(b)
- -------------------------------
SUPPLEMENTAL DATA
- -------------------------------
Net assets, end of period
(000 omitted) $401,135 $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.
** Six months ended November 30, 1994 (unaudited).
*** 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.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT CASH SERIES
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(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 non-diversified 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.
(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 that the value of collateral 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 (the "Directors"). Risks may arise from the
potential inability of counterparties to honor the terms of the repurchase
agreement. Accordingly, the Fund could receive less than the repurchase price
on the sale of collateral securities.
C. 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. The 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. OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At November 30, 1994, there were 12,500,000,000 shares of $0.001 par value
capital stock authorized. Capital paid-in aggregated $401,134,821. Transactions
in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
--------------------------------
1995* 1994
- ------------------------------------------------------------- -------------- --------------
<S> <C> <C>
Shares sold 1,716,314,699 3,153,905,957
- -------------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 5,583,711 7,564,032
- -------------------------------------------------------------
Shares redeemed (1,722,097,293) (3,160,367,176)
- ------------------------------------------------------------- -------------- --------------
Net change resulting from capital stock transactions (198,883) 1,102,813
- ------------------------------------------------------------- -------------- --------------
</TABLE>
* Six months ended November 30, 1994.
(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
.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. The FAS fee is based on the level of
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received during the
period of the Administrative Services Agreement shall be at least $125,000 per
portfolio and $30,000 per each additional class of shares.
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 .35 of 1% of the average daily net assets of
the shares, annually, to reimburse FSC.
GOVERNMENT CASH SERIES
- --------------------------------------------------------------------------------
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services ("FSS"), the Fund will pay FSS up to .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 FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. The
FServ fee is based on the size, type and number of accounts and transactions
made by shareholders.
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
<TABLE>
<S> <C>
DIRECTORS OFFICERS
- --------------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Richard B. Fisher
William J. Copeland President
J. Christopher Donahue J. Christopher Donahue
James E. Dowd Vice President
Lawrence D. Ellis, M.D. Edward C. Gonzales
Edward L. Flaherty, Jr. Vice President and Treasurer
Peter E. Madden John W. McGonigle
Gregor F. Meyer Vice President and Secretary
Wesley W. Posvar David M. Taylor
Marjorie P. Smuts Assistant Treasurer
Charles H. Field
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risks,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
- --------------------------------------------------------------------------------
PRIME
- --------------------------------------------------------------------------------
CASH
- --------------------------------------------------------------------------------
SERIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
NOVEMBER 30, 1994
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
147551105
0122606 (1/95)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Prime Cash
Series (the "Fund"), which covers the six-month period ended November 30, 1994.
The report includes the Investment Review and Financial Statements, which
contain the Portfolio of Investments.
During the period, the Fund helped your cash earn dividends of $0.02 per share,
while offering the advantages of daily liquidity and stability of principal.*
At the end of the period, Fund assets stood at $880.2 million, which was
invested in a diversified, high-quality portfolio that included commercial paper
(46.3%), variable rate obligations (28.8%), repurchase agreements (23.4%),
corporate notes (1.1%), and U.S. Treasury obligations (0.1%).
Thank you for choosing the Fund as a convenient way to put your cash to work.
Please contact your investment representative if you have any questions about
the Fund.
Sincerely,
Richard B. Fisher
President
January 15, 1995
* No money market mutual fund can guarantee that a stable net asset value will
be maintained. An investment in the Fund is neither insured nor guaranteed by
the U.S. government.
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 of the 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, variable rate instruments, and repurchase agreements.
The pace of U.S. economic activity has increased during the reporting period.
Nonfarm payrolls have expanded at a steady pace while personal income and
personal spending have experienced increases. From a manufacturing vantage
point, industrial production, capacity utilization, and durable goods orders
have all made favorable progress. Despite this growing strength in the 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 the Fund has been maintained at its
current 30-40 day range during the entire reporting period. This reflects
management's 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 30-35% of the Fund's assets in variable rate demand notes and
accomplishing a modest barbell structure.
Defensive positioning has proven helpful throughout the entire time period. The
Federal Reserve Board (the "Fed") has raised short-term rates two times since
May 31, 1994. The Fed Funds target has gone from 4.25% to 5.50% and the discount
rate has increased from 3.5% to 5.25%. Despite the fact that CPI and PPI
indicate moderate inflationary levels, the Fed continues to fight "inflation
expectations."
During the six months ending November 30, 1994, the net assets of the Fund
increased from $791.1 to $880.2 million while the 7-day net yield increased from
3.18% to 4.64%.* The effective average maturity of the Fund on November 30,
1994, was 40 days.
* Performance quoted represents past performance and is not indicative of future
results. Yield will vary.
PRIME CASH SERIES
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
*COMMERCIAL PAPER--46.3%
- ----------- ----------------------------------------------------------------------
BANKING--4.4%
-----------------------------------------------------------------
$ 8,000,000 Abbey National N.A. Corp., (Guaranteed by Abbey National Bank
PLC, London), 5.84%, 5/9/95 $ 7,793,653
-----------------------------------------------------------------
8,000,000 Bank of Nova Scotia, Toronto, 5.07%-5.70%, 1/9/95-4/25/95 7,868,731
-----------------------------------------------------------------
5,000,000 Barclays Bank of Canada, (Guaranteed by Barclays Bank PLC,
London), 5.30%, 1/6/95 4,973,500
-----------------------------------------------------------------
5,000,000 BNP U.S. Finance Corp., (Guaranteed by Banque Nationale de
Paris), 5.60%, 4/4/95 4,903,556
-----------------------------------------------------------------
5,000,000 Commerzbank U.S. Finance, Inc., (Guaranteed by Commerzbank AG,
Frankfurt), 5.05%, 1/30/95 4,957,917
-----------------------------------------------------------------
5,000,000 Dresdner US Finance, 6.20%, 5/31/95 4,844,139
-----------------------------------------------------------------
3,000,000 Toronto Dominion Holdings (USA), Inc., (Guaranteed by
Toronto-Dominion Bank) 5.07%, 3/8/95 2,959,018
----------------------------------------------------------------- ------------
Total 38,300,514
----------------------------------------------------------------- ------------
FINANCE--COMMERCIAL--21.0%
-----------------------------------------------------------------
5,000,000 Alpha Finance Corp., Ltd., 5.15%, 1/17/95 4,966,382
-----------------------------------------------------------------
41,000,000 Asset Securitization Cooperative Corp., 5.00%-5.75%,
1/19/95-2/13/95 40,589,740
-----------------------------------------------------------------
32,000,000 Beta Finance, Inc., 4.80%-5.85%, 12/22/94-5/10/95 31,580,894
-----------------------------------------------------------------
11,100,000 CIESCO, Inc., 4.85%-5.34%, 12/6/94-3/15/95 11,002,529
-----------------------------------------------------------------
5,000,000 CIT Group Holdings, Inc., 4.80%, 12/14/94 4,991,333
-----------------------------------------------------------------
9,000,000 Corporate Asset Funding Co., Inc. (CAFCO), 5.05%, 1/5/95-1/23/95 8,945,713
-----------------------------------------------------------------
28,000,000 General Electric Capital Corp., 5.08%-6.30%, 1/18/95-6/5/95 27,526,051
-----------------------------------------------------------------
12,000,000 Grand Metropolitan Investment Corp., (Guaranteed by Grand
Metropolitan PLC), 4.85%, 12/2/94 11,998,383
-----------------------------------------------------------------
23,775,000 PREFCO-Preferred Receivables Funding Co., 4.83%-5.45%,
12/5/94-3/16/95 23,616,866
-----------------------------------------------------------------
20,000,000 Sheffield Receivables Corp., 5.68%, 12/1/94 20,000,000
----------------------------------------------------------------- ------------
Total 185,217,891
----------------------------------------------------------------- ------------
</TABLE>
PRIME CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
*COMMERCIAL PAPER--CONTINUED
- ----------------------------------------------------------------------------------
FINANCE--RETAIL--12.9%
-----------------------------------------------------------------
$30,000,000 Associates Corp. of North America, 5.30%-5.75%, 12/1/94-1/11/95 $ 29,969,819
-----------------------------------------------------------------
15,500,000 Ford Credit Receivables Funding, Inc., 4.86%-5.50%,
12/1/94-2/2/95 15,442,938
-----------------------------------------------------------------
5,000,000 Household Finance Corp., 5.42%, 1/24/95 4,959,350
-----------------------------------------------------------------
35,000,000 McKenna Triangle National Corp., 5.10%-6.25%, 2/14/95-5/30/95 34,263,857
-----------------------------------------------------------------
24,000,000 New Center Asset Trust, A1+/P1 Series, 4.85%-5.18%,
12/2/94-2/14/95 23,896,464
-----------------------------------------------------------------
5,000,000 Norwest Financial Corp., 4.70%, 12/15/94 4,990,861
----------------------------------------------------------------- ------------
Total 113,523,289
----------------------------------------------------------------- ------------
INSURANCE--3.9%
-----------------------------------------------------------------
1,395,000 American General Corp., 5.70%, 12/1/94 1,395,000
-----------------------------------------------------------------
33,578,000 Prospect Street Senior Portfolio, L.P., (Guaranteed by Financial
Security Assurance, Inc.), 5.10%-5.70%, 1/17/95-4/19/95 33,149,822
----------------------------------------------------------------- ------------
Total 34,544,822
----------------------------------------------------------------- ------------
MACHINERY, EQUIPMENT, AUTO--1.5%
-----------------------------------------------------------------
13,000,000 Eaton Corp., 4.82%-4.87%, 12/13/94-12/20/94 12,974,294
----------------------------------------------------------------- ------------
PHARMACEUTICALS AND HEALTH CARE--1.1%
-----------------------------------------------------------------
10,000,000 American Home Products Corp., 6.20%, 5/22/95 9,703,778
----------------------------------------------------------------- ------------
TELECOMMUNICATIONS--1.1%
-----------------------------------------------------------------
10,000,000 Ameritech Corp., 4.70%-5.75%, 12/8/94-4/28/95 9,831,786
----------------------------------------------------------------- ------------
TRANSPORTATION--0.4%
-----------------------------------------------------------------
3,246,000 Norfolk Southern Corp., 5.78%, 2/21/95 3,203,265
----------------------------------------------------------------- ------------
TOTAL COMMERCIAL PAPER 407,299,639
----------------------------------------------------------------- ------------
CORPORATE NOTES--1.1%
- ----------------------------------------------------------------------------------
LEASING--1.1%
-----------------------------------------------------------------
10,107,489 Copelco Capital Funding Corp. II Series 1994-A, 6.03%, 10/20/95 10,107,489
----------------------------------------------------------------- ------------
**VARIABLE RATE OBLIGATIONS--28.8%
- ----------------------------------------------------------------------------------
BANKING--19.8%
-----------------------------------------------------------------
1,175,000 Avalon Hotel Associates, (Meridian Bank, Reading, PA LOC),
6.10%, 12/1/94 1,175,000
-----------------------------------------------------------------
10,000,000 Azdel, Inc., (PNC Bank, Kentucky LOC), 5.95%, 12/5/94 10,000,000
-----------------------------------------------------------------
</TABLE>
PRIME CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
**VARIABLE RATE OBLIGATIONS--CONTINUED
- ----------------------------------------------------------------------------------
BANKING--CONTINUED
-----------------------------------------------------------------
$ 8,500,000 College-Kent L.P., (Society National Bank, Cleveland, OH LOC),
6.09%, 12/2/94 $ 8,500,000
-----------------------------------------------------------------
2,075,000 Eastern Milk Producers Corp., (Barclays Bank PLC, London LOC),
6.13%, 12/7/94 2,075,000
-----------------------------------------------------------------
8,300,000 Euclid Superior Parking, (Society National Bank, Cleveland, OH
LOC), 6.09%, 12/2/94 8,300,000
-----------------------------------------------------------------
3,150,000 I.D.B. City of Pelham Series 1994-B, (Columbus Bank and Trust
Co., GA LOC), 6.17%, 12/1/94 3,150,000
-----------------------------------------------------------------
7,600,000 I.D.B. City of Pelham, (Columbus Bank and Trust Co., GA LOC),
6.17%, 12/1/94 7,600,000
-----------------------------------------------------------------
13,000,000 Kentucky Rural Economic Development Authority (PCI),
(PNC Bank, N.A. LOC), 6.05%, 12/5/94 13,000,000
-----------------------------------------------------------------
4,835,000 Maryland Industrial Development Finance Authority -- Genetic
Therapy, Inc., (First National Bank of Maryland, Baltimore LOC),
6.13%, 12/5/94 4,835,000
-----------------------------------------------------------------
6,300,000 Maryland Industrial Development Finance Authority -- Kelly
Springfield Tire, (First National Bank of Maryland, Baltimore
LOC), 6.13%, 12/5/94 6,300,000
-----------------------------------------------------------------
8,000,000 National Funding Corp. 1994-A, (American National Bank, Chicago
LOC), 5.91%, 12/1/94 8,000,000
-----------------------------------------------------------------
4,105,000 New Jersey EDA, (Series 1992H)/(Banque Nationale de Paris LOC),
5.97%, 12/5/94 4,105,000
-----------------------------------------------------------------
765,000 New Jersey EDA, (Series 1992K-3)/(Banque Nationale de Paris LOC),
5.97%, 12/5/94 765,000
-----------------------------------------------------------------
6,300,000 Pennsylvania Economic Development Finance Authority, Series
1993-C, (Barclays Bank PLC, London LOC), 6.02%, 12/1/94 6,300,000
-----------------------------------------------------------------
35,000,000 PHH/CFC Leasing, Inc., (Societe Generale, Paris LOC) 6.00%,
12/7/94 35,000,000
-----------------------------------------------------------------
20,000,000 SMM Trust 1994-B, (Guaranteed by Morgan Guaranty Trust Co., NY),
5.89%, 2/13/95 19,992,066
-----------------------------------------------------------------
4,130,000 Sylacuaga, AL, Industrial Development Board, (SouthTrust Bank of
Alabama, Birmingham LOC), 6.12%, 12/7/94 4,130,000
-----------------------------------------------------------------
</TABLE>
PRIME CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
**VARIABLE RATE OBLIGATIONS--CONTINUED
- ----------------------------------------------------------------------------------
BANKING--CONTINUED
-----------------------------------------------------------------
$ 3,760,000 Toledo Medical Building I L.P., (Huntington National Bank,
Columbus, OH LOC), 6.82%, 10/31/95 $ 3,760,000
-----------------------------------------------------------------
20,075,000 Union Development Co., (Bank of America NT and SA, San Francisco
LOC), 5.99%, 12/1/94 20,075,000
-----------------------------------------------------------------
7,000,000 Van Dyne Crotty Co., (Huntington National Bank, Columbus, OH
LOC), 5.97%, 12/1/94 7,000,000
----------------------------------------------------------------- ------------
Total 174,062,066
----------------------------------------------------------------- ------------
FINANCE--AUTOMOTIVE--2.6%
-----------------------------------------------------------------
23,000,000 Carco Auto Loan Master Trust, Series 1993-2, 5.37%, 12/15/94 23,000,000
----------------------------------------------------------------- ------------
FINANCE--RETAIL--2.3%
-----------------------------------------------------------------
20,000,000 American Financial Services, Inc. (AFS) 1994-A, 5.87%, 12/15/94 20,000,000
----------------------------------------------------------------- ------------
FOOD & BEVERAGE--0.1%
-----------------------------------------------------------------
1,000,000 Pepsico, Inc., 5.72%, 12/7/94 1,000,000
----------------------------------------------------------------- ------------
INSURANCE--4.0%
-----------------------------------------------------------------
12,500,000 Sun Life Insurance Co. of America, 5.28%, 12/7/94 12,500,000
-----------------------------------------------------------------
12,500,000 Sun Life Insurance Co. of America, 6.17%, 12/7/94 12,500,000
-----------------------------------------------------------------
10,000,000 Travelers Insurance Co., 5.05%, 12/29/94 10,000,000
----------------------------------------------------------------- ------------
Total 35,000,000
----------------------------------------------------------------- ------------
TOTAL VARIABLE RATE OBLIGATIONS 253,062,066
----------------------------------------------------------------- ------------
U.S. TREASURY--0.1%
- ----------------------------------------------------------------------------------
TREASURY SECURITIES--0.1%
-----------------------------------------------------------------
500,000 United States Treasury Bill, 1/12/95 498,037
----------------------------------------------------------------- ------------
***REPURCHASE AGREEMENTS--23.4%
- ----------------------------------------------------------------------------------
30,000,000 Fuji Government Securities, Inc., 5.72%, 12/1/94 30,000,000
-----------------------------------------------------------------
40,000,000 Harris Government Security, Inc., 5.72%, 12/1/94 40,000,000
-----------------------------------------------------------------
10,150,000 J.P. Morgan & Co., Inc., 5.72%, 12/1/94 10,150,000
-----------------------------------------------------------------
12,000,000 PaineWebber Group, Inc., 5.75%, 12/1/94 12,000,000
-----------------------------------------------------------------
</TABLE>
PRIME CASH SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
***REPURCHASE AGREEMENTS--CONTINUED
- ----------------------------------------------------------------------------------
$40,000,000 Salomon Brothers, Inc., 5.75%, 12/1/94 $ 40,000,000
-----------------------------------------------------------------
72,900,000 Warburg Securities, 5.72%, 12/1/94 72,900,000
----------------------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS 205,050,000
----------------------------------------------------------------- ------------
TOTAL INVESTMENTS, AT AMORTIZED COST $876,017,231+
----------------------------------------------------------------- ------------
</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
($880,215,005) at November 30, 1994.
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C> <C>
EDA -- Economic Development Authority
LOC -- Letter of Credit
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME CASH SERIES
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in repurchase agreements $205,050,000
- -----------------------------------------------------------------
Investments in other securities 670,967,231
- ----------------------------------------------------------------- ------------
Total investments, at amortized cost and value $876,017,231
- --------------------------------------------------------------------------------
Cash 244,979
- --------------------------------------------------------------------------------
Receivable for capital stock sold 5,736,648
- --------------------------------------------------------------------------------
Interest receivable 1,345,055
- -------------------------------------------------------------------------------- ------------
Total assets 883,343,913
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Payable for capital stock redeemed 1,726,277
- -----------------------------------------------------------------
Dividends payable 1,122,063
- -----------------------------------------------------------------
Accrued expenses 280,568
- ----------------------------------------------------------------- ------------
Total liabilities 3,128,908
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 880,215,005 shares of capital stock outstanding $880,215,005
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
($880,215,005 / 880,215,005 shares of capital stock outstanding) $1.00
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME CASH SERIES
STATEMENT OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest income $19,748,487
- ---------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------
Investment advisory fee $2,038,530
- --------------------------------------------------------------------
Distribution services fees 407,706
- --------------------------------------------------------------------
Directors' fees 4,343
- --------------------------------------------------------------------
Administrative personnel and services 308,634
- --------------------------------------------------------------------
Custodian and portfolio accounting fees 137,147
- --------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 682,040
- --------------------------------------------------------------------
Shareholder services fee 1,019,265
- --------------------------------------------------------------------
Capital stock registration costs 42,188
- --------------------------------------------------------------------
Auditing fees 14,660
- --------------------------------------------------------------------
Legal fees 7,889
- --------------------------------------------------------------------
Printing and postage 11,701
- --------------------------------------------------------------------
Insurance 15,931
- --------------------------------------------------------------------
Taxes 76,999
- --------------------------------------------------------------------
Miscellaneous 2,309
- -------------------------------------------------------------------- ----------
Total expenses 4,769,342
- --------------------------------------------------------------------
Deduct--Waiver of investment advisory fee 733,053
- -------------------------------------------------------------------- ----------
Net expenses 4,036,289
- --------------------------------------------------------------------------------- -----------
Net investment income $15,712,198
- --------------------------------------------------------------------------------- -----------
</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,
----------------------------------
1995* 1994
--------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------
Net investment income $ 15,712,198 $ 19,909,172
- ----------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------
Dividends to shareholders from net investment income (15,712,198) (19,909,172)
- ----------------------------------------------------------- --------------- ---------------
CAPITAL STOCK TRANSACTIONS--
- -----------------------------------------------------------
Proceeds from sale of shares 2,124,104,798 4,172,769,883
- -----------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 14,482,033 18,573,064
- -----------------------------------------------------------
Cost of shares redeemed (2,049,518,897) (4,197,027,389)
- ----------------------------------------------------------- --------------- ---------------
Change in net assets resulting from capital stock
transactions 89,067,934 (5,684,442)
- ----------------------------------------------------------- --------------- ---------------
Change in net assets 89,067,934 (5,684,442)
- -----------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------
Beginning of period 791,147,071 796,831,513
- ----------------------------------------------------------- --------------- ---------------
End of period $ 880,215,005 $ 791,147,071
- ----------------------------------------------------------- --------------- ---------------
</TABLE>
*Six months ended November 30, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
PRIME CASH SERIES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
---------------------------------------------------------
1995** 1994 1993 1992 1991 1990*
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------
Net investment income 0.02 0.02 0.03 0.04 0.07 0.06
- ------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------
Dividends to shareholders from
net investment income (0.02) (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 $1.00
- ------------------------------------ ----- ----- ----- ----- ----- -----
TOTAL RETURN*** 1.94% 2.48% 2.61% 4.37% 6.99% 6.56%
- ------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------
Expenses 0.99%(b) 0.99% 0.99% 0.98% 0.94% 0.73%(b)
- ------------------------------------
Net investment income 3.85%(b) 2.45% 2.58% 4.21% 6.50% 7.82%(b)
- ------------------------------------
Expense waiver/reimbursements (a) 0.18%(b) 0.18% 0.15% 0.22% 0.44% 0.46%(b)
- ------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------
Net assets, end of period (000
omitted) $880,215 $791,147 $796,832 $750,016 $562,465 $189,254
- ------------------------------------
</TABLE>
* Reflects operations for the period from August 18, 1989 (date of initial
public offering), to May 31, 1990. For the period from the start of
business, July 27, 1989, to August 17, 1989, the net investment income was
distributed to the Trust's adviser.
** Six months ended November 30, 1994 (unaudited).
*** 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.
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
PRIME CASH SERIES
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(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 non-diversified 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.
(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 of collateral 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 (the "Directors"). Risks may arise from the
potential inability of counterparties to honor the terms of the repurchase
agreement. Accordingly, the Fund could receive less than the repurchase price
on the sale of collateral securities.
C. 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.
PRIME CASH SERIES
- --------------------------------------------------------------------------------
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The 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. OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At November 30, 1994, there were 12,500,000,000 shares of $0.001 par value
capital stock authorized. Capital paid in aggregated $880,215,005. Transactions
in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
--------------------------------
1995* 1994
- ------------------------------------------------------------- -------------- --------------
<S> <C> <C>
Shares sold 2,124,104,798 4,172,769,883
- -------------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 14,482,033 18,573,064
- -------------------------------------------------------------
Shares redeemed (2,049,518,897) (4,197,027,389)
- ------------------------------------------------------------- -------------- --------------
Net change resulting from capital stock transactions 89,067,934 (5,684,442)
- ------------------------------------------------------------- -------------- --------------
</TABLE>
*Six months ended November 30, 1994.
(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
.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. The FAS fee is based on the level of
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received during the
period of the Administrative Services Agreement shall be at least $125,000 per
portfolio and $30,000 per each additional class of shares.
DISTRIBUTION AND SHAREHOLDER SERVICES FEE--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 .35 of 1% of the average daily net assets of
the shares, annually, to reimburse FSC.
PRIME CASH SERIES
- --------------------------------------------------------------------------------
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services ("FSS"), the Fund will pay FSS up to .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 FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. The
FServ fee is based on the size, type and number of accounts and transactions
made by shareholders.
Certain of the Officers and Directors of the Corporation are Officers and
Directors or Trustees of the above companies.
<TABLE>
<S> <C>
DIRECTORS OFFICERS
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Richard B. Fisher
William J. Copeland President
J. Christopher Donahue J. Christopher Donahue
James E. Dowd Vice President
Lawrence D. Ellis, M.D. Edward C. Gonzales
Edward L. Flaherty, Jr. Vice President and Treasurer
Peter E. Madden John W. McGonigle
Gregor F. Meyer Vice President and Secretary
Wesley W. Posvar David M. Taylor
Marjorie P. Smuts Assistant Treasurer
Charles H. Field
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risks,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
