PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I'm pleased to present the Annual Report to Shareholders for Government Cash
Series, which covers the twelve-month period from June 1, 1995, through May 31,
1996. The report contains commentary by the portfolio manager, followed by a
complete list of the fund's investments on the last day of the period, and the
financial statements.
During the period, Government Cash Series continued to help your ready cash earn
daily income-- while giving you the additional advantages of daily liquidity and
stability of principal.* The fund's portfolio holds some of the most
conservative investments available--short-term U.S. government obligations or
repurchase agreements backed by these obligations.
Dividends paid to shareholders during the period totaled $22.9 million, or $0.05
per share. At the end of the period, the fund's net assets stood at $448
million.
Thank you for selecting Government Cash Series as a convenient way to keep your
ready cash working on a daily basis. Please contact your investment
representative if you have any questions.
Sincerely,
Richard B. Fisher
President
July 15, 1996
* 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. An
investment in the fund is neither insured nor guaranteed by the U.S.
government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Government Cash Series is invested in direct U.S. Treasury and U.S. government
agency obligations and in repurchase agreements which have these securities as
collateral. 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
Corporation, and maintains a small U.S. Treasury position for liquidity
purposes.
Over the twelve months ended May 31, 1996, the Federal Reserve Board (the
"Federal Reserve") eased monetary policy on three occasions, lowering the
federal funds target rate by 25 basis points in July, December, and in late
January 1996. The moves brought the target rate down to its current level of
5.25%, and came amid signs of sluggish consumer spending and manufacturing and
benign inflation. Short-term interest rates led the Federal Reserve moves
downward and throughout this easing period. The rate on the three-month U.S.
Treasury bill fell from 5.6% at the beginning of June 1995 to 4.9% in
mid-February 1996.
The remainder of the reporting period brought a shift in market psychology
regarding the extent and direction of changes in monetary policy by the Federal
Reserve. Strength in consumer spending and housing combined with signs of a
rebound in manufacturing to paint a picture of an economy that was not on the
verge of recession--as thought earlier this year--but of one that is growing at
a pace above the 2-1/2% believed by many to be the non-inflationary potential
rate of growth. Now confronted with a much sturdier economy than previously
thought, the front end of the market retreated from its expectations for
additional easing from the Federal Reserve in the near future, and moved to
pricing in anticipation of a tightening in monetary policy by the Federal
Reserve later in 1996. Yields on short-term U.S. government securities reflected
this rather volatile mood in the markets; the yield on the three-month U.S.
Treasury bill began the reporting period in December 1995 at 5.5%, declined to
4.9% by mid-February 1996, and ended May at close to 5.2%.
The fund remained targeted in a 40- to 50-day average maturity target range
throughout the reporting period, and moved its positioning within that range
according to the relative value opportunities offered in the market. As a yield
advantage continued to exist for investments in repurchase agreements versus
direct investments in short-term U.S. 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. Treasury and U.S. government agency securities
with short-term agency floating rate notes and U.S. Treasury and agency
securities with longer maturities of 6 to 12 months. This portfolio structure
continues to provide a competitive yield.
Although a run-up in commodity prices early in the second quarter has since
subsided, tight labor market conditions in many regions have raised fears of
wage inflation. Market participants now expect that the Federal Reserve will
need to tighten monetary policy in the not-too-distant future-- in spite of the
Presidential election later in the year--to ward off these pressures. Shortly
after the close of the reporting period, the fund lowered its average maturity
target range from 40-50 days to 35-45 days, to reflect our anticipation of
higher interest rates in the future. We expect that the fund will maintain this
posture in the near future, seeking to maximize its performance through ongoing
relative value analysis. However, changing economic and market developments are
continuously monitored to best serve our clients attracted to the short-term
U.S. government market.
GOVERNMENT CASH SERIES
PORTFOLIO OF INVESTMENTS
MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
SHORT-TERM OBLIGATIONS--40.4%
- ------------------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK, NOTE--0.6%
---------------------------------------------------------------------------------
$ 2,500,000 5.60%, 6/3/1997 $ 2,496,493
--------------------------------------------------------------------------------- --------------
FEDERAL HOME LOAN BANK, NOTES--2.8%
---------------------------------------------------------------------------------
5,000,000 6.02%, 6/3/1996 5,000,067
---------------------------------------------------------------------------------
3,500,000 6.05%, 6/5/1996 3,499,953
---------------------------------------------------------------------------------
4,000,000 6.05%, 6/13/1996 4,000,114
--------------------------------------------------------------------------------- --------------
Total 12,500,134
--------------------------------------------------------------------------------- --------------
(A)FEDERAL HOME LOAN BANK, DISCOUNT NOTES--0.9%
---------------------------------------------------------------------------------
4,000,000 5.33%, 9/12/1996 3,941,061
--------------------------------------------------------------------------------- --------------
(B)FEDERAL HOME LOAN BANK, FLOATING RATE NOTES--2.0%
---------------------------------------------------------------------------------
2,000,000 5.29%, 6/4/1996 1,999,796
---------------------------------------------------------------------------------
7,000,000 5.34%, 6/4/1996 6,997,858
--------------------------------------------------------------------------------- --------------
Total 8,997,654
--------------------------------------------------------------------------------- --------------
(A)FEDERAL HOME LOAN MORTGAGE ASSOCIATION, DISCOUNT NOTES--0.5%
---------------------------------------------------------------------------------
2,500,000 5.34%, 6/24/1996 2,491,694
--------------------------------------------------------------------------------- --------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION, NOTES--2.5%
---------------------------------------------------------------------------------
3,400,000 5.41%, 12/6/1996 3,397,223
---------------------------------------------------------------------------------
3,200,000 5.60%, 11/1/1996 3,197,927
---------------------------------------------------------------------------------
3,000,000 5.63%, 6/28/1996 2,999,812
---------------------------------------------------------------------------------
1,600,000 5.91%, 8/19/1996 1,600,980
--------------------------------------------------------------------------------- --------------
Total 11,195,942
--------------------------------------------------------------------------------- --------------
(A)FEDERAL NATIONAL MORTGAGE ASSOCIATION, DISCOUNT NOTES--7.1%
---------------------------------------------------------------------------------
8,000,000 5.23%, 9/18/1996 7,878,404
---------------------------------------------------------------------------------
2,000,000 5.25%, 12/23/1996 1,943,169
---------------------------------------------------------------------------------
6,000,000 5.26%-5.37%, 9/24/1996 5,902,250
---------------------------------------------------------------------------------
$ 3,000,000 5.27%, 9/27/1996 $ 2,950,342
---------------------------------------------------------------------------------
4,000,000 5.28%, 11/20/1996 3,903,871
---------------------------------------------------------------------------------
7,000,000 5.39%, 10/11/1996 6,867,047
---------------------------------------------------------------------------------
2,600,000 5.41%, 11/7/1996 2,540,114
--------------------------------------------------------------------------------- --------------
Total 31,985,197
--------------------------------------------------------------------------------- --------------
(B)FEDERAL NATIONAL MORTGAGE ASSOCIATION, FLOATING RATE NOTES--7.4%
---------------------------------------------------------------------------------
6,000,000 5.18%, 6/4/1996 5,993,563
---------------------------------------------------------------------------------
7,000,000 5.28%, 6/17/1996 6,995,766
---------------------------------------------------------------------------------
3,500,000 5.30%, 6/4/1996 3,493,051
---------------------------------------------------------------------------------
6,500,000 5.34%, 6/6/1996 6,499,615
---------------------------------------------------------------------------------
5,000,000 5.45%, 6/4/1996 4,996,127
---------------------------------------------------------------------------------
5,000,000 5.57%, 6/4/1996 4,999,516
--------------------------------------------------------------------------------- --------------
Total 32,977,638
--------------------------------------------------------------------------------- --------------
(B)STUDENT LOAN MORTGAGE ASSOCIATION, FLOATING RATE NOTES--4.2%
---------------------------------------------------------------------------------
4,500,000 5.31%, 6/4/1996 4,500,000
---------------------------------------------------------------------------------
8,000,000 5.41%, 6/4/1996 7,997,369
---------------------------------------------------------------------------------
6,150,000 5.56%, 6/4/1996 6,157,717
--------------------------------------------------------------------------------- --------------
Total 18,655,086
--------------------------------------------------------------------------------- --------------
(A)UNITED STATES TREASURY BILLS--2.9%
---------------------------------------------------------------------------------
6,000,000 4.79%-4.89%, 11/14/1996 5,866,462
---------------------------------------------------------------------------------
2,500,000 4.85%, 9/19/1996 2,462,951
---------------------------------------------------------------------------------
5,000,000 4.93%-4.98%, 3/6/1997 4,808,991
--------------------------------------------------------------------------------- --------------
Total 13,138,404
--------------------------------------------------------------------------------- --------------
UNITED STATES TREASURY NOTES--9.5%
---------------------------------------------------------------------------------
10,000,000 6.50%, 9/30/1996 10,043,081
---------------------------------------------------------------------------------
4,000,000 6.88%, 10/31/1996 4,031,514
---------------------------------------------------------------------------------
3,000,000 6.88%, 3/31/1997 3,029,925
---------------------------------------------------------------------------------
$ 2,000,000 7.25%, 11/15/1996 $ 2,019,960
---------------------------------------------------------------------------------
5,000,000 7.25%, 11/30/1996 5,051,530
---------------------------------------------------------------------------------
3,000,000 7.50%, 12/31/1996 3,038,628
---------------------------------------------------------------------------------
6,000,000 8.00%, 1/15/1997 6,085,159
---------------------------------------------------------------------------------
6,000,000 8.00%, 10/15/1996 6,064,500
---------------------------------------------------------------------------------
3,000,000 8.50%, 4/15/1997 3,069,078
--------------------------------------------------------------------------------- --------------
Total 42,433,375
--------------------------------------------------------------------------------- --------------
TOTAL SHORT-TERM OBLIGATIONS 180,812,678
--------------------------------------------------------------------------------- --------------
(C)REPURCHASE AGREEMENTS--61.0%
- ------------------------------------------------------------------------------------------------
9,500,000 Barclays de Zoete Wedd Securities, Inc., 5.340%, dated 5/31/1996, due 6/3/1996 9,500,000
---------------------------------------------------------------------------------
20,000,000 CIBC Wood Gundy Securities Corp., 5.370%, dated 5/31/1996,
due 6/3/1996 20,000,000
---------------------------------------------------------------------------------
20,000,000 Deutsche Bank Government Securities, Inc., 5.340%, dated 5/31/1996,
due 6/3/1996 20,000,000
---------------------------------------------------------------------------------
70,000,000 Fuji Government Securities, Inc., 5.370%, dated 5/31/1996,
due 6/3/1996 70,000,000
---------------------------------------------------------------------------------
25,000,000 Greenwich Capital Markets, Inc., 5.380%, dated 5/31/1996,
due 6/3/1996 25,000,000
---------------------------------------------------------------------------------
20,000,000 Nikko Securities Co. International, Inc., 5.380%, dated 5/31/1996,
due 6/3/1996 20,000,000
---------------------------------------------------------------------------------
20,000,000 Nomura Securities Intenational, Inc., 5.370%, dated 5/31/1996,
due 6/3/1996 20,000,000
---------------------------------------------------------------------------------
20,000,000 PaineWebber Inc., 5.370%, dated 5/31/1996, due 6/3/1996 20,000,000
---------------------------------------------------------------------------------
15,000,000 Smith Barney, Harris Upham & Co., Inc., 5.375%, dated 5/31/1996, due 6/3/1996 15,000,000
---------------------------------------------------------------------------------
20,000,000 UBS Securities, Inc., 5.380%, dated 5/31/1996, due 6/3/1996 20,000,000
---------------------------------------------------------------------------------
12,000,000 (d)J.P. Morgan Securities, Inc., 5.300%, dated 3/13/1996, due 6/11/1996 12,000,000
---------------------------------------------------------------------------------
11,000,000 (d)Lehman Brothers, Inc., 5.330%, dated 4/10/1996, due 6/10/1996 11,000,000
---------------------------------------------------------------------------------
$ 11,000,000 (d)Morgan Stanley & Co., Inc., 5.300%, dated 4/9/1996, due 6/10/1996 $ 11,000,000
--------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 273,500,000
--------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(E) $ 454,312,678
--------------------------------------------------------------------------------- --------------
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase.
(b) Denotes variable rate obligations for which the current rate and next demand
date is shown.
(c) The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio. The investments in the repurchase agreements are through
participation in joint accounts with other Federated funds.
(d) 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 issurer is
downgraded.
(e) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($448,128,709) at May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT CASH SERIES
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Investments in repurchase agreements $ 273,500,000
- ---------------------------------------------------------------------------------
Investments in securities 180,812,678
- --------------------------------------------------------------------------------- --------------
Total investments in securities, at amortized cost and value $ 454,312,678
- -------------------------------------------------------------------------------------------------
Income receivable 2,158,613
- -------------------------------------------------------------------------------------------------
Receivable for shares sold 2,006,988
- ------------------------------------------------------------------------------------------------- --------------
Total assets 458,478,279
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------
Payable for investments purchased 7,492,619
- ---------------------------------------------------------------------------------
Payable for shares redeemed 1,316,466
- ---------------------------------------------------------------------------------
Income distribution payable 495,942
- ---------------------------------------------------------------------------------
Payable to Bank 760,190
- ---------------------------------------------------------------------------------
Accrued expenses 284,353
- --------------------------------------------------------------------------------- --------------
Total liabilities 10,349,570
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 448,128,709 shares outstanding $ 448,128,709
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -------------------------------------------------------------------------------------------------
$448,128,709 / 448,128,709 shares outstanding $1.00
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT CASH SERIES
STATEMENT OF OPERATIONS
YEAR ENDED MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest $ 27,721,482
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------
Investment advisory fee $ 2,411,464
- ------------------------------------------------------------------------------------
Administrative personnel and services fee 364,861
- ------------------------------------------------------------------------------------
Custodian fees 107,323
- ------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 222,417
- ------------------------------------------------------------------------------------
Directors'/Trustees' fees 7,298
- ------------------------------------------------------------------------------------
Auditing fees 13,287
- ------------------------------------------------------------------------------------
Legal fees 4,050
- ------------------------------------------------------------------------------------
Portfolio accounting fees 92,599
- ------------------------------------------------------------------------------------
Distribution services fee 1,688,025
- ------------------------------------------------------------------------------------
Shareholder services fee 1,205,732
- ------------------------------------------------------------------------------------
Share registration costs 29,450
- ------------------------------------------------------------------------------------
Printing and postage 26,668
- ------------------------------------------------------------------------------------
Insurance premiums 9,179
- ------------------------------------------------------------------------------------
Taxes 48,042
- ------------------------------------------------------------------------------------
Miscellaneous 5,919
- ------------------------------------------------------------------------------------ -------------
Total expenses 6,236,314
- ------------------------------------------------------------------------------------
Waivers--
- ---------------------------------------------------------------------
Waiver of investment advisory fee $ (234,663)
- ---------------------------------------------------------------------
Waiver of distribution services fee (1,205,732)
- --------------------------------------------------------------------- -------------
Total waivers (1,440,395)
- ------------------------------------------------------------------------------------ -------------
Net expenses 4,795,919
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 22,925,563
- --------------------------------------------------------------------------------------------------- -------------
</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,
<S> <C> <C>
1996 1995
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------
Net investment income $ 22,925,563 $ 17,758,338
- ---------------------------------------------------------------------------- ----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------
Distributions from net investment income (22,925,563) (17,758,338)
- ---------------------------------------------------------------------------- ----------------- -----------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------
Proceeds from sale of shares 3,204,189,310 3,457,947,479
- ----------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions
declared 18,085,135 13,027,588
- ----------------------------------------------------------------------------
Cost of shares redeemed (3,227,241,493) (3,419,213,014)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from share transactions (4,967,048) 51,762,053
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets (4,967,048) 51,762,053
- ----------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------
Beginning of period 453,095,757 401,333,704
- ---------------------------------------------------------------------------- ----------------- -----------------
End of period $ 448,128,709 $ 453,095,757
- ---------------------------------------------------------------------------- ----------------- -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT CASH SERIES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
<S> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992 1991 1990(A)
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------
Net investment income 0.05 0.04 0.02 0.03 0.04 0.07 0.06
- ------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------
Distributions from net investment income (0.05) (0.04) (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 $ 1.00
- ------------------------------------------ --------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (B) 4.85% 4.43% 2.45% 2.54% 4.33% 6.80% 6.53%
- ------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------
Expenses 0.99% 0.99% 0.99% 0.99% 0.98% 0.94% 0.73%*
- ------------------------------------------
Net investment income 4.75% 4.35% 2.41% 2.53% 4.25% 6.48% 7.74%*
- ------------------------------------------
Expense waiver/
reimbursement (c) 0.30% 0.08% 0.09% 0.06% 0.06% 0.13% 0.32%*
- ------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------
Net assets, end of period (000 omitted) $448,129 $453,096 $401,334 $400,231 $550,675 $631,718 $493,995
- ------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from August 23, 1989, (date of initial
public investment) to May 31, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT CASH SERIES
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Cash Trust Series, Inc. (the "Corporation") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Corporation consists of four portfolios. The financial
statements included herein are only those of Government Cash Series (the
"Fund"), a diversified portfolio. 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. The investment objective of the Fund is current income consistent with
stability of principal and liquidity.
(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.
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.
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 under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
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 the guidelines and/or
standards reviewed or 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.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the 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 income. Accordingly, no
provisions for federal tax are necessary.
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.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At May 31, 1996, there were 12,500,000,000 shares of $0.001 par value capital
stock authorized. At May 31, 1996, capital paid in aggregated $448,128,709.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
<S> <C> <C>
1996 1995
Shares sold 3,204,189,310 3,457,947,479
- ------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 18,085,135 13,027,588
- ------------------------------------------------------------------------------
Shares redeemed (3,227,241,493) (3,419,213,014)
- ------------------------------------------------------------------------------ ---------------- ----------------
Net change resulting from share transactions (4,967,048) 51,762,053
- ------------------------------------------------------------------------------ ---------------- ----------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Advisers, the Fund's investment adviser, (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received during the
period of the Administrative Services Agreement shall be at least $125,000 per
portfolio and $30,000 per each additional class of shares.
DISTRIBUTION 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
compensate Federated Securities Corp., the principal distributor, from the net
assets of the Fund to finance activities intended to result in the sale of the
Fund's shares. The Plan provides that the Fund may incur distribution expenses
up to 0.35% of the average daily net assets of the Fund shares, annually, to
compensate Federated Securities Corp. The distributor may voluntarily choose to
waive any portion of its fee. The distributor can modify or terminate this
voluntary waiver at any time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25%
of average daily net assets of the Fund for the period. The fee paid to FSS is
used to finance certain services for shareholders and to maintain shareholder
accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its
subsidiary, Federated Shareholder Services Company ("FSSC"), serves as transfer
and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Directors of the Corporation are Officers
and Directors or Trustees of the above companies.
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Board of Directors of
CASH TRUST SERIES, INC. and Shareholders of
GOVERNMENT CASH SERIES:
We have audited the accompanying statement of assets and liabilities of
Government Cash Series (one of the portfolios comprising Cash Trust Series,
Inc.) including the portfolio of investments, as of May 31, 1996, the related
statement of operations for the year then ended, the statements of changes in
net assets for the years ended May 31, 1996 and 1995 and the financial
highlights for the periods presented. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
May 31, 1996 by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Government Cash
Series as of May 31, 1996, the results of its operations, the changes in its net
assets, and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
July 10, 1996
DIRECTORS OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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 Executive Vice President
Lawrence D. Ellis, M.D. Edward C. Gonzales
Edward L. Flaherty, Jr. Executive Vice President
Peter E. Madden John W. McGonigle
Gregor F. Meyer Executive Vice President and Secretary
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Treasurer
Marjorie P. Smuts 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
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
ANNUAL REPORT
TO SHAREHOLDERS
MAY 31, 1996
(LOGO) FEDERATED INVESTORS
SINCE 1955
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
FEDERATED SECURITIES CORP. IS THE DISTRIBUTOR OF THE FUND
AND IS A SUBSIDIARY OF FEDERATED INVESTORS.
(LOGO)
CUSIP 147551204 RECYCLED
0062902 (7/96) PAPER
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for Municipal Cash
Series, which covers the twelve-month period from June 1, 1995, through May 31,
1996. The report contains commentary by the portfolio manager, followed by a
complete list of the fund's investments on the last day of the period, and the
financial statements.
Municipal Cash Series continues to help your cash earn daily income free of
federal regular income tax* while giving you the additional advantages of daily
liquidity and stability of principal.** At the end of the report period, the
fund was invested in high quality, short-term securities issued by
municipalities across 36 states.
Tax-free dividends paid to shareholders during the period totaled $14.8 million,
or $0.03 per share. At the end of the period, the fund's net assets stood at
$478.6 million.
As always, we thank you for using Municipal Cash Series as a convenient way to
pursue daily, tax-free income on your ready cash. Please contact your investment
representative if you have any questions. We look forward to keeping you up to
date on your investment.
Sincerely,
Richard B. Fisher
President
July 15, 1996
* Income may be subject to the federal alternative minimum tax and state and
local taxes.
** 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. An
investment in the fund is neither insured nor guaranteed by the U.S.
government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Municipal Cash Series invests in high quality short-term tax-exempt debt
securities and seeks to maintain a constant net asset value of $1.00 per share.
For the twelve-month period ended May 31, 1996, the fund paid shareholders a net
annualized total return of 3.04%.* This is equivalent to a taxable money market
fund total return of 5.03% in the highest federal tax bracket of 39.6%.
Interest rates in the money markets were on a rollercoaster ride over the
reporting period. In the second quarter of 1995 with signs that the Federal
Reserve Board's (the "Federal Reserve's") seven increases in the federal funds
target rate were taking hold on the economy, market sentiment shifted from
expecting the Federal Reserve's next move to be an easing rather than a
tightening in monetary policy. The front end of the curve flattened
significantly in anticipation of a change in Federal Reserve policy. The market
proved to be right, as in early July 1995, the Federal Reserve cut the target
rate from 6.00% to 5.75%. After holding steady for a couple of months, the
Federal Reserve lowered the federal funds target rate from 5.75% to 5.50% in
December and again from 5.50% to the current 5.25% at the end of January. The
Federal Reserve cited a weakening economy and better than expected inflation as
the impetus behind the easings. Throughout the period, money market participants
anticipated the policy moves from the Federal Reserve and looked forward to
additional eases in the not-so-distant future.
Economic data for February and March, however, have changed the minds of many
market participants who now feel that the January cut was the last for a while.
Strong employment growth in February and March as well as improved housing and
retail sectors indicated that the economy could be heating up. Now confronted
with a more robust economy than previously anticipated, market participants have
moved expectations toward a more neutral policy from the Federal Reserve in the
near term with a possible tightening, or increase in rates, later in 1996.
Yields on short-term U.S. government securities reflected this rather volatile
mood in the markets. The yield on one-year U.S. Treasury bills began December at
5.35%, fell to 4.81% in mid-February, but rose to 5.70% at the end of May. We
saw similar movements in the municipal market, with the Bond Buyer One Year Note
Index** starting December at 3.45%, falling to 3.08% in mid-February, and rising
to 3.73% by the end of May. Yields on short-term municipal securities also
reflected supply and demand imbalances unique to the municipal money markets.
These imbalances resulted in municipal yields experiencing more volatility on a
weekly basis than U.S. Treasury yields, particularly with variable rate
securities.
In this interest rate environment, the fund's average maturity was in a neutral
range of 45-65 days. Looking ahead to the latter half of 1996, short-term
interest rates should trade in a fairly narrow range based on expectations of a
steady monetary policy. However, an increase in short-term rates by the Federal
Reserve cannot be ruled out if economic data, particularly the employment
numbers, remain strong.
*Performance quoted represents past performance and is not indicative of future
results.
**Bond Buyer's Index is composed of 40 actively traded general obligation and
municipal revenue issues rated A or higher. Municipal bond yields are measured
against this unmanaged index.
MUNICIPAL CASH SERIES
PORTFOLIO OF INVESTMENTS
MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- --------------
SHORT-TERM MUNICIPALS--99.6%
- -------------------------------------------------------------------------------------------------
ALABAMA--1.4%
-----------------------------------------------------------------------------------
$ 485,000 Hoover, AL IDA Weekly VRDNs (Bud's Best Cookies, Inc.)/ (SouthTrust Bank of
Alabama, Birmingham LOC) $ 485,000
-----------------------------------------------------------------------------------
5,000,000 Mobile, AL Port City Medical Clinic Board, Revenue Bonds (Series 1992-A), 4.05% CP
(Mobile, AL Infirmiary Association)/(Fuji Bank, Ltd., Tokyo LOC), Mandatory Tender
6/19/1996 5,000,000
-----------------------------------------------------------------------------------
345,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell Manufacturing)/ (SouthTrust Bank of
Alabama, Birmingham LOC) 345,000
-----------------------------------------------------------------------------------
370,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell Manufacturing)/ (SouthTrust Bank of
Alabama, Birmingham LOC) 370,000
-----------------------------------------------------------------------------------
325,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell Manufacturing)/ (SouthTrust Bank of
Alabama, Birmingham LOC) 325,000
-----------------------------------------------------------------------------------
395,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell Manufacturing)/ (SouthTrust Bank of
Alabama, Birmingham LOC) 395,000
----------------------------------------------------------------------------------- --------------
Total 6,920,000
----------------------------------------------------------------------------------- --------------
ARKANSAS--9.3%
-----------------------------------------------------------------------------------
9,000,000 Arkansas Development Finance Authority, (Series 1995) Weekly VRDNs (Paco Steel &
Engineering Corporation Project)/(Union Bank of California LOC) 9,000,000
-----------------------------------------------------------------------------------
4,000,000 Hope, AR , Solid Waste Disposal Revenue Bonds (Series 1994), 3.70% CP
(Temple-Inland Forest Products Corporation Project)/(Temple-Inland, Inc. GTD),
Mandatory Tender 7/12/1996 4,000,000
-----------------------------------------------------------------------------------
3,000,000 Hope, AR , Solid Waste Disposal Revenue Bonds (Series 1994), 3.75% CP
(Temple-Inland Forest Products Corporation Project)/(Temple-Inland, Inc. GTD),
Mandatory Tender 7/23/1996 3,000,000
-----------------------------------------------------------------------------------
7,900,000 Hope, AR , Solid Waste Disposal Revenue Bonds (Series 1994), 3.80% CP
(Temple-Inland Forest Products Corporation Project)/(Temple-Inland, Inc. GTD),
Mandatory Tender 10/17/1996 7,900,000
-----------------------------------------------------------------------------------
$ 4,000,000 Hope, AR , Solid Waste Disposal Revenue Bonds (Series 1994), 3.80% CP
(Temple-Inland Forest Products Corporation Project)/(Temple-Inland, Inc. GTD),
Mandatory Tender 7/25/1996 $ 4,000,000
-----------------------------------------------------------------------------------
1,000,000 Sheridan, AR IDA, (Series B) Weekly VRDNs (H.H. Robertson Co.)/ (PNC Bank, N.A.
LOC) 1,000,000
-----------------------------------------------------------------------------------
7,500,000 Siloam Springs, AR, IDRB (Series 1994) Weekly VRDNs (La-Z Boy Chair Co.)/(NBD Bank,
Michigan LOC) 7,500,000
-----------------------------------------------------------------------------------
8,000,000 Springdale, AR, IDA Weekly VRDNs (Newlywed Food)/(Mellon Bank NA, Pittsburgh LOC) 8,000,000
----------------------------------------------------------------------------------- --------------
Total 44,400,000
----------------------------------------------------------------------------------- --------------
CALIFORNIA--2.8%
-----------------------------------------------------------------------------------
5,000,000 California HFA, Home Mortgage Revenue Bonds (1995 Series E), 3.50% TOBs (Bayerische
Landesbank Girozentrale GIC), Mandatory Tender 2/1/1997 5,000,000
-----------------------------------------------------------------------------------
1,785,000 Los Angeles County, CA Housing Authority, Single Family Mortgage Revenues, 4.125%
TOBs (GNMA COL)/(Meridian Bank, Reading, PA LIQ), Optional Tender 6/1/1997 1,785,000
-----------------------------------------------------------------------------------
2,170,000 Los Angeles County, CA Housing Authority, Single Family Mortgage Revenues, 4.50%
TOBs (GNMA COL)/(Meridian Bank, Reading, PA LIQ), Optional Tender 6/1/1996 2,170,000
-----------------------------------------------------------------------------------
4,500,000 Pomona, CA, 4.70% TRANs, 6/28/1996 4,501,273
----------------------------------------------------------------------------------- --------------
Total 13,456,273
----------------------------------------------------------------------------------- --------------
COLORADO--0.9%
-----------------------------------------------------------------------------------
4,500,000 Adams County, CO IDB, (Series 1993) Weekly VRDNs (Bace Manufacturing,
Inc.)/(Citibank NA, New York LOC) 4,500,000
----------------------------------------------------------------------------------- --------------
GEORGIA--2.1%
-----------------------------------------------------------------------------------
4,200,000 Clayton County, GA Development Authority, (Series 1994) Weekly VRDNs (Lear Seating
Corp.)/(Chemical Bank, New York LOC) 4,200,000
-----------------------------------------------------------------------------------
$ 490,000 Columbus, GA IDA Industrial & Port Development Commission, (Series 1992) Weekly
VRDNs (Maine Street Village Partnership)/ (Columbus Bank and Trust Co., GA LOC) $ 490,000
-----------------------------------------------------------------------------------
1,000,000 Forsythe County, GA Development Authority, IDRB (Series 1995) Weekly VRDNs
(American BOA, Inc. Project)/(Dresdner Bank Ag, Frankfurt LOC) 1,000,000
-----------------------------------------------------------------------------------
3,040,000 Franklin County, GA Industrial Building Authority, (Series 1995) Weekly VRDNs
(Bosal Industries, Inc.)/(ABN AMRO Bank N.V., Amsterdam LOC) 3,040,000
-----------------------------------------------------------------------------------
1,500,000 Screven County, GA IDA, (Series 1995) Weekly VRDNs (Sylvania Yarn Systems, Inc.
Project)/(SunTrust Bank, Atlanta LOC) 1,500,000
----------------------------------------------------------------------------------- --------------
Total 10,230,000
----------------------------------------------------------------------------------- --------------
IDAHO--0.2%
-----------------------------------------------------------------------------------
760,000 Idaho Housing Agency, (Series 1988C), 4.125% TOBs, Optional Tender 7/1/1996 760,000
----------------------------------------------------------------------------------- --------------
ILLINOIS--2.5%
-----------------------------------------------------------------------------------
3,700,000 Chicago, IL, Gas Supply Revenue Bonds (1993 Series B), 3.85% TOBs (Peoples Gas
Light & Coke Company), Optional Tender 12/1/1996 3,700,000
-----------------------------------------------------------------------------------
4,400,000 Community Unit School District Number 220, IL, 4.10% TANs,
1/1/1997 4,400,000
-----------------------------------------------------------------------------------
4,000,000 Morton, IL, IDRB (Series 1996) Weekly VRDNs (Morton Welding Co, Inc. Project)/(Bank
One, Chicago LOC) 4,000,000
----------------------------------------------------------------------------------- --------------
Total 12,100,000
----------------------------------------------------------------------------------- --------------
INDIANA--8.0%
-----------------------------------------------------------------------------------
555,000 Avilla, IN, IDR Weekly VRDNs (Group Dekko International)/(Bank One, Indianapolis,
IN LOC) 555,000
-----------------------------------------------------------------------------------
2,275,000 Crown Point, IN, IDA Weekly VRDNs (D & M Manufacturing)/ (National City Bank,
Kentucky LOC) 2,275,000
-----------------------------------------------------------------------------------
$ 2,600,000 Franklin, IN, Economic Development Revenue Refunding Bonds (Series 1994) Weekly
VRDNs (Pedcor Investments L.P.)/(Federal Home Loan Bank of Indianapolis LOC) $ 2,600,000
-----------------------------------------------------------------------------------
6,540,000 Gary, IN, Economic Development Refunding Revenue Bonds (Series 1996 A) Weekly VRDNs
(Miller Partnership L.P. Project)/(Royal Bank of Scotland PLC, Edinburgh LOC) 6,540,000
-----------------------------------------------------------------------------------
2,735,000 Huntingburg, IN , (Series 1994) Weekly VRDNs (DMI Furniture, Inc.)/ (Bank One,
Indianapolis, IN LOC) 2,735,000
-----------------------------------------------------------------------------------
2,850,000 Huntingburg, IN , EDRB (Series 1993) Weekly VRDNs (DMI Furniture, Inc.)/(Bank One,
Indianapolis, IN LOC) 2,850,000
-----------------------------------------------------------------------------------
700,000 Indiana Economic Development Commission, (Series 1989) Weekly VRDNs (O'Neal Steel,
Inc.)/(SouthTrust Bank of Alabama, Birmingham LOC) 700,000
-----------------------------------------------------------------------------------
4,885,000 Indiana State HFA, Single Family Mortgage Revenue Bonds (Series 1995 D-2), 3.95%
TOBs (FGIC GIC), Mandatory Tender 11/1/1996 4,885,000
-----------------------------------------------------------------------------------
2,805,000 Indianapolis, IN, (Series 1991) Weekly VRDNs (Cantor & Coleman II Project)/(Bank
One, Indianapolis, IN LOC) 2,805,000
-----------------------------------------------------------------------------------
3,500,000 Lawrence, IN , (Series 1996), 4.10% TOBs (Woodward Commons Project)/(FGIC GIC),
Mandatory Tender 4/1/1997 3,500,000
-----------------------------------------------------------------------------------
2,145,000 Lebanon, IN IDA, (Series 1991) Weekly VRDNs (White Castle System)/ (Bank One,
Columbus, N.A. LOC) 2,145,000
-----------------------------------------------------------------------------------
3,000,000 Tippecanoe County, IN Economic Development Revenue Weekly VRDNs (Lafayette Venetian
Blind)/(PNC Bank, Ohio, N.A. LOC) 3,000,000
-----------------------------------------------------------------------------------
3,555,000 Westfield, IN, IDR, (Series 1994) Weekly VRDNs (Standard Locknut & Lockwasher,
Inc.)/(Bank One, Indianapolis, IN LOC) 3,555,000
----------------------------------------------------------------------------------- --------------
Total 38,145,000
----------------------------------------------------------------------------------- --------------
IOWA--1.2%
-----------------------------------------------------------------------------------
3,500,000 Des Moines, IA, IDR Bonds (Series 1994) Weekly VRDNs (Printer, Inc.)/(Norwest Bank
Minnesota, Minneapolis LOC) 3,500,000
-----------------------------------------------------------------------------------
$ 2,330,000 Iowa Finance Authority, IDRB Weekly VRDNs (V-T Industries, Inc. Project)/(Norwest
Bank Minnesota, Minneapolis LOC) $ 2,330,000
----------------------------------------------------------------------------------- --------------
Total 5,830,000
----------------------------------------------------------------------------------- --------------
KENTUCKY--5.5%
-----------------------------------------------------------------------------------
325,000 Caldwell County, KY, (Series 1990) Weekly VRDNs (Thompson Steel Pipe)/(Corestates
Bank N.A., Philadelphia, PA LOC) 325,000
-----------------------------------------------------------------------------------
3,805,000 Glasgow, KY, (Series 1994) Weekly VRDNs (Ply Tech Corp.)/(Liberty National Bank &
Trust Co. LOC) 3,805,000
-----------------------------------------------------------------------------------
1,800,000 Jefferson County, KY Weekly VRDNs (Gateway Press, Inc.)/(PNC Bank, Kentucky LOC) 1,800,000
-----------------------------------------------------------------------------------
2,040,000 Jefferson County, KY, IDR (Series 1991) Weekly VRDNs (Findley Adhesives)/(Bank One,
Columbus, N.A. LOC) 2,040,000
-----------------------------------------------------------------------------------
2,000,000 Jefferson County, KY, IDR Weekly VRDNs (O'Neal Steel, Inc.)/ (SouthTrust Bank of
Alabama, Birmingham LOC) 2,000,000
-----------------------------------------------------------------------------------
4,700,000 Kentucky Pollution Abatement & Water Resource Finance Authority Daily VRDNs (Toyota
Motor Credit Corp.) 4,700,000
-----------------------------------------------------------------------------------
1,800,000 Kentucky Rural EDA, (Series 1990) Weekly VRDNs (Thompson Steel Pipe)/(NBD Bank,
Michigan LOC) 1,800,000
-----------------------------------------------------------------------------------
6,000,000 Scottsville, KY, 4.15% TOBs (Sumitomo Electric Wiring Systems)/ (Sumitomo Bank
Ltd., Osaka LOC), Optional Tender 11/1/1996 6,000,000
-----------------------------------------------------------------------------------
4,000,000 Winchester, KY, (Series 1990) Weekly VRDNs (Walle Corp.)/(Union Bank of
Switzerland, Zurich LOC) 4,000,000
----------------------------------------------------------------------------------- --------------
Total 26,470,000
----------------------------------------------------------------------------------- --------------
LOUISIANA--2.8%
-----------------------------------------------------------------------------------
8,000,000 Lake Charles, LA Harbor & Terminal District, Revenue Bonds (Series 1995A) Weekly
VRDNs (Polycom-Huntsman, Inc. Project)/(National City Bank, Pittsburgh LOC) 8,000,000
-----------------------------------------------------------------------------------
5,000,000 Louisiana HFA, Single Family Mortgage Revenue Bonds (Series 1996A), 3.45% TOBs
(FGIC GIC), Mandatory Tender 1/15/1997 5,000,000
----------------------------------------------------------------------------------- --------------
Total 13,000,000
----------------------------------------------------------------------------------- --------------
MARYLAND--2.8%
-----------------------------------------------------------------------------------
$ 1,000,000 Baltimore County, MD IDA, (Series 1994A) Weekly VRDNs (Pitts Realty Limited
Partnership)/(PNC Bank, NA, Delaware LOC) $ 1,000,000
-----------------------------------------------------------------------------------
1,000,000 Baltimore County, MD, Revenue Bonds (1994 Issue) Weekly VRDNs (Direct Marketing
Associates, Inc. Facility)/(First National Bank of Maryland, Baltimore LOC) 1,000,000
-----------------------------------------------------------------------------------
645,000 Baltimore, MD, (Series 1988) Weekly VRDNs (Cherill Associated
Facility)/(Nationsbank of Maryland, N.A. LOC) 645,000
-----------------------------------------------------------------------------------
1,800,000 Maryland State Community Development Administration, (Series 1990B) Weekly VRDNs
(Cherry Hill Apartment Ltd.)/(Nationsbank of Maryland, N.A. LOC) 1,800,000
-----------------------------------------------------------------------------------
5,000,000 Montgomery County, MD Housing Opportunities Commission, Multifamily Housing Revenue
Bonds (1995 Series B), 3.90% BANs,
11/14/1996 5,000,000
-----------------------------------------------------------------------------------
4,000,000 Wicomico County, MD, EDRB (Series 1994) Weekly VRDNs (Field Container Co.
L.P.)/(Northern Trust Co., Chicago, IL LOC) 4,000,000
----------------------------------------------------------------------------------- --------------
Total 13,445,000
----------------------------------------------------------------------------------- --------------
MASSACHUSETTS--1.6%
-----------------------------------------------------------------------------------
7,500,000 Gardner, MA, 4.00% BANs, 4/1/1997 7,511,993
----------------------------------------------------------------------------------- --------------
MICHIGAN--2.5%
-----------------------------------------------------------------------------------
1,215,000 Michigan State, Strategic Fund (Series 1991) Weekly VRDNs (AGA Gas, Inc.)/(Svenska
Handelsbanken, Stockholm LOC) 1,215,000
-----------------------------------------------------------------------------------
2,000,000 Michigan State, Strategic Fund Limited Obligation Revenue Bonds (Series 1994)
Weekly VRDNs (Tesco Engineering)/(Bank of Tokyo-Mitsubishi LTD. LOC) 2,000,000
-----------------------------------------------------------------------------------
3,300,000 Michigan State, Strategic Fund Weekly VRDNs (Tesco Engineering)/ (Bank of
Tokyo-Mitsubishi LTD. LOC) 3,300,000
-----------------------------------------------------------------------------------
4,250,000 Michigan Strategic Fund, Limited Obligation (Series 1995) Weekly VRDNs (J.R.
Automation Technologies Project)/(Old Kent Bank & Trust Co., Grand Rapids LOC) 4,250,000
-----------------------------------------------------------------------------------
$ 1,100,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1995) Weekly
VRDNs (Bear Lake Associates Project)/(Old Kent Bank & Trust Co., Grand Rapids LOC) $ 1,100,000
----------------------------------------------------------------------------------- --------------
Total 11,865,000
----------------------------------------------------------------------------------- --------------
MINNESOTA--2.7%
-----------------------------------------------------------------------------------
700,000 Minnesota State Higher Education Coordinating Board, (Series 1992A) Weekly VRDNs
(First Bank NA, Minneapolis LIQ) 700,000
-----------------------------------------------------------------------------------
9,000,000 Minnesota State Higher Education Coordinating Board, 1992 (Series C) Weekly VRDNs
(First Bank NA, Minneapolis LIQ) 9,000,000
-----------------------------------------------------------------------------------
895,000 Plymouth, MN Weekly VRDNs (Nuaire, Inc.)/(Norwest Bank Minnesota, Minneapolis LOC) 895,000
-----------------------------------------------------------------------------------
2,420,000 St. Paul, MN Port Authority Weekly VRDNs (H.M. Smyth Co., Inc.)/ (Norwest Bank
Minnesota, Minneapolis LOC) 2,420,000
----------------------------------------------------------------------------------- --------------
Total 13,015,000
----------------------------------------------------------------------------------- --------------
MISSISSIPPI--2.6%
-----------------------------------------------------------------------------------
2,000,000 Mississippi Business Finance Corp. Weekly VRDNs (O'Neal Steel, Inc.)/(SouthTrust
Bank of Alabama, Birmingham LOC) 2,000,000
-----------------------------------------------------------------------------------
5,000,000 Mississippi Business Finance Corp., (Series 1995) Weekly VRDNs (Mississippi Baking
Company L.L.C. Project)/(First National Bank of Maryland, Baltimore LOC) 5,000,000
-----------------------------------------------------------------------------------
2,600,000 Mississippi Business Finance Corp., IDRB (Series 1994) Weekly VRDNs (Flexsteel
Industries, Inc.)/(Norwest Bank Minnesota, Minneapolis LOC) 2,600,000
-----------------------------------------------------------------------------------
2,700,000 Olive Branch, MS, (Series 1986) Weekly VRDNs (First Union National Bank, Charlotte,
N.C.)/(First Union National Bank, Charlotte, N.C. LOC) 2,700,000
----------------------------------------------------------------------------------- --------------
Total 12,300,000
----------------------------------------------------------------------------------- --------------
MISSOURI--1.0%
-----------------------------------------------------------------------------------
975,000 Missouri Export & Infrastructure Board Weekly VRDNs (Ex-L-Tube, Inc.)/(Norwest Bank
Minnesota, Minneapolis LOC) 975,000
-----------------------------------------------------------------------------------
$ 4,000,000 Missouri State Housing Development Commission, Single Family Mortgage Revenue Bonds
(Series 1995 D), 4.20% TOBs (FGIC GIC), Mandatory Tender 11/1/1996 $ 4,000,000
----------------------------------------------------------------------------------- --------------
Total 4,975,000
----------------------------------------------------------------------------------- --------------
MONTANA--1.0%
-----------------------------------------------------------------------------------
4,780,000 (a)Montana State Board of Housing, MERLOTS (Series F), 4.25% TOBs (FHA INS),
Optional Tender 10/1/1996 4,780,000
----------------------------------------------------------------------------------- --------------
NEBRASKA--1.0%
-----------------------------------------------------------------------------------
4,800,000 Douglas County, NE, (Series 1991) Weekly VRDNs (Malhove, Inc.)/ (Norwest Bank
Minnesota, Minneapolis LOC) 4,800,000
----------------------------------------------------------------------------------- --------------
NEW HAMPSHIRE--5.8%
-----------------------------------------------------------------------------------
7,000,000 New Hampshire Business Finance Authority, PCR Bonds (Series A), 3.40% CP (New
England Power Co.), Mandatory Tender 8/9/1996 7,000,000
-----------------------------------------------------------------------------------
8,850,000 New Hampshire Business Finance Authority, PCR Bonds (Series A), 3.75% CP (New
England Power Co.), Mandatory Tender 7/26/1996 8,850,000
-----------------------------------------------------------------------------------
8,000,000 New Hampshire Business Finance Authority, PCR Bonds (Series A), 3.80% CP (New
England Power Co.), Mandatory Tender 10/17/1996 8,000,000
-----------------------------------------------------------------------------------
4,010,000 New Hampshire State IDA, (Series 1991), 4.05% TOBs (International Paper Co.),
Optional Tender 10/15/1996 4,005,990
----------------------------------------------------------------------------------- --------------
Total 27,855,990
----------------------------------------------------------------------------------- --------------
NEW JERSEY--1.4%
-----------------------------------------------------------------------------------
1,490,875 Monroe Township, NJ, 3.75% BANs, 2/27/1997 1,493,539
-----------------------------------------------------------------------------------
1,800,000 Morristown, NJ, 3.80% TANs, 2/14/1997 1,800,000
-----------------------------------------------------------------------------------
3,249,780 Stafford Township, NJ, (Series A), 4.25% BANs, 9/20/1996 3,254,097
----------------------------------------------------------------------------------- --------------
Total 6,547,636
----------------------------------------------------------------------------------- --------------
NEW MEXICO--1.5%
-----------------------------------------------------------------------------------
4,000,000 New Mexico Mortgage Finance Authority, Single Family Mortgage Program Bonds (Series
1996B), 3.25% TOBs (FGIC GIC), Mandatory Tender 2/28/1997 4,000,000
-----------------------------------------------------------------------------------
$ 3,300,000 Santa Fe, NM, Single Family Mortgage Revenue Bonds (Series 1995B), 4.00% TOBs (FGIC
GIC), Mandatory Tender 11/15/1996 $ 3,300,000
----------------------------------------------------------------------------------- --------------
Total 7,300,000
----------------------------------------------------------------------------------- --------------
NEW YORK--6.6%
-----------------------------------------------------------------------------------
7,000,000 Brentwood Union Free School District, NY, 4.375% TANs, 6/28/1996 7,001,361
-----------------------------------------------------------------------------------
4,000,000 Longwood Central School District, NY, 4.50% TANs, 6/26/1996 4,001,182
-----------------------------------------------------------------------------------
8,000,000 New York City, NY, UT GO Fiscal 1994 (Series H-3), 4.25% CP (FSA INS)/(Banque
Paribas, Paris LIQ), Mandatory Tender 8/20/1996 8,000,000
-----------------------------------------------------------------------------------
12,500,000 Niagara County, NY IDA, Solid Waste Disposal Facility Revenue Bonds (Series 1994B),
3.65% CP (American Ref-Fuel Company)/(Air Products & Chemicals, Inc. and
Browning-Ferris Industries, Inc. GTDs), Mandatory Tender 6/13/1996 12,500,000
----------------------------------------------------------------------------------- --------------
Total 31,502,543
----------------------------------------------------------------------------------- --------------
NORTH CAROLINA--1.1%
-----------------------------------------------------------------------------------
2,825,000 Guilford County, NC Industrial Facilities & PCFA, (Series 1989) Weekly VRDNs (Culp,
Inc.)/(Wachovia Bank of NC, NA, Winston-Salem LOC) 2,825,000
-----------------------------------------------------------------------------------
2,200,000 Wilson County, NC PCA, (Series 1994) Weekly VRDNs (Granutec, Inc.)/(Branch Banking
& Trust Co, Wilson LOC) 2,200,000
----------------------------------------------------------------------------------- --------------
Total 5,025,000
----------------------------------------------------------------------------------- --------------
OHIO--0.0%
-----------------------------------------------------------------------------------
100,000 Defiance County, OH, IDR Weekly VRDNs (Dietrich Industries, Inc.)/ (PNC Bank, N.A.
LOC) 100,000
----------------------------------------------------------------------------------- --------------
OKLAHOMA--1.6%
-----------------------------------------------------------------------------------
2,300,000 Adair County, OK IDA, (Series B) Weekly VRDNs (Baldor Electric Co.)/(Wachovia Bank
of NC, NA, Winston-Salem LOC) 2,300,000
-----------------------------------------------------------------------------------
5,300,000 Oklahoma Development Finance Authority, 3.60% TOBs (Simmons Poultry
Farms)/(Rabobank Nederland, Utrecht LOC), Optional Tender 8/1/1996 5,300,000
----------------------------------------------------------------------------------- --------------
Total 7,600,000
----------------------------------------------------------------------------------- --------------
PENNSYLVANIA--11.3%
-----------------------------------------------------------------------------------
$ 5,700,000 Carbon County, PA IDA, Solid Waste Disposal Revenue Notes (Series 1995B), 3.90%
RANs (Horsehead Resource Development, Inc.)/ (Chemical Bank, New York LOC),
12/3/1996 $ 5,700,000
-----------------------------------------------------------------------------------
5,450,000 Clinton County, PA IDA, Solid Waste Disposal Revenue Bonds (Series 1992A), 3.80%
TOBs (International Paper Co.), Optional Tender
1/15/1997 5,450,000
-----------------------------------------------------------------------------------
2,075,000 Pennsylvania Education Development Authority Weekly VRDNs (Stone and Lime Co.)/(PNC
Bank, N.A. LOC) 2,075,000
-----------------------------------------------------------------------------------
600,000 Pennsylvania Education Development Authority Weekly VRDNs (Tamaqua Cable
Company)/(PNC Bank, N.A. LOC) 600,000
-----------------------------------------------------------------------------------
1,000,000 Pennsylvania Education Development Authority, (1995 Series D2) Weekly VRDNs (ARCO
Enterprises, Inc./Ronald L. Repasky, Sr. Project)/(PNC Bank, N.A. LOC) 1,000,000
-----------------------------------------------------------------------------------
1,500,000 Pennsylvania Education Development Authority, (1995 Series D9) Weekly VRDNs (North
American Communications, Inc. Project)/(PNC Bank, N.A. LOC) 1,500,000
-----------------------------------------------------------------------------------
5,500,000 Philadelphia, PA IDA, 4.25% TOBs (Suite Hotel)/(First National Bank of Boston, MA
LOC), Optional Tender 6/1/1996 5,500,000
-----------------------------------------------------------------------------------
5,500,000 Philadelphia, PA IDA, Commercial Development Revenue Bonds (Series A), 4.00% TOBs
(Economy Inn)/(First National Bank of Boston, MA LOC), Optional Tender 7/1/1996 5,500,000
-----------------------------------------------------------------------------------
17,100,000 Philadelphia, PA, GO (Series 1990), 3.70% CP (Fuji Bank, Ltd., Tokyo LOC),
Mandatory Tender 7/18/1996 17,100,000
-----------------------------------------------------------------------------------
10,700,000 Washington County, PA IDA, Solid Waste Disposal Revenue Bonds (Series 1995) Weekly
VRDNs (American Iron Oxide Company Project)/ (Bank of Tokyo-Mitsubishi LTD. LOC) 10,700,000
----------------------------------------------------------------------------------- --------------
Total 55,125,000
----------------------------------------------------------------------------------- --------------
RHODE ISLAND--1.6%
-----------------------------------------------------------------------------------
4,600,000 Rhode Island Housing & Mortgage Finance Corp, (Series 19-D), 3.55% TOBs (Societe
Generale, Paris GIC), Mandatory Tender 1/30/1997 4,600,000
-----------------------------------------------------------------------------------
$ 3,100,000 Rhode Island Public Transit Authority, (Series 1995), 4.375% RANs,
7/8/1996 $ 3,100,529
----------------------------------------------------------------------------------- --------------
Total 7,700,529
----------------------------------------------------------------------------------- --------------
SOUTH CAROLINA--2.8%
-----------------------------------------------------------------------------------
5,000,000 Georgetown County, SC, Pollution Control Facilities Adjustable Rate Bonds (Series
A), 4.30% TOBs (International Paper Co.), Optional Tender 9/1/1996 5,003,407
-----------------------------------------------------------------------------------
5,500,000 South Carolina Job Development Authority, (Series 1996) Weekly VRDNs (PVC Container
Corp. Project)/(NatWest NA LOC) 5,500,000
-----------------------------------------------------------------------------------
2,885,000 South Carolina Job Development Authority, EDRB (Series 1994) Weekly VRDNs (Carolina
Cotton Works, Inc. Project)/(Branch Banking & Trust Co, Wilson LOC) 2,885,000
----------------------------------------------------------------------------------- --------------
Total 13,388,407
----------------------------------------------------------------------------------- --------------
SOUTH DAKOTA--1.3%
-----------------------------------------------------------------------------------
6,000,000 South Dakota Housing Development Authority, Homeownership Mortgage Bonds (Series
1995E), 4.05% TOBs, Mandatory Tender
10/24/1996 6,000,000
----------------------------------------------------------------------------------- --------------
TENNESSEE--1.3%
-----------------------------------------------------------------------------------
2,000,000 Jackson, TN IDB , Solid Waste Facility Bonds (Series 1995) Weekly VRDNs (Florida
Steel Corp.)/(Nationsbank of Florida, N.A. LOC) 2,000,000
-----------------------------------------------------------------------------------
2,500,000 McMinn County, TN IDB, Industrial Development Bonds (Series 1995) Weekly VRDNs
(Creative Fabrication Corp. Project)/(NBD Bank, Michigan LOC) 2,500,000
-----------------------------------------------------------------------------------
1,500,000 Union County, TN IDB, (Series 1995) Weekly VRDNs (Cooper Container Corporation
Project)/(SunTrust Bank, Nashville LOC) 1,500,000
----------------------------------------------------------------------------------- --------------
Total 6,000,000
----------------------------------------------------------------------------------- --------------
TEXAS--2.1%
-----------------------------------------------------------------------------------
3,950,000 Brazos Harbor, TX Industrial Development Corporation, (Series 1991) Weekly VRDNs
(Rangen, Inc. Project)/(Norwest Bank Minnesota, Minneapolis LOC) 3,950,000
-----------------------------------------------------------------------------------
$ 5,000,000 San Antonio, TX, Special Facilities Airport Revenue Bonds (Series 1995) Weekly
VRDNs (Cessna Aircraft Company Project)/(Nationsbank of Texas, N.A. LOC) $ 5,000,000
-----------------------------------------------------------------------------------
1,300,000 Tyler, TX Health Facilities Development Corp., (Series 1993C), 4.10% CP (East Texas
Medical Center)/(Banque Paribas LOC), Mandatory Tender 7/16/1996 1,300,000
----------------------------------------------------------------------------------- --------------
Total 10,250,000
----------------------------------------------------------------------------------- --------------
UTAH--1.2%
-----------------------------------------------------------------------------------
1,475,000 Utah State HFA, (Series A), 4.125% TOBs (Meridian Bank, Reading, PA LIQ), Optional
Tender 7/1/1996 1,475,000
-----------------------------------------------------------------------------------
1,930,000 Utah State HFA, (Series C-2), 4.125% TOBs (Meridian Bank, Reading, PA LIQ),
Optional Tender 7/1/1996 1,930,000
-----------------------------------------------------------------------------------
2,140,000 Utah State HFA, (Series C-3), 4.125% TOBs (Meridian Bank, Reading, PA LIQ),
Optional Tender 7/1/1996 2,140,000
----------------------------------------------------------------------------------- --------------
Total 5,545,000
----------------------------------------------------------------------------------- --------------
VIRGINIA--2.9%
-----------------------------------------------------------------------------------
1,600,000 Franklin County, VA IDA Weekly VRDNs (American Graphics)/ (Nationsbank of Virginia,
N.A. LOC) 1,600,000
-----------------------------------------------------------------------------------
2,900,000 Richmond, VA Redevelopment & Housing Authority, (Series B-1) Weekly VRDNs
(Richmond, VA Red Tobacco Row)/(Westdeutsche Landesbank Girozentrale LOC) 2,900,000
-----------------------------------------------------------------------------------
3,160,000 Richmond, VA Redevelopment & Housing Authority, (Series B-5) Weekly VRDNs
(Richmond, VA Red Tobacco Row)/(Westdeutsche Landesbank Girozentrale LOC) 3,160,000
-----------------------------------------------------------------------------------
1,800,000 Richmond, VA Redevelopment & Housing Authority, (Series B-9) Weekly VRDNs
(Richmond, VA Red Tobacco Row)/(Westdeutsche Landesbank Girozentrale LOC) 1,800,000
-----------------------------------------------------------------------------------
2,170,000 Virginia Beach, VA IDA, (Series 1993) Weekly VRDNs (Ocean Ranch Motel
Corp.)/(Nationsbank of Virginia, N.A. LOC) 2,170,000
-----------------------------------------------------------------------------------
$ 2,400,000 Virginia Peninsula Port Authority Daily VRDNs (Kinyo Virginia, Inc.)/ (Industrial
Bank of Japan Ltd., Tokyo LOC) $ 2,400,000
----------------------------------------------------------------------------------- --------------
Total 14,030,000
----------------------------------------------------------------------------------- --------------
WASHINGTON--1.3%
-----------------------------------------------------------------------------------
3,500,000 Pierce County, WA Economic Development Corp., (Series 1995) Weekly VRDNs
(Simpson-Tacoma Kraft Company Project)/(Seattle-First Bank, Seattle LOC) 3,500,000
-----------------------------------------------------------------------------------
2,770,000 Washington State Housing Finance Commission, (1995 Series 1A-S), 4.10% TOBs (FGIC
INS), Mandatory Tender 6/1/1996 2,770,000
----------------------------------------------------------------------------------- --------------
Total 6,270,000
----------------------------------------------------------------------------------- --------------
WISCONSIN--3.8%
-----------------------------------------------------------------------------------
2,550,000 Germantown, WI, IDA Weekly VRDNs (Zenith Sintered Products, Inc.)/(Bank One,
Milwaukee, WI N.A. LOC) 2,550,000
-----------------------------------------------------------------------------------
2,550,000 Marshfield, WI, IDR (Series 1993) Weekly VRDNs (Building Systems, Inc.)/(Bank One,
Milwaukee, WI N.A. LOC) 2,550,000
-----------------------------------------------------------------------------------
1,780,000 Plover, WI Weekly VRDNs (Sirco Manufacturing, Inc.)/(Norwest Bank Minnesota,
Minneapolis LOC) 1,780,000
-----------------------------------------------------------------------------------
1,050,000 Shell Lake, WI Weekly VRDNs (Doboy Packaging)/(Union Bank of Switzerland, Zurich
LOC) 1,050,000
-----------------------------------------------------------------------------------
1,980,000 Waukesha, WI, IDRB (Series 1995) Weekly VRDNs (Weldall Manufacturing Inc.
Project)/(Bank One, Milwaukee, WI N.A. LOC) 1,980,000
-----------------------------------------------------------------------------------
8,230,000 Wisconsin Housing & Economic Development Authority, (Series B), 4.00% TOBs (FSA
INS)/(Meridian Bank, Reading, PA LIQ), Optional Tender 9/1/1996 8,230,000
----------------------------------------------------------------------------------- --------------
Total 18,140,000
----------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (AT AMORTIZED COST) (B) $476,883,371
----------------------------------------------------------------------------------- --------------
</TABLE>
MUNICIPAL CASH SERIES
- --------------------------------------------------------------------------------
Securities that are subject to Alternative Minimum Tax represent 82.2% of the
portfolio as calculated based upon total portfolio market value.
(a) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. These securities have been determined to be
liquid under criteria established by the Board of Directors. At the end of
the period, these securities amounted to $4,780,000 which represents 1.0% of
net assets.
(b) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($478,604,551) at
May 31, 1996.
The following acronyms are used throughout this portfolio:
BANs--Bond Anticipation Notes
COL--Collateralized
CP--Commercial Paper
EDA--Economic Development Authority
EDRB--Economic Development Revenue Bonds
FGIC--Financial Guaranty Insurance Company
FHA--Federal Housing Administration
FSA--Financial Security Assurance
GIC--Guaranteed Investment Contract
GNMA--Government National Mortgage Association
GO--General Obligation
GTD--Guaranty
HFA--Housing Finance Authority
IDA--Industrial Development Authority
IDB--Industrial Development Bond
IDR--Industrial Development Revenue
IDRB--Industrial Development Revenue Bond
INS--Insured
LIQ--Liquidity Agreement
LOC--Letter of Credit
PCA--Pollution Control Authority
PCR--Pollution Control Revenue
PCFA--Pollution Control Finance Authority
PLC--Public Limited Company
RANs--Revenue Anticipation Notes
TANs--Tax Anticipation Notes
TOBs--Tender Option Bonds
TRANs--Tax and Revenue Anticipation Notes
UT--Unlimited Tax
VRDNs--Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL CASH SERIES
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Total investments in securities, at amortized cost and value $ 476,883,371
- -------------------------------------------------------------------------------------------------
Cash 408,935
- -------------------------------------------------------------------------------------------------
Income receivable 3,832,532
- -------------------------------------------------------------------------------------------------
Receivable for shares sold 35,209
- ------------------------------------------------------------------------------------------------- --------------
Total assets 481,160,047
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable for investments purchased $ 1,785,000
- -----------------------------------------------------------------------------------
Payable for shares redeemed 238,400
- -----------------------------------------------------------------------------------
Income distribution payable 254,134
- -----------------------------------------------------------------------------------
Accrued expenses 277,962
- ----------------------------------------------------------------------------------- ------------
Total liabilities 2,555,496
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 478,604,551 shares outstanding $ 478,604,551
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$478,604,551 / 478,604,551 shares outstanding $1.00
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL CASH SERIES
STATEMENT OF OPERATIONS
YEAR ENDED MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------
Interest $ 19,738,911
- --------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------
Investment advisory fee $ 2,478,141
- ------------------------------------------------------------------------------------
Administrative personnel and services fee 374,937
- ------------------------------------------------------------------------------------
Custodian fees 66,414
- ------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 402,274
- ------------------------------------------------------------------------------------
Directors'/Trustees' fees 6,654
- ------------------------------------------------------------------------------------
Auditing fees 13,286
- ------------------------------------------------------------------------------------
Legal fees 2,889
- ------------------------------------------------------------------------------------
Portfolio accounting fees 91,541
- ------------------------------------------------------------------------------------
Distribution services fee 1,734,698
- ------------------------------------------------------------------------------------
Shareholder services fee 1,239,070
- ------------------------------------------------------------------------------------
Share registration costs 40,367
- ------------------------------------------------------------------------------------
Printing and postage 32,581
- ------------------------------------------------------------------------------------
Insurance premiums 8,343
- ------------------------------------------------------------------------------------
Taxes 61,537
- ------------------------------------------------------------------------------------
Miscellaneous 4,966
- ------------------------------------------------------------------------------------ ------------
Total expenses 6,557,698
- ------------------------------------------------------------------------------------
Waivers
- ----------------------------------------------------------------------
Waiver of investment advisory fee $ (390,103)
- ----------------------------------------------------------------------
Waiver of distribution services fee (1,239,070)
- ---------------------------------------------------------------------- ------------
Total waivers (1,629,173)
- ------------------------------------------------------------------------------------ ------------
Net expenses 4,928,525
- -------------------------------------------------------------------------------------------------- -------------
Net investment income $ 14,810,386
- -------------------------------------------------------------------------------------------------- -------------
</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,
<S> <C> <C>
1996 1995
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------
Net investment income $ 14,810,386 $ 14,471,528
- ---------------------------------------------------------------------------- ----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------
Distributions from net investment income (14,810,386) (14,471,528)
- ---------------------------------------------------------------------------- ----------------- -----------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------
Proceeds from sale of shares 2,133,541,489 2,187,590,706
- ----------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions
declared 13,828,571 12,592,729
- ----------------------------------------------------------------------------
Cost of shares redeemed (2,113,929,309) (2,329,820,910)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from share transactions 33,440,751 (129,637,475)
- ---------------------------------------------------------------------------- ----------------- -----------------
NET ASSETS:
- ----------------------------------------------------------------------------
Beginning of period 445,163,800 574,801,275
- ---------------------------------------------------------------------------- ----------------- -----------------
End of period $ 478,604,551 $ 445,163,800
- ---------------------------------------------------------------------------- ----------------- -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL CASH SERIES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED MAY 31
<S> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992 1991 1990(A)
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------
Net investment income 0.03 0.03 0.02 0.03 0.04 0.05 0.04
- ------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------
Distributions from net investment
income (0.03) (0.03) (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 $ 1.00
- ------------------------------------ --------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (B) 3.04% 2.84% 1.83% 2.11% 3.53% 5.24% 4.68%
- ------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------
Expenses 0.99% 0.99% 0.99% 0.99% 0.98% 0.94% 0.73%*
- ------------------------------------
Net investment income 2.99% 2.76% 1.81% 2.10% 3.42% 5.02% 5.76%*
- ------------------------------------
Expense waiver (c) 0.33% 0.05% 0.06% 0.03% 0.03% 0.17% 0.45%*
- ------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------
Net assets, end of period
(000 omitted) $478,605 $445,164 $574,801 $456,205 $516,814 $403,151 $195,897
- ------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from August 25, 1989 (date of initial
public investment) to May 31, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL CASH SERIES
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION
Cash Trust Series, Inc. (the "Corporation") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Corporation consists of four portfolios. The financial
statements included herein are only those of Municipal Cash Series (the "Fund"),
a non-diversified portfolio. 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.
The investment objective of the Fund is current income exempt from federal
regular income tax consistent with stability of principal.
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.
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.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the 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 income. Accordingly, no
provisions for federal tax are necessary.
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.
RESTRICTED SECURITIES--Restricted securities are securities that may only
be resold upon registration under federal securities laws or in
transactions exempt from such registration. Many restricted securities may
be resold in the secondary market in transactions exempt from registration.
In some cases, the restricted securities may be resold without registration
upon exercise of a demand feature. Such restricted securities may be
determined to be liquid under criteria established by the Board of
Directors. The Fund will not incur any registration costs
upon such resales. Restricted securities are valued at amortized cost in
accordance with Rule 2a-7 under the Act.
Additional information on each restricted security held at May 31, 1996, is
as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Montana State Board of Housing,
MERLOTS (Series F) 12/01/1995 $ 4,920,000
</TABLE>
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
3. CAPITAL STOCK
At May 31, 1996, there were 12,500,000,000 shares ($0.001 par value per share)
authorized. At
May 31, 1996, capital paid in aggregated $478,604,551. Transactions in capital
stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
<S> <C> <C>
1996 1995
Shares sold 2,133,541,489 2,187,590,706
- ------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 13,828,571 12,592,729
- ------------------------------------------------------------------------------
Shares redeemed (2,113,929,309) (2,329,820,910)
- ------------------------------------------------------------------------------ ---------------- ----------------
Net change resulting from share transactions 33,440,751 (129,637,475)
- ------------------------------------------------------------------------------ ---------------- ----------------
</TABLE>
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Advisers, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors for the period. The administrative fee received during the period of
the Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
DISTRIBUTION 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
compensate Federated Securities Corp. ("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's shares. The Plan provides that the Fund may incur distribution
expenses up to 0.35% of the average daily net assets, annually, to compensate
FSC.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25%
of the average daily net assets of the Fund for the period. The fee paid to FSS
is used to finance certain services for shareholders and to maintain shareholder
accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its
subsidiary, Federated Shareholder Services Company ("FSSC"), serves as transfer
and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
INTERFUND TRANSACTIONS--During the fiscal year ended May 31, 1996, the Fund
engaged in purchase and sale transactions at current market value with funds
that have a common investment adviser (or affiliated investment advisers),
common Directors/Trustees, and/or common Officers. These transactions were made
at current market value pursuant to Rule 17a-7 under the Act, amounting to
$678,765,000 and $861,710,000, respectively.
GENERAL--Certain of the Officers and Directors of the Corporation are Officers
and Directors or Trustees of the above companies.
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Board of Directors of
CASH TRUST SERIES, INC. and Shareholders of
MUNICIPAL CASH SERIES:
We have audited the accompanying statement of assets and liabilities of
Municipal Cash Series (one of the portfolios comprising Cash Trust Series,
Inc.), including the portfolio of investments, as of May 31, 1996, the related
statements of operations for the year then ended, the statements of changes in
net assets for the years ended May 31, 1996 and 1995 and the financial
highlights for the periods presented. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of May
31, 1996 by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Municipal Cash
Series as of May 31, 1996, the results of its operations, the changes in its net
assets, and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
July 10, 1996
DIRECTORS OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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 Executive Vice President
Lawrence D. Ellis, M.D. Edward C. Gonzales
Edward L. Flaherty, Jr. Executive Vice President
Peter E. Madden John W. McGonigle
Gregor F. Meyer Executive Vice President and Secretary
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Treasurer
Marjorie P. Smuts 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.
- -----------------------------------------------------------------------------
MUNICIPAL
- -----------------------------------------------------------------------------
CASH
- -----------------------------------------------------------------------------
SERIES
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
ANNUAL REPORT
TO SHAREHOLDERS
MAY 31, 1996
(LOGO) FEDERATED INVESTORS
SINCE 1955
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
FEDERATED SECURITIES CORP. IS THE DISTRIBUTOR OF THE FUND
AND IS A SUBSIDIARY OF FEDERATED INVESTORS.
(LOGO)
CUSIP 147551303 RECYCLED
0062903 (7/96) PAPER
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I'm pleased to present the Annual Report to Shareholders for Prime Cash Series,
which covers the twelve-month period from June 1, 1995, through May 31, 1996.
The report contains commentary by the portfolio manager, followed by a complete
list of the fund's investments on the last day of the period, and the financial
statements.
Prime Cash Series continues to help your cash earn daily income--while giving
you the additional advantages of daily liquidity and stability of principal.*
The fund invests in high quality, short-term securities. At the end of the
period, the portfolio was invested primarily in commercial paper (44%) and
variable rate obligations (34.6%). It also held positions in repurchase
agreements (8.6%) and time deposits (6.5%), as well as certificates of deposit,
bank notes, and a U.S. Treasury note.
Dividends paid to shareholders during the period totaled $63.9 million, or $0.05
per share. At the end of the period, the fund's net assets reached the $1.5
billion mark.
As always, we thank you for using Prime Cash Series as a convenient way to
pursue daily income on your ready cash. Please contact your investment
representative if you have any questions. We look forward to keeping you up to
date on your investment.
Sincerely,
Richard B. Fisher
President
July 15, 1996
* 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. An
investment in the fund is neither insured nor guaranteed by the U.S.
government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Prime Cash Series invests in money market instruments maturing in 13 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.
Through the end of 1995, economic activity continued to expand, but at a very
moderate pace. This was driven by particularly dismal retail sales for most of
the holiday season. Since the beginning of 1996, however, the pace of the
economic expansion seems to have quickened. Gross Domestic Product growth for
the first quarter of 1996 rebounded to 2.8%, with growth in overall employment
leading the expansion. This faster growth was achieved despite several dampening
factors including severe winter weather during much of January, a United
Automobile Workers strike at General Motors that shut down the automotive
giant's operations for 2-1/2 weeks, and a government closure for a week related
to budget negotiations. Throughout the time period, inflation remained steady.
Overall wage increases remain moderate, and material costs are subdued.
Budget negotiations also played a role in the market during the time period. As
negotiations failed and temporary "fixes" were devised for meeting the U.S.
Treasury's scheduled debt obligations, fixed income investors became nervous and
yields began to rise.
Thirty-day commercial paper started the period at 5.82% on December 1, 1995, and
held very close to that level until January 2, 1996, when year-end pressures
subsided. At that time rates settled into the 5.55% level, reflecting a 5.50%
federal funds target established by the Federal Reserve Board (the "Federal
Reserve") on December 19, 1995. Rates fell throughout the month of January until
the Federal Reserve acted again on January 31, 1996, lowering the federal funds
target to 5.25%. Commercial paper rates have been hovering in the 5.25% area
since that time.
The money market yield curve steepened dramatically throughout the time period.
One-month commercial paper rates declined 52 basis points while six-month rates
dropped just 12 basis points, reflecting the concern in the market about the
more rapid economic growth.
The target average maturity range for Prime Cash Series began the period at
40-50 days, was subsequently lengthened to a 45-55 day range in February and
then shortened back to the 40-50 day range in May, reflecting the changing
economic and monetary sentiment. In structuring the fund, there is continued
emphasis placed on positioning 30-35% of the fund's core assets in variable rate
demand notes and accomplishing a modest barbell structure.
During the twelve months ended May 31, 1996, the net assets of Prime Cash Series
increased from $1,027.1 to $1,539.2 million while the 7-day net yield decreased
from 5.28% to 4.42%.* The effective average maturity of the fund on May 31,
1996, was 47 days.
* Performance quoted represents past performance and is not indicative of future
results. Yield will vary.
PRIME CASH SERIES
PORTFOLIO OF INVESTMENTS
MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- -------------------------------------------------------------------------------- ----------------
BANK NOTES--1.3%
- -----------------------------------------------------------------------------------------------
$ 1,000,000 Comerica Bank, Detroit, MI, 5.650%, 9/23/1996 $ 999,820
--------------------------------------------------------------------------------
9,000,000 Mellon Bank NA, Pittsburgh, 5.750%-5.780%, 9/26/1996-10/16/1996 8,999,266
--------------------------------------------------------------------------------
10,000,000 Seattle First National Bank, Seattle, 5.330%, 7/9/1996 10,000,000
-------------------------------------------------------------------------------- ----------------
TOTAL BANK NOTES 19,999,086
-------------------------------------------------------------------------------- ----------------
CERTIFICATES OF DEPOSIT--1.5%
- -----------------------------------------------------------------------------------------------
8,000,000 Lloyds Bank PLC, London, 5.720%, 8/16/1996 8,003,567
--------------------------------------------------------------------------------
15,000,000 MBNA America Bank, NA, 5.150%, 7/30/1996 15,000,000
-------------------------------------------------------------------------------- ----------------
TOTAL CERTIFICATES OF DEPOSIT 23,003,567
-------------------------------------------------------------------------------- ----------------
(A) COMMERCIAL PAPER--44.0%
- -----------------------------------------------------------------------------------------------
BANKING--7.7%
--------------------------------------------------------------------------------
10,000,000 Abbey National N.A. Corp., (Guaranteed by Abbey National Bank PLC, London),
5.489%, 12/3/1996 9,728,550
--------------------------------------------------------------------------------
10,000,000 ABN AMRO N.A., Finance, Inc., (Guaranteed by ABN AMRO Bank N.V., Amsterdam),
5.373%, 8/1/1996 9,910,194
--------------------------------------------------------------------------------
10,000,000 Royal Bank of Canada, Montreal, 5.516%, 6/7/1996 9,991,050
--------------------------------------------------------------------------------
38,000,000 Societe Generale North America, Inc., (Guaranteed by Societe Generale, Paris),
5.015%-5.287%, 7/17/1996-8/13/1996 37,669,972
--------------------------------------------------------------------------------
38,500,000 Svenska Handelsbanken, Inc., (Guaranteed by Svenska
Handelsbanken, Stockholm), 5.147%-5.497%, 6/28/1996-11/7/1996 38,012,070
--------------------------------------------------------------------------------
13,000,000 Westpac Capital Corp., (Guaranteed by Westpac Banking, Corp., Sydney), 5.309%,
7/18/1996 12,912,254
-------------------------------------------------------------------------------- ----------------
Total 118,224,090
-------------------------------------------------------------------------------- ----------------
FINANCE-AUTOMOTIVE--3.3%
--------------------------------------------------------------------------------
52,000,000 General Motors Acceptance Corp., 5.394%-5.519%, 6/13/1996-
11/19/1996 51,228,525
-------------------------------------------------------------------------------- ----------------
FINANCE-COMMERCIAL--17.9%
--------------------------------------------------------------------------------
$ 3,000,000 Alpha Finance Corp., Ltd., 5.050%, 7/29/1996 $ 2,976,172
--------------------------------------------------------------------------------
25,000,000 Asset Securitization Cooperative Corp., 5.366%-5.445%, 7/23/1996-
10/16/1996 24,746,042
--------------------------------------------------------------------------------
75,000,000 Beta Finance, Inc., 4.992%-5.518%, 6/21/1996-11/7/1996 74,106,139
--------------------------------------------------------------------------------
25,000,000 CIT Group Holdings, Inc., 5.317%-5.350%, 6/20/1996-7/22/1996 24,883,717
--------------------------------------------------------------------------------
11,600,000 Corporate Asset Funding Co., Inc. (CAFCO), 5.354%-5.359%,
7/18/1996-8/2/1996 11,505,583
--------------------------------------------------------------------------------
26,690,000 Falcon Asset Securitization Corp., 5.351%-5.435%, 7/25/1996-
10/29/1996 26,214,681
--------------------------------------------------------------------------------
28,000,000 General Electric Capital Corp., 5.327%-5.453%, 6/28/1996-11/8/1996 27,717,117
--------------------------------------------------------------------------------
10,000,000 Greenwich Funding Corp., 5.352%, 6/21/1996 9,970,667
--------------------------------------------------------------------------------
74,350,000 PREFCO--Preferred Receivables Funding Co., 4.972%-5.476%,
7/25/1996-11/19/1996 73,135,073
-------------------------------------------------------------------------------- ----------------
Total 275,255,191
-------------------------------------------------------------------------------- ----------------
FINANCE-RETAIL--10.5%
--------------------------------------------------------------------------------
17,000,000 American Express Credit Corp., 5.253%-5.278%, 7/19/1996-10/9/1996 16,791,804
--------------------------------------------------------------------------------
54,000,000 Associates Corp. of North America, 5.321%-5.550%, 6/3/1996-
9/24/1996 53,819,022
--------------------------------------------------------------------------------
28,755,000 McKenna Triangle National Corp., 5.340%-5.381%, 6/25/1996-
8/5/1996 28,539,477
--------------------------------------------------------------------------------
55,000,000 New Center Asset Trust, A1/P1 Series, 5.361%-5.516%, 7/9/1996-
10/18/1996 54,211,398
--------------------------------------------------------------------------------
8,000,000 Norwest Financial, Inc., 5.314%, 9/17/1996 7,877,120
-------------------------------------------------------------------------------- ----------------
Total 161,238,821
-------------------------------------------------------------------------------- ----------------
INSURANCE--1.3%
--------------------------------------------------------------------------------
20,000,000 CXC, Inc., (CAPMAC Surety Bond), 5.197%-5.332%, 6/5/1996-
6/13/1996 19,976,767
-------------------------------------------------------------------------------- ----------------
OIL & OIL FINANCE--3.3%
--------------------------------------------------------------------------------
$ 5,000,000 Chevron Transport Corp., (Guaranteed by Chevron Corp.), 4.991%, 8/9/1996 $ 4,953,329
--------------------------------------------------------------------------------
47,000,000 Koch Industries, Inc., 5.382%, 6/3/1996 46,985,952
-------------------------------------------------------------------------------- ----------------
Total 51,939,281
-------------------------------------------------------------------------------- ----------------
TOTAL COMMERCIAL PAPER 677,862,675
-------------------------------------------------------------------------------- ----------------
CORPORATE NOTES--3.0%
- -----------------------------------------------------------------------------------------------
BANKING--0.3%
--------------------------------------------------------------------------------
5,000,000 Mercantile Safe Deposit & Trust Company, 6.000%, 2/25/1997 5,026,678
-------------------------------------------------------------------------------- ----------------
FINANCE-COMMERCIAL--0.9%
--------------------------------------------------------------------------------
14,500,000 WFS Financial Owner Trust 1996-A, 5.350%, 3/1/1997 14,496,134
-------------------------------------------------------------------------------- ----------------
FINANCE-EQUIPMENT--0.3%
--------------------------------------------------------------------------------
3,664,723 Navistar Financial 1995-A Owner Trust, 5.750%, 11/15/1996 3,664,696
-------------------------------------------------------------------------------- ----------------
FOOD & BEVERAGE--1.5%
--------------------------------------------------------------------------------
6,000,000 PepsiCo, Inc., 5.750%, 9/6/1996 5,998,803
--------------------------------------------------------------------------------
10,000,000 PepsiCo, Inc., 5.830%, 8/27/1996 10,001,301
--------------------------------------------------------------------------------
7,000,000 PepsiCo, Inc., 6.875%, 5/15/1997 7,071,522
-------------------------------------------------------------------------------- ----------------
Total 23,071,626
-------------------------------------------------------------------------------- ----------------
TOTAL CORPORATE NOTES 46,259,134
-------------------------------------------------------------------------------- ----------------
(B) NOTES-VARIABLE--34.6%
- -----------------------------------------------------------------------------------------------
AUTOMOTIVE--0.6%
--------------------------------------------------------------------------------
8,500,000 Alabama State IDA, (GMC Projects), Tax Revenue Bonds (Series 1994), (General
Motors Corp. LOC), 5.690%, 6/6/1996 8,500,000
-------------------------------------------------------------------------------- ----------------
BANKING--22.8%
--------------------------------------------------------------------------------
2,002,500 Alabama State IDA, (Nichols Research Corp.), (SouthTrust Bank of Alabama,
Birmingham LOC), 5.470%, 6/3/1996 2,002,500
--------------------------------------------------------------------------------
1,975,000 Athens-Clarke County, GA IDA, Barrett Project (Series 1995), (Columbus Bank and
Trust Co., GA LOC), 5.640%, 6/6/1996 1,975,000
--------------------------------------------------------------------------------
$ 4,885,000 Aurora City, IL, (Series 1995), (First of America Bank-Illinois LOC), 5.680%,
6/6/1996 $ 4,885,000
--------------------------------------------------------------------------------
20,000,000 Australia & New Zealand Banking Group, Melbourne, 5.490%,
6/3/1996 19,984,698
--------------------------------------------------------------------------------
1,025,000 Avalon Hotel Associates, (Meridian Bank, Reading, PA LOC), 5.570%, 6/6/1996 1,025,000
--------------------------------------------------------------------------------
10,000,000 Azdel, Inc., (PNC Bank, Kentucky LOC), 5.421%, 6/3/1996 10,000,000
--------------------------------------------------------------------------------
3,000,000 Boardwalk Villas Ltd., (Series 1995), (SouthTrust Bank of Alabama, Birmingham
LOC), 5.490%, 6/6/1996 3,000,000
--------------------------------------------------------------------------------
13,420,000 Congregate Care Corp., (Union Bank of California LOC), 5.680%,
6/5/1996 13,420,000
--------------------------------------------------------------------------------
1,525,000 Denver Urban Renewal Authority, (Series 1992-B), (Banque Paribas, Paris LOC),
5.650%, 6/6/1996 1,525,000
--------------------------------------------------------------------------------
6,300,000 Dewberry III, L.P., (First National Bank of Maryland, Baltimore LOC), 5.580%,
6/6/1996 6,300,000
--------------------------------------------------------------------------------
7,500,000 Euclid Superior Parking, (Society National Bank, Cleveland, OH LOC), 5.589%,
6/7/1996 7,500,000
--------------------------------------------------------------------------------
11,560,000 HJH Associates of Alabama, Hilton Hotel, Huntsville, (SouthTrust Bank of
Alabama, Birmingham LOC), 5.470%, 6/6/1996 11,560,000
--------------------------------------------------------------------------------
6,500,000 KBL Capital Fund, (Series 1995-A), (Old Kent Bank & Trust Co., Grand Rapids
LOC), 5.380%, 6/6/1996 6,500,000
--------------------------------------------------------------------------------
4,000,000 KBL Capital Fund, (Series 1995-B), (Old Kent Bank & Trust Co., Grand Rapids
LOC), 5.380%, 6/6/1996 4,000,000
--------------------------------------------------------------------------------
2,535,000 KBL Capital Fund, (Series 1995-C), (Old Kent Bank & Trust Co., Grand Rapids
LOC), 5.380%, 6/6/1996 2,535,000
--------------------------------------------------------------------------------
2,640,000 KBL Capital Fund, (Series 1995-D), (Old Kent Bank & Trust Co., Grand Rapids
LOC), 5.380%, 6/6/1996 2,640,000
--------------------------------------------------------------------------------
2,000,000 KBL Capital Fund, (Series 1995-E), (Old Kent Bank & Trust Co., Grand Rapids
LOC), 5.380%, 6/6/1996 2,000,000
--------------------------------------------------------------------------------
$ 1,000,000 KBL Capital Fund, (Series 1995-G), (Old Kent Bank & Trust Co., Grand Rapids
LOC), 5.380%, 6/6/1996 $ 1,000,000
--------------------------------------------------------------------------------
1,000,000 KBL Capital Fund, (Series 1996-A), (Old Kent Bank & Trust Co., Grand Rapids
LOC), 5.380%, 6/6/1996 1,000,000
--------------------------------------------------------------------------------
5,400,000 Kenny, Donald R. and Cheryl A., (Series 1996-C), (Star Bank, NA, Cincinnati
LOC), 5.440%, 6/6/1996 5,400,000
--------------------------------------------------------------------------------
14,000,000 Kentucky Rural Economic Development Authority, (PNC Bank, N.A. LOC), 5.521%,
6/3/1996 14,000,000
--------------------------------------------------------------------------------
4,340,000 Maryland State IDFA, (Genetic Therapy, Inc.), (First National Bank of Maryland,
Baltimore LOC), 5.500%, 6/3/1996 4,340,000
--------------------------------------------------------------------------------
3,056,000 Maryland State IDFA, (Human Genome), (Series 1994), (First National Bank of
Maryland, Baltimore LOC), 5.500%, 6/3/1996 3,056,000
--------------------------------------------------------------------------------
6,100,000 Maryland State IDFA, (Kelly Springfield Tire), (First National Bank of Maryland,
Baltimore LOC), 5.600%, 6/3/1996 6,100,000
--------------------------------------------------------------------------------
18,000,000 National Funding Corp., (Series 1994-A), (American National Bank, Chicago LOC),
5.370%, 6/6/1996 18,000,000
--------------------------------------------------------------------------------
695,000 New Jersey EDA, (Series 1992 K-3), (Banque Nationale de Paris LOC), 5.729%,
6/3/1996 695,000
--------------------------------------------------------------------------------
3,995,000 New Jersey EDA, (Series 1992-H), (Banque Nationale de Paris LOC), 5.604%,
6/3/1996 3,995,000
--------------------------------------------------------------------------------
7,315,000 Pelham City, IDB, (Columbus Bank and Trust Co., GA LOC), 5.640%, 6/6/1996 7,315,000
--------------------------------------------------------------------------------
2,850,000 Pelham City, IDB, (Columbus Bank and Trust Co., GA LOC), 5.640%, 6/6/1996 2,850,000
--------------------------------------------------------------------------------
6,100,000 Pennsylvania EDFA, (Series 1993-C), (Barclays Bank PLC, London LOC), 5.490%,
6/5/1996 6,100,000
--------------------------------------------------------------------------------
2,400,000 Pinehurst Villsa, LTD, (Series 1995), (SouthTrust Bank of Alabama, Birmingham
LOC), 5.490%, 6/6/1996 2,400,000
--------------------------------------------------------------------------------
37,000,000 PNC Bank, N.A., 5.390%, 5/31/1996 36,986,642
--------------------------------------------------------------------------------
$ 2,300,000 Saegertown Manufacturing Corp., (PNC Bank, N.A. LOC), 5.421%, 6/3/1996 $ 2,300,000
--------------------------------------------------------------------------------
10,000,000 (c)SMM Trust, (Series 1995-B), (Morgan Guaranty Trust Co., New York), 5.438%,
6/3/1996 10,000,000
--------------------------------------------------------------------------------
10,000,000 (c)SMM Trust, (Series 1995-L), (Morgan Guaranty Trust Co., New York), 5.450%,
6/17/1996 9,999,871
--------------------------------------------------------------------------------
16,000,000 (c)SMM Trust, (Series 1995-N), (Morgan Guaranty Trust Co., New York), 5.530%,
8/15/1996 16,000,000
--------------------------------------------------------------------------------
30,000,000 (c)SMM Trust, (Series 1996-I), (Morgan Guaranty Trust Co., New York), 5.480%,
6/3/1996 30,000,000
--------------------------------------------------------------------------------
3,000,000 (c)SMM Trust, (Series 1996-V), (Morgan Guaranty Trust Co., New York), 5.488%,
6/26/1996 3,000,000
--------------------------------------------------------------------------------
6,310,000 Southeast Regional Holdings, LLC, (Series 1995-A), (Columbus Bank and Trust Co.,
GA LOC), 5.640%, 6/6/1996 6,310,000
--------------------------------------------------------------------------------
10,400,000 Southern Coil Processing, Inc. Notes, (Amsouth Bank N.A., Birmingham LOC),
5.450%, 6/6/1996 10,400,000
--------------------------------------------------------------------------------
3,650,000 Sylacuaga, AL IDB, (SouthTrust Bank of Alabama, Birmingham LOC), 5.493%,
6/4/1996 3,650,000
--------------------------------------------------------------------------------
3,720,000 (c)Toledo Medical Building I L.P., (Huntington National Bank, Columbus, OH LOC),
6.380%, 11/1/1996 3,720,000
--------------------------------------------------------------------------------
19,575,000 Union Development Co., (Bank of America NT and SA, San Francisco LOC), 5.470%,
6/6/1996 19,575,000
--------------------------------------------------------------------------------
7,280,000 United Jewish Federation of Greater Pittsburgh VRDB, (Series 1995A), (PNC Bank,
N.A. LOC), 5.400%, 6/6/1996 7,280,000
--------------------------------------------------------------------------------
6,690,000 Van Dyne Crotty Co., (Huntington National Bank, Columbus, OH LOC), 5.440%,
6/6/1996 6,690,000
--------------------------------------------------------------------------------
1,945,000 Vista Funding Corp., (Series 1995-A), (Star Bank, NA, Cincinnati LOC), 5.570%,
6/6/1996 1,945,000
--------------------------------------------------------------------------------
$ 6,000,000 Woodbury Business Forms, Inc./Carribean Business Forms, (Series 1996) Taxable
Revenue Bonds, (Columbus Bank and Trust Co., GA LOC), 5.640%, 6/6/1996 $ 6,000,000
-------------------------------------------------------------------------------- ----------------
Total 350,959,711
-------------------------------------------------------------------------------- ----------------
FINANCE-RETAIL--2.8%
--------------------------------------------------------------------------------
20,000,000 (c)AFS Insurance Premium Receivables Trust, (Series 1994-A), 5.996%, 6/17/1996 20,000,000
--------------------------------------------------------------------------------
23,000,000 Carco Auto Loan Master Trust 1993-2, (Series 1993-2 Class A1), 5.505%, 6/17/1996 23,000,000
-------------------------------------------------------------------------------- ----------------
Total 43,000,000
-------------------------------------------------------------------------------- ----------------
INSURANCE--8.4%
--------------------------------------------------------------------------------
60,000,000 General American Life Insurance Co., 5.640%, 6/21/1996 60,000,000
--------------------------------------------------------------------------------
15,000,000 SunAmerica Life Insurance Co., 5.538%, 6/3/1996 15,000,000
--------------------------------------------------------------------------------
12,500,000 SunAmerica Life Insurance Co., 5.588%, 6/3/1996 12,500,000
--------------------------------------------------------------------------------
12,500,000 (c)SunAmerica Life Insurance Co., 5.768%, 6/3/1996 12,500,000
--------------------------------------------------------------------------------
30,000,000 Transamerica Occidental Life Insurance Co., 5.438%, 6/3/1996 30,000,000
-------------------------------------------------------------------------------- ----------------
Total 130,000,000
-------------------------------------------------------------------------------- ----------------
TOTAL NOTES-VARIABLE 532,459,711
-------------------------------------------------------------------------------- ----------------
TIME DEPOSITS--6.5%
- -----------------------------------------------------------------------------------------------
BANKING--6.5%
--------------------------------------------------------------------------------
50,000,000 Bank of Tokyo-Mitsubishi Ltd., 5.438%, 6/3/1996 50,000,000
--------------------------------------------------------------------------------
50,000,000 Canadian Imperial Bank of Commerce, Toronto, 5.375%, 6/3/1996 50,000,000
-------------------------------------------------------------------------------- ----------------
TOTAL TIME DEPOSITS 100,000,000
-------------------------------------------------------------------------------- ----------------
U.S. TREASURY--1.2%
- -----------------------------------------------------------------------------------------------
18,000,000 United States Treasury Notes, 7.500%, 1/31/1997 18,273,460
-------------------------------------------------------------------------------- ----------------
(D) REPURCHASE AGREEMENTS--8.6%
- -----------------------------------------------------------------------------------------------
20,000,000 Aubrey G. Lanston and Company, Inc., 5.300%, dated 5/31/1996,
due 6/3/1996 20,000,000
--------------------------------------------------------------------------------
$ 45,000,000 Chase Securities, Inc., 5.300%, dated 5/31/1996, due 6/3/1996 $ 45,000,000
--------------------------------------------------------------------------------
25,000,000 J.P. Morgan & Co., Inc., 5.330%, dated 5/31/1996, due 6/3/1996 25,000,000
--------------------------------------------------------------------------------
15,000,000 (e)J.P. Morgan & Co., Inc., 5.300%, dated 3/13/1996, due 6/11/1996 15,000,000
--------------------------------------------------------------------------------
23,000,000 PaineWebber Group, Inc., 5.340%, dated 5/31/1996, due 6/3/1996 23,000,000
--------------------------------------------------------------------------------
3,700,000 Swiss Bank Capital Markets, 5.310%, dated 5/31/1996, due 6/3/1996 3,700,000
-------------------------------------------------------------------------------- ----------------
TOTAL REPURCHASE AGREEMENTS 131,700,000
-------------------------------------------------------------------------------- ----------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(F) $ 1,549,557,633
-------------------------------------------------------------------------------- ----------------
</TABLE>
(a) Each issue shows the rate of discount at time of purchase for discount
issues, or the coupon for interest bearing issues.
(b) Current rate and next reset date shown.
(c) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At the end of the period, these securities
amounted to $105,219,871 which represents 6.8% of net assets.
(d) The repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in joint
accounts with other Federated funds.
(e) 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.
(f) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($1,539,235,507) at
May 31, 1996.
PRIME CASH SERIES
- --------------------------------------------------------------------------------
The following acronyms are used throughout this portfolio:
CAPMAC--Capital Municipal Assurance Corporation
EDA--Economic Development Authority
EDFA--Economic Development Financing Authority
IDA--Industrial Development Authority
IDB--Industrial Development Bond
IDFA--Industrial Development Finance Authority
LOC--Letter of Credit
PLC--Public Limited Company
SA--Support Agreement
VRDB--Variable Rate Demand Bond.
(See Notes which are an integral part of the Financial Statements)
PRIME CASH SERIES
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------------------------
Total investments in securities, at amortized cost and value $ 1,549,557,633
- ------------------------------------------------------------------------------------------------
Cash 1,543,438
- ------------------------------------------------------------------------------------------------
Income receivable 5,157,818
- ------------------------------------------------------------------------------------------------
Receivable for shares sold 608,718
- ------------------------------------------------------------------------------------------------ ----------------
Total assets 1,556,867,607
- ------------------------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------------------
Payable for investments purchased $ 9,728,550
- ----------------------------------------------------------------------------------
Payable for shares redeemed 5,091,607
- ----------------------------------------------------------------------------------
Income distribution payable 1,968,072
- ----------------------------------------------------------------------------------
Accrued expenses 843,871
- ---------------------------------------------------------------------------------- ------------
Total liabilities 17,632,100
- ------------------------------------------------------------------------------------------------ ----------------
NET ASSETS for 1,539,235,507 shares outstanding $ 1,539,235,507
- ------------------------------------------------------------------------------------------------ ----------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$1,539,235,507 / 1,539,235,507 shares outstanding $1.00
- ------------------------------------------------------------------------------------------------ ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME CASH SERIES
STATEMENT OF OPERATIONS
YEAR ENDED MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------
Interest $ 77,214,795
- --------------------------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------
Investment advisory fee $ 6,691,023
- -----------------------------------------------------------------------------------
Administrative personnel and services fee 1,012,314
- -----------------------------------------------------------------------------------
Custodian fees 180,632
- -----------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 1,955,458
- -----------------------------------------------------------------------------------
Directors'/Trustees' fees 16,417
- -----------------------------------------------------------------------------------
Auditing fees 13,287
- -----------------------------------------------------------------------------------
Legal fees 8,187
- -----------------------------------------------------------------------------------
Portfolio accounting fees 125,318
- -----------------------------------------------------------------------------------
Distribution services fee 4,683,716
- -----------------------------------------------------------------------------------
Shareholder services fee 3,345,511
- -----------------------------------------------------------------------------------
Share registration costs 140,744
- -----------------------------------------------------------------------------------
Printing and postage 65,336
- -----------------------------------------------------------------------------------
Insurance premiums 16,329
- -----------------------------------------------------------------------------------
Taxes 173,140
- -----------------------------------------------------------------------------------
Miscellaneous 18,904
- ----------------------------------------------------------------------------------- -------------
Total expenses 18,446,316
- -----------------------------------------------------------------------------------
Waivers--
- --------------------------------------------------------------------
Waiver of investment advisory fee $ (1,766,935)
- --------------------------------------------------------------------
Waiver of distribution services fee (3,372,274)
- -------------------------------------------------------------------- -------------
Total waivers (5,139,209)
- ----------------------------------------------------------------------------------- -------------
Net expenses 13,307,107
- -------------------------------------------------------------------------------------------------- -------------
Net investment income $ 63,907,688
- -------------------------------------------------------------------------------------------------- -------------
</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,
<S> <C> <C>
1996 1995
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------
Net investment income $ 63,907,688 $ 40,486,440
- ---------------------------------------------------------------------------- ----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------
Distributions from net investment income (63,907,688) (40,486,440)
- ---------------------------------------------------------------------------- ----------------- -----------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------
Proceeds from sale of shares 6,213,736,052 4,556,300,176
- ----------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions
declared 60,421,530 37,549,911
- ----------------------------------------------------------------------------
Cost of shares redeemed (5,762,005,353) (4,357,913,880)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from share transactions 512,152,229 235,936,207
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets 512,152,229 235,936,207
- ----------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------
Beginning of period 1,027,083,278 791,147,071
- ---------------------------------------------------------------------------- ----------------- -----------------
End of period $ 1,539,235,507 $ 1,027,083,278
- ---------------------------------------------------------------------------- ----------------- -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME CASH SERIES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
<S> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992 1991 1990(A)
NET ASSET VALUE, BEGINNING OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------
INCOME FROM INVESTMENT
OPERATIONS
- -------------------------------
Net investment income 0.05 0.05 0.02 0.03 0.04 0.07 0.06
- -------------------------------
LESS DISTRIBUTIONS
- -------------------------------
Distributions from net
investment income (0.05) (0.05) (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 $ 1.00
- ------------------------------- --------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (B) 4.90% 4.60% 2.48% 2.61% 4.37% 6.99% 6.56%
- -------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------
Expenses 0.99% 0.99% 0.99% 0.99% 0.98% 0.94% 0.73%*
- -------------------------------
Net investment income 4.78% 4.57% 2.45% 2.58% 4.21% 6.50% 7.82%*
- -------------------------------
Expense waiver/ reimbursement
(c) 0.38% 0.20% 0.18% 0.15% 0.22% 0.44% 0.46%*
- -------------------------------
SUPPLEMENTAL DATA
- -------------------------------
Net assets, end of period
(000 omitted) $1,539,235 $1,027,083 $791,147 $796,832 $750,016 $562,465 $189,254
- -------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from August 18, 1989 (date of initial
public investment) to May 31, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
PRIME CASH SERIES
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Cash Trust Series, Inc. (the "Corporation") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Corporation consists of four portfolios. The financial
statements included herein are only those of Prime Cash Series (the "Fund"), a
diversified portfolio. 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.
The investment objective of the Fund is current income consistent with stability
of principal and liquidity.
(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.
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.
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 under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
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 the guidelines and/or
standards reviewed or 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.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the 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 income. Accordingly, no
provisions for federal tax are necessary.
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.
RESTRICTED SECURITIES--Restricted securities are securities that may only
be resold upon registration under federal securities laws or in
transactions exempt from such registration. Many restricted securities may
be resold in the secondary market in transactions exempt from registration.
In some cases, the restricted securities may be resold without registration
upon exercise of a demand feature. Such restricted securities may be
determined to be liquid under criteria established by the Board of
Directors. The Fund will not incur any registration costs upon such
resales. Restricted securities are valued at amortized cost in accordance
with Rule 2a-7 under the Investment Company Act of 1940.
Additional information on each restricted security held at April 30, 1996
is as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
SMM Trust, (Series 1995-B) 8/4/95 $ 10,000,000
SMM Trust, (Series 1995-L) 8/4/95 10,038,436
SMM Trust, (Series 1995-N) 11/8/95 16,000,000
SMM Trust, (Series 1996-I) 5/23/96 30,000,000
SMM Trust, (Series 1996-V) 3/18/96 3,000,000
Toledo Medical Building 1 L.P. 11/2/92 3,720,000
AFS Insurance Premium Receivables Trust (Series 1994-A) 8/16/94 20,000,000
SunAmerica Life Insurance Co. 9/20/93 12,500,000
</TABLE>
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At May 31, 1996, there were 12,500,000,000 shares ($0.001 par value per share)
of capital stock authorized. At May 31, 1996, capital paid-in aggregated
$1,539,235,507.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
<S> <C> <C>
1996 1995
Shares sold 6,213,736,052 4,556,300,176
- ---------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 60,421,530 37,549,911
- ---------------------------------------------------------------------------
Shares redeemed (5,762,005,353) (4,357,913,880)
- --------------------------------------------------------------------------- ---------------- ----------------
Net change resulting from share transactions 512,152,229 235,936,207
- --------------------------------------------------------------------------- ---------------- ----------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Advisers, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors for the period. The administrative fee received during the period of
the Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
DISTRIBUTION 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
compensate Federated Securities Corp. ("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's shares. The Plan provides that the Fund may incur distribution
expenses up to 0.35% of the average daily net assets of the Fund shares,
annually, to compensate FSC. The distributor may voluntarily choose to waive any
portion of its fee. The distributor can modify or terminate this voluntary
waiver at any time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25%
of average daily net assets of the Fund for the period. The fee paid to FSS is
used to finance certain services for shareholders and to maintain shareholder
accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its
subsidiary, Federated Shareholder Services Company ("FSSC"), serves as transfer
and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Directors of the Corporation are Officers
and Directors or Trustees of the above companies.
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Board of Directors of
CASH TRUST SERIES, INC. and Shareholders of
PRIME CASH SERIES:
We have audited the accompanying statement of assets and liabilities of Prime
Cash Series (one of the portfolios comprising Cash Trust Series, Inc.) including
the portfolio of investments, as of May 31, 1996, the related statement of
operations for the year then ended, the statements of changes in net assets for
the years ended May 31, 1996 and 1995 and the financial highlights for periods
presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
May 31, 1996 by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Prime Cash Series as
of May 31, 1996, the results of its operations, the changes in its net assets
and its financial highlights for the respective stated periods in conformity
with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
July 10, 1996
DIRECTORS OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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 Executive Vice President
Lawrence D. Ellis, M.D. Edward C. Gonzales
Edward L. Flaherty, Jr. Executive Vice President
Peter E. Madden John W. McGonigle
Gregor F. Meyer Executive Vice President and Secretary
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Treasurer
Marjorie P. Smuts 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.
- -----------------------------------------------------------------------------
PRIME
- -----------------------------------------------------------------------------
CASH
- -----------------------------------------------------------------------------
SERIES
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
ANNUAL REPORT
TO SHAREHOLDERS
MAY 31, 1996
(LOGO) FEDERATED INVESTORS
SINCE 1955
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
FEDERATED SECURITIES CORP. IS THE DISTRIBUTOR OF THE FUND
AND IS A SUBSIDIARY OF FEDERATED INVESTORS.
(LOGO)
CUSIP 147551105 RECYCLED
0062904 (7/96) PAPER
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I'm pleased to present the Annual Report to Shareholders for Treasury Cash
Series, which covers the twelve-month period from June 1, 1995, through May 31,
1996. The report begins with commentary by the portfolio manager, followed by a
complete list of the fund's investments on the last day of the period, and the
financial statements.
During the period, Treasury Cash Series helped your ready cash earn daily
income--while giving you the additional advantages of daily liquidity and
stability of principal.* The fund's portfolio holds some of the most
conservative investments available--short-term U.S. Treasury obligations or
repurchase agreements backed by these obligations.
Dividends paid to shareholders during the period totaled $28.6 million, or $0.05
per share. At the end of the period, the fund's net assets stood at $593.7
million, a 40% increase from the first day of the period.
Thank you for selecting Treasury Cash Series as a convenient way to keep your
ready cash working on a daily basis. Please contact your investment
representative if you have any questions.
Sincerely,
Richard B. Fisher
President
July 15, 1996
* 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. An
investment in the fund is neither insured nor guaranteed by the U.S.
government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Treasury Cash Series is invested in direct obligations of the U.S. Treasury,
either in the form of notes and bills or as collateral for repurchase
agreements. The fund is rated AAAm by Standard & Poor's Corporation and Aaa by
Moody's Investors Service, Inc.*
Over the twelve months ended May 31, 1996, the Federal Reserve Board (the
"Federal Reserve") eased monetary policy on three occasions, lowering the
federal funds target rate by 25 basis points in July, December, and in late
January 1996. The moves brought the target rate down to its current level of
5.25%, and came amid signs of sluggish consumer spending and manufacturing and
benign inflation. Short-term interest rates led the Federal Reserve moves
downward throughout this easing period. The rate on the three-month U.S.
Treasury bill fell from 5.6% at the beginning of June 1995 to 4.9% in
mid-February 1996.
The remainder of the reporting period brought a shift in market psychology
regarding the extent and direction of changes in monetary policy by the Federal
Reserve, however. Strength in consumer spending and housing combined with signs
of a rebound in manufacturing to paint a picture of an economy that was not on
the verge of recession--as thought earlier this year--but of one that is growing
at a pace above the 2-1/2% believed by many to be the non-inflationary potential
rate of growth. Now confronted with a much sturdier economy than previously
thought, the front end of the market retreated from its expectations for
additional easing from the Federal Reserve in the near future, and moved to
pricing in anticipation of a tightening in monetary policy by the Federal
Reserve later in 1996. Yields on short-term U.S. government securities reflected
this rather volatile mood in the markets; the yield on the three-month U.S.
Treasury bill rose from 4.9% to close the period at 5.2% at the end of May.
The fund remained targeted in a 40- to 50-day average maturity range throughout
the reporting period, and moved its positioning within that range according to
the relative value opportunities offered in the market. As a yield advantage
continued to exist for investments in repurchase agreements versus direct
investments in short-term U.S. Treasury 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.
Treasury securities with purchases of direct U.S. Treasury securities with
longer maturities of 6 to 12 months. This barbelled portfolio structure
continues to provide a competitive yield.
Although a run-up in commodity prices early in the second quarter has since
subsided, tight labor market conditions in many regions have raised fears of
wage inflation. Market participants now expect that the Federal Reserve will
need to tighten monetary policy in the not-too-distant future-- in spite of the
Presidential election later in the year--to ward off these pressures. Shortly
after the close of the reporting period, the fund lowered its average maturity
target range from 40-50 days to 35-45 days, to reflect our anticipation of
higher interest rates in the future. The fund is expected to maintain this
posture in the near future, seeking to maximize its 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.
*An AAAm rating is obtained after Standard & Poor's Ratings Group evaluates a
number of factors, including credit quality, market price exposure and
management. Standard & Poor's Ratings Group monitors the portfolio weekly for
developments that could cause changes in the ratings. Money market funds and
bond funds rated Aaa by Moody's Investors Service, Inc. are judged to be of an
investment quality similar to Aaa-rated fixed income obligations, that is, they
are judged to be of the best quality. These ratings do not remove market risks
and are subject to change.
TREASURY CASH SERIES
PORTFOLIO OF INVESTMENTS
MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- --------------
SHORT-TERM U.S. TREASURY OBLIGATIONS--21.3%
- -------------------------------------------------------------------------------------------------
(A)U.S. TREASURY BILLS--10.2%
----------------------------------------------------------------------------------
$ 62,500,000 4.62%-5.32%, 8/8/1996-4/3/1997 $ 60,824,823
----------------------------------------------------------------------------------
U.S. TREASURY NOTES--11.1%
----------------------------------------------------------------------------------
65,190,000 6.125%-8.00%, 7/31/1996-3/31/1997 65,740,122
---------------------------------------------------------------------------------- --------------
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 126,564,945
---------------------------------------------------------------------------------- --------------
(B)REPURCHASE AGREEMENTS--79.1%
- -------------------------------------------------------------------------------------------------
25,000,000 BT Securities Corporation, 5.34%, dated 5/31/1996, due 6/3/1996 25,000,000
----------------------------------------------------------------------------------
25,000,000 Bank of Tokyo Ltd., Tokyo, 5.35%, dated 5/31/1996, due 6/3/1996 25,000,000
----------------------------------------------------------------------------------
69,400,000 Barclays de Zoete Wedd Securities, Inc., 5.34%, dated 5/31/1996, due 6/3/1996 69,400,000
----------------------------------------------------------------------------------
25,000,000 Bear, Stearns and Co., 5.33%, dated 5/31/1996, due 6/3/1996 25,000,000
----------------------------------------------------------------------------------
25,000,000 CIBC Wood Gundy Securities Corp., 5.32%, dated 5/31/1996, due
6/3/1996 25,000,000
----------------------------------------------------------------------------------
25,000,000 Chase Government Securities, Inc., 5.30%, dated 5/31/1996, due 6/3/ 1996 25,000,000
----------------------------------------------------------------------------------
25,000,000 Daiwa Securities America, Inc., 5.32%, dated 5/31/1996, due 6/3/1996 25,000,000
----------------------------------------------------------------------------------
25,000,000 Deutsche Bank Government Securities, Inc., 5.32%, dated 5/31/1996, due 6/3/1996 25,000,000
----------------------------------------------------------------------------------
25,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.28%, dated
5/31/1996, due 6/3/1996 25,000,000
----------------------------------------------------------------------------------
25,000,000 Dresdner Securities (USA), Inc., 5.32%, dated 5/31/1996, due 6/3/1996 25,000,000
----------------------------------------------------------------------------------
25,000,000 First Union Capital Markets, 5.35%, dated 5/31/1996, due 6/3/1996 25,000,000
----------------------------------------------------------------------------------
25,000,000 Harris Government Security, Inc., 5.34%, dated 5/31/1996, due
6/3/1996 25,000,000
----------------------------------------------------------------------------------
50,000,000 J.P. Morgan & Co., Inc., 5.33%, dated 5/31/1996, due 6/3/1996 50,000,000
----------------------------------------------------------------------------------
25,000,000 Prudential Securities, Inc., 5.35%, dated 5/31/1996, due 6/3/1996 25,000,000
----------------------------------------------------------------------------------
25,000,000 Sanwa-BGK Securities Co., L.P., 5.33%, dated 5/31/1996, due 6/3/1996 25,000,000
----------------------------------------------------------------------------------
$ 25,000,000 Swiss Bank Capital Markets, 5.33%, dated 5/31/1996, due 6/3/1996 $ 25,000,000
---------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 469,400,000
---------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (AT AMORTIZED COST) (C) $ 595,964,945
---------------------------------------------------------------------------------- --------------
</TABLE>
(a) Each issue shows the rate of discount at time of purchase.
(b) The repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in joint
accounts with other Federated funds.
(c) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($593,730,072) at May 31, 1996.
The following acronyms are used throughout this portfolio:
LP--Limited Partnership
LTD--Limited
(See Notes which are an integral part of the Financial Statements)
TREASURY CASH SERIES
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Investments in repurchase agreements $ 469,400,000
- ---------------------------------------------------------------------------------
Investments in securities 126,564,945
- --------------------------------------------------------------------------------- --------------
Total investments in securities, at amortized cost and value $ 595,964,945
- -------------------------------------------------------------------------------------------------
Cash 195,779
- -------------------------------------------------------------------------------------------------
Income receivable 966,482
- -------------------------------------------------------------------------------------------------
Receivable for investments sold 4,060,621
- -------------------------------------------------------------------------------------------------
Receivable for shares sold 143,624
- ------------------------------------------------------------------------------------------------- --------------
Total assets 601,331,451
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------
Payable for investments purchased 5,977,602
- ---------------------------------------------------------------------------------
Payable for shares redeemed 459,019
- ---------------------------------------------------------------------------------
Income distribution payable 864,821
- ---------------------------------------------------------------------------------
Accrued expenses 299,937
- --------------------------------------------------------------------------------- --------------
Total liabilities 7,601,379
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 593,730,072 shares outstanding $ 593,730,072
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
($593,730,072 / 593,730,072 shares outstanding) $1.00
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TREASURY CASH SERIES
STATEMENT OF OPERATIONS
YEAR ENDED MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest $ 34,705,463
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------
Investment advisory fee $ 3,046,700
- ------------------------------------------------------------------------------------
Administrative personnel and services fee 460,924
- ------------------------------------------------------------------------------------
Custodian fees 131,168
- ------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 171,539
- ------------------------------------------------------------------------------------
Directors'/Trustees' fees 6,858
- ------------------------------------------------------------------------------------
Auditing fees 13,287
- ------------------------------------------------------------------------------------
Legal fees 4,123
- ------------------------------------------------------------------------------------
Portfolio accounting fees 97,948
- ------------------------------------------------------------------------------------
Distribution services fee 2,132,690
- ------------------------------------------------------------------------------------
Shareholder services fee 1,523,350
- ------------------------------------------------------------------------------------
Share registration costs 119,182
- ------------------------------------------------------------------------------------
Printing and postage 31,456
- ------------------------------------------------------------------------------------
Insurance premiums 8,686
- ------------------------------------------------------------------------------------
Taxes 41,159
- ------------------------------------------------------------------------------------
Miscellaneous 12,411
- ------------------------------------------------------------------------------------ -------------
Total expenses 7,801,481
- ------------------------------------------------------------------------------------
Waivers and reimbursements--
- ---------------------------------------------------------------------
Waiver of investment advisory fee $ (218,855)
- ---------------------------------------------------------------------
Waiver of distribution services fee (1,523,350)
- --------------------------------------------------------------------- -------------
Total waivers (1,742,205)
- ------------------------------------------------------------------------------------ -------------
Net expenses 6,059,276
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 28,646,187
- --------------------------------------------------------------------------------------------------- -------------
</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>
1996 1995
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------
Net investment income $ 28,646,187 $ 18,450,054
- ------------------------------------------------------------------------- ----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------------------
Distributions from net investment income (28,646,187) (18,450,054)
- ------------------------------------------------------------------------- ----------------- -----------------
SHARE TRANSACTIONS--
- -------------------------------------------------------------------------
Proceeds from sale of shares 3,620,620,510 2,391,925,952
- -------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 22,590,400 14,469,163
- -------------------------------------------------------------------------
Cost of shares redeemed (3,473,572,068) (2,409,309,269)
- ------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from share transactions 169,638,842 (2,914,154)
- ------------------------------------------------------------------------- ----------------- -----------------
Change in net assets 169,638,842 (2,914,154)
- -------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------
Beginning of period 424,091,230 427,005,384
- ------------------------------------------------------------------------- ----------------- -----------------
End of period $ 593,730,072 $ 424,091,230
- ------------------------------------------------------------------------- ----------------- -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TREASURY CASH SERIES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
<S> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992 1991 1990(A)
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------
Net investment income 0.05 0.04 0.02 0.02 0.04 0.07 0.02
- ------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------
Distributions from net investment income (0.05) (0.04) (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 $ 1.00
- ------------------------------------------ --------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (B) 4.83% 4.34% 2.37% 2.47% 4.24% 6.83% 2.42%
- ------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------
Expenses 0.99% 0.99% 0.99% 0.99% 0.98% 0.88% 0.60%*
- ------------------------------------------
Net investment income 4.70% 4.26% 2.33% 2.46% 4.18% 6.39% 7.75%*
- ------------------------------------------
Expense waiver/
reimbursement (c) 0.29% 0.08% 0.10% 0.04% 0.04% 0.22% 0.44%*
- ------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------
Net assets, end of period (000 omitted) $593,730 $424,091 $427,005 $532,334 $638,761 $713,430 $127,800
- ------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 7, 1990 (date of initial
public investment) to May 31, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
TREASURY CASH SERIES
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Cash Trust Series, Inc. (the "Corporation") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Corporation consists of four portfolios. The financial
statements included herein are only those of Treasury Cash Series (the "Fund"),
a diversified portfolio. 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. The
objective of the Fund is current income consistent with stability of principal
and liquidity.
(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.
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.
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 under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
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 the guidelines and/or
standards reviewed or 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.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the 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 income. Accordingly, no
provisions for federal tax are necessary.
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.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requries management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses, and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At May 31, 1996, there were 12,500,000,000 shares of $0.001 par value capital
stock authorized. At May 31, capital paid-in aggregated $593,730,072.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
<S> <C> <C>
1996 1995
Shares sold 3,620,620,510 2,391,925,952
- ---------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 22,590,400 14,469,163
- ---------------------------------------------------------------------------
Shares redeemed (3,473,572,068) (2,409,309,269)
- --------------------------------------------------------------------------- ---------------- ----------------
Net change resulting from capital stock transactions 169,638,842 (2,914,154)
- --------------------------------------------------------------------------- ---------------- ----------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Advisers, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received during the
period of the Administrative Services Agreement shall be at least $125,000 per
portfolio and $30,000 per each additional class of shares.
DISTRIBUTION 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
compensate Federated Securities Corp. ("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's shares. The Plan provides that the Fund may incur distribution
expenses up to 0.35% of the average daily net assets of the Fund shares,
annually, to compensate FSC. The distributor may voluntarily choose to waive any
portion of its fee. The distributor can modify or terminate this voluntary
waiver at any time at its sole discretion.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25%
of the average daily net assets of the Fund for the period. This fee paid to FSS
is to finance certain services for shareholders and to maintain shareholder
accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through its
subsidiary, Federated Shareholder Services Company ("FSSC"), serves as transfer
and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Directors of the Corporation are Officers
and Directors or Trustees of the above companies.
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Board of Directors of
CASH TRUST SERIES, INC. and Shareholders of
TREASURY CASH SERIES:
We have audited the accompanying statement of assets and liabilities of Treasury
Cash Series (one of the portfolios comprising Cash Trust Series, Inc.) including
the portfolio of investments, as of May 31, 1996, the related statement of
operations for the year then ended, the statements of changes in net assets for
the years ended May 31, 1996 and 1995 and the financial highlights for the
periods presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
May 31, 1996 by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Treasury Cash Series
as of May 31, 1996, the results of its operations, the changes in its net assets
and its financial highlights for the respective stated periods in conformity
with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
July 10, 1996
Directors Officers
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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 Executive Vice President
Lawrence D. Ellis, M.D. Edward C. Gonzales
Edward L. Flaherty, Jr. Executive Vice President
Peter E. Madden John W. McGonigle
Gregor F. Meyer Executive Vice President and Secretary
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Treasurer
Marjorie P. Smuts 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.
- -----------------------------------------------------------------------------
TREASURY
- -----------------------------------------------------------------------------
CASH
- -----------------------------------------------------------------------------
SERIES
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
ANNUAL REPORT
TO SHAREHOLDERS
MAY 31, 1996
(LOGO) FEDERATED INVESTORS
SINCE 1955
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
FEDERATED SECURITIES CORP. IS THE DISTRIBUTOR OF THE FUND
AND IS A SUBSIDIARY OF FEDERATED INVESTORS.
(LOGO)
CUSIP 147551402 RECYCLED
2062301 (7/96) PAPER
