1933 Act File No. 33-38550
1940 Act File No. 811-6269
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 7 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 6 X
CASH SERIES TRUST II
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
X on July 31, 1995 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i).
75 days after filing pursuant to paragraph (a)(ii)
on _________________ pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940, and:
X filed the Notice required by that Rule on July 14, 1995; or
intends to file the Notice required by that Rule on or about
____________; or
during the most recent fiscal year did not sell any securities
pursuant to Rule 24f-2 under the Investment Company Act of 1940, and,
pursuant to Rule 24f-2(b)(2), need not file the Notice.
Copies to:
Matthew G. Maloney, Esquire
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
CROSS REFERENCE SHEET
This amendment to the Registration Statement of CASH TRUST SERIES
II, which consists of 2 portfolios, (1) Municipal Cash Series II; and
(2) and Treasury Cash Series II, is comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page (1-2) Cover Page.
Item 2. Synopsis (1-2) Summary of Fund Expenses; (1-
2) Financial Highlights.
Item 3. Condensed Financial
Information (1-2) Performance Information.
Item 4. General Description of
Registrant (1-2) General Information;
(1-2) Investment Information;
(1-2) Investment Objective;
(1-2) Investment Policies;
(1-2) Investment Limitations;
(2) Investment Risks; (2) Non-
Diversification; (1-2) Regulatory
Compliance.
Item 5. Management of the Fund (1-2) Trust Information; (1-2)
Management of Cash Trust Series II;
(1-2) Distribution of Shares; (1-2)
Administration of the Fund;
(1-2) Distribution Plan.
Item 6. Capital Stock and Other
Securities (1-2) Account and Share Information;
(1-2) Dividends; (1-2) Capital
Gains; (1-2) Voting Rights;
(1-2) Massachusetts Partnership Law;
(1-2) Tax Information; (1-2) Federal
Income Tax; (1-2) Pennsylvania
Corporate and Personal Property
Taxes; (1-2) Other State and Local
Taxes.
Item 7. Purchase of Securities Being
Offered (1-2) Net Asset Value; (1-2) How to
Purchase Shares; (1-2) Special
Purchase Features; (1-2) Account and
Share Information
Item 8. Redemption or Repurchase (1-2) How to Redeem Shares;(1-2)
Special Redemption Features;(1-2)
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page (1-2) Cover Page.
Item 11. Table of Contents (1-2) Table of Contents.
Item 12. General Information and
History (1-2) General Information About the
Fund.
Item 13. Investment Objectives and
Policies (1-2) Investment Policies (1-2)
Investment Limitations.
Item 14. Management of the Fund (1-2) Cash Trust Series II
Management; (1-2) Trustees
Compensation.
Item 15. Control Persons and Principal
Holders of Securities Not Applicable.
Item 16. Investment Advisory and Other
Services (1-2) Investment Advisory Services;
(1-2) Fund Administration.
Item 17. Brokerage Allocation (1-2) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not Applicable.
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered (1-2) Determining Net Asset Value;
(1-2) Redeeming Shares.
(1-2) Redemption in Kind
Item 20. Tax Status (1-2) The Fund's Tax Status.
Item 21. Underwriters (1-2) Distribution Plan.
Item 22. Calculation of Performance
Data (1-2) Yield; (1-2) Effective Yield;
(1) Tax-Equivalent Yield;
(1-2) Performance Comparisons.
Item 23. Financial Statements Filed in Part A
MUNICIPAL CASH SERIES II
(A PORTFOLIO OF CASH TRUST SERIES II)
PROSPECTUS
The shares of Municipal Cash Series II (the "Fund") offered by this prospectus
represent interests in a non-diversified portfolio of Cash Trust Series II (the
"Trust"), an open-end management investment company (a mutual fund). The Fund
invests in short-term municipal securities to achieve current income exempt from
federal regular income tax consistent with stability of principal.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE FUND
ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE
NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated July 31,
1995, with the Securities and Exchange Commission. The information contained in
the Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Statement of Additional Information,
which is in paper form only, or a paper copy of this prospectus, if you have
received it electronically, free of charge by calling 1-800-235-4669. To obtain
other information, or make inquiries about the Trust, contact your financial
institution.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated July 31, 1995
- ------------------------------------------
- ------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary of Fund Expenses............... 1
Financial Highlights................... 2
General Information.................... 3
Investment Information................. 3
Investment Objective................. 3
Investment Policies.................. 3
Acceptable Investments............... 3
Municipal Securities................. 6
Investment Risks..................... 6
Non-Diversification.................. 7
Investment Limitations............... 7
Regulatory Compliance................ 7
Trust Information...................... 8
Management of Cash Trust Series II... 8
Distribution of Shares............... 9
Administration of the Fund........... 10
Net Asset Value........................ 11
How to Purchase Shares................. 12
Special Purchase Features............ 12
How to Redeem Shares................... 13
Special Redemption Features.......... 14
Account and Share Information.......... 15
Tax Information........................ 16
Federal Income Tax................... 16
Pennsylvania Corporate and Personal
Property Taxes..................... 16
Performance Information................ 17
Financial Statements................... 18
Independent Auditor's Report........... 30
Addresses.............................. 31
</TABLE>
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- ------------------------------------------
SUMMARY OF FUND EXPENSES
MUNICIPAL CASH SERIES II
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).............................................. None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price).............................................. None
Contingent Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, as applicable).............................................. None
Redemption Fee (as a percentage of amount redeemed, if applicable)................. None
Exchange Fee....................................................................... None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<S> <C> <C>
Management Fee (after waiver) (1)....................................................... 0.27%
12b-1 Fee............................................................................... 0.20%
Total Other Expenses.................................................................... 0.32%
Shareholder Services Fee................................................. None
Total Fund Operating Expenses (2)............................................... 0.79%
<FN>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.50%.
(2) The total Fund operating expenses would have been 1.02% absent the
voluntary waiver of a portion of the management fee.
</TABLE>
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Cash Trust Series II Information." Wire-transferred redemptions
of less than $5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
- -------------------------------------------------------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2)
redemption at the end of each time period............... $ 8 $ 25 $ 44 $ 98
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
1
- ------------------------------------------
- ------------------------------------------
MUNICIPAL CASH SERIES II
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the report of Deloitte & Touche LLP, Independent Auditors,
on page 30.
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
---------------------------------------------------------------
1995 1994 1993 1992 1991(A)
- -------------------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------
Net investment income 0.03 0.02 0.02 0.04 0.01
- -------------------------------------------- ----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS
- --------------------------------------------
Distributions to shareholders from net
investment income (0.03) (0.02) (0.02) (0.04) (0.01)
- -------------------------------------------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
TOTAL RETURN (B) 3.02% 1.99% 2.29% 3.72% 1.19%
- --------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------
Expenses 0.79% 0.79% 0.77% 0.74% 0.47%(c)
- --------------------------------------------
Net investment income 2.91% 1.97% 2.23% 3.56% 4.68%(c)
- --------------------------------------------
Expense waiver/reimbursement (d) 0.23% 0.28% 0.50% 0.50% 0.39%(c)
- --------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------
Net assets, end of period (000 omitted) $67,611 $131,770 $104,563 $65,628 $34,048
- --------------------------------------------
<FN>
(a) Reflects operations for the period from February 13, 1991 (date of initial
public investment) to May 31, 1991.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
2
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GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 14, 1990. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The Fund is designed for customers of financial institutions such as
banks, fiduciaries, custodians of public funds, investment advisers and
broker/dealers, as a convenient means of accumulating an interest in a
professionally managed, non-diversified portfolio investing primarily in
short-term municipal securities. The Trust may not be a suitable investment for
retirement plans because it invests in municipal securities. A minimum initial
investment of $25,000 is required. Subsequent investments must be in amounts of
at least $500.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
- ------------------------------------------
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is current income exempt from federal
regular income tax consistent with stability of principal and liquidity. This
investment objective cannot be changed without shareholder approval. While there
is no assurance that the Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in a portfolio of
municipal securities (as defined below) maturing in 13 months or less. As a
matter of investment policy, which cannot be changed without shareholder
approval, at least 80% of the Fund's annual interest income will be exempt from
federal regular income tax. (Federal regular income tax does not include the
federal individual alternative minimum tax or the federal alternative minimum
tax for corporations.) The average maturity of the securities in the Fund's
portfolio, computed on a dollar-weighted basis, will be 90 days or less. Unless
indicated otherwise, the investment policies may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in these policies becomes effective.
ACCEPTABLE INVESTMENTS
The Fund invests primarily in debt obligations issued by or on behalf of states,
territories, and possessions of the United States, including the District of
Columbia, and any political subdivision or financing authority of any of these,
the income from which is, in the opinion of
3
qualified legal counsel, exempt from federal regular income tax ("Municipal
Securities"). Examples of Municipal Securities include, but are not limited to:
- tax and revenue anticipation notes ("TRANs") issued to finance working
capital needs in anticipation of receiving taxes or other revenues;
- bond anticipation notes ("BANs") that are intended to be refinanced
through a later issuance of longer-term bonds;
- municipal commercial paper and other short-term notes;
- variable rate demand notes;
- municipal bonds (including bonds having serial maturities and pre-refunded
bonds) and leases; and
- participation, trust, and partnership interests in any of the foregoing
obligations.
VARIABLE RATE DEMAND NOTES
Variable rate demand notes are long-term debt instruments that have variable or
floating interest rates and provide the Fund with the right to tender the
security for repurchase at its stated principal amount plus accrued interest.
Such securities typically bear interest at a rate that is intended to cause the
securities to trade at par. The interest rate may float or be adjusted at
regular intervals (ranging from daily to annually), and is normally based on a
published interest rate or interest rate index. Most variable rate demand notes
allow the Fund to demand the repurchase of the security on not more than seven
days prior notice. Other notes only permit the Fund to tender the security at
the time of each interest rate adjustment or at other fixed intervals. See
"Demand Features." The Fund treats variable rate demand notes as maturing on the
later of the date of the next interest rate adjustment or the date on which the
Fund may next tender the security for repurchase.
PARTICIPATION INTERESTS
The Fund may purchase interests in Municipal Securities from financial
institutions such as commercial and investment banks, savings and loan
associations, and insurance companies. These interests may take the form of
participations, beneficial interests in a trust, partnership interests or any
other form of indirect ownership that allows the Fund to treat the income from
the investment as exempt from federal income tax. The Fund invests in these
participation interests in order to obtain credit enhancement or demand features
that would not be available through direct ownership of the underlying Municipal
Securities.
MUNICIPAL LEASES
Municipal leases are obligations issued by state and local governments or
authorities to finance the acquisition of equipment and facilities. They may
take the form of a lease, an installment purchase contract, a conditional sales
contract, or a participation interest in any of the above.
RATINGS
The securities in which the Fund invests must be rated in one of the two highest
short-term rating categories by one or more nationally recognized statistical
rating organizations ("NRSROs") or be of comparable quality to securities having
such ratings. An NRSRO's two highest rating categories are determined without
regard for sub-categories and gradations. For example, securities rated SP-1+,
SP-1, or SP-2 by Standard & Poor's Ratings Group ("S&P"), MIG-1 or MIG-2 by
Moody's Investors Service, Inc. ("Moody's"), or FIN-1+, FIN-1, and FIN-2 by
Fitch Investors Service, Inc. ("Fitch") are all considered rated in
4
one of the two highest short-term rating cate-
gories. The Fund will follow applicable regulations in determining whether a
security rated by more than one NRSRO can be treated as being in one of the two
highest short-term rating categories; currently, such securities must be rated
by two NRSROs in one of their two highest rating categories. See "Regulatory
Compliance."
CREDIT ENHANCEMENT
Certain of the Fund's acceptable investments may be credit enhanced by a
guaranty, letter of credit, or insurance. The Fund typically evaluates the
credit quality and ratings of credit-enhanced securities based upon the
financial condition and ratings of the party providing the credit enhancement
(the "credit enhancer"), rather than the issuer. However, credit-enhanced
securities will not be treated as having been issued by the credit enhancer for
diversification purposes, unless the Fund has invested more than 10% of its
assets in securities issued, guaranteed or otherwise credit enhanced by the
credit enhancer, in which case the securities will be treated as having been
issued by both the issuer and the credit enhancer. The bankruptcy, receivership,
or default of the credit enhancer will adversely affect the quality and
marketability of the underlying security.
The Fund may have more than 25% of its total assets invested in securities
credit enhanced by banks.
DEMAND FEATURES
The Fund may acquire securities that are subject to puts and standby commitments
("demand features") to purchase the securities at their principal amount
(usually with accrued interest) within a fixed period (usually seven days)
following a demand by the Fund. The demand feature may be issued by the issuer
of the underlying securities, a dealer in the securities, or by another third
party, and may not be transferred separately from the underlying security. The
Fund uses these arrangements to provide the Fund with liquidity and not to
protect against changes in the market value of the underlying securities. The
bankruptcy, receivership, or default by the issuer of the demand feature, or a
default on the underlying security or other event that terminates the demand
feature before its exercise, will adversely affect the liquidity of the
underlying security. Demand features that are exercisable even after a payment
default on the underlying security may be treated as a form of credit
enhancement.
RESTRICTED AND ILLIQUID SECURITIES
The Fund may invest in restricted securities. Restricted securities are any
securities in which the Fund may invest pursuant to its investment objective and
policies but which are subject to restrictions on resale under federal
securities laws. Under criteria established by the Trustees, certain restricted
securities are determined to be liquid. To the extent that restricted securities
are not determined to be liquid, the Fund will limit their purchase, together
with other illiquid securities, to 10% of its net assets. This investment policy
cannot be changed without shareholder approval.
WHEN-ISSUED AND DELAYED
DELIVERY TRANSACTIONS
The Fund may purchase securities on a when-issued or delayed delivery basis.
These transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The seller's failure to
complete these transactions may cause the Fund to miss a price or yield
considered to be advantageous. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices. Accordingly, the Fund may pay more
or
5
less than the market value of the securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
TEMPORARY INVESTMENTS
From time to time, when the investment adviser determines that market conditions
call for a temporary defensive posture, the Fund may invest in tax-exempt or
taxable securities such as: obligations issued by or on behalf of municipal or
corporate issuers having the same quality characteristics as described above;
obligations issued or guaranteed by the U.S. government, its agencies, or
instrumentalities; instruments issued by a U.S. branch of a domestic bank or
other deposit institution having capital, surplus, and undivided profits in
excess of $100,000,000 at the time of investment; and repurchase agreements
(arrangements in which the organization selling the Fund a temporary investment
agrees at the time of sale to repurchase it at a mutually agreed upon time and
price); and prime commercial paper rated A-1 by Standard & Poor's Ratings Group,
Prime-1 by Moody's, or F-1 by Fitch and other short-term credit instruments.
Although the Fund is permitted to make taxable, temporary investments, there is
no current intention to do so. However, the interest from certain Municipal
Securities is subject to the federal alternative minimum tax.
MUNICIPAL SECURITIES
Municipal Securities are generally issued to finance public works, such as
airports, bridges, highways, housing, hospitals, mass transportation projects,
schools, streets, and water and sewer works. They are also issued to repay
outstanding obligations, to raise funds for general operating expenses, and to
make loans to other public institutions and facilities.
Municipal Securities include industrial development bonds issued by or on behalf
of public authorities to provide financing aid to acquire sites or construct and
equip facilities for privately or publicly owned corporations. The availability
of this financing encourages these corporations to locate within the sponsoring
communities and thereby increases local employment.
The two principal classifications of Municipal Securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. Interest on and principal of revenue bonds, however, are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.
INVESTMENT RISKS
Yields on Municipal Securities depend on a variety of factors, including: the
general conditions of the short-term municipal note market and of the municipal
bond market; the size of the particular offering; the maturity of the
obligations; and the rating of the issue. The ability of the Fund to achieve its
investment objective also depends on the continuing ability of the issuers of
Municipal Securities and participation interests, or the credit enhancers of
either, to meet their obligations for the payment of interest and principal when
6
due. In addition, from time to time, the supply of Municipal Securities
acceptable for purchase by the Fund could become limited.
The Fund may invest in Municipal Securities which are repayable out of revenue
streams generated from economically related projects or facilities and/or whose
issuers are located in the same state. Sizable investments in these Municipal
Securities could involve an increased risk to the Fund should any of these
related projects or facilities experience financial difficulties.
Obligations of issuers of Municipal Securities are subject to the provisions of
bankruptcy, insolvency, and other laws affecting the rights and remedies of
creditors. In addition, the obligations of such issuers may become subject to
laws enacted in the future by Congress, state legislators, or referenda
extending the time for payment of principal and/or interest, or imposing other
constraints upon enforcement of such obligations or upon the ability of states
or municipalities to levy taxes. There is also the possibility that, as a result
of litigation or other conditions, the power or ability of any issuer to pay,
when due, the principal of and interest on its municipal securities may be
materially affected.
NON-DIVERSIFICATION
The Fund is non-diversified. An investment in the Fund, therefore, will entail
greater risk than would exist if it were diversified because the higher
percentage of investments among fewer issuers may result in greater fluctuation
in the total market value of the Fund's portfolio. Any economic, political, or
regulatory developments affecting the value of the securities in the Fund's
portfolio will have a greater impact on the total value of the portfolio than
would be the case if the portfolio were diversified among more issuers.
The Fund will attempt to minimize the risks associated with a non-diversified
portfolio so as not to impair its ability to stabilize its net asset value at
$1.00 per share by limiting, with respect to 75% of the Fund's total assets,
investments in one issuer to not more than 10% of the value of its total assets.
The total amount of the remaining 25% of the value of the Fund's total assets
could be invested in a single issuer if the investment adviser believes such a
strategy to be prudent. However, the Fund intends to comply with Subchapter M of
the Internal Revenue Code. This undertaking requires that, at the end of each
quarter of each taxable year, with regard to at least 50% of the Fund's total
assets, no more than 5% of its total assets are invested in the securities of a
single issuer and that with respect to the remainder of the Fund's total assets,
no more than 25% of its total assets are invested in the securities of a single
issuer.
INVESTMENT LIMITATIONS
The Fund will not borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a money market instrument for a percentage
of its cash value with an agreement to buy it back on a set date) or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge assets to secure such
borrowings.
The above investment limitation cannot be changed without shareholder approval.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended.
7
In particular, the Fund will comply with the various requirements of Rule 2a-7,
which regulates money market mutual funds. The Fund will determine the effective
maturity of its investments, as well as its ability to consider a security as
having received the requisite short-term ratings by NRSROs, according to Rule
2a-7. The Fund may change these operational policies to reflect changes in the
laws and regulations without the approval of its shareholders.
- ------------------------------------------
TRUST INFORMATION
MANAGEMENT OF CASH TRUST SERIES II
BOARD OF TRUSTEES
The Trust is managed by a Board of Trustees. The Trustees are responsible for
managing the Fund's business affairs and for exercising all the Trust's powers
except those reserved for the shareholders. An Executive Committee of the Board
of Trustees handles the Board's responsibilities between meetings of the Board.
INVESTMENT ADVISER
Investment decisions for the Fund are made by Federated Advisers, the Fund's
investment adviser, subject to direction by the Trustees. The adviser
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES
The adviser receives an annual investment advisory fee equal to .50 of 1% of the
Fund's average daily net assets. The adviser has undertaken to reimburse the
Fund up to the amount of the advisory fee for operating expenses in excess of
limitations established by certain states. The adviser also may voluntarily
choose to waive a portion of its fee or reimburse other expenses of the Fund,
but reserves the right to terminate such waiver or reimbursement at any time at
its sole discretion.
ADVISER'S BACKGROUND
Federated Advisers, a Delaware business trust, organized on April 11, 1989 is a
registered investment adviser under the Investment Advisers Act of 1940. It is a
subsidiary of
8
Federated Investors. All of the Class A (voting) shares of Federated Investors
are owned by a trust, the trustees of which are John F. Donahue, Chairman and
Trustee of Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Advisers and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private accounts.
Certain other subsidiaries also provide administrative services to a number of
investment companies. With over $72 billion invested across more than 260 funds
under management and/or administration by its subsidiaries, as of December 31,
1994, Federated Investors is one of the largest mutual fund investment managers
in the United States. With more than 1,750 employees, Federated continues to be
led by the management who founded the company in 1955. Federated funds are
presently at work in and through 4,000 financial institutions nationwide. More
than 100,000 investment professionals have selected Federated funds for their
clients.
Both the Trust and the Adviser have adopted strict codes of ethics governing the
conduct of all employees who manage the Fund and its portfolio securities. These
codes recognize that such persons owe a fiduciary duty to the Fund's
shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Board of Trustees,
and could result in severe penalties.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for shares of the Fund.
It is a Pennsylvania corporation organized on November 14, 1969, and is the
principal distributor for a number of investment companies. Federated Securities
Corp. is a subsidiary of Federated Investors.
State securities laws may require certain financial institutions such as
depository institutions to register as dealers.
DISTRIBUTION PLAN
Under a distribution plan adopted in accordance with Investment Company Act Rule
12b-1 (the "Plan"), the distributor may select financial institutions such as
banks, fiduciaries, custodians for public funds, investment advisers and
brokers/dealers to provide sales services or distribution-related support
services as agents for their clients or customers. These services may include,
but are not limited to the following functions: providing office space,
equipment, telephone facilities, and various personnel including clerical,
supervisory, and computer as necessary or beneficial to establish and maintain
shareholder accounts and records; processing purchase and redemption
transactions and automatic investments of client account cash balances;
answering routine client inquiries regarding the Fund; assisting clients in
changing dividend options, account designations, and addresses; and providing
such other services as the Fund reasonably requests.
The distributor will pay financial institutions a fee based upon shares subject
to the Plan and owned by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid will be
determined from time to time by the Board of Trustees of the Fund provided that
for any period the total amount of these fees shall not
9
exceed an annual rate of .20 of 1% of the average net asset value of shares
subject to the Plan held during the period by clients or customers of financial
institutions. The current annual rate of such fees is .20 of 1%. Any fees paid
by the distributor under the Plan, will be reimbursed from the assets of the
Fund.
SUPPLEMENTAL PAYMENTS TO
FINANCIAL INSTITUTIONS
In addition to periodic payments to financial institutions under the
Distribution Plan, certain financial institutions may be compensated by the
adviser or its affiliates for the continuing investment of customers' assets in
certain funds, including the Fund, advised by those entities. These payments
will be made directly by the distributor or adviser from their assets, and will
not be made from the assets of the Fund or by the assessment of a sales load on
shares.
Furthermore, the distributor may offer to pay a supplemental fee from its own
assets to financial institutions as financial assistance for providing
substantial sales services, distribution-related support services or shareholder
services. The support may include sponsoring sales, educational and training
seminars for their employees, providing sales literature, and engineering
computer software programs that emphasize the attributes of the Fund. Such
assistance will be predicated upon the amount of shares the financial
institution sells or may sell, and/or upon the type and nature of sales or
marketing support furnished by the financial institution. Any payments made by
the distributor may be reimbursed by the Fund's investment adviser or its
affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES
Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Fund. Federated Administrative
Services provides these at an annual rate as specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE
MAXIMUM FEE DAILY NET ASSETS
- -------------- -----------------------
<C> <S>
.15 of 1% on the first $250
million
.125 of 1% on the next $250
million
.10 of 1% on the next $250
million
.075 of 1% on assets in excess of
$750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. Average
aggregate daily net assets include those of all mutual funds advised by
affiliates of Federated Investors. Federated Administrative Services may choose
voluntarily to waive a portion of its fee.
CUSTODIAN
State Street Bank and Trust Company, Boston, MA, is custodian for the securities
and cash of the Fund.
TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT
Federated Services Company, Boston, MA, is transfer agent for the shares of, and
dividend disbursing agent for, the Fund. Federated Services Company is a
subsidiary of Federated Investors.
INDEPENDENT AUDITORS
The independent auditors for the Fund are Deloitte & Touche LLP, Pittsburgh,
P.A.
10
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the investment adviser looks for prompt execution of the order at a
favorable price. In working with dealers, the investment adviser will generally
utilize those who are recognized dealers in specific portfolio instruments,
except when a better price and execution of the order can be obtained elsewhere.
In selecting among firms believed to meet these criteria, the investment adviser
may give consideration to those firms which have sold or are selling shares of
the Fund and other Funds distributed by Federated Securities Corp. The
investment adviser makes decisions on portfolio transactions and selects brokers
and dealers subject to review by the Trustees.
- ------------------------------------------
NET ASSET VALUE
The Fund attempts to stabilize the net asset value of its shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net asset
value per share is determined by subtracting total liabilities from total assets
and dividing the remainder by the number of shares outstanding. The Fund cannot
guarantee that its net asset value will always remain at $1.00 per share.
The net asset value is determined at 12:00 noon, 3:00 p.m. (Eastern time), and
as of the close of trading (normally 4:00 p.m., Eastern time) on the New York
Stock Exchange each day the New York Stock Exchange is open.
11
- ------------------------------------------
HOW TO PURCHASE SHARES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange and the Federal Reserve Wire System are open for business. Shares may
be purchased as described below either through a financial institution (such as
a bank or broker/ dealer) or by wire or by check directly to the Fund with a
minimum initial investment of $25,000 or more and additional investments of as
little as $500. The minimum initial investment for retirement plans is only
$1,000. (Financial institutions may impose different minimum investment
requirements on their customers.)
In connection with any sale, Federated Securities Corp. may from time to time
offer certain items of nominal value to any shareholder or investor. The Fund
reserves the right to reject any purchase request. An account must be
established at a financial institution or by completing, signing, and returning
the new account form available from the Fund before shares can be purchased.
PURCHASING SHARES THROUGH A
FINANCIAL INSTITUTION
Investors may purchase shares through a financial institution which has a sales
agreement with the distributor. Orders are considered received when the Fund
receives payment by wire or converts payment by check from the financial
institution into federal funds. It is the financial institution's responsibility
to transmit orders promptly. Financial institutions may charge additional fees
for their services.
PURCHASING SHARES BY WIRE
Shares may be purchased by wire by calling the Fund before 3:00 p.m. (Eastern
time). The order is considered received immediately. Payment by federal funds
must be received before 3:00 p.m. (Eastern time) in order to begin earning
dividends that same day. Federal funds should be wired as follows: Federated
Services Company, c/o State Street Bank and Trust Company, Boston, MA;
Attention; EDGEWIRE; For credit to: Municipal Cash Series II; (Fund Number)
(this number can be found on the account statement or by contacting the Fund)
Group Number or Order Number; Nominee or Institution Name; and ABA Number
011000028. Shares cannot be purchased by wire on holidays when wire transfers
are restricted.
PURCHASING SHARES BY CHECK
Shares may be purchased by sending a check made payable to Municipal Cash Series
II to: Federated Services Company, P.O. Box 8600 Boston, MA 02266-8600. Orders
by mail are considered received when payment by check is converted into federal
funds (normally the business day after the check is received) and shares begin
earning dividends the next day.
SPECIAL PURCHASE FEATURES
SYSTEMATIC INVESTMENT PROGRAM
A minimum of $500 can be automatically withdrawn periodically from the
shareholder's checking account at an Automated Clearing House ("ACH") member and
invested in Fund shares. Shareholders should contact their financial institution
or the Fund to participate in this program.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts. However,
certain financial institutions may wish to use the transfer agent's
subaccounting system to minimize their
12
internal recordkeeping requirements. The transfer agent charges a fee based on
the level of subaccounting services rendered. Financial institutions may charge
or pass through subaccounting fees as part of or in addition to normal trust or
agency account fees. They may also charge fees for other services provided which
may be related to the ownership of Fund shares. This prospectus should,
therefore, be read together with any agreement between the customer and the
financial institution with regard to the services provided, the fees charged for
those services, and any restrictions and limitations imposed.
- ------------------------------------------
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests must be received in
proper form and can be made as described below.
REDEEMING THROUGH A
FINANCIAL INSTITUTION
Shares may be redeemed by contacting the shareholder's financial institution.
Shares will be redeemed at the net asset value next determined after Federated
Services Company receives the redemption request. According to the shareholder's
instructions, redemption proceeds can be sent to the financial institution or to
the shareholder by check or wire. The financial institution is responsible for
promptly submitting redemption requests and providing proper written redemption
instructions. Customary fees and commissions may be charged by the financial
institution for this service.
REDEEMING SHARES BY TELEPHONE
Redemptions in any amount may be made by calling the Fund provided the Fund has
a completed authorization form. These forms can be obtained from Federated
Securities Corp. Proceeds from redemption requests received before 12:00 noon
(Eastern time) will be wired the same day to the shareholder's account at a
domestic commercial bank which is a member of the Federal Reserve System, but
will not include that day's dividend. Proceeds from redemption requests received
after that time will include that day's dividends but will be wired the
following business day. Under limited circumstances, arrangements may be made
with the distributor for same-day payment of
13
proceeds, without that day's dividend, for redemption requests received before
2:00 p.m. (Eastern time). Proceeds from redeemed shares purchased by check or
through ACH will not be wired until that method of payment has cleared.
Telephone instructions will be recorded and if reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions. In the event of drastic economic or market
changes, a shareholder may experience difficulty in redeeming shares by
telephone. If this occurs, "Redeeming Shares by Mail" should be considered. If
at any time the Fund shall determine it necessary to terminate or modify the
telephone redemption privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL
Shares may be redeemed in any amount by mailing a written request together with
certificates, if issued, to:
Municipal Cash Series II
P.O. Box 8600
Boston, MA 02266-8600
The written request should state: the Fund Name; the account name as registered
with the Fund; the account number; and the number of shares to be redeemed or
the dollar amount requested. All owners of the account must sign the request
exactly as the shares are registered. All share certificates should be sent by
registered or certified mail with the written request. Normally, a check for the
proceeds is mailed within one business day, but in no event more than seven
days, after receipt of a proper written redemption request. Dividends are paid
up to and including the day that a redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund, or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by: a commercial
or savings bank, trust company or savings and loan association whose deposits
are insured by an organization which is administered by the Federal Deposit
Insurance Corporation; a member firm of a domestic stock exchange; or any other
"eligible guarantor institution" as defined in the Securities Exchange Act of
1934. The Fund does not accept signatures guaranteed by a notary public.
SPECIAL REDEMPTION FEATURES
CHECK WRITING
Upon request, a checking account will be established to allow shareholders to
redeem their Fund shares. A fee will be charged for this service. The check
writing service allows the shareholder to receive the daily dividend declared on
the shares to be redeemed until the check is presented to State Street Bank for
payment. However, checks should never be made payable or sent to State Street
Bank or the Fund to redeem shares, and a check may not be written to close an
account. Canceled checks are sent to the shareholder each month.
DEBIT CARD
Upon request, a debit account will be established. This account allows
shareholders to redeem shares by using a debit card. A fee will be charged for
this service.
SYSTEMATIC WITHDRAWAL PROGRAM
If a shareholder's account has a value of at least $25,000, a systematic
withdrawal program may be established whereby automatic redemptions are made
from the account and transferred electronically to any commercial bank, savings
bank, or credit union that is an ACH member. Shareholders may apply for
participation in this program through their financial institution or the Fund.
14
- ------------------------------------------
ACCOUNT AND SHARE INFORMATION
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested in writing to the Fund.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Fund will distribute in cash or additional shares any realized
net long-term capital gains at least once every 12 months.
CERTIFICATE AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund or Federated Services Company in writing. Monthly
confirmations are sent to report transactions such as all purchases and
redemptions as well as dividends paid during the month.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, if an account
balance falls below $25,000 due to shareholder redemptions, the Fund may redeem
all of the remaining shares in that account (except accounts maintained by
retirement plans) and pay the proceeds to the shareholder. Before shares are
redeemed to close an account, the shareholder will be notified in writing and
allowed 30 days to purchase additional shares to meet the minimum requirement.
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
15
- ------------------------------------------
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
Shareholders are not required to pay the federal regular income tax on any
dividends received from the Fund that represent net interest on tax-exempt
municipal bonds. However, under the Tax Reform Act of 1986, dividends
representing net interest earned on certain "private activity" bonds issued
after August 7, 1986, may be included in calculating the federal individual
alternative minimum tax or the federal alternative minimum tax for corporations.
The Fund may purchase all types of municipal bonds, including private activity
bonds.
The alternative minimum tax applies when it exceeds the regular tax for the
taxable year. Alternative minimum taxable income is equal to the regular taxable
income of the taxpayer increased by certain "tax preference" items not included
in regular taxable income and reduced by only a portion of the deductions
allowed in the calculation of the regular tax.
Dividends of the Fund representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.
These tax consequences apply whether dividends are received in cash or as
additional shares.
PENNSYLVANIA CORPORATE AND
PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston, & Donnelly, counsel to the Trust: Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that the
portfolio securities in the Fund would be subject to such taxes if owned
directly by residents of those jurisdictions.
OTHER STATE AND LOCAL TAXES
Because interest received by the Fund may not be exempt from all state and local
income taxes, shareholders may be required to pay state and local taxes on
dividends received from the Fund. Shareholders are urged to consult their own
tax advisers regarding the status of their accounts under state and local tax
laws.
16
- ------------------------------------------
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield, and
tax-equivalent yield.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment. The tax-equivalent yield is calculated similarly to the yield, but
is adjusted to reflect the taxable yield that would have to be earned to equal
the Fund's tax exempt yield, assuming a specific tax rate.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the Fund after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
17
- ------------------------------------------
- ------------------------------------------
MUNICIPAL CASH SERIES II
PORTFOLIO OF INVESTMENTS
MAY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
----------- ------------------------------------------------------------ --------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--98.8%
-------------------------------------------------------------------------
ALABAMA--1.8%
------------------------------------------------------------
$ 925,000 Abbeville, AL, IDB Monthly VRDNs (Great Southern Wood
Preserving Co.)/(SouthTrust Bank of Alabama, Birmingham LOC) P-1 $ 925,000
------------------------------------------------------------
305,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell
Manufacturing)/(SouthTrust Bank of Alabama, Birmingham LOC) P-1 305,000
------------------------------------------------------------ -----------
Total 1,230,000
------------------------------------------------------------ -----------
ARKANSAS--6.7%
------------------------------------------------------------
3,500,000 Hope, AR , Solid Waste Disposal Revenue Bonds (Series 1994),
4.30% CP (Temple-Inland Forest Products Corporation
Project)/(Temple-Inland, Inc. GTD), Mandatory Tender
8/24/1995 A-1 3,500,000
------------------------------------------------------------
1,000,000 Springdale, AR, IDA Weekly VRDNs (Newlywed Food)/ (Mellon
Bank NA, Pittsburgh LOC) VMIG1 1,000,000
------------------------------------------------------------ -----------
Total 4,500,000
------------------------------------------------------------ -----------
CALIFORNIA--5.0%
------------------------------------------------------------
2,400,000 Riverside County, CA, IDA Weekly VRDNs (Golden West
Homes)/(Wells Fargo Bank, N.A. LOC) P-1 2,400,000
------------------------------------------------------------
1,000,000 Sacramento County, CA, Housing Development Authority, (1992
Issue A) Weekly VRDNs (Shadowwood Apartments)/ (General
Electric Capital Corp. LOC) P-1 1,000,000
------------------------------------------------------------ -----------
Total 3,400,000
------------------------------------------------------------ -----------
GEORGIA--3.9%
------------------------------------------------------------
2,655,000 Georgia State, HFA, (Series 1990C), 4.40% TOBs (First
National Bank of Chicago LIQ), Optional Tender 6/1/1995 NR(2) 2,655,000
------------------------------------------------------------ -----------
</TABLE>
18
- ------------------------------------------
- ------------------------------------------
MUNICIPAL CASH SERIES II
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
----------- ------------------------------------------------------------ --------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
-------------------------------------------------------------------------
ILLINOIS--4.6%
------------------------------------------------------------
$ 1,000,000 Chicago, IL, Gas Supply Revenue Bonds (1993 Series B), 4.95%
TOBs (Peoples Gas Light & Coke Company), Optional Tender
12/1/1995 VMIG1 $ 1,000,000
------------------------------------------------------------
2,135,000 Illinois Development Finance Authority Weekly VRDNs (Olympic
Steel, Inc.)/(National City Bank, Cleveland, OH LOC) P-1 2,135,000
------------------------------------------------------------ -----------
Total 3,135,000
------------------------------------------------------------ -----------
INDIANA--8.0%
------------------------------------------------------------
3,105,000 Avilla, IN Weekly VRDNs (Group Dekko International)/ (Bank
One, Indianapolis, IN LOC) P-1 3,105,000
------------------------------------------------------------
885,000 Avilla, IN, IDR Weekly VRDNs (Group Dekko
International)/(Bank One, Indianapolis, IN LOC) P-1 885,000
------------------------------------------------------------
1,415,000 Indiana Development Finance Authority, Adjustable Rate
Economic Development Revenue Refunding Bonds Weekly VRDNs
(T. M. Morris Manufacturing Co., Inc. Project)/ (Bank One,
Indianapolis, IN LOC) P-1 1,415,000
------------------------------------------------------------ -----------
Total 5,405,000
------------------------------------------------------------ -----------
KENTUCKY--4.4%
------------------------------------------------------------
1,000,000 Kentucky Pollution Abatement & Water Resource Finance
Authority Daily VRDNs (Toyota Motor Corp.) A-1+ 1,000,000
------------------------------------------------------------
2,000,000 Scottsville, KY, 4.45% TOBs (Sumitomo Electric Wiring
Systems)/(Sumitomo Bank Ltd., Osaka LOC), Optional Tender
11/1/1995 A-1 2,000,000
------------------------------------------------------------ -----------
Total 3,000,000
------------------------------------------------------------ -----------
LOUISIANA--3.2%
------------------------------------------------------------
2,150,000 East Baton Rouge, LA, Mortgage Finance Authority, Single
Family Mortgage Revenue Bonds (Series 1994C), 5.00% TOBs
(United States Treasury COL), Mandatory Tender 6/15/1995 MIG1 2,150,000
------------------------------------------------------------ -----------
</TABLE>
19
- ------------------------------------------
- ------------------------------------------
MUNICIPAL CASH SERIES II
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
----------- ------------------------------------------------------------ --------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
-------------------------------------------------------------------------
MARYLAND--3.8%
------------------------------------------------------------
$ 2,575,000 Baltimore County, MD, IDA, (Series 1994A) Weekly VRDNs
(Pitts Realty Limited Partnership)/(PNC Bank, NA, Delaware
LOC) P-1 $ 2,575,000
------------------------------------------------------------ -----------
NEVADA--3.7%
------------------------------------------------------------
2,500,000 Nevada State Department of Community and Industrial
Development Weekly VRDNs (Smithey-Oasis Co.)/(Mellon Bank
NA, Pittsburgh LOC) P-1 2,500,000
------------------------------------------------------------ -----------
NEW HAMPSHIRE--9.6%
------------------------------------------------------------
3,000,000 New Hampshire Business Finance Authority, Pollution Control
Revenue Bonds (Series A), 4.15% CP (New England Power Co.),
Mandatory Tender 10/19/1995 A-1 3,000,000
------------------------------------------------------------
1,200,000 New Hampshire Business Finance Authority, Pollution Control
Revenue Bonds (Series A), 4.30% CP (New England Power Co.),
Mandatory Tender 8/24/1995 A-1 1,200,000
------------------------------------------------------------
2,300,000 New Hampshire Higher Educational & Health Facilities
Authority Weekly VRDNs (Colby Sawyer College Issue)/
(Baybank LOC) A-2 2,300,000
------------------------------------------------------------ -----------
Total 6,500,000
------------------------------------------------------------ -----------
NEW JERSEY--3.0%
------------------------------------------------------------
2,000,000 Hudson County, NJ, 4.55% BANs, 10/11/1995 NR(4) 2,001,037
------------------------------------------------------------ -----------
NEW YORK--9.6%
------------------------------------------------------------
3,000,000 Central Islip, NY, Union Free School District, 4.50% TANs,
6/30/1995 NR 3,001,145
------------------------------------------------------------
3,475,000 South Country Central School District, NY, 4.50% TANs,
6/29/1995 NR(4) 3,475,598
------------------------------------------------------------ -----------
Total 6,476,743
------------------------------------------------------------ -----------
</TABLE>
20
- ------------------------------------------
- ------------------------------------------
MUNICIPAL CASH SERIES II
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
----------- ------------------------------------------------------------ --------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
-------------------------------------------------------------------------
OHIO--3.8%
------------------------------------------------------------
$ 2,000,000 Ohio State Air Quality Development Authority, (Series C),
4.25% TOBs (Ohio Edison Co.)/(Barclays Bank PLC, London
LOC), Optional Tender 9/1/1995 A-1+ $ 2,000,000
------------------------------------------------------------
600,000 Youngstown City School District, OH, (Series 1994-2), 5.45%
RANs, 7/1/1995 NR 600,452
------------------------------------------------------------ -----------
Total 2,600,452
------------------------------------------------------------ -----------
PENNSYLVANIA--1.0%
------------------------------------------------------------
700,000 Pennsylvania EDA Weekly VRDNs (Respironics, Inc.)/(PNC Bank,
N.A. LOC) P-1 700,000
------------------------------------------------------------ -----------
SOUTH CAROLINA--4.3%
------------------------------------------------------------
2,885,000 South Carolina Job Development Authority, Economic
Development Revenue Bonds (Series 1994) Weekly VRDNs
(Carolina Cotton Works, Inc. Project)/(Branch Banking &
Trust Co, Wilson LOC) A-1 2,885,000
------------------------------------------------------------ -----------
TENNESSEE--5.5%
------------------------------------------------------------
1,000,000 Cocke County, TN, IDB Weekly VRDNs (GLI, Inc.)/(Sanwa Bank
Ltd, Osaka LOC) P-1 1,000,000
------------------------------------------------------------
700,000 Paris, TN, IDB Weekly VRDNs (Plumley -Marugo Limited)/ (PNC
Bank, Kentucky LOC) A-1 700,000
------------------------------------------------------------
2,000,000 Roane, TN, Industrial Development Board, Solid Waste
Disposal Revenue Bonds (Series 1990A), 4.85% TOBs (Horsehead
Resource Development, Inc.)/(Long Term Credit Bank of Japan
Ltd, Tokyo LOC), Mandatory Tender 11/1/1995 A-2 2,000,000
------------------------------------------------------------ -----------
Total 3,700,000
------------------------------------------------------------ -----------
WISCONSIN--16.9%
------------------------------------------------------------
2,850,000 Germantown, WI, IDA Weekly VRDNs (Zenith Sintered Products,
Inc.)/(Bank One, Milwaukee, WI N.A. LOC) P-1 2,850,000
------------------------------------------------------------
1,940,000 Plover, WI Weekly VRDNs (Sirco Manufacturing, Inc.)/
(Norwest Bank, Minneapolis LOC) A-1+ 1,940,000
------------------------------------------------------------
</TABLE>
21
- ------------------------------------------
- ------------------------------------------
MUNICIPAL CASH SERIES II
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
----------- ------------------------------------------------------------ --------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
-------------------------------------------------------------------------
WISCONSIN--CONTINUED
------------------------------------------------------------
$ 2,000,000 Plymouth, WI, IDB Weekly VRDNs (Great Lakes Cheese)/
(Rabobank Nederland, Utrecht LOC) A-1+ $ 2,000,000
------------------------------------------------------------
2,800,000 Portage, WI, Adjustable Rate IDRB (Series 1994) Weekly VRDNs
(Portage Industries Corporation Project)/(Bank One,
Milwaukee, WI N.A. LOC) A-1+ 2,800,000
------------------------------------------------------------
1,840,000 Wisconsin Housing & Economic Development Authority, (Series
B), 4.625% TOBs (FSA INS)/(Meridian Bank, Reading, PA LIQ),
Optional Tender 6/1/1995 NR(1) 1,840,000
------------------------------------------------------------ -----------
Total 11,430,000
------------------------------------------------------------ -----------
TOTAL INVESTMENTS (AT AMORTIZED COST) $66,843,232+
------------------------------------------------------------ -----------
-----------
<FN>
* Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings. Current Credit Ratings are unaudited.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($67,611,234) at May 31, 1995.
</TABLE>
22
- ------------------------------------------
- ------------------------------------------
MUNICIPAL CASH SERIES II
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
The following abbreviation(s) are used in this portfolio:
BANs --Bond Anticipation Notes
COL --Collateralized
CP --Commercial Paper
EDA --Economic Development Authority
FSA --Financial Security Assurance
GTD --Guaranty
HFA --Housing Finance Authority
IDA --Industrial Development Authority
IDB --Industrial Development Bond
IDR --Industrial Development Revenue
IDRB --Industrial Development Revenue Bonds
INS --Insured
LIQ --Liquidity Agreement
LOC --Letter of Credit
RANs --Revenue Anticipation Notes
TANs --Tax Anticipation Notes
TOBs --Tender Option Bonds
VRDNs --Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
23
- ------------------------------------------
- ------------------------------------------
MUNICIPAL CASH SERIES II
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $ 66,843,232
- -----------------------------------------------------------------------------------
Cash 160,841
- -----------------------------------------------------------------------------------
Income receivable 724,437
- -----------------------------------------------------------------------------------
Deferred expenses 14,739
- ----------------------------------------------------------------------------------- ------------
Total assets 67,743,249
- -----------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------
Payable for shares redeemed $ 1,236
- ----------------------------------------------------------------------
Income distribution payable 102,355
- ----------------------------------------------------------------------
Accrued expenses 28,424
- ---------------------------------------------------------------------- ----------
Total liabilities 132,015
- ----------------------------------------------------------------------------------- ------------
NET ASSETS for 67,611,234 shares outstanding $ 67,611,234
- ----------------------------------------------------------------------------------- ------------
------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
($67,611,234 DIVIDED BY 67,611,234 shares outstanding) $ 1.00
- ----------------------------------------------------------------------------------- ------------
------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
24
- ------------------------------------------
- ------------------------------------------
MUNICIPAL CASH SERIES II
STATEMENT OF OPERATIONS
YEAR ENDED MAY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------
Interest $ 3,470,108
- -----------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------
Investment advisory fee $469,638
- ------------------------------------------------------------
Administrative personnel and services fee 125,000
- ------------------------------------------------------------
Custodian fees 31,272
- ------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and
expenses 27,536
- ------------------------------------------------------------
Directors'/Trustees' fees 5,082
- ------------------------------------------------------------
Auditing fees 13,196
- ------------------------------------------------------------
Legal fees 10,815
- ------------------------------------------------------------
Portfolio accounting fees 19,335
- ------------------------------------------------------------
Distribution services fee 187,785
- ------------------------------------------------------------
Share registration costs 39,897
- ------------------------------------------------------------
Printing and postage 9,097
- ------------------------------------------------------------
Insurance premiums 5,634
- ------------------------------------------------------------
Miscellaneous 15,721
- ------------------------------------------------------------ --------
Total expenses 960,008
- ------------------------------------------------------------
Deduct--Waiver of investment advisory fee 218,074
- ------------------------------------------------------------ --------
Net expenses 741,934
- ----------------------------------------------------------------------- -----------
Net investment income $ 2,728,174
- ----------------------------------------------------------------------- -----------
-----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
25
- ------------------------------------------
- ------------------------------------------
MUNICIPAL CASH SERIES II
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
------------------------------
1995 1994
------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------
OPERATIONS--
- ------------------------------------------------
Net investment income $ 2,728,174 $ 2,474,809
- ------------------------------------------------ ------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------
Distributions from net investment income (2,728,174) (2,474,809)
- ------------------------------------------------ ------------- ---------------
SHARE TRANSACTIONS--
- ------------------------------------------------
Proceeds from sale of Shares 627,259,519 1,279,506,572
- ------------------------------------------------
Net asset value of Shares issued to shareholders
in payment of distributions declared 2,143,218 2,011,384
- ------------------------------------------------
Cost of Shares redeemed (693,561,189) (1,254,311,439)
- ------------------------------------------------ ------------- ---------------
Change in net assets resulting from Share
transactions (64,158,452) 27,206,517
- ------------------------------------------------ ------------- ---------------
Change in net assets (64,158,452) 27,206,517
- ------------------------------------------------
NET ASSETS:
- ------------------------------------------------
Beginning of period 131,769,686 104,563,169
- ------------------------------------------------ ------------- ---------------
End of period $ 67,611,234 $ 131,769,686
- ------------------------------------------------ ------------- ---------------
------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
26
- ------------------------------------------
- ------------------------------------------
MUNICIPAL CASH SERIES II
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1995
- --------------------------------------------------------------------------------
1. ORGANIZATION
Cash Trust Series II (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end management investment
company. The Trust consists of two portfolios, one diversified and one
non-diversified. The financial statements presented herein present only those of
Municipal Cash Series II (the "Fund"). The financial statements of the other
portfolio are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
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.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
OTHER--Investment transactions are accounted for on the trade date.
27
- ------------------------------------------
- ------------------------------------------
MUNICIPAL CASH SERIES II
- --------------------------------------------------------------------------------
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At May
31, 1995, capital paid-in aggregated $67,611,234.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------
MAY 31, 1995 MAY 31, 1994
- ------------------------------------------------- ------------- ---------------
<S> <C> <C>
Shares sold 627,259,519 1,279,506,572
- -------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 2,143,218 2,011,384
- -------------------------------------------------
Shares redeemed (693,561,189) (1,254,311,439)
- ------------------------------------------------- ------------- ---------------
Net change resulting from share transactions (64,158,452) 27,206,517
- ------------------------------------------------- ------------- ---------------
</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
.50 of 1% of the Fund's average daily net assets. The Adviser may voluntarily
choose to waive a portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The FAS fee is based on the level of average aggregate
daily net assets of all funds advised by subsidiaries of Federated Investors for
the period. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $125,000 per portfolio and
$30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
reimburse Federated Securities Corp., 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 .20 of 1% of the average daily net assets of the Fund, annually, to
reimburse Federated Securities Corp.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. This fee is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also 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.
28
- ------------------------------------------
- ------------------------------------------
MUNICIPAL CASH SERIES II
- --------------------------------------------------------------------------------
ORGANIZATIONAL EXPENSES--Organizational expenses ($18,628) and start up
administrative service expenses ($82,502) were initially borne by the Adviser.
The Fund has agreed to reimburse the Adviser at an annual rate of .005 of 1% of
average daily net assets and .01 of 1% of average daily net assets for
organizational and start-up administrative expenses, respectively, until
expenses initially borne by the Adviser are fully reimbursed or the expiration
of five years after April 24, 1991 (date the Fund first became effective),
whichever occurs earlier. For the year ended May 31, 1995, the Fund paid $3,505
and $9,787 pursuant to this agreement.
INTERFUND TRANSACTIONS--During the year ended May 31, 1995, the Fund engaged in
purchase and sale transactions 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 $253,950,000 and $331,040,000, respectively.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
29
- ------------------------------------------
- ------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Board of Trustees of
CASH TRUST SERIES II and
Shareholders of MUNICIPAL CASH SERIES II:
We have audited the accompanying statement of assets and liabilities of
Municipal Cash Series II (one of the portfolios comprising Cash Trust Series
II), including the portfolio of investments, as of May 31, 1995, the related
statement of operations for the year then ended, the statement of changes in net
assets for the years ended May 31, 1995 and 1994 and the financial highlights
(see page 2 of the prospectus) for each of the years in the four-year period
ended May 31, 1995. 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, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Municipal Cash
Series II as of May 31, 1995, 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 14, 1995
30
- ------------------------------------------
- ------------------------------------------
ADDRESSES
Cash Trust Series II
Federated Investors Tower
Pittsburgh, PA 15222-3779
<TABLE>
<S> <C>
DISTRIBUTOR TRANSFER AGENT AND DIVIDEND DISBURSING
Federated Securities Corp. AGENT
Federated Investors Tower Federated Services Company
Pittsburgh, PA 15222-3779 P.O. Box 8600
Boston, MA 02266-8600
INVESTMENT ADVISER INDEPENDENT PUBLIC ACCOUNTANTS
Federated Advisers Deloitte & Touche LLP
Federated Investors Tower 2500 One PPG Place
Pittsburgh, PA 15222-3779 Pittsburgh, PA 15222-5401
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 8600
Boston, MA 02266-8600
</TABLE>
31
MUNICIPAL CASH SERIES II
(A PORTFOLIO OF CASH TRUST
SERIES II)
PROSPECTUS
A Non-Diversified Portfolio of
Cash Trust Series II,
An Open-End Management
Investment Company
Prospectus dated July 31, 1995
[LOGO] FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Cusip 147552103
0111205a (7/95) [RECYCLED PAPER LOGO]
TREASURY CASH SERIES II
(A PORTFOLIO OF CASH TRUST SERIES II)
PROSPECTUS
The shares of Treasury Cash Series II (the "Fund") offered by this prospectus
represent interests in a diversified portfolio of Cash Trust Series II (the
"Trust"), an open-end management investment company (a mutual fund). The Fund
invests in short-term U.S. Treasury securities to achieve current income
consistent with stability of principal and liquidity.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE FUND
ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE
NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated July 31,
1995, with the Securities and Exchange Commission. The information contained in
the Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Statement of Additional Information,
which is in paper form only, or a paper copy of this prospectus, if you have
received it electronically, free of charge by calling 1-800-235-4669. To obtain
other information, or make inquiries about the Trust, contact your financial
institution.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated July 31, 1995
- ------------------------------------------
- ------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary of Fund Expenses............... 1
Financial Highlights................... 2
General Information.................... 3
Investment Information................. 3
Investment Objective................. 3
Investment Policies.................. 3
Acceptable Investments............... 3
Investment Limitations............... 4
Regulatory Compliance................ 4
Trust Information...................... 5
Management of Cash Trust Series II... 5
Distribution of Shares............... 6
Administration of the Fund........... 7
Net Asset Value........................ 8
How to Purchase Shares................. 8
Special Purchase Features............ 9
How to Redeem Shares................... 10
Special Redemption Features.......... 11
Account and Share Information.......... 11
Tax Information........................ 13
Federal Income Tax................... 13
Pennsylvania Corporate and Personal
Property Taxes..................... 13
Performance Information................ 13
Financial Statements................... 14
Independent Auditors' Report........... 22
Addresses.............................. 23
</TABLE>
- ------------------------------------------
- ------------------------------------------
SUMMARY OF FUND EXPENSES
TREASURY CASH SERIES II
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).............................................. None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price).............................................. None
Contingent Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, as applicable).............................................. None
Redemption Fee (as a percentage of amount redeemed, if applicable)................. None
Exchange Fee....................................................................... None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
<TABLE>
<S> <C> <C>
Management Fee.......................................................................... 0.50%
12b-1 Fee............................................................................... 0.20%
Total Other Expenses.................................................................... 0.18%
Shareholder Services Fee................................................. None
Total Fund Operating Expenses................................................... 0.88%
</TABLE>
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Cash Trust Series II Information." Wire-transferred redemptions
of less than $5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
- -------------------------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2)
redemption at the end of each time period............... $ 9 $ 28 $ 49 $ 108
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
1
- ------------------------------------------
- ------------------------------------------
TREASURY CASH SERIES II
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Deloitte & Touche LLP, Independent Auditors,
on page 22.
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
----------------------------------------------------------
1995 1994 1993 1992 1991(A)
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------
Net investment income 0.04 0.02 0.03 0.04 0.02
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS
- ------------------------------------------------------------
Distributions from net investment income (0.04) (0.02) (0.03) (0.04) (0.02)
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
TOTAL RETURN (B) 4.47% 2.47% 2.64% 4.41% 2.06%
- ------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------
Expenses 0.88% 0.89% 0.78% 0.73% 0.47%(c)
- ------------------------------------------------------------
Net investment income 4.40% 2.42% 2.55% 4.34% 5.71%(c)
- ------------------------------------------------------------
Expense waiver/reimbursement (d) 0.00% 0.05% 0.19% 0.57% 0.37%(c)
- ------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------
Net assets, end of period (000 omitted) $243,651 $229,882 $310,648 $104,371 $70,798
- ------------------------------------------------------------
<FN>
(a) Reflects operations for the period from February 9, 1991 (date of initial
public investment) to May 31, 1991.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
2
- ------------------------------------------
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 14, 1990. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The Fund is designed for customers of financial institutions such as
banks, fiduciaries, custodians of public funds, investment advisers and
broker/dealers, as a convenient means of accumulating an interest in a
professionally managed, diversified portfolio investing only in short-term U.S.
Treasury securities. A minimum initial investment of $25,000 is required, except
for retirement plans, which have a minimum initial investment of $1,000.
Subsequent investments must be in amounts of at least $500.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
- ------------------------------------------
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is current income consistent with stability
of principal and liquidity. This investment objective cannot be changed without
shareholder approval. While there is no assurance that the Fund will achieve its
investment objective, it endeavors to do so by following the investment policies
described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in U.S. Treasury
securities maturing in 13 months or less. The average maturity of the securities
in the Fund's portfolio, computed on a dollar-weighted basis, will be 90 days or
less. Unless indicated otherwise, the investment policies may be changed by the
Trustees without shareholder approval. Shareholders will be notified before any
material change in these policies becomes effective.
The Fund will limit its investments to investments which, if owned directly, pay
interest exempt from state personal income tax. Therefore, dividends paid by the
Fund may be exempt from state personal income tax.
ACCEPTABLE INVESTMENTS
The Fund invests only in U.S. Treasury securities, which are fully guaranteed as
to principal and interest by the United States.
REPURCHASE AGREEMENTS
Certain securities in which the Fund invests may be purchased pursuant to
repurchase agreements. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell
3
securities to the Fund and agree at the time of sale to repurchase them at a
mutually agreed upon time and price. To the extent that the seller does not
repurchase the securities from the Fund, the Fund could receive less than the
repurchase price on any sale of such securities.
WHEN-ISSUED AND DELAYED
DELIVERY TRANSACTIONS
The Fund may purchase securities on a when-issued or delayed delivery basis.
These transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The seller's failure to
complete these transactions may cause the Fund to miss a price or yield
considered to be advantageous. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices. Accordingly, the Fund may pay more
or less than the market value of the securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
INVESTMENT LIMITATIONS
The Fund will not borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a money market instrument for a percentage
of its cash value with an agreement to buy it back on a set date) or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge assets to secure such
borrowings.
The above investment limitation cannot be changed without shareholder approval.
The following limitation, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in this limitation becomes effective.
The Fund will not invest more than 10% of its net assets in illiquid securities,
including repurchase agreements providing for settlement in more than seven days
after notice.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended. In particular, the Fund
will comply with the various requirements of Rule 2a-7, which regulates money
market mutual funds. The Fund will determine the effective maturity of its
investments according to Rule 2a-7. The Fund may change these operational
policies to reflect changes in the laws and regulations without the approval of
its shareholders.
4
- ------------------------------------------
TRUST INFORMATION
MANAGEMENT OF CASH TRUST SERIES II
BOARD OF TRUSTEES
The Trust is managed by a Board of Trustees. The Trustees are responsible for
managing the Fund's business affairs and for exercising all the Trust's powers
except those reserved for the shareholders. An Executive Committee of the Board
of Trustees handles the Board's responsibilities between meetings of the Board.
INVESTMENT ADVISER
Investment decisions for the Fund are made by Federated Advisers, the Fund's
investment adviser, subject to direction by the Trustees. The adviser
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES
The adviser receives an annual investment advisory fee equal to .50 of 1% of the
Fund's average daily net assets. The adviser has undertaken to reimburse the
Fund up to the amount of the advisory fee for operating expenses in excess of
limitations established by certain states. The adviser also may voluntarily
choose to waive a portion of its fee or reimburse other expenses of the Fund,
but reserves the right to terminate such waiver or reimbursement at any time at
its sole discretion.
ADVISER'S BACKGROUND
Federated Advisers, a Delaware business trust, organized on April 11, 1989, is a
registered investment adviser under the Investment Advisers Act of 1940. It is a
subsidiary of Federated Investors. All of the Class A (voting) shares of
Federated Investors are owned by a trust, the trustees of which are John F.
Donahue, Chairman and Trustee of Federated Investors, Mr. Donahue's wife, and
Mr. Donahue's son, J. Christopher Donahue, who is President and Trustee of
Federated Investors.
Federated Advisers and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private accounts.
Certain other subsidiaries also provide administrative services to a number of
investment companies. With over $72 billion invested across more than 260 funds
under management and/or administration by its subsidiaries, as of December 31,
1994, Federated Investors is one of the largest mutual fund investment managers
in the United States. With more than 1,750 employees, Federated continues to be
led by the management who founded the company in 1955. Federated funds are
presently at work in and through 4,000 financial institutions nationwide. More
than 100,000 investment professionals have selected Federated funds for their
clients.
Both the Trust and the Adviser have adopted strict codes of ethics governing the
conduct of all employees who manage the Fund and its portfolio securities. These
codes recognize that such persons owe a fiduciary duty to the Fund's
shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to
5
review by the Board of Trustees, and could result in severe penalties.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for shares of the Fund.
It is a Pennsylvania corporation organized on November 14, 1969, and is the
principal distributor for a number of investment companies. Federated Securities
Corp. is a subsidiary of Federated Investors.
State securities laws may require certain financial institutions such as
depository institutions to register as dealers.
DISTRIBUTION PLAN
Under a distribution plan adopted in accordance with Investment Company Act Rule
12b-1 (the "Plan"), the distributor may select financial institutions such as
banks, fiduciaries, custodians for public funds, investment advisers and
brokers/dealers to provide sales services or distribution-related support
services as agents for their clients or customers. These services may include,
but are not limited to the following functions: providing office space,
equipment, telephone facilities, and various personnel including clerical,
supervisory, and computer as necessary or beneficial to establish and maintain
shareholder accounts and records; processing purchase and redemption
transactions and automatic investments of client account cash balances;
answering routine client inquiries regarding the Fund; assisting clients in
changing dividend options, account designations, and addresses; and providing
such other services as the Fund reasonably requests.
The distributor will pay financial institutions a fee based upon shares subject
to the Plan and owned by their clients or customers. The schedules of such fees
and the basis upon which such fees will be paid will be determined from time to
time by the Board of Trustees of the Fund provided that for any period the total
amount of these fees shall not exceed an annual rate of .20 of 1% of the average
net asset value of shares subject to the Plan held during the period by clients
or customers of financial institutions. The current annual rate of such fees is
.20 of 1%. Any fees paid by the distributor under the Plan, will be reimbursed
from the assets of the Fund.
SUPPLEMENTAL PAYMENTS TO
FINANCIAL INSTITUTIONS
In addition to periodic payments to financial institutions under the
Distribution Plan, certain financial institutions may be compensated by the
adviser or its affiliates for the continuing investment of customers' assets in
certain funds, including the Fund, advised by those entities. These payments
will be made directly by the distributor or adviser from their assets, and will
not be made from the assets of the Fund or by the assessment of a sales load on
shares.
Furthermore, the distributor may offer to pay a supplemental fee from its own
assets to financial institutions as financial assistance for providing
substantial sales services, distribution-related support services, or
shareholder services. The support may include sponsoring sales, educational and
training seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes of the
Fund. Such assistance will be predicated upon the amount of shares the financial
institution sells or may sell, and/or upon the type and nature of sales or
marketing support furnished by the financial institution. Any payments made by
the distributor may be reimbursed by the Fund's investment adviser or its
affiliates.
6
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES
Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Fund. Federated Administrative
Services provides these at an annual rate as specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE
MAXIMUM FEE DAILY NET ASSETS
- -------------- -----------------------
<C> <S>
.15 of 1% on the first $250
million
.125 of 1% on the next $250
million
.10 of 1% on the next $250
million
.075 of 1% on assets in excess of
$750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. Average
aggregate daily net assets include those of all mutual funds advised by
affiliates of Federated Investors. Federated Administrative Services may choose
voluntarily to waive a portion of its fee.
CUSTODIAN
State Street Bank and Trust Company, Boston, MA, is custodian for the securities
and cash of the Fund.
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Federated Services Company, Boston, MA, is transfer agent for the shares of, and
dividend disbursing agent for, the Fund. Federated Services Company is a
subsidiary of Federated Investors.
INDEPENDENT AUDITORS
The independent auditors for the Fund are Deloitte & Touche LLP, Pittsburgh,
P.A.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the investment adviser looks for prompt execution of the order at a
favorable price. In working with dealers, the investment adviser will generally
utilize those who are recognized dealers in specific portfolio instruments,
except when a better price and execution of the order can be obtained elsewhere.
In selecting among firms believed to meet these criteria, the investment adviser
may give consideration to those firms which have sold or are selling shares of
the Fund and other Funds distributed by Federated Securities Corp. The
investment adviser makes decisions on portfolio transactions and selects brokers
and dealers subject to review by the Trustees.
7
- ------------------------------------------
NET ASSET VALUE
The Fund attempts to stabilize the net asset value of its shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net asset
value per share is determined by subtracting total liabilities from total assets
and dividing the remainder by the number of shares outstanding. The Fund cannot
guarantee that its net asset value will always remain at $1.00 per share.
The net asset value is determined at 12:00 noon, 3:00 p.m. (Eastern time), and
as of the close of trading (normally 4:00 p.m., Eastern time) on the New York
Stock Exchange each day the New York Stock Exchange is open.
- ------------------------------------------
HOW TO PURCHASE SHARES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange and the Federal Reserve Wire System are open for business. Shares may
be purchased as described below either through a financial institution (such as
a bank or broker/dealer) or by wire or by check directly to the Fund with a
minimum initial investment of $25,000 or more and additional investments of as
little as $500. The minimum initial investment for retirement plans is only
$1,000. (Financial institutions may impose different minimum investment
requirements on their customers.)
In connection with any sale, Federated Securities Corp. may from time to time
offer certain items of nominal value to any shareholder or investor. The Fund
reserves the right to reject any purchase request. An account must be
established at a financial institution or by completing, signing, and returning
the new account form available from the Fund before shares can be purchased.
PURCHASING SHARES THROUGH A
FINANCIAL INSTITUTION
Investors may purchase shares through a financial institution which has a sales
agreement with the distributor. Orders are considered received when the Fund
receives payment by wire or converts payment by check from the financial
institution into federal funds. It is the financial institution's responsibility
to transmit orders promptly. Financial institutions may charge additional fees
for their services.
PURCHASING SHARES BY WIRE
Shares may be purchased by wire by calling the Fund before 3:00 p.m. (Eastern
time). The
8
order is considered received immediately. Payment by federal funds must be
received before 3:00 p.m. (Eastern time) in order to begin earning dividends
that same day. Federal funds should be wired as follows: Federated Services
Company, c/o State Street Bank and Trust Company, Boston, MA; Attention;
EDGEWIRE; For credit to: Treasury Cash Series II; (Fund Number) (this number can
be found on the account statement or by contacting the Fund) Group Number or
Order Number; Nominee or Institution Name; and ABA Number 011000028. Shares
cannot be purchased by wire on holidays when wire transfers are restricted.
PURCHASING SHARES BY CHECK
Shares may be purchased by sending a check made payable to Treasury Cash Series
II to: Federated Services Company, P.O. Box 8600, Boston, MA 02266-8600. Orders
by mail are considered received when payment by check is converted into federal
funds (normally the business day after the check is received) and shares begin
earning dividends the next day.
SPECIAL PURCHASE FEATURES
SYSTEMATIC INVESTMENT PROGRAM
A minimum of $500 can be automatically withdrawn periodically from the
shareholder's checking account at an Automated Clearing House ("ACH") member and
invested in Fund shares. Shareholders should contact their financial institution
or the Fund to participate in this program.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts. However,
certain financial institutions may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent charges a fee based on the level of subaccounting services
rendered. Financial institutions may charge or pass through subaccounting fees
as part of or in addition to normal trust or agency account fees. They may also
charge fees for other services provided which may be related to the ownership of
Fund shares. This prospectus should, therefore, be read together with any
agreement between the customer and the financial institution with regard to the
services provided, the fees charged for those services, and any restrictions and
limitations imposed.
9
- ------------------------------------------
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests must be received in
proper form and can be made as described below.
REDEEMING THROUGH A
FINANCIAL INSTITUTION
Shares may be redeemed by contacting the shareholder's financial institution.
Shares will be redeemed at the net asset value next determined after Federated
Services Company receives the redemption request. According to the shareholder's
instructions, redemption proceeds can be sent to the financial institution or to
the shareholder by check or wire. The financial institution is responsible for
promptly submitting redemption requests and providing proper written redemption
instructions. Customary fees and commissions may be charged by the financial
institution for this service.
REDEEMING SHARES BY TELEPHONE
Redemptions in any amount may be made by calling the Fund provided the Fund has
a completed authorization form. These forms can be obtained from Federated
Securities Corp. Proceeds from redemption requests received before 12:00 noon
(Eastern time) will be wired the same day to the shareholder's account at a
domestic commercial bank which is a member of the Federal Reserve System, but
will not include that day's dividend. Proceeds from redemption requests received
after that time will include that day's dividends but will be wired the
following business day. Under limited circumstances, arrangements may be made
with the distributor for same-day payment of proceeds, without that day's
dividend, for redemption requests received before 2:00 p.m. (Eastern time).
Proceeds from redeemed shares purchased by check or through ACH will not be
wired until that method of payment has cleared.
Telephone instructions will be recorded and if reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions. In the event of drastic economic or market
changes, a shareholder may experience difficulty in redeeming shares by
telephone. If this occurs, "Redeeming Shares by Mail" should be considered. If
at any time the Fund shall determine it necessary to terminate or modify the
telephone redemption privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL
Shares may be redeemed in any amount by mailing a written request together with
certificates, if issued, to:
Treasury Cash Series II
P.O. Box 8600
Boston, MA 02266-8600
The written request should state: the Fund Name; the account name as registered
with the Fund; the account number; and the number of shares to be redeemed or
the dollar amount requested. All owners of the account must sign the request
exactly as the shares are registered. All share certificates should be sent by
registered or certified mail with the written request. Normally, a check for the
proceeds is mailed within one business day, but in no event more than seven
days, after receipt of a proper written redemption request. Dividends are paid
up to and including the day that a redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund, or a redemption
10
payable other than to the shareholder of record must have their signatures
guaranteed by: a commercial or savings bank, trust company or savings and loan
association whose deposits are insured by an organization which is administered
by the Federal Deposit Insurance Corporation; a member firm of a domestic stock
exchange; or any other "eligible guarantor institution" as defined in the
Securities Exchange Act of 1934. The Fund does not accept signatures guaranteed
by a notary public.
SPECIAL REDEMPTION FEATURES
CHECK WRITING
Upon request, a checking account will be established to allow shareholders to
redeem their Fund shares. A fee will be charged for this service. The check
writing service allows the shareholder to receive the daily dividend declared on
the shares to be redeemed until the check is presented to State Street Bank for
payment. However, checks should never be made payable or sent to State Street
Bank or the Fund to redeem shares, and a check may not be written to close an
account. Canceled checks are sent to the shareholder each month.
DEBIT CARD
Upon request, a debit account will be established. This account allows
shareholders to redeem shares by using a debit card. A fee will be charged for
this service.
SYSTEMATIC WITHDRAWAL PROGRAM
If a shareholder's account has a value of at least $25,000, a systematic
withdrawal program may be established whereby automatic redemptions are made
from the account and transferred electronically to any commercial bank, savings
bank, or credit union that is an ACH member. Shareholders may apply for
participation in this program through their financial institution or the Fund.
- ------------------------------------------
ACCOUNT AND SHARE INFORMATION
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested in writing to the Fund.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Fund will distribute in cash or additional shares any realized
net long-term capital gains at least once every 12 months.
CERTIFICATE AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund or Federated Services Company in writing. Monthly
confirmations are sent to report transactions such as all purchases and
redemptions as well as dividends paid during the month.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, if an account
balance falls below $25,000 due to shareholder redemptions, the Fund may redeem
all of the remaining shares in that account (except accounts maintained by
retirement plans) and pay the proceeds to the shareholder. Before shares are
redeemed to close an account, the shareholder will be notified in writing and
allowed 30 days to purchase additional shares to meet the minimum requirement.
11
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
12
- ------------------------------------------
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies. The Fund will be
treated as a single, separate entity for federal income tax purposes so that
income (including capital gains) and losses realized by the Trust's other
portfolios will not be combined for tax purposes with those realized by the
Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.
PENNSYLVANIA CORPORATE AND
PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston, & Donnelly, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that the
portfolio securities in the Fund would be subject to such taxes if owned
directly by residents of those jurisdictions.
OTHER STATE AND LOCAL TAXES
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
- ------------------------------------------
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield and effective yield.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the Fund after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
13
- ------------------------------------------
- ------------------------------------------
TREASURY CASH SERIES II
PORTFOLIO OF INVESTMENTS
MAY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------------- -------------------------------------------------- ------------
<C> <S> <C>
SHORT-TERM U.S. TREASURY OBLIGATIONS--18.8%
- ------------------------------------------------------------------
(a) U.S. TREASURY BILLS--15.1%
--------------------------------------------------
$38,000,000 5.58%-6.50%, 8/24/1995-4/4/1996 $ 36,918,066
-------------------------------------------------- ------------
U.S. TREASURY NOTES--3.7%
--------------------------------------------------
9,000,000 3.875%-8.50%, 9/30/1995-1/31/1996 8,958,071
-------------------------------------------------- ------------
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 45,876,137
-------------------------------------------------- ------------
(B)REPURCHASE AGREEMENTS--81.2%
- ------------------------------------------------------------------
10,000,000 BT Securities Corp., 6.18%, dated 5/31/1995, due
6/1/1995 10,000,000
--------------------------------------------------
17,800,000 BZW Securities, Inc., 6.18%, dated 5/31/1995, due
6/1/1995 17,800,000
--------------------------------------------------
10,000,000 BOT Securities, Inc., 6.15%, dated 5/31/1995, due
6/1/1995 10,000,000
--------------------------------------------------
10,000,000 Bear, Stearns & Co., Inc., 6.125%, dated
5/31/1995, due 6/1/1995 10,000,000
--------------------------------------------------
10,000,000 Chase Government Securities, Inc., N.A., 6.14%,
dated 5/31/1995, due 6/1/1995 10,000,000
--------------------------------------------------
10,000,000 Daiwa Securities America, Inc., 6.125%, dated
5/31/1995, due 6/1/1995 10,000,000
--------------------------------------------------
10,000,000 Deutsche Bank Government Securities, 6.18%, dated
5/31/1995, due 6/1/1995 10,000,000
--------------------------------------------------
10,000,000 Donaldson, Lufkin and Jenrette Securities Corp.,
6.15%, dated 5/31/1995, due 6/1/1995 10,000,000
--------------------------------------------------
10,000,000 First Chicago Capital Markets, Inc., 6.125%, dated
5/31/1995, due 6/1/1995 10,000,000
--------------------------------------------------
10,000,000 HSBC Securities, Inc., 6.18%, dated 5/31/1995, due
6/1/1995 10,000,000
--------------------------------------------------
10,000,000 Harris Government Securities, Inc., 6.18%, dated
5/31/1995, due 6/1/1995 10,000,000
--------------------------------------------------
10,000,000 J.P. Morgan Securities, Inc., 6.17%, dated
5/31/1995, due 6/1/1995 10,000,000
--------------------------------------------------
5,000,000 (c) Merrill Lynch, Government Securities, Inc.,
6.00%, dated 5/2/1995, due 6/30/1995 5,000,000
--------------------------------------------------
5,000,000 (c) Merrill Lynch, Government Securities, Inc.,
6.05%, dated 4/11/1995, due 6/23/1995 5,000,000
--------------------------------------------------
</TABLE>
14
- ------------------------------------------
- ------------------------------------------
TREASURY CASH SERIES II
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------------- -------------------------------------------------- ------------
<C> <S> <C>
(B)REPURCHASE AGREEMENTS--CONTINUED
- ------------------------------------------------------------------
$10,000,000 National Westminster USA, 6.15%, dated 5/31/1995,
due 6/1/1995 $ 10,000,000
--------------------------------------------------
10,000,000 NationsBank of North Carolina-Charlotte, 6.13%,
dated 5/31/1995, due 6/1/1995 10,000,000
--------------------------------------------------
10,000,000 Nikko Securities Co. International, Inc., 6.15%,
dated 5/31/1995, due 6/1/1995 10,000,000
--------------------------------------------------
10,000,000 Nomura Securities International, Inc., 6.125%,
dated 5/31/1995, due 6/1/1995 10,000,000
--------------------------------------------------
10,000,000 Sanwa Securities USA Co., L.P., 6.125%, dated
5/31/1995, due 6/1/1995 10,000,000
--------------------------------------------------
10,000,000 Swiss Bank Corp., New York, 6.15%, dated
5/31/1995, due 6/1/1995 10,000,000
-------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS 197,800,000
-------------------------------------------------- ------------
TOTAL INVESTMENTS, AT AMORTIZED COST (D) $243,676,137
-------------------------------------------------- ------------
------------
<FN>
(a) The issue shows the rate of discount at time of purchase.
(b) The repurchase agreements are fully collateralized by U.S. Treasury
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) 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.
(d) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($243,650,582) at May 31, 1995.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
15
- ------------------------------------------
- ------------------------------------------
TREASURY CASH SERIES II
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C>
- --------------------------------------------------------------------------
Investments in repurchase agreements $197,800,000
- ------------------------------------------------------------
Investments in securities 45,876,137
- ------------------------------------------------------------ ------------
Total Investments in securities, at amortized cost and
value $243,676,137
- --------------------------------------------------------------------------
Cash 151,824
- --------------------------------------------------------------------------
Income receivable 167,458
- --------------------------------------------------------------------------
Deferred expenses 37,258
- -------------------------------------------------------------------------- ------------
Total assets 244,032,677
- --------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------
Payable for shares redeemed 100
- ------------------------------------------------------------
Income distribution payable 257,903
- ------------------------------------------------------------
Accrued expenses 124,092
- ------------------------------------------------------------ ------------
Total liabilities 382,095
- -------------------------------------------------------------------------- ------------
NET ASSETS for 243,650,582 shares outstanding $243,650,582
- -------------------------------------------------------------------------- ------------
------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per
Share: ($243,650,582 DIVIDED BY 243,650,582 shares
outstanding) $ 1.00
- -------------------------------------------------------------------------- ------------
------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
16
- ------------------------------------------
- ------------------------------------------
TREASURY CASH SERIES II
STATEMENT OF OPERATIONS
YEAR ENDED MAY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
- ------------------------------------------------------------------------
Interest $12,416,941
- ------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------
Investment advisory fee $1,174,877
- ------------------------------------------------------------
Administrative personnel and services fee 177,876
- ------------------------------------------------------------
Custodian fees 79,817
- ------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and
expenses 29,949
- ------------------------------------------------------------
Directors'/Trustees' fees 4,503
- ------------------------------------------------------------
Auditing fees 13,197
- ------------------------------------------------------------
Legal fees 10,005
- ------------------------------------------------------------
Portfolio accounting fees 28,814
- ------------------------------------------------------------
Distribution services fee 469,951
- ------------------------------------------------------------
Share registration costs 64,497
- ------------------------------------------------------------
Printing and postage 7,464
- ------------------------------------------------------------
Insurance premiums 7,692
- ------------------------------------------------------------
Taxes 354
- ------------------------------------------------------------
Miscellaneous 6,322
- ------------------------------------------------------------ ----------
Total expenses 2,075,318
- ------------------------------------------------------------------------ -----------
Net investment income $10,341,623
- ------------------------------------------------------------------------ -----------
-----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
17
- ------------------------------------------
- ------------------------------------------
TREASURY CASH SERIES II
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
------------------------------
1995 1994
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------
Net investment income $ 10,341,623 $ 5,902,413
- --------------------------------------------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------------------
Distributions from net investment income (10,341,623) (5,902,413)
- --------------------------------------------------------------------------- ------------- -------------
SHARE TRANSACTIONS--
- ---------------------------------------------------------------------------
Proceeds from sale of Shares 677,897,145 658,832,271
- ---------------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of
distributions declared 7,311,204 4,890,179
- ---------------------------------------------------------------------------
Cost of Shares redeemed (671,440,119) (744,488,408)
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets resulting from Share transactions 13,768,230 (80,765,958)
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets 13,768,230 (80,765,958)
- ---------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------
Beginning of period 229,882,352 310,648,310
- --------------------------------------------------------------------------- ------------- -------------
End of period $ 243,650,582 $ 229,882,352
- --------------------------------------------------------------------------- ------------- -------------
------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
18
- ------------------------------------------
- ------------------------------------------
TREASURY CASH SERIES II
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1995
- --------------------------------------------------------------------------------
1. ORGANIZATION
Cash Trust Series II (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end management investment
company. The Trust consists of two portfolios, one diversified and one
non-diversified. The financial statements included herein present only those of
Treasury Cash Series II (the "Fund"). The financial statements of the other
portfolio are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
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 a 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 Trustees (the "Trustees").
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.
19
- ------------------------------------------
- ------------------------------------------
TREASURY CASH SERIES II
- --------------------------------------------------------------------------------
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.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
OTHER--Investment transactions are accounted for on the trade date.
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At May
31, 1995, capital paid-in aggregated $243,650,582. Transactions in shares were
as follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
-----------------------------
1995 1994
------------- -------------
<S> <C> <C>
- --------------------------------------------------
Shares sold 677,897,145 658,832,271
- --------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 7,311,204 4,890,179
- --------------------------------------------------
Shares redeemed (671,440,119) (744,488,408)
- -------------------------------------------------- ------------- -------------
Net change resulting from share transactions 13,768,230 (80,765,958)
- -------------------------------------------------- ------------- -------------
------------- -------------
</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
.50 of 1% of the Fund's average daily net assets.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The FAS fee is based on the level of average aggregate
daily net assets of all funds advised by subsidiaries of Federated Investors for
the period. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $125,000 per portfolio and
$30,000 per each additional class of shares.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
reimburse Federated Securities Corp. ("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended
20
- ------------------------------------------
- ------------------------------------------
TREASURY CASH SERIES II
- --------------------------------------------------------------------------------
to result in the sale of the Fund's shares. The Plan provides that the Fund may
incur distribution expenses up to .20 of 1% of the average daily net assets of
the shares, annually, to reimburse FSC.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. This fee is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also 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 Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
21
- ------------------------------------------
- ------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Board of Trustees of
CASH TRUST SERIES II and
Shareholders of TREASURY CASH SERIES II:
We have audited the accompanying statement of assets and liabilities of Treasury
Cash Series II (one of the portfolios comprising Cash Trust Series II),
including the portfolio of investments, as of May 31, 1995, the related
statement of operations for the year then ended, the statement of changes in net
assets for the years ended May 31, 1995 and 1994 and the financial highlights
(see page 2 of the prospectus) for each of the years in the five-year period
ended May 31, 1995. 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, 1995, 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
II as of May 31, 1995, 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 14, 1995
22
- ------------------------------------------
- ------------------------------------------
ADDRESSES
Cash Trust Series II
Federated Investors Tower
Pittsburgh, PA 15222-3779
<TABLE>
<S> <C>
DISTRIBUTOR TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Securities Corp. Federated Services Company
Federated Investors Tower P.O. Box 8600
Pittsburgh, PA 15222-3779 Boston, MA 02266-8600
INVESTMENT ADVISER INDEPENDENT PUBLIC ACCOUNTANTS
Federated Advisers Deloitte & Touche LLP
Federated Investors Tower 2500 One PPG Place
Pittsburgh, PA 15222-3779 Pittsburgh, PA 15222-5401
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 8600
Boston, MA 02266-8600
</TABLE>
23
TREASURY CASH SERIES II
(A PORTFOLIO OF CASH TRUST SERIES
II)
PROSPECTUS
A Diversified Portfolio of Cash Trust
Series II
An Open-End Management
Investment Company
Prospectus dated July 31, 1995
[LOGO] FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Cusip 147552301
0111203a (7/95) [RECYCLED PAPER LOGO]
MUNICIPAL CASH SERIES II
(A PORTFOLIO OF CASH TRUST SERIES II)
Statement of Additional Information
This Statement of Additional Information should be read with the
prospectus of Municipal Cash Series II (the "Fund"), a portfolio
of Cash Trust Series II (the "Trust") dated July 31, 1995. This
Statement is not a prospectus. To receive a copy of a prospectus,
write or call the Trust.
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Statement dated July 31, 1995
Federated Securities Corp.
Distributor
A subsidiary of
Federated Investors
GENERAL INFORMATION ABOUT THE
FUND 1
INVESTMENT POLICIES 1
Acceptable Investments 1
Participation Interests 1
Municipal Leases 1
When-Issued And Delayed
Delivery Transactions 1
Repurchase Agreements 1
Reverse Repurchase Agreements 2
INVESTMENT LIMITATIONS 2
Selling Short and Buying on
Margin 2
Issuing Senior Securities and
Borrowing Money 2
Pledging Assets 2
Lending Cash or Securities 2
Investing in Commodities 2
Investing in Real Estate 2
Underwriting 3
Concentration of Investments 3
Investing in Restricted
Securities 3
Investing in Illiquid
Securities 3
Investing in Securities of
Other Investment Companies 3
Investing in New Issuers 3
Investing for Control 3
Investing in Issuers Whose
Securities Are
Owned by Officers of the Fund 3
Investing in Options 4
Investing in Minerals 4
CASH TRUST SERIES II MANAGEMENT 5
Share Ownership 9
Trustees Compensation 10
Trustee Liability 11
INVESTMENT ADVISORY SERVICES 11
Investment Adviser 11
Advisory Fees 11
State Expense Limitations 11
FUND ADMINISTRATION 11
DISTRIBUTION PLAN 11
DETERMINING NET ASSET VALUE 12
REDEMPTION IN KIND 12
THE FUND'S TAX STATUS 12
PERFORMANCE INFORMATION 13
Yield 13
Effective Yield 13
Tax-Equivalent Yield 13
Tax-Equivalency Table 13
Performance Comparisons 14
About Federated Investors 15
APPENDIX 16
GENERAL INFORMATION ABOUT THE FUND
The Fund is a portfolio in Cash Trust Series II (the "Trust"), which was
established as a Massachusetts business trust under a Declaration of
Trust dated November 14, 1990.
INVESTMENT POLICIES
Unless indicated otherwise, the policies described below may be changed
by the Trustees without shareholder approval. Shareholders will be
notified before any material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS
When determining whether a security presents minimal credit risks, the
investment adviser will consider the creditworthiness of: the issuer of
the security, the issuer of any demand feature applicable to the
security, or any guarantor of either the security or any demand feature.
PARTICIPATION INTERESTS
The financial institutions from which the Fund purchases participation
interests frequently provide or secure from another financial
institution irrevocable letters of credit or guarantees and give the
Fund the right to demand payment of the principal amounts of the
participation interests plus accrued interest on short notice (usually
within seven days). The municipal securities subject to the
participation interests are not limited to the Fund's maximum maturity
requirements so long as the participation interests include the right to
demand payment from the issuers of those interests. By purchasing these
participation interests, the Fund is buying a security meeting the
maturity and quality requirements of the Fund and also is receiving the
tax-free benefits of the underlying securities.
MUNICIPAL LEASES
The Fund may purchase municipal securities in the form of participation
interests that represent an undivided proportional interest in lease
payments by a governmental or nonprofit entity. The lease payments and
other rights under the lease provide for and secure payments on the
certificates. Lease obligations may be limited by municipal charter or
the nature of the appropriation for the lease. Furthermore, a lease may
provide that the participants cannot accelerate lease obligations upon
default. The participants would only be able to enforce lease payments
as they became due. In the event of a default or failure of
appropriation, unless the participation interests are credit enhanced,
it is unlikely that the participants would be able to obtain an
acceptable substitute source of payment.
In determining the liquidity of municipal lease securities, the
investment adviser, under the authority delegated by the Board of
Trustees, will base its determination on the following factors: whether
the lease can be terminated by the lessee; the potential recovery, if
any, from a sale of the leased property upon termination of the lease;
the lessee's general credit strength (e.g., its debt, administrative,
economic and financial characteristics and prospects); the likelihood
that the lessee will discontinue appropriating funding for the leased
property because the property is no longer deemed essential to its
operations (e.g., the potential for an "event of non-appropriation");
and any credit enhancement or legal recourse provided upon an event of
non-appropriation or other termination of the lease.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses,
other than normal transaction costs, are incurred. However, liquid
assets of the Fund sufficient to make payment for the securities to be
purchased are segregated on the Fund's records at the trade date. These
assets are marked to market daily and are maintained until the
transaction has been settled. The Fund does not intend to engage in when-
issued and delayed delivery transactions to an extent that would cause
the segregation of more than 20% of the total value of its assets.
REPURCHASE AGREEMENTS
Certain securities in which the Fund invests may be purchased pursuant
to repurchase agreements. Repurchase agreements are arrangements in
which banks, broker/dealers, and other recognized financial institutions
sell securities to the Fund and agree at the time of sale to repurchase
them at a mutually agreed upon time and price. To the extent that the
seller does not repurchase the securities from the Fund, the Fund could
receive less than the repurchase price on any sale of such securities.
The Fund or its custodian will take possession of the securities subject
to repurchase agreements, and these securities will be marked to market
daily. In the event that a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by the Fund might be
delayed pending court action. The Fund believes that under the regular
procedures normally in effect for custody of the Fund's portfolio
securities subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Fund and allow retention or
disposition of such securities. The Fund will only enter into
repurchase agreements with banks and other recognized financial
institutions, such as broker/dealers, which are deemed by the Fund's
adviser to be creditworthy pursuant to guidelines established by the
Trustees.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase
agreement, the Fund transfers possession of a portfolio instrument in
return for a percentage of the instrument's market value in cash and
agrees that on a stipulated date in the future the Fund will repurchase
the portfolio instrument by remitting the original consideration plus
interest at an agreed upon rate. The use of reverse repurchase
agreements may enable the Fund to avoid selling portfolio instruments
at a time when a sale may be deemed to be disadvantageous, but does not
ensure this result. When effecting reverse repurchase agreements, liquid
assets of the Fund, in a dollar amount sufficient to make payment for
the obligations to be purchased, are: segregated on the Fund's records
at the trade date; marked to market daily; and maintained until the
transaction is settled.
From time to time, such as when suitable municipal securities are not
available, the Fund may invest a portion of its assets in cash. Any
portion of the Fund's assets maintained in cash will reduce the amount
of assets in municipal securities and thereby reduce the Fund's yield.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities
on margin but may obtain such short-term credits as are necessary for
clearance of transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may
borrow money directly or through reverse repurchase agreements in
amounts up to one-third of the value of its total assets, including the
amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure or to facilitate management of the
portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Fund will not purchase any securities while
borrowings in excess of 5% of the value of its total assets are
outstanding. During the period any reverse repurchase agreements are
outstanding, the Fund will restrict the purchase of portfolio securities
to money market instruments maturing on or before the expiration date of
the reverse repurchase agreements, but only to the extent necessary to
assure completion of the reverse repurchase agreements.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except as
necessary to secure permitted borrowings. In these cases, it may pledge
assets having a market value not exceeding the lesser of the dollar
amounts borrowed or 10% of the value of total assets at the time of the
pledge.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except that it may acquire
publicly or non-publicly issued municipal securities or temporary
investments or enter into repurchase agreements, in accordance with its
investment objective, policies, and limitations, or Declaration of
Trust.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited
partnership interests, although it may invest in securities of issuers
whose business involves the purchase or sale of real estate or in
securities which are secured by real estate or interests in real estate.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its investment
objective, policies, and limitations.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in
any one industry, or in industrial development bonds or other securities
the interest upon which is paid from revenues of similar types of
projects, except that the Fund may invest 25% or more of the value of
its total assets in cash, cash items, or securities issued or guaranteed
by the government of the United States or its agencies, or
instrumentalities and repurchase agreements collateralized by such U.S.
government securities.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
securities subject to restrictions on resale under the Securities Act of
1933, except for certain restricted securities which meet the criteria
for liquidity as established by the Trustees.
INVESTING IN ANY ONE ISSUER
With respect to securities comprising 75% of its assets, the Fund will
not invest more than 10% of its total assets in the securities of any
one issuer.
Under this limitation, each governmental subdivision, including states
and the District of Columbia, territories, possessions of the United
States, or their political subdivisions, agencies,
authorities,instrumentalities, or similar entities, will be considered a
separate issuer if its assets and revenues are separate from those of
the governmental body creating it and the security is backed only by its
own assets and revenues.
Industrial development bonds, backed only by the assets and revenues of
a nongovernmental user, are considered to be issued solely by that user.
If in the case of an industrial development bond or governmental-issued
security, a governmental or some other entity guarantees the security,
such guarantee would be considered a separate security issued by the
guarantor as well as the other issuer, subject to limited exclusions
allowed by the Investment Company Act of 1940.
The above limitations cannot be changed without shareholder approval.
The following investment limitations, however, may be changed by the
Trustees without shareholder approval. Shareholders will be notified
before any material change in these limitations becomes effective.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not purchase securities of other investment companies,
except as part of a merger, consolidation, or other acquisition.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets
in securities of issuers (including companies responsible for paying
principal and interest on industrial development bonds) which have
records of less than three years of continuous operations, including the
operation of any predecessor.
INVESTING FOR CONTROL
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS OF THE FUND
The Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Fund or its investment adviser owning
individually more than .50 of 1% of the issuer's securities together own
more than 5% of the issuer's securities.
INVESTING IN OPTIONS
The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.
INVESTING IN MINERALS
The Fund will not purchase or sell interests in oil, gas, or other
mineral exploration or development programs or leases, although it may
purchase the securities of issuers which invest in or sponsor such
programs.
For purposes of the above limitations, the Fund considers instruments
issued by a U.S. branch of a domestic bank or savings and loan having
capital, surplus, and undivided profits in excess of $100,000,000 at the
time of investment to be "cash items". Except with respect to borrowing
money, if a percentage limitation is adhered to at the time of
investment, a later increase or decrease in percentage resulting from
any change in value or net assets will not result in a violation of such
limitation.
The Fund did not borrow money or pledge securities in excess of 5% of
the value of its net assets during the last fiscal year and has no
present intent to do so during the coming fiscal year.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the adviser looks for prompt execution of the
order at a favorable price. In working with dealers, the adviser will
generally use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can
be obtained elsewhere. The adviser makes decisions on portfolio
transactions and selects brokers and dealers subject to guidelines
established by the Board of Trustees. The adviser may select brokers
and dealers who offer brokerage and research services. These services
may be furnished directly to the Fund or to the adviser and may include:
advice as to the advisability of investing in securities; security
analysis and reports; economic studies; industry studies; receipt of
quotations for portfolio evaluations; and similar services. Research
services provided by brokers and dealers may be used by the adviser or
its affiliates in advising the Trust and other accounts. To the extent
that receipt of these services may supplant services for which the
adviser or its affiliates might otherwise have paid, it would tend to
reduce their expenses. The adviser and its affiliates exercise
reasonable business judgment in selecting brokers who offer brokerage
and research services to execute securities transactions. They
determine in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research
services provided. During the fiscal years ended May 31, 1995, 1994 and
1993, the Trust paid no brokerage commissions.
Although investment decisions for the Fund are made independently from
those of the other accounts managed by the adviser, investments of the
type the Fund may make may also be made by those other accounts. When
the Fund and one or more other accounts managed by the adviser are
prepared to invest in, or desire to dispose of, the same security,
available investments or opportunities for sales will be allocated in a
manner believed by the adviser to be equitable to each. In some cases,
this procedure may adversely affect the price paid or received by the
Fund or the size of the position obtained or disposed of by the Fund.
In other cases, however, it is believed that coordination and the
ability to participate in volume transactions will be to the benefit of
the Fund.
Cash Trust Series II Management
Officers and Trustees are listed with their addresses, present positions
with Cash Trust Series II, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp.; Chairman, Passport Research, Ltd.; Director, AEtna Life
and Casualty Company; Chief Executive Officer and Director, Trustee, or
Managing General Partner of the Funds. Mr. Donahue is the father of J.
Christopher Donahue, Executive Vice President and Trustee of the Trust.
J. Christopher Donahue *
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President and Trustee
President and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; President and Director,
Federated Research Corp.; President, Passport Research, Ltd.; Trustee,
Federated Administrative Services, Federated Services Company, and
Federated Shareholder Services; President or Vice President of the
Funds; Director, Trustee, or Managing General Partner of some of the
Funds. Mr. Donahue is the son of John F. Donahue, Chairman and Trustee
of the Trust.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's
Hospital of Pittsburgh; Director, Trustee, or Managing General Partner
of the Funds; formerly, Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President,
John R. Wood and Associates, Inc., Realtors; President, Northgate
Village Development Corporation; Partner or Trustee in private real
estate ventures in Southwest Florida; Director, Trustee, or Managing
General Partner of the Funds; formerly, President, Naples Property
Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Vi
Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp. and
Director, Ryan Homes, Inc.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director,
Trustee, or Managing General Partner of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, University of
Pittsburgh; Medical Director, University of Pittsburgh Medical Center -
Downtown; Member, Board of Directors, University of Pittsburgh Medical
Center; formerly, Hematologist, Oncologist, and Internist, Presbyterian
and Montefiore Hospitals; Director, Trustee, or Managing General Partner
of the Funds.
Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty;
Director, Eat'N Park Restaurants, Inc., and Statewide Settlement Agency,
Inc.; Director, Trustee, or Managing General Partner of the Funds;
formerly, Counsel, Horizon Financial, F.A., Western Region.
Peter E. Madden
70 Westcliff Road
Westin, MA
Birthdate: March 16, 1942
Trustee
Consultant; State Representative, Commonwealth of Massachusetts;
Director, Trustee, or Managing General Partner of the Funds; formerly,
President, State Street Bank and Trust Company and State Street Boston
Corporation.
Gregor F. Meyer
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Partner, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice
Chairman, Horizon Financial, F.A.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner,
Mollica, Murray and Hogue; Director, Trustee or Managing General Partner
of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics and Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation, Online
Computer Library Center, Inc., and U.S. Space Foundation; Chairman,
Czecho Management Center; Director, Trustee, or Managing General Partner
of the Funds; President Emeritus, University of Pittsburgh; founding
Chairman, National Advisory Council for Environmental Policy and
Technology and Federal Emergency Management Advisory Board.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: July 21, 1935
Trustee
Public relations/marketing consultant; Director, Trustee, or Managing
General Partner of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
President
Executive Vice President and Trustee, Federated Investors; Director,
Federated Research Corp.; Chairman and Director, Federated Securities
Corp.; President or Vice President of some of the Funds; Director or
Trustee of some of the Funds.
Edward C. Gonzales *
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice President, Treasurer, and Trustee, Federated Investors; Vice
President and Treasurer, Federated Advisers, Federated Management,
Federated Research, Federated Research Corp., and Passport Research,
Ltd.; Executive Vice President, Treasurer, and Director, Federated
Securities Corp.; Trustee, Federated Services Company and Federated
Shareholder Services; Chairman, Treasurer, and Trustee, Federated
Administrative Services; Trustee or Director of some of the Funds;
Executive Vice President or President of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President and Secretary
Secretary,
Secretary, and Trustee, Federated Administrative Services; Secretary and
Trustee, Federated Shareholder Services; Executive Vice President and
Director, Federated Securities Corp.; Vice President and Secretary of
the Funds.
David M. Taylor *
Federated Investors Tower
Pittsburgh, PA
Birthdate: January 13, 1947
Treasurer
Senior Vice President, Controller, and Trustee, Federated Investors;
Controller, Federated Advisers, Federated Management, Federated
Research, Federated Research Corp., and Passport Research, Ltd.; Senior
Vice President, Federated Shareholder Services; Senior Vice President,
Federated Administrative Services; Treasurer of the Funds.
* This Trustee is deemed to be an "interested person" as defined
in the Investment Company Act of 1940, as amended.
@ Member of the Executive Committee. The Executive Committee of
the Board of Trustees handles the responsibilities of the Board
of Trustees between meetings of the Board.
As used in the table on the previous page, "The Funds" and "Funds" mean
the following investment companies: American Leaders Fund, Inc.; Annuity
Management Series; Arrow Funds; Automated Cash Management Trust;
Automated Government Money Trust; California Municipal Cash Trust; Cash
Trust Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D.
Jones & Co. Daily Passport Cash Trust; Federated ARMs Fund; Federated
Exchange Fund, Ltd.; Federated GNMA Trust; Federated Government Trust;
Federated Growth Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index Trust;
Federated Institutional Trust; Federated Intermediate Government Trust;
Federated Master Trust; Federated Municipal Trust; Federated Short-
Intermediate Government Trust; Federated Short-Term U.S. Government
Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated U.S.
Government Bond Fund; First Priority Funds; Fixed Income Securities,
Inc.; Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress
Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S.
Government Securities, Inc.; Government Income Securities, Inc.; High
Yield Cash Trust; Insight Institutional Series, Inc.; Insurance
Management Series; Intermediate Municipal Trust; International Series,
Inc.; Investment Series Funds, Inc.; Investment Series Trust; Liberty
Equity Income Fund, Inc.; Liberty High Income Bond Fund, Inc.; Liberty
Municipal Securities Fund, Inc.; Liberty U.S. Government Money Market
Trust; Liberty Term Trust, Inc. - 1999; Liberty Utility Fund, Inc.;
Liquid Cash Trust; Managed Series Trust; Money Market Management, Inc.;
Money Market Obligations Trust; Money Market Trust; Municipal Securities
Income Trust; Newpoint Funds; New York Municipal Cash Trust; 111
Corcoran Funds; Peachtree Funds; The Planters Funds; RIMCO Monument
Funds; The Shawmut Funds; Short-Term Municipal Trust; Star Funds; The
Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.;
Sunburst Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
Trademark Funds; Trust for Financial Institutions; Trust For Government
Cash Reserves; Trust for Short-Term U.S. Government Securities; Trust
for U.S. Treasury Obligations; The Virtus Funds; World Investment
Series, Inc.
SHARE OWNERSHIP
Officers and Trustees as a group own less than 1% of the Fund's
outstanding shares.
As of July 7, 1995, the following shareholders of record owned 5% or
more of the outstanding shares of Municipal Cash Series II: Kaw & Co.,
Charleston, WV, owned approximately 12,939,006 shares (18.56%); Software
Spectrum, Garland, TX , owned approximately 10,487,067 shares (15.04%);
and Clear Lakes Trout Co., Boise, ID, owned approximately 5,397,102
shares (7.74%).
Trustees COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX +
John F. Donahue
Trustee and Chairman $ -0- $-0- for the Trust and
68 other investment companies
in the Fund Complex
Thomas G. Bigley
Trustee $ 454 $20,688 for the Trust and
49 other investment companies
in the Fund Complex
John T. Conroy
Trustee $ 670 $117,202 for the Trust and
64 other investment companies
in the Fund Complex
William J. Copeland
Trustee $ 670 $117,202 for the Trust and
64 other investment companies
in the Fund Complex
J. Christopher Donahue
Trustee and Exec. Vice Pres.$ -0- $-0- for the Trust and
14 other investment companies
in the Fund Complex
James E. Dowd
Trustee $ 670 $117,202 for the Trust and
64 other investment companies
in the Fund Complex
Lawrence D. Ellis, M.D.
Trustee $ 611 $106,460 for the Trust and
64 other investment companies
in the Fund Complex
Edward L. Flaherty, Jr.
Trustee $ 670 $117,202 for the Trust and
64 other investment companies
in the Fund Complex
Peter E. Madden
Trustee $ 519 $90,563 for the Trust and
64 other investment companies
in the Fund Complex
Gregor F. Meyer
Trustee $ 611 $106,460 for the Trust and
64 other investment companies
in the Fund Complex
John E. Murray, Jr.
Trustee $ 301 $-0- for the Trust and
64 other investment companies
in the Fund Complex
Wesley W. Posvar
Trustee $ 611 $106,460 for the Trust and
64 other investment companies
in the Fund Complex
Marjorie P. Smuts
Trustee $ 611 $106,460 for the Trust and
64 other investment companies
in the Fund Complex
*Information is furnished for the fiscal year ended May 31, 1995.
#The aggregate compensation is provided for the Trust which is comprised
of 2 portfolios.
+The information is provided for the last calendar year.
TRUSTEE LIABILITY
The Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law. However, they are
not protected against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of their
office.
INVESTMENT ADVISORY SERVICES
INVESTMENT ADVISER
The Fund's investment adviser is Federated Advisers. It is a subsidiary
of Federated Investors. All the voting securities of Federated
Investors are owned by a trust, the trustees of which are John F.
Donahue, his wife and his son, J. Christopher Donahue.
The adviser shall not be liable to the Trust, the Fund, or any
shareholder of the Fund for any losses that may be sustained in the
purchase, holding, or sale of any security or for anything done or
omitted by it, except acts or omissions involving willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties imposed
upon it by its contract with the Trust.
ADVISORY FEES
For its advisory services, Federated Advisers receives an annual
investment advisory fee as described in the prospectus. For the fiscal
years ended May 31 1995, 1994, and 1993, the adviser earned $469,638,
$626,848, and $599,682, respectively, of which $218,074, $346,147, and
$599,389, respectively, were waived.
State Expense Limitations
The adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose
shares are registered for sale in those states. If the Fund's
normal operating expenses (including the investment advisory fee,
but not including brokerage commissions, interest, taxes, and
extraordinary expenses) exceed 2-1/2% per year of the first $30
million of average net assets, 2% per year of the next $70 million
of average net assets, and 1-1/2% per year of the remaining
average net assets, the adviser will reimburse the Fund for its
expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by
the amount of the excess, subject to an annual adjustment. If the
expense limitation is exceeded, the amount to be reimbursed by the
adviser will be limited, in any single fiscal year, by the amount
of the investment advisory fees.
This arrangement is not part of the advisory contract and may be
amended or rescinded in the future.
FUND ADMINISTRATION
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee as
described in the prospectus. Prior to March 1, 1994, Federated
Administrative Services, Inc., also a subsidiary of Federated Investors,
served as the Fund's Administrator. (For purposes of this Statement of
Additional Information, Federated Administrative Services and Federated
Administrative Services, Inc. may hereinafter collectively be referred
to as the "Administrators".) For the fiscal year ended May 31, 1995,
Federated Administrative Services earned $125,000. For the fiscal year
ended May 31, 1994, the Administrators earned $246,535. For the fiscal
year ended May 31, 1993, Federated Administrative Services, Inc. earned
$240,232. Dr. Henry J. Gailliot, an officer of Federated Advisers, the
adviser to the Fund, holds approximately 20% of the outstanding common
stock and serves as a director of Commercial Data Services, Inc., a
company which provides computer processing services to Federated
Administrative Services.
DISTRIBUTION PLAN
The Fund has adopted a Plan pursuant to Rule 12b-1 which was promulgated
by the Securities and Exchange Commission pursuant to the Investment
Company Act of 1940. The Plan permits the payment of fees to financial
institutions for sales services or distribution-related support
services. The Plan is designed to stimulate distribution activities and
to cause services to be provided to shareholders by a representative who
has knowledge of the shareholder's particular circumstances and goals.
By adopting the Plan, the Board of Trustees expects that the Fund will
be able to achieve a more predictable flow of cash for investment
purposes and to meet redemptions. This will facilitate more efficient
portfolio management and assist the Fund in seeking to achieve its
investment objectives. By identifying potential investors whose needs
are served by the Fund's objectives, and properly servicing these
accounts, the Fund may be able to curb sharp fluctuations in rates of
redemptions and sales. Other benefits may include: (1) an efficient and
effective distribution-related support system; (2) a more efficient use
of shareholder assets by having them rapidly invested with a minimum of
delay and administrative detail; and (3) an efficient and reliable
shareholder records system and prompt responses to shareholder requests
and inquiries concerning their accounts. For the fiscal year ending May
31, 1995, payments in the amount of $187,785 were made pursuant to the
distribution plan, all of which was paid to financial institutions.
Custodian and Portfolio Recordkeeper. State Street Bank and Trust
Company, Boston, MA, is custodian for the securities and cash of the
Fund. It also provides certain accounting and recordkeeping services
with respect to the Fund's portfolio investments.
Transfer Agent. As transfer agent, Federated Services Company maintains
all necessary shareholder records. For its services, the transfer agent
receives a fee based on the number of shareholder accounts.
DETERMINING NET ASSET VALUE
The Trustees have decided that the best method for determining the value
of portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for
amortization of premium or accumulation of discount rather than at
current market value. Accordingly, neither the amount of daily income
nor the net asset value is affected by any unrealized appreciation or
depreciation of the portfolio. In periods of declining interest rates,
the indicated daily yield on shares of the Fund computed by dividing the
annualized daily income on the Fund's portfolio by the net asset value
computed as above may tend to be higher than a similar computation made
by using a method of valuation based upon market prices and estimates.
In periods of rising interest rates, the opposite may be true.
The Fund's use of the amortized cost method of valuing portfolio
instruments depends on its compliance with certain conditions in Rule 2a-
7 (the "Rule") promulgated by the Securities and Exchange Commission
under the Investment Company Act of 1940. Under the Rule, the Trustees
must establish procedures reasonably designed to stabilize the net asset
value per share, as computed for purposes of distribution and
redemption, at $1.00 per share, taking into account current market
conditions and the Fund's investment objective. The procedures include
monitoring the relationship between the amortized cost value per share
and the net asset value per share based upon available indications of
market value. The Trustees will decide what, if any, steps should be
taken if there is a difference of more than 0.5 of 1% between the two
values. The Trustees will take any steps they consider appropriate (such
as redemption in kind or shortening the average portfolio maturity) to
minimize any material dilution or other unfair results arising from
differences between the two methods of determining net asset value.
REDEMPTION IN KIND
The Fund is obligated to redeem shares solely in cash up to $250,000 or
1% of the Fund's net asset value, whichever is less, for any one
shareholder within a 90-day period. Any redemption beyond this amount
will also be in cash unless the Trustees determine that further payments
should be in kind. In such cases, the Fund will pay all or a portion of
the remainder of the redemption in portfolio instruments valued in the
same way as the Fund determines net asset value. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable. Redemption in kind is not as liquid as a cash redemption.
If redemption is made in kind, shareholders who sell these securities
could receive less than the redemption value and could incur certain
transaction costs.
THE FUND'S TAX STATUS
To qualify for the special tax treatment afforded to regulated
investment companies, the Fund must, among other requirements: derive
at least 90% of its gross income from dividends, interest, and gains
from the sale of securities; derive less than 30% of its gross income
from the sale of securities held less than three months; invest in
securities within certain statutory limits; and distribute to its
shareholders at least 90% of its net income earned during the year.
PERFORMANCE INFORMATION
Performance depends upon such variables as: portfolio quality; average
portfolio maturity; type of instruments in which the portfolio is
invested; changes in interest rates; changes in expenses; and the
relative amount of cash flow. To the extent that financial institutions
and broker/dealers charge fees in connection with services provided in
conjunction with an investment in shares of the Fund, the performance
will be reduced for those shareholders paying those fees.
YIELD
The yield is calculated based upon the seven days ending on the day of
the calculation, called the "base period." This yield is computed by:
determining the net change in the value of a hypothetical account with a
balance of one share at the beginning of the base period, with the net
change excluding capital changes but including the value of any
additional shares purchased with dividends earned from the original one
share and all dividends declared on the original and any purchased
shares; dividing the net change in the account's value by the value of
the account at the beginning of the base period to determine the base
period return; and multiplying the base period return by 365/7.
The Fund's yield for the seven-day period ended May 31, 1995, was 3.55%.
EFFECTIVE YIELD
The effective yield is calculated by compounding the unannualized base
period return by: adding 1 to the base period return; raising the sum to
the 365/7th power; and subtracting 1 from the result.
The Fund's effective yield for the seven-day period ended May 31, 1995,
was 3.62%.
TAX-EQUIVALENT YIELD
The Fund's tax-equivalent yield for the seven-day period ended May 31,
1995, was 5.99%.
TAX-EQUIVALENCY TABLE
A tax-equivalency table may be used in advertising and sales literature.
The interest earned by the municipal securities in the Fund's portfolio
generally remains free from federal regular income tax,* and is often
free from state and local taxes as well. As the table below indicates,
a "tax-free" investment can be an attractive choice for investors,
particularly in times of narrow spreads between tax-free and taxable
yields.
TAXABLE YIELD EQUIVALENT FOR 1995
MULTISTATE MUNICIPAL FUND
FEDERAL INCOME TAX BRACKET:
15.00% 28.00% 31.00% 36.00%
39.60%
Joint $1- $39,001 - $94,251 - $143,601 - OVER
Return 39,000 94,250 143,600 256,500 256,500
Single Return $1- $23,351 - $56,551 - $117,951 - OVER
23,350 56,550 117,950 256,500 $256,500
TAX-EXEMPT
YIELD TAXABLE YIELD EQUIVALENT
1.00% 1.18% 1.39% 1.45% 1.56%
1.66%
1.50% 1.76% 2.08% 2.17% 2.34%
2.48%
2.00% 2.35% 2.78% 2.90% 3.13%
3.31%
2.50% 2.94% 3.47% 3.62% 2.91%
4.14%
3.00% 3.53% 4.17% 4.35% 4.69%
4.97%
3.50% 4.12% 4.86% 5.07% 5.47%
5.79%
4.00% 4.71% 5.56% 5.80% 6.25%
6.62%
4.50% 5.29% 6.25% 6.52% 7.03%
7.45%
5.00% 5.88% 6.94% 7.25% 7.81%
8.28%
5.50% 6.47% 7.64% 7.97% 8.59%
9.11%
6.00% 7.06% 8.33% 8.70% 9.38%
9.93%
6.50% 7.65% 9.03% 9.42% 10.16%
10.76%
7.00% 8.24% 9.72% 10.14% 10.94%
11.59%
7.50% 8.82% 10.42% 10.87% 11.72%
12.42%
8.00% 9.41% 11.11% 11.59% 12.50%
13.25%
Note: The maximum marginal tax rate for each bracket was used in
calculating the taxable yield equivalent.
The chart above is for illustrative purposes only. It is not an
indicator of past or future performance of the Fund.
*Some portion of the Fund's income may be subject to the federal
alternative minimum tax and state and local taxes.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors such as the composition
of any index used, prevailing market conditions, portfolio compositions
of other funds, and methods used to value portfolio securities and
compute offering price. The financial publications and/or indices which
the Fund uses in advertising may include:
O LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund
categories based on total return, which assumes the reinvestment
of all income dividends and capital gains distributions, if any.
o DONOGHUE'S MONEY FUND REPORT publishes annualized yields of money
market funds weekly. Donoghue's MONEY MARKET INSIGHT publication
reports monthly and 12-month-to-date investment results for the
same money funds.
o MONEY, a monthly magazine, regularly ranks money market funds in
various categories based on the latest available seven-day
effective yield.
About Federated Investors
Federated is dedicated to meeting investor needs which is reflected in
its investment decision making--structured, straightforward, and
consistent. This has resulted in a history of competitive performance
with a range of competitive investment products that have gained the
confidence of thousands of clients and their customers.
The company's disciplined security selection process is firmly rooted in
sound methodologies backed by fundamental and technical research.
Investment decisions are made and executed by teams of portfolio
managers, analysts, and traders dedicated to specific market sectors.
In the money market sector, Federated gained prominence in the mutual
fund industry in 1974 with the creation of the first institutional money
market fund. Simultaneously, the company pioneered the use of the
amortized cost method of accounting for valuing shares of money market
funds, a principal means used by money managers today to value money
market fund shares. Other innovations include the first institutional
tax-free money market fund. As of December 31, 1994, Federated managed
more than $31 billion in assets across approximately 43 money market
funds, including 17 government, 8 prime and 18 municipal with assets
approximating $17 billion, $7.4 billion and $6.6 billion, respectively.
J. Thomas Madden, Executive Vice President, oversees Federated's equity
and high yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated's domestic fixed income
management. Henry A. Frantzen, Executive Vice President, oversees the
management of Federated's international portfolios.
Mutual Fund Market
Twenty-seven percent of American households are pursuing
their financial goals through mutual funds. These investors,
as well as businesses and institutions, have entrusted over
$2 trillion to the more than 5,500 funds available.*
Federated Investors, through its subsidiaries, distributes
mutual funds for a variety of investment applications.
Specific markets include:
Institutional
Federated meets the needs of more than 4,000 institutional
clients nationwide by managing and servicing separate
accounts and mutual funds for a variety of applications,
including defined benefit and defined contribution programs,
cash management, and asset/liability management.
Institutional clients include corporations, pension funds,
tax-exempt entities, foundations/endowments, insurance
companies, and investment and financial advisors. The
marketing effort to these institutional clients is headed
by John B. Fisher, President, Institutional Sales Division.
Trust Organizations
Other institutional clients include close relationships with
more than 1,500 banks and trust organizations. Virtually
all of the trust divisions of the top 100 bank holding
companies use Federated funds in their clients' portfolios.
The marketing effort to trust clients is headed by Mark R.
Gensheimer, Executive Vice President, Bank Marketing &
Sales.
Broker/dealers and bank broker/dealer subsidiaries
Federated mutual funds are available to consumers through
major brokerage firms nationwide--including 200 New York
Stock Exchange firms--supported by more wholesalers than any
other mutual fund distributor. The marketing effort to
these firms is headed by James F. Getz, President,
Broker/Dealer Division.
*source: Investment Company Institute
APPENDIX
STANDARD AND POOR'S RATINGS GROUP MUNICIPAL BOND RATINGS
AAA - Debt rated "AAA" has the highest rating assigned by Standard &
Poor's Corporation. Capacity to pay interest and repay principal is
extremely strong.
AA - Debt rated "AA" has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only in small
degree.
A - Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effect
of changes in circumstances and economic conditions than debt in higher
rated categories.
NR-NR indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not
rate a particular type of obligation as a matter of policy.
Plus (+) or minus(-): The ratings from AA to BBB may be modified by the
addition of a plus or minus sign to show relative standing within the
major rating categories.
MOODY'S INVESTORS SERVICE, INC. MUNICIPAL BOND RATINGS
AAA - Bonds which are rated AAA are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
AA - Bonds which are rated AA are judged to be of high quality by all
standards. Together with the AAA group, they comprise what are
generally known as high grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in AAA
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-
term risks appear somewhat larger than in AAA securities.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
BAA - Bonds which are rated BAA are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.
NR-Not rated by Moody's.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from AA through BAA in its corporate or municipal bond
rating system. The modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks in
the lower end of its generic rating category.
STANDARD & POOR'S RATINGS GROUP MUNICIPAL NOTE RATINGS
SP-1 - Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus sign (+) designation.
SP-2 - atisfactory capacity to pay principal and interest.
MOODY'S INVESTORS SERVICE, INC. SHORT TERM LOAN RATING DEFINITIONS
MIG 1/VMIG 1 - This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support
or demonstrated broad based access to the market for refinancing.
MIG 2/VMIG 2 - This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
FITCH INVESTORS SERVICE, INC. SHORT-TERM DEBT RATINGS
F-1 - VERY STRONG CREDIT QUALITY. Issues assigned this rating reflect
an assurance for timely payment only slightly less in degree than issues
rated F-1+.
F-2 - GOOD CREDIT QUALITY. Issues carrying this rating have a
satisfactory degree of assurance for timely payment, but the margin of
safety is not as great as for issues assigned F-1+ and F-1 ratings.
STANDARD & POOR'S RATINGS GROUP COMMERCIAL PAPER RATINGS
A-1 - This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation.
A-2 - Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated A-1.
MOODY'S INVESTORS SERVICE, INC. COMMERCIAL PAPER RATINGS
PRIME-1 - Issuers rated PRIME-1 (or related supporting institutions)
have a superior capacity for repayment of short-term promissory
obligations. PRIME-1 repayment capacity will normally be evidenced by
the following characteristics:
- Leading market positions in well established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance on
debt and ample asset protection.
- Broad margins in earning coverage of fixed financial charges and
high internal cash generation.
- Well-established access to a range of financial markets and assured
sources of alternate liquidity
PRIME-2 - Issuers rated PRIME-2 (or related supporting institutions)
have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the
characteristics cited above, but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is
maintained.
Cusip 147552103
0111205b (7/95)
TREASURY CASH SERIES II
(A PORTFOLIO OF CASH TRUST SERIES II)
Statement of Additional Information
This Statement of Additional Information should be read with the
prospectus of Treasury Cash Series II (the "Fund"), a portfolio of
Cash Trust Series II (the "Trust") dated July 31, 1995. This
Statement is not a prospectus. To receive a copy of a prospectus,
write or call the Trust.
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Statement dated July 31, 1995
Federated Securities Corp.
Distributor
A subsidiary of
Federated Investors
GENERAL INFORMATION ABOUT THE
FUND 1
INVESTMENT POLICIES 1
Repurchase Agreements 1
When-Issued And Delayed
Delivery Transactions 1
Reverse Repurchase Agreements 1
INVESTMENT LIMITATIONS 1
Selling Short and Buying on
Margin 1
Issuing Senior Securities and
Borrowing Money 1
Pledging Assets 2
Lending Cash or Securities 2
Investing in Restricted
Securities 2
Investing in Illiquid
Securities 2
Investing in Securities of
Other Investment
Companies 2
Investing for Control 2
Investing in Issuers Whose
Securities Are
Owned by Officers of the Fund 2
Investing in Options 2
Investing in Minerals 2
Investing in Commodities 2
Underwriting 2
CASH TRUST SERIES II MANAGEMENT 4
Share Ownership 8
Trustees Compensation 9
Trustee Liability 10
INVESTMENT ADVISORY SERVICES 10
Investment Adviser 10
Advisory Fees 10
FUND ADMINISTRATION 10
DISTRIBUTION PLAN 11
DETERMINING NET ASSET VALUE 11
REDEMPTION IN KIND 11
THE FUND'S TAX STATUS 11
PERFORMANCE INFORMATION 12
Yield 12
Effective Yield 12
Performance Comparisons 12
About Federated Investors 12
GENERAL INFORMATION ABOUT THE FUND
The Fund is a portfolio in Cash Trust Series II (the "Trust"), which was
extablished as a Massachusetts business trust under a Declaration of
Trust dated November 14, 1990.
INVESTMENT POLICIES
Unless indicated otherwise, the policies described below may be changed
by the Trustees without shareholder approval. Shareholders will be
notified before any material change in these policies becomes effective.
REPURCHASE AGREEMENTS
The Fund or its custodian will take possession of the securities subject
to repurchase agreements, and these securities will be marked to market
daily. In the event that a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by the Fund might be
delayed pending court action. The Fund believes that under the regular
procedures normally in effect for custody of the Fund's portfolio
securities subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Fund and allow retention or
disposition of such securities. The Fund will only enter into
repurchase agreements with banks and other recognized financial
institutions, such as broker/dealers, which are deemed by the Fund's
adviser to be creditworthy pursuant to guidelines established by the
Trustees.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses,
other than normal transaction costs, are incurred. However, liquid
assets of the Fund sufficient to make payment for the securities to be
purchased are segregated on the Fund's records at the trade date. These
assets are marked to market daily and are maintained until the
transaction has been settled. The Fund does not intend to engage in when-
issued and delayed delivery transactions to an extent that would cause
the segregation of more than 20% of the total value of its assets.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase
agreement, the Fund transfers possession of a portfolio instrument in
return for a percentage of the instrument's market value in cash and
agrees that on a stipulated date in the future the Fund will repurchase
the portfolio instrument by remitting the original consideration plus
interest at an agreed upon rate. The use of reverse repurchase
agreements may enable the Fund to avoid selling portfolio instruments at
a time when a sale may be deemed to be disadvantageous, but does not
ensure this result. When effecting reverse repurchase agreements, liquid
assets of the Fund in a dollar amount sufficient to make payment for
the obligations to be purchased, are: segregated on the Fund's records
at the trade date; marked to market daily; and maintained until the
transaction is settled.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities
on margin but may obtain such short-term credits as are necessary for
clearance of transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure or to facilitate management of the
portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Fund will not purchase any securities while
borrowings in excess of 5% of the value of its total assets are
outstanding. During the period any reverse repurchase agreements are
outstanding, the Fund will restrict the purchase of portfolio securities
to money market instruments maturing on or before the expiration date of
the reverse repurchase agreements, but only to the extent necessary to
assure completion of the reverse repurchase agreements.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except as
necessary to secure permitted borrowings. In these cases, it may pledge
assets having a market value not exceeding the lesser of the dollar
amounts borrowed or 10% of the value of total assets of the Fund at the
time of the borrowing.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except that it may purchase or
hold portfolio securities permitted by its investment objective,
policies, and limitations, or Declaration of Trust.
INVESTING IN RESTRICTED SECURITIES
The Fund will not purchase or sell securities which are restricted as to
resale under federal securities law.
The above limitations cannot be changed without shareholder approval.
The following investment limitations, however, may be changed by the
Trustees without shareholder approval. Shareholders will be notified
before any material change in these limitations becomes effective.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not purchase securities of other investment companies,
except as part of a merger, consolidation, or other acquisition.
INVESTING FOR CONTROL
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS OF THE FUND
The Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Fund or its investment adviser owning
individually more than .50 of 1% of the issuer's securities together own
more than 5% of the issuer's securities.
INVESTING IN OPTIONS
The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.
INVESTING IN MINERALS
The Fund will not purchase or sell interests in oil, gas, or other
mineral exploration or development programs or leases, although it may
purchase the securities of issuers which invest in or sponsor such
programs.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its investment
objective, policies, and limitations.
For purposes of the above limitations, the Fund considers instruments
issued by a U.S. branch of a domestic bank or savings and loan having
capital, surplus, and undivided profits in excess of $100,000,000 at the
time of investment to be "cash items". Except with respect to borrowing
money, if a percentage limitation is adhered to at the time of
investment, a later increase or decrease in percentage resulting from
any change in value or net assets will not result in a violation of such
limitation.
The Fund did not borrow money or pledge securities in excess of 5% of
the value of its net assets during the last fiscal year and has no
present intent to do so during the coming fiscal year.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the adviser looks for prompt execution of the
order at a favorable price. In working with dealers, the adviser will
generally use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can
be obtained elsewhere. The adviser makes decisions on portfolio
transactions and selects brokers and dealers subject to guidelines
established by the Board of Trustees. The adviser may select brokers
and dealers who offer brokerage and research services. These services
may be furnished directly to the Fund or to the adviser and may include:
advice as to the advisability of investing in securities; security
analysis and reports; economic studies; industry studies; receipt of
quotations for portfolio evaluations; and similar services. Research
services provided by brokers and dealers may be used by the adviser or
its affiliates in advising the Trust and other accounts. To the extent
that receipt of these services may supplant services for which the
adviser or its affiliates might otherwise have paid, it would tend to
reduce their expenses. The adviser and its affiliates exercise
reasonable business judgment in selecting brokers who offer brokerage
and research services to execute securities transactions. They
determine in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research
services provided. During the fiscal years ended May 31, 1995, 1994 and
1993, the Trust paid no brokerage commissions.
Although investment decisions for the Fund are made independently from
those of the other accounts managed by the adviser, investments of the
type the Fund may make may also be made by those other accounts. When
the Fund and one or more other accounts managed by the adviser are
prepared to invest in, or desire to dispose of, the same security,
available investments or opportunities for sales will be allocated in a
manner believed by the adviser to be equitable to each. In some cases,
this procedure may adversely affect the price paid or received by the
Fund or the size of the position obtained or disposed of by the Fund.
In other cases, however, it is believed that coordination and the
ability to participate in volume transactions will be to the benefit of
the Fund.
Cash Trust Series II Management
Officers and Trustees are listed with their addresses, present positions
with Cash Trust Series II, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp.; Chairman, Passport Research, Ltd.; Director, AEtna Life
and Casualty Company; Chief Executive Officer and Director, Trustee, or
Managing General Partner of the Funds. Mr. Donahue is the father of J.
Christopher Donahue, Executive Vice President and Trustee of the Trust.
J. Christopher Donahue *
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President and Trustee
President and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; President and Director,
Federated Research Corp.; President, Passport Research, Ltd.; Trustee,
Federated Administrative Services, Federated Services Company, and
Federated Shareholder Services; President or Vice President of the
Funds; Director, Trustee, or Managing General Partner of some of the
Funds. Mr. Donahue is the son of John F. Donahue, Chairman and Trustee
of the Trust.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's
Hospital of Pittsburgh; Director, Trustee, or Managing General Partner
of the Funds; formerly, Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President,
John R. Wood and Associates, Inc., Realtors; President, Northgate
Village Development Corporation; Partner or Trustee in private real
estate ventures in Southwest Florida; Director, Trustee, or Managing
General Partner of the Funds; formerly, President, Naples Property
Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Vi
Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp. and
Director, Ryan Homes, Inc.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director,
Trustee, or Managing General Partner of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, University of
Pittsburgh; Medical Director, University of Pittsburgh Medical Center -
Downtown; Member, Board of Directors, University of Pittsburgh Medical
Center; formerly, Hematologist, Oncologist, and Internist, Presbyterian
and Montefiore Hospitals; Director, Trustee, or Managing General Partner
of the Funds.
Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty;
Director, Eat'N Park Restaurants, Inc., and Statewide Settlement Agency,
Inc.; Director, Trustee, or Managing General Partner of the Funds;
formerly, Counsel, Horizon Financial, F.A., Western Region.
Peter E. Madden
70 Westcliff Road
Westin, MA
Birthdate: March 16, 1942
Trustee
Consultant; State Representative, Commonwealth of Massachusetts;
Director, Trustee, or Managing General Partner of the Funds; formerly,
President, State Street Bank and Trust Company and State Street Boston
Corporation.
Gregor F. Meyer
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Partner, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice
Chairman, Horizon Financial, F.A.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner,
Mollica, Murray and Hogue; Director, Trustee or Managing General Partner
of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics and Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation, Online
Computer Library Center, Inc., and U.S. Space Foundation; Chairman,
Czecho Management Center; Director, Trustee, or Managing General Partner
of the Funds; President Emeritus, University of Pittsburgh; founding
Chairman, National Advisory Council for Environmental Policy and
Technology and Federal Emergency Management Advisory Board.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: July 21, 1935
Trustee
Public relations/marketing consultant; Director, Trustee, or Managing
General Partner of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
President
Executive Vice President and Trustee, Federated Investors; Director,
Federated Research Corp.; Chairman and Director, Federated Securities
Corp.; President or Vice President of some of the Funds; Director or
Trustee of some of the Funds.
Edward C. Gonzales *
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice President, Treasurer, and Trustee, Federated Investors; Vice
President and Treasurer, Federated Advisers, Federated Management,
Federated Research, Federated Research Corp., and Passport Research,
Ltd.; Executive Vice President, Treasurer, and Director, Federated
Securities Corp.; Trustee, Federated Services Company and Federated
Shareholder Services; Chairman, Treasurer, and Trustee, Federated
Administrative Services; Trustee or Director of some of the Funds;
Executive Vice President or President of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President and Secretary
Secretary,
Secretary, and Trustee, Federated Administrative Services; Secretary and
Trustee, Federated Shareholder Services; Executive Vice President and
Director, Federated Securities Corp.; Vice President and Secretary of
the Funds.
David M. Taylor *
Federated Investors Tower
Pittsburgh, PA
Birthdate: January 13, 1947
Treasurer
Senior Vice President, Controller, and Trustee, Federated Investors;
Controller, Federated Advisers, Federated Management, Federated
Research, Federated Research Corp., and Passport Research, Ltd.; Senior
Vice President, Federated Shareholder Services; Senior Vice President,
Federated Administrative Services; Treasurer of the Funds.
* This Trustee is deemed to be an "interested person" as defined
in the Investment Company Act of 1940, as amended.
@ Member of the Executive Committee. The Executive Committee of
the Board of Trustees handles the responsibilities of the Board
of Trustees between meetings of the Board.
As used in the table on the previous page, "The Funds" and "Funds" mean
the following investment companies: American Leaders Fund, Inc.; Annuity
Management Series; Arrow Funds; Automated Cash Management Trust;
Automated Government Money Trust; California Municipal Cash Trust; Cash
Trust Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D.
Jones & Co. Daily Passport Cash Trust; Federated ARMs Fund; Federated
Exchange Fund, Ltd.; Federated GNMA Trust; Federated Government Trust;
Federated Growth Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index Trust;
Federated Institutional Trust; Federated Intermediate Government Trust;
Federated Master Trust; Federated Municipal Trust; Federated Short-
Intermediate Government Trust; Federated Short-Term U.S. Government
Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated U.S.
Government Bond Fund; First Priority Funds; Fixed Income Securities,
Inc.; Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress
Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S.
Government Securities, Inc.; Government Income Securities, Inc.; High
Yield Cash Trust; Insight Institutional Series, Inc.; Insurance
Management Series; Intermediate Municipal Trust; International Series,
Inc.; Investment Series Funds, Inc.; Investment Series Trust; Liberty
Equity Income Fund, Inc.; Liberty High Income Bond Fund, Inc.; Liberty
Municipal Securities Fund, Inc.; Liberty U.S. Government Money Market
Trust; Liberty Term Trust, Inc. - 1999; Liberty Utility Fund, Inc.;
Liquid Cash Trust; Managed Series Trust; Money Market Management, Inc.;
Money Market Obligations Trust; Money Market Trust; Municipal Securities
Income Trust; Newpoint Funds; New York Municipal Cash Trust; 111
Corcoran Funds; Peachtree Funds; The Planters Funds; RIMCO Monument
Funds; The Shawmut Funds; Short-Term Municipal Trust; Star Funds; The
Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.;
Sunburst Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
Trademark Funds; Trust for Financial Institutions; Trust For Government
Cash Reserves; Trust for Short-Term U.S. Government Securities; Trust
for U.S. Treasury Obligations; The Virtus Funds; World Investment
Series, Inc.
SHARE OWNERSHIP
Officers and Trustees as a group own less than 1% of the Fund's
outstanding shares.
As of July 7, 1995, the following shareholders of record owned 5% or
more of the outstanding shares of Treasury Cash Series II: The Bank of
Guam, Agana, GU, for the account of the Gov. of Guam Gen. Obl. Funds
Procd., owned approximately 38,065, 524 shares (13.30%); Clark & Co.,
Westerville, OH, owned approximately 30,171,167 shares (10.54%); The
Bank of Guam, Agana, GU, for the account of the Government of Guam,
owned approximately 25,600,320 shares (8.95%); The Bank of Guam, Agana,
GU, for the account of the Government of Guam, owned approximately
22,752,171 shares (7.95%); The Bank of Guam, Agana, GU, for the account
of CPA Seaport Rev. Bond 1995A Cons., owned approximately 16,656,336
shares (5.82%); and The Bank of Guam, Agana, GU, for the account of Guam
Power Authority, owned approximately 15,434,790 shares (5.39%).
Trustees COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX +
John F. Donahue
Trustee and Chairman $ -0- $-0- for the Trust and
68 other investment companies
in the Fund Complex
Thomas G. Bigley
Trustee $ 552 $20,688 for the Trust and
49 other investment companies
in the Fund Complex
John T. Conroy
Trustee $ 798 $117,202 for the Trust and
64 other investment companies
in the Fund Complex
William J. Copeland
Trustee $ 798 $117,202 for the Trust and
64 other investment companies
in the Fund Complex
J. Christopher Donahue
Trustee and Exec. Vice Pres.$ -0- $-0- for the Trust and
14 other investment companies
in the Fund Complex
James E. Dowd
Trustee $ 798 $117,202 for the Trust and
64 other investment companies
in the Fund Complex
Lawrence D. Ellis, M.D.
Trustee $ 728 $106,460 for the Trust and
64 other investment companies
in the Fund Complex
Edward L. Flaherty, Jr.
Trustee $ 798 $117,202 for the Trust and
64 other investment companies
in the Fund Complex
Peter E. Madden
Trustee $ 617 $90,563 for the Trust and
64 other investment companies
in the Fund Complex
Gregor F. Meyer
Trustee $ 728 $106,460 for the Trust and
64 other investment companies
in the Fund Complex
John E. Murray, Jr.
Trustee $ 367 $-0- for the Trust and
64 other investment companies
in the Fund Complex
Wesley W. Posvar
Trustee $ 728 $106,460 for the Trust and
64 other investment companies
in the Fund Complex
Marjorie P. Smuts
Trustee $ 728 $106,460 for the Trust and
64 other investment companies
in the Fund Complex
*Information is furnished for the fiscal year ended May 31, 1995.
#The aggregate compensation is provided for the Trust which is comprised
of 2 portfolios.
+The information is provided for the last calendar year.
TRUSTEE LIABILITY
The Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law. However, they are
not protected against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of their
office.
INVESTMENT ADVISORY SERVICES
INVESTMENT ADVISER
The Fund's investment adviser is Federated Advisers. It is a subsidiary
of Federated Investors. All the voting securities of Federated
Investors are owned by a trust, the trustees of which are John F.
Donahue, his wife and his son, J. Christopher Donahue.
The adviser shall not be liable to the Trust, the Fund, or any
shareholder of the Fund for any losses that may be sustained in the
purchase, holding, or sale of any security or for anything done or
omitted by it, except acts or omissions involving willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties imposed
upon it by its contract with the Trust.
ADVISORY FEES
For its advisory services, Federated Advisers receives an annual
investment advisory fee as described in the prospectus. For the fiscal
years ended May 31, 1995, 1994, and 1993, the adviser earned $1,174,877,
$1,217,479, and $1,278,111, respectively, of which $0, $122,580, and
$497,407, respectively, were waived.
State Expense Limitations
The adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose
shares are registered for sale in those states. If the Fund's
normal operating expenses (including the investment advisory fee,
but not including brokerage commissions, interest, taxes, and
extraordinary expenses) exceed 2-1/2% per year of the first $30
million of average net assets, 2% per year of the next $70 million
of average net assets, and 1-1/2% per year of the remaining
average net assets, the adviser will reimburse the Fund for its
expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by
the amount of the excess, subject to an annual adjustment. If the
expense limitation is exceeded, the amount to be reimbursed by the
adviser will be limited, in any single fiscal year, by the amount
of the investment advisory fees.
This arrangement is not part of the advisory contract and may be
amended or rescinded in the future.
FUND ADMINISTRATION
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee as
described in the prospectus. Prior to March 1, 1994, Federated
Administrative Services, Inc., also a subsidiary of Federated Investors,
served as the Fund's Administrator. (For purposes of this Statement of
Additional Information, Federated Administrative Services and Federated
Administrative Services, Inc. may hereinafter collectively be referred
to as the "Administrators".) For the fiscal year ended May 31, 1995,
Federated Administrative Services earned $177,876. For the fiscal year
ended May 31, 1994, the Administrators earned $310,344. For the fiscal
year ended May 31, 1993, Federated Administrative Services, Inc. earned
$333,357. Dr. Henry J. Gailliot, an officer of Federated Advisers, the
adviser to the Fund, holds approximately 20% of the outstanding common
stock and serves as a director of Commercial Data Services, Inc., a
company which provides computer processing services to Federated
Administrative Services.
DISTRIBUTION PLAN
The Fund has adopted a Plan pursuant to Rule 12b-1 which was promulgated
by the Securities and Exchange Commission pursuant to the Investment
Company Act of 1940. The Plan permits the payment of fees to financial
institutions for sales services or distribution-related support
services. The Plan is designed to stimulate distribution activities and
to cause services to be provided to shareholders by a representative who
has knowledge of the shareholder's particular circumstances and goals.
By adopting the Plan, the Board of Trustees expects that the Fund will
be able to achieve a more predictable flow of cash for investment
purposes and to meet redemptions. This will facilitate more efficient
portfolio management and assist the Fund in seeking to achieve its
investment objectives. By identifying potential investors whose needs
are served by the Fund's objectives, and properly servicing these
accounts, the Fund may be able to curb sharp fluctuations in rates of
redemptions and sales. Other benefits may include: (1) an efficient and
effective distribution-related support system; (2) a more efficient use
of shareholder assets by having them rapidly invested with a minimum of
delay and administrative detail; and (3) an efficient and reliable
shareholder records system and prompt responses to shareholder requests
and inquiries concerning their accounts. For the fiscal year ending May
31, 1995, payments in the amount of $469,951 were made pursuant to the
distribution plan, all of which was paid to financial institutions.
Custodian and Portfolio Recordkeeper. State Street Bank and Trust
Company, Boston, MA, is custodian for the securities and cash of the
Fund. It also provides certain accounting and recordkeeping services
with respect to the Fund's portfolio investments.
Transfer Agent. As transfer agent, Federated Services Company maintains
all necessary shareholder records. For its services, the transfer agent
receives a fee based on the number of shareholder accounts.
DETERMINING NET ASSET VALUE
The Trustees have decided that the best method for determining the value
of portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for
amortization of premium or accumulation of discount rather than at
current market value. Accordingly, neither the amount of daily income
nor the net asset value is affected by any unrealized appreciation or
depreciation of the portfolio. In periods of declining interest rates,
the indicated daily yield on shares of the Fund computed by dividing the
annualized daily income on the Fund's portfolio by the net asset value
computed as above may tend to be higher than a similar computation made
by using a method of valuation based upon market prices and estimates.
In periods of rising interest rates, the opposite may be true.
The Fund's use of the amortized cost method of valuing portfolio
instruments depends on its compliance with certain conditions in Rule 2a-
7 (the "Rule") promulgated by the Securities and Exchange Commission
under the Investment Company Act of 1940. Under the Rule, the Trustees
must establish procedures reasonably designed to stabilize the net asset
value per share, as computed for purposes of distribution and
redemption, at $1.00 per share, taking into account current market
conditions and the Fund's investment objective. The procedures include
monitoring the relationship between the amortized cost value per share
and the net asset value per share based upon available indications of
market value. The Trustees will decide what, if any, steps should be
taken if there is a difference of more than 0.5 of 1% between the two
values. The Trustees will take any steps they consider appropriate (such
as redemption in kind or shortening the average portfolio maturity) to
minimize any material dilution or other unfair results arising from
differences between the two methods of determining net asset value.
REDEMPTION IN KIND
The Fund is obligated to redeem shares solely in cash up to $250,000 or
1% of the Fund's net asset value, whichever is less, for any one
shareholder within a 90-day period. Any redemption beyond this amount
will also be in cash unless the Trustees determine that further payments
should be in kind. In such cases, the Fund will pay all or a portion of
the remainder of the redemption in portfolio instruments valued in the
same way as the Fund determines net asset value. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable. Redemption in kind is not as liquid as a cash redemption.
If redemption is made in kind, shareholders who sell these securities
could receive less than the redemption value and could incur certain
transaction costs.
THE FUND'S TAX STATUS
To qualify for the special tax treatment afforded to regulated
investment companies, the Fund must, among other requirements: derive
at least 90% of its gross income from dividends, interest, and gains
from the sale of securities; derive less than 30% of its gross income
from the sale of securities held less than three months; invest in
securities within certain statutory limits; and distribute to its
shareholders at least 90% of its net income earned during the year.
PERFORMANCE INFORMATION
Performance depends upon such variables as: portfolio quality; average
portfolio maturity; type of instruments in which the portfolio is
invested; changes in interest rates; changes in expenses; and the
relative amount of cash flow. To the extent that financial institutions
and broker/dealers charge fees in connection with services provided in
conjunction with an investment in shares of the Fund, the performance
will be reduced for those shareholders paying those fees.
YIELD
The yield is calculated based upon the seven days ending on the day of
the calculation, called the "base period." This yield is computed by:
determining the net change in the value of a hypothetical account with a
balance of one share at the beginning of the base period, with the net
change excluding capital changes but including the value of any
additional shares purchased with dividends earned from the original one
share and all dividends declared on the original and any purchased
shares; dividing the net change in the account's value by the value of
the account at the beginning of the base period to determine the base
period return; and multiplying the base period return by 365/7.
The Fund's yield for the seven-day period ended May 31, 1995, was 5.23%.
EFFECTIVE YIELD
The effective yield is calculated by compounding the unannualized base
period return by: adding 1 to the base period return; raising the sum to
the 365/7th power; and subtracting 1 from the result.
The Fund's effective yield for the seven-day period ended May 31, 1995,
was 5.37%.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors such as the composition
of any index used, prevailing market conditions, portfolio compositions
of other funds, and methods used to value portfolio securities and
compute offering price. The financial publications and/or indices which
the Fund uses in advertising may include:
O LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund
categories based on total return, which assumes the reinvestment
of all income dividends and capital gains distributions, if any.
o DONOGHUE'S MONEY FUND REPORT publishes annualized yields of money
market funds weekly. Donoghue's MONEY MARKET INSIGHT publication
reports monthly and 12-month-to-date investment results for the
same money funds.
o MONEY, a monthly magazine, regularly ranks money market funds in
various categories based on the latest available seven-day
effective yield.
o SALOMON 30-DAY TREASURY BILL INDEX is a weekly quote of the most
representative yields for selected securities, issued by the U.S.
Treasury, maturing in 30 days.
About Federated Investors
Federated is dedicated to meeting investor needs which is reflected in
its investment decision making--structured, straightforward, and
consistent. This has resulted in a history of competitive performance
with a range of competitive investment products that have gained the
confidence of thousands of clients and their customers.
The company's disciplined security selection process is firmly rooted in
sound methodologies backed by fundamental and technical research.
Investment decisions are made and executed by teams of portfolio
managers, analysts, and traders dedicated to specific market sectors.
In the money market sector, Federated gained prominence in the mutual
fund industry in 1974 with the creation of the first institutional money
market fund. Simultaneously, the company pioneered the use of the
amortized cost method of accounting for valuing shares of money market
funds, a principal means used by money managers today to value money
market fund shares. Other innovations include the first institutional
tax-free money market fund. As of December 31, 1994, Federated managed
more than $31 billion in assets across approximately 43 money market
funds, including 17 government, 8 prime and 18 municipal with assets
approximating $17 billion, $7.4 billion and $6.6 billion, respectively.
J. Thomas Madden, Executive Vice President, oversees Federated's equity
and high yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated's domestic fixed income
management. Henry A. Frantzen, Executive Vice President, oversees the
management of Federated's international portfolios.
Mutual Fund Market
Twenty-seven percent of American households are pursuing
their financial goals through mutual funds. These investors,
as well as businesses and institutions, have entrusted over
$2 trillion to the more than 5,500 funds available.*
Federated Investors, through its subsidiaries, distributes
mutual funds for a variety of investment applications.
Specific markets include:
Institutional
Federated meets the needs of more than 4,000 institutional
clients nationwide by managing and servicing separate
accounts and mutual funds for a variety of applications,
including defined benefit and defined contribution programs,
cash management, and asset/liability management.
Institutional clients include corporations, pension funds,
tax-exempt entities, foundations/endowments, insurance
companies, and investment and financial advisors. The
marketing effort to these institutional clients is headed
by John B. Fisher, President, Institutional Sales Division.
Trust Organizations
Other institutional clients include close relationships with
more than 1,500 banks and trust organizations. Virtually
all of the trust divisions of the top 100 bank holding
companies use Federated funds in their clients' portfolios.
The marketing effort to trust clients is headed by Mark R.
Gensheimer, Executive Vice President, Bank Marketing &
Sales.
Broker/dealers and bank broker/dealer subsidiaries
Federated mutual funds are available to consumers through
major brokerage firms nationwide--including 200 New York
Stock Exchange firms--supported by more wholesalers than any
other mutual fund distributor. The marketing effort to
these firms is headed by James F. Getz, President,
Broker/Dealer Division.
*source: Investment Company Institute
Cusip 147552301
0111203b (7/95)
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements (Filed in Part A)
(b) Exhibits:
(1) (i) Conformed Copy of Declaration of Trust of the
Registrant; +
(ii) Conformed Copy of Amendment No. 1 to Declaration
of Trust of the Registrant; +
(iii) Conformed Copy of Amendment No. 2 to Declaration
of Trust of the Registrant; +
(2) Copy of By-Laws of the Registrant; (1.)
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of Beneficial
Interest of the Registrant; (2.)
(5) Conformed Copy of Investment Advisory Contract of the
Registrant; +
(6) (i) Conformed Copy of Distributor's Contract of
the Registrant; +
(ii) Conformed Copy of Specimen Mutual Funds Sales and
Service Agreement; +
(iii) Conformed Copy of Specimen Mutual Funds Service
Agreement; +
(iv) Conformed Copy of Specimen Plan Trustee/Mutual
Funds Service Agreement. +
(7) Not applicable;
(8) Conformed copy of Custodian Agreement of the
Registrant; +
(9) (i) Conformed copy of Fund Accounting, Shareholder
Recordkeeping, and Custody Services Procurement
Agreement of the Registrant; +
(ii) Conformed copy of Administrative Services
Agreement; (4.)
(iii) Conformed copy of Shareholder Services
Agreement; (4.)
(iv) The response and exhibits described in Item
24.(b)(6) are hereby incorporated by reference.
+ Exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed January 4, 1991. (File Nos.
33-38550 and 811-6269)
2. Response is incorporated by reference to Registrant's Registration
Statement on Form N-1A filed January 24, 1991. (File Nos. 33-38550 and
811-6269)
4. Response is incorporated by reference to Registrant's Registration
Statement on Form N-1A filed July 28, 1994. (File Nos. 33-38550 and 811-
6269)
(10) Conformed Copy of Opinion and Consent of Counsel
as to legality of shares being registered; +
(11) Conformed copy of Consent of the Independent
Auditor;+
(12) Not applicable;
(13) Conformed Copy of Initial Capital Understanding
; +
(14) Not applicable;
(15) (i) Copy of Distribution Plan; (1.)
(ii) The response and exhibits described in Item
24.(b)(6) are hereby incorporated by reference.
(16) Schedule for Computation of Fund Performance
Data; (3.)
(17) Copy of Financial Data Schedules; +
(18) Conformed Copy of Power of Attorney. +
1. Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed January 4, 1991. (File Nos.
33-38550 and 811-6269)
2. Response is incorporated by reference to Registrant's Registration
Statement on Form N-1A filed January 24, 1991. (File Nos. 33-38550 and
811-6269)
3. Response is incorporated by reference to Registrant's Registration
Statement on Form N-1A filed July 25, 1991. (File Nos. 33-38550 and 811-
6269)
Item 25. Persons Controlled by or Under Common Control with Registrant
None
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of July 7,1995
Shares of Beneficial Interest
Municipal Cash Series II 467
Treasury Cash Series II 369
Item 27. Indemnification: (2.)
Item 28. Business and Other Connections of Investment Adviser:
(a) For a description of the other business of the investment
adviser, see the section entitled "Trust Information -
Management of Cash Trust Series II" in Part A. The
affiliations with the Registrant of four of the Trustees and
one of the Officers of the investment adviser are included in
Part B of this Registration Statement under "Cash Trust
Series II Management." The remaining Trustee of the
investment adviser, his position with the investment adviser,
and, in parentheses, his principal occupation is: Mark D.
Olson (Partner, Wilson, Halbrook & Bayard) 107 West Market
Street, Georgetown, Delaware 19947.
The remaining Officers of the investment adviser are: Mark L.
Mallon, William D. Dawson, III, J. Thomas Madden, Henry A.
Frantzen, Executive Vice President; Henry J. Gailliot, Senior
Vice President-Economist; Peter R. Anderson, J. Alan Minteer,
Senior Vice Presidents; J.Scott Albrecht, Randall A. Bauer,
David A. Briggs, Jonathan C. Conley, Deborah A. Cunningham,
Michael P. Donnelly, Mark E. Durbiano, Kathleen M. Foody-
Malus, Thomas M. Franks, Edward C. Gonzales, Jeff A.
Kozemchak, Marian R. Marinack, John W. McGonigle, Susan M.
Nason, Mary Jo Ochson, Robert J. Ostrowski, Frederick L.
Plautz, Jr., Charles A. Ritter, James D. Roberge, Sandra L.
Weber, Christopher H. Wiles, Vice Presidents, Edward C.
Gonzales, Treasurer, and John W. McGonigle, Secretary. The
business address of each of the Officers of the investment
adviser is Federated Investors Tower, Pittsburgh, PA 15222-
3779. These individuals are also officers of a majority of
the investment advisers to the Funds listed in Part B of this
Registration Statement.
Item 29. Principal Underwriters:
(a) Federated Securities Corp., the Distributor for shares of the
Registrant, also acts as principal underwriter for the
following open-end investment companies: Alexander Hamilton
Funds; American Leaders Fund, Inc.; Annuity Management
Series; Arrow Funds; Automated Cash Management Trust;
Automated Government Money Trust; BayFunds; The Biltmore
Funds; The Biltmore Municipal Funds; California Municipal
Cash Trust; Cash Trust Series, Inc.; Cash Trust Series II; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash
Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Master Trust;
Federated Municipal Trust; Federated Short-Term Municipal
Trust; Federated Short-Term U.S. Government Trust; Federated
Stock Trust; Federated Tax-Free Trust; Federated Total Return
Series, Inc.; Federated U.S. Government Bond Fund; Federated
U.S. Government Securities Fund: 1-3 Years; Federated
U.S. Government Securities Fund: 3-5 Years;First Priority
Funds; First Union Funds; Fixed Income Securities, Inc.;
Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress
Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.;
Fountain Square Funds; Fund for U.S. Government Securities,
Inc.; Government Income Securities, Inc.; High Yield Cash
Trust; Independence One Mutual Funds; Insurance Management
Series; Intermediate Municipal Trust; International Series
Inc.; Investment Series Funds, Inc.; Investment Series Trust;
Liberty Equity Income Fund, Inc.; Liberty High Income Bond
Fund, Inc.; Liberty Municipal Securities Fund, Inc.; Liberty
U.S. Government Money Market Trust; Liberty Utility Fund,
Inc.; Liquid Cash Trust; Managed Series Trust; Marshall
Funds, Inc.; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; The Monitor Funds;
Municipal Securities Income Trust; Newpoint Funds; New York
Municipal Cash Trust; 111 Corcoran Funds; Peachtree Funds;
The Planters Funds; RIMCO Monument Funds; The Shawmut Funds;
SouthTrust Vulcan Funds; Star Funds; The Starburst Funds; The
Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
Tower Mutual Funds; Trademark Funds; Trust for Financial
Institutions; Trust for Government Cash Reserves; Trust for
Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; The Virtus Funds; Vision Fiduciary
Funds, Inc.; Vision Group of Funds, Inc.; and World
Investment Series, Inc.
Federated Securities Corp. also acts as principal underwriter
for the following closed-end investment company: Liberty
Term Trust, Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice Executive Vice
Federated Investors Tower President, and Treasurer, President
Pittsburgh, PA 15222-3779 Federated Securities
Corp.
John W. McGonigle Director, Executive Vice Executive Vice
Federated Investors Tower President, and Assistant President and
Pittsburgh, PA 15222-3779 Secretary, Federated Secretary
Securities Corp.
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
H. Joseph Kennedy Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph L. Epstein Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael D. Fitzgerald Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David C. Glabicki Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William J. Kerns Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Stephen A. LaVersa Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Francis J. Matten, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Jeffrey Niss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charles A. Robison Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John C. Shelar, Jr. Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jamie M. Teschner Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charlene H. Jennings Assistant Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, Assistant
Federated Investors Tower Federated Securities Corp. Secretary
Pittsburgh, PA 15222-3779
(c) Not applicable.
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section
31(a) of the Investment Company Act of 1940 and Rules 31a-1
through 31a-3 promulgated thereunder are maintained at one
of the following locations.
Cash Trust Series II Federated Investors Tower
Registrant Pittsburgh, PA 15222-3779
Federated Services Company Federated Investors Tower
Transfer Agent, Dividend Pittsburgh, PA 15222-3779
Disbursing Agent and
Shareholder Servicing Agent
Federated Administrative
Services Federated Investors Tower
Administrator Pittsburgh, PA 15222-3779
Federated Advisers Federated Investors Tower
Adviser Pittsburgh, PA 15222-3779
State Street Bank and
Trust Company P.O. Box 8604
Custodian Boston, MA 02266-8604
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, CASH TRUST SERIES II has
duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized, in the City of
Pittsburgh and Commonwealth of Pennsylvania, on the 24th day of July,
1995.
CASH TRUST SERIES II
BY: /s/ Charles H. Field
Charles H. Field, Assistant Secretary
Attorney in Fact for John F. Donahue
July 24, 1995
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE DATE
By: /s/ Charles H. Field
Charles H. Field Attorney In Fact July 24, 1995
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Richard B. Fisher* President
J. Christopher Donahue* Executive Vice President and
Trustee
Edward C. Gonzales* Executive Vice President
Thomas G. Bigley* Trustee
John T. Conroy, Jr.* Trustee
William J. Copeland* Trustee
James E. Dowd* Trustee
Lawrence D. Ellis, M.D.* Trustee
Edward L. Flaherty, Jr.* Trustee
Peter E. Madden* Trustee
Gregor F. Meyer* Trustee
John E. Murray, Jr. Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
Exhibit 11 under Form N-1A
Exhibit 23 under Item 601/Reg. S-K
INDEPENDENT AUDITOR'S CONSENT
We consent to the use in this Post-Effective Amendment No. 7 to
Registration Statement (No. 33-38550) of Cash Trust Series II of our
reports dated July 14, 1995, appearing in the Prospectuses of Municipal
Cash Series II and Treasury Cash Series II, which are a part of such
Registration Statement, and to the references to us under the heading
"Financial Highlights" in such Prospectuses.
By: /s/Deloitte & Touche LLP
Pittsburgh, Pennsylvania
July 24, 1995
Exhibit 17 under Form N-1A
Exhibit 24 under Item 601/Reg. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretary of CASH TRUST SERIES II and the
Assistant General Counsel of Federated Investors, and each of them, their true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution for them and in their names, place and stead, in any and all
capacities, to sign any and all documents to be filed with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940, by means of the
EDGAR; and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to sign and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by
virtue thereof.
SIGNATURES TITLE DATE
/s/ John F. Donahue Chairman and Trustee July 7, 1995
John F. Donahue (Chief Executive Officer)
/s/ Richard B. Fisher President July 7, 1995
Richard B. Fisher
/s/ Edward C. Gonzales Executive Vice President July 7, 1995
Edward C. Gonzales
/s/ Thomas G. Bigley Trustee July 7, 1995
Thomas G. Bigley
/s/ John T. Conroy, Jr. Trustee July 7, 1995
John T. Conroy, Jr.
/s/ William J. Copeland Trustee July 7, 1995
William J. Copeland
SIGNATURES TITLE DATE
/s/ David M. Taylor Treasurer July 7, 1995
David M. Taylor (Principal Financial and
Accounting Officer)
/s/ James E. Dowd Trustee July 7, 1995
James E. Dowd
/s/ Lawrence D. Ellis, M.D. Trustee July 7, 1995
Lawrence D. Ellis, M.D.
/s/ Edward L. Flaherty, Jr. Trustee July 7, 1995
Edward L. Flaherty, Jr.
/s/ Peter E. Madden Trustee July 7, 1995
Peter E. Madden
/s/ Gregor F. Meyer Trustee July 7, 1995
Gregor F. Meyer
/s/ John E. Murray, Jr. Trustee July 7, 1995
John E. Murray, Jr.
/s/ Wesley W. Posvar Trustee July 7, 1995
Wesley W. Posvar
/s/ Marjorie P. Smuts Trustee July 7, 1995
Marjorie P. Smuts
Sworn to and subscribed before me this 7th day of July, 1995
/s/ Marie M. Hamm
Marie M. Hamm, Notary Public
Plum Boro, Allegheny County
My Commission Expires Sept. 16, 1996
member, Pennsylvania Association of Notaries
-1-
Exhibit 1(i) under Form N-1A
Exhibit 3(a)(i) under Item 601/Reg. S-K
DECLARATION OF TRUST
CASH TRUST SERIES II
Dated November 14, 1990
DECLARATION OF TRUST made November 14, 1990, by John F. Donahue, William
J. Copeland, J. Christopher Donahue, James F. Dowd, Lawrence D. Ellis, M.D.,
Edward L. Flaherty, Jr., J. Joseph Maloney, Jr., Gregor F. Meyer, Wesley W.
Posvar and Marjorie P. Smuts.
WHEREAS, the Trustees desire to establish a trust fund for the
investment and reinvestment of funds contributed thereto;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed under this
Declaration of Trust IN TRUST as herein set forth below.
ARTICLE I
NAMES AND DEFINITIONS
Section 1. Name.
This Trust shall be known as Cash Trust Series II.
Section 2. Definitions.
Wherever used herein, unless otherwise required by the context or
specifically provided:
(a) The terms "Affiliated Person," "Assignment," "Commission,"
"Interested Person," "Majority Shareholder Vote" (the 67% or 50%
requirement of Section 2(a)(42) of the 1940 Act, whichever may be
applicable) and "Principal Underwriter" shall have the meanings given
them in the 1940 Act, as amended from time to time;
(b) The "Trust" refers to Cash Trust Series II;
(c) "Class" refers to a class of Shares established and designated
under or in accordance with the provisions of Article III;
(d) "Series" refers to a series of Shares established and
designated under or in accordance with the provisions of Article III;
(e) "Series Company" refers to the form of a registered open-end
investment company described in Section 18(f)(2) of the 1940 Act or in
any successor statutory provision;
(f) "Shareholder" means a record owner of Shares of any Series or
Class;
(g) The "Trustees" refer to the individual Trustees in their
capacity as Trustees hereunder of the Trust and their successor or
successors for the time being in office as such Trustees;
(h) "Shares" means the equal proportionate units of interest into
which the beneficial interest in the Trust shall be divided from time to
time, or if more than one Series or Class of Shares is authorized by
the Trustees, the equal proportionate units into which each Series or
Class of Shares shall be divided from time to time and includes
fractions of Shares as well as whole Shares; and
(i) The "1940 Act" refers to the Investment Company Act of 1940,
and the Rules and Regulations thereunder (including any exemptions
granted thereunder), as amended from time to time.
ARTICLE II
PURPOSE OF TRUST
The purpose of this Trust is to provide investors a continuous source of
managed investments by investing primarily in securities (including options)
and also in debt instruments, commodities, commodity contracts and options
thereon.
ARTICLE III
BENEFICIAL INTEREST
Section 1. Shares of Beneficial Interest.
The beneficial interest in the Trust shall at all times be divided
into transferable Shares, without par value. Subject to the provisions
of Section 5 of this Article III, each Share shall have voting rights as
provided in Article VIII hereof, and holders of the Shares of any Series
shall be entitled to receive dividends, when and as declared with
respect thereto in the manner provided in Article X, Section 1 hereof.
The Shares of any Series may be issued in two or more Classes, as the
Trustees may authorize pursuant to Article XII, Section 8 hereof.
Unless the Trustees have authorized the issuance of Shares of a Series
in two or more Classes, each Share of a Series shall represent an equal
proportionate interest in the assets and liabilities of the Series with
each other Share of the same Series, none having priority or preference
over another. If the Trustees have authorized the issuance of Shares of
a Series in two or more Classes, then the Classes may have such
variations as to dividend, redemption, and voting rights, net asset
values, expenses borne by the Classes, and other matters as the Trustees
have authorized provided that each Share of a Class shall represent an
equal proportionate interest in the assets and liabilities of the Class
with each other Share of the same Class, none having priority or
preference over another. The number of Shares authorized shall be
unlimited. The Trustees may from time to time divide or combine the
Shares of any Series or Class into a greater or lesser number without
thereby changing the proportionate beneficial interests in the Series or
Class.
Section 2. Ownership of Shares.
The ownership of Shares shall be recorded in the books of the Trust
or a transfer agent, which books shall be maintained separately for the
Shares of each Series or Class. The Trustees may make such rules as
they consider appropriate for the transfer of Shares and similar
matters. The record books of the Trust or any transfer agent, as the
case may be, shall be conclusive as to who are the Shareholders of each
Series or Class and as to the number of Shares of each Series or Class
held from time to time by each.
Section 3. Investment in the Trust.
The Trustees shall accept investments in the Trust from such persons
and on such terms as they may from time to time authorize. After the
date of the initial contribution of capital (which shall occur prior to
the initial public offering of Shares), the number of Shares to
represent the initial contribution shall be considered as outstanding
and the amount received by the Trustees on account of the contribution
shall be treated as an asset of the Trust to be allocated among any
Series or Classes in the manner described in Section 5(a) of this
Article. Subsequent to such initial contribution of capital, Shares
(including Shares which may have been redeemed or repurchased by the
Trust) may be issued or sold at a price which will net the relevant
Series or Class, as the case may be, before paying any taxes in
connection with such issue or sale, not less than the net asset value
(as defined in Article X, Section 3) thereof; provided, however, that
the Trustees may in their discretion impose a sales charge upon
investments in the Trust.
Section 4. No Pre-emptive Rights.
Shareholders shall have no pre-emptive or other right to subscribe
to any additional Shares or other securities issued by the Trust.
Section 5. Establishment and Designation of Series or Class.
Without limiting the authority of the Trustees set forth in Article
XII, Section 8, inter alia, to establish and designate any additional
Series or Class or to modify the rights and preferences of any existing
Series or Class, Prime Cash Series II, Treasury Cash Series II and
Municipal Cash Series II shall be, and are established and designated
as, a Series of the Trust.
Shares of any Series or Class established in this Section 5 shall
have the following relative rights and preferences:
(a) Assets belonging to Series or Class. All consideration
received by the Trust for the issue or sale of Shares of a
particular Series or Class, together with all assets in which such
consideration is invested or reinvested, all income, earnings,
profits, and proceeds thereof from whatever source derived,
including, without limitation, any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the
same may be, shall irrevocably belong to that Series or Class for
all purposes, subject only to the rights of creditors, and shall be
so recorded upon the books of account of the Trust. Such
consideration, assets, income, earnings, profits and proceeds
thereof, from whatever source derived, including, without
limitation, any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from
any reinvestment of such proceeds, in whatever form the same may be,
are herein referred to as "assets belonging to" that Series or
Class. In the event that there are any assets, income, earnings,
profits and proceeds thereof, funds or payments which are not
readily identifiable as belonging to any particular Series or Class
(collectively "General Assets"), the Trustees shall allocate such
General Assets to, between or among any one or more of the Series or
Classes established and designated from time to time in such manner
and on such basis as they, in their sole discretion, deem fair and
equitable, and any General Assets so allocated to a
particular Series or Class shall belong to that Series or Class.
Each such allocation by the Trustees shall be conclusive and binding
upon the Shareholders of all Series or Classes for all purposes.
(b) Liabilities Belonging to Series or Class. The assets
belonging to each particular Series or Class shall be charged with
the liabilities of the Trust in respect to that Series or Class and
all expenses, costs, charges and reserves attributable to that
Series or Class, and any general liabilities of the Trust which are
not readily identifiable as belonging to any particular Series or
Class shall be allocated and charged by the Trustees to and among
any one or more of the Series or Classes established and designated
from time to time in such manner and on such basis as the Trustees
in their sole discretion deem fair and equitable. The liabilities,
expenses, costs, charges and reserves so charged to a Series or
Class are herein referred to as "liabilities belonging to" that
Series or Class. Each allocation of liabilities belonging to a
Series or Class by the Trustees shall be conclusive and binding upon
the Shareholders of all Series or Classes for all purposes.
(c) Dividends, Distributions, Redemptions, Repurchases
and Indemnification. Notwithstanding any other provisions of this
Declaration, including, without limitation, Article X, no dividend
or distribution (including, without limitation, any distribution
paid upon termination of the Trust or of any Series or Class) with
respect to, nor any redemption or repurchase of, the Shares of any
Series or Class shall be affected by the Trust other than from the
assets belonging to such Series or Class, nor except as specifically
provided in Section 1 of Article XI hereof, shall any Shareholder of
any particular Series or Class otherwise have any right or claim
against the assets belonging to any other Series or Class except to
the extent that such Shareholder has such a right or claim hereunder
as a Shareholder of such other Series or Class.
(d) Voting. Notwithstanding any of the other provisions of
this Declaration, including, without limitation, Section 1 of
Article VIII, only Shareholders of a particular Series or Class
shall be entitled to vote on any matters affecting such Series or
Class. Except with respect to matters as to which any particular
Series or Class is affected, all of the Shares of each Series or
Class shall, on matters as to which such Series or Class is entitled
to vote, vote with other Series or Classes so entitled as a single
class. Notwithstanding the foregoing, with respect to matters which
would otherwise be voted on by two or more Series or Classes as a
single class, the Trustees may, in their sole discretion, submit
such matters to the Shareholders of any or all such Series or
Classes, separately.
(e) Fraction. Any fractional Share of a Series or Class shall
carry proportionately all the rights and obligations of a whole
Share of that Series or Class, including rights with respect to
voting, receipt of dividends and distributions, redemption of Shares
and termination of the Trust or of any Series or Class.
(f) Exchange Privilege. The Trustees shall have the authority
to provide that the holders of Shares of any Series or Class shall
have the right to exchange said Shares for Shares of one or more
other Series or Classes in accordance with such requirements and
procedures as may be established by the Trustees.
(g) Combination of Series or Classes. The Trustees shall have
the authority, without the approval of the Shareholders of any
Series or Class, unless otherwise required by applicable law, to
combine the assets and liabilities belonging to a single Series or
Class with the assets and liabilities of one or more other Series or
Classes.
(h) Elimination of Series or Classes. At any time that there
are no Shares outstanding of any particular Series or Class
previously established and designated, the Trustees may amend this
Declaration of Trust to abolish that Series or Class and to rescind
the establishment and designation thereof.
ARTICLE IV
THE TRUSTEES
Section 1. Management of the Trust.
The business and affairs of the Trust shall be managed by the
Trustees, and they shall have all powers necessary and desirable to
carry out that responsibility. The Trustees who shall serve until the
election of Trustees at the Meeting of Shareholders subsequent to the
initial public offering of Shares shall be John F. Donahue, William J.
Copeland, J. Christopher Donahue, James E. Dowd, Lawrence D. Ellis,
M.D., Edward L. Flaherty, Jr., J. Joseph Maloney, Jr., Gregor F. Meyer,
Wesley W. Posvar and Marjorie P. Smuts.
Section 2. Election of Trustees at Meeting of Shareholders.
On a date fixed by the Trustees, which shall be subsequent to the
initial public offering of Shares, the Shareholders shall elect
Trustees. The number of Trustees shall be determined by the Trustees
pursuant to Article IV, Section 5.
Section 3. Term of Office of Trustees.
The Trustees shall hold office during the lifetime of this Trust,
and until its termination as hereinafter provided; except (a) that any
Trustee may resign his office at any time by written instrument signed
by him and delivered to the other Trustees, which shall take effect upon
such delivery or upon such later date as is specified therein; (b) that
any Trustee may be removed at any time by written instrument signed by
at least two-thirds of the number of Trustees prior to such removal,
specifying the date when such removal shall become effective; (c) that
any Trustee who requests in writing to be retired or who has become
mentally or physically incapacitated may be retired by written
instrument signed by a majority of the other Trustees, specifying the
date of his retirement; and (d) a Trustee may be removed at any special
meeting of Shareholders of the Trust by a vote of two-thirds of the
outstanding Shares.
Section 4. Termination of Service and Appointment of Trustees.
In case of the death, resignation, retirement, removal or mental or
physical incapacity of any of the Trustees, or in case a vacancy shall,
by reason of an increase in number, or for any other reason, exist, the
remaining Trustees shall fill such vacancy by appointing such other
person as they in their discretion shall see fit. Such appointment
shall be effected by the signing of a written instrument by a majority
of the Trustees in office. An appointment of a Trustee may be made by
the Trustees then in office in anticipation of a vacancy to occur by
reason of retirement, resignation or increase in number of Trustees
effective at
a later date, provided that said appointment shall become effective only
at or after the effective date of said retirement, resignation or
increase in number of Trustees. As soon as any Trustee so appointed
shall have accepted this Trust, the trust estate shall vest in the new
Trustee or Trustees, together with the continuing Trustees, without any
further act or conveyance, and he shall be deemed a Trustee hereunder.
Any appointment authorized by this Section 4 is subject to the
provisions of Section 16(a) of the 1940 Act.
Section 5. Number of Trustees.
The number of Trustees, not less than three (3) nor more than twenty
(20) serving hereunder at any time, shall be determined by the Trustees
themselves.
Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled or while any Trustee is physically or mentally
incapacitated, the other Trustees shall have all the powers hereunder
and the certificate signed by a majority of the other Trustees of such
vacancy, absence or incapacity, shall be conclusive, provided, however,
that no vacancy which reduces the number of Trustees below three (3)
shall remain unfilled for a period longer than six calendar months.
Section 6. Effect of Death, Resignation, etc. of a Trustee.
The death, resignation, retirement, removal, or mental or physical
incapacity of the Trustees, or any one of them, shall not operate to
annul the Trust or to revoke any existing agency created pursuant to the
terms of this Declaration of Trust.
Section 7. Ownership of Assets.
The assets belonging to each Series or Class shall be held separate
and apart from any assets now or hereafter held in any capacity other
than as Trustee hereunder by the Trustees or any successor Trustee. All
of the assets belonging to each Series or Class or owned by the Trust
shall at all times be considered as vested in the Trustees. No
Shareholder shall be deemed to have a severable ownership interest in
any individual asset belonging to any Series or Class or owned by the
Trust or any right of partition or possession thereof, but each
Shareholder shall have a proportionate undivided beneficial interest in
a Series or Class.
ARTICLE V
POWERS OF THE TRUSTEES
Section 1. Powers.
The Trustees in all instances shall act as principals, and are and
shall be free from the control of the Shareholders. The Trustees shall
have full power and authority to do any and all acts and to make and
execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust
or a Series or Class. The Trustees shall not be bound or limited by
present or future laws or customs in regard to trust investments, but
shall have full authority and power to make any and all investments
which they, in their uncontrolled discretion, shall deem proper to
accomplish the purpose of this Trust. Without limiting the foregoing,
the Trustees shall have the following specific powers and authority,
subject to any
applicable limitation in this Declaration of Trust or in the By-Laws of
the Trust:
(a) To buy, and invest funds in their hands in securities
including, but not limited to, common stocks, preferred stocks,
bonds, debentures, warrants and rights to purchase securities,
options, certificates of beneficial interest, money market
instruments, notes or other evidences of indebtedness issued by any
corporation, trust or association, domestic or foreign, or issued or
guaranteed by the United States of America or any agency or
instrumentality thereof, by the government of any foreign country,
by any State of the United States, or by any political subdivision
or agency or instrumentality of any State or foreign country, or in
"when-issued" or "delayed-delivery" contracts for any such
securities, or in any repurchase agreement or reverse repurchase
agreement, or in debt instruments, commodities, commodity contracts
and options thereon, or to retain assets belonging to each and every
Series or Class in cash, and from time to time to change the
investments of the assets belonging to each Series or Class;
(b) To adopt By-Laws of the Trust not inconsistent with the
Declaration of Trust providing for the conduct of the business of
the Trust and to amend and repeal them to the extent that they do
not reserve that right to the Shareholders;
(c) To elect and remove such officers of the Trust and appoint
and terminate such agents of the Trust as they consider appropriate;
(d) To appoint or otherwise engage a bank or trust company as
custodian of any assets belonging to any Series or Class subject to
any conditions set forth in this Declaration of Trust or in the By-
Laws;
(e) To appoint or otherwise engage transfer agents, dividend
disbursing agents, Shareholder servicing agents, investment
advisers, sub-investment advisers, principal underwriters,
administrative service agents, and such other agents as the Trustees
may from time to time appoint or otherwise engage;
(f) To provide for the distribution of any Shares of any
Series or Class either through a principal underwriter in the manner
hereinafter provided for or by the Trust itself, or both;
(g) To set record dates in the manner hereinafter provided
for;
(h) To delegate such authority as they consider desirable to a
committee or committees composed of Trustees, including without
limitation, an Executive Committee, or to any officers of the Trust
and to any agent, custodian or underwriter;
(i) To sell or exchange any or all of the assets belonging to
one or more Series or Classes, subject to the provisions of Article
XII, Section 4(b) hereof;
(j) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property;
and to execute and deliver powers of attorney to such person or
persons as the Trustees shall deem proper, granting to such person
or persons such power and discretion with relation to securities or
property as the Trustees shall deem proper;
(k) To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities;
(l) To hold any security or property in a form not indicating
any trust, whether in bearer, unregistered or other negotiable form;
or either in its own name or in the name of a custodian or a nominee
or nominees, subject in either case to proper safeguards according
to the usual practice of Massachusetts trust companies or investment
companies;
(m) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or
concern, any security of which belongs to any Series or Class; to
consent to any contract, lease, mortgage, purchase, or sale of
property by such corporation or concern, and to pay calls or
subscriptions with respect to any security which belongs to any
Series or Class;
(n) To engage in and to prosecute, compound, compromise,
abandon, or adjust, by arbitration, or otherwise, any actions,
suits, proceedings, disputes, claims, demands, and things relating
to the Trust, and out of the assets belonging to any Series or Class
to pay, or to satisfy, any debts, claims or expenses incurred in
connection therewith, including those of litigation, upon any
evidence that the Trustees may deem sufficient (such powers shall
include without limitation any actions, suits, proceedings,
disputes, claims, demands and things relating to the Trust wherein
any of the Trustees may be named individually and the subject matter
of which arises by reason of business for or on behalf of the
Trust);
(o) To make distributions of income and of capital gains to
Shareholders;
(p) To borrow money;
(q) From time to time to issue and sell the Shares of any
Series or Class either for cash or for property whenever and in such
amounts as the Trustees may deem desirable, but subject to the
limitation set forth in Section 3 of Article III.
(r) To purchase insurance of any kind, including, without
limitation, insurance on behalf of any person who is or was a
Trustee, officer, employee or agent of the Trust, or is or was
serving at the request of the Trust as a trustee, director, officer,
agent or employee of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity or arising out
of his status as such.
(s) To sell, exchange, lend, pledge, mortgage, hypothecate,
lease, or write options with respect to or otherwise deal in any
property rights relating to any or all of the assets belonging to
any Series or Class.
The Trustees shall have all of the powers set forth in this Section
1 with respect to all assets and liabilities of each Series and Class.
Section 2. Principal Transactions.
The Trustees shall not cause the Trust on behalf of any Series or
Class to buy any securities (other than Shares) from or sell any
securities (other than Shares) to, or lend any assets belonging to any
Series or Class to any Trustee or officer or employee of the Trust or
any firm of which any such Trustee or officer is a member acting as
principal unless permitted by the 1940 Act, but the Trust may employ any
such other party or any such person or firm or company in which any such
person is an Interested Person in any capacity not prohibited by the
1940 Act.
Section 3. Trustees and Officers as Shareholders.
Any Trustee, officer or other agent of the Trust or any Series or
Class may acquire, own and dispose of Shares of any Series or Class to
the same extent as if he were not a Trustee, officer or agent; and the
Trustees may issue and sell or cause to be issued or sold Shares of any
Series or Class to and buy such Shares from any such person or any firm
or company in which he is an interested person subject only to the
general limitations herein contained as to the sale and purchase of such
Shares; and all subject to any restrictions which may be contained in
the By-Laws.
Section 4. Parties to Contract.
The Trustees may enter into any contract of the character described
in Article VII or in Article IX hereof or any other capacity not
prohibited by the 1940 Act with any corporation, firm, trust or
association, although one or more of the Shareholders, Trustees,
officers, employees or agents of the Trust or any Series or Class or
their affiliates may be an officer, Director, Trustee, Shareholder or
Interested Person of such other party to the contract, and no such
contract shall be invalidated or rendered voidable by reason of the
existence of any such relationship, nor shall any person holding such
relationship be liable merely by reason of such relationship for any
loss or expense to the Trust or any Series or Class under or by reason
of said contract or accountable for any profit realized directly or
indirectly therefrom, in the absence of actual fraud. The same person
(including a firm, corporation, trust or association) may be the other
party to contracts entered into pursuant to Article VII or Article IX or
any other capacity not prohibited by the 1940 Act, and any individual
may be financially interested or otherwise an Interested Person of
persons who are parties to any or all of the contracts mentioned in this
Section 4.
ARTICLE VI
TRUSTEES' EXPENSES AND COMPENSATION
Section 1. Trustee Reimbursement.
The Trustees shall be reimbursed from the assets belonging to each
particular Series or Class for all of such Trustees' expenses as such
expenses are allocated to and among any one or more of the Series or
Classes pursuant to Article III, Section 5(b), including, without
limitation, expenses of organizing the Trust or any Series or Class and
continuing its or their existence; fees and expenses of Trustees and
officers of the Trust; fees for investment advisory services,
administrative services and principal underwriting services provided for
in Article VII, Sections 1, 2 and 3; fees and expenses of preparing and
printing Registration Statements under the Securities Act of 1933 and
the 1940 Act and any amendments thereto; expenses of registering and
qualifying the Trust and any Series or Class and the Shares of any
Series or Class under federal and state laws and regulations; expenses
of preparing, printing and distributing prospectuses and any amendments
thereto sent to Shareholders, underwriters, broker-dealers and to
investors who may be considering the purchase of Shares; expenses of
registering, licensing or other authorization of the Trust or any Series
or Class as a broker-dealer and of its or their officers as agents and
salesmen under federal and state laws and regulations; interest expense,
taxes, fees and commissions of every kind; expenses of issue (including
cost of share certificates), purchases, repurchases and redemptions of
Shares, including expenses attributable to a program of periodic issue;
charges and expenses of custodians, transfer agents, dividend disbursing
agents, Shareholder servicing agents and registrars; printing and
mailing costs; auditing, accounting and legal expenses; reports to
Shareholders and governmental officers and commissions; expenses of
meetings of Shareholders and proxy solicitations therefor; insurance
expenses; association membership dues and nonrecurring items as may
arise, including all losses and liabilities by them incurred in
administering the Trust and any Series or Class, including expenses
incurred in connection with litigation, proceedings and claims and the
obligations of the Trust under Article XI hereof and the By-Laws to
indemnify its Trustees, officers, employees, Shareholders and agents,
and any contractual obligation to indemnify principal underwriters under
Section 3 of Article VII; and for the payment of such expenses,
disbursements, losses and liabilities, the Trustees shall have a lien on
the assets belonging to each Series or Class prior to any rights or
interests of the Shareholders of any Series or Class. This section
shall not preclude the Trust from directly paying any of the
aforementioned fees and expenses.
Section 2. Trustee Compensation.
The Trustees shall be entitled to compensation from the Trust from
the assets belonging to any Series or Class for their respective
services as Trustees, to be determined from time to time by vote of the
Trustees, and the Trustees shall also determine the compensation of all
officers, consultants and agents whom they may elect or appoint. The
Trust may pay out of the assets belonging to any Series or Class any
Trustee or any corporation, firm, trust or other entity of which a
Trustee is an Interested Person for services rendered in any capacity
not prohibited by the 1940 Act, and such payments shall not be deemed
compensation for services as a Trustee under the first sentence of this
Section 2 of Article VI.
ARTICLE VII
INVESTMENT ADVISER, ADMINISTRATIVE SERVICES,
PRINCIPAL UNDERWRITER AND TRANSFER AGENT
Section 1. Investment Adviser.
Subject to a Majority Shareholder Vote by the relevant Series or
Class, the Trustees may in their discretion from time to time enter into
an investment advisory contract whereby the other party to such contract
shall undertake to furnish the Trustees investment advisory services for
such Series or Class upon such terms and conditions and for such
compensation as the Trustees may in their discretion determine. Subject
to a Majority Shareholder Vote by the relevant Series or Class, the
investment adviser may enter into a sub-investment advisory contract to
receive investment advice and/or statistical and factual information
from the sub-investment adviser for such Series or Class upon such terms
and conditions and for such compensation as the Trustees, in their
discretion, may agree. Notwithstanding any provisions of this
Declaration of Trust, the Trustees may authorize the investment adviser
or sub-investment adviser or any person furnishing administrative
personnel and services as set forth in Article VII, Section 2 (subject
to such general or specific instructions as the Trustees may from time
to time adopt) to effect purchases, sales or exchanges of portfolio
securities belonging to a Series or Class on behalf of the Trustees or
may authorize any officer or Trustee to effect such purchases, sales, or
exchanges pursuant to recommendations of the investment adviser (and all
without further action by the Trustees). Any such purchases, sales and
exchanges shall be deemed to have been authorized by the Trustees. The
Trustees may also authorize the investment adviser to determine what
firms shall be employed to effect transactions in securities for the
account of a Series or Class and to determine what firms shall
participate in any such transactions or shall share in commissions or
fees charged in connection with such transactions.
Section 2. Administrative Services.
The Trustees may in their discretion from time to time contract for
administrative personnel and services whereby the other party shall
agree to provide the Trustees administrative personnel and services to
operate the Trust or a Series or Class on a daily basis, on such terms
and conditions as the Trustees may in their discretion determine. Such
services may be provided by one or more entities.
Section 3. Principal Underwriter.
The Trustees may in their discretion from time to time enter into an
exclusive or nonexclusive contract or contracts providing for the sale
of the Shares of a Series or Class to net such Series or Class not less
than the amount provided in Article III, Section 3 hereof, whereby a
Series or Class may either agree to sell the Shares to the other party
to the contract or appoint such other party its sales agent for such
shares. In either case, the contract shall be on such terms and
conditions (including indemnification of principal underwriters
allowable under applicable law and regulation) as the Trustees may in
their discretion determine not inconsistent with the provisions of this
Article VII; and such contract may also provide for the repurchase or
sale of Shares of a Series or Class by such other party as principal or
as agent of the Trust and may provide that the other party may maintain
a market for shares of a Series or Class.
Section 4. Transfer Agent.
The Trustees may in their discretion from time to time enter into
transfer agency and shareholder services contracts whereby the other
party shall undertake to furnish a transfer agency and shareholder
services. The contracts shall be on such terms and conditions as the
Trustees may in their discretion determine not inconsistent with the
provisions of this Declaration of Trust or of the By-Laws. Such
services may be provided by one or more entities.
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. Voting Powers.
Subject to the provisions set forth in Article III, Section 5(d),
the Shareholders shall have power to vote, (i) for the election of
Trustees as provided in Article IV, Section 2; (ii) for the removal of
Trustees as provided in Article IV, Section 3(d); (iii) with respect to
any investment adviser or sub-investment adviser as provided in Article
VII, Section 1; (iv) with respect to the amendment of this Declaration
of Trust as provided in Article XII, Section 7; (v) to the same extent
as the shareholders of a Massachusetts business corporation as to
whether or not a court action, proceeding or claim should be brought or
maintained
derivatively or as a class action on behalf of the Trust or the
Shareholders; and (vi) with respect to such additional matters relating
to the Trust as may be required by law, by this Declaration of Trust, or
the By-Laws of the Trust or any regulation of the Trust or the
Commission or any State, or as the Trustees may consider desirable.
Each whole Share shall be entitled to one vote as to any matter on which
it is entitled to vote, and each fractional Share shall be entitled to a
proportionate fractional vote. There shall be no cumulative voting in
the election of Trustees. Shares may be voted in person or by proxy.
Until Shares of a Series or Class are issued, the Trustees may exercise
all rights of Shareholders of such Series or Class with respect to
matters affecting such Series or Class, and may take any action with
respect to the Trust or such Series or Class required or permitted by
law, this Declaration of Trust or any By-Laws of the Trust to be taken
by Shareholders.
Section 2. Meetings.
A Shareholders meeting shall be held as specified in Section 2 of
Article IV at the principal office of the Trust or such other place as
the Trustees may designate. Special meetings of the Shareholders may be
called by the Trustees or the Chief Executive Officer of the Trust and
shall be called by the Trustees upon the written request of Shareholders
owning at least one-tenth of the outstanding Shares of all Series and
Classes entitled to vote. Shareholders shall be entitled to at least
fifteen days' notice of any meeting.
Section 3. Quorum and Required Vote.
Except as otherwise provided by law, to constitute a quorum for the
transaction of any business at any meeting of Shareholders there must be
present, in person or by proxy, holders of more than fifty percent of
the total number of outstanding Shares of all Series and Classes
entitled to vote at such meeting. When any one or more Series or
Classes is entitled to vote as a single Series or Class, more than fifty
percent of the shares of each such Series or Class entitled to vote
shall constitute a quorum at a Shareholder's meeting of that Series or
Class. If a quorum shall not be present for the purpose of any vote
that may properly come before the meeting, the Shares present in person
or by proxy and entitled to vote at such meeting on such matter may, by
plurality vote, adjourn the meeting from time to time to such place and
time without further notice than by announcement to be given at the
meeting until a quorum entitled to vote on such matter shall be present,
whereupon any such matter may be voted upon at the meeting as though
held when originally convened. Subject to any applicable requirement of
law or of this Declaration of Trust or the By-Laws, a plurality of the
votes cast shall elect a Trustee, and all other matters shall be decided
by a majority of the votes cast and entitled to vote thereon.
Section 4. Additional Provisions.
The By-Laws may include further provisions for Shareholders' votes
and meetings and related matters.
ARTICLE IX
CUSTODIAN
The Trustees may, in their discretion, from time to time enter into
contracts providing for custodial and accounting services to the Trust or any
Series or Class. The contracts shall be on the terms and conditions as the
Trustees may in their discretion determine not inconsistent with the
provisions of this Declaration of Trust or of the By-Laws. Such services may
be provided by one or more entities, including one or more sub-custodians.
ARTICLE X
DISTRIBUTIONS AND REDEMPTIONS
Section 1. Distributions.
(a) The Trustees may from time to time declare and pay
dividends to the Shareholders of any Series or Class, and the amount
of such dividends and the payment of them shall be wholly in the
discretion of the Trustees. Such dividends may be accrued and
automatically reinvested in additional Shares (or fractions thereof)
of the relevant Series or Class or paid in cash or additional Shares
of such Series or Class, all upon such terms and conditions as the
Trustees may prescribe.
(b) The Trustees may distribute in respect of any fiscal year
as dividends and as capital gains distributions, respectively,
amounts sufficient to enable any Series or Class to qualify as a
regulated investment company to avoid any liability for federal
income taxes in respect of that year.
(c) The decision of the Trustees as to what constitutes income
and what constitutes principal shall be final, and except as
specifically provided herein the decision of the Trustees as to what
expenses and charges of any Series or Class shall be charged against
principal and what against the income shall be final. Any income
not distributed in any year may be permitted to accumulate and as
long as not distributed may be invested from time to time in the
same manner as the principal funds of any Series or Class.
(d) All dividends and distributions on Shares of a particular
Series or Class shall be distributed pro rata to the holders of that
Series or Class in proportion to the number of Shares of that Series
or Class held by such holders and recorded on the books of the Trust
or its transfer agent at the date and time of record established for
that payment.
Section 2. Redemptions and Repurchases.
(a) In case any Shareholder of record of any Series or Class
at any time desires to dispose of Shares of such Series or Class
recorded in his name, he may deposit a written request (or such
other form of request as the Trustees may from time to time
authorize) requesting that the Trust purchase his Shares, together
with such other instruments or authorizations to effect the transfer
as the Trustees may from time to time require, at the office of the
Transfer Agent, and the Trust shall purchase his Shares out of
assets belonging to such Series or Class. The purchase price shall
be the net asset value of his shares reduced by any redemption
charge as the Trustees from time to time may determine.
Payment for such Shares shall be made by the Trust to the
Shareholder of record within that time period required under the
1940 Act after the request (and, if required, such other instruments
or authorizations of transfer) is deposited, subject to the right of
the Trustees to postpone the date of payment pursuant to Section 4
of this Article X. If the redemption is postponed beyond the date
on which it would normally occur by reason of a declaration by the
Trustees suspending the right of redemption pursuant to Section 4 of
this Article X, the right of the Shareholder to have his Shares
purchased by the Trust shall be similarly suspended, and he may
withdraw his request (or such other instruments or authorizations of
transfer) from deposit if he so elects; or, if he does not so elect,
the purchase price shall be the net asset value of his Shares
determined next after termination of such suspension (reduced by any
redemption charge), and payment therefor shall be made within the
time period required under the 1940 Act.
(b) The Trust may purchase Shares of a Series or Class by
agreement with the owner thereof at a purchase price not exceeding
the net asset value per Share (reduced by any redemption charge)
determined (1) next after the purchase or contract of purchase is
made or (2) at some later time.
(c) The Trust may pay the purchase price (reduced by any
redemption charge) in whole or in part by a distribution in kind of
securities from the portfolio of the relevant Series or Class,
taking such securities at the same value employed in determining net
asset value, and selecting the securities in such manner as the
Trustees may deem fair and equitable.
Section 3. Net Asset Value of Shares.
The net asset value of each Share of a Series or Class outstanding
shall be determined at such time or times as may be determined by or on
behalf of the Trustees. The power and duty to determine net asset value
may be delegated by the Trustees from time to time to one or more of the
Trustees or officers of the Trust, to the other party to any contract
entered into pursuant to Section 1 or 2 of Article VII or to the
custodian or to a transfer agent or other person designated by the
Trustees.
The net asset value of each Share of a Series or Class as of any
particular time shall be the quotient (adjusted to the nearer cent)
obtained by dividing the value, as of such time, of the net assets
belonging to such Series or Class (i.e., the value of the assets
belonging to such Series or Class less the liabilities belonging to such
Series or Class exclusive of capital and surplus) by the total number of
Shares outstanding of the Series or Class at such time in accordance
with the requirements of the 1940 Act and applicable provisions of the
By-Laws of the Trust in conformity with generally accepted accounting
practices and principles.
The Trustees may declare a suspension of the determination of net
asset value for the whole or any part of any period in accordance with
the 1940 Act.
Section 4. Suspension of the Right of Redemption.
The Trustees may declare a suspension of the right of redemption or
postpone the date of payment for the whole or any part of any period in
accordance with the 1940 Act.
Section 5. Trust's Right to Redeem Shares.
The Trust shall have the right to cause the redemption of Shares of
any Series or Class in any Shareholder's account for their then current
net asset value and promptly make payment to the shareholder (which
payment may be reduced by any applicable redemption charge), if at any
time the total investment in the account does not have a minimum dollar
value determined from time to time by the Trustees in their sole
discretion.
ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 1. Limitation of Personal Liability and Indemnification of
Shareholders.
The Trustees, officers, employees or agents of the Trust shall have
no power to bind any Shareholder of any Series or Class personally or to
call upon such Shareholder for the payment of any sum of money or
assessment whatsoever, other than such as the Shareholder may at any
time agree to pay by way of subscription to any Shares or otherwise.
No Shareholder or former Shareholder of any Series or Class shall be
liable solely by reason of his being or having been a Shareholder for
any debt, claim, action, demand, suit, proceeding, judgment, decree,
liability or obligation of any kind, against, or with respect to the
Trust or any Series or Class arising out of any action taken or omitted
for or on behalf of the Trust or such Series or Class, and the Trust or
such Series or Class shall be solely liable therefor and resort shall be
had solely to the property of the relevant Series or Class of the Trust
for the payment or performance thereof.
Each Shareholder or former Shareholder of any Series or Class (or
their heirs, executors, administrators or other legal representatives
or, in case of a corporate entity, its corporate or general successor)
shall be entitled to be indemnified and reimbursed by the Trust to the
full extent of such liability and the costs of any litigation or other
proceedings in which such liability shall have been determined,
including, without limitation, the fees and disbursements of counsel if,
contrary to the provisions hereof, such Shareholder or former
Shareholder of such Series or Class shall be held to be personally
liable. Such indemnification and reimbursement shall come exclusively
from the assets of the relevant Series or Class.
The Trust shall, upon request by a Shareholder or former
Shareholder, assume the defense of any claim made against any
Shareholder for any act or obligation of the Trust or any Series or
Class and satisfy any judgment thereon.
Section 2. Limitation of Personal Liability of Trustees,
Officers, Employees or Agents of the Trust.
No Trustee, officer, employee or agent of the Trust shall have the
power to bind any other Trustee, officer, employee or agent of the Trust
personally. The Trustees, officers, employees or agents of the Trust
incurring any debts, liabilities or obligations, or in taking or
omitting any other actions for or in connection with the Trust are, and
each shall be deemed to be, acting as Trustee, officer, employee or
agent of the Trust and not in his own individual capacity.
Trustees and officers of the Trust shall be liable for their willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee or officer, as
the case may be, and for nothing else.
Section 3. Express Exculpatory Clauses and Instruments.
The Trustees shall use every reasonable means to assure that all
persons having dealings with the Trust or any Series or Class shall be
informed that the property of the Shareholders and the Trustees,
officers, employees and agents of the Trust or any Series or Class shall
not be subject to claims against or obligations of the Trust or any
other Series or Class to any extent whatsoever. The Trustees shall
cause to be inserted in any written agreement, undertaking or obligation
made or issued on behalf of the Trust or any Series or Class (including
certificates for Shares of any Series or Class) an appropriate reference
to the provisions of this Declaration, providing that neither the
Shareholders, the Trustees, the officers, the employees nor any agent of
the Trust or any Series or Class shall be liable thereunder, and that
the other parties to such instrument shall look solely to the assets
belonging to the relevant Series or Class for the payment of any claim
thereunder or for the performance thereof; but the omission of such
provisions from any such instrument shall not render any Shareholder,
Trustee, officer, employee or agent liable, nor shall the Trustee, or
any officer, agent or employee of the Trust or any Series or Class be
liable to anyone for such omission. If, notwithstanding this provision,
any Shareholder, Trustee, officer, employee or agent shall be held
liable to any other person by reason of the omission of such provision
from any such agreement, undertaking or obligation, the Shareholder,
Trustee, officer, employee or agent shall be indemnified and reimbursed
by the Trust.
ARTICLE XII
MISCELLANEOUS
Section 1. Trust is not a Partnership.
It is hereby expressly declared that a trust and not a partnership
is created hereby.
Section 2. Trustee Action Binding, Expert Advice, No Bond or Surety.
The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. Subject to the
provisions of Article XI, the Trustees shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees may take advice of
counsel or other experts with respect to the meaning and operation of
this Declaration of Trust, and subject to the provisions of Article XI,
shall be under no liability for any act or omission in accordance with
such advice or for failing to follow such advice. The Trustees shall
not be required to give any bond as such, nor any surety if a bond is
required.
Section 3. Establishment of Record Dates.
The Trustees may close the Share transfer books of the Trust
maintained with respect to any Series or Class for a period not
exceeding sixty (60) days preceding the date of any meeting of
Shareholders of the Trust or any Series or Class, or the date for the
payment of any dividend or the making of any distribution to
Shareholders, or the date for the allotment of rights, or the date when
any change or conversion or exchange of Shares of any Series or Class
shall go into effect; or in lieu of closing the Share transfer books as
aforesaid, the Trustees may fix in advance a date, not exceeding sixty
(60) days preceding the date of any meeting of Shareholders of the Trust
or any Series or Class, or the date for the payment of any dividend or
the making of any
distribution to Shareholders of any Series or Class, or the date
for the allotment of rights, or the date when any change or conversion
or exchange of Shares of any Series or Class shall go into effect, or
the last day on which the consent or dissent of Shareholders of any
Series or Class may be effectively expressed for any purpose, as a
record date for the determination of the Shareholders entitled to notice
of, and, to vote at, any such meeting and any adjournment thereof, or
entitled to receive payment of any such dividend or distribution, or to
any such allotment of rights, or to exercise the rights in respect of
any such change, conversion or exchange of shares, or to exercise the
right to give such consent or dissent, and in such case such
Shareholders and only such Shareholders as shall be Shareholders of
record on the date so fixed shall be entitled to such notice of, and to
vote at, such meeting, or to receive payment of such dividend or
distribution, or to receive such allotment or rights, or to exercise
such rights, as the case may be, notwithstanding, after such date fixed
aforesaid, any transfer of any Shares on the books of the Trust
maintained with respect to any Series or Class. Nothing in the
foregoing sentence shall be construed as precluding the Trustees from
setting different record dates for different Series or Classes.
Section 4. Termination of Trust.
(a) This Trust shall continue without limitation of time but
subject to the provisions of paragraphs (b), (c) and (d) of this
Section 4.
(b) The Trustees may, by majority action, with the approval of
the holders of more than fifty percent of the outstanding Shares of
each Series or Class entitled to vote and voting separately by
Series or Class, sell and convey the assets of the Trust or any
Series or Class to another trust or corporation. Upon making
provision for the payment of all liabilities, by assumption or
otherwise, the Trustees shall distribute the remaining proceeds
belonging to each Series or Class ratably among the holders of the
Shares of that Series or Class then outstanding.
(c) Subject to a Majority Shareholder Vote by such Series or
Class, the Trustees may at any time sell and convert into money all
the assets of the Trust or any Series or Class. Upon making
provision for the payment of all outstanding obligations, taxes and
other liabilities, accrued or contingent, belonging to each Series
or Class, the Trustees shall distribute the remaining assets
belonging to each Series or Class ratably among the holders of the
outstanding Shares of that Series or Class.
(d) Upon completion of the distribution of the remaining
proceeds of the remaining assets as provided in paragraphs (b) and
(c), the Trust or the applicable Series or Class shall terminate and
the Trustees shall be discharged of any and all further liabilities
and duties hereunder or with respect thereto and the right, title
and interest of all parties shall be canceled and discharged.
Section 5. Offices of the Trust, Filing of Copies,
Headings, Counterparts.
The Trust shall maintain a usual place of business in Massachusetts,
which, initially, shall be 50 Congress Street, Boston, Massachusetts,
and shall continue to maintain an office at such address unless changed
by the Trustees to another location in Massachusetts. The Trust may
maintain other offices as the Trustees may from time to time determine.
The original or a copy of this instrument and of each Declaration of
Trust supplemental hereto shall be kept at the office of the Trust where
it may be inspected by any Shareholder. A copy of this instrument and
of each supplemental declaration of trust shall be filed by the Trustees
with the Massachusetts Secretary of State and the Boston City Clerk, as
well as any other governmental office where such filing may from time to
time be required. Headings are placed herein for convenience of
reference only and in case of any conflict, the text of this instrument,
rather than the headings shall control. This instrument may be executed
in any number of counterparts each of which shall be deemed an original.
Section 6. Applicable Law.
The Trust set forth in this instrument is created under and is to be
governed by and construed and administered according to the laws of The
Commonwealth of Massachusetts. The Trust shall be of the type commonly
called a Massachusetts business trust, and without limiting the
provisions hereof, the Trust may exercise all powers which are
ordinarily exercised by such a trust.
Section 7. Amendments -- General.
Prior to the initial issuance of Shares pursuant to Section 3 of
Article III, a majority of the Trustees then in office may amend or
otherwise supplement this instrument by making a Declaration of Trust
supplemental hereto, which thereafter shall form a part hereof.
Subsequent to such initial issuance of Shares, amendments or supplements
to this instrument may be authorized by a majority of the Trustees then
in office and by a Majority Shareholder Vote of all Series and Classes
then outstanding and entitled to vote thereon (except that any
amendments or supplements changing the name of the Trust or pursuant to
Section 8 hereunder may be made without shareholder approval), or by any
larger vote which may be required by applicable law or this Declaration
of Trust in any particular case, which amendment or supplement
thereafter shall form a part hereof. Any such amendment or supplement
(which may be in the form of a complete restatement) may be evidenced by
either (i) a supplemental Declaration of Trust signed by at least a
majority of the Trustees then in office or (ii) by a certificate of the
President and Secretary of the Trust setting forth such amendment or
supplement and certifying that such amendment or supplement has been
duly authorized by the Trustees, and if required, by the shareholders.
Copies of the supplemental Declaration of Trust or the certificate of
the President and Secretary, as the case may be, shall be filed as
specified in Section 5 of this Article XII.
Section 8. Amendments -- Series.
The establishment and designation of any series or class of Shares
in addition to those established and designated in Section 5 of Article
III hereof shall be effective upon the execution by a majority of the
then Trustees of an amendment to this Declaration of Trust, taking the
form of a complete restatement or otherwise, setting forth such
establishment and designation and the relative rights and preferences of
any such Series or Class, or as otherwise provided in such instrument.
Without limiting the generality of the foregoing, the Declaration
of the Trust may be amended to:
(a) create one or more Series or Classes of Shares (in addition to
any Series or Classes already existing or otherwise) with such
rights and preferences and such eligibility requirements for
investment therein as the Trustees shall determine and reclassify
any or all outstanding Shares as Shares of particular Series or
Classes in accordance with such eligibility requirements;
(b) combine two or more Series or Classes of Shares into a single
Series or Class on such terms and conditions as the Trustees shall
determine;
(c) change or eliminate any eligibility requirements for investment
in Shares of any Series or Class, including without limitation the
power to provide for the issue of Shares of any Series or Class in
connection with any merger or consolidation of the Trust with
another trust or company or any acquisition by the Trust of part or
all of the assets of another trust or company;
(d) change the designation of any Series or Class of Shares;
(e) change the method of allocating dividends among the various
Series and Classes of Shares;
(f) allocate any specific assets or liabilities of the Trust or
any specific items of income or expense of the Trust to one or more
Series and Classes of Shares;
(g) specifically allocate assets to any or all Series or Classes of
Shares or create one or more additional Series or Classes of Shares
which are preferred over all other Series or Classes of Shares in
respect of assets specifically allocated thereto or any dividends
paid by the Trust with respect to any net income, however
determined, earned from the investment and reinvestment of any
assets so allocated or otherwise and provide for any special voting
or other rights with respect to such Series or Classes.
IN WITNESS WHEREOF, the undersigned have executed this instrument the day
and year first above written.
/s/John F. Donahue /s/J. Joseph Maloney, Jr.
John F. Donahue J. Joseph Maloney, Jr.
/s/William J. Copeland /s/Gregor F. Meyer
William J. Copeland Gregor F. Meyer
/s/J. Christopher Donahue /s/Wesley W. Posvar
J. Christopher Donahue Wesley W. Posvar
/s/James E. Dowd /s/Marjorie P. Smuts
James E. Dowd Marjorie P. Smuts
/s/Lawrence D. Ellis, M.D. /s/Edward L. Flaherty, Jr.
Lawrence D. Ellis, M.D. Edward L. Flaherty, Jr.
Exhibit 1(ii) under Form N-1A
Exhibit 3(a)(ii) under Item 601/Reg. S-K
CASH TRUST SERIES II
Amendment No. 1
DECLARATION OF TRUST
Dated November 14, 1990
THIS Declaration of Trust is amended as follows:
Delete the first paragraph of Section 5 in Article III and substitute
in its place the following:
Section 5. Establishment and Designation of Series or Class.
Without limiting the authority of the Trustees set forth in
Article XII, Section 8, inter alia, to establish and designate
any additional Series or Class or to modify the rights and
preferences of any existing Series or Class, the Series and
Classes of the Trust shall be and are established and
designated as:
Municipal Cash Series II
Treasury Cash Series II
The undersigned Assistant Secretary of Cash Trust Series II hereby
certifies that the above stated Amendment is a true and correct Amendment to
the Declaration of Trust, effective as of May 29, 1992, as adopted by the
Trustees of the Trust as of the 22nd day of May, 1992.
WITNESS the due execution hereof this 15th day of June, 1992.
/s/ Charles H. Field________
Charles H. Field
Assistant Secretary
Exhibit 1(iii) under Form N-1A
Exhibit 3(a)(iii) under Item 601/Reg. S-
K
December 15, 1993
Ms. Sheila Burke
The Commonwealth of Massachusetts
Office of the Secretary of State
Room 1712 - Trust Division
One Ashburton Place
Boston, Massachusetts 02108
Re: CASH TRUST SERIES II
Dear Ms. Burke:
I, S. Elliott Cohan, Assistant Secretary of Cash Trust Series II, am
writing to inform you that on November 18, 1993, the Board of Trustees
voted to change the Resident Agent of said Trust, from 176 Federal
Street, Boston, Massachusetts 02110 to Donnelly, Conroy & Gelhaar, One
Post Office Square, Boston, Massachusetts 02109-2105. Please return a
date stamped copy of the change.
Very truly yours,
/s/S. Elliott Cohan
S. Elliott Cohan
Assistant Secretary
-1-
Exhibit 5 under Form N-1A
Exhibit 10 under Item 601 /Reg. S-K
CASH TRUST SERIES II
INVESTMENT ADVISORY CONTRACT
This Contract is made this 25th day of January, 1991 between FEDERATED
ADVISERS, a Delaware business trust having its principal place of business in
Pittsburgh, Pennsylvania (the "Adviser"), and CASH TRUST SERIES II, a
Massachusetts business trust having its principal place of business in
Pittsburgh, Pennsylvania (the "Trust").
WHEREAS the Trust is an open-end management investment company as that
term is defined in the Investment Company Act of 1940 and is registered
as such with the Securities and Exchange Commission; and
WHEREAS Adviser is engaged in the business of rendering investment
advisory and management services.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. The Trust hereby appoints Adviser as Investment Adviser for each of
the portfolios ("Funds") of the Trust which executes an exhibit to this
Contract, and Adviser accepts the appointments. Subject to the direction of
the Trustees of the Trust, Adviser shall provide investment research and
supervision of the investments of the Funds and conduct a continuous program
of investment evaluation and of appropriate sale or other disposition and
reinvestment of each Fund's assets.
2. Adviser, in its supervision of the investments of each of the Funds
will be guided by each of the Fund's investment objectives and policies and
the provisions and restrictions contained in the Declaration of Trust and By-
Laws of the Trust and as set forth in the Registration Statements and
exhibits as may be on file with the Securities and Exchange Commission.
3. Each Fund shall pay or cause to be paid all of its own expenses and
its allocable share of Trust expenses, including, without limitation, the
expenses of organizing the Trust and continuing its existence; fees and
expenses of Trustees and officers of the Trust; fees for investment advisory
services and administrative personnel and services; expenses incurred in the
distribution of its shares ("Shares") including expenses of adiministrative
support services, fees and expenses of preparing and printing its
Registration Statements under the Securities Act of 1933 and the Investment
Company Act of 1940 and any amendments thereto; expenses of registering and
qualifying the Trust, the Funds, and Shares of the Funds under federal and
state laws and regulations; expenses of preparing, printing, and distributing
prospectuses (and any amendments thereto) to shareholders; interest expense,
taxes, fees, and commissions of every kind; expenses of issue (including cost
of Share certificates), purchase, repurchase, and redemption of Shares,
including expenses attributable to a program of periodic issue; charges and
expenses of custodians, transfer agents, dividend disbursing agents,
shareholder servicing agents, and registrars; printing and mailing costs,
auditing, accounting, and legal expenses; reports to shareholders and
governmental officers and commissions; expenses of meetings of Trustees and
shareholders and proxy solicitations therefor; insurance expenses;
association membership dues and such nonrecurring items as may arise,
including all losses and liabilities incurred in administering the Trust and
the Funds. Each Fund will also pay its allocable share of such extraordinary
expenses as may arise including expenses incurred in connection with
litigation, proceedings, and claims and
the legal obligations of the Trust to indemnify its officers and Trustees and
agents with respect thereto.
4. Each of the Funds shall pay to Adviser, for all services rendered
to each Fund by Adviser hereunder, the fees set forth in the exhibits
attached hereto.
5. The net asset value of each Fund's Shares as used herein will be
calculated to the nearest 1/10th of one cent.
6. The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation (and, if appropriate, assume expenses of
one or more of the Funds) to the extent that any Fund's expenses exceed such
lower expense limitation as the Adviser may, by notice to the Fund,
voluntarily declare to be effective.
7. This Contract shall begin for each Fund as of the date of execution
of the applicable exhibit and shall continue in effect with respect to each
Fund presently set forth on an exhibit and any subsequent Funds added
pursuant to an exhibit during the initial term of this Contract for two years
from the date set forth above and thereafter for successive periods of one
year subject to the provisions for termination and all of the other terms
and conditions hereof if: (a) such continuation shall be specifically
approved at least annually by the vote of a majority of the Trustees of the
Trust, including a majority of the Trustees who are not parties to this
Contract or interested persons of any such party (other than as Trustees
of the Trust), cast in person at a meeting called for that purpose; and (b)
Adviser shall not have notified a Fund in writing at least sixty (60) days
prior to the anniversary date of this Contract in any year thereafter that it
does not desire such continuation with respect to that Fund. If a Fund is
added after the first approval by the Trustees as described above, this
Contract will be effective as to that Fund upon execution of the applicable
exhibit and will continue in effect until the next annual approval of this
Contract by the Trustees and thereafter for successive periods of one year,
subject to approval as described above.
8. Notwithstanding any provision in this Contract, it may be
terminated at any time with respect to any Fund, without the payment of any
penalty, by the Trustees of the Trust or by a vote of the shareholders of
that Fund on sixty (60) days' written notice to Adviser.
9. This Contract may not be assigned by Adviser and shall
automatically terminate in the event of any assignment. Adviser may employ
or contract with such other person, persons, corporation, or corporations at
its own cost and expense as it shall determine in order to assist it in
carrying out this Contract.
10. In the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the obligations or duties under this Contract on the
part of Adviser, Adviser shall not be liable to the Trust or to any of the
Funds or to any shareholder for any act or omission in the course of or
connected in any way with rendering services or for any losses that may be
sustained in the purchase, holding, or sale of any security.
11. This Contract may be amended at any time by agreement of the
parties provided that the amendment shall be approved both by the vote of a
majority of the Trustees of the Trust, including a majority of the Trustees
who are not parties to this Contract or interested persons of any such party
to this Contract (other than as Trustees of the Trust) cast in person at a
meeting called for that purpose, and on behalf of a Fund by a majority of the
outstanding voting securities of such Fund.
12. Adviser is hereby expressly put on notice of the limitation of
liability as set forth in Article XI of the Declaration of Trust and agrees
that the obligations pursuant to this Contract of a particular Fund and of
the Trust with respect to that particular Fund be limited solely to the
assets of that particular Fund, and Adviser shall not seek satisfaction of
any such
obligation from any other Fund, the shareholders of any Fund, the Trustees,
officers, employees or agents of the Trust, or any of them.
13. The Trust and the Funds are hereby expressly put on notice of the
limitation of liability as set forth in the Declaration of Trust of the
Adviser and agrees that the obligations assumed by the Adviser pursuant to
this Contract shall be limited in any case to the Adviser and its assets and,
except to the extent expressly permitted by the Investment Company Act of
1940, the Trust and the Funds shall not seek satisfaction of any such
obligation from the shareholders of the Adviser, the Trustees, officers,
employees, or agents of the Adviser, or any of them.
14. This Contract shall be construed in accordance with and governed by
the laws of the Commonwealth of Pennsylvania.
15. This Contract will become binding on the parties hereto upon their
execution of the attached exhibits to this Contract.
EXHIBIT A
MUNICIPAL CASH SERIES II
For all services rendered by Adviser hereunder, the above-named Fund of
the Trust shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment
advisory fee equal to .50 of 1% of the average daily net assets of the Fund.
The portion of the fee based upon the average daily net assets of the
Fund shall be accrued daily at the rate of 1/365th of .50 of 1% applied to
the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
Witness the due execution hereof this 25th day of January, 1991.
Attest: FEDERATED ADVISERS
/s/ John W. McGonigle By: /s/ Edward C.
Gonzales Secretary
Vice President
Attest: CASH TRUST SERIES II
/s/ John W. McGonigle By: /s/ Edward
C. Gonzales Secretary
Vice President
EXHIBIT B
PRIME CASH SERIES II
For all services rendered by Adviser hereunder, the above-named Fund of
the Trust shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment
advisory fee equal to .50 of 1% of the average daily net assets of the Fund.
The portion of the fee based upon the average daily net assets of the
Fund shall be accrued daily at the rate of 1/365th of .50 of 1% applied to
the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
Witness the due execution hereof this 25th day of January, 1991.
Attest: FEDERATED ADVISERS
/s/ John W. McGonigle By: /s/ Edward C.
Gonzales Secretary
Vice President
Attest: CASH TRUST SERIES II
/s/ John W. McGonigle By: /s/ Edward
C. Gonzales Secretary
Vice President
EXHIBIT C
TREASURY CASH SERIES II
For all services rendered by Adviser hereunder, the above-named Fund of
the Trust shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment
advisory fee equal to .50 of 1% of the average daily net assets of the Fund.
The portion of the fee based upon the average daily net assets of the
Fund shall be accrued daily at the rate of 1/365th of .50 of 1% applied to
the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
Witness the due execution hereof this 25th day of January, 1991.
Attest: FEDERATED ADVISERS
/s/ John W. McGonigle By: /s/ Edward C.
Gonzales Secretary
Vice President
Attest: CASH TRUST SERIES II
/s/ John W. McGonigle By: /s/ Edward
C. Gonzales Secretary
Vice President
-1-
Exhibit 6(i) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
CASH TRUST SERIES II
DISTRIBUTOR'S CONTRACT
AGREEMENT made this 25th day of January, 1991, by and among CASH TRUST
SERIES II (the "Trust"), a Massachusetts business trust, on behalf of the
portfolios (the "Funds") of the Trust set forth in Exhibit A hereto and
FEDERATED SECURITIES CORP. ("FSC"), a Pennsylvania corporation.
In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and among the parties hereto as follows:
1. The Trust hereby appoints FSC to act as distributor of the shares
of the Funds ("Shares") and to select a group of brokers ("Brokers") to
sell Shares at the current offering price thereof as described and set
forth in the prospectus of each Fund and to render administrative support
services to the Funds and their shareholders. In addition, the Trust
hereby appoints FSC to select a group of Administrators ("Administrators")
to render administrative support services to the Funds and their
shareholders.
2. Administrative support services may include, but are not limited
to, the following functions: (1) communicating account openings via the
"Edge" (Electronic Data Gathering Extension) system, which consists of
computer terminals located on the Administrator's premises or via a toll-
free telephone number; (2) communicating account closings via the Edge
system or via a toll-free telephone number; (3) entering purchase trans-
actions via the Edge system or via a toll-free telephone number; (4)
entering redemption transactions via the Edge system or via a toll-free
telephone number; (5) providing or arranging to provide accounting support
for all transactions, wiring funds and receiving funds for Fund share
purchases and redemptions, confirming and reconciling all transactions,
reviewing the activity in Fund accounts, and providing training and
supervision of personnel; (6) posting and reinvesting dividends to Fund
accounts or arranging for this service to be performed by the Fund's
transfer agent; (7) maintaining and distributing current copies of
prospectuses and shareholder reports; (8) continuously advertising the
availability of services and products; (9) continuously providing names
of potential new accounts; (10) continuously designing material to send
to customers and developing methods of making such materials accessible to
customers; and (11) continuously providing information about the product
needs of customers.
3. FSC accepts such appointment and will enter into separate written
agreements with various firms to provide services set forth in Paragraph 1
herein. The Trust will pay FSC a periodic fee computed at the annual rate
of up to .20 of 1% of the average aggregate net asset value of Shares held
in each Fund during the period. Subject to the limitation set forth in the
preceding sentence, such fee shall not exceed such amounts as are set from
time to time by the Board of Trustees and shall not exceed the amounts of
such fees as are actually paid to Brokers and Administrators from time to
time by FSC.
4. In addition to the fees paid to Brokers and Administrators, which
the Trust agrees to pay or reimburse pursuant to Paragraph 3 hereof, the
Trust acknowledges that FSC, in its sole discretion, may pay Brokers and
Administrators fees out of any source available to it, which fee shall not
be paid or reimbursed by the Trust.
5. FSC will prepare reports to the Board of Trustees of the Trust on
a quarterly basis showing amounts paid to the various firms and the purpose
for such payments.
6. The sale of Shares may be suspended without prior notice whenever
in the judgment of the Trust it is in its best interest to do so.
7. Neither FSC nor any other person is authorized by the Trust to
give any information or to make any representation relative to the Shares
other than those contained in the Registration Statement or prospectuses
and statements of additional information filed with the Securities and
Exchange Commission as the same may be amended from time to time or in any
supplemental information to said prospectuses or statements of additional
information approved by the Trust. FSC agrees that any other information
or representations, other than those specified above which it or any dealer
or other person who purchases Shares through FSC may make in connection
with the offer or sale of Shares, shall be made entirely without liability
on the part of the Trust or the Funds. No person or dealer, other than
FSC, is authorized to act as agent for the Trust or the Funds for any
purpose. FSC agrees that in offering or selling Shares as agent of the
Funds, it will, in all respects, duly conform to all applicable state and
Federal laws and the rules and regulations of the National Association of
Securities Dealers, Inc., including its Rules of Fair Practice. FSC will
submit to the Trust copies of all sales literature before using the same
and will not use such sales literature if disapproved by the Trust.
8. This Agreement is effective with respect to each Fund listed
on Exhibit A and shall continue in effect with respect to each Fund
presently set forth on Exhibit A, and any subsequent Fund added to Exhibit
A during the initial term of this Agreement, for one year from the date set
forth above, and thereafter for successive periods of one year if such
continuance is approved at least annually by a vote of the Trustees of the
Trust, including a majority of the members of the Board of Trustees of the
Trust who are not interested persons of the Trust and have no direct or
indirect financial interest in the operation of any Distribution Plan
relating to the Trust or in any related documents to such Plan
("Disinterested Trustees"), cast in person at a meeting for that purpose.
If a Fund is added after the first annual approval by the Trustees as
described above, this Agreement will be effective as to that Fund upon its
addition to Exhibit A and will continue in effect until the next annual
approval of this Agreement by the Trustees and thereafter for successive
periods of one year, subject to approval as described above.
9. This Agreement may be terminated with respect to a particular
Fund at any time, without the payment of any penalty, by the vote of a
majority of the Disinterested Trustees or by a majority of the outstanding
voting securities of the particular Fund on not more than sixty (60) days
notice to any other party to this Agreement. This Agreement may be
terminated by FSC on sixty (60) days written notice to the particular Fund.
10. This Agreement may not be assigned by FSC and shall automatically
terminate in the event of an assignment by FSC as defined in the Investment
Company Act of 1940, provided, however, that FSC may employ such other
person, persons, corporation or corporations as it shall determine in order
to assist it in carrying out its duties under this Agreement.
11. FSC shall not be liable to the Trust or to any of the Funds or to
any shareholder of the Funds for anything done or omitted by it, except
acts or omissions involving willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties imposed by this Agreement.
12. This Agreement may be amended at any time by mutual agreement in
writing of all the parties hereto, provided that such amendment is approved
by the Trustees of the Trust including a majority of the Disinterested
Trustees of the Trust cast in person at a meeting called for that purpose,
and provided further, that in the event any amendment materially increases
the maximum fee set forth in Paragraph 3 with respect to a particular Fund,
such amendment is also approved by a vote of a majority of the outstanding
voting securities of the particular Fund.
13. This Agreement shall be construed in accordance with and governed
by the laws of the Commonwealth of Pennsylvania.
14. (a) Subject to the conditions set forth below, the Trust agrees
to indemnify and hold harmless FSC and each person, if any, who controls
FSC within the meaning of Section 15 of the Securities Act of 1933 and
Section 20 of the Securities Act of 1934, as amended, against any and all
loss, liability, claim, damage and expense whatsoever (including but not
limited to any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or the prospectuses and statements of
additional information (as from time to time amended and supplemented) or
the omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in reliance upon and
in conformity with written information furnished to the Trust with respect
to FSC by or on behalf of FSC expressly for use in the Registration
Statement or prospectuses and statements of additional information, or any
amendment or supplement thereof.
(b) If any action is brought against FSC or any controlling
person thereof in respect of which indemnity may be sought against the
Trust pursuant to subsection (a), FSC shall promptly notify the Trust in
writing of the institution of such action and the Trust shall assume the
defense of such action, including the employment of counsel selected by the
Trust and payment of expenses. FSC or any such controlling person thereof
shall have the right to employ separate counsel in any such case, but the
fees and expenses of such counsel shall be at the expense of FSC or such
controlling person unless the employment of such counsel shall have been
authorized in writing by the Trust in connection with the defense of such
action or the Trust shall not have employed counsel to have charge of the
defense of such action, in any of which events such fees and expenses shall
be borne by the Trust and allocated to the Funds, as appropriate. Anything
in this paragraph to the contrary notwithstanding, neither the Trust nor
any of the Funds shall be liable for any settlement of any such claim or
action effected without its written consent. The Trust agrees promptly to
notify FSC of the commencement of any litigation or proceedings against the
Trust or any of the Funds or any of the Trust's officers or Trustees or
controlling persons in connection with the issue and sale of Shares or in
connection with such Registration Statement or prospectuses and statements
of additional information.
(c) FSC agrees to indemnify and hold harmless the Trust, each of
the Funds, each of the Trustees and officers of the Trust who have signed
the Registration Statement and each other person, if any, who controls the
Trust within the meaning of Section 15 of the Securities Act of 1933, but
only with respect to statements or omissions, if any, made in the
Registration Statement or prospectuses or statements of additional
information or any amendment or supplement thereof in reliance upon, and in
conformity with, information furnished to the Trust with respect to FSC by
or on behalf of FSC expressly for use in the Registration Statement or
prospectuses or statements of additional information or any amendment or
supplement thereof. In case any action shall be brought against the Trust
or any of the Funds or any other person so indemnified based on the
Registration Statement or prospectuses and statements of additional
information, or any amendment or supplement thereof, and in respect of
which indemnity may be sought against FSC, FSC shall have the rights and
duties given to the Trust, and the Trust and each other person so
indemnified shall have the rights and duties given to FSC by the provisions
of subsection (b) above.
(d) Nothing herein contained shall be deemed to protect any
person against liability to the Trust or any of the Funds or their
shareholders to which such person would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of
the duties of such person or by reason of the reckless disregard by such
person of the obligations and duties of such person under this Agreement.
(e) Insofar as indemnification for liabilities may be permitted
pursuant to Section 17 of the Investment Company Act of 1940 for FSC or
Trustees, officers and controlling persons of the Trust by the Trust
pursuant to this Agreement, the Trust is aware of the position of the
Securities and Exchange Commission as set forth in the Investment Company
Act Release No. IC-11330. Therefore, the Trust undertakes that in addition
to complying with the applicable provisions of this Agreement, in the
absence of a final decision on the merits by a court or other body before
which the proceeding was brought, that an indemnification payment will not
be made unless in the absence of such a decision, a reasonable
determination based upon factual review has been made (i) by a majority
vote of a quorum of non-party Trustees who are not interested persons of
the Trust or (ii) by independent legal counsel in a written opinion that
the indemnitee was not liable for an act of willful misfeasance, bad faith,
gross negligence or reckless disregard of duties. The Trust further
undertakes that advancement of expenses incurred in the defense of a
proceeding (upon undertaking for repayment unless it is ultimately
determined that indemnification is appropriate) against FSC or an officer,
Trustee or controlling person of the Trust will not be made absent the
fulfillment of at least one of the following conditions: (i) the
indemnitee provides security for his undertaking; (ii) the Trust is insured
against losses arising by reason of any lawful advances; or (iii) a
majority of a quorum of disinterested non-party Trustees or independent
legal counsel in a written opinion makes a factual determination that there
is reason to believe the indemnitee will be entitled to indemnification.
IN WITNESS WHEREOF, this Agreement has been duly executed on the day
and the year first above written.
CASH TRUST SERIES II
By: /s/ John F. Donahue
Vice President
FEDERATED SECURITIES CORP.
By: /s/ Richard B. Fisher
President
EXHIBIT A
PORTFOLIOS OF CASH TRUST SERIES II
Cash Trust Series II (the "Trust") consists of the following
portfolios (the "Funds") effective as of the dates set forth below:
Name
Date
Municipal Cash Series II January 25, 1991
Prime Cash Series II January 25, 1991
Treasury Cash Series II January 25, 1991
Mutual Funds Sales and Service Agreement Page 1
Exhibit 6(ii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
MUTUAL FUNDS
SALES AND SERVICE
AGREEMENT
This Agreement is entered into among the financial institution
executing this Agreement ("Financial Institution"), Federated Securities
Corp. ("FSC"), and Federated Shareholder Services ("FSS"), with respect
to those investment companies listed in Exhibit A hereto (referred to
individually as the "Fund" and collectively as the "Funds") for whose
shares of beneficial interest or capital stock ("Shares") FSC serves as
Distributor and for whom FSS provides or coordinates shareholder
services.
A. Financial Institution.
1. Status of Financial Institution as "Bank" or Registered Broker-
Dealer.
Financial Institution represents and warrants to FSC and FSS:
(a)(i) that it is a broker or dealer as defined in
Section 3(a)(4) or 3(a)(5) of the Securities Exchange
Act of 1934 ("Exchange Act"); that it is registered
with the Securities and Exchange Commission pursuant
to Section 15 of the Exchange Act; that it is a member
of the National Association of Securities Dealers,
Inc.; that its customers' accounts are insured by the
Securities Investors Protection Corporation ("SIPC");
and that, during the term of this Agreement, it will
abide by all of the rules and regulations of the NASD
including, without limitation, the NASD Rules of Fair
Practice. Financial Institution agrees to notify FSC
immediately in the event of (1) the termination of its
coverage by the SIPC; (2) its expulsion or suspension
from the NASD, or (3) its being found to have violated
any applicable federal or state law, rule or
regulation arising out of its activities as a broker-
dealer or in connection with this Agreement, or which
may otherwise affect in any material way its ability
to act in accordance with the terms of this Agreement.
Financial Institution's expulsion from the NASD will
automatically terminate this Agreement immediately
without notice. Suspension of Financial Institution
from the NASD for violation of any applicable federal
or state law, rule or regulation will terminate this
Agreement effective immediately upon FSC's written
notice of termination to Financial Institution; or
(a)(ii) that it is a "bank," as that term is defined in
Section 3(a)(6) of the Exchange Act and that, during
the term of this Agreement, it will abide by the rules
and regulations of those state and federal banking
authorities with appropriate jurisdiction over the
Financial Institution, especially those regulations
dealing with the activities of the Institution as
described under this Agreement. Financial Institution
agrees to notify FSC or FSS immediately of any action
by or communication from state or federal banking
authorities, state securities authorities, the
Securities and Exchange Commission, or any other party
which may affect its status as a bank, or which may
otherwise affect in any material way its ability to
act in accordance with the terms of this Agreement.
Any action or decision of any of the foregoing
regulatory authorities or any court of appropriate
jurisdiction which affects Financial Institution's
ability to act in accordance with the terms of this
agreement, including the loss of its exemption from
registration as a broker or dealer, will terminate
this Agreement effective upon FSC's written notice of
termination to Financial Institution; and
(b) that Financial Institution is registered with the
appropriate securities authorities in all states in
which its activities make such registration necessary.
2. Financial Institution Acts as Agent for its Customers.
The parties agree that in each transaction in the Shares of any
Fund and with regard to any services rendered pursuant to this
Agreement: (a) Financial Institution is acting as agent for the
customer; (b) each transaction is initiated solely upon the order of the
customer; (c) as between Financial Institution and its customer, the
customer will have full beneficial ownership of all Shares of the Funds;
(d) each transaction shall be for the account of the customer and not
for Financial Institution's account; and (e) each transaction shall be
without recourse to Financial Institution provided that Financial
Institution acts in accordance with the terms of this Agreement.
Financial Institution shall not have any authority in any transaction to
act as FSC's agent or as agent for the Funds.
B. Sales of Fund Shares.
3. Execution of Orders for Purchase and Redemption of Shares.
(a) All orders for the purchase of any Shares shall be executed at
the then-current public offering price per share (i.e., the net
asset value per share plus the applicable initial sales load, if
any) and all orders for the redemption of any Shares shall be
executed at the net asset value per share, in each case as described
in the prospectus of the Fund. Any applicable redemption fee or
deferred sales charge will be deducted by the Fund prior to the
transmission of the redemption proceeds to Financial Institution or
its customer. FSC and the Funds reserve the right to reject any
purchase request in their sole discretion . If required by law,
each transaction shall be confirmed in writing on a fully disclosed
basis and, if confirmed by FSC, a copy of each confirmation shall be
sent simultaneously to Financial Institution if Financial
Institution so requests.
(b) The procedures relating to all orders will be subject to the
terms of the prospectus of each Fund and FSC's written instructions
to Financial Institution from time to time.
(c) Payments for Shares shall be made as specified in the applicable
Fund prospectus. If payment for any purchase order is not received
in accordance with the terms of the applicable Fund prospectus, FSC
reserves the right, without notice, to cancel the sale and to hold
Financial Institution responsible for any loss sustained as a result
thereof.
4. Initial Sales Loads Payable to Financial Institution.
(a) On each order accepted by FSC, in exchange for the performance of
sales and/or distribution services, Financial Institution will be
entitled to receive the applicable percentage of the initial sales
load, if any, as established by FSC from the amount paid by
Financial Institution's customer . The initial sales loads for any
Fund shall be those set forth in its prospectus. The portion of the
initial sales load payable to Financial Institution may be changed
at any time at FSC's sole discretion upon written notice to
Financial Institution.
(b) Transactions may be settled by Financial Institution: (1) by
payment of the full purchase price less an amount equal to Financial
Institution's applicable percentage of the initial sales load, or
(2) by payment of the full purchase price, in which case Financial
Institution shall receive, not less frequently than monthly, the
aggregate fees due it on orders received and settled.
(c) It shall be the obligation of the Financial Institution either:
(i) to provide FSC with all necessary information regarding the
application of the appropriate initial sales load to each
transaction, or (ii) to assess the appropriate initial sales load
for each transaction and to forward the public offering price, net
of the amount of the initial sales load to be reallocated to the
Financial Institution, to the appropriate Fund. Neither the Fund
nor FSC shall have any responsibility to correct the payment or
assessment of an incorrect initial sales load due to the failure of
the Financial Institution to fulfill the foregoing obligation.
5. Advance Commissions Payable to Financial Institution.
Upon the purchase of certain Shares, as described in the applicable
prospectuses, FSC will pay Financial Institution an advance commission
as set forth on Exhibit A (or, if more recently published, the Fund's
current prospectus). This amount is not to be considered an initial
sales load and should not be deducted from the public offering price of
the Shares which shall be forwarded to the Fund. Generally, a
contingent deferred sales charge ("CDSC") will be assessed upon the
redemption of Shares with regard to which an advance commission is paid
by FSC; in the event that Financial Institution notifies FSC in writing
that Financial Institution elects to waive such advance commission, and
if the Fund's prospectus permits such a waiver, the CDSC will not be
charged upon the redemption of the relevant Shares. To receive advance
commission from FSC on Shares that are subject to a CDSC, Financial
Institution must open investor accounts with the Fund on a fully-
disclosed basis or be able to account for share ownership periods used
in calculating the CDSC. Furthermore, should the custody (or record
ownership) of the shares of the investor account(s) be transferred
during the applicable CDSC holding period (as described in the Fund
prospectus) to a financial institution which does not maintain investor
accounts on a fully disclosed basis and does not account for share
ownership periods, the Financial Institution agrees to reimburse FSC
prior to such transfer for advance commissions paid to it by FSC.
C. Distribution Services.
6. Agreement to Provide Distribution Services.
(a) With regard to those Funds which pay asset-based sales charges
(pursuant to Distribution Plans adopted under Investment Company Act
Rule 12b-1), as noted on Exhibit A hereto (or, if more recently
published, the Fund's current prospectus), FSC hereby appoints
Financial Institution to render or cause to be rendered distribution
and sales services to the Funds and their shareholders.
(b) The services to be provided under this Paragraph (a) may include,
but are not limited to, the following:
(i) reviewing the activity in Fund accounts;
(ii) providing training and supervision of its personnel;
(iii) maintaining and distributing current copies of
prospectuses and shareholder reports;
(iv) advertising the availability of its services and products;
(v) providing assistance and review in designing materials to send
to customers and potential customers and developing methods of
making such materials accessible to customers and potential
customers; and
(vi) responding to customers' and potential customers' questions
about the Funds.
7. Asset-Based Sales Loads Payable to Financial Institution.
During the term of this Agreement, FSC will pay Financial Institution
asset-based sales charges (also known as "Rule 12b-1 Fees") for each
Fund as set forth in Exhibit A to this Agreement (or, if more recently
published, the Fund's current prospectus). For the payment period in
which this Agreement becomes effective or terminates, there shall be an
appropriate proration of the fee on the basis of the number of days that
this Agreement is in effect during the quarter.
D. Shareholder Services.
8. Agreement to Provide Shareholder and Account Maintenance Services.
With regard to those Funds which pay a Shareholder Services Fee to
Financial Institutions, as noted on Exhibit A hereto (or, if more
recently published, the Fund's current prospectus), Financial
Institution agrees to render or cause to be rendered personal services
to shareholders of the Funds and/or the maintenance of accounts of
shareholders of the Funds ("Shareholder Services"). Financial
Institution agrees to provide Shareholder Services which, in its best
judgment, are necessary or desirable for its customers who are investors
in the Funds. Financial Institution further agrees to provide FSS, upon
request, a written description of the Shareholder Services which
Financial Institution is providing hereunder.
9. Shareholder Service Fees Payable to Financial Institution.
During the term of this Agreement, FSS will pay Financial Institution
Shareholder Service Fees as set forth in Exhibit A to this Agreement
(or, if more recently published, the Fund's current prospectus). For
the payment period in which this Agreement becomes effective or
terminates, there shall be an appropriate proration of the fee on the
basis of the number of days that this Agreement is in effect during the
quarter.
E. Supplemental Payments.
10. Supplemental Payments to Financial Institution.
During the term of this Agreement, FSC, FSS, or their affiliates will
make Supplemental Payments to Financial Institution as set forth in
Exhibit A to this Agreement (or, if more recently published, the Fund's
current prospectus) as additional compensation for services described in
Paragraphs 6 or 8, above; such payments will be made from the assets of
FSC, FSS, or their affiliates, and not from assets of the Funds nor from
fees payable under applicable Distribution (Rule 12b-1) Plans or
Shareholder Services Agreement. For the payment period in which this
Agreement becomes effective or terminates, there shall be an appropriate
proration of the payments on the basis of the number of days that this
Agreement is in effect during the quarter.
F. Miscellaneous.
11. Delivery of Prospectuses to Customers.
Financial Institution will deliver or cause to be delivered to each
customer, at or prior to the time of any purchase of Shares, a copy of
the current prospectus of the Fund and, upon request by a customer or
shareholder, a copy of the Fund's current Statement of Additional
Information. Financial Institution shall not make any representations
concerning any Shares other than those contained in the prospectus or
Statement of Additional Information of the Fund or in any promotional
materials or sales literature furnished to Financial Institution by FSC
or the Fund.
12. ERISA Assets.
(a) Financial Institution understands that the Department of Labor
views ERISA as prohibiting fiduciaries of discretionary ERISA assets
from receiving administrative service fees or other compensation
from funds in which the fiduciary's discretionary ERISA assets are
invested. To date, the Department of Labor has not issued any
exemptive order or advisory opinion that would exempt fiduciaries
from this interpretation. Without specific authorization from the
Department of Labor, fiduciaries should carefully avoid investing
discretionary assets in any fund pursuant to an arrangement where
the fiduciary is to be compensated by the fund for such investment.
Receipt of such compensation could violate ERISA provisions against
fiduciary self-dealing and conflict of interest and could subject
the fiduciary to substantial penalties.
(b) Financial Institution will not perform or provide any duties
which would cause it to be a fiduciary under Section 4975 of the
Internal Revenue Code, as amended. For purposes of that Section,
Financial Institution understands that any person who exercises any
discretionary authority or discretionary control with respect to any
individual retirement account or its assets, or who renders
investment advice for a fee, or has any authority or responsibility
to do so, or has any discretionary authority or discretionary
responsibility in the administration of such an account, is a
fiduciary.
13. Indemnification.
(a) Financial Institution shall indemnify and hold harmless FSC, FSS,
each Fund, the transfer agents of the Funds, and their respective
subsidiaries, affiliates, officers, directors, agents and employees
from all direct or indirect liabilities, losses or costs (including
attorneys fees) arising from, related to or otherwise connected
with: (1) any breach by Financial Institution of any provision of
this Agreement; or (2) any actions or omissions of FSC, FSS, any
Fund, the transfer agents of the Funds, and their subsidiaries,
affiliates, officers, directors, agents and employees in reliance
upon any oral, written or computer or electronically transmitted
instructions believed to be genuine and to have been given by or on
behalf of Financial Institution.
(b) FSC shall indemnify and hold harmless Financial Institution and
its subsidiaries, affiliates, officers, directors, agents and
employees from and against any and all direct or indirect
liabilities, losses or costs (including attorneys fees) arising
from, related to or otherwise connected with: (1) any breach by FSC
of any provision of this Agreement; or (2) any alleged untrue
statement of a material fact contained in any Fund's Registration
Statement or Prospectus, or as a result of or based upon any alleged
omission to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading.
(c) FSS shall indemnify and hold harmless Financial Institution and
its subsidiaries, affiliates, officers, directors, agents and
employees from and against any and all direct or indirect
liabilities, losses or costs (including attorneys fees) arising
from, related to or otherwise connected with any breach by FSS of
any provision of this Agreement.
(d) The agreement of the parties in this Paragraph to indemnify each
other is conditioned upon the party entitled to indemnification
(Indemnified Party) giving notice to the party required to provide
indemnification (Indemnifying Party) promptly after the summons or
other first legal process for any claim as to which indemnity may be
sought is served on the Indemnified Party. The Indemnified Party
shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting from it, provided that
counsel for the Indemnifying Party who shall conduct the defense of
such claim or litigation shall be approved by the Indemnified Party
(which approval shall not unreasonably be withheld), and that the
Indemnified Party may participate in such defense at its expense.
The failure of the Indemnified Party to give notice as provided in
this subparagraph (c) shall not relieve the Indemnifying Party from
any liability other than its indemnity obligation under this
Paragraph. No Indemnifying Party, in the defense of any such claim
or litigation, shall, without the consent of the Indemnified Party,
consent to entry of any judgment or enter into any settlement that
does not include as an unconditional term the giving by the claimant
or plaintiff to the Indemnified Party of a release from all
liability in respect to such claim or litigation.
(e) The provisions of this Paragraph 13 shall survive the
termination of this Agreement.
14. Customer Names Proprietary to Financial Institution.
(a) The names of Financial Institution's customers are and shall
remain Financial Institution's sole property and shall not be used
by FSC, FSS, or their affiliates for any purpose except the
performance of their respective duties and responsibilities under
this Agreement and except for servicing and informational mailings
relating to the Funds. Notwithstanding the foregoing, this Paragraph
14 shall not prohibit FSC, FSS, or any of their affiliates from
utilizing the names of Financial Institution's customers for any
purpose if the names are obtained in any manner other than from
Financial Institution pursuant to this Agreement.
(b) Neither party shall use the name of the other party in any manner
without the other party's written consent, except as required by any
applicable federal or state law, rule or regulation, and except
pursuant to any mutually agreed upon promotional programs.
(c) The provisions of this Paragraph 14 shall survive the termination
of this Agreement.
15. Security Against Unauthorized Use of Funds' Recordkeeping Systems.
Financial Institution agrees to provide such security as is necessary
to prevent any unauthorized use of the Funds' recordkeeping system,
accessed via any computer hardware or software provided to Financial
Institution by FSC or FSS.
16. Solicitation of Proxies.
Financial Institution agrees not to solicit or cause to be
solicited directly, or indirectly, at any time in the future, any
proxies from the shareholders of any or all of the Funds in opposition
to proxies solicited by management of the Fund or Funds, unless a court
of competent jurisdiction shall have determined that the conduct of a
majority of the Board of Directors or Trustees of the Fund or Funds
constitutes willful misfeasance, bad faith, gross negligence or reckless
disregard of their duties. This Paragraph 16 will survive the term of
this Agreement.
17. Certification of Customers' Taxpayer Identification Numbers.
Financial Institution agrees to obtain any taxpayer identification
number certification from its customers required under Section 3406 of
the Internal Revenue Code, and any applicable Treasury regulations, and
to provide FSC, FSS, or their respective designee with timely written
notice of any failure to obtain such taxpayer identification number
certification in order to enable the implementation of any required
backup withholding.
18. Notices.
Except as otherwise specifically provided in this Agreement, all
notices required or permitted to be given pursuant to this Agreement
shall be given in writing and delivered by personal delivery or by
postage prepaid, registered or certified United States first class mail,
return receipt requested, overnight courier services, or by facsimile or
similar electronic means of delivery (with a confirming copy by mail as
provided herein). Unless otherwise notified in writing, all notices to
FSC or FSS shall be given or sent to FSC or FSS at their offices located
at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779, and
all notices to Financial Institution shall be given or sent to it at its
address shown below.
19. Termination and Amendment.
(a) This Agreement shall become effective in this form as of the date
set forth below or as of the first date thereafter upon which
Financial Institution executes any transaction, performs any
service, or receives any payment pursuant hereto. This Agreement
supersedes any prior sales, distribution, shareholder service, or
administrative service agreements between the parties.
(b) With respect to each Fund, this Agreement shall continue in
effect for one year from the date of its execution, and thereafter
for successive periods of one year if the form of this Agreement is
approved at least annually by the Directors or Trustees of the Fund,
including a majority of the members of the Board of Directors or
Trustees of the Fund who are not interested persons of the Fund and
have no direct or indirect financial interest in the operation of
the Fund's Distribution Plan or in any related documents to such
Plan ("Independent Directors or Trustees") cast in person at a
meeting called for that purpose.
(c) This Agreement, including Exhibit A hereto, may be amended by FSC
and/or FSS from time to time by the following procedure. FSC or FSS
will mail a copy of the amendment to Financial Institution's
address, as shown below. If Financial Institution does not object
to the amendment within thirty (30) days after its receipt, the
amendment will become part of the Agreement. Financial
Institution's objection must be in writing and be received by FSC or
FSS within such thirty days.
(d) Notwithstanding subparagraph 19(b) and in addition to
subparagraph 1(a), this Agreement may be terminated as follows:
(i) at any time, without the payment of any penalty, by the vote of
a majority of the Independent Directors or Trustees of the Fund
or by a vote of a majority of the outstanding voting securities
of the Fund as defined in the Investment Company Act of 1940 on
not more than sixty (60) days' written notice to the parties to
this Agreement;
(ii)automatically in the event of the Agreement's assignment as
defined in the Investment Company Act of 1940, upon the
termination of the "Distributor's Contract" between the Fund and
FSC, upon termination of the "Shareholder Services Agreement"
between the Fund and FSS, or upon the termination of the
Distribution Plan to which this Agreement is related; and
(iii) by any party to the Agreement without cause by giving the
other party at least sixty (60) days' written notice of its
intention to terminate.
(e) The termination of this Agreement with respect to any one Fund
will not cause the Agreement's termination with respect to any other
Fund.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
20. Governing Law.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Pennsylvania.
FEDERATED SECURITIES CORP.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By: /s/ Richard B. Fisher Date: July 1, 1995
Richard B. Fisher, Chairman
FEDERATED SHAREHOLDER SERVICES
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By: /s/ John W. McGonigle Date: July 1, 1995
John W. McGonigle, President
_______________________________________
Financial Institution Name
(Please Print or Type)
_______________________________________
Address
_______________________________________
City State Zip Code
By:______________________________
Authorized Signature
_______________________________________
Title
_______________________________________
Print Name or Type Name
Dated:_____________________
Mutual Funds Service Agreement Page 1
Exhibit 6(iii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
MUTUAL FUNDS SERVICE AGREEMENT
This Agreement is entered into among the financial institution or
service provider executing this Agreement (the "Institution"), Federated
Securities Corp. ("FSC"), and Federated Shareholder Services ("FSS"), with
respect to those investment companies listed in Exhibit A hereto (referred to
individually as the "Fund" and collectively as the "Funds") for whose shares
of beneficial interest or capital stock ("Shares") FSC serves as Distributor
and for whom FSS provides or coordinates shareholder services.
WHEREAS, the Institution provides agency, investment advisory,
fiduciary, administrative, or other services for its clients, customers, or
affiliates;
WHEREAS, FSS provides shareholder services for the shareholders of the
Funds in part by retaining financial institutions (such as the Institution) to
perform those shareholder services and FSC provides distribution services for
the Funds in part by retaining financial institutions (such as the
Institution) to perform distribution or support services;
WHEREAS, FSS and FSC have determined that services usually provided by
the Institution are substantially equivalent to shareholder services and that
the compensation of the Institution for those services could reasonably be
expected to contribute to the distribution and sale of Fund shares to clients,
customers, or affiliates of the Institution; and
WHEREAS, the Institution is willing to provide shareholder services for
shareholders of the Funds or distribution or support services for the funds as
consideration for compensation received from FSS and FSC;
NOW, THEREFORE, the parties agree as follows:
1. Agreement to Provide Services.
FSS hereby appoints the Institution to render or cause to be rendered
personal services to shareholders of the Funds and/or the maintenance of
accounts of shareholders of the Funds ("Shareholder Services"); and FSC hereby
appoints the Institution to render or cause to be rendered (i) distribution
and sales services to the Funds and their shareholders ("Sales Services"), or
(ii) services which, in the opinion of FSC, contribute to the distribution of
shares of Funds which have adopted Distribution Plans pursuant to Rule 12b-1
of the Investment Company Act of 1940 ("Support Services,"); Provided,
however, the Institution, FSS, and FSC all acknowledge that it is not the
intent of the parties to this Agreement that the Institution be compensated
for distribution-related services in connection with the investment of assets
over which the Institution, acting as a fiduciary, exercises investment
discretion.
Sales Services may include, but are not limited to, (a) selling and
compensating personnel for the sale of Shares; (b) reviewing the activity in
Fund accounts; (c) providing training and supervision of its personnel; (d)
maintaining and distributing current copies of prospectuses and shareholder
reports; (e) advertising the availability of its services and products; (f)
providing assistance and review in designing materials to send to customers
and potential customers and developing methods of making such materials
accessible to customers and potential customers; and (g) responding to
customers' and potential customers' questions about the Funds. Distribution-
related Support Services may include, but are not limited to, the following
functions: (a) account openings; (b) account closings; (c) enter purchase
transaction; (d) enter redemption transactions; (e) account maintenance; (f)
interest posting; (g) prospectus and shareholder reports; (h) advertisement of
the Institution's services; (i) customer lists; (j) design services; and
(k) consultation services.
The Institution agrees to provide Shareholder Services, Sales Services,
and/or Support Services which, in its best judgment, are necessary or
desirable for its customers who are investors in the Funds. The Institution
further agrees to provide FSS and FSC, upon request, a written description of
the Shareholder Services, Sales Services, and Support Services which the
Institution is providing hereunder.
2. Service Fees Payable to the Institution.
During the term of this Agreement, FSS and FSC will pay the Institution
fees as set forth in a written schedule delivered to the Institution pursuant
to this Agreement. The fee schedule for the Institution may be changed by FSS
or FSC sending a new fee schedule or written notice to the Institution
pursuant to Paragraph 10 of this Agreement. Payments by FSS for Shareholder
Services under this Agreement may be derived from payments received by FSS
from the Funds under their Shareholder Services Agreement or from FSS's own
assets; payments by FSC for Sales Services or Support Services under this
Agreement may be derived from payments received by FSC from the Funds under
Distribution (Rule 12b-1) Plans or from FSC's own assets. FSS or FSC may make
supplemental payments to the Institution as set forth in Exhibit A to this
Agreement as additional compensation for Shareholder Services, Sales Services,
or Support Services; such supplemental payments will be made from the assets
of FSC, FSS, or their affiliates, and not from the assets of the Funds nor
from payments received by FSC or FSS under any applicable Distribution (Rule
12b-1) Plan or Shareholder Service Agreement.
3. Status of the Institution.
The Institution hereby represents and warrants:
(a)(i) that it is a broker or dealer as defined in Section 3(a)(4) or
3(a)(5) of the Securities Exchange Act of 1934 ("Exchange Act");
that it is registered with the Securities and Exchange Commission
pursuant to Section 15 of the Exchange Act; that it is a member of
the National Association of Securities Dealers, Inc.; and that,
during the term of this Agreement, it will abide by all of the
rules and regulations of the NASD including, without limitation,
the NASD Rules of Fair Practice. The Institution agrees to notify
FSC immediately in the event of (1) its expulsion or suspension
from the NASD, or (2) its being found to have violated any
applicable federal or state law, rule or regulation arising out of
its activities as a broker-dealer or in connection with this
Agreement, or which may otherwise affect in any material way its
ability to act in accordance with the terms of this Agreement. The
Institution's expulsion from the NASD will automatically terminate
this Agreement immediately without notice. Suspension of the
Institution from the NASD for violation of any applicable federal
or state law, rule or regulation will terminate this Agreement
effective immediately upon FSC's written notice of termination to
the Institution; or
(a)(ii)that it is a "bank," as that term is defined in Section 3(a)(6) of
the Exchange Act and that, during the term of this Agreement, it
will abide by the rules and regulations of those state and federal
banking authorities with appropriate jurisdiction over the
Institution, especially those regulations dealing with the
activities of the Institution as described under this Agreement.
The Institution agrees to notify FSC or FSS immediately of any
action by or communication from state or federal banking
authorities, state securities authorities, the Securities and
Exchange Commission, or any other party which may affect its status
as a bank, or which may otherwise affect in any material way its
ability to act in accordance with the terms of this Agreement. Any
action or decision of any of the foregoing regulatory authorities
or any court of appropriate jurisdiction which affects the
Institution's ability to act in accordance with the terms of this
agreement, including the loss of its exemption from registration as
a broker or dealer, will terminate this Agreement effective upon
FSC's written notice of termination to the Institution; or
(a)(iii) that its activities and business, including the services
which are rendered under this Agreement, do not require the
Institution to register as a broker or a dealer with the Securities
and Exchange Commission. The Institution agrees to notify FSC or FSS
immediately of any action by or communication from state
securities authorities, the Securities and Exchange Commission, or
any other party which action or communication may in any material
way affect its ability to act in accordance with the terms of this
Agreement. Any action or decision of any of the foregoing
regulatory authorities or any court of appropriate jurisdiction
which affects the Institution's ability to act in accordance with
the terms of this agreement, including the loss of its exemption
from registration as a broker or dealer, will terminate this
Agreement effective upon FSC's written notice of termination to the
Institution; and
(b) that the Institution is registered with the appropriate securities
authorities in all states in which its activities make such
registration necessary.
4. The Institution Acts as Agent for its Customers.
The parties agree that in each transaction in the Shares of any Fund and
with regard to any services rendered pursuant to this Agreement: (a) the
Institution is acting in the capacity of agent or fiduciary on behalf of the
customer; (b) each transaction over which the Institution does not exercise
investment discretion is initiated solely upon the order of the customer; (c)
as between the Institution and its customer, the customer will have full
beneficial ownership of all Shares of the Funds; (d) each transaction shall be
for the account of the customer and not for the Institution's account; and (e)
each transaction shall be without recourse to the Institution provided that
the Institution acts in accordance with the terms of this Agreement. The
Institution shall not have any authority in any transaction to act as FSC's
agent or as agent for the Funds.
5. Solicitation of Proxies.
Unless such action would cause the Institution to violate its fiduciary
or other similar obligations to its customers, the Institution agrees not to
solicit or cause to be solicited directly, or indirectly at any time in the
future, any proxies from the shareholders of a Fund in opposition to proxies
solicited by management of the Fund, unless a court of competent jurisdiction
shall have determined that the conduct of a majority of the Board of Trustees
or Directors of the Fund constitutes willful misfeasance, bad faith, gross
negligence, or reckless disregard of their duties. This paragraph 5 will
survive the term of this Agreement.
6. Delivery of Prospectuses to Customers.
In circumstances where the Institution does not have investment
discretion over the customer's account, the Institution will deliver or cause
to be delivered to each customer, at or prior to the time of any purchase of
Shares, a copy of the current prospectus of the Fund and, upon request by a
customer or shareholder, a copy of the Fund's current Statement of Additional
Information. The Institution shall not make any representations concerning
any Shares other than those contained in the prospectus or Statement of
Additional Information of the Fund or in any promotional materials or sales
literature furnished to the Institution by FSC or the Fund.
7. ERISA and Discretionary Assets.
(a)(i) The Institution understands that the Department of Labor views
ERISA as prohibiting fiduciaries of discretionary ERISA assets from
receiving administrative service fees or other compensation from
funds in which the fiduciary's discretionary ERISA assets are
invested. To date, the Department of Labor has not issued any
exemptive order or advisory opinion that would exempt fiduciaries
from this interpretation. Without specific authorization from the
Department of Labor, fiduciaries should carefully avoid investing
discretionary assets in any fund pursuant to an arrangement where
the fiduciary is to be compensated by the fund for such investment.
Receipt of such compensation could violate ERISA provisions against
fiduciary self-dealing and conflict of interest and could subject
the fiduciary to substantial penalties.
(ii) The Institution will not perform or provide any duties which would
cause it to be a fiduciary under Section 4975 of the Internal
Revenue Code, as amended. For purposes of that Section, the
Institution understands that any person who exercises any
discretionary authority or discretionary control with respect to
any individual retirement account or assets of an employee benefit
plan, or who renders investment advice to such an account or plan
for a fee, or has any authority or responsibility to do so, or has
any discretionary authority or discretionary responsibility in the
administration of such an account or plan, is a fiduciary.
(b) The Institution understands that the common law of trusts in
several states prohibits fiduciaries from receiving distribution-
related compensation from funds in which the fiduciary's
discretionary trust assets are invested. Without specific
authorization in the underlying trust documents or applicable
statutes, fiduciaries should carefully avoid investing
discretionary trust assets in any fund pursuant to an arrangement
where the fiduciary is to be compensated for distribution-related
services by the fund or FSC with respect to such investment.
8. Customer Names Proprietary to the Institution.
(a) The names of the Institution's customers are and shall remain the
Institution's sole property and shall not be used by FSC, FSS, or their
affiliates for any purpose except the performance of their respective
duties and responsibilities under this Agreement and except for servicing
and informational mailings relating to the Funds. Notwithstanding the
foregoing, this Paragraph 8 shall not prohibit FSC, FSS, or any of their
affiliates from utilizing the names of the Institution's customers for any
purpose if the names are obtained in any manner other than from the
Institution pursuant to this Agreement.
(b) Neither party shall use the name of the other party in any manner
without the other party's written consent, except as required by any
applicable federal or state law, rule or regulation, and except pursuant
to any mutually agreed upon promotional programs.
(c) The provisions of this Paragraph 8 shall survive the termination of
this Agreement.
9. Security Against Unauthorized Use of Funds' Recordkeeping Systems.
The Institution agrees to provide such security as is necessary to
prevent any unauthorized use of the Funds' recordkeeping system, accessed via
any computer hardware or software provided to the Institution by FSC or FSS.
10. Termination and Amendment.
(a) This Agreement shall become effective in this form as of the date set
forth below or as of the first date thereafter upon which the Institution
executes any transaction, performs any service, or receives any payment
pursuant hereto. This Agreement supersedes any prior sales, distribution,
shareholder service, or administrative service agreements between the
parties.
(b) With respect to each Fund, this Agreement shall continue in effect for
one year from the date of its execution, and thereafter for successive
periods of one year if the form of this Agreement is approved at least
annually by the Directors or Trustees of the Fund, including a majority of
the members of the Board of Directors or Trustees of the Fund who are not
interested persons of the Fund and have no direct or indirect financial
interest in the operation of the Fund's Distribution Plan or in any
related documents to such Plan ("Independent Directors or Trustees") cast
in person at a meeting called for that purpose.
(c) This Agreement, including Exhibit A hereto, may be amended by FSC
and/or FSS from time to time by the following procedure. FSC or FSS will
mail a copy of the amendment to the Institution's address, as shown below.
If the Institution does not object to the amendment within thirty (30)
days after its receipt, the amendment will become part of the Agreement.
The Institution's objection must be in writing and be received by FSC or
FSS within such thirty days.
(d) Notwithstanding subparagraph 10(b) and in addition to subparagraph
3(a), this Agreement may be terminated as follows:
(i) at any time, without the payment of any penalty, by the vote of a
majority of the Independent Directors or Trustees of the Fund or by a
vote of a majority of the outstanding voting securities of the Fund
as defined in the Investment Company Act of 1940 on not more than
sixty (60) days' written notice to the parties to this Agreement;
(ii) automatically in the event of the Agreement's assignment as defined
in the Investment Company Act of 1940, upon the termination of the
"Distributor's Contract" between the Fund and FSC, upon termination
of the "Shareholder Service Agreement" between the Fund and FSS, or
upon the termination of the Distribution Plan to which this Agreement
is related; and
(iii) by any party to the Agreement without cause by giving the other party
at least sixty (60) days' written notice of its intention to
terminate.
(e) The termination of this Agreement with respect to any one Fund will not
cause the Agreement's termination with respect to any other Fund.
11. Certification of Customers' Taxpayer Identification Numbers.
The Institution agrees to obtain any taxpayer identification number
certification from its customers required under Section 3406 of the Internal
Revenue Code, and any applicable Treasury regulations, and to provide FSC,
FSS, or their respective designee with timely written notice of any failure to
obtain such taxpayer identification number certification in order to enable
the implementation of any required backup withholding.
12. Miscellaneous.
(a) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject
hereof whether oral or written. If any provision of this Agreement shall
be held or made invalid by a court or regulatory agency decision, statute,
rule or otherwise, the remainder of this Agreement shall not be affected
thereby. Subject to the provisions of Section 10, hereof, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto
and their respective successors and shall be governed by Pennsylvania law;
provided, however, that nothing herein shall be construed in a manner
inconsistent with the Investment Company Act of 1940 or any rule or
regulation promulgated by the Securities and Exchange Commission
thereunder.
(b) This Agreement may be executed by different parties on separate
counterparts, each of which, when so executed and delivered, shall be an
original, and all such counterparts shall together constitute one and the
same instrument.
(c) Except as otherwise specifically provided in this Agreement, all
notices required or permitted to be given pursuant to this Agreement shall
be given in writing and delivered by personal delivery or by postage
prepaid, registered or certified United States first class mail, return
receipt requested, overnight courier services, or by facsimile or similar
electronic means of delivery (with a confirming copy by mail as provided
herein). Unless otherwise notified in writing, all notices to FSC or FSS
shall be given or sent to FSC or FSS at their offices located at Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779, and all notices to
the Institution shall be given or sent to it at its address shown below.
FEDERATED SHAREHOLDER SERVICES
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By: /s/ John W. McGonigle
John W. McGonigle, President
FEDERATED SECURITIES CORP.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By: /s/ Richard B. Fisher
Richard B. Fisher, Chairman
[Institution]
Address
City State Zip Code
Dated: By:
Authorized Signature
Title
Print Name of Authorized Signature
Plan Trustee / Mutual Funds Service Agreement Page 1
Exhibit 6(iv) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
PLAN TRUSTEE / MUTUAL FUNDS SERVICE AGREEMENT
This Agreement is entered into among the financial institution executing
this Agreement ("Plan Trustee"), Federated Securities Corp. ("FSC"), and
Federated Shareholder Services ("FSS"), with respect to those investment
companies listed in Exhibit A hereto (referred to individually as the "Fund"
and collectively as the "Funds") for whose shares of beneficial interest or
capital stock ("Shares") FSC serves as Distributor and for whom FSS provides
or coordinates shareholder services.
WHEREAS, Plan Trustee is a trustee for various employee pension benefit
plans (the "Plans");
WHEREAS, FSS provides shareholder services for shareholders of the Funds
in part by retaining financial institutions (such as the Plan Trustee) to
perform those shareholder services and FSC provides distribution services for
the Funds in part by retaining financial institutions (such as the Plan
Trustee) to perform distribution-related support services ("trust services");
WHEREAS, FSS and FSC have determined that services usually provided by
trustees of employee benefit plans such as the Plan Trustee are substantially
equivalent to shareholder services and that the compensation of the Plan
Trustee for those services would contribute to the distribution and sale of
Fund shares to employee benefit plans; and
WHEREAS, Plan Trustee desires to provide such services for compensation
received from FSS and FSC;
NOW, THEREFORE, the parties agree as follows:
1. FSS and FSC hereby appoint the Plan Trustee to provide trust
services to the Plans pursuant to the terms and condition of this agreement.
The Plan Trustee agrees to provide trust services which, in its best judgment,
are necessary or desirable for its customers who are investors in the Funds.
The Plan Trustee further agrees to provide FSS and FSC, upon request, a
written description of the trust services which Plan Trustee is providing
hereunder.
2. During the term of this Agreement, FSS and FSC will pay the Plan
Trustee fees as set forth in a written schedule delivered to the Plan Trustee
pursuant to this Agreement. The fee schedule for the Plan Trustee may be
changed by FSS or FSC sending a new fee schedule or written notice to the Plan
Trustee pursuant to Paragraph 9 of this Agreement. To enable the Funds to
comply with an applicable exemptive order, the Plan Trustee represents that
the fees received pursuant to this Agreement will be disclosed to its
customers, will be authorized by its customers (directly or by operation of
applicable law), and will not result in an excessive fee to the Plan Trustee.
3. The Plan Trustee hereby warrants that:
(a) it has been authorized to exercise trust powers in the state
in which the Plan Trustee is located by the appropriate
regulatory authority and, as to each of its Plans, the Plan
Trustee has or will obtain the proper authority to act on
behalf of such Plans;
(b) each Plan on whose behalf the Plan Trustee is acting or will
act is either (i) a trust which is tax-exempt under Sections
401 and 501 of the Internal Revenue Code or (ii) a
government retirement plan as described under Section
401(a)(24) of the Internal Revenue Code;
(c) the governing document of each Plan on whose behalf the Plan
Trustee is acting or will act includes or will be amended to
include a provision which authorizes investment in the Funds
(or, generally, in investment company shares) and which
provides that expenses of the Plan may be paid from the
assets of the Plan; and
(d) the Plan Trustee is functioning as a "non-discretionary
fiduciary" with regard to the Plan's investments in the
Funds, and the plan's sponsor or other appropriate
independent fiduciary of the Plan has reviewed and approved
the investment of Plan assets in the Funds and the
compensation of the Plan Trustee as contemplated under this
Agreement.
The Plan Trustee agrees to notify FSS and FSC immediately of any action
by or communication from the Internal Revenue Service, the sponsor of a Plan,
the Department of Labor, or any other party which in any way affects the
continuing accuracy of any warranty or representation set forth in this
Agreement. Such communications or actions specifically may include, without
limitation, any communication or action with regard to the tax qualified
status of any Plan, any amendment to or alteration in the governing document
of any Plan, and any other communication or action which affects the ability
of any Plan to invest in or continue to hold shares of the Funds. The Plan
Trustee acknowledges that upon the breach of any of the foregoing warranties,
the Plan Trustee may be liable to FSS, FSC, and the Funds for any direct and
consequential damages resulting from such a breach of this Agreement.
4. Unless such action would cause the Plan Trustee to violate its
fiduciary obligations under the terms of the Plan or under the provisions of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the
Plan Trustee agrees not to solicit or cause to be solicited directly, or
indirectly at any time in the future, any proxies from the shareholders of a
Fund in opposition to proxies solicited by management of the Fund, unless a
court of competent jurisdiction shall have determined that the conduct of a
majority of the Board of Trustees or Directors of the Fund constitutes willful
misfeasance, bad faith, gross negligence, or reckless disregard of their
duties. This paragraph 4 will survive the term of this Agreement.
5. This Agreement shall continue in effect for one year from the date
of its execution, and thereafter for successive periods of one year if the
form of this Agreement is approved at least annually by the Board of each
Fund, including a majority of the members of the Board of the Fund who are not
interested persons of the Fund and have no direct or indirect financial
interest in the operation of the Fund's Plan or in any related documents to
the Plan ("Disinterested Board Members") cast in person at a meeting called
for that purpose.
6. Notwithstanding paragraph 5, this Agreement may be terminated as
follows:
(a) at any time with regard to a particular Fund or class of
shares of a Fund, without the payment of any penalty, by the vote of
a majority of the Disinterested Board Members of the Fund or by a
vote of a majority of the outstanding voting securities of the class
of shares of the Fund as defined in the Investment Company Act of
1940 on not more than sixty (60) days' written notice to the parties
to this Agreement;
(b) automatically in the event of the Agreement's assignment
as defined in the Investment Company Act of 1940, upon the
termination of the "Distributor's Contract" between the Fund and FSC,
upon termination of the "Shareholder Services Agreement" between the
Fund and FSS, or upon the termination of the Distribution Plan to
which this Agreement is related; and
(c) by either party to the Agreement without cause by giving
the other party at least sixty (60) days' written notice of its
intention to terminate.
7. The Plan Trustee agrees to obtain any taxpayer identification
number certification from its Plans required under Section 3406 of the
Internal Revenue Code, and any applicable Treasury regulations, and to provide
FSS with timely written notice of any failure to obtain such taxpayer
identification number certification in order to enable the implementation of
any required backup withholding.
8. The execution and delivery of this Agreement have been authorized
by the Trustees of FSS and signed by an authorized officer of FSS, acting as
such, and neither such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, and the
obligations of this Agreement are not binding upon any of the Trustees or
shareholders of FSS, but bind only the trust property of FSS as provided in
the Declaration of Trust of FSS.
9. Notices of any kind to be given hereunder shall be in writing
(including facsimile communication) and shall be duly given if delivered to
Plan Trustee at the address set forth below and if delivered to FSS or FSC
at Federated Investors Tower, Pittsburgh, PA 15222-3779, Attention:
President.
10. This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
hereof whether oral or written. If any provision of this Agreement shall be
held or made invalid by a court or regulatory agency decision, statute, rule
or otherwise, the remainder of this Agreement shall not be affected thereby.
Subject to the provisions of Sections 5 and 6, hereof, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and shall be governed by Pennsylvania law; provided,
however, that nothing herein shall be construed in a manner inconsistent with
the Investment Company Act of 1940 or any rule or regulation promulgated by
the Securities and Exchange Commission thereunder.
11. This Agreement may be executed by different parties on separate
counterparts, each of which, when so executed and delivered, shall be an
original, and all such counterparts shall together constitute one and the same
instrument.
12. This Agreement shall not be assigned by any party without the
prior written consent of FSS and FSC in the case of assignment by Plan
Trustee, or of Plan Trustee in the case of assignment by FSS or FSC, except
that any party may assign to a successor all of or a substantial portion of
its business to a party controlling, controlled by, or under common control
with such party.
13. This Agreement may be amended by FSS or FSC from time to time by
the following procedure. FSS or FSC will mail a copy of the amendment to the
Plan Trustee's address, as shown below. If the Plan Trustee does not object
to the amendment within thirty (30) days after its receipt, the amendment will
become part of the Agreement. The Plan Trustee's objection must be in writing
and be received by FSS or FSC within such thirty days. Amendments to Exhibit
A may be made by FSS or FSC at any time by written or electronic notice to the
Institution. FSS and FSC anticipate that a revised Exhibit A, reflecting all
changes in effect at the time of transmission, will be sent to the Institution
annually during the term of this Agreement.
14. The Plan Trustee acknowledges and agrees that FSS has entered into
this Agreement solely in the capacity of agent for the Funds and administrator
of the Plan. The Plan Trustee agrees not to claim that FSS is liable for any
responsibilities or amounts due by the Funds hereunder.
FEDERATED SHAREHOLDER SERVICES
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By: /s/ John W. McGonigle
President
FEDERATED SECURITIES CORP.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By: /s/ Richard B. Fisher
Chairman
[Plan Trustee]
Address
City State Zip Code
Dated: By:
Authorized Signature
Title
Print Name of Authorized Signature
CUSTODIAN CONTRACT
Between
FEDERATED INVESTMENT COMPANIES
and
STATE STREET BANK AND TRUST COMPANY
and
FEDERATED SERVICES COMPANY
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held by It 1
2. Duties of the Custodian With Respect to Property of the
Funds Held by the Custodian 2
2.1 Holding Securities 2
2.2 Delivery of Securities 2
2.3 Registration of Securities 5
2.4 Bank Accounts 6
2.5 Payments for Shares 7
2.6 Availability of Federal Funds 7
2.7 Collection of Income 7
2.8 Payment of Fund Moneys 8
2.9 Liability for Payment in Advance of Receipt of Securities
Purchased. 9
2.10 Payments for Repurchases or Redemptions of Shares of a Fund 9
2.11 Appointment of Agents 10
2.12 Deposit of Fund Assets in Securities System 10
2.13 Segregated Account 12
2.14 Joint Repurchase Agreements 13
2.15 Ownership Certificates for Tax Purposes 13
2.16 Proxies 13
2.17 Communications Relating to Fund Portfolio Securities 13
2.18 Proper Instructions 14
2.19 Actions Permitted Without Express Authority 14
2.20 Evidence of Authority 15
2.21 Notice to Trust by Custodian Regarding Cash Movement. 15
3. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income 15
4. Records 16
5. Opinion of Funds' Independent Public Accountants/Auditors 16
6. Reports to Trust by Independent Public Accountants/Auditors 17
7. Compensation of Custodian 17
8. Responsibility of Custodian 17
9. Effective Period, Termination and Amendment 19
10. Successor Custodian 20
11. Interpretive and Additional Provisions 21
12. Massachusetts Law to Apply 22
13. Notices 22
14. Counterparts 22
15. Limitations of Liability 22
CUSTODIAN CONTRACT
This Contract between those INVESTMENT COMPANIES listed on Exhibit 1, as it
may be amended from time to time, (the "Trust"), which may be Massachusetts
business trusts or Maryland corporations or have such other form of
organization as may be indicated, on behalf of the portfolios (hereinafter
collectively called the "Funds" and individually referred to as a "Fund") of
the Trust, having its principal place of business at Federated Investors
Tower, Pittsburgh, Pennsylvania, 15222-3779, and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company, having its principal place of business
at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian", and FEDERATED SERVICES COMPANY, a Delaware business trust
company, having its principal place of business at Federated Investors Tower,
Pittsburgh, Pennsylvania, 15222-3779, hereinafter called ("Company").
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Trust hereby employs the Custodian as the custodian of the assets of
each of the Funds of the Trust. Except as otherwise expressly provided
herein, the securities and other assets of each of the Funds shall be
segregated from the assets of each of the other Funds and from all other
persons and entities. The Trust will deliver to the Custodian all
securities and cash owned by the Funds and all payments of income,
payments of principal or capital distributions received by them with
respect to all securities owned by the Funds from time to time, and the
cash consideration received by them for shares ("Shares") of beneficial
interest/capital stock of the Funds as may be issued or sold from time
to time. The Custodian shall not be responsible for any property of the
Funds held or received by the Funds and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Section
2.18), the Custodian shall from time to time employ one or more sub-
custodians upon the terms specified in the Proper Instructions, provided
that the Custodian shall have no more or less responsibility or
liability to the Trust or any of the Funds on account of any actions or
omissions of any sub-custodian so employed than any such sub-custodian
has to the Custodian.
2. Duties of the Custodian With Respect to Property of the Funds Held
by the Custodian
2.1 Holding Securities. The Custodian shall hold and physically
segregate for the account of each Fund all non-cash property,
including all securities owned by each Fund, other than securities
which are maintained pursuant to Section 2.12 in a clearing agency
which acts as a securities depository or in a book-entry system
authorized by the U.S. Department of the Treasury, collectively
referred to herein as "Securities System", or securities which are
subject to a joint repurchase agreement with affiliated funds
pursuant to Section 2.14. The Custodian shall maintain records of
all receipts, deliveries and locations of such securities, together
with a current inventory thereof, and shall conduct periodic
physical inspections of certificates representing stocks, bonds and
other securities held by it under this Contract in such manner as
the Custodian shall determine from time to time to be advisable in
order to verify the accuracy of such inventory. With respect to
securities held by any agent appointed pursuant to Section 2.11
hereof, and with respect to securities held by any sub-custodian
appointed pursuant to Section 1 hereof, the Custodian may rely upon
certificates from such agent as to the holdings of such agent and
from such sub-custodian as to the holdings of such sub-custodian,
it being understood that such reliance in no way relieves the
Custodian of its responsibilities under this Contract. The
Custodian will promptly report to the Trust the results of such
inspections, indicating any shortages or discrepancies uncovered
thereby, and take appropriate action to remedy any such shortages
or discrepancies.
2.2 Delivery of Securities. The Custodian shall release and deliver
securities owned by a Fund held by the Custodian or in a Securities
System account of the Custodian only upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
(1) Upon sale of such securities for the account of a Fund and
receipt of payment therefor;
(2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Trust;
(3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
(4) To the depository agent in connection with tender or other
similar offers for portfolio securities of a Fund, in
accordance with the provisions of Section 2.17 hereof;
(5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to
be delivered to the Custodian;
(6) To the issuer thereof, or its agent, for transfer into the name
of a Fund or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent
appointed pursuant to Section 2.11 or into the name or nominee
name of any sub-custodian appointed pursuant to Section 1; or
for exchange for a different number of bonds, certificates or
other evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new
securities are to be delivered to the Custodian;
(7) Upon the sale of such securities for the account of a Fund, to
the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery custom";
provided that in any such case, the Custodian shall have no
responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such
securities except as may arise from the Custodian's own failure
to act in accordance with the standard of reasonable care or
any higher standard of care imposed upon the Custodian by any
applicable law or regulation if such above-stated standard of
reasonable care were not part of this Contract;
(8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered
to the Custodian;
(9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
(10)For delivery in connection with any loans of portfolio
securities of a Fund, but only against receipt of adequate
collateral in the form of (a) cash, in an amount specified by
the Trust, (b) certificated securities of a description
specified by the Trust, registered in the name of the Fund or
in the name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer, or (c)
securities of a description specified by the Trust, transferred
through a Securities System in accordance with Section 2.12
hereof;
(11)For delivery as security in connection with any borrowings
requiring a pledge of assets by a Fund, but only against
receipt of amounts borrowed, except that in cases where
additional collateral is required to secure a borrowing already
made, further securities may be released for the purpose;
(12)For delivery in accordance with the provisions of any agreement
among the Trust or a Fund, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934, as
amended, (the "Exchange Act") and a member of The National
Association of Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing Corporation
and of any registered national securities exchange, or of any
similar organization or organizations, regarding escrow or
other arrangements in connection with transactions for a Fund;
(13)For delivery in accordance with the provisions of any agreement
among the Trust or a Fund, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any Contract Market, or any
similar organization or organizations, regarding account
deposits in connection with transaction for a Fund;
(14)Upon receipt of instructions from the transfer agent ("Transfer
Agent") for a Fund, for delivery to such Transfer Agent or to
the holders of shares in connection with distributions in kind,
in satisfaction of requests by holders of Shares for repurchase
or redemption; and
(15)For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions, a certified copy of a
resolution of the Executive Committee of the Trust on behalf of
a Fund signed by an officer of the Trust and certified by its
Secretary or an Assistant Secretary, specifying the securities
to be delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom
delivery of such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian
(other than bearer securities) shall be registered in the name of a
particular Fund or in the name of any nominee of the Fund or of any
nominee of the Custodian which nominee shall be assigned
exclusively to the Fund, unless the Trust has authorized in writing
the appointment of a nominee to be used in common with other
registered investment companies affiliated with the Fund, or in the
name or nominee name of any agent appointed pursuant to Section
2.11 or in the name or nominee name of any sub-custodian appointed
pursuant to Section 1. All securities accepted by the Custodian on
behalf of a Fund under the terms of this Contract shall be in
"street name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate
bank account or accounts in the name of each Fund, subject only to
draft or order by the Custodian acting pursuant to the terms of
this Contract, and shall hold in such account or accounts, subject
to the provisions hereof, all cash received by it from or for the
account of each Fund, other than cash maintained in a joint
repurchase account with other affiliated funds pursuant to Section
2.14 of this Contract or by a particular Fund in a bank account
established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940, as amended, (the "1940 Act").
Funds held by the Custodian for a Fund may be deposited by it to
its credit as Custodian in the Banking Department of the Custodian
or in such other banks or trust companies as it may in its
discretion deem necessary or desirable; provided, however, that
every such bank or trust company shall be qualified to act as a
custodian under the 1940 Act and that each such bank or trust
company and the funds to be deposited with each such bank or trust
company shall be approved by vote of a majority of the Board of
Trustees/Directors ("Board") of the Trust. Such funds shall be
deposited by the Custodian in its capacity as Custodian for the
Fund and shall be withdrawable by the Custodian only in that
capacity. If requested by the Trust, the Custodian shall furnish
the Trust, not later than twenty (20) days after the last business
day of each month, an internal reconciliation of the closing
balance as of that day in all accounts described in this section to
the balance shown on the daily cash report for that day rendered to
the Trust.
2.5 Payments for Shares. The Custodian shall make such arrangements
with the Transfer Agent of each Fund, as will enable the Custodian
to receive the cash consideration due to each Fund and will deposit
into each Fund's account such payments as are received from the
Transfer Agent. The Custodian will provide timely notification to
the Trust and the Transfer Agent of any receipt by it of payments
for Shares of the respective Fund.
2.6 Availability of Federal Funds. Upon mutual agreement between the
Trust and the Custodian, the Custodian shall make federal funds
available to the Funds as of specified times agreed upon from time
to time by the Trust and the Custodian in the amount of checks,
clearing house funds, and other non-federal funds received in
payment for Shares of the Funds which are deposited into the Funds'
accounts.
2.7 Collection of Income.
(1) The Custodian shall collect on a timely basis all income and
other payments with respect to registered securities held
hereunder to which each Fund shall be entitled either by law or
pursuant to custom in the securities business, and shall
collect on a timely basis all income and other payments with
respect to bearer securities if, on the date of payment by the
issuer, such securities are held by the Custodian or its agent
thereof and shall credit such income, as collected, to each
Fund's custodian account. Without limiting the generality of
the foregoing, the Custodian shall detach and present for
payment all coupons and other income items requiring
presentation as and when they become due and shall collect
interest when due on securities held hereunder. The collection
of income due the Funds on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility of
the Trust. The Custodian will have no duty or responsibility
in connection therewith, other than to provide the Trust with
such information or data as may be necessary to assist the
Trust in arranging for the timely delivery to the Custodian of
the income to which each Fund is properly entitled.
(2) The Custodian shall promptly notify the Trust whenever income
due on securities is not collected in due course and will
provide the Trust with monthly reports of the status of past
due income unless the parties otherwise agree.
2.8 Payment of Fund Moneys. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the
parties, the Custodian shall pay out moneys of each Fund in the
following cases only:
(1) Upon the purchase of securities, futures contracts or options
on futures contracts for the account of a Fund but only (a)
against the delivery of such securities, or evidence of title
to futures contracts, to the Custodian (or any bank, banking
firm or trust company doing business in the United States or
abroad which is qualified under the 1940 Act to act as a
custodian and has been designated by the Custodian as its agent
for this purpose) registered in the name of the Fund or in the
name of a nominee of the Custodian referred to in Section 2.3
hereof or in proper form for transfer, (b) in the case of a
purchase effected through a Securities System, in accordance
with the conditions set forth in Section 2.12 hereof or (c) in
the case of repurchase agreements entered into between the
Trust and any other party, (i) against delivery of the
securities either in certificate form or through an entry
crediting the Custodian's account at the Federal Reserve Bank
with such securities or (ii) against delivery of the receipt
evidencing purchase for the account of the Fund of securities
owned by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such securities from
the Fund;
(2) In connection with conversion, exchange or surrender of
securities owned by a Fund as set forth in Section 2.2 hereof;
(3) For the redemption or repurchase of Shares of a Fund issued by
the Trust as set forth in Section 2.10 hereof;
(4) For the payment of any expense or liability incurred by a Fund,
including but not limited to the following payments for the
account of the Fund: interest; taxes; management, accounting,
transfer agent and legal fees; and operating expenses of the
Fund, whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
(5) For the payment of any dividends on Shares of a Fund declared
pursuant to the governing documents of the Trust;
(6) For payment of the amount of dividends received in respect of
securities sold short;
(7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a
resolution of the Executive Committee of the Trust on behalf of
a Fund signed by an officer of the Trust and certified by its
Secretary or an Assistant Secretary, specifying the amount of
such payment, setting forth the purpose for which such payment
is to be made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom such payment is to be
made.
2.9 Liability for Payment in Advance of Receipt of Securities
Purchased. In any and every case where payment for purchase of
securities for the account of a Fund is made by the Custodian in
advance of receipt of the securities purchased, in the absence of
specific written instructions from the Trust to so pay in advance,
the Custodian shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had been
received by the Custodian.
2.10Payments for Repurchases or Redemptions of Shares of a Fund. From
such funds as may be available for the purpose of repurchasing or
redeeming Shares of a Fund, but subject to the limitations of the
Declaration of Trust/Articles of Incorporation and any applicable
votes of the Board of the Trust pursuant thereto, the Custodian
shall, upon receipt of instructions from the Transfer Agent, make
funds available for payment to holders of shares of such Fund who
have delivered to the Transfer Agent a request for redemption or
repurchase of their shares including without limitation through
bank drafts, automated clearinghouse facilities, or by other means.
In connection with the redemption or repurchase of Shares of the
Funds, the Custodian is authorized upon receipt of instructions
from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders.
2.11Appointment of Agents. The Custodian may at any time or times in
its discretion appoint (and may at any time remove) any other bank
or trust company which is itself qualified under the 1940 Act and
any applicable state law or regulation, to act as a custodian, as
its agent to carry out such of the provisions of this Section 2 as
the Custodian may from time to time direct; provided, however, that
the appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.12Deposit of Fund Assets in Securities System. The Custodian may
deposit and/or maintain securities owned by the Funds in a clearing
agency registered with the Securities and Exchange Commission
("SEC") under Section 17A of the Exchange Act, which acts as a
securities depository, or in the book-entry system authorized by
the U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities System" in
accordance with applicable Federal Reserve Board and SEC rules and
regulations, if any, and subject to the following provisions:
(1) The Custodian may keep securities of each Fund in a Securities
System provided that such securities are represented in an
account ("Account") of the Custodian in the Securities System
which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for
customers;
(2) The records of the Custodian with respect to securities of the
Funds which are maintained in a Securities System shall
identify by book-entry those securities belonging to each Fund;
(3) The Custodian shall pay for securities purchased for the
account of each Fund upon (i) receipt of advice from the
Securities System that such securities have been transferred to
the Account, and (ii) the making of an entry on the records of
the Custodian to reflect such payment and transfer for the
account of the Fund. The Custodian shall transfer securities
sold for the account of a Fund upon (i) receipt of advice from
the Securities System that payment for such securities has been
transferred to the Account, and (ii) the making of an entry on
the records of the Custodian to reflect such transfer and
payment for the account of the Fund. Copies of all advices
from the Securities System of transfers of securities for the
account of a Fund shall identify the Fund, be maintained for
the Fund by the Custodian and be provided to the Trust at its
request. Upon request, the Custodian shall furnish the Trust
confirmation of each transfer to or from the account of a Fund
in the form of a written advice or notice and shall furnish to
the Trust copies of daily transaction sheets reflecting each
day's transactions in the Securities System for the account of
a Fund.
(4) The Custodian shall provide the Trust with any report obtained
by the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the Securities System;
(5) The Custodian shall have received the initial certificate,
required by Section 9 hereof;
(6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Trust for any loss or damage
to a Fund resulting from use of the Securities System by reason
of any negligence, misfeasance or misconduct of the Custodian
or any of its agents or of any of its or their employees or
from failure of the Custodian or any such agent to enforce
effectively such rights as it may have against the Securities
System; at the election of the Trust, it shall be entitled to
be subrogated to the rights of the Custodian with respect to
any claim against the Securities System or any other person
which the Custodian may have as a consequence of any such loss
or damage if and to the extent that a Fund has not been made
whole for any such loss or damage.
(7) The authorization contained in this Section 2.12 shall not
relieve the Custodian from using reasonable care and diligence
in making use of any Securities System.
2.13Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or
accounts for and on behalf of each Fund, into which account or
accounts may be transferred cash and/or securities, including
securities maintained in an account by the Custodian pursuant to
Section 2.12 hereof, (i) in accordance with the provisions of any
agreement among the Trust, the Custodian and a broker-dealer
registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or
the Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions for a
Fund, (ii) for purpose of segregating cash or government securities
in connection with options purchased, sold or written for a Fund or
commodity futures contracts or options thereon purchased or sold
for a Fund, (iii) for the purpose of compliance by the Trust or a
Fund with the procedures required by any release or releases of the
SEC relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate
purposes, but only, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution
of the Board or of the Executive Committee signed by an officer of
the Trust and certified by the Secretary or an Assistant Secretary,
setting forth the purpose or purposes of such segregated account
and declaring such purposes to be proper corporate purposes.
2.14Joint Repurchase Agreements. Upon the receipt of Proper
Instructions, the Custodian shall deposit and/or maintain any
assets of a Fund and any affiliated funds which are subject to
joint repurchase transactions in an account established solely for
such transactions for the Fund and its affiliated funds. For
purposes of this Section 2.14, "affiliated funds" shall include all
investment companies and their portfolios for which subsidiaries or
affiliates of Federated Investors serve as investment advisers,
distributors or administrators in accordance with applicable
exemptive orders from the SEC. The requirements of segregation set
forth in Section 2.1 shall be deemed to be waived with respect to
such assets.
2.15Ownership Certificates for Tax Purposes. The Custodian shall
execute ownership and other certificates and affidavits for all
federal and state tax purposes in connection with receipt of income
or other payments with respect to securities of a Fund held by it
and in connection with transfers of securities.
2.16Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than
in the name of a Fund or a nominee of a Fund, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Trust such proxies, all proxy
soliciting materials and all notices relating to such securities.
2.17Communications Relating to Fund Portfolio Securities. The
Custodian shall transmit promptly to the Trust all written
information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection
therewith and notices of exercise of call and put options written
by the Fund and the maturity of futures contracts purchased or sold
by the Fund) received by the Custodian from issuers of the
securities being held for the Fund. With respect to tender or
exchange offers, the Custodian shall transmit promptly to the Trust
all written information received by the Custodian from issuers of
the securities whose tender or exchange is sought and from the
party (or his agents) making the tender or exchange offer. If the
Trust desires to take action with respect to any tender offer,
exchange offer or any other similar transaction, the Trust shall
notify the Custodian in writing at least three business days prior
to the date on which the Custodian is to take such action.
However, the Custodian shall nevertheless exercise its best efforts
to take such action in the event that notification is received
three business days or less prior to the date on which action is
required.
2.18Proper Instructions. Proper Instructions as used throughout this
Section 2 means a writing signed or initialed by one or more person
or persons as the Board shall have from time to time authorized.
Each such writing shall set forth the specific transaction or type
of transaction involved. Oral instructions will be deemed to be
Proper Instructions if (a) the Custodian reasonably believes them
to have been given by a person previously authorized in Proper
Instructions to give such instructions with respect to the
transaction involved, and (b) the Trust promptly causes such oral
instructions to be confirmed in writing. Upon receipt of a
certificate of the Secretary or an Assistant Secretary as to the
authorization by the Board of the Trust accompanied by a detailed
description of procedures approved by the Board, Proper
Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board
and the Custodian are satisfied that such procedures afford
adequate safeguards for a Fund's assets.
2.19Actions Permitted Without Express Authority. The Custodian may in
its discretion, without express authority from the Trust:
(1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, provided that all such payments
shall be accounted for to the Trust in such form that it may be
allocated to the affected Fund;
(2) surrender securities in temporary form for securities in
definitive form;
(3) endorse for collection, in the name of a Fund, checks, drafts
and other negotiable instruments; and
(4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property of
each Fund except as otherwise directed by the Trust.
2.20Evidence of Authority. The Custodian shall be protected in acting
upon any instructions, notice, request, consent, certificate or
other instrument or paper reasonably believed by it to be genuine
and to have been properly executed on behalf of a Fund. The
Custodian may receive and accept a certified copy of a vote of the
Board of the Trust as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or (b) of any
determination of or any action by the Board pursuant to the
Declaration of Trust/Articles of Incorporation as described in such
vote, and such vote may be considered as in full force and effect
until receipt by the Custodian of written notice to the contrary.
2.21Notice to Trust by Custodian Regarding Cash Movement. The
Custodian will provide timely notification to the Trust of any
receipt of cash, income or payments to the Trust and the release of
cash or payment by the Trust.
3. Duties of Custodian With Respect to the Books of Account and Calculation
of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of the Trust to keep the
books of account of each Fund and/or compute the net asset value per
share of the outstanding Shares of each Fund or, if directed in writing
to do so by the Trust, shall itself keep such books of account and/or
compute such net asset value per share. If so directed, the Custodian
shall also calculate daily the net income of a Fund as described in the
Fund's currently effective prospectus and Statement of Additional
Information ("Prospectus") and shall advise the Trust and the Transfer
Agent daily of the total amounts of such net income and, if instructed
in writing by an officer of the Trust to do so, shall advise the
Transfer Agent periodically of the division of such net income among its
various components. The calculations of the net asset value per share
and the daily income of a Fund shall be made at the time or times
described from time to time in the Fund's currently effective
Prospectus.
4. Records.
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will
meet the obligations of the Trust and the Funds under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, and specifically including identified cost records used for
tax purposes. All such records shall be the property of the Trust and
shall at all times during the regular business hours of the Custodian be
open for inspection by duly authorized officers, employees or agents of
the Trust and employees and agents of the SEC. In the event of
termination of this Contract, the Custodian will deliver all such
records to the Trust, to a successor Custodian, or to such other person
as the Trust may direct. The Custodian shall supply daily to the Trust
a tabulation of securities owned by a Fund and held by the Custodian and
shall, when requested to do so by the Trust and for such compensation as
shall be agreed upon between the Trust and the Custodian, include
certificate numbers in such tabulations.
5. Opinion of Funds' Independent Public Accountants/Auditors.
The Custodian shall take all reasonable action, as the Trust may from
time to time request, to obtain from year to year favorable opinions
from each Fund's independent public accountants/auditors with respect to
its activities hereunder in connection with the preparation of the
Fund's registration statement, periodic reports, or any other reports to
the SEC and with respect to any other requirements of such Commission.
6. Reports to Trust by Independent Public Accountants/Auditors.
The Custodian shall provide the Trust, at such times as the Trust may
reasonably require, with reports by independent public
accountants/auditors for each Fund on the accounting system, internal
accounting control and procedures for safeguarding securities, futures
contracts and options on futures contracts, including securities
deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian for the Fund under this Contract;
such reports shall be of sufficient scope and in sufficient detail, as
may reasonably be required by the Trust, to provide reasonable assurance
that any material inadequacies would be disclosed by such examination
and, if there are no such inadequacies, the reports shall so state.
7. Compensation of Custodian.
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time
between Company and the Custodian.
8. Responsibility of Custodian.
The Custodian shall be held to a standard of reasonable care in carrying
out the provisions of this Contract; provided, however, that the
Custodian shall be held to any higher standard of care which would be
imposed upon the Custodian by any applicable law or regulation if such
above stated standard of reasonable care was not part of this Contract.
The Custodian shall be entitled to rely on and may act upon advice of
counsel (who may be counsel for the Trust) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to
such advice, provided that such action is not in violation of applicable
federal or state laws or regulations, and is in good faith and without
negligence. Subject to the limitations set forth in Section 15 hereof,
the Custodian shall be kept indemnified by the Trust but only from the
assets of the Fund involved in the issue at hand and be without
liability for any action taken or thing done by it in carrying out the
terms and provisions of this Contract in accordance with the above
standards.
In order that the indemnification provisions contained in this Section 8
shall apply, however, it is understood that if in any case the Trust may
be asked to indemnify or save the Custodian harmless, the Trust shall be
fully and promptly advised of all pertinent facts concerning the
situation in question, and it is further understood that the Custodian
will use all reasonable care to identify and notify the Trust promptly
concerning any situation which presents or appears likely to present the
probability of such a claim for indemnification. The Trust shall have
the option to defend the Custodian against any claim which may be the
subject of this indemnification, and in the event that the Trust so
elects it will so notify the Custodian and thereupon the Trust shall
take over complete defense of the claim, and the Custodian shall in such
situation initiate no further legal or other expenses for which it shall
seek indemnification under this Section. The Custodian shall in no case
confess any claim or make any compromise in any case in which the Trust
will be asked to indemnify the Custodian except with the Trust's prior
written consent.
Notwithstanding the foregoing, the responsibility of the Custodian with
respect to redemptions effected by check shall be in accordance with a
separate Agreement entered into between the Custodian and the Trust.
If the Trust requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action
may, in the reasonable opinion of the Custodian, result in the Custodian
or its nominee assigned to a Fund being liable for the payment of money
or incurring liability of some other form, the Custodian may request the
Trust, as a prerequisite to requiring the Custodian to take such action,
to provide indemnity to the Custodian in an amount and form satisfactory
to the Custodian.
Subject to the limitations set forth in Section 15 hereof, the Trust
agrees to indemnify and hold harmless the Custodian and its nominee from
and against all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) (referred to herein as authorized
charges) incurred or assessed against it or its nominee in connection
with the performance of this Contract, except such as may arise from it
or its nominee's own failure to act in accordance with the standard of
reasonable care or any higher standard of care which would be imposed
upon the Custodian by any applicable law or regulation if such above-
stated standard of reasonable care were not part of this Contract. To
secure any authorized charges and any advances of cash or securities
made by the Custodian to or for the benefit of a Fund for any purpose
which results in the Fund incurring an overdraft at the end of any
business day or for extraordinary or emergency purposes during any
business day, the Trust hereby grants to the Custodian a security
interest in and pledges to the Custodian securities held for the Fund by
the Custodian, in an amount not to exceed 10 percent of the Fund's gross
assets, the specific securities to be designated in writing from time to
time by the Trust or the Fund's investment adviser. Should the Trust
fail to make such designation, or should it instruct the Custodian to
make advances exceeding the percentage amount set forth above and should
the Custodian do so, the Trust hereby agrees that the Custodian shall
have a security interest in all securities or other property purchased
for a Fund with the advances by the Custodian, which securities or
property shall be deemed to be pledged to the Custodian, and the written
instructions of the Trust instructing their purchase shall be considered
the requisite description and designation of the property so pledged for
purposes of the requirements of the Uniform Commercial Code. Should the
Trust fail to cause a Fund to repay promptly any authorized charges or
advances of cash or securities, subject to the provision of the second
paragraph of this Section 8 regarding indemnification, the Custodian
shall be entitled to use available cash and to dispose of pledged
securities and property as is necessary to repay any such advances.
9. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may
be terminated by either party by an instrument in writing delivered or
mailed, postage prepaid to the other party, such termination to take
effect not sooner than sixty (60) days after the date of such delivery
or mailing; provided, however that the Custodian shall not act under
Section 2.12 hereof in the absence of receipt of an initial certificate
of the Secretary or an Assistant Secretary that the Board of the Trust
has approved the initial use of a particular Securities System as
required in each case by Rule 17f-4 under the 1940 Act; provided
further, however, that the Trust shall not amend or terminate this
Contract in contravention of any applicable federal or state
regulations, or any provision of the Declaration of Trust/Articles of
Incorporation, and further provided, that the Trust may at any time by
action of its Board (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the appropriate banking
regulatory agency or upon the happening of a like event at the direction
of an appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Trust shall pay to the Custodian
such compensation as may be due as of the date of such termination and
shall likewise reimburse the Custodian for its costs, expenses and
disbursements.
10. Successor Custodian.
If a successor custodian shall be appointed by the Board of the Trust,
the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form
for transfer, all securities then held by it hereunder for each Fund and
shall transfer to separate accounts of the successor custodian all of
each Fund's securities held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board
of the Trust, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board shall have been delivered to the
Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank
or trust company, which is a "bank" as defined in the 1940 Act, (delete
"doing business ... Massachusetts" unless SSBT is the Custodian) doing
business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $100,000,000, all securities, funds
and other properties held by the Custodian and all instruments held by
the Custodian relative thereto and all other property held by it under
this Contract for each Fund and to transfer to separate accounts of
such successor custodian all of each Fund's securities held in any
Securities System. Thereafter, such bank or trust company shall be the
successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing
to failure of the Trust to procure the certified copy of the vote
referred to or of the Board to appoint a successor custodian, the
Custodian shall be entitled to fair compensation for its services during
such period as the Custodian retains possession of such securities,
funds and other properties and the provisions of this Contract relating
to the duties and obligations of the Custodian shall remain in full
force and effect.
11. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the Custodian and the
Trust may from time to time agree on such provisions interpretive of or
in addition to the provisions of this Contract as may in their joint
opinion be consistent with the general tenor of this Contract. Any such
interpretive or additional provisions shall be in a writing signed by
both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Declaration of
Trust/Articles of Incorporation. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to
be an amendment of this Contract.
12. Massachusetts Law to Apply.
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
13. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Trust at Federated
Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to the
Custodian at address for SSBT only: 225 Franklin Street, Boston,
Massachusetts, 02110, or to such other address as the Trust or the
Custodian may hereafter specify, shall be deemed to have been properly
delivered or given hereunder to the respective address.
14. Counterparts.
This Contract may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
15. Limitations of Liability.
The Custodian is expressly put on notice of the limitation of liability
as set forth in Article XI of the Declaration of Trust of those Trusts
which are business trusts and agrees that the obligations and
liabilities assumed by the Trust and any Fund pursuant to this Contract,
including, without limitation, any obligation or liability to indemnify
the Custodian pursuant to Section 8 hereof, shall be limited in any case
to the relevant Fund and its assets and that the Custodian shall not
seek satisfaction of any such obligation from the shareholders of the
relevant Fund, from any other Fund or its shareholders or from the
Trustees, Officers, employees or agents of the Trust, or any of them.
In addition, in connection with the discharge and satisfaction of any
claim made by the Custodian against the Trust, for whatever reasons,
involving more than one Fund, the Trust shall have the exclusive right
to determine the appropriate allocations of liability for any such claim
between or among the Funds.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed effective as of the 1st day of December, 1993.
ATTEST: INVESTMENT COMPANIES
/s/John G. McGonigle_________ By /s/John G. Donahue__________
John G. McGonigle John F. Donahue
Secretary Chairman
ATTEST: STATE STREET BANK AND TRUST
COMPANY
/s/ Ed McKenzie______________ By /s/ F. J. Sidoti,
Jr._____________
(Assistant) Secretary Typed Name: Frank J. Sidoti, Jr.
Typed Name: Ed McKenzie Title: Vice President
ATTEST: FEDERATED SERVICES COMPANY
/s/ Jeannette Fisher-Garber______ By /s/ James J. Dolan____________
Jeannette Fisher-Garber James J. Dolan
Secretary President
EXHIBIT 1
CONTRACT
DATE INVESTMENT COMPANY
12/01/94 Cash Trust Series II
Exhibit 9(ii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
AGREEMENT
for
FUND ACCOUNTING,
SHAREHOLDER RECORDKEEPING,
and
CUSTODY SERVICES PROCUREMENT
AGREEMENT made as of December 1, 1994, by and between those investment
companies listed on Exhibit 1 as may be amended from time to time, having
their principal office and place of business at Federated Investors Tower,
Pittsburgh, PA 15222-3779 (the "Trust"), on behalf of the portfolios
(individually referred to herein as a "Fund" and collectively as "Funds") of
the Trust, and FEDERATED SERVICES COMPANY, a Delaware business trust, having
its principal office and place of business at Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779 (the "Company").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
with authorized and issued shares of capital stock or beneficial interest
("Shares"); and
WHEREAS, the Trust may desire to retain the Company to provide certain
pricing, accounting and recordkeeping services for each of the Funds,
including any classes of shares issued by any Fund ("Classes") if so indicated
on Exhibit 1, and the Company is willing to furnish such services; and
WHEREAS, the Trust may desire to appoint the Company as its transfer agent,
dividend disbursing agent if so indicated on Exhibit 1, and agent in
connection with certain other activities, and the Company desires to accept
such appointment; and
WHEREAS, the Trust may desire to appoint the Company as its agent to
select, negotiate and subcontract for custodian services from an approved list
of qualified banks if so indicated on Exhibit 1, and the Company desires to
accept such appointment; and
WHEREAS, from time to time the Trust may desire and may instruct the
Company to subcontract for the performance of certain of its duties and
responsibilities hereunder to State Street Bank and Trust Company or another
agent (the "Agent"); and
WHEREAS, the words Trust and Fund may be used interchangeably for those
investment companies consisting of only one portfolio;
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, and intending to be legally bound hereby, the parties hereto agree
as follows:
SECTION ONE: Fund Accounting.
Article 1. Appointment.
The Trust hereby appoints the Company to provide certain pricing and
accounting services to the Funds, and/or the Classes, for the period and on
the terms set forth in this Agreement. The Company accepts such appointment
and agrees to furnish the services herein set forth in return for the
compensation as provided in Article 3 of this Section.
Article 2. The Company's Duties.
Subject to the supervision and control of the Trust's Board of Trustees or
Directors ("Board"), the Company will assist the Trust with regard to fund
accounting for the Trust, and/or the Funds, and/or the Classes, and in
connection therewith undertakes to perform the following specific services;
A. Value the assets of the Funds using: primarily, market quotations,
including the use of matrix pricing, supplied by the independent
pricing services selected by the Company in consultation with the
adviser, or sources selected by the adviser, and reviewed by the
board; secondarily, if a designated pricing service does not provide a
price for a security which the Company believes should be available by
market quotation, the Company may obtain a price by calling brokers
designated by the investment adviser of the fund holding the security,
or if the adviser does not supply the names of such brokers, the
Company will attempt on its own to find brokers to price those
securities; thirdly, for securities for which no market price is
available, the Pricing Committee of the Board will determine a fair
value in good faith. Consistent with Rule 2a-4 of the 40 Act,
estimates may be used where necessary or appropriate. The Company's
obligations with regard to the prices received from outside pricing
services and designated brokers or other outside sources, is to
exercise reasonable care in the supervision of the pricing agent. The
Company is not the guarantor of the securities prices received from
such agents and the Company is not liable to the Fund for potential
errors in valuing a Fund's assets or calculating the net asset value
per share of such Fund or Class when the calculations are based upon
such prices. All of the above sources of prices used as described are
deemed by the Company to be authorized sources of security prices. The
Company provides daily to the adviser the securities prices used in
calculating the net asset value of the fund, for its use in preparing
exception reports for those prices on which the adviser has comment.
Further, upon receipt of the exception reports generated by the
adviser, the Company diligently pursues communication regarding
exception reports with the designated pricing agents.
B. Determine the net asset value per share of each Fund and/or Class, at
the time and in the manner from time to time determined by the Board
and as set forth in the Prospectus and Statement of Additional
Information ("Prospectus") of each Fund;
C. Calculate the net income of each of the Funds, if any;
D. Calculate capital gains or losses of each of the Funds resulting from
sale or disposition of assets, if any;
E. Maintain the general ledger and other accounts, books and financial
records of the Trust, including for each Fund, and/or Class, as
required under Section 31(a) of the 1940 Act and the Rules thereunder
in connection with the services provided by the Company;
F. Preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records to be maintained by Rule 31a-1 under the 1940 Act in
connection with the services provided by the Company. The Company
further agrees that all such records it maintains for the Trust are
the property of the Trust and further agrees to surrender promptly to
the Trust such records upon the Trust's request;
G. At the request of the Trust, prepare various reports or other financial
documents required by federal, state and other applicable laws and
regulations; and
H. Such other similar services as may be reasonably requested by the
Trust.
Article 3. Compensation and Allocation of Expenses.
A. The Funds will compensate the Company for its services rendered
pursuant to Section One of this Agreement in accordance with the fees
agreed upon from time to time between the parties hereto. Such fees do
not include out-of-pocket disbursements of the Company for which the
Funds shall reimburse the Company upon receipt of a separate invoice.
Out-of-pocket disbursements shall include, but shall not be limited
to, the items agreed upon between the parties from time to time.
B. The Fund and/or the Class, and not the Company, shall bear the cost of:
custodial expenses; membership dues in the Investment Company
Institute or any similar organization; transfer agency expenses;
investment advisory expenses; costs of printing and mailing stock
certificates, Prospectuses, reports and notices; administrative
expenses; interest on borrowed money; brokerage commissions; taxes and
fees payable to federal, state and other governmental agencies; fees
of Trustees or Directors of the Trust; independent auditors expenses;
Federated Administrative Services and/or Federated Administrative
Services, Inc. legal and audit department expenses billed to Federated
Services Company for work performed related to the Trust, the Funds,
or the Classes; law firm expenses; or other expenses not specified in
this Article 3 which may be properly payable by the Funds and/or
classes.
C. The compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than monthly,
and shall be paid daily upon request of the Company. The Company will
maintain detailed information about the compensation and out-of-pocket
expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Trust and/or the Funds and a duly authorized officer of
the Company.
E. The fee for the period from the effective date of this Agreement with
respect to a Fund or a Class to the end of the initial month shall be
prorated according to the proportion that such period bears to the
full month period. Upon any termination of this Agreement before the
end of any month, the fee for such period shall be prorated according
to the proportion which such period bears to the full month period.
For purposes of determining fees payable to the Company, the value of
the Fund's net assets shall be computed at the time and in the manner
specified in the Fund's Prospectus.
F. The Company, in its sole discretion, may from time to time subcontract
to, employ or associate with itself such person or persons as the
Company may believe to be particularly suited to assist it in
performing services under this Section One. Such person or persons may
be third-party service providers, or they may be officers and
employees who are employed by both the Company and the Funds. The
compensation of such person or persons shall be paid by the Company
and no obligation shall be incurred on behalf of the Trust, the Funds,
or the Classes in such respect.
SECTION TWO: Shareholder Recordkeeping.
Article 4. Terms of Appointment.
Subject to the terms and conditions set forth in this Agreement, the Trust
hereby appoints the Company to act as, and the Company agrees to act as,
transfer agent and dividend disbursing agent for each Fund's Shares, and agent
in connection with any accumulation, open-account or similar plans provided to
the shareholders of any Fund ("Shareholder(s)"), including without limitation
any periodic investment plan or periodic withdrawal program.
As used throughout this Agreement, a "Proper Instruction" means a writing
signed or initialed by one or more person or persons as the Board shall have
from time to time authorized. Each such writing shall set forth the specific
transaction or type of transaction involved. Oral instructions will be deemed
to be Proper Instructions if (a) the Company reasonably believes them to have
been given by a person previously authorized in Proper Instructions to give
such instructions with respect to the transaction involved, and (b) the Trust,
or the Fund, and the Company promptly cause such oral instructions to be
confirmed in writing. Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided that the
Trust, or the Fund, and the Company are satisfied that such procedures afford
adequate safeguards for the Fund's assets. Proper Instructions may only be
amended in writing.
Article 5. Duties of the Company.
The Company shall perform the following services in accordance with Proper
Instructions as may be provided from time to time by the Trust as to any Fund:
A. Purchases
(1) The Company shall receive orders and payment for the purchase of
shares and promptly deliver payment and appropriate
documentation therefore to the custodian of the relevant Fund,
(the "Custodian"). The Company shall notify the Fund and the
Custodian on a daily basis of the total amount of orders and
payments so delivered.
(2) Pursuant to purchase orders and in accordance with the Fund's
current Prospectus, the Company shall compute and issue the
appropriate number of Shares of each Fund and/or Class and hold
such Shares in the appropriate Shareholder accounts.
(3) For certificated Funds and/or Classes, if a Shareholder or its
agent requests a certificate, the Company, as Transfer Agent,
shall countersign and mail by first class mail, a certificate to
the Shareholder at its address as set forth on the transfer
books of the Funds, and/or Classes, subject to any Proper
Instructions regarding the delivery of certificates.
(4) In the event that any check or other order for the purchase of
Shares of the Fund and/or Class is returned unpaid for any
reason, the Company shall debit the Share account of the
Shareholder by the number of Shares that had been credited to
its account upon receipt of the check or other order, promptly
mail a debit advice to the Shareholder, and notify the Fund
and/or Class of its action. In the event that the amount paid
for such Shares exceeds proceeds of the redemption of such
Shares plus the amount of any dividends paid with respect to
such Shares, the Fund and/the Class or its distributor will
reimburse the Company on the amount of such excess.
B. Distribution
(1) Upon notification by the Funds of the declaration of any
distribution to Shareholders, the Company shall act as Dividend
Disbursing Agent for the Funds in accordance with the provisions
of its governing document and the then-current Prospectus of the
Fund. The Company shall prepare and mail or credit income,
capital gain, or any other payments to Shareholders. As the
Dividend Disbursing Agent, the Company shall, on or before the
payment date of any such distribution, notify the Custodian of
the estimated amount required to pay any portion of said
distribution which is payable in cash and request the Custodian
to make available sufficient funds for the cash amount to be
paid out. The Company shall reconcile the amounts so requested
and the amounts actually received with the Custodian on a daily
basis. If a Shareholder is entitled to receive additional Shares
by virtue of any such distribution or dividend, appropriate
credits shall be made to the Shareholder's account, for
certificated Funds and/or Classes, delivered where requested;
and
(2) The Company shall maintain records of account for each Fund and
Class and advise the Trust, each Fund and Class and its
Shareholders as to the foregoing.
C. Redemptions and Transfers
(1) The Company shall receive redemption requests and redemption
directions and, if such redemption requests comply with the
procedures as may be described in the Fund Prospectus or set
forth in Proper Instructions, deliver the appropriate
instructions therefor to the Custodian. The Company shall notify
the Funds on a daily basis of the total amount of redemption
requests processed and monies paid to the Company by the
Custodian for redemptions.
(2) At the appropriate time upon receiving redemption proceeds from
the Custodian with respect to any redemption, the Company shall
pay or cause to be paid the redemption proceeds in the manner
instructed by the redeeming Shareholders, pursuant to procedures
described in the then-current Prospectus of the Fund.
(3) If any certificate returned for redemption or other request for
redemption does not comply with the procedures for redemption
approved by the Fund, the Company shall promptly notify the
Shareholder of such fact, together with the reason therefor, and
shall effect such redemption at the price applicable to the date
and time of receipt of documents complying with said procedures.
(4) The Company shall effect transfers of Shares by the registered
owners thereof.
(5) The Company shall identify and process abandoned accounts and
uncashed checks for state escheat requirements on an annual
basis and report such actions to the Fund.
D. Recordkeeping
(1) The Company shall record the issuance of Shares of each Fund,
and/or Class, and maintain pursuant to applicable rules of the
Securities and Exchange Commission ("SEC") a record of the total
number of Shares of the Fund and/or Class which are authorized,
based upon data provided to it by the Fund, and issued and
outstanding. The Company shall also provide the Fund on a
regular basis or upon reasonable request with the total number
of Shares which are authorized and issued and outstanding, but
shall have no obligation when recording the issuance of Shares,
except as otherwise set forth herein, to monitor the issuance of
such Shares or to take cognizance of any laws relating to the
issue or sale of such Shares, which functions shall be the sole
responsibility of the Funds.
(2) The Company shall establish and maintain records pursuant to
applicable rules of the SEC relating to the services to be
performed hereunder in the form and manner as agreed to by the
Trust or the Fund to include a record for each Shareholder's
account of the following:
(a) Name, address and tax identification number (and whether
such number has been certified);
(b) Number of Shares held;
(c) Historical information regarding the account, including
dividends paid and date and price for all transactions;
(d) Any stop or restraining order placed against the account;
(e) Information with respect to withholding in the case of a
foreign account or an account for which withholding is
required by the Internal Revenue Code;
(f) Any dividend reinvestment order, plan application, dividend
address and correspondence relating to the current
maintenance of the account;
(g) Certificate numbers and denominations for any Shareholder
holding certificates;
(h) Any information required in order for the Company to
perform the calculations contemplated or required by this
Agreement.
(3) The Company shall preserve any such records required to be
maintained pursuant to the rules of the SEC for the periods
prescribed in said rules as specifically noted below. Such
record retention shall be at the expense of the Company, and
such records may be inspected by the Fund at reasonable times.
The Company may, at its option at any time, and shall forthwith
upon the Fund's demand, turn over to the Fund and cease to
retain in the Company's files, records and documents created and
maintained by the Company pursuant to this Agreement, which are
no longer needed by the Company in performance of its services
or for its protection. If not so turned over to the Fund, such
records and documents will be retained by the Company for six
years from the year of creation, during the first two of which
such documents will be in readily accessible form. At the end of
the six year period, such records and documents will either be
turned over to the Fund or destroyed in accordance with Proper
Instructions.
E. Confirmations/Reports
(1) The Company shall furnish to the Fund periodically the following
information:
(a) A copy of the transaction register;
(b) Dividend and reinvestment blotters;
(c) The total number of Shares issued and outstanding in each
state for "blue sky" purposes as determined according to
Proper Instructions delivered from time to time by the
Fund to the Company;
(d) Shareholder lists and statistical information;
(e) Payments to third parties relating to distribution
agreements, allocations of sales loads, redemption fees,
or other transaction- or sales-related payments;
(f) Such other information as may be agreed upon from time to
time.
(2) The Company shall prepare in the appropriate form, file with the
Internal Revenue Service and appropriate state agencies, and, if
required, mail to Shareholders, such notices for reporting
dividends and distributions paid as are required to be so filed
and mailed and shall withhold such sums as are required to be
withheld under applicable federal and state income tax laws,
rules and regulations.
(3) In addition to and not in lieu of the services set forth above,
the Company shall:
(a) Perform all of the customary services of a transfer agent,
dividend disbursing agent and, as relevant, agent in
connection with accumulation, open-account or similar
plans (including without limitation any periodic
investment plan or periodic withdrawal program), including
but not limited to: maintaining all Shareholder accounts,
mailing Shareholder reports and Prospectuses to current
Shareholders, withholding taxes on accounts subject to
back-up or other withholding (including non-resident alien
accounts), preparing and filing reports on U.S. Treasury
Department Form 1099 and other appropriate forms required
with respect to dividends and distributions by federal
authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares
and other conformable transactions in Shareholder
accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account
information; and
(b) provide a system which will enable the Fund to monitor the
total number of Shares of each Fund and/or Class sold in
each state ("blue sky reporting"). The Fund shall by
Proper Instructions (i) identify to the Company those
transactions and assets to be treated as exempt from the
blue sky reporting for each state and (ii) verify the
classification of transactions for each state on the
system prior to activation and thereafter monitor the
daily activity for each state. The responsibility of the
Company for each Fund's and/or Class's state blue sky
registration status is limited solely to the recording of
the initial classification of transactions or accounts
with regard to blue sky compliance and the reporting of
such transactions and accounts to the Fund as provided
above.
F. Other Duties
(1) The Company shall answer correspondence from Shareholders
relating to their Share accounts and such other correspondence
as may from time to time be addressed to the Company;
(2) The Company shall prepare Shareholder meeting lists, mail proxy
cards and other material supplied to it by the Fund in
connection with Shareholder Meetings of each Fund; receive,
examine and tabulate returned proxies, and certify the vote of
the Shareholders;
(3) The Company shall establish and maintain facilities and
procedures for safekeeping of stock certificates, check forms
and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such
certificates, forms and devices.
Article 6. Duties of the Trust.
A. Compliance
The Trust or Fund assume full responsibility for the preparation,
contents and distribution of their own and/or their classes'
Prospectus and for complying with all applicable requirements of the
Securities Act of 1933, as amended (the "1933 Act"), the 1940 Act and
any laws, rules and regulations of government authorities having
jurisdiction.
B. Share Certificates
The Trust shall supply the Company with a sufficient supply of blank
Share certificates and from time to time shall renew such supply upon
request of the Company. Such blank Share certificates shall be
properly signed, manually or by facsimile, if authorized by the Trust
and shall bear the seal of the Trust or facsimile thereof; and
notwithstanding the death, resignation or removal of any officer of
the Trust authorized to sign certificates, the Company may continue to
countersign certificates which bear the manual or facsimile signature
of such officer until otherwise directed by the Trust.
C. Distributions
The Fund shall promptly inform the Company of the declaration of any
dividend or distribution on account of any Fund's shares.
Article 7. Compensation and Expenses.
A. Annual Fee
For performance by the Company pursuant to Section Two of this
Agreement, the Trust and/or the Fund agree to pay the Company an
annual maintenance fee for each Shareholder account as agreed upon
between the parties and as may be added to or amended from time to
time. Such fees may be changed from time to time subject to written
agreement between the Trust and the Company. Pursuant to information
in the Fund Prospectus or other information or instructions from the
Fund, the Company may sub-divide any Fund into Classes or other sub-
components for recordkeeping purposes. The Company will charge the
Fund the same fees for each such Class or sub-component the same as if
each were a Fund.
B. Reimbursements
In addition to the fee paid under Article 7A above, the Trust and/or
Fund agree to reimburse the Company for out-of-pocket expenses or
advances incurred by the Company for the items agreed upon between the
parties, as may be added to or amended from time to time. In addition,
any other expenses incurred by the Company at the request or with the
consent of the Trust and/or the Fund, will be reimbursed by the
appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than monthly,
and shall be paid daily upon request of the Company. The Company will
maintain detailed information about the compensation and out-of-pocket
expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Trust and/or the Funds and a duly authorized officer of
the Company.
Article 8. Assignment of Shareholder Recordkeeping.
Except as provided below, no right or obligation under this Section Two may
be assigned by either party without the written consent of the other party.
A. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
B. The Company may without further consent on the part of the Trust
subcontract for the performance hereof with (A) State Street Bank and
its subsidiary, Boston Financial Data Services, Inc., a Massachusetts
Trust ("BFDS"), which is duly registered as a transfer agent pursuant
to Section 17A(c)(1) of the Securities Exchange Act of 1934, as
amended, or any succeeding statute ("Section 17A(c)(1)"), or (B) a
BFDS subsidiary duly registered as a transfer agent pursuant to
Section 17A(c)(1), or (C) a BFDS affiliate, or (D) such other provider
of services duly registered as a transfer agent under Section
17A(c)(1) as Company shall select; provided, however, that the Company
shall be as fully responsible to the Trust for the acts and omissions
of any subcontractor as it is for its own acts and omissions; or
C. The Company shall upon instruction from the Trust subcontract for the
performance hereof with an Agent selected by the Trust, other than
BFDS or a provider of services selected by Company, as described in
(2) above; provided, however, that the Company shall in no way be
responsible to the Trust for the acts and omissions of the Agent.
SECTION THREE: Custody Services Procurement.
Article 9. Appointment.
The Trust hereby appoints Company as its agent to evaluate and obtain
custody services from a financial institution that (i) meets the criteria
established in Section 17(f) of the 1940 Act and (ii) has been approved by the
Board as eligible for selection by the Company as a custodian (the "Eligible
Custodian"). The Company accepts such appointment.
Article 10. The Company and Its Duties.
Subject to the review, supervision and control of the Board, the Company
shall:
A. evaluate the nature and the quality of the custodial services provided
by the Eligible Custodian;
B. employ the Eligible Custodian to serve on behalf of the Trust as
Custodian of the Trust's assets substantially on the terms set forth
as the form of agreement in Exhibit 2;
C. negotiate and enter into agreements with the Custodians for the benefit
of the Trust, with the Trust as a party to each such agreement. The
Company shall not be a party to any agreement with any such Custodian;
D. establish procedures to monitor the nature and the quality of the
services provided by the Custodians;
E. continuously monitor the nature and the quality of services provided by
the Custodians; and
F. periodically provide to the Trust (i) written reports on the activities
and services of the Custodians; (ii) the nature and amount of
disbursement made on account of the Trust with respect to each
custodial agreement; and (iii) such other information as the Board
shall reasonably request to enable it to fulfill its duties and
obligations under Sections 17(f) and 36(b) of the 1940 Act and other
duties and obligations thereof.
Article 11. Fees and Expenses.
A. Annual Fee
For the performance by the Company pursuant to Section Three of this
Agreement, the Trust and/or the Fund agree to pay the Company an
annual fee as agreed upon between the parties.
B. Reimbursements
In addition to the fee paid under Section 11A above, the Trust and/or
Fund agree to reimburse the Company for out-of-pocket expenses or
advances incurred by the Company for the items agreed upon between the
parties, as may be added to or amended from time to time. In addition,
any other expenses incurred by the Company at the request or with the
consent of the Trust and/or the Fund, will be reimbursed by the
appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than monthly,
and shall be paid daily upon request of the Company. The Company will
maintain detailed information about the compensation and out-of-pocket
expenses by Fund.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Trust and/or the Funds and a duly authorized officer of
the Company.
Article 12. Representations.
The Company represents and warrants that it has obtained all required
approvals from all government or regulatory authorities necessary to enter
into this arrangement and to provide the services contemplated in Section
Three of this Agreement.
SECTION FOUR: General Provisions.
Article 13. Documents.
A. In connection with the appointment of the Company under this Agreement,
the Trust shall file with the Company the following documents:
(1) A copy of the Charter and By-Laws of the Trust and all amendments
thereto;
(2) A copy of the resolution of the Board of the Trust authorizing
this Agreement;
(3) Specimens of all forms of outstanding Share certificates of the
Trust or the Funds in the forms approved by the Board of the
Trust with a certificate of the Secretary of the Trust as to
such approval;
(4) All account application forms and other documents relating to
Shareholders accounts; and
(5) A copy of the current Prospectus for each Fund.
B. The Fund will also furnish from time to time the following documents:
(1) Each resolution of the Board of the Trust authorizing the
original issuance of each Fund's, and/or Class's Shares;
(2) Each Registration Statement filed with the SEC and amendments
thereof and orders relating thereto in effect with respect to
the sale of Shares of any Fund, and/or Class;
(3) A certified copy of each amendment to the governing document and
the By-Laws of the Trust;
(4) Certified copies of each vote of the Board authorizing officers
to give Proper Instructions to the Custodian and agents for fund
accountant, custody services procurement, and shareholder
recordkeeping or transfer agency services;
(5) Specimens of all new Share certificates representing Shares of
any Fund, accompanied by Board resolutions approving such forms;
(6) Such other certificates, documents or opinions which the Company
may, in its discretion, deem necessary or appropriate in the
proper performance of its duties; and
(7) Revisions to the Prospectus of each Fund.
Article 14. Representations and Warranties.
A. Representations and Warranties of the Company
The Company represents and warrants to the Trust that:
(1) It is a business trust duly organized and existing and in good
standing under the laws of the State of Delaware.
(2) It is duly qualified to carry on its business in the State of
Delaware.
(3) It is empowered under applicable laws and by its charter and by-
laws to enter into and perform this Agreement.
(4) All requisite corporate proceedings have been taken to authorize
it to enter into and perform its obligations under this
Agreement.
(5) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
(6) It is in compliance with federal securities law requirements and
in good standing as a transfer agent.
B. Representations and Warranties of the Trust
The Trust represents and warrants to the Company that:
(1) It is an investment company duly organized and existing and in
good standing under the laws of its state of organization;
(2) It is empowered under applicable laws and by its Charter and By-
Laws to enter into and perform its obligations under this
Agreement;
(3) All corporate proceedings required by said Charter and By-Laws
have been taken to authorize it to enter into and perform its
obligations under this Agreement;
(4) The Trust is an open-end investment company registered under the
1940 Act; and
(5) A registration statement under the 1933 Act will be effective,
and appropriate state securities law filings have been made and
will continue to be made, with respect to all Shares of each
Fund being offered for sale.
Article 15. Standard of Care and Indemnification.
A. Standard of Care
The Company shall be held to a standard of reasonable care in carrying
out the provisions of this Contract. The Company shall be entitled to
rely on and may act upon advice of counsel (who may be counsel for the
Trust) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice, provided that
such action is not in violation of applicable federal or state laws or
regulations, and is in good faith and without negligence.
B. Indemnification by Trust
The Company shall not be responsible for and the Trust or Fund shall
indemnify and hold the Company, including its officers, directors,
shareholders and their agents employees and affiliates, harmless
against any and all losses, damages, costs, charges, counsel fees,
payments, expenses and liabilities arising out of or attributable to:
(1) The acts or omissions of any Custodian, Adviser, Sub-adviser or
other party contracted by or approved by the Trust or Fund,
(2) The reliance on or use by the Company or its agents or
subcontractors of information, records and documents in proper
form which
(a) are received by the Company or its agents or subcontractors
and furnished to it by or on behalf of the Fund, its
Shareholders or investors regarding the purchase,
redemption or transfer of Shares and Shareholder account
information;
(b) are received by the Company from independent pricing
services or sources for use in valuing the assets of the
Funds; or
(c) are received by the Company or its agents or subcontractors
from Advisers, Sub-advisers or other third parties
contracted by or approved by the Trust of Fund for use in
the performance of services under this Agreement;
(d) have been prepared and/or maintained by the Fund or its
affiliates or any other person or firm on behalf of the
Trust.
(3) The reliance on, or the carrying out by the Company or its agents
or subcontractors of Proper Instructions of the Trust or the
Fund.
(4) The offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities
laws or regulations of any state that such Shares be registered
in such state or in violation of any stop order or other
determination or ruling by any federal agency or any state with
respect to the offer or sale of such Shares in such state.
Provided, however, that the Company shall not be protected by
this Article 15.A. from liability for any act or omission
resulting from the Company's willful misfeasance, bad faith,
negligence or reckless disregard of its duties of failure to
meet the standard of care set forth in 15.A. above.
C. Reliance
At any time the Company may apply to any officer of the Trust or Fund
for instructions, and may consult with legal counsel with respect to
any matter arising in connection with the services to be performed by
the Company under this Agreement, and the Company and its agents or
subcontractors shall not be liable and shall be indemnified by the
Trust or the appropriate Fund for any action reasonably taken or
omitted by it in reliance upon such instructions or upon the opinion
of such counsel provided such action is not in violation of applicable
federal or state laws or regulations. The Company, its agents and
subcontractors shall be protected and indemnified in recognizing stock
certificates which are reasonably believed to bear the proper manual
or facsimile signatures of the officers of the Trust or the Fund, and
the proper countersignature of any former transfer agent or registrar,
or of a co-transfer agent or co-registrar.
D. Notification
In order that the indemnification provisions contained in this
Article 15 shall apply, upon the assertion of a claim for which either
party may be required to indemnify the other, the party seeking
indemnification shall promptly notify the other party of such
assertion, and shall keep the other party advised with respect to all
developments concerning such claim. The party who may be required to
indemnify shall have the option to participate with the party seeking
indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required to
indemnify it except with the other party's prior written consent.
Article 16. Termination of Agreement.
This Agreement may be terminated by either party upon one hundred twenty
(120) days written notice to the other. Should the Trust exercise its rights
to terminate, all out-of-pocket expenses associated with the movement of
records and materials will be borne by the Trust or the appropriate Fund.
Additionally, the Company reserves the right to charge for any other
reasonable expenses associated with such termination. The provisions of
Article 15 shall survive the termination of this Agreement.
Article 17. Amendment.
This Agreement may be amended or modified by a written agreement executed
by both parties.
Article 18. Interpretive and Additional Provisions.
In connection with the operation of this Agreement, the Company and the
Trust may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall
be annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision
of the Charter. No interpretive or additional provisions made as provided in
the preceding sentence shall be deemed to be an amendment of this Agreement.
Article 19. Governing Law.
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts
Article 20. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Trust at Federated
Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to the Company at
Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to such
other address as the Trust or the Company may hereafter specify, shall be
deemed to have been properly delivered or given hereunder to the respective
address.
Article 21. Counterparts.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original.
Article 22. Limitations of Liability of Trustees and Shareholders of the Trust.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Trust and signed by an authorized officer of the Trust, acting
as such, and neither such authorization by such Trustees nor such execution
and delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, and the
obligations of this Agreement are not binding upon any of the Trustees or
Shareholders of the Trust, but bind only the appropriate property of the Fund,
or Class, as provided in the Declaration of Trust.
Article 23. Limitations of Liability of Trustees and Shareholders of
the Company.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Company and signed by an authorized officer of the Company,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of them personally,
and the obligations of this Agreement are not binding upon any of the Trustees
or Shareholders of the Company, but bind only the property of the Company as
provided in the Declaration of Trust.
Article 24. Assignment.
This Agreement and the rights and duties hereunder shall not be assignable
with respect to the Trust or the Funds by either of the parties hereto except
by the specific written consent of the other party.
Article 25. Merger of Agreement.
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject hereof whether
oral or written.
Article 26. Successor Agent.
If a successor agent for the Trust shall be appointed by the Trust, the
Company shall upon termination of this Agreement deliver to such successor
agent at the office of the Company all properties of the Trust held by it
hereunder. If no such successor agent shall be appointed, the Company shall at
its office upon receipt of Proper Instructions deliver such properties in
accordance with such instructions.
In the event that no written order designating a successor agent or Proper
Instructions shall have been delivered to the Company on or before the date
when such termination shall become effective, then the Company shall have the
right to deliver to a bank or trust company, which is a "bank" as defined in
the 1940 Act, of its own selection, having an aggregate capital, surplus, and
undivided profits, as shown by its last published report, of not less than
$2,000,000, all properties held by the Company under this Agreement.
Thereafter, such bank or trust company shall be the successor of the Company
under this Agreement.
Article 27. Force Majeure.
The Company shall have no liability for cessation of services hereunder or
any damages resulting therefrom to the Fund as a result of work stoppage,
power or other mechanical failure, natural disaster, governmental action,
communication disruption or other impossibility of performance.
Article 28. Assignment; Successors.
This Agreement shall not be assigned by either party without the prior
written consent of the other party, except that either party may assign to a
successor all of or a substantial portion of its business, or to a party
controlling, controlled by, or under common control with such party. Nothing
in this Article 28 shall prevent the Company from delegating its
responsibilities to another entity to the extent provided herein.
Article 29. Severability.
In the event any provision of this Agreement is held illegal, void or
unenforceable, the balance shall remain in effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
ATTEST: INVESTMENT COMPANIES
(listed on Exhibit 1)
/s/ John W. McGonigle_______ By:__/s/ John F. Donahue___
John W. McGonigle John F. Donahue
Secretary Chairman
ATTEST: FEDERATED SERVICES COMPANY
/s/ Jeannette Fisher-Garber By:_/s/ James J. Dolan_____
Jeannette Fisher-Garber James J. Dolan
Secretary President
EXHIBIT 1
12/01/94 CASH TRUST SERIES II
12/01/94 Treasury Cash Series II
12/01/94 Municipal Cash Series II
Exhibit 10 under Form N-1A
Exhibit 5 under Item 601/Reg. S-K
HOUSTON, HOUSTON & DONNELLY
ATTORNEYS AT LAW
2510 CENTRE CITY TOWER
WILLIAM McC.HOUSTON PITTSBURGH, PA. 15222
FRED CHALMERS HOUSTON, JR. __________
THOMAS J. DONNELLY
JOHN F. MECK (412) 471-5828 FRED CHALMERS HOUSTON
FAX (412) 471-0736 (1914 - 1971)
MARIO SANTILLI, JR.
THEODORE M. HAMMER
January 23, 1991
The Trustees of
Cash Trust Series II
Federated Investors Tower
Pittsburgh, PA 15222-3779
Gentlemen:
Cash Trust Series II ("Trust") proposes to offer and sell three
separate series of shares of beneficial interest representing interests in
separate portfolios of securities known as Municipal Cash Series II, Prime
Cash Series II and Treasury Cash Series II (all such shares of beneficial
interest being herein referred to as "Shares") in the manner and on the terms
set forth in its Registration Statement filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended.
As counsel we have participated in the organization of the Trust,
its registration under the Investment Company Act of 1940 and the preparation
and filing of its Registration Statement under the Securities Act of 1933. We
have examined and are familiar with the provisions of the written Declaration
of Trust dated November 14, 1990, ("Declaration of Trust"), the Bylaws of the
Trust and such other documents and records deemed relevant. We have also
reviewed questions of law and consulted with counsel thereon as deemed
necessary or appropriate by us for the purposes of this opinion.
Based upon the foregoing, it is our opinion that:
1. The Trust is duly organized and validly existing pursuant to
the Declaration of Trust.
2. The Shares which are currently being registered by the
Registration Statement referred to above may be legally and validly issued
from time to time in accordance with the Declaration of Trust upon receipt of
consideration sufficient to comply with the provisions of Article III, Section
3, of the Declaration of Trust and subject to compliance with the Securities
The Trustees of
Cash Trust Series II
Page 2
January 23, 1991
Act of 1933, as amended, the Investment Company Act of 1940, as amended, and
applicable state laws regulating the sale of securities. Such Shares, when so
issued, will be fully paid and non-assessable.
We consent to your filing this opinion as an exhibit to the
Registration Statement referred to above and to any application or
registration statement filed under the securities laws of any of the States of
the United States. We further consent to the reference to our firm under the
caption "Legal Counsel" in the prospectus filed as a part of such Registration
Statement, applications and registration statements.
Very truly yours,
HOUSTON, HOUSTON & DONNELLY
By:/s/ Thomas J. Donnelly
TJD/heh
Exhibit 13 under Form N-1A
Exhibit 99 under Item 601/Reg. S-K
FEDERATED ADMINISTRATIVE SERVICES, INC.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
(412) 288-1900
January 23, 1991
Cash Trust Series II
Federated Investors Tower
Pittsburgh, PA 15222-3779
Gentlemen:
Federated Administrative Services, Inc. agrees to purchase 100,000
shares of Treasury Cash Series II (a portfolio of Cash Trust Series II) at the
cost of $1.00 each. These shares are purchased for investment purposes and
Federated Administrative Services, Inc. has no present intention of redeeming
these shares.
Very truly yours,
/s/ Ronald M. Petnuch
Ronald M. Petnuch
Assistant Secretary
RMP/slb
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<NUMBER> 1
<NAME> Cash Trust Series II
Municipal Cash Series II
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> May-31-1995
<PERIOD-END> May-31-1995
<INVESTMENTS-AT-COST> 66,843,232
<INVESTMENTS-AT-VALUE> 66,843,232
<RECEIVABLES> 724,437
<ASSETS-OTHER> 175,580
<OTHER-ITEMS-ASSETS> 0
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 132,015
<TOTAL-LIABILITIES> 132,015
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<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,470,108
<OTHER-INCOME> 0
<EXPENSES-NET> 741,934
<NET-INVESTMENT-INCOME> 2,728,174
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2,728,174
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,728,174
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<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 627,259,519
<NUMBER-OF-SHARES-REDEEMED> 693,561,189
<SHARES-REINVESTED> 2,143,218
<NET-CHANGE-IN-ASSETS> 64,158,452
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 469,638
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 960,008
<AVERAGE-NET-ASSETS> 93,892,858
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.030
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.030
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 79
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> Cash Trust Series II
Treasury Cash Series II
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> May-31-1995
<PERIOD-END> May-31-1995
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</TABLE>
