PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Municipal
Cash Series II, which covers the six-month period ended November 30, 1995. The
Report begins with an investment review by the fund's portfolio manager, which
is followed by a complete listing of the fund's investments and its financial
statements.
During the reporting period, Municipal Cash Series II helped its shareholders
earn a total of $0.02 in tax-free dividends per share on their ready cash. In
addition to tax-free income, the fund also offers the important advantages of
daily liquidity and stability of principal.* By the end of the period,
shareholders had invested a total of $69.3 million in the fund's diversified
portfolio of tax-free securities issued by municipalities nationwide.
Thank you for choosing Municipal Cash Series II as a convenient way to put your
cash to work pursuing tax-free income. Please contact your investment
representative if you have any questions about the fund.
Sincerely,
LOGO
Richard B. Fisher
President
January 15, 1996
* Income may be subject to the federal alternative minimum tax and state and
local taxes. Although money market mutual funds seek to maintain a stable net
asset value of $1.00 per share, there is no assurance that they will be able
to do so. Investments in mutual funds are neither insured nor guaranteed by
the U.S. government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Municipal Cash Series II invests in high quality, short-term tax-exempt debt
securities and seeks to maintain a constant net asset value of $1.00. For the
six-month period ended November 30, 1995, the fund paid shareholders a net
annualized return of 1.65%. This is equivalent to a taxable money market fund
return of 2.73% for an investor in the highest federal tax bracket of 39.6%. The
seven-day net yield for the six-month period ended November 30, 1995, was
3.29%*.
During the reporting period there was a change in the course of monetary policy
by the Federal Reserve Board ("the Fed"). On July 6, 1995 the Fed lowered the
Federal funds target rate, a practice known as "easing", by 25 basis points from
6.00% to 5.75%. This easing came on the heels of seven consecutive tightenings
from February, 1994 to February, 1995, which brought the Federal funds target
rate from 3.0% to 6.0%. In easing, the Fed cited receding inflationary pressures
as the reason for the cut, although weak economic growth in the first and second
quarters were also thought to have an influence. The Fed then held monetary
policy steady until shortly after the end of the reporting period at its Open
Market Committee Meeting. At the December 19, 1995 meeting, the Fed voted to
ease monetary policy slightly by reducing the Federal funds target rate an
additional 25 basis points to 5.50%. The Fed again cited a better-than-expected
outlook for inflation as the driving force behind the move.
As a result of both anticipation that the Fed would lower interest rates and a
gradually eroding economic outlook, money market rates declined from May, 1995
through the end of November, 1995. Municipal money market rates were also
affected by seasonal supply and demand imbalances throughout the reporting
period. The yield on one-year Treasury bills declined from 5.92% in May, 1995 to
a period low of 5.40% in November, 1995. Short-term municipal note rates
declined as well, but to a lesser degree. Yield levels on the Bond Buyer Index,
a proxy for one-year municipal notes offered in the marketplace, declined from
3.85% in May, 1995 to 3.60% in November, 1995.**
Over the reporting period, the market was also influenced by the ongoing budget
negotiations in Washington. The Treasury auction schedule was disrupted in late
October and early November as the debt ceiling was temporarily reached.
Currently, the Federal government is experiencing its second partial shutdown
since the negotiations began, as Congress and the White House appear to have
reached an impasse. Nevertheless, expectations of a positive outcome toward
credible deficit reduction resulting from the talks have been priced into the
market.
In this interest rate environment, the fund has been managed with a 50 to 55 day
average maturity target range, a moderately bullish stance in anticipation of
further eases by the Fed. Looking ahead to the first half of 1996, it seems
likely that the Fed will seek additional cuts in the Federal funds target rate
if the economic data remain soft and inflation is restrained. However, changing
economic and market developments are continuously monitored to best serve our
clients attracted to the short-term municipal market.
* Performance quoted represents past performance and is not indicative of
future results. Yield will vary.
** The Bond Buyer Index measures municipal bond yields.
MUNICIPAL CASH SERIES II
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- ---------------------------------------------------------- ------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPALS--100.7%
- -------------------------------------------------------------------------
ALABAMA--1.7%
----------------------------------------------------------
$ 895,000 Abbeville, AL, IDB Monthly VRDNs (Great Southern Wood
Preserving Co.)/(SouthTrust Bank of Alabama, Birmingham
LOC) P-1 $ 895,000
----------------------------------------------------------
305,000 Muscle Shoals, AL, IDB Weekly VRDNs (Whitesell
Manufacturing)/(SouthTrust Bank of Alabama, Birmingham
LOC) P-1 305,000
---------------------------------------------------------- -----------
Total 1,200,000
---------------------------------------------------------- -----------
ARKANSAS--5.1%
----------------------------------------------------------
3,500,000 Hope, AR, Solid Waste Disposal Revenue Bonds (Series
1994), 4.05% CP (Temple-Inland Forest Products Corporation
Project)/(Temple-Inland, Inc. GTD), Mandatory Tender
12/14/1995 A-1 3,500,000
---------------------------------------------------------- -----------
CALIFORNIA--4.8%
----------------------------------------------------------
2,300,000 Riverside County, CA IDA Weekly VRDNs (Golden West
Homes)/(Wells Fargo Bank, N.A. LOC) P-1 2,300,000
----------------------------------------------------------
1,000,000 Sacramento County, CA HDA, (1992 Issue A) Weekly VRDNs
(Shadowwood Apartments)/(General Electric Capital Corp.
LOC) P-1 1,000,000
---------------------------------------------------------- -----------
Total 3,300,000
---------------------------------------------------------- -----------
GEORGIA--5.8%
----------------------------------------------------------
4,000,000 Municipal Electric Authority of Georgia, (Series 1994E),
4.15% CP, Mandatory Tender 12/11/1995 A-1 4,000,000
---------------------------------------------------------- -----------
ILLINOIS--7.2%
----------------------------------------------------------
1,000,000 Chicago, IL, Gas Supply Revenue Bonds (1993 Series B),
3.85% TOBs (Peoples Gas Light & Coke Company), Optional
Tender 12/1/1996 VMIG1 1,000,000
----------------------------------------------------------
</TABLE>
MUNICIPAL CASH SERIES II
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- ---------------------------------------------------------- ------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPALS--CONTINUED
- -------------------------------------------------------------------------
ILLINOIS--CONTINUED
----------------------------------------------------------
$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
----------------------------------------------------------
2,030,000 Illinois Development Finance Authority Weekly VRDNs
(Olympic Steel, Inc.)/(National City Bank, Cleveland, OH
LOC) P-1 2,030,000
----------------------------------------------------------
1,000,000 Keeneyville, IL School District Number 20, (Series 1995A),
4.30% TANs, 12/1/1996 NR(3) 1,000,000
---------------------------------------------------------- -----------
Total 5,030,000
---------------------------------------------------------- -----------
INDIANA--7.4%
----------------------------------------------------------
2,905,000 Avilla, IN Weekly VRDNs (Group Dekko International)/(Bank
One, Indianapolis, IN LOC) P-1 2,905,000
----------------------------------------------------------
825,000 Avilla, IN, IDR Weekly VRDNs (Group Dekko
International)/(Bank One, Indianapolis, IN LOC) P-1 825,000
----------------------------------------------------------
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 5,145,000
---------------------------------------------------------- -----------
KENTUCKY--3.9%
----------------------------------------------------------
700,000 Kentucky Pollution Abatement & Water Resource Finance
Authority Daily VRDNs (Toyota Motor Credit Corp.) A-1+ 700,000
----------------------------------------------------------
2,000,000 Scottsville, KY, 4.15% TOBs (Sumitomo Electric Wiring
Systems)/(Sumitomo Bank Ltd., Osaka LOC), Optional Tender
5/1/1996 A-1 2,000,000
---------------------------------------------------------- -----------
Total 2,700,000
---------------------------------------------------------- -----------
MARYLAND--5.6%
----------------------------------------------------------
2,000,000 Anne Arundel County, MD, EDRB (Series 1988), 3.85% CP
(Baltimore Gas & Electric Co.), Mandatory Tender 2/12/1996 A-1 2,000,000
----------------------------------------------------------
</TABLE>
MUNICIPAL CASH SERIES II
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- ---------------------------------------------------------- ------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPALS--CONTINUED
- -------------------------------------------------------------------------
MARYLAND--CONTINUED
----------------------------------------------------------
$1,900,000 Maryland State Energy Financing Administration, Annual
Tender Solid Waste Disposal Revenue Refunding Bonds, 4.30%
TOBs (Nevamar Corp.)/(International Paper Co. GTD),
Optional Tender 9/1/1996 A-2 $ 1,900,000
---------------------------------------------------------- -----------
Total 3,900,000
---------------------------------------------------------- -----------
NEVADA--3.6%
----------------------------------------------------------
2,500,000 Director of the State of Nevada Weekly VRDNs (Smithey-
Oasis Co.)/(Mellon Bank NA, Pittsburgh LOC) P-1 2,500,000
---------------------------------------------------------- -----------
NEW HAMPSHIRE--14.3%
----------------------------------------------------------
1,485,000 Dover, NH, 4.40% BANs, 7/26/1996 NR(3) 1,487,777
----------------------------------------------------------
1,200,000 New Hampshire Business Finance Authority, PCR Bonds
(Series A), 3.90% CP (New England Power Co.), Mandatory
Tender 2/27/1996 A-1 1,200,000
----------------------------------------------------------
3,000,000 New Hampshire Business Finance Authority, PCR Bonds
(Series A), 4.00% CP (New England Power Co.), Mandatory
Tender 2/13/1996 A-1 3,000,000
----------------------------------------------------------
2,200,000 New Hampshire Higher Educational & Health Facilities
Authority Weekly VRDNs (Colby Sawyer College
Issue)/(Baybank, Burlington, MA LOC) A-2 2,200,000
----------------------------------------------------------
2,000,000 Portsmouth, N.H., 4.75% TANs, 12/29/1995 NR(3) 2,000,754
---------------------------------------------------------- -----------
Total 9,888,531
---------------------------------------------------------- -----------
NEW YORK--2.9%
----------------------------------------------------------
2,000,000 Brentwood Union Free School District, NY, 4.375% TANs,
6/28/1996 NR(4) 2,003,024
---------------------------------------------------------- -----------
NORTH CAROLINA--2.9%
----------------------------------------------------------
1,000,000 Richmond County, NC Industrial Facilities & Pollution
Control, (Series 1991) Weekly VRDNs (Bibb
Company)/(Citibank NA, New York LOC) A-1 1,000,000
----------------------------------------------------------
</TABLE>
MUNICIPAL CASH SERIES II
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- ---------------------------------------------------------- ------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPALS--CONTINUED
- -------------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
----------------------------------------------------------
$1,000,000 Wilson County, NC PCA, (Series 1994) Weekly VRDNs
(Granutec, Inc.)/(Branch Banking & Trust Co., Wilson LOC) P-1 $ 1,000,000
---------------------------------------------------------- -----------
Total 2,000,000
---------------------------------------------------------- -----------
NORTH DAKOTA--3.1%
----------------------------------------------------------
2,175,000 Fargo, ND, Variable Rate Demand IDRB (Series 1994) Weekly
VRDNs (Pan-O-Gold Baking Co. Project)/(Norwest Bank
Minnesota, Minneapolis LOC) A-1+ 2,175,000
---------------------------------------------------------- -----------
OKLAHOMA--2.9%
----------------------------------------------------------
2,000,000 Southeastern Oklahoma Industries Authority Weekly VRDNs
(Weyerhaeuser Co.) A-1 2,000,000
---------------------------------------------------------- -----------
PENNSYLVANIA--0.9%
----------------------------------------------------------
600,000 Pennsylvania Education Development Authority Weekly VRDNs
(Respironics, Inc.)/(PNC Bank, N.A. LOC) P-1 600,000
---------------------------------------------------------- -----------
SOUTH DAKOTA--1.4%
----------------------------------------------------------
1,000,000 South Dakota Housing Development Authority, Homeownership
Mortgage Bonds (Series 1995E), 4.05% TOBs, Mandatory
Tender 10/24/1996 A-1+ 1,000,000
---------------------------------------------------------- -----------
TENNESSEE--2.2%
----------------------------------------------------------
1,000,000 Cocke County, TN IDB Weekly VRDNs (GLI, Inc.)/(Sanwa Bank
Ltd., Osaka LOC) P-1 1,000,000
----------------------------------------------------------
500,000 Paris, TN, IDB Weekly VRDNs (Plumley-Marugo Limited)/ (PNC
Bank, Kentucky LOC) A-1 500,000
---------------------------------------------------------- -----------
Total 1,500,000
---------------------------------------------------------- -----------
UTAH--1.7%
----------------------------------------------------------
1,145,000 Utah State HFA, (Series 1988A), 4.25% TOBs (Meridian Bank,
Reading, PA LIQ), Optional Tender 1/1/1996 NR(2) 1,145,000
---------------------------------------------------------- -----------
VIRGINIA--6.6%
----------------------------------------------------------
2,200,000 Campbell County, VA IDA, Solid Waste Disposal Facilities
Revenue ACES Weekly VRDNs (Georgia-Pacific Corp.)/
(Industrial Bank of Japan Ltd., Tokyo LOC) A-1 2,200,000
----------------------------------------------------------
</TABLE>
MUNICIPAL CASH SERIES II
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- ---------------------------------------------------------- ------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPALS--CONTINUED
- -------------------------------------------------------------------------
VIRGINIA--CONTINUED
----------------------------------------------------------
$2,400,000 Richmond, VA Redevelopment & Housing Authority, (Series
B-1) Weekly VRDNs (Richmond, VA Red Tobacco
Row)/(Westdeutsche Landesbank Girozentrale LOC) VMIG1 $ 2,400,000
---------------------------------------------------------- -----------
Total 4,600,000
---------------------------------------------------------- -----------
WASHINGTON--1.2%
----------------------------------------------------------
860,000 Washington State Housing Finance Commission, (1995 Series
1A-S), 4.10% TOBs (FGIC INS), Mandatory Tender 6/1/1996 A-1+ 860,000
---------------------------------------------------------- -----------
WISCONSIN--12.9%
----------------------------------------------------------
2,850,000 Germantown, WI, IDA Weekly VRDNs (Zenith Sintered
Products, Inc.)/(Bank One, Milwaukee, WI N.A. LOC) P-1 2,850,000
----------------------------------------------------------
2,000,000 Plymouth, WI IDB Weekly VRDNs (Great Lakes Cheese)/
(Rabobank Nederland, Utrecht LOC) A-1+ 2,000,000
----------------------------------------------------------
2,250,000 Portage, WI, Adjustable Rate IDRB (Series 1994) Weekly
VRDNs (Portage Industries Corporation Project)/(Bank One,
Milwaukee, WI N.A. LOC) A-1+ 2,250,000
----------------------------------------------------------
1,820,000 (b)Wisconsin Housing & Economic Development Authority,
(Series B), 4.55% TOBs (FSA INS)/(Meridian Bank, Reading,
PA LIQ), Optional Tender 3/1/1996 NR(1) 1,820,000
---------------------------------------------------------- -----------
Total 8,920,000
---------------------------------------------------------- -----------
WYOMING--2.6%
----------------------------------------------------------
1,775,000 Wyoming Community Development Authority, (Series 1987 E),
4.05% TOBs (First National Bank of Chicago LIQ), Optional
Tender 12/1/1995 NR(2) 1,775,000
---------------------------------------------------------- -----------
TOTAL INVESTMENTS (AT AMORTIZED COST)(A) $69,741,555
---------------------------------------------------------- -----------
</TABLE>
(a) Also represents cost for federal tax purposes.
(b) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At the end of the period, this security
amounted to $1,820,000 which represents 2.6% of net assets.
* Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings.
Note: The categories of investments are shown as a percentage of net assets
($69,251,416) at November 30, 1995.
MUNICIPAL CASH SERIES II
- --------------------------------------------------------------------------------
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
ACES -- Adjustable Convertible Extendable Securities
BANs -- Bond Anticipation Notes
CP -- Commercial Paper
EDRB -- Economic Development Revenue Bonds
FGIC -- Financial Guaranty Insurance Company
FSA -- Financial Security Assurance
GTD -- Guaranty
HDA -- Hospital Development Authority
HFA -- Housing Finance Authority
IDA -- Industrial Development Authority
IDB -- Industrial Development Bond
IDR -- Industrial Development Revenue
IDRB -- Industrial Development Revenue Bond
INS -- Insured
LIQ -- Liquidity Agreement
LOC -- Letter of Credit
PCA -- Pollution Control Authority
PCR -- Pollution Control Revenue
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)
MUNICIPAL CASH SERIES II
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Total investments in securities, at amortized cost and value $69,741,555
- ---------------------------------------------------------------------------------
Cash 99,373
- ---------------------------------------------------------------------------------
Income receivable 561,500
- ---------------------------------------------------------------------------------
Deferred expenses 14,739
- --------------------------------------------------------------------------------- -----------
Total assets 70,417,167
- ---------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------
Payable for investments purchased $1,000,000
- --------------------------------------------------------------------
Income distribution payable 125,146
- --------------------------------------------------------------------
Accrued expenses 40,605
- -------------------------------------------------------------------- ----------
Total liabilities 1,165,751
- --------------------------------------------------------------------------------- -----------
Net Assets for 69,251,416 shares outstanding $69,251,416
- --------------------------------------------------------------------------------- -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
($69,251,416 / 69,251,416 shares outstanding) $1.00
- --------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL CASH SERIES II
STATEMENT OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest $1,519,285
- ---------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------
Investment advisory fee $ 186,969
- ---------------------------------------------------------------------
Administrative personnel and services fee 62,500
- ---------------------------------------------------------------------
Custodian fees 11,592
- ---------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 15,331
- ---------------------------------------------------------------------
Directors'/Trustees' fees 2,562
- ---------------------------------------------------------------------
Auditing fees 3,477
- ---------------------------------------------------------------------
Legal fees 5,490
- ---------------------------------------------------------------------
Portfolio accounting fees 22,811
- ---------------------------------------------------------------------
Distribution services fee 74,788
- ---------------------------------------------------------------------
Share registration costs 21,228
- ---------------------------------------------------------------------
Printing and postage 4,941
- ---------------------------------------------------------------------
Insurance premiums 2,745
- ---------------------------------------------------------------------
Miscellaneous 7,869
- --------------------------------------------------------------------- ---------
Total expenses 422,303
- ---------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (125,246)
- --------------------------------------------------------------------- ---------
Net expenses 297,057
- --------------------------------------------------------------------------------- ----------
Net investment income $1,222,228
- --------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL CASH SERIES II
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
NOVEMBER 30, 1995 MAY 31, 1995
----------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------
Net investment income $ 1,222,228 $ 2,728,174
- -------------------------------------------------------- ----------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------
Distributions from net investment income (1,222,228) (2,728,174)
- -------------------------------------------------------- ----------------- ------------
SHARE TRANSACTIONS--
- --------------------------------------------------------
Proceeds from sale of shares 195,847,343 627,259,519
- --------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of distributions declared 903,939 2,143,218
- --------------------------------------------------------
Cost of shares redeemed (195,111,100) (693,561,189)
- -------------------------------------------------------- ----------------- ------------
Change in net assets resulting from share
transactions 1,640,182 (64,158,452)
- -------------------------------------------------------- ----------------- ------------
Change in net assets 1,640,182 (64,158,452)
- --------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------
Beginning of period 67,611,234 131,769,686
- -------------------------------------------------------- ----------------- ------------
End of period $ 69,251,416 $ 67,611,234
- -------------------------------------------------------- ----------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL CASH SERIES II
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED MAY 31, 1995
NOVEMBER 30, -------------------------------------------------
1995 1995 1994 1993 1992 1991(A)
------------ ------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $1.00 $ 1.00 $ 1.00 $1.00 $1.00
- ------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------
Net investment income 0.02 0.03 0.02 0.02 0.04 0.01
- ------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------
Distributions from net investment income (0.02) (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 $1.00
- ------------------------------------------ -------- ------ ------ ------ ------ ------
TOTAL RETURN(B) 1.65% 3.02% 1.99% 2.29% 3.72% 1.19%
- ------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------
Expenses 0.79%* 0.79% 0.79% 0.77% 0.74% 0.47%*
- ------------------------------------------
Net investment income 3.26%* 2.91% 1.97% 2.23% 3.56% 4.68%*
- ------------------------------------------
Expense waiver/reimbursement(c) 0.33%* 0.23% 0.28% 0.50% 0.50% 0.39%*
- ------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------
Net assets, end of period (000 omitted) $69,251 $67,611 $131,770 $104,563 $65,628 $34,048
- ------------------------------------------
</TABLE>
* Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
MUNICIPAL CASH SERIES II
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
(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"), a non-diversified portfolio. 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.
RESTRICTED SECURITIES--Restricted securities are securities that may only
be resold upon registration under federal securities laws or in
transactions exempt from such registration. In some cases, the issuer of
restricted securities has agreed to register such securities for resale, at
the issuer's expense either upon demand by the Fund or in connection with
another registered offering of the securities. Many restricted securities
may be resold in the secondary market in transactions exempt from
registration. Such restricted securities may be determined to be liquid
under criteria established by the Board of Trustees. The Fund will not
incur any registration costs upon such resales. The Fund's restricted
securities are valued at the price provided by dealers in the secondary
MUNICIPAL CASH SERIES II
- --------------------------------------------------------------------------------
market or, if no market prices are available, at the fair value as
determined by the Fund's pricing committee. Additional information on the
restricted security held at November 30, 1995 is as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
-------------------------------------------------- ---------------- ----------------
<S> <C> <C>
Wisconsin Housing & Economic Development Authority
(Series B) 9/1/1995 $1,820,000
</TABLE>
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
November 30, 1995, capital paid-in aggregated $69,251,416.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
NOVEMBER 30, 1995 MAY 31, 1995
- --------------------------------------------------------- ----------------- ------------
<S> <C> <C>
Shares sold 195,847,343 627,259,519
- ---------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 903,939 2,143,218
- ---------------------------------------------------------
Shares redeemed (195,111,100) (693,561,189)
- --------------------------------------------------------- --------------- ------------
Net change resulting from share transactions 1,640,182 (64,158,452)
- --------------------------------------------------------- --------------- ------------
</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.
MUNICIPAL CASH SERIES II
- --------------------------------------------------------------------------------
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 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 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
net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--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 average daily net assets and .01 of 1% of average daily net
assets for start-up administrative expenses 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
six months ended November 30, 1995, the Fund paid $3,756 pursuant to this
agreement.
INTERFUND TRANSACTIONS--During the year ended November 30, 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
$103,035,000 and $104,355,000, respectively.
GENERAL--Certain of the Officers and Trustees of the Fund are Officers and
Directors or Trustees of the above companies.
<TABLE>
<S> <C>
DIRECTORS OFFICERS
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Richard B. Fisher
William J. Copeland President
J. Christopher Donahue J. Christopher Donahue
James E. Dowd Executive Vice President
Lawrence D. Ellis, M.D. Edward C. Gonzales
Edward L. Flaherty, Jr. Executive Vice President
Peter E. Madden John W. McGonigle
Gregor F. Meyer Executive Vice President and Secretary
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Treasurer
Marjorie P. Smuts Charles H. Field
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
- --------------------------------------------------------------------------------
MUNICIPAL
- --------------------------------------------------------------------------------
CASH
- --------------------------------------------------------------------------------
SERIES II
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
NOVEMBER 30, 1995
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
CUSIP 147552103
1121604 (1/96)
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Treasury Cash
Series II, which covers the six-month period ended November 30, 1995. The Report
begins with an investment review by the fund's portfolio manager, which is
followed by a complete listing of the fund's investments and its financial
statements.
During the reporting period, Treasury Cash Series II helped its shareholders
earn a total of $0.03 in dividends per share on their ready cash--while offering
the advantages of daily liquidity and stability of principal.* Assets reached
$388.1 million at the period's end.
At the end of the reporting period, 80.4% of the fund's assets was invested in
repurchase agreements backed by U.S. government securities because these
securities offered yield advantage over many direct government securities. The
remainder of the fund's assets was invested in direct U.S. Treasury bills and
notes.
Thank you for choosing Treasury Cash Series II as a convenient way to put your
cash to work pursuing income from U.S. Treasury obligations. Please contact your
investment representative if you have any questions about your investment.
Sincerely,
LOGO
Richard B. Fisher
President
January 15, 1996
* Although money market mutual funds seek to maintain a stable net asset value
of $1.00 per share, there is no assurance that they will be able to do so.
Investments in mutual funds are neither insured nor guaranteed by the U.S.
government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Treasury Cash Series II is invested in direct obligations of the U.S. Treasury,
either in the form of notes and bills or as collateral for repurchase
agreements. The fund is rated AAAm by Standard & Poor's Ratings Group and Aaa by
Moody's Investors Service, Inc.*
Over the six months ended November 30, 1995, the Federal Reserve Board ("the
Fed") reversed course in monetary policy, lowering the Federal funds target rate
by 25 basis points in early July from 6.00% to 5.75%. This easing in monetary
policy came on the heels of seven consecutive tightenings from February 1994 to
February 1995, which brought the Federal funds target rate from 3.0% to 6.0%.
The Fed cited receding inflationary pressures as the reason for the ease,
although weak economic reports in the second quarter of 1995 were also thought
to have had an influence.
Short-term interest rates led the Fed move downward. The rate on the three-month
Treasury bill declined by 30 basis points over the reporting period, from 5.8%
to 5.5%. The front end of the yield curve inverted over the period, with the
one-year Treasury bill trading 12 basis points below the three-month Treasury
bill at the end of November. This change in shape was a result of growing market
expectations of additional Fed easing in the not too distant future. Shortly
after the end of the reporting period--at its Federal Open Market Committee
Meeting on December 19, 1995--the Fed confirmed market expectations by voting to
ease monetary policy slightly, reducing the Fed funds target rate from 5.75% to
5.5%. The Fed again cited a better-than-expected outlook for inflation as the
driving force behind the move.
Over the reporting period, the market was also influenced by the ongoing budget
negotiations in Washington. The Treasury auction schedule was disrupted in late
October and early November as the debt ceiling was temporarily reached.
Currently, the Federal government is experiencing its second partial shutdown
since the negotiations began, as Congress and the White House appear to have
reached an impasse. Nevertheless, expectations of a positive outcome toward
credible deficit reduction resulting from the talks have been priced into the
market.
Recently, the fund has been managed with a 40 to 50 day average maturity target
range, a moderately bullish stance in anticipation of further gradual eases by
the Fed. Due to larger inflows of cash, however, the average maturity of the
fund has fallen below that target range. In spite of third quarter Gross
Domestic Product growth at 4.2%, recent data on the economy has been somewhat
mixed, with the retail and manufacturing sectors relatively sluggish. Fourth
quarter growth is expected to have been closer to the 2 1/2% rate of growth
considered by many to be non-inflationary. With monetary policy still considered
by many to be slightly restrictive, we would expect to see another slight easing
in the Federal funds target rate by the end of the first quarter.
The fund structure continued to be barbelled in nature, and maximized
performance through ongoing relative value analysis. As a yield advantage
continued to exist for investments in repurchase agreements versus direct
investments in short-term Treasury securities, a substantial percentage of the
fund's investments remained in repurchase agreements. The fund continued to
combine attractive yields from repurchase agreements collateralized by U.S.
Treasury securities with purchases of Treasury securities with six to thirteen
month maturities.
* These ratings are obtained after Standard & Poor's Ratings Group evaluates a
number of factors, including credit quality, market price exposure and
management. Standard & Poor's Ratings Group monitors the portfolio weekly for
developments that could cause changes in the ratings. Money market funds and
bond funds rated Aaa by Moody's Investors Service, Inc. are judged to be of an
investment quality similar to Aaa-rated fixed income obligations, that is,
they are judged to be of the best quality. Ratings are subject to change and
do not remove market risks.
TREASURY CASH SERIES II
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------------------------------------------------------- ------------
<C> <C> <S> <C>
SHORT-TERM U.S. TREASURY OBLIGATIONS--19.8%
- ----------------------------------------------------------------------------------
(A) U.S. TREASURY BILLS--13.6%
---------------------------------------------------------------
$54,000,000 5.51%-5.67%, 12/21/1995-7/25/1996 $ 52,813,462
--------------------------------------------------------------- ------------
U.S. TREASURY NOTES--6.2%
---------------------------------------------------------------
24,000,000 4.625%-9.375%, 1/15/1996-9/30/1996 24,187,501
--------------------------------------------------------------- ------------
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 77,000,963
--------------------------------------------------------------- ------------
(B)REPURCHASE AGREEMENTS--80.4%
- ----------------------------------------------------------------------------------
15,000,000 BT Securities Corporation, 5.92%, dated 11/30/1995, due
12/1/1995 15,000,000
---------------------------------------------------------------
36,000,000 BZW Securities, Inc., 5.93%, dated 11/30/1995, due 12/1/1995 36,000,000
---------------------------------------------------------------
15,000,000 Bear, Stearns and Co., Inc., 5.90%, dated 11/30/1995, due
12/1/1995 15,000,000
---------------------------------------------------------------
15,000,000 Chemical Securities, Inc., 5.90%, dated 11/30/1995, due
12/1/1995 15,000,000
---------------------------------------------------------------
15,000,000 Daiwa Securities America, Inc., 5.90%, dated 11/30/1995, due
12/1/1995 15,000,000
---------------------------------------------------------------
15,000,000 Deutsche Bank Government Securities, Inc., 5.93%, dated
11/30/1995, due 12/1/1995 15,000,000
---------------------------------------------------------------
4,000,000 (c) Donaldson, Lufkin and Jenrette Securities Corp., 5.70%, dated
10/18/1995, due 12/18/1995 4,000,000
---------------------------------------------------------------
10,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.90%, dated
11/30/1995, due 12/1/1995 10,000,000
---------------------------------------------------------------
15,000,000 Dresdner Securities (USA), Inc., 5.90%, dated 11/30/1995, due
12/1/1995 15,000,000
---------------------------------------------------------------
15,000,000 First Chicago Capital Markets, Inc., 5.90%, dated 11/30/1995,
due 12/1/1995 15,000,000
---------------------------------------------------------------
15,000,000 Fuji Government Securities, Inc., 5.93%, dated 11/30/1995, due
12/1/1995 15,000,000
---------------------------------------------------------------
15,000,000 HSBC Securities, Inc., 5.93%, dated 11/30/1995, due 12/1/1995 15,000,000
---------------------------------------------------------------
15,000,000 Harris Government Securities, Inc., 5.93%, dated 11/30/1995,
due 12/1/1995 15,000,000
---------------------------------------------------------------
</TABLE>
TREASURY CASH SERIES II
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------------------------------------------------------- ------------
<C> <C> <S> <C>
(B)REPURCHASE AGREEMENTS--CONTINUED
- ----------------------------------------------------------------------------------
$10,000,000 J.P. Morgan Securities, Inc., 5.93%, dated 11/30/1995, due
12/1/1995 $ 10,000,000
---------------------------------------------------------------
15,000,000 National Westminster USA, 5.90%, dated 11/30/1995, due
12/1/1995 15,000,000
---------------------------------------------------------------
15,000,000 NationsBank of North Carolina-Charlotte, 5.92%, dated
11/30/1995, due 12/1/1995 15,000,000
---------------------------------------------------------------
15,000,000 (c) Nikko Securities Co. International, Inc., 5.90%, dated
11/30/1995, due 12/14/1995 15,000,000
---------------------------------------------------------------
15,000,000 Sanwa-BGK Securities Co., L.P., 5.90%, dated 11/30/1995, due
12/1/1995 15,000,000
---------------------------------------------------------------
12,000,000 (c) Swiss Bank Corp., New York, 5.71%, dated 11/24/1995, due
1/23/1996 12,000,000
---------------------------------------------------------------
15,000,000 Swiss Bank Corp., New York, 5.92%, dated 11/30/1995, due
12/1/1995 15,000,000
---------------------------------------------------------------
15,000,000 UBS Securities, Inc., 5.92%, dated 11/30/1995, due 12/1/1995 15,000,000
--------------------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS 312,000,000
--------------------------------------------------------------- ------------
TOTAL INVESTMENTS, AT AMORTIZED COST)(D) $389,000,963
--------------------------------------------------------------- ------------
</TABLE>
(a) Each 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
($388,111,049) at November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
TREASURY CASH SERIES II
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in repurchase agreements $312,000,000
- -----------------------------------------------------------------
Investments in securities 77,000,963
- ----------------------------------------------------------------- ------------
Total investments in securities, at amortized cost and value $389,000,963
- --------------------------------------------------------------------------------
Cash 148,026
- --------------------------------------------------------------------------------
Income receivable 537,667
- -------------------------------------------------------------------------------- ------------
Total assets 389,686,656
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Income distribution payable 1,454,662
- -----------------------------------------------------------------
Accrued expenses 120,945
- ----------------------------------------------------------------- ------------
Total liabilities 1,575,607
- -------------------------------------------------------------------------------- ------------
Net Assets for 388,111,049 shares outstanding $388,111,049
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
($388,111,049 / 388,111,049 shares outstanding) $1.00
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TREASURY CASH SERIES II
STATEMENT OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------
Interest $9,017,357
- ----------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------
Investment advisory fee $ 759,002
- ---------------------------------------------------------------------
Administrative personnel and services fee 114,913
- ---------------------------------------------------------------------
Custodian fees 36,931
- ---------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 20,372
- ---------------------------------------------------------------------
Directors'/Trustees' fees 3,378
- ---------------------------------------------------------------------
Auditing fees 6,743
- ---------------------------------------------------------------------
Legal fees 3,042
- ---------------------------------------------------------------------
Portfolio accounting fees 38,208
- ---------------------------------------------------------------------
Distribution services fee 292,975
- ---------------------------------------------------------------------
Share registration costs 11,601
- ---------------------------------------------------------------------
Printing and postage 3,083
- ---------------------------------------------------------------------
Insurance premiums 3,858
- ---------------------------------------------------------------------
Taxes 366
- ---------------------------------------------------------------------
Miscellaneous 2,071
- --------------------------------------------------------------------- ----------
Total expenses 1,296,543
- --------------------------------------------------------------------- ----------
Net investment income $7,720,814
- ---------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TREASURY CASH SERIES II
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
NOVEMBER 30, 1995 MAY 31, 1995
------------------ -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------
Net investment income $ 7,720,814 $ 10,341,623
- ------------------------------------------------------- ----------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------
Distributions from net investment income (7,720,814) (10,341,623)
- ------------------------------------------------------- ----------------- ------------
SHARE TRANSACTIONS--
- -------------------------------------------------------
Proceeds from sale of shares 535,035,828 677,897,145
- -------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of distributions declared 4,649,026 7,311,204
- -------------------------------------------------------
Cost of shares redeemed (395,224,387) (671,440,119)
- ------------------------------------------------------- ----------------- ------------
Change in net assets resulting from share
transactions 144,460,467 13,768,230
- ------------------------------------------------------- ----------------- ------------
Change in net assets 144,460,467 13,768,230
- -------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------
Beginning of period 243,650,582 229,882,352
- ------------------------------------------------------- ----------------- ------------
End of period $ 388,111,049 $243,650,582
- ------------------------------------------------------- ----------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TREASURY CASH SERIES II
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED MAY 31,
NOVEMBER 30, -------------------------------------------------------
1995 1995 1994 1993 1992 1991(A)
------------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------
Net investment income 0.03 0.04 0.02 0.03 0.04 0.02
- -------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------
Distributions from net investment
income (0.03) (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 $1.00
- ------------------------------------- ------ ---- ---- ---- ---- -----
TOTAL RETURN(B) 2.57% 4.47% 2.47% 2.64% 4.41% 2.06%
- -------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------
Expenses 0.85%* 0.88% 0.89% 0.78% 0.73% 0.47%*
- -------------------------------------
Net investment income 5.09%* 4.40% 2.42% 2.55% 4.34% 5.71%*
- -------------------------------------
Expense waiver/reimbursement(c) 0.00%* 0.00% 0.05% 0.19% 0.57% 0.37%*
- -------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------
Net assets, end of period (000
omitted) $388,111 $243,651 $229,882 $310,648 $104,371 $70,798
- -------------------------------------
</TABLE>
* Computed on an annualized basis.
(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) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
TREASURY CASH SERIES II
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
(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 are only those of
Treasury Cash Series II (the "Fund"), a diversified portfolio. The financial
statements of the other portfolios are presented separately. The assets of each
portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held.
(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 uses the amortized cost method to value its
portfolio securities in accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
TREASURY CASH SERIES II
- --------------------------------------------------------------------------------
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.
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
November 30, 1995, capital paid-in aggregated $388,111,049.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
NOVEMBER 30, 1995 MAY 31, 1995
<S> <C> <C>
- ------------------------------------------------------ ------------------ ------------
Shares sold 535,035,828 677,897,145
- ------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 4,649,026 7,311,204
- ------------------------------------------------------
Shares redeemed (395,224,387) (671,440,119)
- ------------------------------------------------------ --------------- ------------
Net change resulting from share transactions 144,460,467 13,768,230
- ------------------------------------------------------ --------------- ------------
</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, under the Administrative
Services Agreement, provides the Fund with administrative personnel and
services. This 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 to
TREASURY CASH SERIES II
- --------------------------------------------------------------------------------
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 shares, annually, to reimburse FSC.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--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 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.
<TABLE>
<S> <C>
DIRECTORS OFFICERS
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Richard B. Fisher
William J. Copeland President
J. Christopher Donahue J. Christopher Donahue
James E. Dowd Executive Vice President
Lawrence D. Ellis, M.D. Edward C. Gonzales
Edward L. Flaherty, Jr. Executive Vice President
Peter E. Madden John W. McGonigle
Gregor F. Meyer Executive Vice President and Secretary
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Treasurer
Marjorie P. Smuts Charles H. Field
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
- --------------------------------------------------------------------------------
TREASURY
- --------------------------------------------------------------------------------
CASH
- --------------------------------------------------------------------------------
SERIES II
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
NOVEMBER 30, 1995
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
CUSIP 147552301
1121606 (1/96)
-----------------------------------
-----------------------------------
-----------------------------------
