United States
Securities and Exchange Commission
Washington, D.C. 20549
Form N-CSR
Certified Shareholder Report of Registered Management Investment Companies
811-2993
(Investment Company Act File Number)
_______________________________________________________________
Edward Jones Money Market Fund
(Exact Name of Registrant as Specified in Charter)
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
(Notices should be sent to the Agent for Service)
Date of Fiscal Year End: 2/29/04
Date of Reporting Period: Fiscal year ended 2/29/04
Item 1. Reports to Stockholders
EdwardJones
Edward Jones Money Market Fund
ANNUAL SHAREHOLDER REPORT
February 29, 2004
INVESTMENT SHARES
RETIREMENT SHARES
FINANCIAL HIGHLIGHTS
FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT
BOARD OF TRUSTEES AND FUND OFFICERS
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
Serving Individual Investors Since 1871
NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE
Financial Highlights--Investment Shares
(For a Share Outstanding Throughout Each Period)
Year Ended February 28 or 29 | | 2004 | | | 2003 | | | 2002 | | | 2001 | | | 2000 | |
Net Asset Value, Beginning of Period | | $1.00 | | | $1.00 | | | $1.00 | | | $1.00 | | | $1.00 | |
Income From Investment Operations: | | | | | | | | | | | | | | | |
Net investment income | | 0.003 | | | 0.010 | | | 0.027 | | | 0.055 | | | 0.043 | |
Less Distributions: | | | | | | | | | | | | | | | |
Distributions from net investment income | | (0.003 | ) | | (0.010 | ) | | (0.027 | ) | | (0.055 | ) | | (0.043 | ) |
|
Net Asset Value, End of Period | | $1.00 | | | $1.00 | | | $1.00 | | | $1.00 | | | $1.00 | |
|
Total Return1 | | 0.30 | % | | 0.97 | % | | 2.75 | % | | 5.62 | % | | 4.43 | % |
|
| | | | | | | | | | | | | | | |
Ratios to Average Net Assets: | | | | | | | | | | | | | | | |
|
Expenses | | 0.86 | % | | 0.84 | % | | 0.83 | % | | 0.91 | % | | 0.94 | % |
|
Net investment income | | 0.30 | % | | 0.96 | % | | 2.75 | % | | 5.47 | % | | 4.35 | % |
|
Expense waiver/reimbursement2 | | 0.00 | %3 | | -- | | | -- | | | -- | | | -- | |
|
Supplemental Data: | | | | | | | | | | | | | | | |
|
Net assets, end of period (000 omitted) | | $8,134,397 | | $9,090,066 | | $9,722,644 | | $11,019,037 | | $8,761,300 | |
|
1 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
2 This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above.
3 Represents less than 0.01%.
See Notes which are an integral part of the Financial Statements
Financial Highlights--Retirement Shares
(For a Share Outstanding Throughout Each Period)
| | Year Ended
February 28 or 29, | | Period
Ended | |
| | 2004 | | | 2003 | | | 2/28/2002 | 1 |
Net Asset Value, Beginning of Period | | $1.00 | | | $1.00 | | | $1.00 | |
Income From Investment Operations: | | | | | | | | | |
Net investment income | | 0.001 | | | 0.005 | | | 0.014 | |
Less Distributions: | | | | | | | | | |
Distributions from net investment income | | (0.001 | ) | | (0.005 | ) | | (0.014 | ) |
|
Net Asset Value, End of Period | | $1.00 | | | $1.00 | | | $1.00 | |
|
Total Return2 | | 0.08 | % | | 0.50 | % | | 1.41 | % |
|
| | | | | | | | | |
Ratios to Average Net Assets: | | | | | | | | | |
|
Expenses | | 1.08 | % | | 1.30 | % | | 1.30 | %3 |
|
Net investment income | | 0.08 | % | | 0.49 | % | | 1.78 | %3 |
|
Expense waiver/reimbursement4 | | 0.12 | % | | -- | | | -- | |
|
Supplemental Data: | | | | | | | | | |
|
Net assets, end of period (000 omitted) | | $2,254,070 | | | $2,235,185 | | | $1,826,666 | |
|
1 Reflects operations for the period from May 21, 2001 (date of initial public investment) to February 28, 2002.
2 Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
3 Computed on annualized basis.
4 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
Portfolio of Investments
February 29, 2004
Principal
Amount | | | | Value | |
| | | GOVERNMENT AGENCIES--51.5% | | | | |
$ | 243,000,000 | 1 | Federal Farm Credit System Floating Rate Notes, 0.964%--1.020%, 3/4/2004 -- 3/24/2004 | | $ | 242,986,527 | |
| 63,500,000 | 2 | Federal Home Loan Bank System Discount Note, 1.139%, 5/26/2004 | | | 63,327,220 | |
| 456,000,000 | 1 | Federal Home Loan Bank System Floating Rate Notes, 1.010%-1.035%, 3/11/2004 -- 4/7/2004 | | | 455,929,350 | |
| 281,225,000 | | Federal Home Loan Bank System Notes, 1.250%--7.125%, 4/15/2004-2/28/2005 | | | 282,139,707 | |
| 1,196,957,000 | 2 | Federal National Mortgage Association Discount Notes, 1.060%-1.200%, 3/3/2004--12/27/2004 | | | 1,192,604,820 | |
| 2,227,000,000 | 1 | Federal National Mortgage Association Floating Rate Notes, 0.955%-1.110%, 3/1/2004--5/18/2004 | | | 2,226,298,828 | |
| 877,215,000 | | Federal National Mortgage Association Notes, 1.080%--7.125%, 3/15/2004--2/15/2005 | | | 883,218,502 | |
|
| | | TOTAL GOVERNMENT AGENCIES | | | 5,346,504,954 | |
|
| | | REPURCHASE AGREEMENTS--50.4% | | | | |
| 100,000,000 | | Interest in $700,000,000 joint repurchase agreement with ABN AMRO Bank NV, New York, 1.010%, dated 2/27/2004, to be repurchased at $100,008,417 on 3/1/2004, collateralized by U.S. Treasury Obligations with various maturities to 2/15/2031 | | | 100,000,000 | |
| 100,000,000 | | Interest in $800,000,000 joint repurchase agreement with BNP Paribas Securities Corp., 1.020%, dated 2/27/2004, to be repurchased at $100,008,500 on 3/1/2004, collateralized by U.S. Treasury Obligations with various maturities to 4/15/2032 | | | 100,000,000 | |
| 265,000,000 | 3 | Interest in $480,000,000 joint repurchase agreement with Banc of America Securities LLC, 1.030%, dated 2/6/2004, to be repurchased at $265,432,171 on 4/6/2004, collateralized by U.S. Government Agency Obligations with various maturities to 8/15/2033 | | | 265,000,000 | |
| 123,000,000 | 3 | Interest in $280,000,000 joint repurchase agreement with Banc of America Securities LLC, 1.050%, dated 2/10/2004, to be repurchased at $123,423,325 on 6/8/2004, collateralized by U.S. Government Agency Obligations with various maturities to 10/25/2018 | | | 123,000,000 | |
| 207,365,000 | | Interest in $1,700,000,000 joint repurchase agreement with Banc of America Securities LLC, 1.070%, dated 2/27/2004, to be repurchased at $207,383,490 on 3/1/2004, collateralized by U.S. Government Agency Obligations with various maturities to 3/1/2034 | | | 207,365,000 | |
Principal
Amount | | | | Value | |
| | | REPURCHASE AGREEMENTS--continued | | | | |
$ | 197,179,000 | | Interest in $1,795,000,000 joint repurchase agreement with Barclays Capital, Inc., 1.010%, dated 2/27/2004, to be repurchased at $197,195,596 on 3/1/2004, collateralized by U.S. Treasury Obligations with various maturities to 4/15/2032 | | $ | 197,179,000 | |
| 77,000,000 | | Interest in $200,000,000 joint repurchase agreement with Bear Stearns Cos., Inc., 1.070%, dated 2/27/2004, to be repurchased at $77,006,866 on 3/1/2004, collateralized by U.S. Government Agency Obligations with various maturities to 3/1/2034 | | | 77,000,000 | |
| 688,000,000 | | Interest in $1,500,000,000 joint repurchase agreement with Countrywide Securities Corp., 1.070%, dated 2/27/2004, to be repurchased at $688,061,347 on 3/1/2004, collateralized by U.S. Treasury Obligations and U.S. Government Agency Obligations with various maturities to 5/1/2042 | | | 688,000,000 | |
| 200,000,000 | | Interest in $500,000,000 joint repurchase agreement with Countrywide Securities Corp., 1.070%, dated 2/27/2004, to be repurchased at $200,017,833 on 3/1/2004, collateralized by U.S. Treasury Obligations and U.S. Government Agency Obligations with various maturities to 5/1/2042 | | | 200,000,000 | |
| 150,000,000 | | Interest in $1,000,000,000 joint repurchase agreement with Deutsche Bank Securities, Inc., 1.010%, dated 2/27/2004, to be repurchased at $150,012,625 on 3/1/2004, collateralized by U.S. Treasury Obligations with various maturities to 8/15/2022 | | | 150,000,000 | |
| 157,000,000 | 3 | Interest in $330,000,000 joint repurchase agreement with Deutsche Bank Securities, Inc., 1.030%, dated 2/24/2004, to be repurchased at $157,157,218 on 3/30/2004, collateralized by U.S. Government Agency Obligations with various maturities to 1/1/2034 | | | 157,000,000 | |
| 168,000,000 | 3 | Interest in $380,000,000 joint repurchase agreement with Deutsche Bank Securities, Inc., 1.040%, dated 2/27/2004, to be repurchased at $168,305,760 on 5/3/2004, collateralized by U.S. Government Agency Obligations with various maturities to 1/1/2034 | | | 168,000,000 | |
| 65,000,000 | 3 | Interest in $150,000,000 joint repurchase agreement with Deutsche Bank Securities, Inc., 1.050%, dated 1/8/2004, to be repurchased at $65,113,750 on 3/8/2004, collateralized by U.S. Government Agency Obligations with various maturities to 1/1/2034 | | | 65,000,000 | |
| 173,000,000 | | Interest in $500,000,000 joint repurchase agreement with Greenwich Capital Markets, Inc., 1.070%, dated 2/27/2004, to be repurchased at $173,015,426 on 3/1/2004, collateralized by U.S. Government Agency Obligations with various maturities to 1/25/2042 | | | 173,000,000 | |
| 128,000,000 | 3 | Interest in $250,000,000 joint repurchase agreement with J.P. Morgan Securities, Inc., 1.050%, dated 2/26/2004, to be repurchased at $128,336,000 on 5/27/2004, collateralized by U.S. Government Agency Obligations with various maturities to 9/15/2033 | | | 128,000,000 | |
Principal
Amount | | | | Value | |
| | | REPURCHASE AGREEMENTS--continued | | | | |
$ | 173,000,000 | | Interest in $500,000,000 joint repurchase agreement with J.P. Morgan Securities, Inc., 1.080%, dated 2/27/2004, to be repurchased at $173,015,570 on 3/1/2004, collateralized by U.S. Government Agency Obligations with various maturities to 2/1/2034 | | $ | 173,000,000 | |
| 372,000,000 | 3 | Interest in $750,000,000 joint repurchase agreement with Morgan Stanley & Co., Inc., 1.030%, dated 2/24/2004, to be repurchased at $372,319,300 on 3/25/2004, collateralized by U.S. Government Agency Obligations with various maturities to 7/15/2033 | | | 372,000,000 | |
| 278,000,000 | | Interest in $500,000,000 joint repurchase agreement with Morgan Stanley & Co., Inc., 1.070%, dated 2/27/2004, to be repurchased at $278,024,788 on 3/1/2004, collateralized by U.S. Government Agency Obligations with various maturities to 2/1/2034 | | | 278,000,000 | |
| 267,000,000 | 3 | Interest in $500,000,000 joint repurchase agreement with UBS Securities LLC, 1.040%, dated 1/14/2004, to be repurchased at $267,763,620 on 4/23/2004, collateralized by U.S. Government Agency Obligations with various maturities to 3/1/2034 | | | 267,000,000 | |
| 161,000,000 | 3 | Interest in $300,000,000 joint repurchase agreement with UBS Securities LLC, 1.040%, dated 2/26/2004, to be repurchased at $161,474,413 on 6/7/2004, collateralized by U.S. Government Agency Obligations with various maturities to 10/1/2033 | | | 161,000,000 | |
| 450,000,000 | | Interest in $1,000,000,000 joint repurchase agreement with UBS Securities LLC, 1.060%, dated 2/27/2004, to be repurchased at $450,039,750 on 3/1/2004, collateralized by U.S. Government Agency Obligations with various maturities to 3/1/2034 | | | 450,000,000 | |
| 474,000,000 | | Interest in $2,500,000,000 joint repurchase agreement with UBS Securities LLC, 1.070%, dated 2/27/2004, to be repurchased at $474,042,265 on 3/1/2004, collateralized by U.S. Government Agency Obligations with various maturities to 3/1/2034 | | | 474,000,000 | |
| 265,000,000 | | Interest in $300,000,000 joint repurchase agreement with Westdeutsche Landesbank AG, 1.080%, dated 2/27/2004, to be repurchased at $265,023,850 on 3/1/2004, collateralized by U.S. Treasury Obligations and U.S. Government Agency Obligations with various maturities to 10/1/2042 | | | 265,000,000 | |
|
| | | TOTAL REPURCHASE AGREEMENTS | | | 5,238,544,000 | |
|
| | | TOTAL INVESTMENTS--101.9%
(AT AMORTIZED COST)4 | | | 10,585,048,954 | |
|
| | | OTHER ASSETS AND LIABILITIES - NET--(1.9)% | | | (196,582,359 | ) |
|
| | | TOTAL NET ASSETS--100% | | $ | 10,388,466,595 | |
|
1 Floating rate note with current rate and next reset date shown.
2 Discount rate at time of purchase.
3 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.
4 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of total net assets as of February 29, 2004.
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
February 29, 2004
Assets: | | | | | | | | |
Investments in securities | | $ | 5,346,504,954 | | | | | |
Investments in repurchase agreements | | | 5,238,544,000 | | | | | |
|
Total investments in securities, at amortized cost and value | | | | | | $ | 10,585,048,954 | |
Cash | | | | | | | 523,448 | |
Income receivable | | | | | | | 11,530,347 | |
Receivable for shares sold | | | | | | | 185,568,548 | |
|
TOTAL ASSETS | | | | | | | 10,782,671,297 | |
|
Liabilities: | | | | | | | | |
Payable for investments purchased | | | 376,811,900 | | | | | |
Payable for shares redeemed | | | 12,174,051 | | | | | |
Income distribution payable | | | 361,966 | | | | | |
Payable for transfer and dividend disbursing agent fees and expenses (Note 5) | | | 2,584,047 | | | | | |
Payable for Directors' /Trustees' fees | | | 5,264 | | | | | |
Payable for shareholder services fee (Note 5) | | | 2,051,663 | | | | | |
Accrued expenses | | | 215,811 | | | | | |
|
TOTAL LIABILITIES | | | | | | | 394,204,702 | |
|
Net assets for 10,388,471,775 shares outstanding | | | | | | $ | 10,388,466,595 | |
|
Net Assets Consist of: | | | | | | | | |
Paid-in capital | | | | | | $ | 10,388,471,774 | |
Distributions in excess of net investment income | | | | | | | (5,179 | ) |
|
TOTAL NET ASSETS | | | | | | $ | 10,388,466,595 | |
|
Net Asset Value, Offering Price and Redemption Proceeds Per Share | | | | | | | | |
Investment Shares: | | | | | | | | |
$8,134,396,648 ÷ 8,134,375,000 shares outstanding | | | | | | | $1.00 | |
|
Retirement Shares: | | | | | | | | |
$2,254,069,947 ÷ 2,254,096,775 shares outstanding | | | | | | | $1.00 | |
|
See Notes which are an integral part of the Financial Statements
Statement of Operations
Year Ended February 29, 2004
Investment Income: | | | | | | | | | | | |
Interest | | | | | | | | | | $ | 126,932,011 |
|
Expenses: | | | | | | | | | | | |
Investment adviser fee (Note 5) | | | | | | $ | 44,944,118 | | | | |
Administrative personnel and services fee (Note 5) | | | | | | | 8,379,859 | | | | |
Custodian fees | | | | | | | 322,484 | | | | |
Transfer and dividend disbursing agent fees and expenses -- Investment Shares (Note 5) | | | | | | | 8,864,487 | | | | |
Transfer and dividend disbursing agent fees and expenses -- Retirement Shares (Note 5) | | | | | | | 9,729,032 | | | | |
Directors'/Trustees' fees | | | | | | | 82,961 | | | | |
Auditing fees | | | | | | | 18,616 | | | | |
Legal fees | | | | | | | 3,232 | | | | |
Portfolio accounting fees (Note 5) | | | | | | | 626,658 | | | | |
Shareholder services fee -- Investment Shares (Note 5) | | | | | | | 21,519,903 | | | | |
Shareholder services fee -- Retirement Shares (Note 5) | | | | | | | 5,788,921 | | | | |
Share registration costs | | | | | | | 460,278 | | | | |
Printing and postage -- Investment Shares | | | | | | | 272,341 | | | | |
Printing and postage -- Retirement Shares | | | | | | | 486,026 | | | | |
Insurance premiums | | | | | | | 17,542 | | | | |
Miscellaneous | | | | | | | 55,344 | | | | |
|
TOTAL EXPENSES | | | | | | | 101,571,802 | | | | |
|
Waivers (Note 5): | | | | | | | | | | | |
Waiver of administrative personnel and services fee | | $ | (130,180 | ) | | | | | | | |
Waiver of transfer and dividend disbursing agent fees and expenses -- Retirement Shares | | | (2,697,066 | ) | | | | | | | |
|
TOTAL WAIVERS | | | | | | | (2,827,246 | ) | | | |
|
Net expenses | | | | | | | | | | | 98,744,556 |
|
Net investment income | | | | | | | | | | $ | 28,187,455 |
|
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
Year Ended February 28 or 29 | | | 2004 | | | | 2003 | |
Increase (Decrease) in Net Assets | | | | | | | | |
Operations: | | | | | | | | |
Net investment income | | $ | 28,187,455 | | | $ | 99,239,254 | |
|
Distributions to Shareholders: | | | | | | | | |
Distributions from net investment income | | | | | | | | |
Investment Shares | | | (26,287,160 | ) | | | (89,220,305 | ) |
Retirement Shares | | | (1,829,619 | ) | | | (10,018,949 | ) |
|
CHANGE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS | | | (28,116,779 | ) | | | (99,239,254 | ) |
|
Share Transactions: | | | | | | | | |
Proceeds from sale of shares | | | 48,059,951,491 | | | | 44,944,621,706 | |
Net asset value of shares issued to shareholders in payment of distributions declared | | | 28,542,018 | | | | 100,480,067 | |
Cost of shares redeemed | | | (49,025,348,326 | ) | | | (45,269,160,679 | ) |
|
CHANGE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS | | | (936,854,817 | ) | | | (224,058,906 | ) |
|
Change in net assets | | | (936,784,141 | ) | | | (224,058,906 | ) |
|
Net Assets: | | | | | | | | |
Beginning of period | | | 11,325,250,736 | | | | 11,549,309,642 | |
|
End of period (including distributions in excess of net investment income of $(5,179) and $0, respectively) | | $ | 10,388,466,595 | | | $ | 11,325,250,736 | |
|
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
February 29, 2004
1. ORGANIZATION
Edward Jones Money Market Fund (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a diversified, open-end management investment company. The investment objective of the Fund is stability of principal and current income consistent with stability of principal.
The Fund offers two classes of shares: Investment Shares and Retirement Shares.
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 ("GAAP") in the United States of America.
Investment Valuation
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.
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. The Fund, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into one or more repurchase agreements.
Investment Income, Expenses and Distributions
Interest income and expenses are accrued daily. Distributions to shareholders are recorded on the ex-dividend date. The Fund offers multiple classes of shares, which differ in their respective printing and postage, transfer and dividend disbursing agent and service fees. All shareholders bear the common expenses of the Fund based on average daily net assets of each class, without distinction between share classes. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class expenses.
Premium and Discount Amortization
All premiums and discounts are amortized/accreted.
Federal Taxes
It is the Fund's policy to comply with the Subchapter M provision of the Internal Revenue Code (the "Code") and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal tax is 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. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.
Other
Investment transactions are accounted for on a trade date basis.
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 February 29, 2004, capital paid-in aggregated $10,388,471,774.
Transactions in shares were as follows:
Year Ended February 28 or 29 | | 2004 | | 2003 |
Investment Shares: | | Shares | | | | Amount | | | Shares | | | | Amount | |
Shares sold | | 27,167,605,577 | | | $ | 27,167,605,577 | | | 27,692,036,988 | | | $ | 27,691,961,132 | |
Shares issued to shareholders in payment of distributions declared |
|
26,677,455
|
|
|
|
26,677,455
|
|
|
90,648,276
|
|
|
|
90,648,276
|
|
Shares redeemed | | (28,149,919,143 | ) | | | (28,149,919,143 | ) | | (28,415,317,774 | ) | | | (28,415,317,774 | ) |
|
NET CHANGE RESULTING FROM INVESTMENT SHARE TRANSACTIONS |
|
(955,636,111
| ) |
|
$
|
(955,636,111
| ) |
|
(632,632,510
| ) |
|
$
|
(632,708,366
| ) |
|
| | | | | | | | | | | | | | |
Year Ended February 28 or 29 | | 2004 | | 2003 |
Retirement Shares: | | Shares | | | | Amount | | | Shares | | | | Amount | |
Shares sold | | 20,892,345,914 | | | $ | 20,892,345,914 | | | 17,252,660,574 | | | $ | 17,252,660,574 | |
Shares issued to shareholders in payment of distributions declared |
|
1,864,563
|
|
|
|
1,864,563
|
|
|
9,831,791
|
|
|
|
9,831,791
|
|
Shares redeemed | | (20,875,429,183 | ) | | | (20,875,429,183 | ) | | (16,853,842,905 | ) | | | (16,853,842,905 | ) |
|
NET CHANGE RESULTING FROM RETIREMENT SHARE TRANSACTIONS |
|
18,781,294
|
|
| $ |
18,781,294
|
|
|
408,649,460
|
|
| $ |
408,649,460
|
|
|
NET CHANGE RESULTING FROM SHARE TRANSACTIONS |
|
(936,854,817
| ) |
|
$
|
(936,854,817
| ) |
|
(223,983,050
| ) |
|
$
|
(224,058,906
| ) |
|
4. FEDERAL TAX INFORMATION
The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are due to book and tax differences.
For the year ended February 29, 2004, permanent differences identified and reclassified among the components of net assets were as follows:
Increase (Decrease) | |
Paid-In Capital | | Undistributed Net
Investment Income | |
$75,855 | | $(75,855 | ) |
|
Net investment income (loss), net realized gains (losses), as disclosed on the Statement of Operations and net assets were not affected by this reclassification.
The tax character of distributions as reported on the Statement of Changes in Net Assets for the years ended February 29, 2004 and February 28, 2003 was as follows:
| | 2004 | | 2003 |
Ordinary income1 | | $28,116,779 | | $99,239,254 |
|
1 For tax purposes short-term capital gain distributions are considered ordinary income distributions.
As of February 29, 2004, the component of distributable earnings on a tax basis was as follows:
Undistributed ordinary income | | $356,786 |
|
5. INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
Passport Research Ltd., the Fund's investment adviser (the "Adviser"), receives for its services an annual investment adviser fee based on average daily net assets of the Fund as follows: 0.500% on the first $500 million; 0.475% on the second $500 million; 0.450% on the third $500 million; 0.425% on the fourth $500 million; and 0.400% on amounts more than $2 billion. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion.
Adviser's Background
Passport Research, Ltd. is a Pennsylvania limited partnership organized in 1981. Federated Investment Management Company ("FIMCO"), is the general partner of the Adviser and has a 50.5% interest in the Adviser. FIMCO is owned by Federated Investors, Inc. Edward D. Jones & Co., L.P. d/b/a Edward Jones is the limited partner of the Adviser and has a 49.5% interest in the Adviser.
Administrative Fee
Federated Administrative Services ("FAS"), under the Administrative Services Agreement ("Agreement"), provides the Fund with administrative personnel and services. The fee paid to FAS is based on the average aggregate daily net assets of all Federated funds as specified below:
Maximum Administrative Fee | | Average Aggregate Daily
Net Assets of the Federated Funds |
0.150% | | on the first $5 billion |
0.125% | | on the next $5 billion |
0.100% | | on the next $10 billion |
0.075% | | on assets in excess of $20 billion |
The administrative fee received during any fiscal year shall be at least $150,000 per portfolio and $40,000 per each additional class of Shares.
FAS may voluntarily choose to waive any portion of its fee. FAS can modify or terminate this voluntary waiver at any time at its sole discretion.
Prior to November 1, 2003 Federated Services Company ("FServ") provided the Fund with administrative personnel and services. The fee paid to FServ was based on the average aggregate daily net assets of all Federated funds as specified below:
Maximum Administrative Fee | | Average Aggregate Daily Net Assets
of the Federated Funds |
0.150% | | on the first $250 million |
0.125% | | on the next $250 million |
0.100% | | on the next $250 million |
0.075% | | on assets in excess of $750 million |
The administrative fee received during any fiscal year was at least $125,000 per portfolio and $30,000 per each additional class of Shares.
For the year ended February 29, 2004 the fees paid to FAS and FServ were $2,681,017 and $5,568,662, respectively, after voluntary waiver, if applicable.
Shareholder Services Fee
Under the terms of a Shareholder Services Agreement with Federated Shareholder Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of the average daily net assets of the Fund's Investment Shares and Retirement Shares for the period. The fee paid to FSSC is used to finance certain services for shareholders and to maintain shareholder accounts. FSSC may voluntarily choose to waive any portion of its fee. FSSC can modify or terminate this voluntary waiver at any time at its sole discretion.
Transfer and Dividend Disbursing Agent Fees and Expenses
Edward Jones serves as transfer and dividend disbursing agent for the Fund. The fee paid to Edward Jones is based on the size, type and number of accounts and transactions made by shareholders. Edward Jones may voluntarily choose to waive any portion of its fee. Edward Jones can modify or terminate this voluntary waiver at any time at its sole discretion.
Portfolio Accounting Fees
Prior to January 1, 2004, FServ maintained the Fund's accounting records for which it received a fee. The fee was based on the level of the Fund's average daily net assets for the period, plus out-of-pocket expenses. The fee paid to FServ during the reporting period was $599,688, after voluntary waiver, if applicable.
General
Certain of the Officers and Trustees of the Fund are Officers and Directors or Trustees of the above companies.
Report of Ernst & Young LLP, Independent Auditors
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF EDWARD JONES MONEY MARKET FUND:
We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Edward Jones Money Market Fund (the "Fund"), as of February 29, 2004, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. 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 auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of February 29, 2004 by correspondence with the custodian and brokers, or other appropriate auditing procedures where replies from brokers were not received. 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, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Edward Jones Money Market Fund at February 29, 2004, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States.
Ernst & Young LLP
Boston, Massachusetts
April 7, 2004
Board of Trustees and Fund Officers
The Board is responsible for managing the Fund's business affairs and for exercising all the Fund's powers except those reserved for the shareholders. The following tables give information about each Board member and the senior officers of the Fund. Where required, the tables separately list Board members who are "interested persons" of the Fund (i.e., "Interested" Board members) and those who are not (i.e., "Independent" Board members). Unless otherwise noted, the address of each person listed is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA. The Federated Fund Complex consists of 44 investment companies (comprising 136 portfolios). Unless otherwise noted, each Officer is elected annually. Unless otherwise noted, each Board member oversees all portfolios in the Federated Fund Complex; serves for an indefinite term; and also serves as a Board member of the following investment company complexes: Banknorth Funds--four portfolios; Golden Oak® Family of Funds--seven portfolios; and WesMark Funds--five portfolios. The Fund's Statement of Additional Information includes additional information about Fund Trustees and is available, without charge and upon request, by calling 1-800-341-7400.
INTERESTED TRUSTEES BACKGROUND
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Name
Birth Date
Address
Positions Held with Fund
Date Service Began | | Principal Occupation(s), Other Directorships Held and Previous Position(s) |
John F. Donahue*
Birth Date: July 28, 1924
CHAIRMAN AND TRUSTEE
Began serving: January 1980 | | Principal Occupations: Chairman and Director or Trustee of the Federated Fund Complex; Chairman and Director, Federated Investors, Inc.
Previous Positions: Trustee, Federated Investment Management Company and Chairman and Director, Federated Investment Counseling. |
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J. Christopher Donahue*
Birth Date: April 11, 1949
PRESIDENT AND TRUSTEE
Began serving: November 1998 | | Principal Occupations: Principal Executive Officer and President of the Federated Fund Complex; Director or Trustee of some of the Funds in the Federated Fund Complex; President, Chief Executive Officer and Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment Management Company; Trustee, Federated Investment Counseling; Chairman and Director, Federated Global Investment Management Corp.; Chairman, Passport Research, Ltd.; Trustee, Federated Shareholder Services Company; Director, Federated Services Company.
Previous Positions: President, Federated Investment Counseling; President and Chief Executive Officer, Federated Investment Management Company, Federated Global Investment Management Corp. and Passport Research, Ltd. |
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Name
Birth Date
Address
Positions Held with Fund
Date Service Began | | Principal Occupation(s), Other Directorships Held and Previous Position(s) |
Lawrence D. Ellis, M.D.*
Birth Date: October 11, 1932
3471 Fifth Avenue
Suite 1111
Pittsburgh, PA
TRUSTEE
Began serving: August 1987 | | Principal Occupations: Director or Trustee of the Federated Fund Complex; Professor of Medicine, University of Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown; Hematologist, Oncologist and Internist, University of Pittsburgh Medical Center.
Other Directorships Held: Member, National Board of Trustees, Leukemia Society of America.
Previous Positions: Trustee, University of Pittsburgh; Director, University of Pittsburgh Medical Center. |
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* Family relationships and reasons for "interested" status: John F. Donahue is the father of J. Christopher Donahue; both are "interested" due to the positions they hold with Federated Investors, Inc. and its subsidiaries. Lawrence D. Ellis, M.D. is "interested" because his son-in-law is employed by the Fund's principal underwriter, Federated Securities Corp.
INDEPENDENT TRUSTEES BACKGROUND
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Name
Birth Date
Address
Positions Held with Fund
Date Service Began | | Principal Occupation(s), Other Directorships Held and
Previous Position(s) |
Thomas G. Bigley
Birth Date: February 3, 1934
15 Old Timber Trail
Pittsburgh, PA
TRUSTEE
Began serving: October 1995 | | Principal Occupation: Director or Trustee of the Federated Fund Complex.
Other Directorships Held: Director, Member of Executive Committee, Children's Hospital of Pittsburgh; Director, University of Pittsburgh.
Previous Position: Senior Partner, Ernst & Young LLP. |
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John T. Conroy, Jr.
Birth Date: June 23, 1937
Grubb & Ellis/Investment
Properties Corporation
3838 North Tamiami Trail
Suite 402
Naples, FL
TRUSTEE
Began serving: August 1991 | | Principal Occupations: Director or Trustee of the Federated Fund Complex; Chairman of the Board, Investment Properties Corporation; Partner or Trustee in private real estate ventures in Southwest Florida.
Previous Positions: President, Investment Properties Corporation; Senior Vice President, John R. Wood and Associates, Inc., Realtors; President, Naples Property Management, Inc. and Northgate Village Development Corporation.
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Name
Birth Date
Address
Positions Held with Fund
Date Service Began | | Principal Occupation(s), Other Directorships Held and
Previous Position(s) |
Nicholas P. Constantakis
Birth Date: September 3, 1939
175 Woodshire Drive
Pittsburgh, PA
TRUSTEE
Began serving: November 1998 | | Principal Occupations: Director or Trustee of the Federated Fund Complex.
Other Directorships Held: Director and Member of the Audit Committee, Michael Baker Corporation (engineering and energy services worldwide).
Previous Position: Partner, Andersen Worldwide SC. |
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John F. Cunningham
Birth Date: March 5, 1943
353 El Brillo Way
Palm Beach, FL
TRUSTEE
Began serving: November 1998 | | Principal Occupation: Director or Trustee of the Federated Fund Complex.
Other Directorships Held: Chairman, President and Chief Executive Officer, Cunningham & Co., Inc. (strategic business consulting); Trustee Associate, Boston College.
Previous Positions: Director, Redgate Communications and EMC Corporation (computer storage systems); Chairman of the Board and Chief Executive Officer, Computer Consoles, Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First National Bank of Boston; Director, Apollo Computer, Inc. |
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Peter E. Madden
Birth Date: March 16, 1942
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
TRUSTEE
Began serving: August 1991 | | Principal Occupation: Director or Trustee of the Federated Fund Complex; Management Consultant.
Other Directorships Held: Board of Overseers, Babson College.
Previous Positions: Representative, Commonwealth of Massachusetts General Court; President, State Street Bank and Trust Company and State Street Corporation (retired); Director, VISA USA and VISA International; Chairman and Director, Massachusetts Bankers Association; Director, Depository Trust Corporation; Director, The Boston Stock Exchange. |
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Charles F. Mansfield, Jr.
Birth Date: April 10, 1945
80 South Road
Westhampton Beach, NY
TRUSTEE
Began serving: November 1998 | | Principal Occupations: Director or Trustee of the Federated Fund Complex; Management Consultant; Executive Vice President, DVC Group, Inc. (marketing communications and technology) (prior to 9/1/00).
Previous Positions: Chief Executive Officer, PBTC International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP); Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior Vice President, HSBC Bank USA (formerly, Marine Midland Bank); Vice President, Citibank; Assistant Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra University. |
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Name
Birth Date
Address
Positions Held with Fund
Date Service Began | | Principal Occupation(s), Other Directorships Held and
Previous Position(s) |
John E. Murray, Jr., J.D., S.J.D.
Birth Date: December 20, 1932
Chancellor, Duquesne University
Pittsburgh, PA
TRUSTEE
Began serving: February 1995 | | Principal Occupations: Director or Trustee of the Federated Fund Complex; Chancellor and Law Professor, Duquesne University; Partner, Murray, Hogue and Lannis.
Other Directorships Held: Director, Michael Baker Corp. (engineering, construction, operations and technical services).
Previous Positions: President, Duquesne University; Dean and Professor of Law, University of Pittsburgh School of Law; Dean and Professor of Law, Villanova University School of Law. |
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Marjorie P. Smuts
Birth Date: June 21, 1935
4905 Bayard Street
Pittsburgh, PA
TRUSTEE
Began serving: February 1984 | | Principal Occupations: Director or Trustee of the Federated Fund Complex; Public Relations/Marketing Consultant/Conference Coordinator.
Previous Positions: National Spokesperson, Aluminum Company of America; television producer; President, Marj Palmer Assoc.; Owner, Scandia Bord. |
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John S. Walsh
Birth Date: November 28, 1957
2604 William Drive
Valparaiso, IN
TRUSTEE
Began serving: November 1998 | | Principal Occupations: Director or Trustee of the Federated Fund Complex; President and Director, Heat Wagon, Inc. (manufacturer of construction temporary heaters); President and Director, Manufacturers Products, Inc. (distributor of portable construction heaters); President, Portable Heater Parts, a division of Manufacturers Products, Inc.
Previous Position: Vice President, Walsh & Kelly, Inc. |
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OFFICERS
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Name
Birth Date
Positions Held with Fund
Date Service Began | | Principal Occupation(s) and Previous Position(s) |
John W. McGonigle
Birth Date: October 26, 1938
EXECUTIVE VICE PRESIDENT
AND SECRETARY
Began serving: January 1980 | | Principal Occupations: Executive Vice President and Secretary of the Federated Fund Complex; Executive Vice President, Secretary and Director, Federated Investors, Inc.
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Richard J. Thomas
Birth Date: June 17, 1954
TREASURER
Began serving: November 1998 | | Principal Occupations: Principal Financial Officer and Treasurer of the Federated Fund Complex; Senior Vice President, Federated Administrative Services.
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Richard B. Fisher
Birth Date: May 17, 1923
VICE CHAIRMAN
Began serving: August 2002 | | Principal Occupations: Vice Chairman or President of some of the Funds in the Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Chairman, Federated Securities Corp.
Previous Positions: President and Director or Trustee of some of the Funds in the Federated Fund Complex; Executive Vice President, Federated Investors, Inc. and Director and Chief Executive Officer, Federated Securities Corp. |
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William D. Dawson III
Birth Date: March 3, 1949
CHIEF INVESTMENT OFFICER
Began serving: November 1998 | | Principal Occupations: Chief Investment Officer of this Fund and various other Funds in the Federated Fund Complex; Executive Vice President, Federated Investment Counseling, Federated Global Investment Management Corp., Federated Investment Management Company and Passport Research, Ltd.
Previous Positions: Executive Vice President and Senior Vice President, Federated Investment Counseling Institutional Portfolio Management Services Division; Senior Vice President, Federated Investment Management Company and Passport Research, Ltd. |
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Susan R. Hill
Birth Date: June 20, 1963
VICE PRESIDENT
Began serving: November 1998 | | Susan R. Hill has been the Fund's Portfolio Manager since 1993. She is Vice President of the Fund. Ms. Hill joined Federated in 1990 and has been a Portfolio Manager since 1993 and a Vice President of the Fund's Adviser since 1997. Ms. Hill was a Portfolio Manager and an Assistant Vice President of the Adviser from 1994 until 1997. Ms. Hill is a Chartered Financial Analyst and received an M.S. in Industrial Administration from Carnegie Mellon University. |
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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 the 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.
VOTING PROXIES ON FUND PORTFOLIO SECURITIES
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to securities held in the Fund's portfolio is available, without charge and upon request, by calling 1-800-341-7400. This information is also available from the EDGAR database on the SEC's Internet site at http://www.sec.gov.
Edward Jones
201 Progress Parkway
Maryland Heights, Missouri 63043
1-800-331-2451
EdwardJones
Edward Jones Money Market Fund
Cusip 48019P102
Cusip 48019P201
30310 (4/04)
Item 2. Code of Ethics
As of the end of the period covered by this report, the registrant has
adopted a code of ethics (the "Section 406 Standards for Investment
Companies - Ethical Standards for Principal Executive and Financial
Officers") that applies to the registrant's Principal Executive Officer
and Principal Financial Officer; the registrant's Principal Financial
Officer also serves as the Principal Accounting Officer.
The registrant hereby undertakes to provide any person, without charge,
upon request, a copy of the code of ethics. To request a copy of the code
of ethics, contact the registrant at 1-800-341-7400, and ask for a copy of
the Section 406 Standards for Investment Companies - Ethical Standards for
Principal Executive and Financial Officers.
Item 3. Audit Committee Financial Expert
The registrant's Board has determined that each member of the Board's
Audit Committee is an "audit committee financial expert," and that each
such member is "independent," for purposes of this Item. The Audit
Committee consists of the following Board members: Thomas G. Bigley, John
T. Conroy, Jr., Nicholas P. Constantakis and Charles F. Mansfield, Jr.
Item 4. Principal Accountant Fees and Services
Item 4 Principal Accountant Fees and Services
(a) Audit Fees billed to the registrant for the two most recent
fiscal years:
Fiscal year ended 2004 - $13,484
Fiscal year ended 2003 - $13,000
(b) Audit-Related Fees billed to the registrant for the two most
recent fiscal years:
Fiscal year ended 2004 - $0
Fiscal year ended 2003 - $0
Amount requiring approval of the registrant's audit committee
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $0
and $0 respectively.
(c) Tax Fees billed to the registrant for the two most recent
fiscal years:
Fiscal year ended 2004 - $0
Fiscal year ended 2003 - $0
Amount requiring approval of the registrant's audit committee
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $0
and $0 respectively.
(d) All Other Fees billed to the registrant for the two most
recent fiscal years:
Fiscal year ended 2004 - $0
Fiscal year ended 2003 - $0
Amount requiring approval of the registrant's audit committee
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $0
and $8,112 respectively. Executive compensation analysis.
(e)(1) Audit Committee Policies regarding Pre-approval of Services.
The Audit Committee is required to pre-approve audit and
non-audit services performed by the independent auditor in order to assure
that the provision of such services do not impair the auditor's
independence. Unless a type of service to be provided by the independent
auditor has received general pre-approval, it will require specific
pre-approval by the Audit Committee. Any proposed services exceeding
pre-approved cost levels will require specific pre-approval by the Audit
Committee.
Certain services have the general pre-approval of the Audit
Committee. The term of the general pre-approval is 12 months from the
date of pre-approval, unless the Audit Committee specifically provides for
a different period. The Audit Committee will annually review the services
that may be provided by the independent auditor without obtaining specific
pre-approval from the Audit Committee and may grant general pre-approval
for such services. The Audit Committee will revise the list of general
pre-approved services from time to time, based on subsequent
determinations. The Audit Committee will not delegate its
responsibilities to pre-approve services performed by the independent
auditor to management.
The Audit Committee has delegated pre-approval authority to
its Chairman. The Chairman will report any pre-approval decisions to the
Audit Committee at its next scheduled meeting. The Committee will
designate another member with such pre-approval authority when the
Chairman is unavailable.
AUDIT SERVICES
The annual Audit services engagement terms and fees will be subject
to the specific pre-approval of the Audit Committee. The Audit Committee
must approve any changes in terms, conditions and fees resulting from
changes in audit scope, registered investment company (RIC) structure or
other matters.
In addition to the annual Audit services engagement specifically
approved by the Audit Committee, the Audit Committee may grant general
pre-approval for other Audit Services, which are those services that only
the independent auditor reasonably can provide. The Audit Committee has
pre-approved certain Audit services, all other Audit services must be
specifically pre-approved by the Audit Committee.
AUDIT-RELATED SERVICES
Audit-related services are assurance and related services that are
reasonably related to the performance of the audit or review of the
Company's financial statements or that are traditionally performed by the
independent auditor. The Audit Committee believes that the provision of
Audit-related services does not impair the independence of the auditor,
and has pre-approved certain Audit-related services, all other
Audit-related services must be specifically pre-approved by the Audit
Committee.
TAX SERVICES
The Audit Committee believes that the independent auditor can
provide Tax services to the Company such as tax compliance, tax planning
and tax advice without impairing the auditor's independence. However, the
Audit Committee will not permit the retention of the independent auditor
in connection with a transaction initially recommended by the independent
auditor, the purpose of which may be tax avoidance and the tax treatment
of which may not be supported in the Internal Revenue Code and related
regulations. The Audit Committee has pre-approved certain Tax services,
all Tax services involving large and complex transactions must be
specifically pre-approved by the Audit Committee.
ALL OTHER SERVICES
With respect to the provision of services other than audit, review
or attest services the pre-approval requirement is waived if:
(1) The aggregate amount of all such services provided constitutes no
more than five percent of the total amount of revenues
paid by the registrant, the registrant's adviser (not
including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or
overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with
the investment adviser that provides ongoing services to
the registrant to its accountant during the fiscal year
in which the services are provided;
(2) Such services were not recognized by the registrant, the
registrant's adviser (not including any sub-adviser
whose role is primarily portfolio management and is
subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or
under common control with the investment adviser that
provides ongoing services to the registrant at the time
of the engagement to be non-audit services; and
(3) Such services are promptly brought to the attention of the Audit
Committee of the issuer and approved prior to the
completion of the audit by the Audit Committee or by one
or more members of the Audit Committee who are members
of the board of directors to whom authority to grant
such approvals has been delegated by the Audit Committee.
The Audit Committee may grant general pre-approval to those
permissible non-audit services classified as All Other services that it
believes are routine and recurring services, and would not impair the
independence of the auditor.
The SEC's rules and relevant guidance should be consulted to
determine the precise definitions of prohibited non-audit services and the
applicability of exceptions to certain of the prohibitions.
PRE-APPROVAL FEE LEVELS
Pre-approval fee levels for all services to be provided by the
independent auditor will be established annually by the Audit Committee.
Any proposed services exceeding these levels will require specific
pre-approval by the Audit Committee.
PROCEDURES
Requests or applications to provide services that require specific
approval by the Audit Committee will be submitted to the Audit Committee
by both the independent auditor and the Principal Accounting Officer
and/or Internal Auditor, and must include a joint statement as to whether,
in their view, the request or application is consistent with the SEC's
rules on auditor independence.
(e)(2) Percentage of services identified in items 4(b) through 4(d)
that were approved by the registrants audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X:
4(b)
Fiscal year ended 2004 - 0%
Fiscal year ended 2003 - 0%
Percentage of services provided to the registrants investment
adviser and any entity controlling, controlled by, or under
common control with the investment adviser that provides
ongoing services to the registrant that were approved by the
registrants audit committee pursuant to paragraph (c)(7)(i)(C)
of Rule 2-01 of Regulation S-X, 0% and 0% respectively.
4(c)
Fiscal year ended 2004 - 0%
Fiscal year ended 2003 - 0%
Percentage of services provided to the registrants investment
adviser and any entity controlling, controlled by, or under
common control with the investment adviser that provides
ongoing services to the registrant that were approved by the
registrants audit committee pursuant to paragraph (c)(7)(i)(C)
of Rule 2-01 of Regulation S-X, 0% and 0% respectively.
4(d)
Fiscal year ended 2004 - 0%
Fiscal year ended 2003 - 0%
Percentage of services provided to the registrants investment
adviser and any entity controlling, controlled by, or under
common control with the investment adviser that provides
ongoing services to the registrant that were approved by the
registrants audit committee pursuant to paragraph (c)(7)(i)(C)
of Rule 2-01 of Regulation S-X, 0% and 0% respectively.
(f) NA
(g) Non-Audit Fees billed to the registrant, the registrant's investment
adviser, and certain entities controlling, controlled by or under
common control with the investment adviser that provides ongoing
services to the registrant:
Fiscal year ended 2004 - $50,726
Fiscal year ended 2003 - $191,414
(h) The registrant's Audit Committee has considered that the
provision of non-audit services that were rendered to the registrant's
adviser (not including any sub-adviser whose role is primarily portfolio
management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
Item 5 Audit Committee of Listed Registrants
Not Applicable
Item 6 [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for
Closed-End Management Investment Companies
Not Applicable
Item 8. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers
Not Applicable
Item 9. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 10. Controls and Procedures
(a) The registrant's President and Treasurer have concluded that the
registrant's disclosure controls and procedures (as defined in rule
30a-3(c) under the Act) are effective in design and operation and are
sufficient to form the basis of the certifications required by Rule
30a-(2) under the Act, based on their evaluation of these disclosure
controls and procedures within 90 days of the filing date of this report
on Form N-CSR.
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in rule 30a-3(d) under the Act), or the
internal control over financial reporting of its service providers during
the last fiscal half year (the registrant's second half year in the case
of an annual report) that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
Item 11. Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Registrant Federated Income Securities Trust
By /S/ Richard J. Thomas, Principal Financial Officer
(insert name and title)
Date April 23, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /S/ J. Christopher Donahue, Principal Executive Officer
Date April 23, 2004
By /S/ Richard J. Thomas, Principal Financial Officer
Date April 23, 2004
