CASH TRUST SERIES, 497, 1996-10-02

CASH TRUST SERIES
497, 1996-10-02

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CASH TRUST SERIES, INC.
PRIME CASH SERIES
TREASURY CASH SERIES
GOVERNMENT CASH SERIES
MUNICIPAL CASH SERIES

PROSPECTUS

This prospectus offers shares in Prime Cash Series (the "Prime Fund"), Treasury
Cash Series (the "Treasury Fund"), Government Cash Series (the "Government
Fund"), and Municipal Cash Series (the "Municipal Fund"). Each of these Funds is
a separate money-market portfolio of Cash Trust Series, Inc. (the "Company").
Except for the Municipal Fund, each Fund seeks current income consistent with
stability of principal and liquidity. The Municipal Fund seeks current income
exempt from federal regular income tax consistent with stability of principal.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. EACH
FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN
BE NO ASSURANCE THAT A FUND WILL BE ABLE TO DO SO.

This prospectus contains the information you should read and know before you
invest in any of the Funds. Keep this prospectus for future reference.

Each Fund has also filed a Statement of Additional Information dated September
30, 1996, with the Securities and Exchange Commission ("SEC"). The information
contained in each Statement of Additional Information is incorporated by
reference into this prospectus. You may request a copy of a Statement of
Additional Information or a paper copy of this prospectus, if you have received
your prospectus electronically, free of charge by calling 1-800-341-7400. To
obtain other information, or make inquiries about a Fund, contact your financial
institution. The Statement of Additional Information, material incorporated by
reference into this document, and other information regarding the Funds is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Prospectus dated September 30, 1996

- -------------------------------------------------------
-------------------------------------------------------
TABLE OF CONTENTS

Summary of Fund Expenses.......................................................1

Financial Highlights...........................................................2

Prime Cash Series

Treasury Cash Series

Financial Highlights...........................................................3

Government Cash Series

Municipal Cash Series

General Information............................................................4

Investment Information.........................................................4

Investment Objective.........................................................4

Investment Policies..........................................................4

More About the Municipal Fund................................................8

Investment Limitations.......................................................9

Fund Information..............................................................10

Management of the Funds.....................................................10

Distribution of Shares......................................................11

Administration of the Funds.................................................12

Net Asset Value...............................................................12

How to Purchase Shares........................................................13

Purchasing Shares Through a

Financial Institution....................................................13

Purchasing Shares by Wire...................................................13

Purchasing Shares by Check..................................................13

Special Purchase Features...................................................13

How to Redeem Shares..........................................................14

Redeeming Through a Financial
Institution..............................................................14

Redeeming Shares by Telephone...............................................14

Redeeming Shares by Mail....................................................14

Special Redemption Features.................................................15

Account and Share Information.................................................16

Tax Information...............................................................17

Federal Income Tax..........................................................17

State and Local Taxes.......................................................17

Performance Information.......................................................18

Addresses.....................................................................19

- -------------------------------------------------------
-------------------------------------------------------

SUMMARY OF FUND EXPENSES
CASH TRUST SERIES, INC.
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)...................................................................... None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)...................................................................... None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable).................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)......................................... None
Exchange Fee............................................................................................... None
</TABLE>

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)

GOVERNMENT MUNICIPAL PRIME TREASURY
CASH SERIES CASH SERIES CASH SERIES CASH SERIES
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fee
(after waiver) (1)........................... 0.45% 0.42% 0.37% 0.46%
12b-1 Fee (2).................................. 0.10% 0.10% 0.10% 0.10%
Total Other Expenses........................... 0.44% 0.47% 0.52% 0.43%
Shareholder Services Fee.................. 0.25% 0.25% 0.25% 0.25%
Total Fund Operating Expenses (3).... 0.99% 0.99% 0.99% 0.99%

</TABLE>

(1) The management fees have been reduced to reflect the voluntary waivers of a
portion of the management fees. The adviser can terminate these voluntary
waivers at any time at its sole discretion. The maximum management fees are
0.50%

(2) The maximum 12b-1 fees are 0.35%. The 12b-1 fee has been reduced to reflect
the voluntary waiver of a portion of the 12b-1 fee. The distributor can
terminate this voluntary waiver at any time at its sole discretion.

(3) The Total Fund Operating Expenses would have been 1.29%, 1.32%, 1.37%, and
1.28% absent the voluntary waivers of a portion of the management fees for
Government Cash Series, Municipal Cash Series, Prime Cash Series, and
Treasury Cash Series Funds, respectively.

The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Fund Information." Wire transferred redemptions of less than
$5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment on any Fund in
the Cash Trust Series, Inc., assuming (1) a 5% annual return and (2)
redemption at the end of each time period:................................ $10 $32 $55 $121
</TABLE>

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

- -------------------------------------------------------
-------------------------------------------------------
FINANCIAL HIGHLIGHTS
CASH TRUST SERIES, INC.
- --------------------------------------------------------------------------------

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

The following tables have been audited by Deloitte & Touche LLP, the Funds'
independent auditors. Their reports, dated July 10, 1996, on each Fund's
financial statements for the year ended May 31, 1996, and on the following
tables for each of the periods presented, are included in each Fund's Annual
Report, which are incorporated by reference. These tables should be read in
conjunction with each Fund's financial statements and notes thereto, which may
be obtained from a Fund.
<TABLE>
<CAPTION>
PRIME CASH SERIES
YEAR ENDED MAY 31,

<CAPTION>
1996 1995 1994 1993 1992 1991 1990(A)
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------
Net investment income 0.05 0.05 0.02 0.03 0.04 0.07 0.06
- ----------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------
Distributions from net investment
income (0.05) (0.05) (0.02) (0.03) (0.04) (0.07) (0.06)
- ---------------------------------------- --------- --------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------- --------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (B) 4.90% 4.60% 2.48% 2.61% 4.37% 6.99% 6.56%
- ----------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------
Expenses 0.99% 0.99% 0.99% 0.99% 0.98% 0.94% 0.73%*
- ----------------------------------------
Net investment income 4.78% 4.57% 2.45% 2.58% 4.21% 6.50% 7.82%*
- ----------------------------------------
Expense waiver/reimbursement (c) 0.38% 0.20% 0.18% 0.15% 0.22% 0.44% 0.46%*
- ----------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------
Net assets, end of period (000
omitted) $1,539,235 $1,027,083 $791,147 $796,832 $750,016 $562,465 $189,254
- ----------------------------------------
</TABLE>

* Computed on an annualized basis.
(a) Reflects operations for the period from August 18, 1989 (date of initial
public investment) to May 31, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
<TABLE>
<CAPTION>
TREASURY CASH SERIES
YEAR ENDED MAY 31,
<CAPTION>
1996 1995 1994 1993 1992 1991 1990(A)
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------
Net investment income 0.05 0.04 0.02 0.02 0.04 0.07 0.02
- ----------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------
Distributions from net investment
income (0.05) (0.04) (0.02) (0.02) (0.04) (0.07) (0.02)
- ---------------------------------------- --------- --------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------- --------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (B) 4.83% 4.34% 2.37% 2.47% 4.24% 6.83% 2.42%
- ----------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------
Expenses 0.99% 0.99% 0.99% 0.99% 0.98% 0.88% 0.60%*
- ----------------------------------------
Net investment income 4.70% 4.26% 2.33% 2.46% 4.18% 6.39% 7.75%*
- ----------------------------------------
Expense waiver/reimbursement (c) 0.29% 0.08% 0.10% 0.04% 0.04% 0.22% 0.44%*
- ----------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------
Net assets, end of period (000
omitted) $593,730 $424,091 $427,005 $532,334 $638,761 $713,430 $127,800
- ----------------------------------------
</TABLE>

* Computed on an annualized basis.
(a) Reflects operations for the period from February 7, 1990 (date of initial
public investment) to May 31, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.

Further information about each Fund's performance is contained in each Fund's
Annual Report dated May 31, 1996, which can be obtained free of charge.

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

The following tables have been audited by Deloitte & Touche LLP, the Funds'
independent auditors. Their reports, dated July 10, 1996, on each Fund's
financial statements for the year ended May 31, 1996, and on the following
tables for the periods presented, are included in each Fund's Annual Report,
which are incorporated by reference. These tables should be read in conjunction
with each Fund's financial statements and notes thereto, which may be obtained
from a Fund.

<TABLE>
<CAPTION>
GOVERNMENT CASH SERIES
YEAR ENDED MAY 31,

<CAPTION>
1996 1995 1994 1993 1992 1991 1990(A)
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------
Net investment income 0.05 0.04 0.02 0.03 0.04 0.07 0.06
- ----------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------
Distributions from net investment
income (0.05) (0.04) (0.02) (0.03) (0.04) (0.07) (0.06)
- ---------------------------------------- --------- --------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN (B) 4.85% 4.43% 2.45% 2.54% 4.33% 6.80% 6.53%
- ----------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------
Expenses 0.99% 0.99% 0.99% 0.99% 0.98% 0.94% 0.73%*
- ----------------------------------------
Net investment income 4.75% 4.35% 2.41% 2.53% 4.25% 6.48% 7.74%*
- ----------------------------------------
Expense waiver/reimbursement (c) 0.30% 0.08% 0.09% 0.06% 0.06% 0.13% 0.32%*
- ----------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------
Net assets, end of period (000
omitted) $448,129 $453,096 $401,334 $400,231 $550,675 $631,718 $493,995
- ----------------------------------------
</TABLE>

* Computed on an annualized basis.
(a) Reflects operations for the period from August 23, 1989, (date of initial
public investment) to May 31, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
<TABLE>
<CAPTION>
MUNICIPAL CASH SERIES
YEAR ENDED MAY 31,

<CAPTION>
1996 1995 1994 1993 1992 1991 1990(A)
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------
Net investment income 0.03 0.03 0.02 0.03 0.04 0.05 0.04
- ----------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------
Distribution from net investment
income (0.03) (0.03) (0.02) (0.03) (0.04) (0.05) (0.04)
- ---------------------------------------- --------- --------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------- --------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (B) 3.04% 2.84% 1.83% 2.11% 3.53% 5.24% 4.68%
- ----------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------
Expenses 0.99% 0.99% 0.99% 0.99% 0.98% 0.94% 0.73%*
- ----------------------------------------
Net investment income 2.99% 2.76% 1.81% 2.10% 3.42% 5.02% 5.76%*
- ----------------------------------------
Expense waiver/reimbursement (c) 0.33% 0.05% 0.06% 0.03% 0.03% 0.17% 0.45%*
- ----------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------
Net assets, end of period (000
omitted) $478,605 $445,164 $574,801 $456,205 $516,814 $403,151 $195,897
- ----------------------------------------
</TABLE>

* Computed on an annualized basis.

(a) Reflects operations for the period from August 25, 1989 (date of initial
public investment) to May 31, 1990.

(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.

Further information about each Fund's performance is contained in each Fund's
Annual Report dated May 31, 1996, which can be obtained free of charge.

- -------------------------------------------------------
-------------------------------------------------------

GENERAL INFORMATION

The Company was established as a Maryland corporation under Articles of
Incorporation dated February 1, 1993. The Articles of Incorporation permit the
Company to offer separate series of shares representing interests in separate
portfolios of securities. Each Fund is designed for customers of financial
institutions such as banks, fiduciaries, custodians of public funds, investment
advisers, and broker/dealers as a convenient means of accumulating an interest
in a professionally managed portfolio investing only in short-term money market
securities. A minimum initial investment of $10,000 is required, except for
retirement plans. The Municipal Fund may not be a suitable investment for
retirement plans because it invests primarily in municipal securities.

Each Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.

- -------------------------------------------------------
INVESTMENT INFORMATION

INVESTMENT OBJECTIVE

Except for the Municipal Fund, the investment objective of each Fund is current
income consistent with stability of principal and liquidity. The investment
objective of the Municipal Fund is current income exempt from federal regular
income tax consistent with stability of principal. An investment objective
cannot be changed without shareholder approval. While there is no assurance that
a Fund will achieve its investment objective, each endeavors to do so by
complying with the diversification and other requirements of Rule 2a-7 under the
Investment Company Act of 1940 which regulates money market mutual funds and by
following the investment policies described in this prospectus.

INVESTMENT POLICIES

Each Fund pursues its investment objective by investing only in money market
securities maturing in 13 months or less. All securities must be denominated and
payable in U.S. dollars. The average maturity of the securities in each Fund's
portfolio, computed on a dollar-weighted basis, will be 90 days or less. The
Municipal Fund has a fundamental policy that at least 80% of its annual interest
income will be exempt from federal regular income tax. (Federal regular income
tax does not include the federal individual alternative minimum tax for
corporations.) Unless indicated otherwise, the investment policies may be
changed by the Board of Directors ("the Directors") without shareholder
approval. Shareholders will be notified before any material change in these
policies becomes effective.

ACCEPTABLE INVESTMENTS

The Prime Fund invests in high quality money market instruments that are either
rated in one of the two highest short-term rating categories by one or more
nationally recognized statistical rating organizations or are of comparable
quality to securities having such ratings. Examples of these instruments
include, but are not limited to: domestic issues of corporate debt obligations,
including variable rate demand notes; commercial paper (including Canadian
Commercial Paper and Europaper); certificates of deposit, demand and time
deposits, bankers' acceptances and other instruments of domestic and foreign
banks and other deposit institutions ("Bank Instruments"); short-term credit
facilities; asset backed securities; obligations issued or guaranteed as to
payment of principal and interest by the U.S. government or one of its agencies
or instrumentalities; and other money market instruments.

The Treasury Fund invests only in U.S. Treasury securities, which are fully
guaranteed as to principal and interest by the United States.

The Government Fund invests only in U.S. government securities. These
instruments are either issued or guaranteed by the U.S. government, its
agencies, or instrumentalities. These securities include, but are not limited
to: direct obligations of the U.S. Treasury, such as U.S. Treasury bills, notes,
and bonds; notes, bonds, and discount notes issued or guaranteed by U.S.
government agencies and instrumentalities supported by the full faith and credit
of the United States; and notes, bonds, and discount notes of other U.S.
government agencies or instrumentalities which receive or have access to federal
funding. Some obligations issued or guaranteed by agencies or instrumentalities
of the U.S. government are backed by the full faith and credit of the U.S.
Treasury. No assurances can be given that the U.S. government will provide
financial support to other agencies or instrumentalities, since it is not
obligated to do so. These instrumentalities are supported by: the issuer's right
to borrow an amount limited to a specific line of credit from the U.S. Treasury;
discretionary authority of the U.S. government to purchase certain obligations
of an agency or instrumentality; or the credit of the agency or instrumentality.

The Municipal Fund invests primarily in debt obligations issued by or on behalf
of states, territories, and possessions of the United States, including the
District of Columbia, and any political subdivision or financing authority of
any of these, the income from which is, in the opinion of qualified legal
counsel, exempt from federal regular income tax ("Municipal Securities").
Examples of Municipal Securities include, but are not limited to: tax and
revenue anticipation notes issued to finance working capital needs in
anticipation of receiving taxes or other revenues; bond anticipation notes that
are intended to be refinanced through a later issuance of longer-term bonds;
municipal commercial paper and other short-term notes; variable rate demand
notes; municipal bonds (including bonds having serial maturities and pre-
refunded bonds) and leases; and participation, trust, and partnership interests
in any of the foregoing obligations.

VARIABLE RATE DEMAND NOTES

Variable rate demand notes are long-term debt instruments that have variable or
floating interest rates and provide the Prime Fund and the Municipal Fund with
the right to tender the security for repurchase at its stated principal amount
plus accrued interest. Such securities typically bear interest at a rate that is
intended to cause the securities to trade at par. The interest rate may float or
be adjusted at regular intervals (ranging from daily to annually), and is
normally based on a published interest rate or interest rate index. Most
variable rate demand notes allow the Prime Fund and the Municipal Fund to demand
the repurchase of the security on not more than seven days prior notice. Other
notes only permit these Funds to tender the security at the time of each
interest rate adjustment or at other fixed intervals. See "Demand Features." The
Prime Fund and the Municipal Fund treat variable rate demand notes as maturing
on the later of the date of the next interest rate adjustment or the date on
which the Fund may next tender the security for repurchase.

BANK INSTRUMENTS

The Prime Fund only invests in Bank Instruments either issued by an institution
having capital, surplus and undivided profits over $100 million, or insured by
the Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund
("SAIF"). Bank Instruments may include Eurodollar Certificates of Deposit
("ECDs"), Yankee Certificates of Deposit ("Yankee CDs"), and Eurodollar Time
Deposits ("ETDs"). The Fund will treat securities credit enhanced with a bank's
letter of credit as Bank Instruments.

ASSET-BACKED SECURITIES
Asset-backed securities are securities issued by special purpose entities whose
primary assets consist of a pool of loans or accounts receivable. The securities
may take the form of beneficial interests in special purpose trusts, limited
partnership interests, or commercial paper or other debt securities issued by a
special purpose corporation. Although the securities often have some form of
credit or liquidity enhancement, payments on the securities depend predominantly
upon collections of the loans and receivables held by the issuer.

SHORT-TERM CREDIT FACILITIES

The Prime Fund may enter into, or acquire participations in, short-term
borrowing arrangements with corporations, consisting of either a short-term
revolving credit facility or a master note agreement payable upon demand. Under
these arrangements, the borrower may reborrow funds during the term of the
facility. The Prime Fund treats any commitments to provide such advances as a
standby commitment to purchase the borrower's notes.

REPURCHASE AGREEMENTS

Certain securities in which the Funds invest may be purchased pursuant to
repurchase agreements. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell securities to
the Funds and agree at the time of sale to repurchase them at a mutually agreed
upon time and price. To the extent that the seller does not repurchase the
securities from a Fund, the Fund could receive less than the repurchase price on
any sale of such securities.

CREDIT ENHANCEMENT

Certain of the Prime Fund's and Municipal Fund's acceptable investments may be
credit-enhanced by a guaranty, letter of credit, or insurance. Any bankruptcy,
receivership, default, or change in the credit quality of the party providing
the credit enhancement will adversely affect the quality and marketability of
the underlying security and could cause losses to the Prime Fund or the
Municipal Fund and affect their share prices. The Municipal Fund may have more
than 25% of its total assets invested in securities credit-enhanced by banks.

DEMAND FEATURES

The Prime Fund and Municipal Fund may acquire securities that are subject to
puts and standby commitments ("demand features") to purchase the securities at
their principal amount (usually with accrued interest) within a fixed period
(usually seven days) following a demand by the Funds. The demand feature may be
issued by the issuer of the underlying securities, a dealer in the securities,
or by another third party, and may not be transferred separately from the
underlying security. The Funds use these arrangements to provide the Funds with
liquidity and not to protect against changes in the market value of the
underlying securities. The bankruptcy, receivership, or default by the issuer of
the demand feature, or a default on the underlying security or other event that
terminates the demand feature before its exercise, will adversely affect the
liquidity of the underlying security. Demand features that are exercisable even
after a payment default on the underlying security may be treated as a form of
credit enhancement.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

Each of the Funds may purchase securities on a when-issued or delayed delivery
basis. These transactions are arrangements in which a Fund purchases securities
with payment and delivery scheduled for a future time. The seller's failure to
complete these transactions may cause a Fund to miss a price or yield considered
to be advantageous. Settlement dates may be a month or more after entering into
these transactions, and the market values of the securities purchased may vary
from the purchase prices. Accordingly, a Fund may pay more or less than the
market value of the securities on the settlement date.

A Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, a Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. A Fund may realize short-term profits or losses upon the sale of such
commitments.

LENDING OF PORTFOLIO SECURITIES

As a matter of fundamental policy, in order to generate additional income, the
Prime Fund and Government Fund may lend their portfolio securities on a
short-term or long-term basis, or both, to broker/dealers, banks, or other
institutional borrowers of securities. The Funds will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the adviser
has determined are creditworthy under guidelines established by the Funds'
Directors and will receive collateral at all times equal to at least 100% of the
value of the securities loaned.

There is the risk that when lending portfolio securities, the securities may not
be available to a Fund on a timely basis and the Fund may, therefore, lose the
opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.

CONCENTRATION OF INVESTMENTS

As a matter of fundamental policy, the Prime Fund may invest 25% or more of its
total assets in commercial paper issued by finance companies. The finance
companies in which the Prime Fund intends to invest can be divided into two
categories, commercial finance companies and consumer finance companies.
Commercial finance companies are principally engaged in lending to corporations
or other businesses. Consumer finance companies are primarily engaged in lending
to individuals. Captive finance companies or finance subsidiaries which exist to
facilitate the marketing and financial activities of their parent will, for
purposes of industry concentration, be classified in the industry of their
parent's corporation. In addition, the Prime Fund may invest 25% or more of the
value of its total assets in instruments issued by a U.S. branch of a domestic
bank or savings association having capital, surplus, and undivided profits in
excess of $100,000,000 at the time of investment. Concentrating investments in
one industry may subject the Fund to more risk than if it did not concentrate.

MORE ABOUT THE MUNICIPAL FUND

PARTICIPATION INTERESTS

The Municipal Fund may purchase interests in Municipal Securities from financial
institutions such as commercial and investment banks, savings associations, and
insurance companies. These interests may take the form of participations,
beneficial interests in a trust, partnership interests or any other form of
indirect ownership that allows the Municipal Fund to treat the income from the
investment as exempt from federal regular income tax. The Municipal Fund invests
in these participation interests in order to obtain credit enhancement or demand
features that would not be available through direct ownership of the underlying
Municipal Securities.

MUNICIPAL LEASES

Municipal leases are obligations issued by state and local governments or
authorities to finance the acquisition of equipment and facilities. They may
take the form of a lease, an installment purchase contract, a conditional sales
contract, or a participation interest in any of the above. Lease obligations may
be subject to periodic appropriation. Municipal leases are subject to certain
specific risks in the event of default or failure of appropriation.

TEMPORARY INVESTMENTS

From time to time, when the investment adviser determines that market conditions
call for a temporary defensive posture, the Municipal Fund may invest in
tax-exempt or taxable securities, all of comparable quality to other securities
in which the Municipal Fund invests, such as: obligations issued by or on behalf
of municipal or corporate issuers; obligations issued or guaranteed by the U.S.
government, its agencies, or instrumentalities; instruments issued by a U.S.
branch of a domestic bank or other deposit institutions having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of investment; and
repurchase agreements (arrangements in which the organization selling the
Municipal Fund a temporary investment agrees at the time of sale to repurchase
it at a mutually agreed upon time and price). Although the Municipal Fund is
permitted to make taxable, temporary investments, there is no current intention
to do so.

MUNICIPAL SECURITIES

Municipal Securities are generally issued to finance public works, such as
airports, bridges, highways, housing, hospitals, mass transportation projects,
schools, streets, and water and sewer works. They are also issued to repay
outstanding obligations, to raise funds for general operating expenses, and to
make loans to other public institutions and facilities. Municipal Securities
include industrial development bonds issued by or on behalf of public
authorities to provide financing aid to acquire sites or construct and equip
facilities for privately or publicly owned corporations. The availability of
this financing encourages these corporations to locate within the sponsoring
communities and thereby increases local employment. The two principal
classifications of Municipal Securities are "general obligation" and "revenue"
bonds. General obligation bonds are secured by the issuer's pledge of its full
faith and credit and taxing power for the payment of principal and interest.
Interest on and principal of revenue bonds, however, are payable only from the
revenue generated by the facility financed by the bond or other specified
sources of revenue. Revenue bonds do not represent a pledge of credit or create
any debt of or charge against the general revenues of a municipality or public
authority. Industrial development bonds are typically classified as revenue
bonds.

Yields on Municipal Securities depend on a variety of factors, including: the
general conditions of the short-term municipal note market and of the municipal
bond market; the size of the particular offering; the maturity of the
obligations; and the rating of the issue. The ability of the Municipal Fund to
achieve its investment objective also depends on the continuing ability of the
issuers of Municipal Securities and participation interests, or the credit
enhancers of either, to meet their obligations for the payment of interest and
principal when due. In addition, from time to time, the supply of Municipal
Securities acceptable for purchase by the Municipal Fund could become limited.

The Municipal Fund may invest in Municipal Securities which are repayable out of
revenue streams generated from economically related projects or facilities
and/or whose issuers are located in the same state. Sizable investments in these
municipal securities could involve an increased risk to the Municipal Fund
should any of these related projects or facilities experience financial
difficulties.

Obligations of issuers of Municipal Securities are subject to the provisions of
bankruptcy, insolvency, and other laws affecting the rights and remedies of
creditors. In addition, the obligations of such issuers may become subject to
laws enacted in the future by Congress, state legislators, or referenda
extending the time for payment of principal and/or interest, or imposing other
constraints upon enforcement of such obligations or upon the ability of states
or municipalities to levy taxes. There is also the possibility that, as a result
of litigation or other conditions, the power or ability of any issuer to pay,
when due, the principal of and interest on its municipal securities may be
materially affected.

INVESTMENT LIMITATIONS

Each Fund will not borrow money directly or through reverse repurchase
agreements (arrangements in which a Fund sells a money market instrument for a
percentage of its cash value with an agreement to buy it back on a set date) or
pledge securities except, under certain circumstances, each Fund may borrow up
to one-third of the value of its total assets and pledge up to 10% of the total
assets to secure such borrowings.

The Prime Fund and the Municipal Fund may invest in restricted securities.
However, neither Fund may invest more than 10% of its total assets in these
securities, except for Section 4(2) commercial paper in the case of the Prime
Fund, and except for restricted securities determined to be liquid under
criteria established by the Directors in the case of the Municipal Fund.
The above investment limitations cannot be changed without shareholder approval.
The following limitation, however, may be changed by the Directors without
shareholder approval. Shareholders will be notified before any material change
in this limitation becomes effective.

None of the Funds will invest more than 10% of its net assets in illiquid
securities, including repurchase agreements providing for settlement in more
than seven days after notice.

- -------------------------------------------------------
FUND INFORMATION
MANAGEMENT OF THE FUNDS

BOARD OF DIRECTORS

The Funds are managed by a Board of Directors. The Directors are responsible for
managing each Fund's business affairs and for exercising all the Company's
powers except those reserved for the shareholders. An Executive Committee of the
Board of Directors handles the Board's responsibilities between meetings of the
Board.

INVESTMENT ADVISER

Investment decisions for each Fund are made by Federated Advisers, the Funds'
investment adviser, subject to direction by the Directors. The adviser
continually conducts investment research and supervision for each Fund and is
responsible for the purchase and sale of portfolio instruments.

ADVISORY FEES

The adviser receives an annual investment advisory fee equal to .50% of each
Fund's average daily net assets. The adviser has undertaken to reimburse each
Fund up to the amount of the advisory fee for operating expenses in excess of
limitations established by certain states. Also, the adviser may voluntarily
choose to waive a portion of its fee or reimburse other expenses of a Fund, but
reserves the right to terminate such waiver or reimbursement at any time at its
sole discretion.

ADVISER'S BACKGROUND

Federated Advisers, a Delaware business trust, organized on April 11, 1989, is a
registered investment adviser under the Investment Advisers Act of 1940. It is a
subsidiary of Federated Investors. All of the Class A (voting) shares of
Federated Investors are owned by a trust, the trustees of which are John F.
Donahue, Chairman and Trustee of Federated Investors, Mr. Donahues wife, and Mr.
Donahue's son, J. Christopher Donahue, who is President and Trustee of Federated
Investors.

Federated Advisers and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private accounts.
Certain other subsidiaries also provide administrative services to a number of
investment companies. With over $80 billion invested across more than 250 funds
under management and/or administration by its subsidiaries, as of December 31,
1995, Federated Investors is one of the largest mutual fund investment managers
in the United States. With more than 1,800 employees, Federated continues to be
led by the management who founded the company in 1955. Federated funds are
presently at work in and through 4,000 financial institutions nationwide. More
than 100,000 investment professionals have selected Federated funds for their
clients.
Both the Company and the adviser have adopted strict codes of ethics governing
the conduct of all employees who manage the Fund and its portfolio securities.
These codes recognize that such persons owe a fiduciary duty to the Fund's
shareholders and must place the interests of shareholders ahead of the
employees' own interests. Among other things, the codes: require preclearance
and periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Directors, and could
result in severe penalties.

DISTRIBUTION OF SHARES

Federated Securities Corp. is the principal distributor for shares of each Fund.
It is a Pennsylvania corporation organized on November 14, 1969, and is the
principal distributor for a number of investment companies. Federated Securities
Corp. is a subsidiary of Federated Investors.

State securities laws may require certain financial institutions such as
depository institutions to register as dealers.

DISTRIBUTION AND SHAREHOLDER
SERVICES

Under a distribution plan adopted in accordance with Investment Company Act Rule
12b-1 (the 'Plan'), the distributor may select financial institutions such as
banks, fiduciaries, custodians for public funds, investment advisers and
brokers/dealers to provide distribution and/or administrative services as agents
for their clients or customers. These services may include, but are not limited
to the following functions: providing office space, equipment, telephone
facilities, and various personnel including clerical, supervisory, and computer
as necessary or beneficial to establish and maintain shareholder accounts and
records; processing purchase and redemption transactions and automatic
investments of client account cash balances; answering routine client inquiries
regarding the Funds; assisting clients in changing dividend options, account
designations, and addresses; and providing such other services as the Funds
reasonably request.

The distributor will pay financial institutions a fee based upon shares subject
to the Plan and owned by their clients or customers. The schedules of such fees
and the basis upon which such fees will be paid will be determined from time to
time by the Directors of the Funds provided that for any period the total amount
of these fees shall not exceed an annual rate of .35% of the average net asset
value of shares subject to the Plan held during the period by clients or
customers of financial institutions. The current annual rate of such fees is
.35%. Any fees paid by the distributor under the Plan, will be reimbursed from
the assets of a Fund.

In addition, each Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under which
a Fund may make payments up to .25% of the average daily net asset value of each
Fund to obtain personal services for shareholders and for the maintenance of
shareholder accounts. Under the Shareholder Services Agreement, Federated
Shareholders Services will either perform shareholder services directly or will
select financial institutions to perform shareholder services. From time to time
and for such periods as deemed appropriate, the amounts stated above may be
reduced voluntarily. Financial institutions will receive fees based upon shares
owned by their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time by each
Fund and Federated Shareholder Services.

SUPPLEMENTAL PAYMENTS TO
FINANCIAL INSTITUTIONS

In addition to payments made pursuant to the Distribution Plan, Federated
Securities Corp. from its own assets, may pay financial institutions
supplemental fees for the performance of substantial sales services,
distribution-related support services, or shareholder services.

The support may include sponsoring sales, educational and training seminars for
their employees, providing sales literature, and engineering computer software
programs that emphasize the attributes of the Funds. Such assistance will be
predicated upon the amount of shares the financial institution sells or may
sell, and/or upon the type and nature of sales or marketing support
furnished by the financial institution. Any payments made by the distributor may
be reimbursed by the Funds' investment adviser or its affiliates.

ADMINISTRATION OF THE FUNDS

ADMINISTRATIVE SERVICES

Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Funds at an annual rate which
relates to the average aggregate daily net assets of all funds advised by
affiliates of Federated Investors specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE
MAXIMUM FEE DAILY NET ASSETS
<C> <S>
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% on assets in excess of
$750 million
</TABLE>

The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its fee.

- -------------------------------------------------------
NET ASSET VALUE

Each Fund attempts to stabilize the net asset value of its shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net asset
value per share is determined by subtracting total liabilities from total assets
and dividing the remainder by the number of shares outstanding. The Funds cannot
guarantee that their net asset values will always remain at $1.00 per share.

The net asset value is determined at 12:00 noon, 3:00 p.m. (Eastern time), and
as of the close of trading (normally 4:00 p.m., Eastern time) on the New York
Stock Exchange, Monday through Friday, except on New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day.

- -------------------------------------------------------

HOW TO PURCHASE SHARES

Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days which the New York Stock Exchange
is open for business. Shares may be purchased as described below, either through
a financial institution (such as a bank or broker/dealer) or by wire or by check
directly to the Funds, with a minimum initial investment of $10,000 or more or
additional investments of as little as $500. The minimum initial investment for
retirement plans is only $500. Financial institutions may impose different
minimum investment requirements on their customers.

In connection with any sale, Federated Securities Corp. may from time to time
offer certain items of nominal value to any shareholder or investor. The Funds
reserve the right to reject any purchase request. An account must be established
at a financial institution or by completing, signing, and returning the new
account form available from the Funds before shares can be purchased.

PURCHASING SHARES THROUGH A FINANCIAL INSTITUTION

Investors may purchase shares through a financial institution which has a sales
agreement with the distributor. Orders are considered received when a Fund
receives payment by wire or converts payment by check from the financial
institution into federal funds. It is the financial institution's responsibility
to transmit orders promptly. Financial institutions may charge additional fees
for their services.

PURCHASING SHARES BY WIRE

Shares may be purchased by wire by calling the appropriate Fund before 3:00 p.m.
(Eastern time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 3:00 p.m. (Eastern time) in
order to begin earning dividends that same day. Federal funds should be wired as
follows: Federated Shareholder Services Company, c/o State Street Bank and Trust
Company, Boston, MA; Attention;: EDGEWIRE; For Credit to: Fund Name; Fund Number
(this number can be found on the account statement or by contacting the Funds);
Group Number or Order Number; Nominee or Institution Name; and ABA Number
011000028. Shares cannot be purchased by wire on holidays when wire transfers
are restricted. Questions on wire purchases should be directed to your
shareholder services representative at the telephone number listed on your
account statement.

PURCHASING SHARES BY CHECK

Shares may be purchased by sending a check to Federated Shareholder Services
Company, P.O. Box 8600, Boston, MA 02266-8600. The check should be made payable
to the name of the appropriate Fund. Please include an account number on the
check. Orders by mail are considered received when payment by check is converted
into federal funds (normally the business day after the check is received), and
shares begin earning dividends the next day.

SPECIAL PURCHASE FEATURES

SYSTEMATIC INVESTMENT PROGRAM

A minimum of $500 can be automatically withdrawn periodically from the
shareholder's checking account at an Automated Clearing House ("ACH") member and
invested in Fund's shares. Shareholders should contact their financial
institution or the Funds to participate in this program.

- -------------------------------------------------------
HOW TO REDEEM SHARES

Shares are redeemed at their net asset value next determined after Federated
Shareholder Services Company receives the redemption request. Redemptions will
be made on days on which the Funds computes their net asset values. Redemption
requests must be received in proper form and can be made as described below.

REDEEMING THROUGH A FINANCIAL INSTITUTION

Shares may be redeemed by contacting the shareholder's financial institution.
Shares will be redeemed at the net asset value next determined after Federated
Shareholder Services Company receives the redemption request. According to the
shareholder's instructions, redemption proceeds can be sent to the financial
institution or to the shareholder by check or by wire. The financial institution
is responsible for promptly submitting redemption requests and providing proper
written redemption instructions. Customary fees and commissions may be charged
by the financial institution for this service.

REDEEMING SHARES BY TELEPHONE

Redemptions in any amount may be made by calling the Funds provided the Funds
have a properly completed authorization form. These forms can be obtained from
Federated Securities Corp. Proceeds from redemption requests before 12:00 noon
(Eastern time) will be wired the same day to the shareholder's account at a
domestic commercial bank which is a member of the Federal Reserve System, but
will not include that day's dividend. Proceeds from redemption requests received
after that time will include that day's dividend but will be wired the following
business day. Under limited circumstances, arrangements may be made with the
distributor for same-day payment of proceeds, without that day's dividend, for
redemption requests received before 2:00 p.m. (Eastern time). Proceeds from
redeemed shares purchased by check or through ACH will not be wired until that
method of payment has cleared. Proceeds from redemption requests on holidays
when wire transfers are restricted will be wired the following business day.
Questions about telephone redemptions on days when wire transfers are restricted
should be directed to your shareholder services representative at the telephone
number listed on your account statement.

Telephone instructions may be recorded and if reasonable procedures are not
followed by the Funds, they may be liable for losses due to unauthorized or
fraudulent telephone instructions.

In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If this occurs, "Redeeming Shares By Mail"
should be considered. If at any time the Funds shall determine it necessary to
terminate or modify the telephone redemption privilege, shareholders would be
promptly notified.

REDEEMING SHARES BY MAIL

Shares may be redeemed in any amount by mailing a written request to: Federated
Shareholder Services Company, P.O. Box 8600, Boston, MA 02266-8600. If share
certificates have been issued, they should be sent unendorsed with the written
request by registered or certified mail to the address noted above.

Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after the receipt of a proper written redemption
request. Dividends are paid up to and including the day that a redemption
request is processed.

Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Funds, or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by: a commercial
or savings bank, trust company or savings association whose deposits are insured
by an organization which is administered by the Federal Deposit Insurance
Corporation; a member firm of a domestic stock exchange; or any other "eligible
guarantor institution," as defined in the Securities Exchange Act of 1934. The
Fund does not accept signatures guaranteed by a notary public.

SPECIAL REDEMPTION FEATURES

CHECK WRITING

Upon request, a checking account will be established to allow shareholders to
redeem their Fund shares. Shareholder accounts will continue to receive the
daily dividend declared on the shares to be redeemed until the check is
presented to UMB Bank, N.A., the bank responsible for administering the check
writing program, for payment. However, checks should never be made payable or
sent to UMB Bank, N.A. or the Fund to redeem shares, and a check may not be
written to close an account.

DEBIT CARD

Upon request, a debit account will be established. This account allows
shareholders to redeem shares by using a debit card. A fee will be charged to
the account for this service.

SYSTEMATIC WITHDRAWAL PROGRAM

If a shareholder's account has a value of at least $10,000, a systematic
withdrawal program may be established whereby automatic redemptions are made
from the account and transferred electronically to any commercial bank, savings
bank, or credit union that is an ACH member. Shareholders may apply for
participation in this program through their financial institutions or the Funds.

- -------------------------------------------------------
ACCOUNT AND SHARE
INFORMATION

DIVIDENDS

Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Funds unless cash
payments are requested by writing to the Funds.

CAPITAL GAINS

The Funds do not expect to realize any capital gains or losses. If capital gains
or losses were to occur, they could result in an increase or decrease in
dividends. The Funds will distribute in cash or additional shares any realized
net long-term capital gains at least once every 12 months.

CERTIFICATES AND CONFIRMATIONS

As transfer agent for the Funds, Federated Shareholder Services Company
maintains a share account for each shareholder. Share certificates are not
issued unless requested by contacting the Funds or Federated Shareholder
Services Company in writing. Monthly confirmations are sent to report all
transactions as well as dividends paid during the month.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the Funds may
redeem shares in any account, except accounts maintained by retirement plans,
and pay the proceeds to the shareholder if the account balance falls below a
required minimum value of $10,000 due to shareholder redemptions. Before shares
are redeemed to close an account, the shareholder is notified in writing and
allowed 30 days to purchase additional shares to meet the minimum requirement.

VOTING RIGHTS

Each share of the Company owned by a shareholder gives that shareholder one vote
in Director elections and other matters submitted to shareholders for vote. All
shares of each portfolio in the Company have equal voting rights, except that in
matters affecting only a particular portfolio, only shareholders of that
portfolio are entitled to vote. The Company is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Company's or a Fund's operation and for the election of Directors
under certain circumstances.

Directors may be removed by the Directors or by shareholders at a special
meeting. A special meeting shall be called by the Directors upon the written
request of shareholders owning at least 10% of the outstanding shares of the
Company.

As of September 3, 1996, McDonald & Co. Securities, Inc., Cincinnati, Ohio,
owned 33.09% of the voting securities of the Municipal Fund, and, therefore,
may, for certain purposes, be deemed to control the Municipal Fund and be able
to affect the outcome of certain matters presented for a vote of shareholders.

- -------------------------------------------------------

TAX INFORMATION
FEDERAL INCOME TAX

The Funds will pay no federal income tax because they expect to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
Each Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by one
Fund will not be combined for tax purposes with those realized by any other
Fund.

Except for shareholders of the Municipal Fund, shareholders not otherwise exempt
are required to pay federal income tax on any dividends and other distributions
received. This applies whether dividends and distributions are received in cash
or as additional shares.

Shareholders of the Municipal Fund are not required to pay the federal regular
income tax on any dividends received from the Municipal Fund that represent net
interest on tax-exempt municipal bonds. However, under the Tax Reform Act of
1986, dividends representing net interest earned on certain "private activity"
bonds issued after August 7, 1986, may be included in calculating the federal
individual alternative minimum tax or the federal alternative minimum tax for
corporations. The Municipal Fund may purchase, within the limits of its
investment policies, all types of municipal bonds, including private activity
bonds. The alternative minimum tax applies when it exceeds the regular tax for
the taxable year. Alternative minimum taxable income is equal to the regular
taxable income of the taxpayer increased by certain "tax preference" items not
included in regular taxable income and reduced by only a portion of the
deductions allowed in the calculation of the regular tax. Dividends of the
Municipal Fund representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.
These tax consequences apply whether dividends are received in cash or as
additional shares.

STATE AND LOCAL TAXES

Company shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.

Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.

- -------------------------------------------------------
PERFORMANCE INFORMATION

From time to time, the Funds advertise their yield, effective yield, and total
return. The Municipal Fund also advertises its tax-equivalent yield.

Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment. The tax-equivalent yield is calculated similarly to the yield, but
it is adjusted to reflect the taxable yield that would have to be earned to
equal the Municipal Fund's tax exempt yield, assuming a specified tax rate.

Total return represents the change, over a specified period of time, in the
value of an investment in a Fund after reinvesting all income distributions. It
is calculated by dividing that change by the initial investment and is expressed
as a percentage.

From time to time, advertisements for the Funds may refer to ratings, rankings,
and other information in certain financial publications and/or compare a Fund's
performance to certain indices.

- -------------------------------------------------------
-------------------------------------------------------
ADDRESSES

Cash Trust Series, Inc.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, PA 15222-3779

INVESTMENT ADVISER
Federated Advisers
Federated Investors Tower
Pittsburgh, PA 15222-3779

CUSTODIAN
State Street Bank and Trust Company
P.O. Box 8600
Boston, MA 02266-8600

TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600

INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP
2500 One PPG Place
Pittsburgh, PA 15222

CASH TRUST SERIES, INC.

PRIME CASH SERIES
TREASURY CASH SERIES
GOVERNMENT CASH SERIES
MUNICIPAL CASH SERIES

PROSPECTUS
Portfolios of Cash Trust Series, Inc.,
An Open-End Management
Investment Company

Prospectus dated September 30, 1996

[LOGO] FEDERATED INVESTORS
Since 1955

Federated Investors Tower
Pittsburgh, PA 15222-3779

Federated Securities Corp. is the distributor of the Funds
and is a subsidiary of Federated Investors

CUSIP 147551105
CUSIP 147551402
CUSIP 147551204 [LOGO]
CUSIP 147551303
G00861-01 (9/96)

GOVERNMENT CASH SERIES
(A PORTFOLIO OF CASH TRUST SERIES, INC.)

PROSPECTUS

The shares of Government Cash Series (the "Fund") offered by this prospectus
represent interests in a portfolio of Cash Trust Series, Inc. (the "Company"),
an open-end management investment company (a mutual fund). The Fund invests in
short-term U.S. government securities to achieve current income consistent
with stability of principal and liquidity.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE
FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE
CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.

The Fund has also filed a Statement of Additional Information dated September
30, 1996, with the Securities and Exchange Commission ("SEC"). The information
contained in the Statement of Additional Information is incorporated by
reference into this prospectus. You may request a copy of the Statement of
Additional Information or a paper copy of this prospectus, if you have
received your prospectus electronically, free of charge by calling 1-800-341-
7400. To obtain other information, or make inquiries about the Fund, contact
your financial institution. The Statement of Additional Information, material
incorporated by reference into this document, and other information regarding
the Fund is maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).

Prospectus dated September 30, 1996

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES 1 NET ASSET VALUE 7
- ------------------------------------- -----------------------------------
FINANCIAL HIGHLIGHTS-- HOW TO PURCHASE SHARES 8
GOVERNMENT CASH SERIES 2
- ------------------------------------- -------------------------------------

Special Purchase Features 8

GENERAL INFORMATION 3 HOW TO REDEEM SHARES 9
-------------------------------------
- -------------------------------------

INVESTMENT INFORMATION 3 Special Redemption Features 10
- -------------------------------------
Investment Objective 3 ACCOUNT AND SHARE INFORMATION 10
Investment Policies 3 -------------------------------------
Investment Limitations 4
TAX INFORMATION 11
-------------------------------------
FUND INFORMATION 5
- ------------------------------------- Federal Income Tax 11

Management of the Fund 5 State and Local Taxes 11
Distribution of Shares 6
Administration of the Fund 7 PERFORMANCE INFORMATION 11
-------------------------------------

ADDRESSES Inside Back Cover
-------------------------------------

SUMMARY OF FUND EXPENSES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>

<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)............................... None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)............................... None
Contingent Deferred Sales Charge (as a percentage of original pur-
chase price
or redemption proceeds, as applicable)............................ None
Redemption Fee (as a percentage of amount redeemed, if applicable). None
Exchange Fee....................................................... None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1).................................. 0.45%
12b-1 Fee (after waiver) (2)....................................... 0.10%
Total Other Expenses............................................... 0.44%
Shareholder Services Fee......................................... 0.25%
Total Operating Expenses (3)....................................... 0.99%
</TABLE>

(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.50%.

(2) The maximum 12b-1 fee is 0.35%. The 12b-1 fee has been reduced to reflect
the voluntary waiver of a portion of the 12b-1 fee. The distributor can
terminate this voluntary waiver at any time at its sole discretion.

(3) The total operating expenses were 1.29% absent the voluntary waivers of
portions of the management fee and the 12b-1 fee.

The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs
and expenses, see "Fund Information." Wire-transferred redemptions of less
than $5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000
investment, assuming (1) 5% annual return and
(2) redemption at the end of each time period.. $10 $32 $55 $121
</TABLE>

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

GOVERNMENT CASH SERIES

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report, dated July 10, 1996, on the Fund's
financial statements for the year ended May 31, 1996, and on the following
table for the periods presented, is included in the Annual Report, which is
incorporated by reference. This table should be read in conjunction with the
Fund's financial statements and notes thereto, which may be obtained from the
Fund.
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
----------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990(A)
- ----------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------
INCOME FROM INVESTMENT
OPERATIONS
- -----------------------
Net investment income 0.05 0.04 0.02 0.03 0.04 0.07 0.06
- -----------------------
LESS DISTRIBUTIONS
- -----------------------
Distributions from net
investment income (0.05) (0.04) (0.02) (0.03) (0.04) (0.07) (0.06)
- ----------------------- ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
END OF PERIOD ------ ------ ------ ------ ------ ------ ------
- -----------------------
TOTAL RETURN (B) 4.85% 4.43% 2.45% 2.54% 4.33% 6.80% 6.53%
- -----------------------
RATIOS TO AVERAGE NET
ASSETS
- -----------------------
Expenses 0.99% 0.99% 0.99% 0.99% 0.98% 0.94% 0.73%*
- -----------------------
Net investment income 4.75% 4.35% 2.41% 2.53% 4.25% 6.48% 7.74%*
- -----------------------
Expense waiver/
reimbursement (c) 0.30% 0.08% 0.09% 0.06% 0.06% 0.13% 0.32%*
- -----------------------
SUPPLEMENTAL DATA
- -----------------------
<CAPTION>
Net assets, end of
period (000 omitted) $448,129 $453,096 $401,334 $400,231 $550,675 $631,718 $493,995
- -----------------------
</TABLE>

*Computed on an annualized basis.

(a) Reflects operations for the period from August 23, 1989, (date of initial
public investment) to May 31, 1990.

(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

Further information about the Fund's performance is contained in the Fund's
Annual Report dated May 31, 1996, which can be obtained free of charge.

GENERAL INFORMATION
- -------------------------------------------------------------------------------

The Company was established as a Maryland corporation under Articles of
Incorporation dated February 1, 1993. The Articles of Incorporation permit the
Company to offer separate series of shares representing interests in separate
portfolios of securities. The Fund is designed for customers of financial
institutions such as banks, fiduciaries, custodians of public funds,
investment advisers, and broker/dealers as a convenient means of accumulating
an interest in a professionally managed portfolio investing only in short-term
U.S. government securities. A minimum initial investment of $10,000 is
required, except for retirement plans.

The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.

INVESTMENT INFORMATION
- -------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Fund is current income consistent with
stability of principal and liquidity. This investment objective cannot be
changed without shareholder approval. While there is no assurance that the
Fund will achieve its investment objective, it endeavors to do so by complying
with the diversification and other requirements of Rule 2a-7 under the
Investment Company Act of 1940 which regulates money market mutual funds and
by following the investment policies described in this prospectus.

INVESTMENT POLICIES

The Fund pursues its investment objective by investing only in a portfolio of
U.S. government securities maturing in 13 months or less. The average maturity
of the securities in the Fund's portfolio, computed on a dollar-weighted
basis, will be 90 days or less. Unless indicated otherwise, the investment
policies may be changed by the Board of Directors ("the Directors") without
shareholder approval. Shareholders will be notified before any material change
in these policies becomes effective.

ACCEPTABLE INVESTMENTS. The Fund invests only in U.S. government securities.
These instruments are either issued or guaranteed by the U.S. government, its
agencies, or instrumentalities. These securities include, but are not limited
to:

. direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds;

. notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities supported by the full faith and credit of
the United States; and

. notes, bonds, and discount notes of other U.S. government agencies or
instrumentalities which receive or have access to federal funding.

Some obligations issued or guaranteed by agencies or instrumentalities of the
U.S. government are backed by the full faith and credit of the U.S. Treasury.
No assurances can be given that the U.S. government will provide financial
support to other agencies or instrumentalities, since it is not obligated to do
so. These instrumentalities are supported by:

. the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;

. discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or

. the credit of the agency or instrumentality.

REPURCHASE AGREEMENTS. Certain securities in which the Fund invests may be
purchased pursuant to repurchase agreements. Repurchase agreements are
arrangements in which banks, broker/dealers, and other recognized financial
institutions sell securities to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. To the extent that
the seller does not repurchase the securities from the Fund, the Fund could
receive less than the repurchase price on any sale of such securities.

The Fund may dispose of a commitment prior to settlement if the adviser deems
it appropriate to do so. In addition, the Fund may enter into transactions to
sell its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at
later dates. The Fund may realize short-term profits or losses upon the sale
of such commitments.

LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis, or
both, to broker/dealers, banks, or other institutional borrowers of
securities. The Fund will only enter into loan arrangements with
broker/dealers, banks, or other institutions which the adviser has determined
are creditworthy under guidelines established by the Fund's Directors and will
receive collateral at all times equal to at least 100% of the value of the
securities loaned. There is the risk that when lending portfolio securities,
the securities may not be available to the Fund on a timely basis and the Fund
may, therefore, lose the opportunity to sell the securities at a desirable
price. In addition, in the event that a borrower of securities would file for
bankruptcy or become insolvent, disposition of the securities may be delayed
pending court action.

INVESTMENT LIMITATIONS

The Fund will not borrow money directly or through reverse repurchase
agreements (arrangements in which the Fund sells a money market instrument for
a percentage of its cash value with an agreement to buy it back on a set date)
or pledge securities except, under certain circumstances, the Fund may borrow
up to one-third of the value of its total assets and pledge up to 10% of its
total assets to secure such borrowings.

The above investment limitations cannot be changed without shareholder
approval. The following limitation, however, may be changed by the Directors
without shareholder approval. Shareholders will be notified before any
material change in this limitation becomes effective.

The Fund will not invest more than 10% of its net assets in illiquid
securities, including repurchase agreements providing for settlement in more
than seven days after notice.

FUND INFORMATION
- -------------------------------------------------------------------------------

MANAGEMENT OF THE FUND

BOARD OF DIRECTORS. The Fund is managed by a Board of Directors. The Directors
are responsible for managing the Fund's business affairs and for exercising
all the Company's powers except those reserved for the shareholders. An
Executive Committee of the Board of Directors handles the Board's
responsibilities between meetings of the Board.

INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Advisers, the Fund's investment adviser, subject to direction by the
Directors. The adviser continually conducts investment research and
supervision for the Fund and is responsible for the purchase and sale of
portfolio instruments.

ADVISORY FEES. The adviser receives an annual investment advisory fee
equal to .50% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
Also, the adviser may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.

ADVISER'S BACKGROUND. Federated Advisers, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated
Investors. All of the Class A (voting) shares of Federated Investors are
owned by a trust, the trustees of which are John F. Donahue, Chairman and
Trustee of Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son,
J. Christopher Donahue, who is President and Trustee of Federated
Investors.

Both the Company and the adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its
portfolio securities. These codes recognize that such
persons owe a fiduciary duty to the Fund's shareholders and must place the
interests of shareholders ahead of the employees' own interests. Among
other things, the codes: require preclearance and periodic reporting of
personal securities transactions; prohibit personal transactions in
securities being purchased or sold, or being considered for purchase or
sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than
sixty days. Violations of the codes are subject to review by the
Directors, and could result in severe penalties.

DISTRIBUTION OF SHARES

Federated Securities Corp. is the principal distributor for shares of the
Fund. It is a Pennsylvania corporation organized on November 14, 1969, and is
the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.

State securities laws may require certain financial institutions such as
depository institutions to register as dealers.

DISTRIBUTION AND SHAREHOLDER SERVICES. Under a distribution plan adopted in
accordance with Investment Company Act Rule 12b-1 (the "Plan"), the
distributor may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers and brokers/dealers to
provide distribution and/or administrative services as agents for their
clients or customers. These services may include, but are not limited to the
following functions: providing office space, equipment, telephone facilities,
and various personnel including clerical, supervisory, and computer as
necessary or beneficial to establish and maintain shareholder accounts and
records; processing purchase and redemption transactions and automatic
investments of client account cash balances; answering routine client
inquiries regarding the Fund; assisting clients in changing dividend options,
account designations, and addresses; and providing such other services as the
Fund reasonably requests.

The distributor will pay financial institutions a fee based upon shares
subject to the Plan and owned by their clients or customers. The schedules of
such fees and the basis upon which such fees will be paid will be determined
from time to time by the Directors of the Fund provided that for any period
the total amount of these fees shall not exceed an annual rate of .35% of the
average net asset value of shares subject to the Plan held during the period
by clients or customers of financial institutions. The current annual rate of
such fees is .35%. Any fees paid by the distributor under the Plan, will be
reimbursed from the assets of the Fund.

In addition, the Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under
which the Fund may make payments up to .25% of the average daily net asset
value of the Fund to obtain personal services for shareholders and for the
maintenance of shareholder accounts. Under the Shareholder Services Agreement,
Federated Shareholders Services will either perform shareholder services
directly or will select financial institutions to perform shareholder
services. From time to time and for such periods as deemed appropriate, the
amounts stated above may be reduced voluntarily. Financial institutions will
receive fees based upon shares owned by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid will be
determined from time to time by the Fund and Federated Shareholder Services.

SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to payments made
pursuant to the Distribution Plan, Federated Securities Corp. from its own
assets, may pay financial institutions supplemental fees for the performance
of substantial sales services, distribution-related support services, or
shareholder services.

The support may include sponsoring sales, educational and training seminars
for their employees, providing sales literature, and engineering computer
software programs that emphasize the attributes of the Fund. Such assistance
will be predicated upon the amount of shares the financial institution sells
or may sell, and/or upon the type and nature of sales or marketing support
furnished by the financial institution. Any payments made by the distributor
may be reimbursed by the Fund's investment adviser or its affiliates.

ADMINISTRATION OF THE FUND

MAXIMUM
FEE AVERAGE AGGREGATE DAILY NET ASSETS
- ----------- -----------------------------------
<S> <C>
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>

NET ASSET VALUE
- -------------------------------------------------------------------------------

The Fund attempts to stabilize the net asset value of its shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net
asset value per share is determined by subtracting total liabilities from
total assets and dividing the remainder by the number of shares outstanding.
The Fund cannot guarantee that its net asset value will always remain at $1.00
per share.

HOW TO PURCHASE SHARES
- -------------------------------------------------------------------------------

Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange is open for business. Shares may be purchased as described below
either through a financial institution (such as a bank or broker/dealer) or by
wire or by check directly from the Fund, with a minimum initial investment of
$10,000 or more or additional investments of as little as $500. The minimum
initial and subsequent investments for retirement plans are only $1,000 and
$500, respectively. Financial institutions may impose different minimum
investment requirements on their customers.

In connection with any sale, Federated Securities Corp. may from time to time
offer certain items of nominal value to any shareholder or investor. The Fund
reserves the right to reject any purchase request. An account must be
established at a financial institution or by completing, signing, and
returning the new account form available from the Fund before shares can be
purchased.

PURCHASING SHARES THROUGH A FINANCIAL INSTITUTION. Investors may purchase
shares through a financial institution which has a sales agreement with the
distributor. Orders are considered received when the Fund receives payment by
wire or converts payment by check from the financial institution into federal
funds. It is the financial institution's responsibility to transmit orders
promptly. Financial institutions may charge additional fees for their
services.

PURCHASING SHARES BY WIRE. Shares may be purchased by wire by calling the Fund
before 3:00 p.m. (Eastern time) to place an order. The order is considered
received immediately. Payment by federal funds must be received before 3:00
p.m. (Eastern time) in order to begin earning dividends that same day. Federal
funds should be wired as follows: Federated Shareholder Services Company, c/o
State Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For
Credit to: Government Cash Series; Fund Number (this number can be found on
the account statement or by contacting the Fund); Group Number or Order
Number; Nominee or Institution Name; and ABA Number 011000028. Shares cannot
be purchased by wire on holidays when wire transfers are restricted. Questions
on wire purchases should be directed to your shareholder services
representative at the telephone number listed on your account statement.

PURCHASING SHARES BY CHECK. Shares may be purchased by sending a check to
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA 02266-8600.
The check should be made payable to Government Cash Series. Please include an
account number on the check. Orders by mail are considered received when
payment by check is converted into federal funds (normally the business day
after the check is received), and shares begin earning dividends the next day.

SPECIAL PURCHASE FEATURES

SYSTEMATIC INVESTMENT PROGRAM. A minimum of $500 can be automatically
withdrawn periodically from the shareholder's checking account at an Automated
Clearing House ("ACH") member and invested in Fund shares. Shareholders should
contact their financial institution or the Fund to participate in this
program.

HOW TO REDEEM SHARES
- -------------------------------------------------------------------------------

Shares are redeemed at their net asset value next determined after Federated
Shareholder Services Company receives the redemption request. Redemptions will
be made on days on which the Fund computes its net asset value. Redemption
requests must be received in proper form and can be made as described below.

REDEEMING SHARES THROUGH A FINANCIAL INSTITUTION. Shares may be redeemed by
contacting the shareholder's financial institution. Shares will be redeemed at
the net asset value next determined after Federated Shareholder Services
Company receives the redemption request. According to the shareholder's
instructions, redemption proceeds can be sent to the financial institution or
to the shareholder by check or by wire. The financial institution is
responsible for promptly submitting redemption requests and providing proper
written redemption instructions. Customary fees and commissions may be charged
by the financial institution for this service.

REDEEMING SHARES BY TELEPHONE. Redemptions in any amount may be made by
calling the Fund provided the Fund has a properly completed authorization
form. These forms can be obtained from Federated Securities Corp. Ordinarily,
proceeds from redemption requests before 12:00 noon (Eastern time) will be
wired the same day to the shareholder's account at a domestic commercial bank
which is a member of the Federal Reserve System, but will not include that
day's dividend. Proceeds from redemption requests received after that time
include that day's dividend but will be wired the following business day.
Under limited circumstances, arrangements may be made with the distributor for
same-day payment of proceeds, without that day's dividend, for redemption
requests received before 2:00 p.m. (Eastern time) Proceeds from redeemed
shares purchased by check or through ACH will not be wired until that method
of payment has cleared. Proceeds from redemption requests on holidays when
wire transfers are restricted will be wired the following business day.
Questions about telephone redemptions on days when wire transfers are
restricted should be directed to your shareholder services representative at
the telephone number listed on your account statement.

Telephone instructions may be recorded, and if reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.

In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares By Mail" should be considered. If at any time the Fund shall determine
it necessary to terminate or modify the telephone redemption privilege,
shareholders would be promptly notified.

REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If share certificates have been issued, they should be
sent unendorsed with the written request by registered or certified mail to
the address noted above.

Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by a
commercial or savings bank, trust company, or savings association whose
deposits are insured by an organization which is administered by the Federal
Deposit Insurance Corporation; a member firm of a domestic stock exchange; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934. The Fund does not accept signatures guaranteed by a
notary public.

SPECIAL REDEMPTION FEATURES

CHECK WRITING. Upon request, a checking account will be established to allow
shareholders to redeem their Fund shares. Shareholder accounts will continue
to receive the daily dividend declared on the shares to be redeemed until the
check is presented to UMB Bank, N.A., the bank responsible for administering
the check writing program, for payment. However, checks should never be made
payable or sent to UMB Bank, N.A. or the Fund to redeem shares, and a check
may not be written to close an account.

DEBIT CARD. Upon request, a debit account will be established. This account
allows shareholders to redeem shares by using a debit card. A fee will be
charged to the account for this service.

SYSTEMATIC WITHDRAWAL PROGRAM. If a shareholder's account has a value of at
least $10,000, a systematic withdrawal program may be established whereby
automatic redemptions are made from the account and transferred electronically
to any commercial bank, savings bank, or credit union that is an ACH member.
Shareholders may apply for participation in this program through their
financial institutions or the Fund.

ACCOUNT AND SHARE INFORMATION
- -------------------------------------------------------------------------------

DIVIDENDS. Dividends are declared daily and paid monthly. Dividends are
automatically reinvested on payment dates in additional shares of the Fund
unless cash payments are requested by writing to the Fund.

CAPITAL GAINS. The Fund does not expect to realize any capital gains or
losses. If capital gains or losses were to occur, they could result in an
increase or decrease in dividends. The Fund will distribute in cash or
additional shares any realized net long-term capital gains at least once every
12 months.

CERTIFICATES AND CONFIRMATIONS. As transfer agent for the Fund, Federated
Shareholder Services Company maintains a share account for each shareholder.
Share certificates are not issued unless requested by contacting the Fund or
Federated Shareholder Services Company in writing. Monthly confirmations are
sent to report all transactions as well as dividends paid during the month.

ACCOUNTS WITH LOW BALANCES. Due to the high cost of maintaining accounts with
low balances, the Fund may redeem shares in any account, except accounts
maintained by retirement plans, and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $10,000 due to
shareholder redemptions. Before shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to purchase additional
shares to meet the minimum requirement.

VOTING RIGHTS. Each share of the Company owned by a shareholder gives that
shareholder one vote in Director elections and other matters submitted to
shareholders for vote. All shares of each portfolio in the Company have equal
voting rights, except that in matters affecting only a particular portfolio,
only shareholders of that portfolio are entitled to vote. The Company is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Company's or the Fund's operation and
for election of Directors under certain circumstances.

TAX INFORMATION
- -------------------------------------------------------------------------------

FEDERAL INCOME TAX

The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Company's other portfolios will not be combined for tax purposes with those
realized by the Fund.

Unless otherwise exempt, shareholders are required to pay federal income tax
on any dividends and other distributions received. This applies whether
dividends and distributions are received in cash or as additional shares.

STATE AND LOCAL TAXES

Company shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.

Shareholders are urged to consult their own tax advisers regarding the status
of their accounts under state and local tax laws.

PERFORMANCE INFORMATION
- -------------------------------------------------------------------------------

From time to time, the Fund advertises its yield, effective yield, and total
return.

Total return represents the change, over a specified period of time, in the
value of an investment in the Fund after reinvesting all income distributions.
It is calculated by dividing that change by the initial investment and is
expressed as a percentage.

From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.

ADDRESSES
- --------------------------------------------------------------------------------
Government Cash Series Federated Investors Tower
Pittsburgh, PA 15222-3779
- --------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
- --------------------------------------------------------------------------------
Investment Adviser
Federated Advisers Federated Investors Tower
Pittsburgh, PA 15222-3779
- --------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company

P.O. Box 8600 Boston, MA
02266-8600
- --------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company
P.O. Box 8600 Boston, MA
02266-8600
- --------------------------------------------------------------------------------
Independent Public Accountants
Deloitte & Touche LLP 2500 One PPG Place
Pittsburgh, PA 15222
- --------------------------------------------------------------------------------

GOVERNMENT CASH SERIES

PROSPECTUS

A Portfolio of

Cash Trust Series, Inc., an Open-End
Management Investment Company

Prospectus dated September 30, 1996

[LOGO] Federated Investors
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779

Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors

Cusip 147551204
9080103A (9/96) [LOGO]
MUNICIPAL CASH SERIES
(A PORTFOLIO OF CASH TRUST SERIES, INC.)

PROSPECTUS

The shares of Municipal Cash Series (the "Fund") offered by this prospectus
represent interests in a portfolio of Cash Trust Series, Inc. (the "Company"),
an open-end management investment company (a mutual fund). The Fund invests in
short-term municipal securities to achieve current income exempt from federal
regular income tax consistent with stability of principal.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE
FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE
CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.

This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.

Prospectus dated September 30, 1996

<PAGE>

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES 1
- ------------------------------------ NET ASSET VALUE 9
------------------------------------
FINANCIAL HIGHLIGHTS-- MUNICIPAL
CASH SERIES 2 HOW TO PURCHASE SHARES 9
------------------------------------
- ------------------------------------

GENERAL INFORMATION 3 Special Purchase Features 10
- ------------------------------------

INVESTMENT INFORMATION 3 HOW TO REDEEM SHARES 10
- ------------------------------------ ------------------------------------

Investment Objective 3 Special Redemption Features 11
------------------------------------

Investment Policies 3 ACCOUNT AND SHARE INFORMATION 12

Municipal Securities 5
Investment Risks 6

Investment Limitations 6 TAX INFORMATION 13
------------------------------------

FUND INFORMATION 6
- ------------------------------------ Federal Income Tax 13

State and Local Taxes 13
Management of the Fund 6
PERFORMANCE INFORMATION 13
Distribution of Shares 7 ------------------------------------
Administration of the Fund 9

ADDRESSES 15
------------------------------------

SUMMARY OF FUND EXPENSES
- -------------------------------------------------------------------------------
<TABLE>

<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)............................... None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)............................... None
Contingent Deferred Sales Charge (as a percentage of original pur-
chase price
or redemption proceeds, as applicable)............................ None
Redemption Fee (as a percentage of amount redeemed, if applicable). None
Exchange Fee....................................................... None
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee (after waiver) (1).................................. 0.42%
12b-1 Fee (after waiver) (2)....................................... 0.10%
Total Other Expenses............................................... 0.47%
Shareholder Services Fee......................................... 0.25%
Total Operating Expenses (3)................................... 0.99%
</TABLE>

(1) The management fee has been reduced to reflect the voluntary waiver of a
portions of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.50%.

(3) The total Fund operating expenses were 1.32% absent the voluntary waivers
of portions of the management fee and the 12b-1 fee.

The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs
and expenses, see "Fund Information." Wire-transferred redemptions of less
than $5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment,
assuming (1) 5% annual return and (2) redemp-
tion at the end of each time period............ $10 $32 $55 $121
</TABLE>

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

MUNICIPAL CASH SERIES
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report, dated July 10, 1996, on the Fund's
financial statements for the year ended May 31, 1996, and on the following
table for each of the periods presented, is included in the Annual Report,
which is incorporated by reference. This table should be read in conjunction
with the Fund's financial statements and notes thereto, which may be obtained
from the Fund.
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
--------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990(A)
- ----------------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------
INCOME FROM INVESTMENT
OPERATIONS
- -----------------------
Net investment income 0.03 0.03 0.02 0.03 0.04 0.05 0.04
- -----------------------
LESS DISTRIBUTIONS
- -----------------------
Distribution from net
investment income (0.03) (0.03) (0.02) (0.03) (0.04) (0.05) (0.04)
- ----------------------- ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------- ------ ------ ------ ------ ------ ------ ------
TOTAL RETURN (B) 3.04% 2.84% 1.83% 2.11% 3.53% 5.24% 4.68%
- -----------------------
RATIOS TO AVERAGE NET
ASSETS
- -----------------------
Expenses 0.99% 0.99% 0.99% 0.99% 0.98% 0.94% 0.73%*
- -----------------------
Net investment income 2.99% 2.76% 1.81% 2.10% 3.42% 5.02% 5.76%*
- -----------------------
Expense waiver (c) 0.33% 0.05% 0.06% 0.03% 0.03% 0.17% 0.45%*
- -----------------------
SUPPLEMENTAL DATA
- -----------------------
Net assets, end of
period (000 omitted) $478,605 $445,164 $574,801 $456,205 $516,814 $403,151 $195,897
- -----------------------
</TABLE>

* Computed on an annualized basis.

(a) Reflects operations for the period from August 25, 1989 (date of initial
public investment) to May 31, 1990.

(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

Further information about the Fund's performance is contained in the Fund's
Annual Report, dated May 31, 1996, which can be obtained free of charge.

GENERAL INFORMATION
- -------------------------------------------------------------------------------

The Company was established as a Maryland corporation under Articles of
Incorporation dated February 1, 1993. The Articles of Incorporation permit the
Company to offer separate series of shares representing interests in separate
portfolios of securities. The Fund is designed for customers of financial
institutions such as banks, fiduciaries, custodians of public funds,
investment advisers, and broker/dealers as a convenient means of accumulating
an interest in a professionally managed portfolio investing in short-term
municipal securities. The Fund may not be a suitable investment for retirement
plans because it invests in municipal securities. A minimum initial investment
of $10,000 is required.

The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
- -------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Fund is current income exempt from federal
regular income tax consistent with stability of principal. This investment
objective cannot be changed without shareholder approval. While there is no
assurance that the Fund will achieve its investment objective, it endeavors to
do so by complying with the diversification and other requirements of Rule 2a-
7 under the Investment Company Act of 1940 which regulates money market mutual
funds and by following the investment policies described in this prospectus.

INVESTMENT POLICIES

The Fund pursues its investment objective by investing in a portfolio of
municipal securities maturing in 13 months or less. The average maturity of
the securities in the Fund's portfolio, computed on a dollar-weighted basis,
will be 90 days or less. As a matter of investment policy, which cannot be
changed without shareholder approval, at least 80% of the Fund's annual
interest income will be exempt from federal regular income tax. (Federal
regular income tax does not include the federal individual alternative minimum
tax for corporations.) Unless indicated otherwise, the investment policies may
be changed by the Board of Directors ("the Directors") without shareholder
approval. Shareholders will be notified before any material change in these
policies becomes effective.

ACCEPTABLE INVESTMENTS. The Fund invests primarily in debt obligations issued
by or on behalf of states, territories, and possessions of the United States,
including the District of Columbia, and any political subdivision or financing
authority of any of these, the income from which is, in the opinion of
qualified legal counsel, exempt from federal regular income tax ("Municipal
Securities"). Examples of Municipal Securities include, but are not limited
to:

. tax and revenue anticipation notes issued to finance working capital
needs in anticipation of receiving taxes or other revenues;

. bond anticipation notes that are intended to be refinanced through a
later issuance of longer-term bonds;

. municipal commercial paper and other short-term notes;
. variable rate demand notes;
. municipal bonds (including bonds having serial maturities and pre-
refunded bonds) and leases; and
. participation, trust, and partnership interests in any of the foregoing
obligations.

VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term debt
instruments that have variable or floating interest rates and provide the
Fund with the right to tender the security for repurchase at its stated
principal amount plus accrued interest. Such securities typically bear
interest at a rate that is intended to cause the securities to trade at
par. The interest rate may float or be adjusted at regular intervals
(ranging from daily to annually), and is normally based on a published
interest rate or interest rate index. Most variable rate demand notes allow
the Fund to demand the repurchase of the security on not more than seven
days prior notice. Other notes only permit the Fund to tender the security
at the time of each interest rate adjustment or at other fixed intervals.
See "Demand Features." The Fund treats variable rate demand notes as
maturing on the later of the date of the next interest rate adjustment or
the date on which the Fund may next tender the security for repurchase.

PARTICIPATION INTERESTS. The Fund may purchase interests in Municipal
Securities from financial institutions such as commercial and investment
banks, savings associations, and insurance companies. These interests may
take the form of participations, beneficial interests in a trust,
partnership interests or any other form of indirect ownership that allows
the Fund to treat the income from the investment as exempt from federal
regular income tax. The Fund invests in these participation interests in
order to obtain credit enhancement or demand features that would not be
available through direct ownership of the underlying Municipal Securities.

MUNICIPAL LEASES. Municipal leases are obligations issued by state and
local governments or authorities to finance the acquisition of equipment
and facilities. They may take the form of a lease, an installment purchase
contract, a conditional sales contract, or a participation interest in any
of the above. Lease obligations may be subject to periodic appropriation.
Municipal leases are subject to certain specific risks in the event of
default or failure of appropriation.

CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may be
credit-enhanced by a guaranty, letter of credit, or insurance. Any bankruptcy,
receivership, default, or change in the credit quality of the party providing
the credit enhancement will adversely affect the quality and marketability of
the underlying security and could cause losses to the Fund and affect its
share price. The Fund may have more than 25% of its total assets invested in
securities credit-enhanced by banks.

DEMAND FEATURES. The Fund may acquire securities that are subject to puts and
standby commitments ("demand features") to purchase the securities at their
principal amount (usually with accrued interest) within a fixed period (usually
seven days) following a demand by the Fund. The demand feature may be issued by
the issuer of the underlying securities, a dealer in the securities, or by
another third party, and may not be transferred separately from the underlying
security. The Fund uses these arrangements to provide the Fund with liquidity
and not to protect against changes in the market value of the underlying
securities. The bankruptcy, receivership, or default by the issuer of the demand
feature, or a default on the underlying security or other event that terminates
the demand feature before its exercise, will adversely affect the liquidity of
the underlying security. Demand features that are exercisable even after a
payment default on the underlying security may be treated as a form of credit
enhancement.

RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
invest pursuant to its investment objective and policies but which are subject
to restrictions on resale under federal securities law. Under criteria
established by the Directors, certain restricted securities are determined to
be liquid. To the extent that restricted securities are not determined to be
liquid, the Fund will limit their purchase, together with other illiquid
securities, to 10% of its net assets.

TEMPORARY INVESTMENTS. From time to time, when the investment adviser
determines that market conditions call for a temporary defensive posture, the
Fund may invest in tax-exempt or taxable securities, all of comparable quality
to other securities in which the Fund invests, such as: obligations issued by
or on behalf of municipal or corporate issuers; obligations issued or
guaranteed by the U.S. government, its agencies, or instrumentalities;
instruments issued by a U.S. branch of a domestic bank or other deposit
institutions having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment; and repurchase agreements
(arrangements in which the organization selling the Fund a temporary
investment agrees at the time of sale to repurchase it at a mutually agreed
upon time and price). Although the Fund is permitted to make taxable,
temporary investments, there is no current intention to do so.

MUNICIPAL SECURITIES

Municipal Securities include industrial development bonds issued by or on
behalf of public authorities to provide financing aid to acquire sites or
construct and equip facilities for privately or publicly owned corporations.
The availability of this financing encourages these corporations to locate
within the sponsoring communities and thereby increases local employment.

The two principal classifications of Municipal Securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment
of principal and interest. Interest on and principal of revenue bonds,
however, are payable only from the revenue generated by the facility financed
by the bond or other specified sources of revenue. Revenue bonds do not
represent a pledge of credit or create any debt of or charge against the
general revenues of a municipality or public authority. Industrial development
bonds are typically classified as revenue bonds.

INVESTMENT RISKS

Yields on Municipal Securities depend on a variety of factors, including: the
general conditions of the short-term municipal note market and of the
municipal bond market; the size of the particular offering; the maturity of
the obligations; and the rating of the issue. The ability of the Fund to
achieve its investment objective also depends on the continuing ability of the
issuers of Municipal Securities and participation interests, or the credit
enhancers of either, to meet their obligations for the payment of interest and
principal when due. In addition, from time to time, the supply of Municipal
Securities acceptable for purchase by the Fund could become limited.

The Fund may invest in Municipal Securities which are repayable out of revenue
streams generated from economically related projects or facilities and/or
whose issuers are located in the same state. Sizable investments in these
Municipal Securities could involve an increased risk to the Fund should any of
these related projects or facilities experience financial difficulties.
Obligations of issuers of Municipal Securities are subject to the provisions
of bankruptcy, insolvency, and other laws affecting the rights and remedies of
creditors. In addition, the obligations of such issuers may become subject to
laws enacted in the future by Congress, state legislators, or referenda
extending the time for payment of principal and/or interest, or imposing other
constraints upon enforcement of such obligations or upon the ability of states
or municipalities to levy taxes. There is also the possibility that, as a
result of litigation or other conditions, the power or ability of any issuer
to pay, when due, the principal of and interest on its municipal securities
may be materially affected.

INVESTMENT LIMITATIONS

FUND INFORMATION
- -------------------------------------------------------------------------------

MANAGEMENT OF THE FUND

Both the Company and the adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its
portfolio securities. These codes recognize that such persons owe a
fiduciary duty to the Fund's shareholders and must place the interests of
shareholders ahead of the employees' own interests. Among other things,
the codes: require preclearance and periodic reporting of personal
securities transactions; prohibit personal transactions in securities
being purchased or sold, or being considered for purchase or sale, by the
Fund; prohibit purchasing securities in initial public offerings; and
prohibit taking profits on securities held for less than sixty days.
Violations of the codes are subject to review by the Directors, and could
result in severe penalties.

DISTRIBUTION OF SHARES

State securities laws may require certain financial institutions such as
depository institutions to register as dealers.
DISTRIBUTION AND SHAREHOLDER SERVICES. Under a distribution plan adopted in
accordance with Investment Company Act Rule 12b-1 (the "Plan"), the
distributor may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers and brokers/dealers to
provide distribution and/or administrative services as agents for their
clients or customers. These services may include, but are not limited to the
following functions: providing office space, equipment, telephone facilities,
and various personnel including clerical, supervisory, and computer as
necessary or beneficial to establish and maintain shareholder accounts and
records; processing purchase and redemption transactions and automatic
investments of client account cash balances; answering routine client
inquiries regarding the Fund; assisting clients in changing dividend options,
account designations, and addresses; and providing such other services as the
Fund reasonably requests.

The distributor will pay financial institutions a fee based upon shares
subject to the Plan and owned by their clients or customers. The schedules of
such fees and the basis upon which such fees will be paid will be determined
from time to time by the Directors of the Fund provided that for any period
the total amount of these fees shall not exceed an annual rate of .35% of the
average net asset value of shares subject to the Plan held during the period
by clients or customers of financial institutions. The current annual rate of
such fees is .35%. Any fees paid by the distributor under the Plan, will be
reimbursed from the assets of the Fund.

The support may include sponsoring sales, educational and training seminars
for their employees, providing sales literature, and engineering computer
software programs that emphasize the attributes of the Fund. Such assistance
will be predicated upon the amount of shares the financial institution sells
or may sell, and/or upon the type and nature of sales or marketing support
furnished by the financial institution. Any payments made by the distributor
may be reimbursed by the Fund's investment adviser or its affiliates.

ADMINISTRATION OF THE FUND

ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of Federated
Investors, provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund at an
annual rate as which relates to the average aggregate daily net assets of all
funds advised by affiliates of Federated Investors specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE
MAXIMUM FEE DAILY NET ASSETS
----------- ------------------------------
<S> <C>
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>

NET ASSET VALUE
- -------------------------------------------------------------------------------

HOW TO PURCHASE SHARES
- -------------------------------------------------------------------------------

Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days which the New York Stock
Exchange is open for business. Shares may be purchased as described below
either through a financial institution (such as a bank or broker/dealer) or by
wire or by check directly from the Fund, with a minimum initial investment of
$10,000 or more or additional investments of as little as $500. Financial
institutions may impose different minimum investment requirements on their
customers.

PURCHASING SHARES BY WIRE. Shares may be purchased by wire by calling the Fund
before 3:00 p.m. (Eastern time) to place an order. The order is considered
received immediately. Payment by federal funds must be received before 3:00
p.m. (Eastern time) in order to begin earning dividends that same day. Federal
funds should be wired as follows: Federated Shareholder Services Company, c/o
State Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For
Credit to: Municipal Cash Series; Fund Number (this number can be found on the
account statement or by contacting the Fund); Group Number or Order Number;
Nominee or Institution Name; and ABA Number 011000028. Shares cannot be
purchased by wire on holidays when wire transfers are restricted. Questions on
wire purchases should be directed to your shareholder services representative
at the telephone number listed on your account statement.

PURCHASING SHARES BY CHECK. Shares may be purchased by sending a check to
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA 02266-8600.
The check should be made payable to Municipal Cash Series. Please include an
account number on the check. Orders by mail are considered received when
payment by check is converted into federal funds (normally the business day
after the check is received), and shares begin earning dividends the next day.

SPECIAL PURCHASE FEATURES

HOW TO REDEEM SHARES
- -------------------------------------------------------------------------------

Shares are redeemed at their net asset value next determined after Federated
Shareholder Services Company receives the redemption request. Redemptions will
be made on days on which the Fund computes its net asset value. Redemption
requests must be received in proper form and can be made as described below.

REDEEMING SHARES BY TELEPHONE. Redemptions in any amount may be made by
calling the Fund provided the Fund has a properly completed authorization
form. These forms can be obtained from Federated Securities Corp. Ordinarily,
proceeds from redemption requests before 12:00 noon (Eastern time) will be
wired the same day to the shareholder's account at a domestic commercial bank
which is a member of the Federal Reserve System, but will not include that
day's dividend. Proceeds from redemption requests received after that time
include that day's dividend but will be wired the following business day.
Under limited circumstances, arrangements may be made with the distributor for
same-day payment of proceeds, without that day's dividend, for redemption
requests received before 2:00 p.m. (Eastern time). Proceeds from redeemed
shares purchased by check or through ACH will not be wired until that method
of payment has cleared. Proceeds from redemption requests on holidays when
wire transfers are restricted will be wired the following business day.
Questions about telephone redemptions on days when wire transfers are
restricted should be directed to your shareholder services representative at
the telephone number listed on your account statement.

Telephone instructions may be recorded, and if reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.

In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares By Mail" should be considered. If at any time the Fund shall determine
it necessary to terminate or modify the telephone redemption privilege,
shareholders would be promptly notified.

SPECIAL REDEMPTION FEATURES

CHECK WRITING. Upon request, a checking account will be established to allow
shareholders to redeem their Fund shares. Shareholder accounts will continue
to receive the daily dividend declared on the shares to be redeemed until the
check is presented to UMB Bank, N.A., the bank responsible
for administering the check writing program, for payment. However, checks
should never be made payable or sent to UMB Bank, N.A. or the Fund to redeem
shares, and a check may not be written to close an account.

DEBIT CARD. Upon request, a debit account will be established. This account
allows shareholders to redeem shares by using a debit card. A fee will be
charged to the account for this service.

ACCOUNT AND SHARE INFORMATION
- -------------------------------------------------------------------------------

ACCOUNTS WITH LOW BALANCES. Due to the high cost of maintaining accounts with
low balances, the Fund may redeem shares in any account, and pay the proceeds
to the shareholder if the account balance falls below a required minimum value
of $10,000 due to shareholder redemptions. Before shares are redeemed to close
an account, the shareholder is notified in writing and allowed 30 days to
purchase additional shares to meet the minimum requirement.

As of September 3, 1996, McDonald & Co. Securities, Inc., Cincinnati, Ohio,
owned 33.09% of the voting securities of the Fund, and, therefore, may, for
certain purposes, be deemed to control the Fund and be able to affect the
outcome of certain matters presented for a vote of shareholders.

TAX INFORMATION
- -------------------------------------------------------------------------------

FEDERAL INCOME TAX

Shareholders are not required to pay the federal regular income tax on any
dividends received from the Fund that represent net interest on tax-exempt
municipal bonds. However, under the Tax Reform Act of 1986, dividends
representing net interest earned on certain "private activity" bonds issued
after August 7, 1986, may be included in calculating the federal individual
alternative minimum tax or the federal alternative minimum tax for
corporations. The Fund may purchase, within the limits of its investment
policies, all types of municipal bonds, including private activity bonds.

The alternative minimum tax applies when it exceeds the regular tax for the
taxable year. Alternative minimum taxable income is equal to the regular
taxable income of the taxpayer increased by certain "tax preference" items not
included in regular taxable income and reduced by only a portion of the
deductions allowed in the calculation of the regular tax.

Dividends of the Fund representing net interest income earned on some
temporary investments and any realized net short-term gains are taxed as
ordinary income.

These tax consequences apply whether dividends are received in cash or as
additional shares.

STATE AND LOCAL TAXES

Company shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.

Because interest received by the Fund may not be exempt from all state and
local income taxes, shareholders may be required to pay state and local taxes
on dividends received from the Fund. Shareholders are urged to consult their
own tax advisers regarding the status of their accounts under state and local
tax laws.

PERFORMANCE INFORMATION
- -------------------------------------------------------------------------------

From time to time, the Fund advertises its yield, effective yield, tax-
equivalent yield, and total return.

Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on
an investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by
an investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this
assumed reinvestment. The tax-equivalent yield is calculated similarly to the
yield, but is adjusted to reflect the taxable yield that would have to be
earned to equal the Fund's tax-exempt yield, assuming a specific tax rate.

From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.

ADDRESSES
- --------------------------------------------------------------------------------

Federated Investors Tower
Municipal Cash Series Pittsburgh, PA 15222-3779
- --------------------------------------------------------------------------------

Distributor
Federated Investors Tower
Federated Securities Corp. Pittsburgh, PA 15222-3779
- --------------------------------------------------------------------------------

Investment Adviser
Federated Advisers Federated Investors Tower
Pittsburgh, PA 15222-3779
- --------------------------------------------------------------------------------

Custodian
State Street Bank and Trust Company P.O. Box 8600 Boston, MA
02266-8600
- --------------------------------------------------------------------------------

Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company
P.O. Box 8600 Boston, MA
02266-8600

- --------------------------------------------------------------------------------

Independent Public Accountants
Deloitte & Touche LLP 2500 One PPG Place
Pittsburgh, PA 15222
- --------------------------------------------------------------------------------

MUNICIPAL CASH SERIES

PROSPECTUS

A Portfolio of Cash Trust Series, Inc.,

an Open-End Management
Investment Company

Prospectus dated September 30, 1996

LOGO FEDERATED INVESTORS
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779

Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.

CUSIP 147551303 [LOGO]
9080102A (9/96)

PRIME CASH SERIES
(A PORTFOLIO OF CASH TRUST SERIES, INC.)

PROSPECTUS

The shares of Prime Cash Series (the "Fund") offered by this prospectus
represent interests in a portfolio of Cash Trust Series, Inc. (the "Company"),
an open-end management investment company (a mutual fund). The Fund invests in
short-term money market securities to achieve current income consistent with
stability of principal and liquidity.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE
FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE
CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.

This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.

Prospectus dated September 30, 1996

TABLE OF CONTENTS
- -----------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES 1 NET ASSET VALUE 9
- ------------------------------------ ------------------------------------
FINANCIAL HIGHLIGHTS--PRIME CASH HOW TO PURCHASE SHARES 9
SERIES 2 ------------------------------------
- ------------------------------------
GENERAL INFORMATION Special Purchase Features 10
- ------------------------------------
INVESTMENT INFORMATION 3 HOW TO REDEEM SHARES 10
- ------------------------------------ ------------------------------------
Investment Objective 3 Special Redemption Features 12
Investment Policies 3
Investment Risks 6 ACCOUNT AND SHARE INFORMATION 12
Investment Limitations 6 ------------------------------------

FUND INFORMATION 7 TAX INFORMATION 13
- ------------------------------------ ------------------------------------
Management of the Fund 7 Federal Income Tax 13
Distribution of Shares 8 State and Local Taxes 13
Administration of the Fund 9
PERFORMANCE INFORMATION 13
------------------------------------
ADDRESSES 14
------------------------------------

SUMMARY OF FUND EXPENSES
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)............................... None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)............................... None
Contingent Deferred Sales Charge (as a percentage of original pur-
chase price
or redemption proceeds, as applicable)............................ None
Redemption Fee (as a percentage of amount redeemed, if applicable). None
Exchange Fee....................................................... None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1).................................. 0.37%
12b-1 Fee (after waiver) (2)....................................... 0.10%
Total Other Expenses............................................... 0.52%
Shareholder Services Fee......................................... 0.25%
Total Fund Operating Expenses (3).............................. 0.99%
</TABLE>

(3) The total Fund operating expenses were 1.37% absent the voluntary waivers
of portions of the management fee and the 12b-1 fee.

The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs
and expenses, see "Fund Information." Wire-transferred redemptions of less
than $5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment,
assuming (1) 5% annual return and (2) redemp-
tion at the end of each time period............ $10 $32 $55 $121
</TABLE>

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

PRIME CASH SERIES

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report, dated July 10, 1996, on the Fund's
financial statements for the year ended May 31, 1996, and on the following
table for each of the periods presented, is included in the Annual Report,
which is incorporated by reference. This table should be read in conjunction
with the Fund's financial statements and notes thereto, which may be obtained
from the Fund.
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990(A)
- ----------------------- ---------- ---------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------
INCOME FROM INVESTMENT
OPERATIONS
- -----------------------
Net investment income 0.05 0.05 0.02 0.03 0.04 0.07 0.06
- -----------------------
LESS DISTRIBUTIONS
- -----------------------
Distributions from net
investment income (0.05) (0.05) (0.02) (0.03) (0.04) (0.07) (0.06)
- ----------------------- ---------- ---------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------- ---------- ---------- -------- -------- -------- -------- --------
TOTAL RETURN (B) 4.90% 4.60% 2.48% 2.61% 4.37% 6.99% 6.56%
- -----------------------
RATIOS TO AVERAGE NET
ASSETS
- -----------------------
Expenses 0.99% 0.99% 0.99% 0.99% 0.98% 0.94% 0.73%*
- -----------------------
Net investment income 4.78% 4.57% 2.45% 2.58% 4.21% 6.50% 7.82%*
- -----------------------
Expense waiver/
reimbursement (c) 0.38% 0.20% 0.18% 0.15% 0.22% 0.44% 0.46%*
- -----------------------
SUPPLEMENTAL DATA
- -----------------------
Net assets, end of
period (000 omitted) $1,539,235 $1,027,083 $791,147 $796,832 $750,016 $562,465 $189,254
- -----------------------
</TABLE>

* Computed on an annualized basis.

(a) Reflects operations for the period from August 18, 1989 (date of initial
public investment) to May 31, 1990.

(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

Further information about the Fund's performance is contained in the Fund's
Annual Report, dated May 31, 1996, which can be obtained free of charge.

GENERAL INFORMATION
- -------------------------------------------------------------------------------

The Company was established as a Maryland corporation under Articles of
Incorporation dated February 1, 1993. The Articles of Incorporation permit the
Company to offer separate series of shares representing interests in separate
portfolios of securities. The Fund is designed for customers of financial
institutions such as banks, fiduciaries, custodians of public funds,
investment advisers, and broker/dealers as a convenient means of accumulating
an interest in a professionally managed portfolio investing in short-term
money market securities. A minimum initial investment of $10,000 is required,
except for retirement plans.

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

The Fund pursues its investment objective by investing in a portfolio of money
market securities maturing in 13 months or less. The average maturity of the
securities in the Fund's portfolio, computed on a dollar-weighted basis, will
be 90 days or less. Unless indicated otherwise, the investment policies may be
changed by the Board of Directors ("the Directors") without shareholder
approval. Shareholders will be notified before any material change in these
policies becomes effective.

ACCEPTABLE INVESTMENTS. The Fund invests in high quality money market
instruments that are either rated in one of the two highest short-term rating
category by one or more nationally recognized statistical rating organizations
("NRSROs") or are of comparable quality to securities having such ratings.
Examples of these instruments include, but are not limited to:

. domestic issues of corporate debt obligations, including variable rate
demand notes;
. commercial paper (including Canadian Commercial Paper and Europaper);
. certificates of deposit, demand and time deposits, bankers' acceptances
and other instruments of domestic and foreign banks and other deposit
institutions ("Bank Instruments");
. short-term credit facilities;
. asset-backed securities;
. obligations issued or guaranteed as to payment of principal and interest
by the U.S. government or one of its agencies or instrumentalities; and
. other money market instruments.

The Fund invests only in instruments denominated and payable in U.S. dollars.

VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term debt
instruments that have variable or floating interest rates and provide the
Fund with the right to tender the security for repurchase at its stated
principal amount plus accrued interest. Such securities typically bear
interest at a rate that is intended to cause the securities to trade at
par. The interest rate may float or be adjusted at regular intervals
(ranging from daily to annually), and is normally based on a published
interest rate or interest rate index. Most variable rate demand notes
allow the Fund to demand the repurchase of the security on not more than
seven days prior notice. Other notes only permit the Fund to tender the
security at the time of each interest rate adjustment or at other fixed
intervals. See "Demand Features." The Fund treats variable rate demand
notes as maturing on the later of the date of the next interest rate
adjustment or the date on which the Fund may next tender the security for
repurchase.

BANK INSTRUMENTS. The Fund only invests in Bank Instruments either issued
by an institution having capital, surplus and undivided profits over $100
million, or insured by the Bank Insurance Fund ("BIF") or the Savings
Association Insurance Fund ("SAIF"). Bank Instruments may include
Eurodollar Certificates of Deposit ("ECDs"), Yankee Certificates of
Deposit ("Yankee CDs") and Eurodollar Time Deposits ("ETDs"). The Fund
will treat securities credit enhanced with a bank's letter of credit as
Bank Instruments.

ASSET-BACKED SECURITIES. Asset-backed securities are securities issued by
special purpose entities whose primary assets consist of a pool of loans
or accounts receivable. The securities may take the form of beneficial
interests in special purpose trusts, limited partnership interests, or
commercial paper or other debt securities issued by a special purpose
corporation. Although the securities often have some form of credit or
liquidity enhancement, payments on the securities depend predominantly
upon collections of the loans and receivables held by the issuer.

SHORT-TERM CREDIT FACILITIES. The Fund may enter into, or acquire
participations in, short-term borrowing arrangements with corporations,
consisting of either a short-term revolving credit facility or a master
note agreement payable upon demand. Under these arrangements, the borrower
may reborrow funds during the term of the facility. The Fund treats any
commitments to provide such advances as a standby commitment to purchase
the borrower's notes.

CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may be
credit-enhanced by a guaranty, letter of credit, or insurance. Any bankruptcy,
receivership, default or change in the credit quality of the party providing the
credit enhancement will adversely affect the quality and marketability of the
underlying security and could cause losses to the Fund and affect its share
price.

DEMAND FEATURES. The Fund may acquire securities that are subject to puts and
standby commitments ("demand features") to purchase the securities at their
principal amount (usually with accrued interest) within a fixed period
(usually seven days) following a demand by the Fund. The demand feature may be
issued by the issuer of the underlying securities, a dealer in the securities,
or by another third party, and may not be transferred separately from the
underlying security. The Fund uses these arrangements to provide the Fund with
liquidity and not to protect against changes in the market value of the
underlying securities. The bankruptcy, receivership, or default by the issuer
of the demand feature, or a default on the underlying security or other event
that terminates the demand feature before its exercise, will adversely affect
the liquidity of the underlying security. Demand features that are exercisable
even after a payment default on the underlying security may be treated as a
form of credit enhancement.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase
securities on a when-issued or delayed delivery basis. These transactions are
arrangements in which the Fund purchases securities with payment and delivery
scheduled for a future time. The seller's failure to complete these
transactions may cause the Fund to miss a price or yield considered to be
advantageous. Settlement dates may be a month or more after entering into
these transactions, and the market values of the securities purchased may vary
from the purchase prices. Accordingly, the Fund may pay more or less than the
market value of the securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems
it appropriate to do so. In addition, the Fund may enter into transactions to
sell its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at
later dates. The Fund may realize short-term profits or losses upon the sale
of such commitments.

RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
invest pursuant to its investment objective and policies but which are subject
to restrictions on resale under federal securities law. However, the Fund will
limit investments in illiquid securities, including certain restricted
securities not determined by the Directors to be liquid, non-negotiable time
deposits, and repurchase agreements providing for settlement in more than
seven days after notice, to 10% of its net assets.

The Fund may invest in commercial paper issued in reliance on the exemption
from registration afforded by Section 4(2) of the Securities Act of 1933.
Section 4(2) commercial paper is restricted as to disposition under federal
securities law, and is generally sold to institutional investors, such as the
Fund, who agree that they are purchasing the paper for investment purposes and
not with a view to public distribution. Any resale by the purchaser must be in
an exempt transaction. Section 4(2) commercial paper is normally resold to
other institutional investors like the Fund through or with the assistance of
the issuer or investment dealers who make a market in Section 4(2) commercial
paper, thus providing liquidity. The Fund believes that Section 4(2)
commercial paper and possibly certain other restricted securities which meet
the criteria for liquidity established by the Directors of the Fund are quite
liquid. The Fund intends, therefore, to treat the restricted securities which
meet the criteria for liquidity established by the Directors, including
Section 4(2) commercial paper, as determined by the Fund's investment adviser,
as liquid and not subject to the investment limitation applicable to illiquid
securities. In addition, because Section 4(2) commercial paper is liquid, the
Fund intends to not subject such paper to the limitation applicable to
restricted securities.

CONCENTRATION OF INVESTMENTS. The Fund may invest 25% or more of its total
assets in commercial paper issued by finance companies. The finance companies
in which the Fund intends to invest can be divided into two categories,
commercial finance companies and consumer finance companies. Commercial
finance companies are principally engaged in lending to corporations or other
businesses. Consumer finance companies are primarily engaged in lending to
individuals. Captive finance companies or finance subsidiaries which exist to
facilitate the marketing and financial activities of their parent will, for
purposes of industry concentration, be classified in the industry of their
parent's corporation. In addition, the Fund may invest 25% or more of the
value of its total assets in instruments issued by a U.S. branch of a domestic
bank or savings association having capital, surplus, and undivided profits in
excess of $100,000,000 at the time of investment. Concentrating investments in
one industry may subject the Fund to more risk than if it did not concentrate.

INVESTMENT RISKS

ECDs, ETDs, Yankee CDs, Canadian Commercial Paper, and Europaper are subject
to different risks than domestic obligations of domestic banks or
corporations. Examples of these risks include international economic and
political developments, foreign governmental restrictions that may adversely
affect the payment of principal or interest, foreign withholding or other
taxes on interest income, difficulties in obtaining or enforcing a judgment
against the issuing entity, and the possible impact of interruptions in the
flow of international currency transactions. Risks may also exist for ECDs,
ETDs, and Yankee CDs because the banks issuing these instruments, or their
domestic or foreign branches, are not necessarily subject to the same
regulatory requirements that apply to domestic banks, such as reserve
requirements, loan limitations, examinations, accounting, auditing,
recordkeeping, and the public availability of information. These factors will
be carefully considered by the Fund's adviser in selecting investments for the
Fund.

INVESTMENT LIMITATIONS

The Fund will not borrow money directly or through reverse repurchase
agreements (arrangements in which the Fund sells a money market instrument for
a percentage of its cash value with an agreement to buy it back on a set date)
or pledge securities except, under certain circumstances, the Fund may
borrow up to one-third of the value of its total assets and pledge up to 10%
of its total assets to secure such borrowings. These investment limitations
cannot be changed without shareholder approval.
FUND INFORMATION
- -------------------------------------------------------------------------------

MANAGEMENT OF THE FUND

Both the Company and the adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its
portfolio securities. These codes recognize that such persons owe a
fiduciary duty to the Fund's shareholders and must place the interests of
shareholders ahead of the employees' own interests. Among other things,
the codes: require preclearance and periodic reporting of personal
securities transactions; prohibit personal transactions in securities being
purchased or sold, or being considered for purchase or sale, by the Fund;
prohibit purchasing securities in initial public offerings; and prohibit
taking profits on securities held for less than sixty days. Violations of
the codes are subject to review by the Directors, and could result in severe
penalties.

DISTRIBUTION OF SHARES

State securities laws may require certain financial institutions such as
depository institutions to register as dealers.

The distributor will pay financial institutions a fee based upon shares
subject to the Plan and owned by their clients or customers. The schedules of
such fees and the basis upon which such fees will be paid will be determined
from time to time by the Directors of the Fund provided that for any period
the total amount of these fees shall not exceed an annual rate of .35% of the
average net asset value of shares subject to the Plan held during the period
by clients or customers of financial institutions. The current annual rate of
such fees is .35%. Any fees paid by the distributor under the Plan, will be
reimbursed from the assets of the Fund.

In addition, the Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under
which the Fund may make payments up to.25% of the average daily net asset
value of the Fund to obtain personal services for shareholders and for the
maintenance of shareholder accounts. Under the Shareholder Services Agreement,
Federated Shareholders Services will either perform shareholder services
directly or will select financial institutions to perform shareholder
services. From time to time and for such periods as deemed appropriate, the
amounts stated above may be reduced voluntarily. Financial institutions will
receive fees based upon shares owned by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid will be
determined from time to time by the Fund and Federated Shareholder Services.

SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to payments made
pursuant to the Distribution Plan, Federated Securities Corp. from its own
assets, may pay financial institutions supplemental fees for the performance of
substantial sales services, distribution-related support services, or
shareholder services.

The support may include sponsoring sales, educational and training seminars
for their employees, providing sales literature, and engineering computer
software programs that emphasize the attributes of the Fund. Such assistance
will be predicated upon the amount of shares the financial institution sells
or may sell, and/or upon the type and nature of sales or marketing support
furnished by the financial institution. Any payments made by the distributor
may be reimbursed by the Fund's investment adviser or its affiliates.

ADMINISTRATION OF THE FUND

ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of Federated
Investors, provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund at an
annual rate as which relates to the average aggregate daily net assets of all
funds advised by affiliates of Federated Investors specified below:
<TABLE>
<CAPTION>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
----------- -----------------------------------
<S> <C>
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>

NET ASSET VALUE
- -------------------------------------------------------------------------------

HOW TO PURCHASE SHARES
- -------------------------------------------------------------------------------

Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days which the New York Stock Exchange
is open for business. Shares may be purchased as described below, either through
a financial institution (such as a bank or broker/dealer) or by wire or by check
directly from the Fund, with a minimum initial investment of $10,000 or more or
additional investments of as little as $500. The minimum initial and subsequent
investments for retirement plans are only $1,000 and $500, respectively.
Financial institutions may impose different minimum investment requirements on
their customers.

PURCHASING SHARES BY WIRE. Shares may be purchased by wire by calling the Fund
before 3:00 p.m. (Eastern time) to place an order. The order is considered
received immediately. Payment by federal funds must be received before 3:00
p.m. (Eastern time) in order to begin earning dividends that same day. Federal
funds should be wired as follows: Federated Shareholder Services Company, c/o
State Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For
Credit to: Prime Cash Series; Fund Number (this number can be found on the
account statement or by contacting the Fund); Group Number or Order Number;
Nominee or Institution Name; and ABA Number 011000028. Shares cannot be
purchased by wire on holidays when wire transfers are restricted. Questions on
wire purchases should be directed to your shareholder services representative
at the telephone number listed on your account statement.

PURCHASING SHARES BY CHECK. Shares may be purchased by sending a check to
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA 02266-8600.
The check should be made payable to Prime Cash Series. Please include an
account number on the check. Orders by mail are considered received when
payment by check is converted into federal funds (normally the business day
after the check is received), and shares begin earning dividends the next day.

SPECIAL PURCHASE FEATURES

HOW TO REDEEM SHARES
- -------------------------------------------------------------------------------

Shares are redeemed at their net asset value next determined after Federated
Shareholder Services Company receives the redemption request. Redemptions will
be made on days on which the Fund computes its net asset value. Redemption
requests must be received in proper form and can be made as described below.

REDEEMING SHARES BY TELEPHONE. Redemptions in any amount may be made by
calling the Fund provided the Fund has a properly completed authorization
form. These forms can be obtained from Federated Securities Corp. Ordinarily,
proceeds from redemption requests before 12:00 noon (Eastern time) will be
wired the same day to the shareholder's account at a domestic commercial bank
which is a member of the Federal Reserve System, but will not include that
day's dividend. Proceeds from redemption requests received after that time
include that day's dividend but will be wired the following business day.
Under limited circumstances, arrangements may be made with the distributor for
same-day payment of proceeds, without that day's dividend, for redemption
requests received before 2:00 p.m. (Eastern time). Proceeds from redeemed
shares purchased by check or through ACH will not be wired until that method
of payment has cleared. Proceeds from redemption requests on holidays when
wire transfers are restricted will be wired the following business day.
Questions about telephone redemptions on days when wire transfers are
restricted should be directed to your shareholder services representative at
the telephone number listed on your account statement.

Telephone instructions may be recorded, and if reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.

In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares By Mail" should be considered. If at any time the Fund shall determine
it necessary to terminate or modify the telephone redemption privilege,
shareholders would be promptly notified.

The written request should state: the Fund name; the account name as
registered with the Fund; the account number; and the number of shares to be
redeemed or the dollar amount requested. All owners of the account must sign
the request exactly as the shares are registered. Normally, a check for the
proceeds is mailed within one business day, but in no event more than seven
days, after the receipt of a proper written redemption request. Dividends are
paid up to and including the day that a redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by a commercial
or savings bank, trust company, or savings association whose deposits are
insured by an organization which is administered by the Federal Deposit
Insurance Corporation; a member firm of a domestic stock exchange; or any other
"eligible guarantor institution," as defined in the Securities Exchange Act of
1934. The Fund does not accept signatures guaranteed by a notary public.

SPECIAL REDEMPTION FEATURES

DEBIT CARD. Upon request, a debit account will be established. This account
allows shareholders to redeem shares by using a debit card. A fee will be
charged to the account for this service.

ACCOUNT AND SHARE INFORMATION
- -------------------------------------------------------------------------------

TAX INFORMATION
- -------------------------------------------------------------------------------

FEDERAL INCOME TAX

The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal tax purposes
so that income (including capital gains) and losses realized by the Company's
other portfolios will not be combined for tax purposes with those realized by
the Fund.

STATE AND LOCAL TAXES

Company shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.

Shareholders are urged to consult their own tax advisers regarding the status
of their accounts under state and local tax laws.

PERFORMANCE INFORMATION
- -------------------------------------------------------------------------------

From time to time, the Fund advertises its yield, effective yield, and total
return.

From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.

ADDRESSES
- --------------------------------------------------------------------------------

Federated Investors Tower
Prime Cash Series Pittsburgh, PA 15222-3779
- --------------------------------------------------------------------------------

Distributor
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, PA 15222-3779
- --------------------------------------------------------------------------------

Investment Adviser
Federated Advisers
Federated Investors Tower
Pittsburgh, PA 15222-3779
- --------------------------------------------------------------------------------

Custodian
State Street Bank and Trust Company
P.O. Box 8600 Boston, MA
02266-8600
- --------------------------------------------------------------------------------

Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company
P.O. Box 8600 Boston, MA
02266-8600
- --------------------------------------------------------------------------------

Independent Public Accountants
Deloitte & Touche LLP 2500 One PPG Place
Pittsburgh, PA 15222
- --------------------------------------------------------------------------------

PRIME CASH SERIES

PROSPECTUS

A Portfolio of Cash Trust Series, Inc.,
an Open-End Management Investment Company

Prospectus dated September 30, 1996

[LOGO]
Since 1955 FEDERATED INVESTORS

Federated Investors Tower
Pittsburgh, PA 15222-3779

Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.

CUSIP 147551105
9080101A (9/96) [LOGO]

TREASURY CASH SERIES
(A PORTFOLIO OF CASH TRUST SERIES, INC.)

PROSPECTUS

The shares of Treasury Cash Series (the "Fund") offered by this prospectus
represent interests in a portfolio of Cash Trust Series, Inc. (the "Company"),
an open-end management investment company (a mutual fund). The Fund invests in
short-term U.S. Treasury securities to achieve current income consistent with
stability of principal and liquidity.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE
FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE
CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.

This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSI ON OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

Prospectus dated September 30, 1996

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES 1
- -------------------------------------

FINANCIAL HIGHLIGHTS--TREASURY CASH
SERIES 2

- -------------------------------------

GENERAL INFORMATION 3
- -------------------------------------

INVESTMENT INFORMATION 3
- -------------------------------------

Investment Objective 3

Investment Policies 3

Investment Limitations 4

FUND INFORMATION 4
- -------------------------------------

Management of the Fund 4

Distribution of Shares 5

Administration of the Fund 6

NET ASSET VALUE 7
- -------------------------------------

HOW TO PURCHASE SHARES 7
- -------------------------------------

Special Purchase Features 8

HOW TO REDEEM SHARES 8
- -------------------------------------

Special Redemption Features 9

ACCOUNT AND SHARE INFORMATION 10
- -------------------------------------

TAX INFORMATION 10
- -------------------------------------

Federal Income Tax 10

State and Local Taxes 11

PERFORMANCE INFORMATION 11
- -------------------------------------

ADDRESSES 12
- -------------------------------------

SUMMARY OF FUND EXPENSES
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)............................... None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)............................... None
Contingent Deferred Sales Charge (as a percentage of original
purchase price
or redemption proceeds, as applicable)............................ None
Redemption Fee (as a percentage of amount redeemed, if applicable). None
Exchange Fee....................................................... None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1).................................. 0.46%
12b-1 Fee (after waiver) (2)....................................... 0.10%
Total Other Expenses............................................... 0.43%
Shareholder Services Fee......................................... 0.25%
Total Operating Expenses (3)....................................... 0.99%
</TABLE>

(3) The total operating expenses were 1.28% absent the voluntary waivers of
portions of the management fee and the 12b-1 fee.

The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs
and expenses, see "Fund Information". Wire-transferred redemptions of less
than $5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual
return and
(2) redemption at the end of each time
period...................................... $10 $32 $55 $121
</TABLE>

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

TREASURY CASH SERIES

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

The following table has been audited by Deloitte & Touche LLP, the Fund's
independent auditors. Their report, dated July 10, 1996, on the Fund's
financial statements for the year ended May 31, 1996, and on the following
table for each of the periods presented, is included in the Annual Report,
which is incorporated by reference. This table should be read in conjunction
with the Fund's financial statements and notes thereto, which may be obtained
from the Fund.
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
--------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990(A)
- ----------------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------
INCOME FROM INVESTMENT
OPERATIONS
- -----------------------
Net investment income 0.05 0.04 0.02 0.02 0.04 0.07 0.02
- -----------------------
LESS DISTRIBUTIONS
- -----------------------
Distributions from net
investment income (0.05) (0.04) (0.02) (0.02) (0.04) (0.07) (0.02)
- ----------------------- -------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------- -------- -------- -------- -------- -------- -------- --------
TOTAL RETURN (B) 4.83% 4.34% 2.37% 2.47% 4.24% 6.83% 2.42%
- -----------------------
RATIOS TO AVERAGE NET
ASSETS
- -----------------------
Expenses 0.99% 0.99% 0.99% 0.99% 0.98% 0.88% 0.60%*
- -----------------------
Net investment income 4.70% 4.26% 2.33% 2.46% 4.18% 6.39% 7.75%*
- -----------------------
Expense waiver/
reimbursement (c) 0.29% 0.08% 0.10% 0.04% 0.04% 0.22% 0.44%*
- -----------------------
SUPPLEMENTAL DATA
- -----------------------
Net assets, end of
period (000 omitted) $593,730 $424,091 $427,005 $532,334 $638,761 $713,430 $127,800
- -----------------------
</TABLE>

* Computed on an annualized basis.

(a) Reflects operations for the period from February 7, 1990 (date of initial
public investment) to May 31, 1990.

(b) Based on net asset value, which does not reflect the sales charge
contingent deferred sales charge, if applicable.

Further information about the Fund's performance is contained in the Fund's
Annual Report dated May 31, 1996, which can be obtained free of charge.

GENERAL INFORMATION
- -------------------------------------------------------------------------------

The Company was established as a Maryland corporation under Articles of
Incorporation dated February 1, 1993. The Articles of Incorporation permit the
Company to offer separate series of shares representing interests in separate
portfolios of securities. The Fund is designed for customers of financial
institutions such as banks, fiduciaries, custodians of public funds,
investment advisers, and broker/dealers as a convenient means of accumulating
an interest in a professionally managed portfolio investing only in short-term
U.S. Treasury securities. A minimum initial investment of $10,000 is required,
except for retirement plans.

The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.

INVESTMENT INFORMATION
- -------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

The Fund pursues its investment objective by investing only in a portfolio of
U.S. Treasury securities maturing in 13 months or less. The average maturity
of the securities in the Fund's portfolio, computed on a dollar-weighted
basis, will be 90 days or less. Unless indicated otherwise, the investment
policies may be changed by the Board of Directors ("the Directors") without
shareholder approval. Shareholders will be notified before any material change
in these policies becomes effective.

ACCEPTABLE INVESTMENTS. The Fund invests only in U.S. Treasury securities,
which are fully guaranteed as to principal and interest by the United States.

INVESTMENT LIMITATIONS

The Fund will not invest more than 10% of its net assets in illiquid
securities, including repurchase agreements providing for settlement in more
than seven days after notice.

FUND INFORMATION
- -------------------------------------------------------------------------------

MANAGEMENT OF THE FUND

ADVISER'S BACKGROUND. Federated Advisers, a Delaware business trust, organized
on April 11, 1989, is a registered investment adviser under the Investment
Advisers Act of 1940. It is a subsidiary of Federated Investors. All of the
Class A (voting) shares of Federated Investors are owned by a trust, the
trustees of which are John F. Donahue, Chairman and Trustee of Federated
Investors, Mr. Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue,
who is President and Trustee of Federated Investors.

Both the Company and the adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its
portfolio securities. These codes recognize that such persons owe a
fiduciary duty to the Fund's shareholders and must place the interests of
shareholders ahead of the employees' own interests. Among other things,
the codes: require preclearance and periodic reporting of personal
securities transactions; prohibit personal transactions in securities
being purchased or sold, or being considered for purchase or sale, by the
Fund; prohibit purchasing securities in initial public offerings; and
prohibit taking profits on securities held for less than sixty days.
Violations of the codes are subject to review by the Directors, and could
result in severe penalties.

DISTRIBUTION OF SHARES

State securities laws may require certain financial institutions such as
depository institutions to register as dealers.

The distributor will pay financial institutions a fee based upon shares subject
to the Plan and owned by their clients or customers. The schedules of such fees
and the basis upon which such fees will be paid will be determined from time to
time by the Directors of the Fund provided that for any period the total amount
of these fees shall not exceed an annual rate of .35% of the average net asset
value of shares subject to the Plan held during the period by clients or
customers of financial institutions. The current annual rate of such fees is
.35%. Any fees paid by the distributor under the Plan, will be reimbursed from
the assets of the Fund.

In addition, the Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under
which the Fund may make payments up to .25% of the average daily net asset
value of the Fund to obtain personal services for shareholders and for the
maintenance of shareholder accounts. Under the Shareholder Services Agreement,
Federated Shareholders Services will either perform shareholder services
directly or will select financial institutions to perform shareholder services.
From time to time and for such periods as deemed appropriate, the amounts
stated above may be reduced voluntarily. Financial institutions will receive
fees based upon shares owned by their clients or customers. The schedules of
such fees and the basis upon which such fees will be paid will be determined
from time to time by the Fund and Federated Shareholder Services.

SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to payments made
pursuant to the Distribution Plan, Federated Securities Corp. from its own
assets, may pay financial institutions supplemental fees for the performance of
substantial sales services, distribution-related support services, or
shareholder services.

The support may include sponsoring sales, educational and training seminars for
their employees, providing sales literature, and engineering computer software
programs that emphasize the attributes of the Fund. Such assistance will be
predicated upon the amount of shares the financial institution sells or may
sell, and/or upon the type and nature of sales or marketing support furnished
by the financial institution. Any payments made by the distributor may be
reimbursed by the Fund's investment adviser or its affiliates.

ADMINISTRATION OF THE FUND

ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of Federated
Investors, provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund at an
annual rate as which relates to the average aggregate daily net assets of all
funds advised by affiliates of Federated Investors specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE
MAXIMUM FEE DAILY NET ASSETS
- ----------- -----------------------------------
<S> <C>
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>

NET ASSET VALUE
- -------------------------------------------------------------------------------

HOW TO PURCHASE SHARES
- -------------------------------------------------------------------------------

Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days which the New York Stock
Exchange is open for business. Shares may be purchased as described below,
either through a financial institution (such as a bank or broker/dealer) or by
wire or by check directly from the Fund, with a minimum initial investment of
$10,000 or more or additional investments of as little as $500. The minimum
initial and subsequent investments for retirement plans are only $1,000 and
$500, respectively. Financial institutions may impose different minimum
investment requirements on their customers.

PURCHASING SHARES BY WIRE. Shares may be purchased by wire by calling the Fund
before 3:00 p.m. (Eastern time) to place an order. The order is considered
received immediately. Payment by federal funds must be received before 3:00
p.m. (Eastern time) in order to begin earning dividends that same day. Federal
funds should be wired as follows: Federated Shareholder Services Company, c/o
State Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For
Credit to: Treasury Cash Series; Fund Number (this number can be found on the
account statement or by contacting the Fund); Group Number or Order Number;
Nominee or Institution Name; and ABA Number 011000028.

Shares cannot be purchased by wire on holidays when wire transfers are
restricted. Questions on wire purchases should be directed to your shareholder
services representative at the telephone number listed on your account
statement.

PURCHASING SHARES BY CHECK. Shares may be purchased by sending a check to
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA 02266-8600.
The check should be made payable to Treasury Cash Series. Please include an
account number on the check. Orders by mail are considered received when
payment by check is converted into federal funds (normally the business day
after the check is received), and shares begin earning dividends the next day.

SPECIAL PURCHASE FEATURES

HOW TO REDEEM SHARES
- -------------------------------------------------------------------------------

Shares are redeemed at their net asset value next determined after Federated
Shareholder Services Company receives the redemption request. Redemptions will
be made on days on which the Fund computes its net asset value. Redemption
requests must be received in proper form and can be made as described below.

REDEEMING SHARES BY TELEPHONE. Redemptions in any amount may be made by
calling the Fund provided the Fund has a properly completed authorization
form. These forms can be obtained from Federated Securities Corp. Ordinarily,
proceeds from redemption requests before 12:00 noon (Eastern time) will be
wired the same day to the shareholder's account at a domestic commercial bank
which is a member of the Federal Reserve System, but will not include that
day's dividend. Proceeds from redemption requests received after that time
include that day's dividend but will be wired the following business day.
Under limited circumstances, arrangements may be made with the distributor for
same-day payment of proceeds, without that day's dividend, for redemption
requests received before 2:00 p.m. (Eastern time). Proceeds from redeemed
shares purchased by check or through ACH will not be wired until that method
of payment has cleared. Proceeds from redemption requests on holidays when
wire transfers are restricted will be wired the following business day.
Questions about telephone redemptions on days when wire transfers are
restricted should be directed to your shareholder services representative at
the telephone number listed on your account statement.

Telephone instructions may be recorded, and if reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.

In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares By Mail" should be considered. If at any time the Fund shall determine
it necessary to terminate or modify the telephone redemption privilege,
shareholders would be promptly notified.

SPECIAL REDEMPTION FEATURES

DEBIT CARD. Upon request, a debit account will be established. This account
allows shareholders to redeem shares by using a debit card. A fee will be
charged to the account for this service.

ACCOUNT AND SHARE INFORMATION
- -------------------------------------------------------------------------------

TAX INFORMATION
- -------------------------------------------------------------------------------

FEDERAL INCOME TAX

STATE AND LOCAL TAXES

Company shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.

Shareholders are urged to consult their own tax advisers regarding the status
of their accounts under state and local tax laws.

PERFORMANCE INFORMATION
- -------------------------------------------------------------------------------

From time to time, the Fund advertises its yield, effective yield, and total
return.

From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.

ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>

<S> <C> <C>
Treasury Cash Series
Federated Investors Tower
Pittsburgh, PA 15222-3779
- ---------------------------------------------------------------------------------------
Distributor

Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
- ---------------------------------------------------------------------------------------
Investment Adviser
Federated Advisers Federated Investors Tower
Pittsburgh, PA 15222-3779
- ---------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company P.O. Box 8600
Boston, MA 02266-8600
- ---------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company P.O. Box 8600
Boston, MA 02266-8600
- ---------------------------------------------------------------------------------------
Independent Public Accountants
Deloitte & Touche LLP 2500 One PPG Place
Pittsburgh, PA 15222
- ---------------------------------------------------------------------------------------
</TABLE>

TREASURY CASH SERIES

PROSPECTUS

A Portfolio of Cash Trust Series, Inc.,
an Open-End Management Investment
Company

Prospectus dated September 30, 1996

[LOGO] FEDERATED INVESTORS
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779

Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors

CUSIP 147551402
0010801A (9/96)

[LOGO]

GOVERNMENT CASH SERIES
(A PORTFOLIO OF CASH TRUST SERIES, INC.)

STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of Government Cash Series (the ``Fund'), a portfolio of Cash
Trust Series, Inc. (the ``Company') dated September 30, 1996. This
Statement is not a prospectus. You may request a copy of a prospectus
or a paper copy of this Statement, if you have received it
electronically, free of charge by calling 1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Statement dated September 30, 1996

FEDERATED INVESTORS
Federated Investors Tower
Pittsburgh, PA 15222-3779

Federated Securities Corp. is the distributor of the Fund
and is a subsidiary of Federated Investors.
Cusip 147551204
9080103B (9/96)
TABLE OF CONTENTS

INVESTMENT POLICIES 1

Acceptable Investments 1
When-Issued and Delayed Delivery
Transactions 1
Repurchase Agreements 1
Reverse Repurchase Agreements 1
Lending of Portfolio Securities 1
INVESTMENT LIMITATIONS 2

Regulatory Compliance 3
CASH TRUST SERIES, INC. MANAGEMENT 4

Share Ownership 8
Director Compensation 8
Director Liability 9
INVESTMENT ADVISORY SERVICES 9

Investment Adviser 9
Advisory Fees 9
BROKERAGE TRANSACTIONS 9

OTHER SERVICES 10

Fund Administration 10
Custodian and Portfolio Accountant 10
Transfer Agent 10
Independent Public Accountants 10
DISTRIBUTION PLAN AND SHAREHOLDER
SERVICES AGREEMENT 10

DETERMINING NET ASSET VALUE 10

REDEMPTION IN KIND 11

THE FUND'S TAX STATUS 11

PERFORMANCE INFORMATION 11

Yield 11
Effective yield 11
Total Return 12
Performance Comparisons 12
Economic and Market Information 12
ABOUT FEDERATED INVESTORS 12

FINANCIAL STATEMENTS 13
INVESTMENT POLICIES

Unless indicated otherwise, the policies described below may be changed by
the Board of Directors (`the Directors'') without shareholder approval.
Shareholders will be notified before any material change in these policies
becomes effective.
ACCEPTABLE INVESTMENTS
Some of the short-term U.S. government securities the Fund may purchase
carry variable interest rates. These securities have a rate of interest
subject to adjustment at least annually. This adjusted interest rate is
ordinarily tied to some objective standard, such as the 91-day U.S.
Treasury bill rate. Variable interest rates will reduce the changes in the
market value of such securities from their original purchase prices.
Accordingly, the potential for capital appreciation or capital depreciation
should not be greater than that of fixed interest rate U.S. government
securities having maturities equal to the interest rate adjustment dates of
the variable rate U.S. government securities. The Fund may purchase
variable rate U.S. government securities upon the determination by the
Board of Directors that the interest rate as adjusted will cause the
instrument to have a current market value that approximates its par value
on the adjustment date.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses, other
than normal transaction costs, are incurred. However, liquid assets of the
Fund in a dollar amount sufficient to make payment for the securities to be
purchased are: segregated on the Fund`s records at the trade date; marked
to market daily; and maintained until the transaction is settled. The Fund
does not intend to engage in when-issued and delayed delivery transactions
to an extent that would cause the segregation of more than 20% of the total
value of its assets.
REPURCHASE AGREEMENTS
The Fund believes that under the regular procedures normally in effect for
custody of the Fund's portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in favor of the
Fund and allow retention or disposition of such securities. The Fund will
only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker/dealers, which are deemed by the
Fund's adviser to be creditworthy pursuant to guidelines established by the
Directors.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase
agreement, the Fund transfers possession of a portfolio instrument in
return for a percentage of the instrument's market value in cash and agrees
that on a stipulated date in the future the Fund will repurchase the
portfolio instrument by remitting the original consideration plus interest
at an agreed upon rate. The use of reverse repurchase agreements may enable
the Fund to avoid selling portfolio instruments at a time when a sale may
be deemed to be disadvantageous, but does not ensure this result. However,
liquid assets of the Fund, in a dollar amount sufficient to make payment
for the securities to be purchased, are: segregated on the Fund's records
at the trade date; marked to market daily; and maintained until the
transaction is settled.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be
valued daily and, should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the Fund.
During the time portfolio securities are on loan, the borrower pays the
Fund any dividends or interest paid on such securities. Loans are subject
to termination at the option of the Fund or the borrower. The Fund may pay
reasonable administrative and custodial fees in connection with a loan and
may pay a negotiated portion of the interest earned on the cash or
equivalent collateral to the borrower or placing broker.

INVESTMENT LIMITATIONS

SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as are necessary for
clearance of transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or
emergency measure or to facilitate management of the portfolio by enabling
the Fund to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous.
The Fund will not purchase any securities while borrowings in excess of 5%
of the value of its total assets are outstanding. During the period any
reverse repurchase agreements are outstanding, the Fund will restrict the
purchase of the portfolio securities to money market instruments maturing
on or before the expiration date of the reverse repurchase agreements, but
only to the extent necessary to assure completion of the reverse repurchase
agreements.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In these cases, it may pledge assets having a
market value not exceeding the lesser of the dollar amounts borrowed or 10%
of the value of total assets at the time of the borrowing.
LENDING CASH OR SECURITIES
The Fund will not lend any assets, except portfolio securities. This shall
not prevent the Fund from purchasing or holding money market instruments,
including repurchase agreements and variable rate U.S. government
securities permitted by its investment objective, policies, limitations, or
Articles of Incorporation.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited
partnership interests.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies, and limitations.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in
any one industry. However, the Fund may invest 25% or more of the value of
its total assets in cash, cash items, or securities issued or guaranteed by
the government of the United States or its agencies, or instrumentalities
and repurchase agreements collateralized by such U.S. government
securities. The U.S. government is not considered to be an industry.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets,
the Fund will not purchase securities of any one issuer (other than cash,
cash items, or securities issued or guaranteed by the government of the
United States or its agencies or instrumentalities and repurchase
agreements collateralized by such U.S. government securities) if as a
result more than 5% of the value of its total assets would be invested in
the securities of that issuer, or if it would own more than 10% of the
outstanding voting securities of that issuer.
The above limitations cannot be changed without shareholder approval. The
following limitations, however, may be changed by the Directors without
shareholder approval. Shareholders will be notified before any material
change in these limitations becomes effective.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest in securities subject to restrictions on resale
under federal securities law.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not purchase securities of other investment companies, except
as part of a merger, consolidation, or other acquisition.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of
continuous operations, including the operation of any predecessor.
INVESTING FOR CONTROL
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND DIRECTORS
The Fund will not purchase or retain the securities of any issuer if the
Officers and Directors of the Company or its investment adviser, owning
individually more than .50% of the issuer's securities, together own more
than 5% of the issuer's securities.
INVESTING IN OPTIONS
The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.
INVESTING IN MINERALS
The Fund will not purchase or sell interests in oil, gas, or other mineral
exploration or development programs or leases, although it may purchase the
securities of issuers which invest in or sponsor such programs.
For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic
bank or savings association having capital, surplus, and undivided profits
in excess of $100,000,000 at the time of investment to be `cash items.''
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not result
in a violation of such limitation.
The Fund did not borrow money or pledge securities in excess of 5% of the
value of its net assets during the last fiscal year and has no present
intent to do so during the coming fiscal year.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in
the prospectus and this Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of
and regulations under the Investment Company Act of 1940. In particular,
the Fund will comply with the various requirements of Rule 2a-7, which
regulates money market mutual funds. The Fund will determine the effective
maturity of its investments according to Rule 2a-7. The Fund may change
these operational policies to reflect changes in the laws and regulations
without the approval of its shareholders.

CASH TRUST SERIES, INC. MANAGEMENT

Officers and Directors are listed with their addresses, birthdates, present
positions with Cash Trust Series, Inc., and principal occupations.

John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Director
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp. and Federated Global Research Corp.; Chairman, Passport
Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds. .

Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Director
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Trustee,
University of Pittsburgh; Director or Trustee of the Funds.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Director
President, Investment Properties Corporation; Senior Vice-President, John
R. Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.

William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Director
Director and Member of the Executive Committee, Michael Baker, Inc.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.

J. Christopher Donahue *
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President and Director
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated
Research Corp. and Federated Global Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated Shareholder Services Company, and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Director of the Company.

James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Director
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director of the
Funds.

Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Director
Professor of Medicine, University of Pittsburgh; Medical Director,
University of Pittsburgh Medical Center - Downtown; Member, Board of
Directors, University of Pittsburgh Medical Center; formerly, Hematologist,
Oncologist, and Internist, Presbyterian and Montefiore Hospitals; Director
or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny, & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Director
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.

Peter E. Madden
Seacliff
562 Bellevue Avenue
Newport, RI
Birthdate: March 16, 1942
Director
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street
Boston Corporation; Director or Trustee of the Funds.

Gregor F. Meyer
Miller, Ament, Henny, & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: October 6, 1926
Director
Attorney, Member of Miller, Ament, Henny & Kochuba; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director or Trustee of the
Funds.

John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Director
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director or Trustee of the Funds.

Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Director
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer
Library Center, Inc., National Defense University, U.S. Space Foundation
and Czech Management Center; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy and
Technology, Federal Emergency Management Advisory Board and Czech
Management Center; Director or Trustee of the Funds.

Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Director
Public relations/Marketing/Conference Planning, Manchester Craftsmen's
Guild; Restaurant Consultant, Frick Art & History Center; Conference
Coordinator, University of Pittsburgh Art History Department; Director or
Trustee of the Funds.

Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some
of the Funds; Director or Trustee of some of the Funds.

Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated
Research Corp., Federated Global Research Corp. and Passport Research,
Ltd.; Executive Vice President and Director, Federated Securities Corp.;
Trustee, Federated Shareholder Services Company; Trustee or Director of
some of the Funds; President, Executive Vice President and Treasurer of
some of the Funds.

John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President , Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds; Treasurer of some of the Funds.

*This Director is deemed to be an ``interested person'' as defined in
the Investment Company Act of 1940.
@Member of the Executive Committee. The Executive Committee of the
Board of Directors handles the responsibilities of the Board between
meetings of the Board.
As referred to in the list of Directors and Officers, `Funds'' include the
following investment companies:
111 Corcoran Funds; Annuity Management Series; Arrow Funds; Automated
Government Money Trust; Blanchard Funds; Blanchard Precious Metals Fund,
Inc.; Cash Trust Series II; Cash Trust Series, Inc. ; DG Investor Series;
Edward D. Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate
U.S. Government Fund, Inc.; Federated American Leaders Fund, Inc.;
Federated ARMs Fund; Federated Equity Funds; Federated Equity Income Fund,
Inc.; Federated Fund for U.S. Government Securities, Inc.; Federated GNMA
Trust; Federated Government Income Securities, Inc.; Federated Government
Trust; Federated High Income Bond Fund, Inc.; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Insurance Series; Federated
Master Trust; Federated Municipal Opportunities Fund, Inc.; Federated
Municipal Securities Fund, Inc.; Federated Municipal Trust; Federated
Short-Term Municipal Trust; Federated Short-Term U.S. Government Trust;
Federated Stock and Bond Fund, Inc.; Federated Stock Trust; Federated Tax-
Free Trust; Federated Total Return Series, Inc.; Federated U.S. Government
Bond Fund; Federated U.S. Government Securities Fund: 1-3 Years; Federated
U.S. Government Securities Fund: 2-5 Years; Federated U.S. Government
Securities Fund: 5-10 Years; Federated Utility Fund, Inc.; First Priority
Funds; Fixed Income Securities, Inc.; Fortress Utility Fund, Inc.; High
Yield Cash Trust; Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Investment Series Trust; Liberty Term Trust,
Inc. - 1999; Liberty U.S. Government Money Market Trust; Liquid Cash Trust;
Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Peachtree Funds; RIMCO Monument Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; The Planters Funds; The Starburst Funds;
The Starburst Funds II; The Virtus Funds; Trust for Financial Institutions;
Trust for Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; and World Investment
Series, Inc.

SHARE OWNERSHIP
Officers and Directors as a group own less than 1% of the Fund`s
outstanding shares.
As of September 3, 1996, the following shareholders of record owned 5% or
more of the outstanding shares of the Fund: Kirpet Co., Omaha, NE, owned
approximately 51,392,239 shares (8.66%); Parker & Parsley Development,
Midland, TX, owned approximately 63,839,847 shares (10.78%); and BHC
Securities, Inc., Philadelphia, PA owned approximately 81,270,964 shares
(13.70%).
DIRECTOR COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
CORPORATION CORPORATION*# FROM FUND COMPLEX +

John F. Donahue $0 $0 for the Fund and
Chairman and Director 54 other investment companies in
the Fund Complex
Thomas G. Bigley++ $703.80 $86,331 for the Fund and
Director 54 other investment companies in
the Fund Complex
John T. Conroy, Jr. $758.11 $115,760 for the Fund and
Director 54 other investment companies in
the Fund Complex
William J. Copeland $758.11 $115,760 for the Fund and
Director 54 other investment companies in
the Fund Complex
J. Christopher Donahue $0 $0 for the Fund and
Director 16 other investment companies in
the Fund Complex
James E. Dowd $758.11 $115,760 for the Fund and
Director 54 other investment companies in
the Fund Complex
Lawrence D. Ellis $703.80 $104,898 for the Fund and
Director 54 other investment companies in
the Fund Complex
Edward L. Flaherty, Jr. $758.11 $115,760 for the Fund and
Director 54 other investment companies in
the Fund Complex
Peter E. Madden $703.80 $104,898 for the Fund and
Director 54 other investment companies in
the Fund Complex
Gregor F. Meyer $703.80 $104,898 for the Fund and
Director 54 other investment companies in
the Fund Complex
John E. Murray, Jr. $703.80 $104,898 for the Fund and
Director 54 other investment companies in
the Fund Complex
Wesley W. Posvar $703.80 $104,898 for the Fund and
Director 54 other investment companies in
the Fund Complex
Marjorie P. Smuts $703.80 $104,898 for the Fund and
Director 54 other investment companies in
the Fund Complex

*Information is furnished for the fiscal year ended May 31, 1996.
#The aggregate compensation is provided for the Corporation which is
comprised of 4 portfolios.
+The information is provided for the last calendar year.
++Mr. Bigley served on 39 investment companies in the Federated Funds
Complex from January 1 through September 30, 1995. On October 1, 1995, he
was appointed a Director or Trustee on 15 additional Federated Funds.
DIRECTOR LIABILITY
The Articles of Incorporation provide that the Directors will not be liable
for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
INVESTMENT ADVISORY SERVICES

INVESTMENT ADVISER
The Fund's investment adviser is Federated Advisers. It is a subsidiary of
Federated Investors. All the voting securities of Federated Investors are
owned by a trust, the trustees of which are John F. Donahue, his wife and
his son, J. Christopher Donahue.
The adviser shall not be liable to the Company, the Fund, or any
shareholder of the Fund for any losses that may be sustained in the
purchase, holding, or sale of any security or for anything done or omitted
by it, except acts or omissions involving willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties imposed upon it by
its contract with the Company.
ADVISORY FEES
For its advisory services, Federated Advisers receives an annual investment
advisory fee as described in the prospectus. For the fiscal years ended May
31, 1996, 1995, and 1994, the adviser earned $2,411,464, $2,041,481, and
$2,214,398, respectively, of which $234,663, $311,977, and $401,216,
respectively, were waived.
STATE EXPENSE LIMITATIONS
The adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares
are registered for sale in those states. If the Fund's normal
operating expenses (including the investment advisory fee, but not
including brokerage commissions, interest, taxes, and extraordinary
expenses) exceed 2-1/2% per year of the first $30 million of average
net assets, 2% per year of the next $70 million of average net assets,
and 1-1/2% per year of the remaining average net assets, the adviser
will reimburse the Fund for its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the adviser
will be limited, in any single fiscal year, by the amount of the
investment advisory fees.
This arrangement is not part of the advisory contract and may be
amended or rescinded in the future.
BROKERAGE TRANSACTIONS

When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the adviser looks for prompt execution of the order
at a favorable price. In working with dealers, the adviser will generally
use those who are recognized dealers in specific portfolio instruments,
except when a better price and execution of the order can be obtained
elsewhere. The adviser makes decisions on portfolio transactions and
selects brokers and dealers subject to guidelines established by the
Directors. The adviser may select brokers and dealers who offer brokerage
and research services. These services may be furnished directly to the Fund
or to the adviser and may include: advice as to the advisability of
investing in securities; security analysis and reports; economic studies;
industry studies; receipt of quotations for portfolio evaluations; and
similar services. Research services provided by brokers and dealers may be
used by the adviser or its affiliates in advising the Fund and other
accounts. To the extent that receipt of these services may supplant
services for which the adviser or its affiliates might otherwise have paid,
it would tend to reduce their expenses. The adviser and its affiliates
exercise reasonable business judgment in selecting brokers who offer
brokerage and research services to execute securities transactions. They
determine in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research
services provided. During the fiscal years ended May 31, 1996, 1995, and
1994, the Fund paid no brokerage commissions.
Although investment decisions for the Fund are made independently from
those of the other accounts managed by the adviser, investments of the type
the Fund may make may also be made by those other accounts. When the Fund
and one or more other accounts managed by the adviser are prepared to
invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a manner
believed by the adviser to be equitable to each. In some cases, this
procedure may adversely affect the price paid or received by the Fund or
the size of the position obtained or disposed of by the Fund. In other
cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
OTHER SERVICES

FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for a fee as described in
the prospectus. From March 1, 1994, to March 1, 1996, Federated
Administrative Services served as the Fund's Administrator. Prior to March
1, 1994, Federated Administrative Services, Inc. served as the Fund's
Administrator. Both former Administrators are subsidiaries of Federated
Investors. For purposes of this Statement of Additional Information,
Federated Services Company, Federated Administrative Services, and
Federated Administrative Services, Inc. may hereinafter collectively be
referred to as the `Administrators.'' For the fiscal years ended May 31,
1996, 1995, and 1994, the Administrators earned $364,861, $309,080, and
$400,965, respectively.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, MA, is custodian for the
securities and cash of the Fund. Federated Services Company, Pittsburgh,
PA, provides certain accounting and recordkeeping services with respect to
the Fund's portfolio investments. The fee paid for this service is based
upon the level of the Fund's average net assets for the period plus out-of-
pocket expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder Services Company, maintains all necessary shareholder
records. For its services, the transfer agent receives a fee based on the
size, type, and number of accounts and transactions made by shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Fund are Deloitte & Touche LLP,
Pittsburgh, PA.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES AGREEMENT

These arrangements permit the payment of fees to financial institutions,
the distributor, and Federated Shareholder Services, to stimulate
distribution activities and to cause services to be provided to
shareholders by a representative who has knowledge of the shareholder's
particular circumstances and goals. These activities and services may
include, but are not limited to, marketing efforts; providing office space,
equipment, telephone facilities, and various clerical, supervisory,
computer, and other personnel as necessary or beneficial to establish and
maintain shareholder accounts and records; processing purchase and
redemption transactions and automatic investments of client account cash
balances; answering routine client inquiries; and assisting clients in
changing dividend options, account designations, and addresses.
By adopting the Distribution Plan, the Directors expect that the Fund will
be able to achieve a more predictable flow of cash for investment purposes
and to meet redemptions. This will facilitate more efficient portfolio
management and assist the Fund in pursuing its investment objectives. By
identifying potential investors whose needs are served by the Fund's
objectives, and properly servicing these accounts, it may be possible to
curb sharp fluctuations in rates of redemptions and sales.
Other benefits, which may be realized under either arrangement, may
include: (1) providing personal services to shareholders; (2) investing
shareholder assets with a minimum of delay and administrative detail; (3)
enhancing shareholder recordkeeping systems; and (4) responding promptly to
shareholders' requests and inquiries concerning their accounts.
For the fiscal year ended May 31, 1996, payments in the amount of
$1,688,025 were made pursuant to the Distribution Plan, of which $1,205,732
was voluntarily waived and $482,293 was paid to financial institutions. In
addition, for this period, the Fund paid Shareholder Services fees in the
amount of $1,205,732.
DETERMINING NET ASSET VALUE

The Directors have decided that the best method for determining the value
of portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization
of premium or accumulation of discount rather than at current market value.
Accordingly, neither the amount of daily income nor the net asset value is
affected by any unrealized appreciation or depreciation of the portfolio.
In periods of declining interest rates, the indicated daily yield on shares
of the Fund computed by dividing the annualized daily income on the Fund's
portfolio by the net asset value computed as above may tend to be higher
than a similar computation made by using a method of valuation based upon
market prices and estimates. In periods of rising interest rates, the
opposite may be true.
The Fund's use of the amortized cost method of valuing portfolio
instruments depends on its compliance with certain conditions in Rule 2a-7
(the `Rule'') promulgated by the Securities and Exchange Commission under
the Investment Company Act of 1940. Under the Rule, the Directors must
establish procedures reasonably designed to stabilize the net asset value
per share, as computed for purposes of distribution and redemption, at
$1.00 per share, taking into account current market conditions and the
Fund's investment objective. The procedures include monitoring the
relationship between the amortized cost value per share and the net asset
value per share based upon available indications of market value. The
Directors will decide what, if any, steps should be taken if there is a
difference of more than 0.5 of 1% between the two values. The Directors
will take any steps they consider appropriate (such as redemption in kind
or shortening the average portfolio maturity) to minimize any material
dilution or other unfair results arising from differences between the two
methods of determining net asset value.
REDEMPTION IN KIND

The Fund is obligated to redeem shares solely in cash up to $250,000 or 1%
of the Fund's net asset value, whichever is less, for any one shareholder
within a 90-day period. Any redemption beyond this amount will also be in
cash unless the Directors determine that further payments should be in
kind. In such cases, the Fund will pay all or a portion of the remainder of
the redemption in portfolio instruments valued in the same way as the Fund
determines net asset value. The portfolio instruments will be selected in a
manner that the Directors deem fair and equitable. Redemption in kind is
not as liquid as a cash redemption. If redemption is made in kind,
shareholders who sell these securities could receive less than the
redemption value and could incur certain transaction costs.
THE FUND'S TAX STATUS

To qualify for the special tax treatment afforded to regulated investment
companies, the Fund must, among other requirements: derive at least 90% of
its gross income from dividends, interest, and gains from the sale of
securities; derive less than 30% of its gross income from the sale of
securities held less than three months; invest in securities within certain
statutory limits; and distribute to its shareholders at least 90% of its
net income earned during the year.
PERFORMANCE INFORMATION

TOTAL RETURN
Average annual total return is the average compounded rate of return for a
given period that would equate a $1,000 initial investment to the ending
redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of shares owned at the end of the period
by the net asset value per share at the end of the period. The number of
shares owned at the end of the period is based on the number of shares
purchased at the beginning of the period with $1,000, adjusted over the
period by any additional shares, assuming the monthly reinvestment of all
dividends and distributions.
The Fund's average annual total returns for the one-year period and five-
year period ended May 31, 1996, and for the period from August 23, 1989,
(date of initial public investment) through May 31, 1996 were 4.85%, 3.71%,
and 4.69%, respectively.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors such as the composition of
any index used, prevailing market conditions, portfolio compositions of
other funds, and methods used to value portfolio securities and compute
offering price. The financial publications and/or indices which the Fund
uses in advertising may include:
OLIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund
categories based on total return, which assumes the reinvestment of
all income dividends and capital gains distributions, if any.
oDONOGHUE'S MONEY FUND REPORT publishes annualized yields of money
market funds weekly. Donoghue's Money Market Insight publication
reports monthly and 12-month-to-date investment results for the same
money funds.
oMONEY, a monthly magazine, regularly ranks money market funds in
various categories based on the latest available seven-day effective
yield.
Advertising and other promotional literature may include charts, graphs,
and other illustrations using the Fund's returns, or returns in general,
that demonstrate basic investment concepts such as tax-deferred
compounding, dollar-cost averaging, and systematic investment. In addition,
the Fund can compare its performance, or performance for the types of
securities in which it invests, to a variety of other investments, such as
bank savings accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial, and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by Fund portfolio managers and their views and analysis
on how such developments could affect the Fund. In addition, advertising
and sales literature may quote statistics and give general information
about the mutual fund industry, including the growth of the industry, from
sources such as the Investment Company Institute.
ABOUT FEDERATED INVESTORS

Federated Investors is dedicated to meeting investor needs which is
reflected in its investment decision making-structured, straightforward,
and consistent. This has resulted in a history of competitive performance
with a range of competitive investment products that have gained the
confidence of thousands of clients and their customers.
The company's disciplined security selection process is firmly rooted in
sound methodologies backed by fundamental and technical research.
Investment decisions are made and executed by teams of portfolio managers,
analysts, and traders dedicated to specific market sectors. These traders
handle trillions of dollars in annual trading volume.
In the money market sector, Federated Investors gained prominence in the
mutual fund industry in 1974 with the creation of the first institutional
money market fund. Simultaneously, the company pioneered the use of the
amortized cost method of accounting for valuing shares of money market
funds, a principal means used by money managers today to value money market
fund shares. Other innovations include the first institutional tax-free
money market fund. As of December 31, 1995, Federated Investors managed
more than $40.2 billion in assets across approximately 47 money market
funds, including 17 government, 10 prime, and 20 municipal with assets
approximating $20.9 billion, $11.5 billion and $7.8 billion, respectively.
J. Thomas Madden, Executive Vice President, oversees Federated Investors'
equity and high yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated Investors' domestic fixed
income management. Henry A. Frantzen, Executive Vice President, oversees
the management of Federated Investors' international portfolios.
MUTUAL FUND MARKET
Twenty-seven percent of American households are pursuing their financial
goals through mutual funds. These investors, as well as businesses and
institutions, have entrusted over $3 trillion to the more than 5,500 funds
available.*
Federated Investors, through its subsidiaries, distributes mutual funds for
a variety of investment applications. Specific markets include:
INSTITUTIONAL CLIENTS
Federated Investors meets the needs of more than 4,000 institutional
clients nationwide by managing and servicing separate accounts and mutual
funds for a variety of applications, including defined benefit and defined
contribution programs, cash management, and asset/liability management.
Institutional clients include corporations, pension funds, tax-exempt
entities, foundations/endowments, insurance companies, and investment and
financial advisers. The marketing effort to these institutional clients is
headed by John B. Fisher, President, Institutional Sales Division.
TRUST ORGANIZATIONS
Other institutional clients include close relationships with more than
1,500 banks and trust organizations. Virtually all of the trust divisions
of the top 100 bank holding companies use Federated funds in their clients'
portfolios. The marketing effort to trust clients is headed by Mark R.
Gensheimer, Executive Vice President, Bank Marketing & Sales.
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated funds are available to consumers through major brokerage firms
nationwide--including 200 New York Stock Exchange firms--supported by more
wholesalers than any other mutual fund distributor. Federated's service to
financial professionals and institutions has earned it high rankings in
DALBAR surveys. The marketing effort to these firms is headed by James F.
Getz, President, Broker/Dealer Division.
FINANCIAL STATEMENTS

The financial statements for Government Cash Series for the fiscal year
ended May 31, 1996, are incorporated herein by reference to the Annual
Report to Shareholders of Government Cash Series dated May 31, 1996.

*Source: Investment Company Institute

MUNICIPAL CASH SERIES
(A PORTFOLIO OF CASH TRUST SERIES, INC.)

STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of Municipal Cash Series (the ``Fund'), a portfolio of Cash
Trust Series, Inc. (the ``Company') dated September 30, 1996. This
Statement is not a prospectus. You may request a copy of a prospectus
or a paper copy of this Statement, if you have received it
electronically, free of charge by calling 1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Statement dated September 30, 1996

FEDERATED INVESTORS
Federated Investors Tower
Pittsburgh, PA 15222-3779

Federated Securities Corp. is the distributor of the Fund
and is a subsidiary of Federated Investors.
Cusip 147551303
9080102B (9/96)
TABLE OF CONTENTS

INVESTMENT POLICIES 1

Acceptable Investments 1
Participation Interests 1
Municipal leases 1
Ratings 1
When-Issued and Delayed Delivery
Transaction 1
Repurchase Agreements 2
Reverse Repurchase Agreements 2
Credit Enhancement 2
INVESTMENT LIMITATIONS 2
Regulatory Compliance 4
CASH TRUST SERIES, INC. MANAGEMENT 5

Share Ownership 9
Director Compensation 9
Director Liability 10
INVESTMENT ADVISORY SERVICES 10

Investment Adviser 10
Advisory Fees 10
BROKERAGE TRANSACTIONS 10

OTHER SERVICES 11

Fund Administration 11
Custodian and Portfolio Accountant 11
Transfer Agent 11
Independent Public accountants 11
DISTRIBUTION PLAN AND SHAREHOLDER
SERVICES AGREEMENT 11

DETERMINING NET ASSET VALUE 12

REDEMPTION IN KIND 12

THE FUND'S TAX STATUS 12

PERFORMANCE INFORMATION 12

Yield 12
Effective Yield 13
Tax-Equivalent Yield 13
Tax-Equivalency Table 13
Total Return 14
Performance Comparisons 14
Economic and Market Information 14
ABOUT FEDERATED INVESTORS 14

FINANCIAL STATEMENTS 15

APPENDIX 16
INVESTMENT POLICIES

Unless indicated otherwise, the policies described below may be changed by
the Board of Directors (`the Directors'') without shareholder approval.
Shareholders will be notified before any material change in these policies
becomes effective.
ACCEPTABLE INVESTMENTS
When determining whether a security presents minimal credit risks, the
investment adviser will consider the creditworthiness of: the issuer of the
security; the issuer of any demand feature applicable to the security; or
any guarantor of either the security or any demand feature.
PARTICIPATION INTERESTS
The financial institutions from which the Fund purchases participation
interests frequently provide or secure from another financial institution
irrevocable letters of credit or guarantees and give the Fund the right to
demand payment of the principal amounts of the participation interests plus
accrued interest on short notice (usually within seven days). The municipal
securities subject to the participation interests are not limited to the
Fund's maximum maturity requirements so long as the participation interests
include the right to demand payment from the issuers of those interests. By
purchasing these participation interests, the Fund is buying a security
meeting the maturity and quality requirements of the Fund and also is
receiving the tax-free benefits of the underlying securities.
MUNICIPAL LEASES
The Fund may purchase municipal securities in the form of participation
interests that represent an undivided proportional interest in lease
payments by a governmental or nonprofit entity. The lease payments and
other rights under the lease provide for and secure payments on the
certificates. Lease obligations may be limited by municipal charter or the
nature of the appropriation for the lease. Furthermore, a lease may provide
that the participants cannot accelerate lease obligations upon default. The
participants would only be able to enforce lease payments as they became
due. In the event of a default or failure of appropriation, unless the
participation interests are credit enhanced, it is unlikely that the
participants would be able to obtain an acceptable substitute source of
payment.
In determining the liquidity of municipal lease securities, the investment
adviser, under the authority delegated by the Directors, will base its
determination on the following factors: whether the lease can be terminated
by the lessee; the potential recovery, if any, from a sale of the leased
property upon termination of the lease; the lessee's general credit
strength (e.g., its debt, administrative, economic and financial
characteristics and prospects); the likelihood that the lessee will
discontinue appropriating funding for the leased property because the
property is no longer deemed essential to its operations (e.g., the
potential for an `event of non-appropriation''); and any credit
enhancement or legal recourse provided upon an event of non-appropriation
or other termination of the lease.
RATINGS
The securities in which the Fund invests must be rated in one of the two
highest short-term rating categories by one or more nationally recognized
statistical rating organizations (`NRSROs'') or be of comparable quality
to securities having such ratings. An NRSRO's two highest rating categories
are determined without regard for sub-categories and gradations. For
example, securities rated SP-1+, SP-1, or SP-2 by Standard & Poor's Ratings
Group (`S&P''), MIG-1 or MIG-2 by Moody's Investors Service, Inc.
(`Moody's''), or F-1+, F-1, or F-2 by Fitch Investors Service, Inc.
(`Fitch'') are all considered rated in one of the two highest short-term
rating categories. The Fund will follow applicable regulations in
determining whether a security rated by more than one NRSRO can be treated
as being in one of the two highest short-term rating categories; currently,
such securities must be rated by two NRSROs in one of their two highest
rating categories. See `Regulatory Compliance.''
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses, other
than normal transaction costs, are incurred. However, liquid assets of the
Fund in a dollar amount sufficient to make payment for the securities to be
purchased are: segregated on the Fund`s records at the trade date; marked
to market daily; and maintained until the transaction is settled. The Fund
does not intend to engage in when-issued and delayed delivery transactions
to an extent that would cause the segregation of more than 20% of the total
value of its assets.

REPURCHASE AGREEMENTS
Certain securities in which the Fund invests may be purchased pursuant to
repurchase agreements. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them at
a mutually agreed upon time and price. To the extent that the seller does
not repurchase the securities from the Fund, the Fund could receive less
than the repurchase price on any sale of such securities. The Fund or its
custodian will take possession of the securities subject to repurchase
agreements, and these securities will be marked to market daily. In the
event that a defaulting seller filed for bankruptcy or became insolvent,
disposition of such securities by the Fund might be delayed pending court
action. The Fund believes that under the regular procedures normally in
effect for custody of the Fund's portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in favor of the
Fund and allow retention or disposition of such securities. The Fund will
only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker/dealers, which are deemed by the
Fund's adviser to be creditworthy pursuant to guidelines established by the
Directors.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase
agreement, the Fund transfers possession of a portfolio instrument in
return for a percentage of the instrument's market value in cash and agrees
that on a stipulated date in the future the Fund will repurchase the
portfolio instrument by remitting the original consideration plus interest
at an agreed upon rate. The use of reverse repurchase agreements may enable
the Fund to avoid selling portfolio instruments at a time when a sale may
be deemed to be disadvantageous, but does not ensure this result. However,
liquid assets of the Fund, in a dollar amount sufficient to make payment
for the securities to be purchased, are: segregated on the Fund's records
at the trade date; marked to market daily; and maintained until the
transaction is settled.
CREDIT ENHANCEMENT
The Fund typically evaluates the credit quality and ratings of credit-
enhanced securities based upon the financial condition and ratings of the
party providing the credit enhancement (the `credit enhancer''), rather
than the issuer. However, credit-enhanced securities will not be treated as
having been issued by the credit enhancer for diversification purposes,
unless the Fund has invested more than 10% of its assets in securities
issued, guaranteed or otherwise credit enhanced by the credit enhancer, in
which case the securities will be treated as having been issued by both the
issuer and the credit enhancer.
The Fund may have more than 25% of its total assets invested in securities
credit enhanced by banks.
INVESTMENT LIMITATIONS

SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as are necessary for
clearance of transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the amount borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or
emergency measure or to facilitate management of the portfolio by enabling
the Fund to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous. The Fund will
not purchase any securities while borrowings in excess of 5% of the value
of its total assets are outstanding. During the period any reverse
repurchase agreements are outstanding, the Fund will restrict the purchase
of portfolio securities to money market instruments maturing on or before
the expiration date of the reverse repurchase agreements, but only to the
extent necessary to assure completion of the reverse repurchase agreements.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except as
necessary to secure permitted borrowings. In those cases, it may pledge
assets having a market value not exceeding the lesser of the dollar amounts
borrowed or 10% of the value of total assets at the time of the borrowing.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except that it may acquire
publicly or non-publicly issued municipal securities or temporary
investments or enter into repurchase agreements, in accordance with its
investment objective, policies, limitations or Articles of Incorporation.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, although it may invest in
municipal securities of issuers whose business involves the purchase or
sale of real estate or in securities which are secured by real estate or
interests in real estate.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies, and limitations.
CONCENTRATION OF INVESTMENTS
The Fund will not purchase securities if, as a result of such purchase, 25%
or more of the value of its total assets would be invested in any one
industry or in industrial development bonds or other securities, the
interest upon which is paid from revenues of similar types of projects.
However, the Fund may invest as temporary investments 25% or more of the
value of its assets in cash or cash items, securities issued or guaranteed
by the U.S. government, its agencies, or instrumentalities, or instruments
secured by these money market instruments, such as repurchase agreements.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of its assets, the Fund will not
invest more than 10% of its total assets in the securities of any one
issuer.
Under this limitation, each government subdivision, including states and
the District of Columbia, territories, possessions of the United States, or
their political subdivisions, agencies, authorities, instrumentalities, or
similar entities, will be considered a separate issuer if its assets and
revenues are separate from those of the governmental body creating it and
the security is backed only by its own assets and revenues.
Industrial development bonds backed only by the assets and revenues of a
nongovernmental user, are considered to be issued solely by that user. If
in the case of an industrial development bond or governmental-issued
security, a governmental or some other entity guarantees the security, such
guarantee would be considered a separate security issued by the guarantor
as well as the other issuer, subject to limited exclusions allowed by the
Investment Company Act of 1940.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
securities subject to restrictions on resale under the Securities Act of
1933.
The above limitations cannot be changed without shareholder approval. The
following limitations, however, may be changed by the Directors without
shareholder approval. Shareholders will be notified before any material
change in these limitations becomes effective.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not purchase securities of other investment companies, except
as part of a merger, consolidation, or other acquisition.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers (including companies responsible for paying principal
and interest on industrial development bonds) which have records of less
than three years of continuous operations, including the operation of any
predecessor.
INVESTING FOR CONTROL
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND DIRECTORS
The Fund will not purchase or retain the securities of any issuer if the
Officers and Directors of the Company or its investment adviser, owning
individually more than .50% of the issuer's securities, together own more
than 5% of the issuer's securities.
INVESTING IN OPTIONS
The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.
INVESTING IN MINERALS
The Fund will not purchase or sell interests in oil, gas, or other mineral
exploration or development programs or leases, although it may purchase the
securities of issuers which invest in or sponsor such programs.
For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic
bank or savings association having capital, surplus, and undivided profits
in excess of $100,000,000 at the time of investment to be `cash items.''
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not result
in a violation of such limitation.
The Fund did not borrow money or pledge securities in excess of 5% of the
value of its net assets during the last fiscal year and has no present
intent to do so during the coming fiscal year.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in
the prospectus and this Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of
and regulations under the Investment Company Act of 1940. In particular,
the Fund will comply with the various requirements of Rule 2a-7, which
regulates money market mutual funds. The Fund will determine the effective
maturity of its investments , as well as its ability to consider a security
as having received the requisite short-term ratings by NRSROs, according to
Rule 2a-7. The Fund may change these operational policies to reflect
changes in the laws and regulations without the approval of its
shareholders.

CASH TRUST SERIES, INC. MANAGEMENT

Officers and Directors are listed with their addresses, birthdates, present
positions with Cash Trust Series, Inc., and principal occupations.

John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Director
President, Investment Properties Corporation; Senior Vice-President, John
R. Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.

James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Director
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director of the
Funds.

SHARE OWNERSHIP
Officers and Directors as a group own less than 1% of the Fund`s
outstanding shares.
As of September 3, 1996, the following shareholders of record owned 5% or
more of the outstanding shares of the Fund: BHC Securities, Inc.,
Philadelphia, PA, owned approximately 32,958,697 shares (6.08%) and
McDonald & Co. Securities, Inc., Cincinnati, OH, owned approximately
179,127,239 shares (33.09%).
DIRECTOR COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
CORPORATION CORPORATION*# FROM FUND COMPLEX +

INVESTMENT ADVISER
The Fund's investment adviser is Federated Advisers. It is a subsidiary of
Federated Investors. All the voting securities of Federated Investors are
owned by a trust, the trustees of which are John F. Donahue, his wife and
his son, J. Christopher Donahue.
The adviser shall not be liable to the Company, the Fund, or any
shareholder of the Fund for any losses that may be sustained in the
purchase, holding, or sale of any security or for anything done or omitted
by it, except acts or omissions involving willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties imposed upon it by
its contract with the Company.
ADVISORY FEES
For its advisory services, Federated Advisers receives an annual investment
advisory fee as described in the prospectus. For the fiscal years ended May
31, 1996, 1995, and 1994, the adviser earned $2,478,141, $2,619,462, and
$2,737,684, respectively, of which $390,103, $264,144, and $315,012,
respectively, were waived.
STATE EXPENSE LIMITATIONS
The adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares
are registered for sale in those states. If the Fund's normal
operating expenses (including the investment advisory fee, but not
including brokerage commissions, interest, taxes, and extraordinary
expenses) exceed 2-1/2% per year of the first $30 million of average
net assets, 2% per year of the next $70 million of average net assets,
and 1-1/2% per year of the remaining average net assets, the adviser
will reimburse the Fund for its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the adviser
will be limited, in any single fiscal year, by the amount of the
investment advisory fees.
This arrangement is not part of the advisory contract and may be
amended or rescinded in the future.
BROKERAGE TRANSACTIONS

FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for a fee as described in
the prospectus. From March 1, 1994, to March 1, 1996, Federated
Administrative Services served as the Fund's Administrator. Prior to March
1, 1994, Federated Administrative Services, Inc. served as the Fund's
Administrator. Both former Administrators are subsidiaries of Federated
Investors. For purposes of this Statement of Additional Information,
Federated Services Company, Federated Administrative Services, and
Federated Administrative Services, Inc. may hereinafter collectively be
referred to as the `Administrators.'' For the fiscal years ended May 31,
1996, 1995, and 1994, the Administrators earned $374,937, $396,587, and
$441,902, respectively.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, MA, is custodian for the
securities and cash of the Fund. Federated Services Company, Pittsburgh,
PA, provides certain accounting and recordkeeping services with respect to
the Fund's portfolio investments. The fee paid for this service is based
upon the level of the Fund's average net assets for the period plus out-of-
pocket expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder Services Company, maintains all necessary shareholder
records. For its services, the transfer agent receives a fee based on the
size, type, and number of accounts and transactions made by shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Fund are Deloitte & Touche LLP,
Pittsburgh, PA.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES AGREEMENT

These arrangements permit the payment of fees to financial institutions,
the distributor, and Federated Shareholder Services, to stimulate
distribution activities and to cause services to be provided to
shareholders by a representative who has knowledge of the shareholder's
particular circumstances and goals. These activities and services may
include, but are not limited to, marketing efforts; providing office space,
equipment, telephone facilities, and various clerical, supervisory,
computer, and other personnel as necessary or beneficial to establish and
maintain shareholder accounts and records; processing purchase and
redemption transactions and automatic investments of client account cash
balances; answering routine client inquiries; and assisting clients in
changing dividend options, account designations, and addresses.
By adopting the Distribution Plan, the Directors expect that the Fund will
be able to achieve a more predictable flow of cash for investment purposes
and to meet redemptions. This will facilitate more efficient portfolio
management and assist the Fund in pursuing its investment objectives. By
identifying potential investors whose needs are served by the Fund's
objectives, and properly servicing these accounts, it may be possible to
curb sharp fluctuations in rates of redemptions and sales.
Other benefits, which may be realized under either arrangement, may
include: (1) providing personal services to shareholders; (2) investing
shareholder assets with a minimum of delay and administrative detail; (3)
enhancing shareholder recordkeeping systems; and (4) responding promptly to
shareholders' requests and inquiries concerning their accounts.
For the fiscal year ended May 31, 1996, payments in the amount of
$1,734,698 were made pursuant to the Distribution Plan, of which $1,239,070
was voluntarily waived and $495,628 was paid to financial institutions. In
addition, for this period, the Fund paid Shareholder Services fees in the
amount of $1,239,070.

DETERMINING NET ASSET VALUE

FEDERAL INCOME TAX BRACKET:
15.00% 28.00% 31.00% 36.00% 39.60%

JOINT $1- $40,101- $96,901- $147,701- OVER
RETURN 40,100 96,900 147,700 263,750 $263,750

SINGLE $1- $24,001- $58,151- $121,301- OVER
RETURN 24,000 58,150 121,300 263,750 $263,750

Tax-Exempt
Yield Taxable Yield Equivalent

1.00% 1.18% 1.39% 1.45% 1.56% 1.66%
1.50% 1.76% 2.08% 2.17% 2.34% 2.48%
2.00% 2.35% 2.78% 2.90% 3.13% 3.31%
2.50% 2.94% 3.47% 3.62% 3.91% 4.14%
3.00% 3.53% 4.17% 4.35% 4.69% 4.97%
3.50% 4.12% 4.86% 5.07% 5.47% 5.79%
4.00% 4.71% 5.56% 5.80% 6.25% 6.62%
4.50% 5.29% 6.25% 6.52% 7.03% 7.45%
5.00% 5.88% 6.94% 7.25% 7.81% 8.28%
5.50% 6.47% 7.64% 7.97% 8.59% 9.11%
6.00% 7.06% 8.33% 8.70% 9.38% 9.93%
6.50% 7.65% 9.03% 9.42% 10.16% 10.76%
7.00% 8.24% 9.72% 10.14% 10.94% 11.59%
7.50% 8.82% 10.42% 10.87% 11.72% 12.42%
8.00% 9.41% 11.11% 11.59% 12.50% 13.25%

Note: The maximum marginal tax rate for each bracket was used in
calculating the taxable yield equivalent. Furthermore, additional
state and local taxes paid on comparable taxable investments were not
used to increase federal deductions.
The chart above is for illustrative purposes only. It is not an
indicator of past or future performance of Fund shares.
* Some portion of the Fund's income may be subject to the federal
alternative minimum tax and state and local income taxes.
TOTAL RETURN
Average annual total return is the average compounded rate of return for a
given period that would equate a $1,000 initial investment to the ending
redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of shares owned at the end of the period
by the net asset value per share at the end of the period. The number of
shares owned at the end of the period is based on the number of shares
purchased at the beginning of the period with $1,000, adjusted over the
period by any additional shares, assuming the monthly reinvestment of all
dividends and distributions.
The Fund's average annual total returns for the one-year period and five-
year period ended May 31, 1996, and for the period from August 25, 1989
(date of initial public investment) through May 31, 1996, were 3.04%,
2.67%, and 3.42%, respectively.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors such as the composition of
any index used, prevailing market conditions, portfolio compositions of
other funds, and methods used to value portfolio securities and compute
offering price. The financial publications and/or indices which the Fund
uses in advertising may include:
OLIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund
categories based on total return, which assumes the reinvestment of
all income dividends and capital gains distributions, if any.
oDONOGHUE'S MONEY FUND REPORT publishes annualized yields of money
market funds weekly. Donoghue's Money Market Insight publication
reports monthly and 12-month-to-date investment results for the same
money funds.
oMONEY, a monthly magazine, regularly ranks money market funds in
various categories based on the latest available seven-day effective
yield.
Advertising and other promotional literature may include charts, graphs,
and other illustrations using the Fund's returns, or returns in general,
that demonstrate basic investment concepts such as tax-deferred
compounding, dollar-cost averaging, and systematic investment. In addition,
the Fund can compare its performance, or performance for the types of
securities in which it invests, to a variety of other investments, such as
bank savings accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial, and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by Fund portfolio managers and their views and analysis
on how such developments could affect the Fund. In addition, advertising
and sales literature may quote statistics and give general information
about the mutual fund industry, including the growth of the industry, from
sources such as the Investment Company Institute.
ABOUT FEDERATED INVESTORS

The financial statements for Municipal Cash Series for the fiscal year
ended May 31, 1996, are incorporated herein by reference to the Annual
Report to Shareholders of Municipal Cash Series dated May 31, 1996.

*Source: Investment Company Institute

APPENDIX

STANDARD & POOR'S RATINGS GROUP
SHORT-TERM MUNICIPAL OBLIGATION RATINGS
A Standard & Poor's Ratings Group (S&P) note rating reflects the liquidity
concerns and market access risks unique to notes.
SP-1 Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will
be given a plus sign (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS
S&P assigns dual ratings to all long-term debt issues that have as part of
their provisions a variable rate demand feature. The first rating (long-
term rating) addresses the likelihood of repayment of principal and
interest when due, and the second rating (short-term rating) describes the
demand characteristics. Several examples are AAA/A-L+, AA/A-I+, A/A-1. (The
definitions for the long-term and the short-term ratings are provided
below.)
COMMERCIAL PAPER (CP) RATINGS
An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365
days.
A-1 This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus sign (+)
designation.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated A-1.
LONG-TERM DEBT RATINGS
AAA Debt rated `AAA'' has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA Debt rate `AA'' has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small
degree.
A Debt rated `A'' has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
MOODY'S INVESTORS SERVICE, INC.,
SHORT-TERM MUNICIPAL OBLIGATION RATINGS
Moody's Investor Service, Inc. (Moody's) short-term ratings are designated
Moody's Investment Grade (MIG or VMIG) (see below). The purpose of the MIG
or VMIG ratings is to provide investors with a simple system by which the
relative investment qualities of short-term obligations may be evaluated.
MIG1 This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad based access to the market for refinancing.
MIG2 This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.

VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS
Short-term ratings on issues with demand features are differentiated by the
use of the VMIG symbol to reflect such characteristics as payment upon
periodic demand rather than fixed maturity dates and payment relying on
external liquidity. In this case, two ratings are usually assigned, (for
example, AAA/VMIG-1); the first representing an evaluation of the degree of
risk associated with scheduled principal and interest payments, and the
second representing an evaluation of the degree of risk associated with the
demand feature. The VMIG rating can be assigned a 1 or 2 designation using
the same definitions described above for the MIG rating.
COMMERCIAL PAPER (CP) RATINGS
P-1 Issuers rated PRIME-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations.
PRIME-1 repayment capacity will normally be evidenced by the following
characteristics: leading market positions in well established
industries, high rates of return on funds employed, conservative
capitalization structure with moderate reliance on debt and ample
asset protection, broad margins in earning coverage of fixed financial
charges and high internal cash generation, well-established access to
a range of financial markets and assured sources of alternate
liquidity.
P-2 Issuers rated PRIME-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations.
This will normally be evidenced by many of the characteristics cited
above, but to a lesser degree. Earnings trends and coverage ratios,
while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
LONG-TERM DEBT RATINGS
AAA Bonds which are rated AAA are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as `gilt edged.'' Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes is can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA Bonds which are rated AA are judged to be of high quality by all
standards. Together with the AAA group, they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in AAA
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-
term risks appear somewhat larger than in AAA securities.
A Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
NR Indicates that both the bonds and the obligor or credit enhancer are
not currently rated by S&P or Moody's with respect to short-term
indebtedness. However, management considers them to be of comparable
quality to first or second tier securities.
NR(1) The underlying issuer/obligor/guarantor has other outstanding
debt rated `AAA'' by S&P or ``AAA'' by Moody's.
NR(2) The underlying issuer/obligor/guarantor has other outstanding
debt rated `AA'' by S&P or ``AA'' by Moody's.
NR(3) The underlying issuer/obligor/guarantor has other outstanding
debt rated `A'' by S&P or Moody's.
FITCH INVESTORS SERVICE, INC.
SHORT-TERM DEBT RATING DEFINITIONS
F-1+ - Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1 - Very Strong Credit Quality. Issues assigned this rating reflect an
assurance for timely payment only slightly less in degree than issues rated
F-1+.
F-2 - Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great as for issues assigned F-1+ and F-1 ratings.

PRIME CASH SERIES
(A PORTFOLIO OF CASH TRUST SERIES, INC.)

STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of Prime Cash Series (the ``Fund'), a portfolio of Cash
Trust Series, Inc. (the ``Company') dated September 30, 1996. This
Statement is not a prospectus. You may request a copy of a prospectus
or a paper copy of this Statement, if you have received it
electronically, free of charge by calling 1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Statement dated September 30, 1996

FEDERATED INVESTORS
Federated Investors Tower
Pittsburgh, PA 15222-3779

Federated Securities Corp. is the distributor of the Fund
and is a subsidiary of Federated Investors.
Cusip 147551105
9080101B (9/96)
TABLE OF CONTENTS

INVESTMENT POLICIES 1

Acceptable Investments 1
U.S. Government Securities 1
Bank Instruments 1
Ratings 1
When-Issued and Delayed Delivery
Transactions 1
Repurchase Agreements 2
Reverse Repurchase Agreements 2
Credit Enhancements 2
Lending of Portfolio Securities 2
INVESTMENT LIMITATIONS 2

Regulatory Compliance 4
CASH TRUST SERIES, INC. MANAGEMENT 5

Share Ownership 9
Director Compensation 9
Director Liability 10
INVESTMENT ADVISORY SERVICES 10

Investment Adviser 10
Advisory Fees 10
BROKERAGE TRANSACTIONS 10

OTHER SERVICES 11

Fund Administration 11
Custodian and Portfolio Accountant 11
Transfer Agent 11
Independent Public Accountants 11
DISTRIBUTION PLAN AND SHAREHOLDER
SERVICES AGREEMENT 11

DETERMINING NET ASSET VALUE 12

REDEMPTION IN KIND 12

THE FUND'S TAX STATUS 12

PERFORMANCE INFORMATION 12

Yield 12
Effective Yield 13
Total Return 13
Performance Comparisons 13
Economic and Market Information 13
ABOUT FEDERATED INVESTORS 13

FINANCIAL STATEMENTS 14
INVESTMENT POLICIES

Unless indicated otherwise, the policies described below may be changed by
the Board of Directors (`the Directors'') without shareholder approval.
Shareholders will be notified before any material change in these policies
becomes effective.
ACCEPTABLE INVESTMENTS
When determining whether a security presents minimal credit risks, the
investment adviser will consider the creditworthiness of: the issuer of the
security; the issuer of any demand feature applicable to the security; or
any guarantor of either the security or any demand feature.
U.S. GOVERNMENT SECURITIES
The types of U.S. government securities in which the Fund may invest
generally include direct obligations of the U.S. Treasury (such as U.S.
Treasury bills, notes, and bonds) and obligations issued or guaranteed by
U.S. government agencies or instrumentalities. These securities are backed
by:
othe full faith and credit of the U.S. Treasury;
othe issuer's right to borrow from the U.S. Treasury;
othe discretionary authority of the U.S. government to purchase
certain obligations of agencies or instrumentalities; or
othe credit of the agency or instrumentality issuing the obligations.
BANK INSTRUMENTS
The instruments of banks and savings associations whose deposits are
insured by the Bank Insurance Fund (`BIF'') or the Savings Association
Insurance Fund (`SAIF''), such as certificates of deposit, demand and time
deposits, savings shares, and bankers' acceptances, are not necessarily
guaranteed by those organizations. In addition to domestic bank
instruments, the Fund may invest in: Eurodollar Certificates of Deposit
issued by foreign branches of U.S. or foreign banks; Eurodollar Time
Deposits, which are U.S. dollar-denominated deposits in foreign branches of
U.S. or foreign banks; Canadian Time Deposits, which are U.S. dollar-
denominated deposits issued by branches of major Canadian banks located in
the United States; and Yankee Certificates of Deposit, which are U.S.
dollar-denominated certificates of deposit issued by U.S. branches of
foreign banks and held in the United States.
RATINGS
The securities in which the Fund invests must be rated in one of the two
highest short-term rating categories by one or more nationally recognized
statistical rating organizations (`NRSROs'') or be of comparable quality
to securities having such ratings. An NRSRO's two highest rating categories
are determined without regard for sub-categories and gradations. For
example, securities rated SP-1+, SP-1, or SP-2 by Standard & Poor's Ratings
Group (`S&P''), MIG-1 or MIG-2 by Moody's Investors Service, Inc.
(`Moody's''), or F-1+, F-1, or F-2 by Fitch Investors Service, Inc.
(`Fitch'') are all considered rated in one of the two highest short-term
rating categories. The Fund will follow applicable regulations in
determining whether a security rated by more than one NRSRO can be treated
as being in one of the two highest short-term rating categories; currently,
such securities must be rated by two NRSROs in one of their two highest
rating categories. See `Regulatory Compliance.''
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses, other
than normal transaction costs, are incurred. However, liquid assets of the
Fund in a dollar amount sufficient to make payment for the securities to be
purchased are: segregated on the Fund`s records at the trade date; marked
to market daily; and maintained until the transaction is settled. The Fund
does not intend to engage in when-issued and delayed delivery transactions
to an extent that would cause the segregation of more than 20% of the total
value of its assets.

REPURCHASE AGREEMENTS
The Fund believes that under the regular procedures normally in effect for
custody of the Fund's portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in favor of the
Fund and allow retention or disposition of such securities. The Fund will
only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker/dealers, which are deemed by the
Fund's adviser to be creditworthy pursuant to guidelines established by the
Directors.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase
agreement, the Fund transfers possession of a portfolio instrument in
return for a percentage of the instrument's market value in cash and agrees
that on a stipulated date in the future the Fund will repurchase the
portfolio instrument by remitting the original consideration plus interest
at an agreed upon rate. The use of reverse repurchase agreements may enable
the Fund to avoid selling portfolio instruments at a time when a sale may
be deemed to be disadvantageous, but does not ensure this result. However,
liquid assets of the Fund, in a dollar amount sufficient to make payment
for the securities to be purchased, are: segregated on the Fund's records
at the trade date; marked to market daily; and maintained until the
transaction is settled.
CREDIT ENHANCEMENT
The Fund typically evaluates the credit quality and ratings of credit-
enhanced securities based upon the financial condition and ratings of the
party providing the credit enhancement (the `credit enhancer''), rather
than the issuer. Generally, the Fund will not treat credit-enhanced
securities as being issued by the credit enhancer for diversification
purposes. However, under certain circumstances applicable regulations may
require the Fund to treat securities as having been issued by both the
issuer and the credit enhancer.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be
valued daily and, should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the Fund.
During the time portfolio securities are on loan, the borrower pays the
Fund any dividends or interest paid on such securities. Loans are subject
to termination at the option of the Fund or the borrower. The Fund may pay
reasonable administrative and custodial fees in connection with a loan and
may pay a negotiated portion of the interest earned on the cash or
equivalent collateral to the borrower or placing broker.
INVESTMENT LIMITATIONS

LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except portfolio securities. This
shall not prevent the Fund from purchasing or holding money market
instruments, including repurchase agreements and variable amount demand
master notes, permitted by its investment objective, policies, limitations,
or Articles of Incorporation.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate although it may invest in
securities of issuers whose business involves the purchase or sale of real
estate or in securities which are secured by real estate or interests in
real estate.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies, and limitations.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in
any one industry except that the Fund will invest 25% or more of the value
of its total assets in the commercial paper issued by finance companies.
The Fund may invest 25% or more of the value of its total assets in cash,
cash items, securities issued or guaranteed by the U.S. government, its
agencies, or instrumentalities, or instruments secured by these money
market instruments, such as repurchase agreements.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets,
the Fund will not purchase securities of any one issuer (other than cash,
cash items, or securities issued or guaranteed by the government of the
United States or its agencies or instrumentalities and repurchase
agreements collateralized by U.S. government securities) if as a result
more than 5% of the value of its total assets would be invested in the
securities of that issuer.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest more than 10% of its net assets in securities
subject to restrictions on resale under the Federal Securities Laws, except
for Section 4(2) commercial paper.
The above limitations cannot be changed without shareholder approval. The
following limitations, however, may be changed by the Directors without
shareholder approval Shareholders will be notified before any material
change in these limitations becomes effective.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not purchase securities of other investment companies, except
as part of a merger, consolidation, or other acquisition.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of
continuous operations, including the operation of any predecessor.
INVESTING FOR CONTROL
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND DIRECTORS
The Fund will not purchase or retain the securities of any issuer if the
Officers and Directors of the Company or its investment adviser, owning
individually more than .50% of the issuer's securities, together own more
than 5% of the issuer's securities.
INVESTING IN OPTIONS
The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.
INVESTING IN MINERALS
The Fund will not purchase or sell interests in oil, gas, or other mineral
exploration or development programs or leases, although it may purchase the
securities of issuers which invest in or sponsor such programs.
For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic
bank or savings association having capital, surplus, and undivided profits
in excess of $100,000,000 at the time of investment to be `cash items.''
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not result
in a violation of such limitation.
The Fund did not borrow money or pledge securities in excess of 5% of the
value of its net assets during the last fiscal year and has no present
intent to do so during the coming fiscal year.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in
the prospectus and this Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of
and regulations under the Investment Company Act of 1940. In particular,
the Fund will comply with the various requirements of Rule 2a-7, which
regulates money market mutual funds. For example, with limited exceptions,
Rule 2a-7 prohibits the investment of more than 5% of the Fund's total
assets in the securities of any one issuer, although the Fund's investment
limitation only requires such 5% diversification with respect to 75% of its
assets. The Fund will invest more than 5% of its assets in any one issuer
only under the circumstances permitted by Rule 2a-7. The Fund will also
determine the effective maturity of its investments, as well as its ability
to consider a security as having received the requisite short-term ratings
by NRSROs, according to Rule 2a-7. The Fund may change these operational
policies to reflect changes in the laws and regulations without the
approval of its shareholders.

CASH TRUST SERIES, INC. MANAGEMENT

Officers and Directors are listed with their addresses, birthdates, present
positions with Cash Trust Series, Inc., and principal occupations.

Edward L. Flaherty, Jr.@
Miller, Ament, Henny, & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Director
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Peter E. Madden
Seacliff
562 Bellevue Avenue
Newport, RI
Birthdate: March 16, 1942
Director
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street
Boston Corporation; Director or Trustee of the Funds.

SHARE OWNERSHIP
Officers and Directors as a group own less than 1% of the Fund`s
outstanding shares.
As of September 3, 1996, the following shareholders of record owned 5% or
more of the outstanding shares of the Fund: Hanifen Imhoff Clearing Corp.,
Denver, CO, owned approximately 98,651,003 shares (5.07%); BHC Securities,
Inc., Philadelphia, PA, owned approximately 196,503,946 shares (10.11%) and
Primvest Financial Services, St. Cloud, MN, owned approximately 206,778,004
shares (10.64%).
DIRECTOR COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
CORPORATION CORPORATION*# FROM FUND COMPLEX +

INVESTMENT ADVISER
The Fund's investment adviser is Federated Advisers. It is a subsidiary of
Federated Investors. All the voting securities of Federated Investors are
owned by a trust, the trustees of which are John F. Donahue, his wife and
his son, J. Christopher Donahue.
The adviser shall not be liable to the Company, the Fund, or any
shareholder of the Fund for any losses that may be sustained in the
purchase, holding, or sale of any security or for anything done or omitted
by it, except acts or omissions involving willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties imposed upon it by
its contract with the Company.
ADVISORY FEES
For its advisory services, Federated Advisers receives an annual investment
advisory fee as described in the prospectus. For the fiscal years ended May
31, 1996, 1995, and 1994, the adviser earned $6,691,023, $4,431,610, and
$4,069,739, respectively, of which $1,766,935, $1,803,372, and $1,478,163,
respectively, were waived.
STATE EXPENSE LIMITATIONS
The adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares
are registered for sale in those states. If the Fund's normal
operating expenses (including the investment advisory fee, but not
including brokerage commissions, interest, taxes, and extraordinary
expenses) exceed 2-1/2% per year of the first $30 million of average
net assets, 2% per year of the next $70 million of average net assets,
and 1-1/2% per year of the remaining average net assets, the adviser
will reimburse the Fund for its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the adviser
will be limited, in any single fiscal year, by the amount of the
investment advisory fees.
This arrangement is not part of the advisory contract and may be
amended or rescinded in the future.
BROKERAGE TRANSACTIONS

FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for a fee as described in
the prospectus. From March 1, 1994, to March 1, 1996, Federated
Administrative Services served as the Fund's Administrator. Prior to March
1, 1994, Federated Administrative Services, Inc. served as the Fund's
Administrator. Both former Administrators are subsidiaries of Federated
Investors. For purposes of this Statement of Additional Information,
Federated Services Company, Federated Administrative Services, and
Federated Administrative Services, Inc. may hereinafter collectively be
referred to as the `Administrators.'' For the fiscal years ended May 31,
1996, 1995, and 1994, the Administrators earned $1,012,314, $607,946, and
$621,911, respectively.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, MA, is custodian for the
securities and cash of the Fund. Federated Services Company, Pittsburgh,
PA, provides certain accounting and recordkeeping services with respect to
the Fund's portfolio investments. The fee paid for this service is based
upon the level of the Fund's average net assets for the period plus out-of-
pocket expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder Services Company, maintains all necessary shareholder
records. For its services, the transfer agent receives a fee based on the
size, type, and number of accounts and transactions made by shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Fund are Deloitte & Touche LLP,
Pittsburgh, PA.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES AGREEMENT

These arrangements permit the payment of fees to financial institutions,
the distributor, and Federated Shareholder Services, to stimulate
distribution activities and to cause services to be provided to
shareholders by a representative who has knowledge of the shareholder's
particular circumstances and goals. These activities and services may
include, but are not limited to, marketing efforts; providing office space,
equipment, telephone facilities, and various clerical, supervisory,
computer, and other personnel as necessary or beneficial to establish and
maintain shareholder accounts and records; processing purchase and
redemption transactions and automatic investments of client account cash
balances; answering routine client inquiries; and assisting clients in
changing dividend options, account designations, and addresses.
By adopting the Distribution Plan, the Directors expect that the Fund will
be able to achieve a more predictable flow of cash for investment purposes
and to meet redemptions. This will facilitate more efficient portfolio
management and assist the Fund in pursuing its investment objectives. By
identifying potential investors whose needs are served by the Fund's
objectives, and properly servicing these accounts, it may be possible to
curb sharp fluctuations in rates of redemptions and sales.
Other benefits, which may be realized under either arrangement, may
include: (1) providing personal services to shareholders; (2) investing
shareholder assets with a minimum of delay and administrative detail; (3)
enhancing shareholder recordkeeping systems; and (4) responding promptly to
shareholders' requests and inquiries concerning their accounts.
For the fiscal year ended May 31, 1996, payments in the amount of
$4,683,716 were made pursuant to the Distribution Plan, of which $3,372,274
was voluntarily waived and $1,311,442 was paid to financial institutions.
In addition, for this period, the Fund paid Shareholder Services fees in
the amount of $3,345,511.

DETERMINING NET ASSET VALUE

Performance depends upon such variables as: portfolio quality; average
portfolio maturity; type of instruments in which the portfolio is invested;
changes in interest rates; changes in expenses; and the relative amount of
cash flow. To the extent that financial institutions and broker/dealers
charge fees in connection with services provided in conjunction with an
investment in shares of the Fund, the performance will be reduced for those
shareholders paying those fees.
YIELD
The yield is calculated based upon the seven days ending on the day of the
calculation, called the `base period.'' This yield is computed by:
determining the net change in the value of a hypothetical account with a
balance of one share at the beginning of the base period, with the net
change excluding capital changes but including the value of any additional
shares purchased with dividends earned from the original one share and all
dividends declared on the original and any purchased shares; dividing the
net change in the account's value by the value of the account at the
beginning of the base period to determine the base period return; and
multiplying the base period return by 365/7.
The Fund's yield for the seven-day period ended May 31, 1996, was 4.42%.
EFFECTIVE YIELD
The effective yield is calculated by compounding the unannualized base
period return by: adding 1 to the base period return; raising the sum to
the 365/7th power; and subtracting 1 from the result.
The Fund's effective yield for the seven-day period ended May 31, 1996, was
4.51%.
TOTAL RETURN
Average annual total return is the average compounded rate of return for a
given period that would equate a $1,000 initial investment to the ending
redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of shares owned at the end of the period
by the net asset value per share at the end of the period. The number of
shares owned at the end of the period is based on the number of shares
purchased at the beginning of the period with $1,000, adjusted over the
period by any additional shares, assuming the monthly reinvestment of all
dividends and distributions.
The Fund's average annual total returns for the one-year period and five-
year period ended May 31, 1996 and for the period from August 18, 1989
(date of initial public investment) through May 31, 1996 were 4.90%, 3.79%,
and 4.77%, respectively.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors such as the composition of
any index used, prevailing market conditions, portfolio compositions of
other funds, and methods used to value portfolio securities and compute
offering price. The financial publications and/or indices which the Fund
uses in advertising may include:
OLIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund
categories based on total return, which assumes the reinvestment of
all income dividends and capital gains distributions, if any.
oDONOGHUE'S MONEY FUND REPORT publishes annualized yields of money
market funds weekly. Donoghue's Money Market Insight publication
reports monthly and 12-month-to-date investment results for the same
money funds.
oMONEY, a monthly magazine, regularly ranks money market funds in
various categories based on the latest available seven-day effective
yield.
Advertising and other promotional literature may include charts, graphs,
and other illustrations using the Fund's returns, or returns in general,
that demonstrate basic investment concepts such as tax-deferred
compounding, dollar-cost averaging, and systematic investment. In addition,
the Fund can compare its performance, or performance for the types of
securities in which it invests, to a variety of other investments, such as
bank savings accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial, and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by Fund portfolio managers and their views and analysis
on how such developments could affect the Fund. In addition, advertising
and sales literature may quote statistics and give general information
about the mutual fund industry, including the growth of the industry, from
sources such as the Investment Company Institute.
ABOUT FEDERATED INVESTORS

The financial statements for Prime Cash Series for the fiscal year ended
May 31, 1996, are incorporated herein by reference to the Annual Report to
Shareholders of Prime Cash Series dated May 31, 1996.

*Source: Investment Company Institute

TREASURY CASH SERIES
(A PORTFOLIO OF CASH TRUST SERIES, INC.)

STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of Treasury Cash Series (the ``Fund'), a portfolio of Cash
Trust Series, Inc. (the ``Company') dated September 30, 1996. This
Statement is not a prospectus. You may request a copy of a prospectus
or a paper copy of this Statement, if you have received it
electronically, free of charge by calling 1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Statement dated September 30, 1996

FEDERATED INVESTORS
Federated Investors Tower
Pittsburgh, PA 15222-3779

Federated Securities Corp. is the distributor of the Fund
and is a subsidiary of Federated Investors.
Cusip 147551402
0010801B (9/96)

TABLE OF CONTENTS

INVESTMENT POLICIES 1

When-Issued and Delayed Delivery
Transactions 1
Repurchase Agreements 1
Reverse Repurchase Agreements 1
INVESTMENT LIMITATIONS 1

Regulatory Compliance 3
CASH TRUST SERIES, INC. MANAGEMENT 4

Share Ownership 8
Director Compensation 8
Director Liability 9
INVESTMENT ADVISORY SERVICES 9

Investment Adviser 9
Advisory Fees 9
BROKERAGE TRANSACTIONS 9

OTHER SERVICES 10

Fund Administration 10
Custodian and Portfolio Accountant 10
Transfer Agent 10
Independent Public Accountants 10
DISTRIBUTION PLAN AND SHAREHOLDER
SERVICES AGREEMENT 10

DETERMINING NET ASSET VALUE 11

REDEMPTION IN KIND 11

THE FUND'S TAX STATUS 11

PERFORMANCE INFORMATION 11

Yield 11
Effective Yield 12
Total Return 12
Performance Comparisons 12
Economic and Market Information 12
ABOUT FEDERATED INVESTORS 12

FINANCIAL STATEMENTS 13

INVESTMENT POLICIES

Unless indicated otherwise, the policies described below may be changed by
the Board of Directors (`the Directors'') without shareholder approval.
Shareholders will be notified before any material change in these policies
becomes effective.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses, other
than normal transaction costs, are incurred. However, liquid assets of the
Fund in a dollar amount sufficient to make payment for the securities to be
purchased are: segregated on the Fund`s records at the trade date; marked
to market daily; and maintained until the transaction is settled. The Fund
does not intend to engage in when-issued and delayed delivery transactions
to an extent that would cause the segregation of more than 20% of the total
value of its assets.
REPURCHASE AGREEMENTS
The Fund believes that under the regular procedures normally in effect for
custody of the Fund's portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in favor of the
Fund and allow retention or disposition of such securities. The Fund will
only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker/dealers, which are deemed by the
Fund's adviser to be creditworthy pursuant to guidelines established by the
Directors.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase

agreement, the Fund transfers possession of a portfolio instrument in
return for a percentage of the instrument's market value in cash and agrees
that on a stipulated date in the future the Fund will repurchase the
portfolio instrument by remitting the original consideration plus interest
at an agreed upon rate. The use of reverse repurchase agreements may enable
the Fund to avoid selling portfolio instruments at a time when a sale may
be deemed to be disadvantageous, but does not ensure this result. However,
liquid assets of the Fund, in a dollar amount sufficient to make payment
for the securities to be purchased, are: segregated on the Fund's records
at the trade date; marked to market daily; and maintained until the
transaction is settled.
INVESTMENT LIMITATIONS

reverse repurchase agreements are outstanding, the Fund will restrict the
purchase of portfolio securities to money market instruments maturing on or
before the expiration date of the reverse repurchase agreements, but only
to the extent necessary to assure completion of the reverse repurchase
agreement.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except as
necessary to secure permitted borrowings. In those cases, it may pledge
assets having a market value not exceeding the lesser of the dollar amounts
borrowed or 10% of the value of total assets of the Fund at the time of the
borrowing.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except that it may purchase or
hold U.S. Treasury obligations, including repurchase agreements, permitted
by its investment objective, policies, and limitations or Articles of
Incorporation.
INVESTING IN RESTRICTED SECURITIES
The Fund will not purchase or sell securities which are restricted as to
resale under federal securities law.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in
any one industry. However, the Fund may invest 25% or more of the value of
its total assets in cash, cash items, or securities issued or guaranteed by
the government of the United States or its agencies, or instrumentalities

and repurchase agreements collateralized by such U.S. government
securities. The U.S. government is not considered to be an industry.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets,
the Fund will not purchase securities of any one issuer (other than cash,
cash items, or securities issued or guaranteed by the government of the
United States or its agencies or instrumentalities and repurchase
agreements collateralized by such U.S. government securities) if as a
result more than 5% of the value of its total assets would be invested in
the securities of that issuer, or if it would own more than 10% of the
outstanding voting securities of that issuer.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies, and limitations.
The above limitations cannot be changed without shareholder approval. The
following limitations, however, may be changed by the Directors without
shareholder approval Shareholders will be notified before any material
change in these limitations becomes effective.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not purchase securities of other investment companies, except
as part of a merger, consolidation, or other acquisition.

INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of
continuous operations, including the operation of any predecessor.
INVESTING FOR CONTROL
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND DIRECTORS
The Fund will not purchase or retain the securities of any issuer if the
Officers and Directors of the Company or its investment adviser, owning
individually more than .50% of the issuer's securities, together own more
than 5% of the issuer's securities.
INVESTING IN OPTIONS
The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.
INVESTING IN MINERALS
The Fund will not purchase or sell interests in oil, gas, or other mineral
exploration or development programs or leases, although it may purchase the
securities of issuers which invest in or sponsor such programs.
For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic
bank or savings association having capital, surplus, and undivided profits
in excess of $100,000,000 at the time of investment to be `cash items.''
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not result
in a violation of such limitation.

The Fund did not borrow money or pledge securities in excess of 5% of the
value of its net assets during the last fiscal year and has no present
intent to do so during the coming fiscal year.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in
the prospectus and this Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of
and regulations under the Investment Company Act of 1940. In particular,
the Fund will comply with the various requirements of Rule 2a-7, which
regulates money market mutual funds. The Fund will determine the effective
maturity of its investments according to Rule 2a-7. The Fund may change
these operational policies to reflect changes in the laws and regulations
without the approval of its shareholders.

CASH TRUST SERIES, INC. MANAGEMENT

Officers and Directors are listed with their addresses, birthdates, present
positions with Cash Trust Series, Inc., and principal occupations.

John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Director

Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp. and Federated Global Research Corp.; Chairman, Passport
Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds. .

James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Director
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director of the
Funds.

Edward L. Flaherty, Jr.@
Miller, Ament, Henny, & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Director

Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.

Marjorie P. Smuts
4905 Bayard Street

Pittsburgh, PA
Birthdate: June 21, 1935
Director
Public relations/Marketing/Conference Planning, Manchester Craftsmen's
Guild; Restaurant Consultant, Frick Art & History Center; Conference
Coordinator, University of Pittsburgh Art History Department; Director or
Trustee of the Funds.

Research Corp., Federated Global Research Corp. and Passport Research,
Ltd.; Executive Vice President and Director, Federated Securities Corp.;
Trustee, Federated Shareholder Services Company; Trustee or Director of
some of the Funds; President, Executive Vice President and Treasurer of
some of the Funds.

111 Corcoran Funds; Annuity Management Series; Arrow Funds; Automated
Government Money Trust; Blanchard Funds; Blanchard Precious Metals Fund,
Inc.; Cash Trust Series II; Cash Trust Series, Inc. ; DG Investor Series;
Edward D. Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate
U.S. Government Fund, Inc.; Federated American Leaders Fund, Inc.;
Federated ARMs Fund; Federated Equity Funds; Federated Equity Income Fund,
Inc.; Federated Fund for U.S. Government Securities, Inc.; Federated GNMA
Trust; Federated Government Income Securities, Inc.; Federated Government
Trust; Federated High Income Bond Fund, Inc.; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Insurance Series; Federated
Master Trust; Federated Municipal Opportunities Fund, Inc.; Federated
Municipal Securities Fund, Inc.; Federated Municipal Trust; Federated
Short-Term Municipal Trust; Federated Short-Term U.S. Government Trust;
Federated Stock and Bond Fund, Inc.; Federated Stock Trust; Federated Tax-
Free Trust; Federated Total Return Series, Inc.; Federated U.S. Government
Bond Fund; Federated U.S. Government Securities Fund: 1-3 Years; Federated
U.S. Government Securities Fund: 2-5 Years; Federated U.S. Government
Securities Fund: 5-10 Years; Federated Utility Fund, Inc.; First Priority
Funds; Fixed Income Securities, Inc.; Fortress Utility Fund, Inc.; High
Yield Cash Trust; Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Investment Series Trust; Liberty Term Trust,
Inc. - 1999; Liberty U.S. Government Money Market Trust; Liquid Cash Trust;
Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Peachtree Funds; RIMCO Monument Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; The Planters Funds; The Starburst Funds;
The Starburst Funds II; The Virtus Funds; Trust for Financial Institutions;

Trust for Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; and World Investment
Series, Inc.

SHARE OWNERSHIP
Officers and Directors as a group own less than 1% of the Fund`s
outstanding shares.
As of September 3, 1996, the following shareholders of record owned 5% or
more of the outstanding shares of the Fund: Var & Co., St. Paul, MN, owned
approximately 37,121,433 shares (6.27%); North Fork Bank & Trust, Mineola,
NY, owned 42,455,072 shares (7.17%); Citizens Commercial & Savings Bank,
Flint, MI, owned approximately 57,973,218 shares (9.80%); and BHC
Securities, Inc., Philadelphia, PA, owned approximately 72,641,676 shares
(12.28%).
DIRECTOR COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
CORPORATION CORPORATION*# FROM FUND COMPLEX +

John T. Conroy, Jr. $758.11 $115,760 for the Fund and
Director 54 other investment companies in
the Fund Complex
William J. Copeland $758.11 $115,760 for the Fund and
Director 54 other investment companies in
the Fund Complex
J. Christopher Donahue $0 $0 for the Fund and
Director 16 other investment companies in
the Fund Complex
James E. Dowd $758.11 $115,760 for the Fund and
Director 54 other investment companies in
the Fund Complex
Lawrence D. Ellis $703.80 $104,898 for the Fund and
Director 54 other investment companies in
the Fund Complex
Edward L. Flaherty, Jr. $758.11 $115,760 for the Fund and
Director 54 other investment companies in
the Fund Complex
Peter E. Madden $703.80 $104,898 for the Fund and
Director 54 other investment companies in
the Fund Complex
Gregor F. Meyer $703.80 $104,898 for the Fund and
Director 54 other investment companies in
the Fund Complex
John E. Murray, Jr. $703.80 $104,898 for the Fund and
Director 54 other investment companies in
the Fund Complex

Wesley W. Posvar $703.80 $104,898 for the Fund and
Director 54 other investment companies in
the Fund Complex
Marjorie P. Smuts $703.80 $104,898 for the Fund and
Director 54 other investment companies in
the Fund Complex

The adviser shall not be liable to the Company, the Fund, or any
shareholder of the Fund for any losses that may be sustained in the
purchase, holding, or sale of any security or for anything done or omitted
by it, except acts or omissions involving willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties imposed upon it by
its contract with the Company.
ADVISORY FEES
For its advisory services, Federated Advisers receives an annual investment
advisory fee as described in the prospectus. For the fiscal years ended May
31, 1996, 1995, and 1994 the adviser earned $3,046,700, $2,165,237, and
$2,413,838, respectively, of which $218,855, $351,246, and $475,263,
respectively, were waived.
STATE EXPENSE LIMITATIONS
The adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares
are registered for sale in those states. If the Fund's normal
operating expenses (including the investment advisory fee, but not
including brokerage commissions, interest, taxes, and extraordinary
expenses) exceed 2-1/2% per year of the first $30 million of average
net assets, 2% per year of the next $70 million of average net assets,
and 1-1/2% per year of the remaining average net assets, the adviser
will reimburse the Fund for its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the adviser
will be limited, in any single fiscal year, by the amount of the
investment advisory fees.

This arrangement is not part of the advisory contract and may be
amended or rescinded in the future.
BROKERAGE TRANSACTIONS

Although investment decisions for the Fund are made independently from
those of the other accounts managed by the adviser, investments of the type
the Fund may make may also be made by those other accounts. When the Fund
and one or more other accounts managed by the adviser are prepared to
invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a manner
believed by the adviser to be equitable to each. In some cases, this
procedure may adversely affect the price paid or received by the Fund or
the size of the position obtained or disposed of by the Fund. In other
cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
OTHER SERVICES

CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, MA, is custodian for the
securities and cash of the Fund. Federated Services Company, Pittsburgh,
PA, provides certain accounting and recordkeeping services with respect to
the Fund's portfolio investments. The fee paid for this service is based
upon the level of the Fund's average net assets for the period plus out-of-
pocket expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder Services Company, maintains all necessary shareholder
records. For its services, the transfer agent receives a fee based on the
size, type, and number of accounts and transactions made by shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Fund are Deloitte & Touche LLP,
Pittsburgh, PA.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES AGREEMENT

balances; answering routine client inquiries; and assisting clients in
changing dividend options, account designations, and addresses.
By adopting the Distribution Plan, the Directors expect that the Fund will
be able to achieve a more predictable flow of cash for investment purposes
and to meet redemptions. This will facilitate more efficient portfolio
management and assist the Fund in pursuing its investment objectives. By
identifying potential investors whose needs are served by the Fund's
objectives, and properly servicing these accounts, it may be possible to
curb sharp fluctuations in rates of redemptions and sales.
Other benefits, which may be realized under either arrangement, may
include: (1) providing personal services to shareholders; (2) investing
shareholder assets with a minimum of delay and administrative detail; (3)
enhancing shareholder recordkeeping systems; and (4) responding promptly to
shareholders' requests and inquiries concerning their accounts.
For the fiscal year ended May 31, 1996, payments in the amount of
$2,132,690 were made pursuant to the Distribution Plan, of which $1,523,350
was voluntarily waived and $609,340 was paid to financial institutions. In
addition, for this period, the Fund paid Shareholder Services fees in the
amount of $1,523,350.
DETERMINING NET ASSET VALUE

of the Fund computed by dividing the annualized daily income on the Fund's
portfolio by the net asset value computed as above may tend to be higher
than a similar computation made by using a method of valuation based upon
market prices and estimates. In periods of rising interest rates, the
opposite may be true.
The Fund's use of the amortized cost method of valuing portfolio
instruments depends on its compliance with certain conditions in Rule 2a-7
(the `Rule'') promulgated by the Securities and Exchange Commission under
the Investment Company Act of 1940. Under the Rule, the Directors must
establish procedures reasonably designed to stabilize the net asset value
per share, as computed for purposes of distribution and redemption, at
$1.00 per share, taking into account current market conditions and the
Fund's investment objective. The procedures include monitoring the
relationship between the amortized cost value per share and the net asset
value per share based upon available indications of market value. The
Directors will decide what, if any, steps should be taken if there is a
difference of more than 0.5 of 1% between the two values. The Directors
will take any steps they consider appropriate (such as redemption in kind
or shortening the average portfolio maturity) to minimize any material
dilution or other unfair results arising from differences between the two
methods of determining net asset value.
REDEMPTION IN KIND

the redemption in portfolio instruments valued in the same way as the Fund
determines net asset value. The portfolio instruments will be selected in a
manner that the Directors deem fair and equitable. Redemption in kind is
not as liquid as a cash redemption. If redemption is made in kind,
shareholders who sell these securities could receive less than the
redemption value and could incur certain transaction costs.
THE FUND'S TAX STATUS

change excluding capital changes but including the value of any additional
shares purchased with dividends earned from the original one share and all
dividends declared on the original and any purchased shares; dividing the
net change in the account's value by the value of the account at the
beginning of the base period to determine the base period return; and
multiplying the base period return by 365/7.
The Fund's net yield for the seven-day period ended May 31, 1996, was
4.32%.
EFFECTIVE YIELD
The effective yield is calculated by compounding the unannualized base
period return by: adding 1 to the base period return; raising the sum to
the 365/7th power; and subtracting 1 from the result.
The Fund's effective yield for the seven-day period ended May 31, 1996, was
4.42%.
TOTAL RETURN
Average annual total return is the average compounded rate of return for a
given period that would equate a $1,000 initial investment to the ending
redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of shares owned at the end of the period
by the net asset value per share at the end of the period. The number of
shares owned at the end of the period is based on the number of shares
purchased at the beginning of the period with $1,000, adjusted over the
period by any additional shares, assuming the monthly reinvestment of all
dividends and distributions.
The Fund's average annual total returns for the one-year period and five-
year period ended May 31, 1996, and for the period from February 7, 1990
(date of initial public investment) through May 31, 1996 were 4.83%, 3.64%,
and 4.35%, respectively.

PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors such as the composition of
any index used, prevailing market conditions, portfolio compositions of
other funds, and methods used to value portfolio securities and compute
offering price. The financial publications and/or indices which the Fund
uses in advertising may include:
OLIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund
categories based on total return, which assumes the reinvestment of
all income dividends and capital gains distributions, if any.
oDONOGHUE'S MONEY FUND REPORT publishes annualized yields of money
market funds weekly. Donoghue's Money Market Insight publication
reports monthly and 12-month-to-date investment results for the same
money funds.
oMONEY, a monthly magazine, regularly ranks money market funds in
various categories based on the latest available seven-day effective
yield.
Advertising and other promotional literature may include charts, graphs and
other illustrations using the Fund's returns, or returns in general, that
demonstrate basic investment concepts such as tax-deferred compounding,
dollar-cost averaging and systematic investment. In addition, the Fund can
compare its performance, or performance for the types of securities in
which it invests, to a variety of other investments, such as bank savings
accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial and political developments and their effect on the

securities market. Such discussions may take the form of commentary on
these developments by Fund portfolio managers and their views and analysis
on how such developments could affect the Fund. In addition, advertising
and sales literature may quote statistics and give general information
about the mutual fund industry, including the growth of the industry, from
sources such as the Investment Company Institute.
ABOUT FEDERATED INVESTORS

J. Thomas Madden, Executive Vice President, oversees Federated Investors'
equity and high yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated Investors' domestic fixed
income management. Henry A. Frantzen, Executive Vice President, oversees
the management of Federated Investors' international portfolios.
MUTUAL FUND MARKET
Twenty-seven percent of American households are pursuing their financial
goals through mutual funds. These investors, as well as businesses and
institutions, have entrusted over $3 trillion to the more than 5,500 funds
available.*
Federated Investors, through its subsidiaries, distributes mutual funds for
a variety of investment applications. Specific markets include:
INSTITUTIONAL CLIENTS
Federated Investors meets the needs of more than 4,000 institutional
clients nationwide by managing and servicing separate accounts and mutual
funds for a variety of applications, including defined benefit and defined
contribution programs, cash management, and asset/liability management.
Institutional clients include corporations, pension funds, tax-exempt
entities, foundations/endowments, insurance companies, and investment and
financial advisers. The marketing effort to these institutional clients is
headed by John B. Fisher, President, Institutional Sales Division.
TRUST ORGANIZATIONS
Other institutional clients include close relationships with more than
1,500 banks and trust organizations. Virtually all of the trust divisions
of the top 100 bank holding companies use Federated funds in their clients'
portfolios. The marketing effort to trust clients is headed by Mark R.
Gensheimer, Executive Vice President, Bank Marketing & Sales.

BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated funds are available to consumers through major brokerage firms
nationwide--including 200 New York Stock Exchange firms--supported by more
wholesalers than any other mutual fund distributor. Federated's service to
financial professionals and institutions has earned it high rankings in
DALBAR surveys. The marketing effort to these firms is headed by James F.
Getz, President, Broker/Dealer Division.
FINANCIAL STATEMENTS

The financial statements for Treasury Cash Series for the fiscal year ended
May 31, 1996, are incorporated herein by reference to the Annual Report to
Shareholders of Treasury Cash Series dated May 31, 1996.

* Source: Investment Company Institute